LINCOLN EDUCATIONAL SERVICES CORP
For the period ended Sep 30, 2025. Filed Nov 10, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 10, 2025
LINC$17.66+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-11.
0001140361-25-030226
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-10.
0001140361-25-041363
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 115 previous paragraphs and 131 current paragraphs.
61 unchanged; 44 reworded; 24 added; 7 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 35 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
Expand Geographically. We plan to open new campuses and enter new markets using existing resources or acquisitions. We opened a new campus in Houston, Texas in August 2025, and have signed leases for new campuses in Hicksville, New York, where programs are expected to begin by the end of 2026, and Rowlett, Texas, expected to open in the first quarter of 2027.
Current report
Replicate Programs and Expand Existing Areas of Study. We are expanding our program portfolio by introducing in-demand offerings at existing campuses and replicating proven in-demand offerings across locations.
Current report
Increase Operating Efficiency. We aim to improve margins and scalability by centralizing operations, standardizing curricula, and leveraging technology to streamline campus functions.
Current report
Maximize Utilization of Existing Facilities. We focus on increasing facility usage through enrollment growth, new programs, and industry partnerships.
Current report
Expand Teaching Platform. We are transitioning to a hybrid teaching platform, Lincoln 10.0, the implementation of which has been substantially completed and is expected to be finalized by the end of the year for all planned programs, to offer greater flexibility, efficiency, and value to students.
Current report
Recent and Planned Campus Openings
Current report
Administrative expenses increased $6.3 million, or 28.3%, primarily due to higher costs associated with our growing student population, increased compensation expenses, including performance-based incentives tied to improved financial performance, and a greater number of employee medical claims.
Current report
Marketing expense increased by $3.5 million, or 28.5% resulting from planned investments and the timing of the marketing activities.
Current report
Provision for credit losses. While the provision increased in absolute terms, it declined as a percentage of revenue from 13.3% to 12.4% year-over-year.
Current report
Gain on insurance proceeds. During the three months ended September 30, 2024, the Company received gross insurance proceeds in the amount of $2.8 million relating to hail damage at one of our campuses.
Current report
Total operating expenses decreased $2.3 million, or 100.0% to zero for the three months ended September 30, 2025, from $2.3 million in the prior year comparable period.
Current report
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Current report
Marketing expense increased by $3.0 million or 8.5% year over year driven by planned investments in new programs and initiatives.
Current report
Provision for credit losses. While the provision increased in absolute terms, it declined as a percentage of revenue from 12.7% to 11.3% year-over-year.
Current report
Gain on insurance proceeds. During the nine months ended September 30, 2024, the Company received gross insurance proceeds in the amount of $2.8 million relating to hail damage at one of our campuses.
Current report
Political and budgetary concerns significantly affect Title IV Programs. Congress periodically revises the Higher Education Act of 1965 ("HEA") and other laws governing Title IV Programs. In addition, Congress reviews and determines federal appropriations for Title IV Programs on an annual basis. Congress can also make changes in the laws affecting Title IV Programs in the annual appropriations bills and in other laws it enacts between the HEA reauthorizations.
Current report
On October 1, 2025, Congress failed to pass appropriations or other funding bills by the end of the federal fiscal year and, as a result, a government shutdown began in which the federal government ceased non-essential operations until new appropriations are approved and enacted. The U.S. Department of Education (the “DOE”) published an electronic announcement on October 1, 2025, stating that there would be minimal impact on students and schools and their ability to participate in the Title IV program because, while DOE offices would be closed during the lapse of appropriations, the majority of its federal student aid processors, contact centers, and websites would remain operational. The DOE also stated in a memorandum dated September 28, 2025, that it would continue to disburse student aid such as Pell Grants and Federal Direct Student loans and that student loan borrowers will still be required to make payments on their outstanding student debt.
Current report
Some of our students receive financial aid from federal sources other than Title IV Programs, such as programs administered by the U.S. Department of Veterans Affairs ("VA"). On October 2, 2025, the VA published an announcement indicating that it would be unable to perform certain duties and responsibilities during the government shutdown that commenced on October 1, 2025, but noting that VA benefits would continue to be processed and delivered, including education benefits and certain other benefits.
Current report
We cannot predict the scope, timing or likelihood of future actions and changes by Congress, the President or the DOE with respect to the operations and existence of the DOE or the laws and regulations applicable to and the funding for the Title IV Programs. Moreover, we cannot predict the duration of the current or future government shutdowns or whether they could lead to disruptions in VA benefits or Title IV Programs resulting from the government shutdown or the appropriations process.
