Legacy Education's FY2026 revenue rose 24.8% to $80.1M and net income 21.3% to $9.1M, helped by a full year of its CCMCC acquisition, but new-student starts fell in the second half and operating cash flow roughly halved as receivables grew.
Revenue
$80M
+24.8% YoY
Net income
$9.1M
+21.3% YoY
Diluted EPS
$0.66
+11.9% YoY
Operating margin
14.8%
Overview
Legacy Education, which runs four career colleges in California training nurses, ultrasound technicians, medical assistants and other healthcare workers, grew revenue 24.8% to $80.1 million in the fiscal year ended June 30, 2026. Net income rose 21.3% to $9.1 million. Two things drove the top line, according to the 10-K: more students (3,483 new starts during the year, ending enrollment up 9% to 3,377), and a full year of Contra Costa Medical Career College (CCMCC), which was bought in December 2024 and therefore only counted for about half of fiscal 2025.
Profit grew a little more slowly than revenue. Costs rose slightly faster than sales, a smaller tax bill helped net income, and more shares outstanding held back per-share earnings.
Key figures
Metric
FY2026
FY2025
YoY Change
Revenue
$80.1M
$64.2M
+24.8%
Operating income
$11.8M
$10.0M
+18.3%
Operating margin
14.8%
15.6%
-0.8 pts
Net income
$9.1M
$7.5M
+21.3%
Diluted EPS
$0.66
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$0.59
+11.9%
Students enrolled (June 30)
3,377
3,101
+8.9%
Cash and cash equivalents
$22.7M
$20.3M
+11.9%
Operating cash flow
$4.0M
$7.8M
about -49%
Operating margin is the share of revenue left after paying for teaching, staff, marketing and other running costs, before interest and tax.
How much of the growth came from the acquisition?
The company doesn't give organic growth (growth excluding the acquisition) directly. It does give an unaudited "pro forma" figure: what fiscal 2025 revenue would have been if CCMCC had been owned all year. That figure is $68.2 million. Measured against it, fiscal 2026 revenue grew about 17%. So roughly 7 of the 25 points of reported growth came from counting a full year of the acquired school, and the rest came from more students at the colleges it already owned.
Revenue by type:
Revenue type
FY2026
FY2025
Change
Tuition and lab fees
$70.3M
$56.9M
+23.5%
Books, registration and other fees
$9.8M
$7.3M
+34.5%
Enrollment by college on June 30, 2026: High Desert Medical College 2,097, Central Coast College 576, Contra Costa Medical Career College 508, Integrity College of Health 196. The company reports as one segment, so it doesn't break out revenue or profit by college.
Where the margin went
Total costs rose 26.0%, a little faster than revenue:
Teaching costs ("educational services") rose 25.3% to $42.9 million, which the company puts down to the instructors and staff needed for more students, plus higher rent, books, supplies, externship fees, and about $0.6 million more in non-cash stock compensation.
General and administrative costs rose 26.7% to $24.2 million, driven by marketing ($5.9 million vs. $4.7 million), professional fees and bad debt. Bad debt is tuition the company expects never to collect. It was $4.0 million, which was actually a slightly smaller share of revenue (5.0% vs. 5.3%).
Below the operating line, a one-off $0.3 million non-cash loss came from swapping a $500,000 promissory note for 75,000 shares worth more than the note. Interest income rose to $1.3 million on a larger cash balance held in Treasury bills. The effective tax rate fell to 27.9% from 31.6% because of tax benefits from employee stock option exercises. That's the main reason net income (+21.3%) grew faster than pre-tax income (+15.1%). This tax benefit depends on how many options get exercised, so it may not recur.
Per-share earnings grew only 11.9%, about half as fast as net income, because the diluted share count rose 9.9% to 13.9 million. That's the full-year effect of the 2024 IPO shares, plus option exercises and stock issued to settle debt.
The weak spot: cash is lagging profit
Operating cash flow fell to $4.0 million from $7.8 million even though the company earned more. The 10-K attributes this mainly to a $9.0 million increase in accounts receivable (tuition billed but not yet collected), compared with a $3.9 million rise the year before. Net current receivables rose 32% to $19.9 million, faster than revenue's 25% growth, and long-term receivables added another $2.2 million. Both the allowance for uncollectible tuition ($2.0 million vs. $1.6 million) and bad-debt expense went up. Some of this is timing: financial-aid disbursements arrive in installments according to federal rules. But it's the number to watch. A school whose receivables keep outgrowing revenue ends up either writing more of them off or funding its growth from its own cash.
The balance sheet is still conservative. The company has $22.7 million of cash, no revolving credit line, and it paid off equipment loans and the CCMCC seller note during the year. Capital spending was $1.3 million.
Takeaway: Headline growth was strong, but about 7 points of the 24.8% came from counting a full year of an acquired college. Starts actually fell year over year in the last two quarters, and operating cash flow roughly halved as unpaid tuition piled up. Underlying growth is real but slowing, and it isn't yet turning into cash the way the income statement suggests.
Enrollment momentum is fading
New student starts, by quarter, compared with a year earlier:
Quarter ended
Starts
YoY
Ending enrollment
YoY
Sep 30, 2025
1,117
+32%
3,495
+38%
Dec 31, 2025
593
+49%
3,234
+17%
Mar 31, 2026
1,078
-12%
3,550
+9%
Jun 30, 2026
695
-4%
3,377
+9%
The early-year comparisons were inflated because CCMCC's students joined the count partway through fiscal 2025. Even so, starts falling in the second half of the year means fiscal 2027 growth will likely depend more on new locations and programs than on the existing campuses.
Reliance on federal student aid
All four colleges take part in the federal Title IV student-aid programs (Pell Grants and federal student loans), and the company says it gets "a substantial portion" of its revenue and cash from them. Under the 90/10 rule, a for-profit college loses access to that aid if more than 90% of its revenue comes from federal aid for two years in a row. For fiscal 2025, the company calculated these shares at 86.82% for High Desert, 80.35% for Central Coast, 84.71% for Integrity and 59.80% for CCMCC. High Desert, the largest school, has little room to spare. The fiscal 2026 calculations are due December 31, 2026, and management expects each college to stay below 90%.
The federal One Big Beautiful Bill Act, whose aid changes took effect July 1, 2026, adds new risk. It caps how much students and parents can borrow (for example, $20,000 a year and $65,000 in total for parent PLUS loans for undergraduates, and a $257,500 lifetime limit). It also adds an earnings test for degree programs, which compares graduates' earnings with those of working adults who have no degree. The company says it can't yet predict whether its degree programs will pass, and that it's still assessing how the loan caps will affect enrollment.
Outlook
Management gave no numeric guidance. The expansion plans it disclosed:
Houston, Texas: in September 2026, Central Coast College signed a lease for a new campus. The term is 130 months, total base rent is about $6.9 million, and the first ten months are rent-free. It's targeted to open in November 2026, subject to regulatory and accreditation approvals. This would be the company's first campus outside California.
New programs: CCMCC plans to add Cardiac Sonography, Veterinary Assistant and MRI programs in the second quarter of fiscal 2027. Integrity expects to launch an EMT program in late 2026, which won't use Title IV funds.
Our view: expect fiscal 2027 revenue growth to be lower than this year's 24.8%. The acquisition boost is gone and starts have slowed, while the Houston campus brings start-up rent and marketing costs before it enrolls students. The two things most likely to decide the year are how fast the company collects tuition and whether the new federal loan caps reduce starts in the fall 2026 intake. The first-quarter 10-Q (quarter ending September 30, 2026) will show early evidence on both.