Legacy Education Inc.

Good day, and welcome to the Legacy Education, Inc. First Quarter Fiscal Year 2026 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 turn it over to Nicole Joseph, Senior Vice President of Legacy Education, Inc. Nicole, please go ahead.

Thank you, and hello, everyone. Legacy Education has issued a news release reporting its financial results and corporate developments for the first quarter fiscal year ended September 30, 2025. The release is available in the investor relations section of our corporate website at LegacyEd.com. With us today on the call are Leann Roman, Chief Executive Officer, and Brandon Pope, Chief Financial Officer. On today's earnings call, statements made by legacies 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, risk, and other influences, many of which are beyond the company's control. That may influence the accuracy of the statements and projection upon which the statements are based. Factors that may affect the company's results include, but are not limited to, the risk and uncertainties discussed in the risk factor 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 Leanne Roman, CEO of Legacy Education. Leanne, to you.

Thank you, Nicole, and good afternoon, everyone. Welcome to Legacy Education's first quarter fiscal year 2026 earnings call. I'm joined today by our Chief Financial Officer, Brandon Pope. We are pleased to report a strong start to fiscal 2026, building on the transformative momentum of 2025, a year of record enrollment, robust financial performance, and strategic progress that solidified our leadership and the high demand allied health education sector. Our growth is accelerating, driven by the nation's urgent need for skilled healthcare professionals. and our proven ability to deliver job-ready graduates through innovative, hands-on programs with chronic shortages and fields like nursing, medical assisting, ultrasound technology, cardiac sonography, and MRI, where hospitals and clinics are actively seeking talent. Legacy education is at the forefront, capitalizing on this structural demand to expand our reach and impact. These are not just careers. They are essential roles that require human empathy, precision, and expertise, qualities we instill in every student, preparing them to meet the needs of a resilient and growing sector. Our Q1 results reflect disciplined execution, and the effectiveness of our growth strategy. We delivered meaningful year-over-year improvements across key metrics, revenue, enrollment, EBITDA, and EPS while making targeted investments to expand capacity and program offerings. This performance confirms that we are starting the fiscal year on track, beating our internal projections and leading with strong momentum and a clear path to sustained value creation. Let me walk you through the highlights. Revenue grew 38.5% to 19.4 million, driven by a 31.6% increase in new student starts to 1,117. and a 37.7% rise in ending student population to 3,495. This is an all-time high and a clear sign of strong demand and the success of our enrollment initiatives. Importantly, this growth represents our 13th consecutive quarter of double-digit revenue growth. And it does not yet even include the contributions from the four new programs that we have recently received approvals. Adjusted EBITDA rose 9.6% to 3.1 million, with a margin of 15.9%. The year-over-year decline in margin reflects deliberate, front-loaded investments and growth and non-reoccurring charges, which Brandon will detail shortly. Net income increased 4.6% to 2.2 million. Diluted EPS was 16 cents compared to 21 cents last year. This was impacted by the increase in diluted shares from 9.8 million to 13.9 million. following our September 24 IPO. On a normalized share count, EPS would have been 22 cents, demonstrating the underlying strength of our earnings. Now let's talk about accounts receivable. In Q4 of fiscal 25, we recorded a 700,000 reserve for graduated borrowers who had fallen behind on payments. a conservative, transparent action to strengthen our balance sheet without writing off the receivable. We committed to you a quarterly write-off and reserve analysis to improve visibility and control. We delivered on that commitment. This quarter, we recorded 178,000 reserves. That's 0.9% of revenue, exactly in line with our expectations. We've enhanced our collections process through executing a partnership with well-known collection companies, Williams and Fudge. We are doing weekly AR reviews and a proactive borrower outreach and support to our graduates, exactly what we've been doing with our active students in-house. The delinquency trends are stabilizing. We are seeing the improvement in the collections. And AR is under control with no anticipated surprises. This disciplined approach reflects our commitment to financial rigor and long-term shareholder value. Moving to our taxes, last year's tax estimates created some variability. Well, this quarter, we reported an effective tax rate of 26.5%. better than the annual estimated 29.4%. This benefit was a result that was tied to employee stock option exercises following our IPO, an advantage that we anticipated and now realize. Taxes are stable, they're predictable, and aligned with our projections. reflecting