Current report
Gainful Employment
Current report
On October 10, 2023, the DOE published final new gainful employment and financial value transparency regulations which had a general effective date of July 1, 2024. The new regulations establish rules for annually evaluating each of our educational programs based on the calculation of debt-to-earnings rates (an annual debt-to-earnings rate and a discretionary debt-to-earnings rate) and an earnings premium measure based on an evaluation of median annual earnings. The regulations also include provisions for providing certifications and reporting data to the DOE and providing required student disclosures related to gainful employment. See Form 10-K at “Regulatory Environment – Gainful Employment.”
Current report
In December 2023, and March 2024, two lawsuits were filed against the DOE to challenge the gainful employment and financial value transparency regulations. On October 2, 2025, the U.S. District Court for the Northern District of Texas granted the DOE’s motion for summary judgment, leaving in place the 2023 gainful employment and financial value transparency rule. The plaintiffs may appeal the decision to the Fifth Circuit Court of Appeals. In the meantime, the DOE published additional guidance regarding deadlines for reporting data to the DOE and regarding steps the DOE intends to take after the federal government reopens toward preparing data for review by schools before its use in calculating official outcome rates.
Current report
Index
Current report
The DOE established a negotiated rulemaking committee to consider topics including changes in institutional and programmatic accountability measures such as financial value transparence and gainful employment and the loss of Direct Loan eligibility for certain programs with low earnings outcomes for two out of three years. This committee is scheduled to meet in December 2025, and January 2026. We cannot predict whether the DOE will modify the gainful employment and financial value transparency rules as a result of the negotiated rulemaking, nor can we predict the timing, scope, and final content of any regulations the DOE may issue. The implementation of new gainful employment regulations and other institutional and programmatic accountability measure regulations could require us to eliminate or modify certain educational programs, could result in the loss of our students’ access to Title IV Program funds for the affected programs, and could have a significant impact on the rate at which students enroll in our programs and on our business and results of operations.
Removed paragraphs (7)
Previous report
Planned campus openings
Previous report
Marketing expense increased modestly by $0.3 million, or 2.8%. Despite the increase in absolute dollars, marketing expense declined as a percentage of revenue, reflecting improved efficiency. Notably, cost per start declined 14.0% compared to the prior-year period, underscoring a higher return on marketing investment.
Previous report
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Previous report
Marketing expense slightly decreased by $0.5 million or 2.3% year over year, demonstrating improved efficiencies. Notably, cost per start declined 17.3% compared to the prior-year period, underscoring a higher return on marketing investment.
Previous report
On April 4, 2025, the DOE published a notice in the Federal Register announcing its intention to commence negotiated rulemaking and to establish one or more negotiated rulemaking committees to prepare proposed regulations related to the Title IV Programs. The DOE conducted negotiated rulemaking sessions from June 30 to July 2, 2025 to discuss potential proposed regulations on issues related to public service student loan forgiveness and loan repayment plan programs, but did not reach consensus on the final content of the proposed regulations. The DOE is expected to proceed with preparing and publishing proposed regulations for public notice and comment before publishing final regulations.
Previous report
Political and budgetary concerns significantly affect Title IV Programs. Congress periodically revises the HEA (“Higher Education Act”) and other laws governing Title IV Programs. See 10-K Part I, Item 1 at “Regulatory Environment – Congressional and Presidential Action.” Congress passed a law signed by the President on July 4, 2025, entitled the “One Big Beautiful Bill Act,” (“the OBBB Act”). The OBBB Act has a general effective date of July 1, 2026 (with exceptions) and enacts several changes to the HEA that will impact us and our schools including, but not limited to:
Previous report
The new accountability metrics do not apply to our non-degree undergraduate programs (although all our non-degree and degree programs are within the scope of the gainful employment regulations). See 10-K Part I, Item 1 at “Regulatory Environment – Gainful Employment.” Moreover, we are still reviewing the new law and waiting for further rules and guidance from the DOE regarding the implementation of the new law. Accordingly, it is difficult for us to predict with certainty how our educational programs will perform under the new metrics and the extent to which certain programs, if any, could lose Direct Loan eligibility.
