Legacy Education Inc. Reports Strong Revenue Growth

Legacy Education Inc. ((LGCY)) has held its Q1 earnings call. Read on for the main highlights of the call.

Legacy Education Inc. has kicked off the fiscal year on a high note, as reflected in its recent earnings call. The company reported significant revenue and enrollment growth, driven by strategic investments that, while temporarily impacting margins, are setting the stage for future expansion. Despite some challenges with margins and accounts receivable, Legacy Education’s operational and strategic initiatives are well-aligned for continued success, supported by a robust balance sheet.

Revenue Growth

Legacy Education Inc. reported a remarkable 38.5% increase in revenue, reaching $19.4 million. This growth was fueled by a 31.6% rise in new student starts, totaling 1,117, and a 37.7% increase in the ending student population, which now stands at 3,495. This impressive performance underscores the company’s successful enrollment strategies and market demand.

Enrollment and Program Expansion

The company’s enrollment initiatives have led to an all-time high in student population. Legacy Education has also received approvals for new programs in high-demand fields such as MRI and cardiac sonography, which are expected to further boost enrollment and revenue in the coming quarters.

Strategic Investments

Investments in program offerings and capacity expansion are anticipated to drive future growth. The company plans to launch new programs in the second quarter and beyond, which are expected to enhance its competitive position and attract more students.

Strong Balance Sheet

Legacy Education maintains a strong balance sheet, boasting $20.6 million in cash, low debt, and a high liquidity position. This financial strength provides a solid foundation for ongoing growth and shareholder value.

Operational Excellence

The company continues to excel in operational performance, with graduate placement rates surpassing industry standards. Most students secure employment within six months of graduation, reflecting the effectiveness of Legacy Education’s programs.

Margin Decline

The adjusted EBITDA margin saw a decline from 20.1% to 15.9%, attributed to strategic front-loaded investments and nonrecurring charges. While this has temporarily impacted profitability, these investments are expected to yield long-term benefits.

Increased G&A Expenses

General and administrative expenses rose to 31.5% of revenue, up from 28.3%. This increase was driven by professional services, marketing, and nonrecurring costs, reflecting the company’s strategic focus on growth.

Accounts Receivable Challenges

Legacy Education recorded a $178,000 reserve for accounts receivable, with delinquency trends stabilizing. The company is enhancing its collections processes to address these challenges effectively.

Forward-Looking Guidance

Looking ahead, Legacy Education is strategically positioned for sustained growth. The company reported a 9.6% increase in adjusted EBITDA to $3.1 million, despite a decline in EBITDA margins. Net income rose by 4.6% to $2.2 million, with diluted EPS at $0.16. With a robust cash position and strong demand in the allied health sector, Legacy Education is poised for continued expansion and success.

In summary, Legacy Education Inc.’s earnings call reflects a strong start to the fiscal year, with significant revenue and enrollment growth. While strategic investments have temporarily impacted margins, they are paving the way for future expansion. The company’s robust balance sheet and operational excellence position it well for sustained growth, making it an attractive prospect for investors.