Legacy Education Inc.
For the period ended Dec 31, 2025. Filed Feb 12, 2026.
View on SEC.govAbout this filing
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.
Dec 31, 2025 · Filed Feb 12, 2026
LGCY$8.62-2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-13.
0001493152-25-022296
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-12.
0001493152-26-006392
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 101 previous paragraphs and 110 current paragraphs.
66 unchanged; 25 reworded; 15 added; 10 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 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 (15)
Current report
The second of the two negotiated rulemaking committees (the AHEAD Committee) convened for one session in December 2025 and one session in January 2026. On December 12, 2025, the AHEAD Committee reached consensus on proposed regulations related to Pell Grants, including the new Workforce Pell program. The proposed regulations clarify which educational programs are eligible for the Workforce Pell program introduced by the OBBBA. Under the OBBBA and the proposed regulations, to be eligible a program must meet certain short-term length requirements (at least 8 but less than 15 weeks and (i) at least 150 but less than 600 clock hours, (ii) at least four but less than sixteen semester or trimester hours, or (iii) at least six but less than 24 quarter hours) and comply with certain other prohibitions. The proposed regulations also clarify processes for approval by state governors, the Secretary of Education, and a separate “value-added earnings” measure. Among other requirements, approval from a governor requires the governor to determine the program prepares students for an occupation that aligns with the state’s workforce needs, and the Secretary determines whether the program meets completion, placement rate, and value-added earnings requirements. To comply with the value-added earnings measure, the program’s total published tuition and fees may not exceed the value-added earnings (as defined in the proposed regulations) of working students who received a Pell Grant for enrollment in the program and completed the program within the applicable cohort period. We are evaluating potential opportunities under the proposed regulations.
Current report
On January 9, 2026, the AHEAD Committee reached consensus on proposed regulations that create new accountability measures based in part on the accountability metrics in the OBBBA and the metrics in the existing gainful employment rules. The new earnings premium measure applies to all degree and non-degree programs at all institutions and eliminates the debt-to-earnings rate measure in the existing gainful employment regulations. Under the earnings premium measure for undergraduate programs (as opposed to the separate measure for graduate programs), the median annual earnings of program completers are compared to the “earnings threshold,” which is the median earnings of holders of high school diplomas who are working adults aged 25-34 using the methodology prescribed in the regulations. If the median annual earnings of program completers fall below the earnings threshold, the Secretary informs the institution that the program is failing under the earnings premium measure and that the program could become ineligible for the Direct Loan programs based on its earnings premium measure for the next award year. The institution must provide a prescribed warning to students and prospective students explaining that it has not passed ED’s standards based on reported earnings of program graduates and that the program could lose access to Direct Loans based on the next calculated metrics. The warning must also include information about accessing the program information website maintained by ED and explain that the student must acknowledge the student viewed the warning in order for the institution to disburse Title IV funds to the student. If the program fails the earnings premium measure in two out of three consecutive award years for which the earnings premium measure is calculated, this would result in the program’s loss of eligibility for Title IV Direct Loans once ED completes a termination action under its established proceedings, unless the institution successfully appeals under those proceedings. Under the proposed regulations, if more than 50% of an institution’s Title IV-recipient students enrolled in, or more than 50% of the institution’s total Title IV funds are from, programs that fail the earnings premium measure in two out of three consecutive award years for which the earnings premium measure is calculated, the institution could be deemed not administratively capable and be placed on provisional status, and the programs could potentially lose access to all Title IV HEA funds if the institution does not successfully appeal the determination.. The proposed regulations also, among other things, describe the process and formulas for calculating earnings accountability measures, revise the requirements for institutional reporting to ED, specify the period of ineligibility for programs that fail the earnings premium measure, allow for limited retention of eligibility during orderly program closure, and modify the institutional data ED is required to…
Excerpt shortened here; the source contains the full paragraph.