Reworded paragraphs (44)
Previous wording
Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our”, and “us”, as applicable) provide diversified career-oriented postsecondary education to recent high school graduates and working adults. The Company, which currently operates 21 campuses in 12 states, has entered into leases for two new campuses: one in Houston, Texas, with programs expected to begin in the second half of 2025, and one in Hicksville, New York, with programs expected to begin by the end of 2026. The Company entered into the Houston lease and Hicksville lease on October 31, 2023 and December 12, 2024, respectively. The Company offers programs in skilled trades, automotive, health sciences and information technology. The schools operate under the brands Lincoln Technical Institute, Lincoln College of Technology and Nashville Auto Diesel College.
Current wording
Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our”, and “us”, as applicable) provide diversified career-oriented postsecondary education to recent high school graduates and working adults. The Company, which currently operates 22 campuses in 12 states, has entered into leases for three new campuses: one in Houston, Texas, which opened in the third quarter of 2025, one in Hicksville, New York, with programs expected to begin by the end of 2026, and one in Rowlett, Texas, a northern suburb of Dallas, where the lease is expected to commence in the fourth quarter of 2025, and programs are expected to begin in the first quarter of 2027. The Company entered into the Houston lease, Hicksville lease and Rowlett lease on October 31, 2023, December 12, 2024, and September 12, 2025, respectively. The Company offers programs in skilled trades, automotive, health sciences and information technology. The schools operate under the brands Lincoln Technical Institute, Lincoln College of Technology and Nashville Auto Diesel College.
Previous wording
Results of Operations for the Three and Six Months Ended June 30, 2025
Current wording
Results of Operations for the Three and Nine Months Ended September 30, 2025
Previous wording
Revenue. Revenue increased $13.6 million, or 13.2% to $116.5 million for the three months ended June 30, 2025 from $102.9 million in the prior year comparable period. Revenue growth was primarily due to a 16.0% increase in average student population, reflecting 21.4% start growth during the first half in 2025 from our campus operations.
Current wording
Revenue. Revenue increased $27.0 million, or 23.6% to $141.4 million for the three months ended September 30, 2025, from $114.4 million in the prior year comparable period. Revenue growth was primarily due to a 17.2% increase in average student population, reflecting 12.0% start growth during the first nine months of 2025 from our campus operations. Additional contributing factors included tuition increases and the timing of books and tools revenue during this quarter.
Previous wording
Includes 2,764 student starts on July 1, 2025, to align with comparable student start activity in the prior year which occurred in the last week of June 2024
Current wording
*Excludes 2,764 student starts on July 1, 2025, to align with comparable student start activity in the prior year which occurred in the last week of June 2024
Previous wording
Educational services and facilities expense. Educational services and facilities expense increased by $1.2 million, or 2.7%, to $46.8 million for the three months ended June 30, 2025, compared to $45.6 million for the same period in 2024. This increase includes a $1.0 million reduction related to the Transitional segment, which incurred expenses in the prior year but not in the current period. On a comparable basis, educational services and facilities expense increased by $2.3 million.
Current wording
Educational services and facilities expense. Educational services and facilities expense increased by $9.2 million, or 19.2%, to $57.3 million for the three months ended September 30, 2025, compared to $48.1 million for the same period in 2024. This increase includes a $1.2 million reduction related to the Transitional segment, which incurred expenses only in the prior year. On a comparable basis, educational services and facilities expense increased by $10.4 million.
Previous wording
The primary driver of the increase was $2.2 million or 37.6% in depreciation expense, largely resulting from capital investments to support our growth initiatives, including two new campus expansions, new program development, and the relocation of two campuses to modern facilities. The remaining increase was attributable to higher costs associated with supporting a larger student population, including market-based adjustments to instructional compensation to remain competitive and retain talent.
Current wording
The primary driver of the increase was higher costs associated with supporting a larger student population, including higher books and tools expense due to the timing of program starts. Additionally, the increase reflects market-based adjustments to instructional compensation to remain competitive and retain talent. The remaining increase was attributable to higher depreciation expense, largely resulting from capital investments to support our growth initiatives.
Previous wording
As a percentage of revenue, instructional expenses decreased to 19.9% for the six months ended June 30, 2025, from 22.0% in the prior-year period, reflecting improved operating efficiency. Similarly, educational services and facilities expense as a percentage of revenue declined to 40.3% from 42.9% in the prior year. These improvements demonstrate continued margin expansion as we scale operations.
Current wording
As a percentage of revenue, instructional expenses decreased to 17.5% for the three months ended September 30, 2025, from 19.6% in the prior-year comparable period, reflecting improved operating efficiency. Similarly, educational services and facilities expense as a percentage of revenue declined to 40.5% from 42.0% in the prior year comparable period. These improvements demonstrate continued margin expansion as our campus operations scale.
