Legacy Education Misses by $0.04 as Costs Bite Into Quarterly Profit

Legacy Education reported quarterly earnings per share of $0.06 on Thursday, missing the consensus estimate of $0.10 by $0.04. The company posted revenue of $20.00 million for the quarter, with a net margin of 11.42% and return on equity of 19.04%, according to FiscalAI.

What drove the profit shortfall?

Operating income fell to $0.9 million from $2.7 million a year earlier, while adjusted EBITDA declined to $2.1 million from $3.1 million. Management attributed much of the gap to planned growth investments, higher seasonal costs, and an unplanned $687,500 estimated legal settlement. The takeaway in plain words: profit fell by roughly two-thirds, and most of the damage was planned or one-off.

Enrollment told a more mixed story. Legacy ended the quarter with a record 3,684 students, up 5.4% year over year, and revenue rose 3.1% to $20 million. Total student starts declined 9.9%, though Title IV starts fell less, by 5.6%. Management said 105 MRI and Cardiac Sonography starts shifted into the second quarter; without that timing shift, Title IV starts would have increased about 5.5% year over year.

Growth in ultrasound technician, sterile processing, and surgical technology programs helped offset weakness. In vocational nursing, starts came in below prior expectations as Legacy tightened admissions. Attrition improved 42% over 18 months, and the first-time NCLEX-PN pass rate reached 85.7% for the year.

What comes next?

Legacy is preparing to launch three approved programs at Contra Costa in the second half of fiscal 2027. The company also expects to open its Houston campus, with seven programs planned initially, subject to approvals. Management is targeting 300 Houston starts by July 1, while cautioning that approval timing could affect the ramp.

The balance sheet remains solid. Legacy ended September with $21.7 million in cash, roughly $34 million in working capital, and minimal debt. Management said this position supports continued investment. The company is also conducting due diligence on a potential acquisition but did not commit to a timing for a deal.

How did the stock and analysts react?

LGCY traded down $0.06, or 0.7%, during midday trading on Friday, reaching $8.09. Volume reached 77,483 shares against an average of 54,110. The firm carries a market capitalization of $103.63 million, a price-to-earnings ratio of 12.26, and a beta of 1.17.

Key trading levels:

• One-year range: $7.58 low, $14.70 high
• 50-day simple moving average: $9.90
• 200-day simple moving average: $11.35

Analyst opinion has split sharply. Zacks Research cut Legacy Education from a "hold" rating to a "strong sell" on Friday, September 25. Maxim Group initiated coverage on Friday, October 30, with a "buy" rating and a $16.00 target price. According to MarketBeat.com, two analysts rate the stock a Buy and one rates it a Sell, producing an average rating of "Hold" and a consensus price target of $15.30.

Who is buying the stock?

Institutional investors have recently adjusted their positions:

• Russell Investments Group lifted its stake by 4.8% in the third quarter, adding 8,867 shares to reach 194,959 shares worth $1,885,000.
• Jefferies Financial Group bought a new stake in the third quarter valued at $97,000.
• Dimensional Fund Advisors grew its position by 68.9% in the first quarter, adding 10,096 shares to reach 24,747 shares valued at $310,000.
• Ancora Advisors increased its holding by 17.6% in the second quarter, adding 15,000 shares to reach 100,225 shares worth $1,179,000.
• Bank of America raised its stake by 481.2% in the first quarter, acquiring 18,088 additional shares to reach 21,847 shares worth $274,000.

What is Legacy Education?

Legacy Education, Inc. is a postsecondary education company providing career-focused training through a network of colleges. Its programs prepare students for employment in healthcare and related fields. The company operates schools in California and Nevada under brands including North-West College, Glendale Career College, and Nevada Career Institute, with nursing and allied health offerings varying by campus.

By Amara Osei