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Presentation

Legacy Education Inc. beats earnings expectations. Reported EPS is $0.1, expectations were $0.09.

Operator: Good day and welcome to the Legacy Education, Inc. Second Quarter Fiscal 2025 Earnings Conference Call. Today’s call is being recorded and broadcast live. It will also be archived on the Legacy Education website for future reference. To kick off the call, I will like to turn it over to Nicole Joseph, Senior Vice President of Marketing, Legacy Education Inc.

Nicole Joseph: Thank you and hello everyone. Legacy Education has issued a news release reporting its financial results and corporate developments for the second quarter and six months ended December 31st, 2024. The release is available in the Investor Relations’ section of our corporate website at legacyed.com. With us today on the call are LeeAnn Rohmann, Chief Executive Officer; and Matt Berry, Senior Vice President, Financial Planning and Analysis. On today’s earnings call, statements made by Legacy’s management regarding the company’s business, which are not historical facts, may be forward-looking statements as identified in Federal Securities laws. The words may, will, expect, believe, anticipate, project, plan, intend, estimate and continue, as well as similar expressions are intended to identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance. The company cautions you that these statements reflect current expectations about the company’s future performance or events and are subject to a number of uncertainties, risks, and other influences, many of which are beyond the company’s control that may influence the accuracy of these statements and projections upon which the statements are based. Factors that may affect the company’s results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly report on Form 10-Q filed with the Securities and Exchange Commission. Forward-looking statements are based on the information available at the time those statements are made and management’s good faith belief as of the time with respect to future events.

All forward-looking statements are qualified in their entirety by this cautionary statement and Legacy undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise after the date thereof. I will now hand the call over to LeeAnn Rohmann, CEO of Legacy Education. LeeAnn to you.

LeeAnn Rohmann: Thanks Nicole and good afternoon everyone. First, I want to extend my gratitude to our employees, students, shareholders and partners for their dedication and support as we continue to build a premier provider of career-focused education. While the second fiscal quarter reflected the seasonal trends we anticipated, we are energized by the strategic investments we’ve made in our team, facilities, and programs. Additionally, our recent acquisition of Contra Costa Medical Career College, which closed on December 18th, has been consolidated into our financial results for approximately two weeks of the second fiscal quarter. We anticipate the full financial impact of this strategic accretive addition to be reflected in our upcoming quarterly reports.

Finally, I am thrilled to announce that we reached a pivotal milestone in our growth strategy, having surpassed more than 3,000 enrolled students as of January 31st, 2025, a testament to our team’s dedication and the increasing value of our educational offerings. The second quarter of fiscal 2025 has been another strong period for Legacy Education, demonstrating consistent growth, operational excellence, and strategic momentum. Our Q2 2025 business highlights. Revenue grew 29.2% year-over-year to $13.6 million, that’s driven by enrollment growth and expansion in high-demand health care programs. The new student starts increased 3%. That is reflecting the strong market demand and improved outreach strategies. Our net income reached $1.4 million with earnings per share at $0.10.

The student population grew 44.8% year-over-year to 2,768 students. It was fueled by strong enrollments and the Contra Costa Medical Career College acquisition. EBITDA of $1.8 million and adjusted EBITDA of $1.9 million. We announced our new program approvals. These expanded offerings include Surgical Technology, Sterile Processing, Pharmacy Technician, and Dental Assistant, all rolled out at our Central Coast College campus in Salinas. We have already enrolled in Surg Tech and Dental Assisting and Sterile Processing and Farm Tech are soon to follow. The recent Los Angeles fires came within three blocks of our Pasadena campus. While we were so fortunate to avoid structural damage, we immediately executed on our emergency preparedness plan and the campus was temporarily shut down, and students were transitioned immediately online for less than a week with no downtime.

Unfortunately, some employees and students did lose their homes. Our sister campuses quickly rallied, organizing donation drives and fundraising initiatives to support the affected members of our community. I really want to give a heartfelt shout out to Legacy Education employees and the students for their incredible efforts during this horrific time. I am pleased to report that Pasadena is now back to business as usual. These results validate our commitment to delivering a high-quality education, addressing critical workforce gaps, and enhancing shareholder value. Now, moving on to operational updates. In our health care program expansions, we continue to scale up our Nursing, Medical Assisting and Imaging programs such as ultrasound, cardiac, and MRI.