Previous wording
Selling, general and administrative expense. Selling, general and administrative expense increased $9.2 million, or 15.9% to $67.1 million for the three months ended June 30, 2025, compared to $57.9 million for the same period in 2024. This includes a $1.1 million reduction related to the Transitional segment, which had expenses in the prior year but none in the current period.
Current wording
Selling, general and administrative expense. Selling, general and administrative expense increased $14.5 million, or 22.8% to $77.8 million for the three months ended September 30, 2025, compared to $63.3 million for the same period in 2024. This includes a $1.1 million reduction related to the Transitional segment, which had expenses in the prior year but none in the current period.
Previous wording
Student services expense increased $0.9 million or 17.3%, driven by continued investments in staffing and support infrastructure to serve a growing student base.
Current wording
Student services expense increased $1.0 million or 18%, driven by continued investments in staffing and support infrastructure to serve a growing student base.
Previous wording
Selling, general and administrative expenses, as a percentage of revenue was 57.6% for the three months ended June 30, 2025, compared to 56.2% for the same period in 2024.
Current wording
Selling, general and administrative expenses, as a percentage of revenue was 55.0% for the three months ended September 30, 2025, compared to 55.4% for the same period in 2024.
Previous wording
Net interest income/(expense). Net interest expensewas $0.8 millionfor the three months ended June 30, 2025, compared to an immaterial amount in the same period in 2024. The increase was primarily driven by a reduction in interest income resulting from lower average cash balances during the period, as funds were used for capital expenditures.
Current wording
Net interest income/(expense). Net interest expense was $1.0 million for the three months ended September 30, 2025, compared to $0.2 million in the same period in 2024. The increase was primarily driven by a reduction in interest income resulting from lower average cash balances during the period, as funds were used for capital expenditures, and by higher interest expense on borrowings.
Previous wording
Income taxes. Income tax provision was $1.4 million for the six months ended June 30, 2025, representing an effective tax rate of 28.6% of pre-tax income. This compares to an income tax benefit of $0.6 million in the prior-year period, which reflected a 39% effective tax rate on a pre-tax net loss.
Current wording
Income taxes. Income tax provision was $1.5 million for the three months ended September 30, 2025, representing an effective tax rate of 28.2% of pre-tax income, compared to $1.7 million income tax provision and an effective tax rate of 29.7% in the prior year comparable period.
Previous wording
Operating income increased $9.2 million, or 90.4% to $19.3 million for the three months ended June 30, 2025 from $10.1 million in the prior year comparable period. The change compared to the prior year comparable period was mainly driven by the following factors:
Current wording
Operating income increased $7.8 million, or 50.0% to $23.3 million for the three months ended September 30, 2025, from $15.5 million in the prior year comparable period. The change compared to the prior year comparable period was mainly driven by the following factors:
Previous wording
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $34.7 million for the six months ended June 30, 2025 compared to $23.5 million in the prior year. The increase was primarily driven by higher salaries and benefits due to workforce expansion to support a larger student population and to execute our growth initiatives. Additionally, medical claims increased and performance-based incentive compensation increased in line with improved financial performance.
Current wording
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $17.0 million for the three months ended September 30, 2025, compared to $9.0 million in the prior year comparable period. The increase was primarily driven by higher salaries and benefits due to workforce expansion to support a larger student population and to execute our growth initiatives. Additionally, employee medical claims increased, and performance-based incentive compensation increased tied to improved financial performance.
Previous wording
Revenue. Revenue increased $27.7 million, or 13.4% to $234.0 million for the six months ended June 30, 2025 from $206.3 million in the prior year comparable period. Revenue growth was primarily due to a 14.5% increase in average student population.
Current wording
Revenue. Revenue increased $54.7 million, or 17.1% to $375.4 million for the nine months ended September 30, 2025, from $320.7 million in the prior year comparable period. Revenue growth was primarily due to a 15.4% increase in average student population.
Previous wording
Educational services and facilities expense. Educational services and facilities expense increased by $5.6 million, or 6.3%, to $94.2 million for the six months ended June 30, 2025, compared to $88.6 million for the same period in 2024. This increase includes a $2.2 million reduction related to the Transitional segment, which incurred expenses in the prior year but not in the current period. On a comparable basis, educational services and facilities expense increased by $7.8 million.