enhanced financial governance and operational maturity. As I move to margins, this quarter reflects strategic investment for long-term growth. Adjusted EBITDA margin was 15.9%. Down from 20.1% a year ago, this reflects strategic front-loaded investments and four new programs approved and not yet launched this quarter. Three of those are degree programs and one is a certificate in high demand fields, including MRI, cardiac sonography, surgical technology, and sterile processing. These investments included curriculum development and regulatory approvals, faculty recruitment for hiring subject matter experts from the field, simulation lab and facility upgrades, surgical tech and sterile processing lab, ADN continued program enhancements, and new finance leadership. That's our new controller. Annual investment. and professional development and training for our exceptional instructional leadership and staff to conduct quality education training that gets our graduates jobs. Educational service expenses rose 53.2% of revenue from 51.4. This is a reflection. of our unwavering commitment to clinical quality and hands-on training. DNA expenses increased to 31.5% from 28.3%, but this is driven by professional services increase, audit, legal, compliance, and M&A-related valuations, all non-reoccurring. Brandon will share more detail when I turn it over to him. Additionally, under GNA expenses, marketing investment up 15% to 1.6 million. This is driving enrollment and the launch of the new programs. And then additionally in GNA, D&O insurance and bad debt reserves tied to the revenue growth, and it's all in line with projections. These are not cost overruns. They are strategic investments in capacity, compliance, and market reach. All these programs scale and fixed leverage costs. We expect margins to expand sequentially throughout the year. This is our playbook for sustainable high return growth and a resilient sector. Our balance sheet It remains a competitive advantage for cash rich, low debt, and high liquid. We are well positioned to fund organic growth, pursue accretive M&A, and navigate any environment with confidence. Operating cash flow was positive, but lower year over year. This was simply due to the timing of our federal title for disbursements. It's a function of the enrollment cycles and regulatory processing, completely unrelated to the government shutdown. Student collections remain strong and growing. CapEx was 200,000 with a targeted and high ROI. Our liquidity position is robust. Cash flow dynamics will normalize. as disbursement timing aligns in our future quarters. As I turn to our strategic developments and milestones, the allied health sector is defined by the enduring human need, not disruption. Technology can assist in diagnostics. It cannot replace the nurse at the bedside. can streamline workflows, we're taking advantage of that internally. But it cannot perform a sterile procedure with precision and care. Data can inform decisions, but it cannot build trust with a patient in crisis. We are training the professionals who deliver that care. The demand remains structural and unrelenting. with more than 200,000 nursing openings annually through 2031, growing shortages and medical assisting, sonography, and sterile processing, just to name a few. Healthcare systems actively seeking job-ready graduates. We are meeting that demand with precision. Our key achievements I am so thrilled to share with you that Contra Costa Medical Career College that we acquired in December of last year is now over 500 students. We have been able to secure our vocational nursing program approval so that their nursing program is aligned with our legacy standards and programs. We have additional new program approvals, MRI, Associates of Applied Science, Cardiac Sonography, Associate of Applied Science at Central Coast College. Similarly, Surgical Technology, Associate of Applied Science approval at High Desert Medical College. It's Lancaster, it's Bakersfield, and Temecula campuses. Sterile Processing Technician Certificate Program at our Integrity College of Health. and High Desert Medical College, Lancaster, Bakersfield, and Temecula. These are all new program approvals that we've talked about, that we have secured, and that we've been making the investments in order for you to see those in the future quarters. Additionally, our end program approvals are in active pursuit across several more of our campuses. Our advisory board is providing strategic guidance and telehealth integration, AI-assisted diagnostics, and hybrid training models, ensuring that we are leveraging innovation to enhance, not replace, the human-centered care. We're preparing our graduates to respond to the changes that are occurring. The graduate placement rate remain above the industry standard and our graduates are placed within six months. We are incredibly proud of that and it's a testament of the program quality and the employer alignment. These milestones reflect our operational excellence that we are constantly and continuously striving for, as well as a deep commitment to our outcomes for our students, for our employees, our shareholders, and the communities that we serve. With that, I'm going to turn it over to Brandon for a detailed financial review. Brandon.