Legacy Education (NYSE American: LGCY) reported fiscal Q4 2026 revenue of $20.1 million, up 12.0% year over year, while diluted EPS increased 44.4% to $0.13 from $0.09. Operating income grew faster than revenue, and lower tax expense helped net income rise 53.3% to $1.9 million.

Core Earnings Data

The quarter showed operating leverage as total costs and expenses increased 9.6%, below the 12.0% revenue growth rate. Operating margin consequently expanded by about 1.9 percentage points to 13.0%.

Both EBITDA measures also advanced by more than 30%. Adjusted EBITDA excludes noncash stock-based compensation and should be considered alongside GAAP net income.

The adjustment from EBITDA to adjusted EBITDA included $0.31 million of noncash compensation, compared with $0.27 million in the prior-year quarter. The company labeled the quarterly results as unaudited.

Enrollment and Expansion Supported Full-Year Growth

For the full fiscal year ended June 30, 2026, revenue increased 24.8% to $80.1 million from $64.2 million. New student starts reached 3,483, representing 9.0% growth, while the year-end student population increased 8.9% to 3,377.

Not all of the annual revenue increase represented comparable enrollment growth. The current year included a full year of revenue from Contra Costa Medical Career College, while fiscal 2025 included only approximately six months following the December 2024 acquisition. The company did not quantify the acquisition timing’s exact contribution.

Legacy Education also expanded capacity at its Lancaster and Temecula campuses and signed a lease for its first planned campus in Houston. Two new degree programs and one certificate program at Contra Costa Medical Career College are planned for launch in fiscal Q2 2027. Management described continued demand for career-focused education as a driver of enrollment gains.

Lower G&A and Tax Expense Outweighed Rising Educational Costs

Quarterly educational services expense rose 19.2% to $11.3 million, faster than revenue. General and administrative expense, however, declined 6.3% to $5.9 million, allowing total expense growth to remain below the top-line increase and supporting the higher operating margin.

Below the operating line, pretax income increased about 15.0% to $2.6 million, while income tax expense declined to $706,000 from $1.0 million. The effective tax rate was approximately 27.3%, compared with 45.4% a year earlier. As a result, the 53.3% increase in net income reflected both operating improvement and a substantially lower tax burden.

The full-year cost picture was less favorable than the fourth-quarter trend. Educational services expense rose from 53.4% to 53.6% of annual revenue, while G&A increased from 29.8% to 30.2%. Full-year operating margin was approximately 14.8%, down from 15.6% in fiscal 2025, despite the fourth-quarter margin expansion.

Liquidity and Balance Sheet

Legacy Education ended June 2026 with $22.7 million in cash and cash equivalents. Current assets totaled $45.8 million against $12.4 million of current liabilities, leaving approximately $33.4 million of excess current assets and a current ratio of about 3.7 times.

Total assets were $78.5 million, and stockholders’ equity stood at $52.8 million. No prior-year balance-sheet comparison was included in the supplied results, so these figures provide a year-end liquidity snapshot rather than evidence of improvement or deterioration.

Recent Insider Transactions

The latest 10 reported insider transactions in the supplied data included eight sales with an aggregate reported value of $376,610 and two purchases totaling $63,414. These records describe transaction activity but do not establish the insiders’ motivations or views about the company’s outlook.

Investor Risks to Watch

• Educational cost growth: Quarterly educational services expense rose faster than revenue. Maintaining margin expansion may depend on continued control of G&A and other operating costs.
• Receivables and bad debt: Full-year bad debt expense increased to approximately $4.0 million from $3.4 million as enrollment and accounts receivable balances grew. Bad debt declined as a percentage of revenue, from 5.3% to 5.0%, but remained a material expense.
• Growth comparability: Fiscal 2026 revenue benefited from including a full year of Contra Costa Medical Career College results versus roughly half a year in fiscal 2025. Investors should distinguish that timing effect from enrollment-driven growth.
• Expansion execution: The Houston campus, expanded California facilities, and new academic programs increase the importance of converting added capacity into student enrollment.
• Stock compensation and share count: Full-year noncash compensation increased to $1.2 million from $0.6 million, while the quarterly diluted weighted-average share count rose to 14.1 million from 13.6 million. These factors can cause EPS growth to trail net income growth and create a gap between GAAP and adjusted results.

Summary

Legacy Education finished fiscal 2026 with a stronger fourth-quarter operating margin and profit growth that exceeded its revenue increase. Lower G&A and tax expense offset faster growth in educational costs, while annual enrollment gains and acquisition timing supported the full-year top line. The main issues to monitor are educational service costs, receivables-related bad debt, and whether campus and program expansion translates into sustained enrollment growth.

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