Current wording
Educational services and facilities expense. Educational services and facilities expense increased by $14.9 million, or 10.9%, to $151.5 million for the nine months ended September 30, 2025, compared to $136.6 million for the same period in 2024. This increase includes a $3.4 million reduction related to the Transitional segment, which incurred expenses only in prior year. On a comparable basis, educational services and facilities expense increased by $18.3 million.
Previous wording
The primary driver of the increase was $1.4 million or 44.3% in depreciation expense, largely resulting from capital investments to support our growth initiatives, including two new campus expansions, new program development, and the relocation of two campuses to modern facilities. The remaining increase was attributable to higher costs associated with supporting a larger student population, including market-based adjustments to instructional compensation to remain competitive and retain talent.
Current wording
The primary driver of the increase was depreciation expense, largely resulting from capital investments to support our growth initiatives. The remaining increase was attributable to higher costs associated with supporting a larger student population, including market-based adjustments to instructional compensation to remain competitive and retain talent.
Previous wording
As a percentage of revenue, instructional expenses decreased to 20.2% for the three months ended June 30, 2025, from 22.3% in the prior-year period, reflecting improved operating efficiency. Similarly, educational services and facilities expense as a percentage of revenue declined to 40.2% from 44.3% in the prior year. These improvements demonstrate continued margin expansion as we scale operations.
Current wording
As a percentage of revenue, instructional expenses decreased to 19.0% for the nine months ended September 30, 2025, from 21.2% in the prior year comparable period, reflecting improved operating efficiency. Similarly, educational services and facilities expense as a percentage of revenue declined to 40.4% from 42.6% in the prior year comparable period. These improvements demonstrate continued margin expansion as we scale operations.
Previous wording
Selling, general and administrative expense. Selling, general and administrative expense increased $15.6 million, or 13.2%, to $134.0 million for the six months ended June 30, 2025, compared to $118.4 million for the same period in 2024. This includes a $2.3 million reduction related to the Transitional segment, which had expenses in the prior year but none in the current period.
Current wording
Selling, general and administrative expense. Selling, general and administrative expense increased $30.1 million, or 16.6%, to $211.8 million for the nine months ended September 30, 2025, compared to $181.7 million for the same period in 2024. This includes a $3.4 million reduction related to the Transitional segment, which had expenses in the prior year but none in the current period.
Previous wording
Administrative expenses rose $7.6 million, or 36.5%, primarily due to higher medical claims and increased costs associated with our expanding student population and improved financial performance.
Current wording
Administrative expenses rose $20.0 million, or 30.5%, primarily due to a greater number of employee medical claims and increased costs associated with our expanding student population and improved financial performance.
Previous wording
Student services expense increased $1.7 million, or 15.2%, driven by continued investments in staffing and support infrastructure to serve a growing student base.
Current wording
Student services expense increased $2.6 million, or 16.1%, driven by continued investments in staffing and support infrastructure to serve a growing student base.
Previous wording
Selling, general and administrative expenses, as a percentage of revenue, was 57.3%, consistent with the prior year.
Current wording
Selling, general and administrative expenses, as a percentage of revenue, was 56.4%, compared to 56.7% in the prior year comparable period.
Previous wording
(Gain) Loss on Sale of Assets. Gain on sale was $0.5 million for the six months ended June 30, 2025, compared to a loss of $0.9 million in the prior year.
Current wording
(Gain) Loss on Sale of Assets. Gain on sale was $0.5 million for the nine months ended September 30, 2025, compared to a loss of $0.9 million in the prior year.
Previous wording
Net interest income/(expense). Net interest expensewas $1.4 millionfor the six months ended June 30, 2025 compared to net interest income of $0.1 million for the six months ended June 30, 2024, primarily driven by a reduction in interest income resulting from lower average cash balances during the period, as funds were used for capital expenditures.
Current wording
Net interest expense. Net interest expense was $2.4 million for the nine months ended September 30, 2025, compared to net interest expense of $0.1 million for the nine months ended September 30, 2024, primarily driven by a reduction in interest income resulting from lower average cash balances during the period, as funds were used for capital expenditures, and by higher interest expense on borrowings.
Previous wording
Income taxes. Income tax provision was $0.5 million for the three months ended June 30, 2025, representing an effective tax rate of 25.1% of pre-tax income. This compares to an income tax benefit of $0.5 million in the prior-year period, which reflected a 40.4% effective tax rate on a pre-tax net loss. The change in effective tax rate was primarily driven by the shift from a pre-tax loss to pre-tax income, as well as the impact of discrete tax items recognized in each period.
