Legacy Education Inc. 2024 Annual Report Review

Overview

Legacy Education Inc. (NYSE: LGCY) is a provider of postsecondary education services through its accredited academic institutions: High Desert Medical College (HDMC), Central Coast College (CCC), and Integrity College of Health (ICH). The company offers a variety of career-focused programs in healthcare, veterinary, medical information technology, business management, and green technology. As of June 30, 2024, Legacy Education Inc. enrolled 2,187 students, reflecting a 28.2% increase from the previous year.

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Business Description

Legacy Education Inc. operates three main institutions:

1. High Desert Medical College (HDMC): Established in 2002, HDMC offers a range of programs including nursing, medical assisting, pharmacy technician, and veterinary assistant. The college has campuses in Lancaster, Bakersfield, and Temecula, California.
2. Central Coast College (CCC): Founded in 1983, CCC provides programs in medical assisting, veterinary technology, and business administration. The college is located in Salinas, California.
3. Integrity College of Health (ICH): Established in 2007, ICH offers programs in vocational nursing, medical assisting, and diagnostic medical sonography. The college is located in Pasadena, California.

Financial Performance

Revenue

Legacy Education Inc. reported a revenue of $46.0 million for the fiscal year ended June 30, 2024, a 29.7% increase from $35.5 million in the previous year. This growth was primarily driven by increased student enrollment and higher pricing for certain programs.

Net Income

The company achieved a net income of $5.1 million in fiscal 2024, compared to $2.7 million in fiscal 2023, marking an increase of approximately $2.4 million. The improvement in net income was attributed to higher revenue and effective cost management.

Operating Expenses

• Educational Services: Expenses increased to $26.4 million in fiscal 2024 from $20.8 million in fiscal 2023, primarily due to higher instructional and staffing costs to support increased enrollments and a non-cash compensation charge of $1.9 million related to stock option grants.
• General and Administrative: Expenses rose to $13.0 million in fiscal 2024 from $10.7 million in fiscal 2023, driven by increased marketing and bad debt expenses.
• Depreciation and Amortization: Expenses were approximately $0.3 million in fiscal 2024, consistent with the previous year.

Cash Flow

• Operating Activities: Net cash provided by operating activities was $1.6 million in fiscal 2024, compared to $1.8 million in fiscal 2023.
• Investing Activities: Net cash used in investing activities was $0.4 million in fiscal 2024, primarily for investments in student labs.
• Financing Activities: Net cash used in financing activities was $0.2 million in fiscal 2024, mainly due to debt repayments.

Risk Factors

Regulatory Risks

Legacy Education Inc. operates in a highly regulated industry and is subject to extensive federal, state, and accrediting agency regulations. Non-compliance with these regulations could result in financial penalties, restrictions on operations, loss of financial aid funding, and loss of accreditation.

Financial Responsibility

The company must satisfy specific standards of financial responsibility to participate in Title IV Programs. Failure to meet these standards could result in the loss of eligibility to participate in federal student financial aid programs.

Competition

The postsecondary education industry is highly competitive. Legacy Education Inc. competes with traditional public and private colleges, other for-profit institutions, and non-traditional education programs. Increased competition could impact student enrollment and revenue.

Cybersecurity

The company faces significant cybersecurity threats, including unauthorized access to sensitive information and potential disruptions to its online technology infrastructure. A breach could have a material adverse effect on the company's reputation and operations.

Growth Strategies

Legacy Education Inc. aims to achieve moderate growth in existing programs, expand its geographic footprint, and introduce new programs. The company plans to launch new branch campuses in Fresno and Santa Ana, California, and explore acquisitions of new institutions in Nevada, Colorado, and New Mexico.

Conclusion

Legacy Education Inc. has demonstrated strong financial performance and growth in student enrollment. However, the company faces significant regulatory and competitive risks. Investors should consider these factors when evaluating the investment potential of Legacy Education Inc.

Investment Score: 7.5/10

Legacy Education Inc. shows promising growth and financial stability, but the regulatory environment and competitive landscape present challenges that could impact future performance.