We are continuing to strengthen our relationships with our health care providers and adding for new externships and job placements. In our technology and innovation, we expanded our use of hybrid learning models, increasing student flexibility and engagement with the full implementation of our learning management system, Blackboard Ultra. The integration of advanced simulation technology to enhance practical training, specifically focused in our Nursing programs and our Imaging programs. As it relates to our campus growth and acquisitions, we are so pleased with the final integration of the Contra Costa Medical Career College that I mentioned that closed on December 18th. This is unlocking new market opportunities for us, and we are adding 14 more programs.

We continue to add additional acquisition targets to expand our geographic footprint. In the regulatory environment, we are closely monitoring the discussions that are going on within the Department of Education regarding potential changes and regulations [Indiscernible] proprietary education. While some for-profit institutions face challenges, Legacy Education remains confident in our standing. Our focus is on high-demand allied health programs, where employers are eager for skilled professionals and it positions us strong. We continue to work with the regulators to ensure compliance and maintain our mission to provide career-focused education that leads to employment opportunities. With these advancements, we are positioning Legacy Education as a leader in career-focused training.

As I move to the financial results, unfortunately, Brandon Pope, our CFO, could not be with us today. He had a minor, but not serious medical procedure this morning. He is doing fine. He will be involved in post-earning callbacks beginning tomorrow morning. And in the absence of Brandon, I will now turn it over to Matt Berry, Senior Vice President for Financial Planning and Analysis, to walk you through our financial results. Matt?

Matt Berry: Thanks, LeeAnn. I’m pleased to report another quarter of strong financial performance. Here’s a summary of our key metrics. For Q2 2025, revenue $13.6 million, 29.2% growth year-over-year. Net income, $1.4 million, 8.5% growth year-over-year. EBITDA, $1.8 million, 3.6% growth year-over-year. Adjusted EBITDA, $1.9 million, 10.1% growth year-over-year. Cash and liquidity, $16.9 million in cash reserves, ensuring financial flexibility. For the six months ended December 31st, 2024, revenue, $27.6 million, 32.1% growth year-over-year. Net income, $3.5 million, 47.9% growth year-over-year. EBITDA, $4.5 million, 43.8% growth year-over-year. Adjusted EBITDA, $4.7 million, 49.5% growth year-over-year. Our financial position remains strong and we are well-positioned to sustain profitable growth. I will now turn it over to LeeAnn Rohmann, CEO, for our strategic outlook and closing remarks.

LeeAnn Rohmann: Thanks Matt. As we look at our strategic outlook, it continues to remain that we’re focused on our enrollment growth, expanding our marketing reach and partnerships to drive our new student starts. We continue to look at program expansion by looking at additional — launching additional health care and technical programs that are aligned with the industry demand. Operational efficiency, we are going to continue to optimize costs, while investing in growth initiatives. And we continue to be exploring selective acquisitions to enhance our educational portfolio. ZZZZZZZ Under regulatory, we have confidence despite ongoing scrutiny of the for-profit education sector that Legacy Education remains well-positioned due to our focus on high-need health care careers.

Employers and allied health fields continue to express urgent demand for our graduates, reinforcing the stability of our business model. In closing, as we move forward, Legacy Education is well-positioned to continue its growth trajectory, we’re committed to empowering students, driving shareholder value, and expanding our market presence. I want to again sincerely thank our legacy Education family for their resilience and support during the Los Angeles fires. The way our team rallied together is a testament to our mission and values. And I want to thank you for your continued support and confidence in our vision. With that, I’ll open the floor for Q&A.

Operator: Thank you. And at this time, we will conduct our question-and-answer session. [Operator Instructions] Our first question comes from Jeff Cohen with Ladenburg Thalmann. Please state your question.

Jeff Cohen: Hi LeeAnn and best regards to Brandon. Congratulations on the great quarter. A couple of questions for you. Firstly, could you hypothesize or talk about the current administration and maybe some of the effects that it may have upon support and funding for current students and future students, any anticipated changes in processes in place?

LeeAnn Rohmann: Hi Jeff, it’s great to hear from you and thank you for your question. We continue to monitor what the talk with regard to the Department of Education. We actually don’t see there to be any challenges or issues as it relates to funding for the current programs that we are teaching. We do see that with this current administration that they seem to be looking at some of the regulations around the gainful employment and the borrower to defense. And we think that they could be lightening either the requirements and/or ensuring that the type of reporting that has been in place in the past that it is going to be more streamlined and really be able to share data that will be effective versus just becoming a burden for us as schools to make sure that we’re putting up.