Current wording
Income taxes. Income tax provision was $2.9 million for the nine months ended September 30, 2025, representing an effective tax rate of 28.4% of pre-tax income, compared to $1.1 million income tax provision and an effective tax rate of 26.4% in the prior year comparable period.
Previous wording
The following table presents selected operating metrics for our two reportable segments for the six months ended June 30, 2025 and 2024:
Current wording
The following table presents selected operating metrics for our two reportable segments for the nine months ended September 30, 2025 and 2024:
Previous wording
Operating income increased $18.2 million, or 80.1% to $41.0 million for the six months ended June 30, 2025 from $22.8 million in the prior year comparable period. The change compared to the prior year was mainly driven by the following factors:
Current wording
Operating income increased $26.0 million, or 67.9% to $64.2 million for the nine months ended September 30, 2025, from $38.3 million in the prior year comparable period. The change compared to the prior year was mainly driven by the following factors:
Previous wording
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $16.4 million for the three months ended June 30, 2025, compared to $10.7 million in the prior year. The increase was primarily driven by higher salaries and benefits due to workforce expansion to support a larger student population and to execute our growth initiatives. Additionally, medical claims increased, and performance-based incentive compensation increased in line with improved financial performance.
Current wording
This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $51.7 million for the nine months ended September 30, 2025, compared to $32.6 million in the prior year comparable period. The increase was primarily driven by higher salaries and benefits due to workforce expansion to support a larger student population and to execute our growth initiatives. Additionally, employee medical claims increased and performance-based incentive compensation increased in line with improved financial performance.
Previous wording
Our primary capital requirements are for maintenance and expansion of our facilities and the development of new programs. Our principal source of liquidity has been cash provided by operating activities. The following chart summarizes the principal elements of our cash flow for each of the three months ended June 30, 2025 and 2024:
Current wording
Our primary capital requirements are for maintenance and expansion of our facilities and the development of new programs. Our principal source of liquidity has been cash provided by operating activities. The following chart summarizes the principal elements of our cash flow for each of the nine months ended September 30, 2025 and 2024:
Previous wording
As of June 30, 2025, the Company had $16.7 million in cash and cash equivalents, compared to $67.0 million in cash and cash equivalents as of June 30, 2024. The change in cash position from the prior year was primarily driven by increased capital expenditures due to campus expansion and continued use of cash in operating activities, partially offset by net proceeds from financing activities.
Current wording
As of September 30, 2025, the Company had $13.5 million in cash and cash equivalents, compared to $54.0 million in cash and cash equivalents as of September 30, 2024. The change in cash position from the prior year comparable period was primarily driven by increased capital expenditures due to campus expansion.
Previous wording
Net cash used in operating activities was $8.1 million for the six months ended June 30, 2025 compared to net cash used in operating activities of $6.6 million in the prior year comparable period. The decrease in cash position was primarily driven by changes in working capital, partially offset by higher net income.
Current wording
Net cash provided by operating activities was $15.8 million for the nine months ended September 30, 2025, compared to net cash used in operating activities of $1.0 million in the prior year comparable period. The increase in cash position was primarily driven by changes in working capital and higher net income.
Previous wording
Net cash used in investing activities was $45.8 million for the six months ended June 30, 2025 compared to $3.0 million net cash provided by investing activities in the prior year comparable period primarily driven by higher capital expenditures associated with growth initiatives.
Current wording
Net cash used in investing activities was $67.6 million for the nine months ended September 30, 2025, compared to $22.2 million net cash used in investing activities in the prior year comparable period primarily driven by higher capital expenditures associated with growth initiatives.
Previous wording
Capital expenditures for the six months ending June 30, 2025 were $46.3 million compared to $12.7 million in prior period. The increase in planned capital expenditures include the buildouts to relocate the Nashville, Tennessee, Levittown, Pennsylvania campuses and buildout for the new campuses in Houston, Texas and Hicksville, New York. In addition, we continue to invest to expand programs at existing campuses which demonstrate high market demand and successful student outcomes. We expect to fund future capital expenditures with cash generated from operating activities and cash on hand.
Current wording
Capital expenditures for the nine months ended September 30, 2025, were $68.1 million compared to $32.1 million in the prior year comparable period. The increase in planned capital expenditures includes the buildouts to relocate the Nashville, Tennessee, and Levittown, Pennsylvania campuses and the buildout for the new Houston, Texas and Hicksville, New York campuses. In addition, we continue to invest to expand programs at existing campuses which demonstrate high market demand and successful student outcomes. We expect to fund future capital expenditures with cash generated from operating activities and cash on hand.
Previous wording
Net cash provided by financing activities for the six months ended June 30, 2025 was $11.3 million, compared to $3.7 million of cash used in financing activity in the six months ended June 30, 2024. The increase in cash position was primarily due to net borrowings in the current period.
Current wording
Net cash provided by financing activities for the nine months ended September 30, 2025, was $6.0 million, compared to $3.1 million of cash used in financing activity in the three and nine months ended September 30, 2024. The increase in cash position was primarily due to net borrowings in the current period.
Previous wording
On February 16, 2024, the Company entered into a secured credit agreement (the “Fifth Third Credit Agreement”) with Fifth Third Bank, National Association (the “Bank”), pursuant to which the Company, as borrower, obtained a revolving credit facility in the aggregate principal amount of $40.0 million including a $10.0 million letter of credit sublimit and a $20.0 million accordion feature (the “Facility”), the proceeds of which are to be used for working capital, general corporate and certain other permitted purposes. The Facility is guaranteed by the Company’s wholly-owned subsidiaries and is secured by a first priority lien in favor of the Bank on substantially all of the personal property owned by the Company and its subsidiaries. The term of the Facility is 36 months, maturing on February 16, 2027.
Current wording
On February 16, 2024, the Company entered into a secured credit agreement (as subsequently amended, the “Fifth Third Credit Agreement”) with Fifth Third Bank, National Association (the “Bank”), pursuant to which the Company, as borrower, obtained a revolving credit facility in the aggregate principal amount of $40.0 million including a $10.0 million letter of credit sublimit and a $20.0 million accordion feature (as subsequently amended, the “Facility”), the proceeds of which are to be used for working capital, general corporate and certain other permitted purposes. The Facility is guaranteed by the Company’s wholly owned subsidiaries and is secured by a first priority lien in favor of the Bank on substantially all of the personal property owned by the Company and its subsidiaries. The term of the Facility is 36 months, maturing on February 16, 2027.
Previous wording
Each advance under the Facility will bear interest on the outstanding principal amount thereof from the date when made at an interest rate determined at the election of the Company at either the Tranche Rate (which is the forward-looking Secured Overnight Financing Rate (SOFR) for one or three months), or the Base Rate (which is a variable per annum rate, as of any date of determination, equal to the Bank’s Prime Rate), plus an Applicable Margin. The Applicable Margin is determined pursuant to a Pricing Grid, which for loans subject to the Tranche Rate varies from 1.75% to 2.50% and for loans subject to the Base Rate varies from 0.75% to 1.50%. The Applicable Margin may change quarterly based on the Total Leverage Ratio at such time. The Total Leverage Ratio is determined with respect to the Company and its subsidiaries on a consolidated basis for an applicable quarterly period by dividing the aggregate principal amount of various forms of borrowed indebtedness as of the last day of a determination period by EBITDA (earnings before interest expense, taxes, depreciation and amortization) for such period. Interest is paid in arrears, either quarterly or monthly depending on the Company’s interest rate election, with the principal due at maturity.
Current wording
Each advance under the Facility will bear interest on the outstanding principal amount thereof from the date when made at an interest rate determined at the election of the Company at either the Tranche Rate (which is the forward-looking Secured Overnight Financing Rate (SOFR) for one or three months), or the Base Rate (which is a variable per annum rate, as of any date of determination, equal to the Bank’s Prime Rate), plus an Applicable Margin. The Applicable Margin is determined pursuant to a Pricing Grid, which for loans subject to the Tranche Rate varies from 1.75% to 2.50% and for loans subject to the Base Rate varies from 0.75% to 1.50%. The Applicable Margin may change quarterly based on the Total Leverage Ratio at such time. The Total Leverage Ratio is determined with respect to the Company and its subsidiaries on a consolidated basis for an applicable quarterly period by dividing the aggregate principal amount of various forms of borrowed indebtedness as of the last day of a determination period by earnings before interest expense, taxes, depreciation and amortization ("EBITDA") for such period. Interest is paid in arrears, either quarterly or monthly depending on the Company’s interest rate election, with the principal due at maturity.
Previous wording
Under the terms of the Fifth Third Credit Agreement, the Company will pay to the Bank an unused facility fee on the average daily unused balance of the Facility at a rate per annum equal to 0.50%, which fee is payable in arrears on dates when interest is due and payable. For the three and six months ended June 30, 2025 the Company paid approximately $0.1 million, compared to less than $0.1 million in the three and six months ended June 30, 2024, in unused facility fees, which were expensed as incurred. The Company will also pay to the Bank a letter of credit fee equal to the Applicable Margin for loans subject to the Tranche Rate multiplied by the maximum amount available to be drawn under such letter of credit. For the three and six months ended June 30, 2025 and 2024 those fees were not material.