But I’m not concerned in any way with regard to the talk that’s going on in the Department because of the programs that we’re teaching and our academic rigorous delivery get people trained and out into the workforce more quickly.

Jeff Cohen: Okay. Fantastic, that’s good to hear. Could you mentioned Surgical Technology, is that a new program? Is that an associate program? What’s the length of that?

LeeAnn Rohmann: It is an associate degree offering program. It is a new program that we got approval for in the first quarter and then we have rolled out that program in our Salinas campus, and it was one of the programs that we picked up in the Contra Costa Medical Career College acquisition.

Jeff Cohen: Okay, great. And just one more, if I may. Could you talk a little bit about M&A, not so much any anticipatory comments, but more about the environment about their pricing, kind of the mental state of some of the buyers and sellers that’s changed or remain the same recently? Thank you.

LeeAnn Rohmann: Absolutely. The M&A continues to be a strong pipeline as you look to see a lot of the single-owner institutions, mom-and-pops that have been in the business for quite some time. There are many schools out there that are quality institutions, they’re accretive, and they are looking for opportunities in order for them to get out. So, our pipeline continues to build. And we are really just assessing in terms of our strategic strategies to want to move outside of California and into the right programs that are critical in need and that we believe that our model can easily roll right into.

Jeff Cohen: Wonderful. LeeAnn, thanks for taking our questions.

LeeAnn Rohmann: Thanks Jeff. Good to hear from you.

Operator: Your next question comes from Mike Grondahl with Northland Securities. Please state your question.

Mike Grondahl: Hey LeeAnn, thank you. In the December quarter, any programs stick out that were maybe stronger than anticipated in terms of enrollment?

LeeAnn Rohmann: Hi Mike, great to hear from you. As we look at our December and the close of that quarter, the programs that really stood out to us were our Cardiac Sonography, our MRI program and then our Nursing programs. So, both vocational nursing and we were poised and we picked up and our additional starts for RN.

Mike Grondahl: Great. And in terms of CCMCC, the integration, it sounds like that’s going well. But you also said something about 14 more programs or just new markets and 14 programs. Can you just expand on that a little bit? I just want to make sure I understand what you meant by that?

LeeAnn Rohmann: Sure. So with the acquisition of Contra Costa, that added 14 programs of which they were currently offering. So, we added those into the current 33 programs that we currently have. Some of those new programs of which we did before we closed the acquisition, Sterile Processing, Surg Tech, we already got approval for those in our Central Coast College location. So, we are excited to like just the way that this school has been able to integrate into the existing legacy education institutions, and we’re excited to really take these 14 programs that they have and some of them will be programs that we do offer in some of our locations, for example, Medical Assisting, but how we can apply our model and our delivery and ramp it up in the Contra Costa location as well as benefit from some of these 14 programs that they have, we can really roll in their design into some of our existing institutions that are teaching some of the same programs.

Mike Grondahl: Got it. Got it. And then kind of a follow-up question on the acquisition pipeline. With the new administration in November, did you see a change in the pipeline? Anything move in your favor with the new administration as far as admission go.

LeeAnn Rohmann: We actually have seen a change in terms of — I think that some people that were sitting on the fence with regard to their decision to stay in or to get out is that they see it as more of an opportunistic time that they can get out. And we have built — we’ve increased our pipeline since that time.

Mike Grondahl: Got it. Got it. And then maybe lastly, any trends to call out January, February, just in terms of enrollment or anything you saw as we started calendar 2025?

LeeAnn Rohmann: The trends that I would tell you is we are — the leads look good. We are performing to the projections that we have set forth. And I can tell you that you see more and more people that are looking to get into the programs that we are currently offering. And we are incredibly excited that we only had two weeks that we could provide on the Contra Costa and we are just confident that Q3 is one that we look forward to that earnings call.

Mike Grondahl: Got it. I mean, in other words, demand has stayed pretty robust?

LeeAnn Rohmann: Yes, very robust.

Mike Grondahl: Got it, great. Thanks a lot.

LeeAnn Rohmann: Thanks Mike. Good to hear from you.

Operator: Thank you. And ladies and gentlemen, this concludes today’s call. Thank you for joining us and have a great day.