Current wording
Under the terms of the Fifth Third Credit Agreement, the Company will pay to the Bank an unused facility fee on the average daily unused balance of the Facility at a rate per annum equal to 0.50%, which fee is payable in arrears on dates when interest is due and payable. For the three and nine months ended September 30, 2025 and 2024, the Company paid approximately $0.1 million and $0.2 million, and $0.1 million and $0.1 million, respectively, in unused facility fees, which were expensed as incurred. The Company will also pay to the Bank a letter of credit fee equal to the Applicable Margin for loans subject to the Tranche Rate multiplied by the maximum amount available to be drawn under such letter of credit. For the three and nine months ended September 30, 2025 and 2024, the fees were not material.
Previous wording
On July 18, 2024, the Company entered into a first amendment (the “First Amendment”) to the Fifth Third Credit Agreement with Bank. Among other things, the First Amendment effects certain modifications to (i) clarify certain representations and affirmative covenants of the Company, (ii) clarify certain conditions to each advance, (iii) clarify and/or replace certain events of default, and (iv) delete or revise certain definitions in order to harmonize them with the other modifications made. The First Amendment also contains customary releases, representations and warranties and reaffirmations consistent with the original terms of the Fifth Third Credit Agreement. Except as set forth above, the First Amendment does not materially alter the Fifth Third Credit Agreement.
Current wording
On July 18, 2024, the Company entered into a first amendment (the “First Amendment”) to the Fifth Third Credit Agreement. Among other things, the First Amendment effects certain modifications to (i) clarify certain representations and affirmative covenants of the Company, (ii) clarify certain conditions to each advance, (iii) clarify and/or replace certain events of default, and (iv) delete or revise certain definitions in order to harmonize them with the other modifications made. The First Amendment also contains customary releases, representations and warranties and reaffirmations consistent with the original terms of the Fifth Third Credit Agreement. Except as set forth above, the First Amendment does not materially alter the Fifth Third Credit Agreement.
Previous wording
In connection with the Fifth Third Credit Agreement, total fees paid during 2024 were approximately $0.5 million, which included bank and legal costs, in addition to other customary expenses and reimbursements. These fees have been capitalized in the prior year and are being amortized over the term of the Fifth Third Credit Agreement. During the six months ended June 30, 2025, the Company has entered into a Second Amendment to the Fifth Third Credit Agreement and has incurred additional bank and legal fees of $0.1 million. The fees have been capitalized and are being amortized over the term of the Second Amendment.
Current wording
In connection with the Fifth Third Credit Agreement, total fees paid during 2024 were approximately $0.5 million, which included bank and legal costs, in addition to other customary expenses and reimbursements. These fees were capitalized in the prior year and are being amortized over the term of the Fifth Third Credit Agreement. During the nine months ended September 30, 2025, the Company incurred additional bank and legal fees of $0.1 million in connection with the Second Amendment. The fees were capitalized and are being amortized over the term of the Second Amendment. For the three and nine months ended September 30, 2025, interest paid in connection with the Fifth Third Credit Agreement was $0.3 million and $0.4 million, respectively.
Previous wording
As of June 30, 2025, the Company had $13.0 million outstanding under the Facility.
Current wording
As of September 30, 2025, the Company had $8.0 million outstanding under the Facility.
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Current report — wording carried from elsewhere
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current report — wording carried from elsewhere
*Excludes 2,764 student starts on July 1, 2025, to align with comparable student start activity in the prior year which occurred in the last week of June 2024
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
(Gain) Loss on Sale of Assets. Gain on sale was $0.3 million for the three months ended June 30, 2025, compared to a loss of $0.6 million in the prior year.
Previous report — wording carried elsewhere
Administrative expenses rose $13.8 million, or 31.5%, primarily due to higher medical claims and increased costs associated with our expanding student population and improved financial performance.
Previous report — wording carried elsewhere
The OBBB Act has a general effective date of July 1, 2026 with certain exceptions and grandfathering provisions. We cannot predict the timing and content of any rules or guidance the DOE may issue to implement or interpret the OBBB Act, nor can we predict with certainty the extent to which our schools and our educational programs will be able to comply with the revised requirements or the extent to which the revisions and reduced aid eligibility will impact our enrollments.