Current report
On January 26, 2026, ED announced it intends to establish a negotiated rulemaking committee that will meet in April and May 2026 to consider amendments to the regulations respecting the Secretary’s recognition of accrediting agencies and related institutional eligibility requirements for the Title IV programs. ED’s stated goals for developing these regulations include simplification of the accreditor recognition process, consideration of the effect of accreditation on higher education costs and “credential inflation,” protecting against undue influence from private trade associations, eliminating discriminatory standards, and focusing on data-driven student outcomes. Among ED’s list of ten proposed issues for negotiation are topics such as reviewing accrediting agencies’ responsibilities to ensure they do not contravene Federal or State law, and determining whether regulations should be revised or expanded to ensure accreditation standards do not impede innovation. Each of our institutions are currently accredited by an accrediting agency recognized by ED, and our participation in the Title IV Programs is dependent on ED continuing to recognize the accrediting agencies that accredit our institutions. See Annual Report at Form 10-K “Education Regulations – ED Recognition of Accrediting Agencies.” Any future regulations or regulatory changes resulting from this negotiated rulemaking process could impact the ability of the accreditors that accredit our institutions to maintain recognition by ED and the accreditation requirements applicable to our institutions. We cannot predict whether and how such rulemaking would impact our institutions and operations.
Current report
The DOE has proposed new regulations during a negotiated rulemaking process that would replace the debt-to-earnings rate measure and the earnings premium measure in the existing financial value transparency and gainful employment regulations with a new earnings premium accountability framework based in part on the accountability measure introduced in the OBBBA. See “Regulatory Updates – Negotiated Rulemaking;” see also Annual Report at Form 10-K “Education Regulations – Congressional Action.”
Current report
Administrative Capability
Current report
Based on the Company’s fiscal year end, our annual compliance audits and audited financial statements were due to ED on December 31, 2025. Due to issues with ED’s systems which the Company raised to ED prior to the submission deadline, our institutions were unable to access the eZ-Audit portal to upload the annual audit submissions to ED. ED could conclude that the annual audit submissions were not filed timely as required and impose sanctions (which we would have the opportunity to appeal). However, we provided the entirety of the annual audit submissions to ED by electronic mail by the required deadline such that ED did receive the required annual audit submissions on a timely basis via alternative means.
Current report
Revenue. Our revenue was approximately 19.2 million for the three months ended December 31, 2025 compared to approximately $13.7 million for the three months ended December 31, 2024, an increase of approximately $5.5 million, or approximately 40.7% driven by a 49.4% increase in new student starts to 593 from 397 last year resulting in a 16.8% increase in student enrollment.
Current report
Six Months Ended December 31, 2025 Compared to Six Months Ended December 31, 2024
Current report
Revenue. Our revenue was approximately $38.6 million for the six months ended December 31, 2025 compared to approximately $27.6 million for the six months ended December 31, 2024, an increase of approximately $10.9 million, or approximately 39.6% driven by a 37.2% increase in new student starts to 1,710 from 1,246 resulting in a 16.8% increase in ending student population.
Current report
*General and administrative expense.*Our general and administrative expense was approximately $12.2 million for the six months ended December 31, 2025 compared to approximately $8.3 million for the six months ended December 31, 2024, an increase of approximately $3.9 million, or approximately 46.9%. The increase was primarily attributable to an increase in marketing expense, professional fees and bad debt expense. Of the total general and administrative expense, $3.0 million and $2.3 million relate to marketing expense for the six months ended December 31, 2025 and 2024, respectively.
Current report
Depreciation and amortization. Our depreciation and amortization expense was approximately $0.3 million for the six months ended December 31, 2025 compared to approximately $0.1 million for the six months ended December 31, 2024.
Current report
Interest expense. Our interest expense was approximately $0.05 million for the six months ended December 31, 2025 compared to approximately $0.06 million for the six months ended December 31, 2024.
Current report
Income tax expense. Our income tax expense was approximately $1.6 million for the six months ended December 31, 2025 compared to approximately $1.3 million for the six months ended December 31, 2024, an increase of approximately $0.3 million, or approximately 20%. The increase is primarily attributable to the increase in income.
Current report
*Net Income.*Our net income was approximately $4.2 million for the six months ended December 31, 2025 compared to approximately $3.5 million for the six months ended December 31, 2024, an increase of approximately $0.7 million, or approximately 21%, due to the reasons mentioned above.
Current report
Net cash used by financing activities was approximately $0.6 million for the six months ended December 31, 2025, and net cash provided of approximately $9.2 million for the six months ended December 31, 2024.
Removed paragraphs (10)
Previous report
On April 4, 2025, ED announced its intention to conduct negotiated rulemaking to prepare proposed regulations on topics pertaining to Title IV regulations, potentially including Public Service Loan Forgiveness, loan repayment programs, and “streamlining” current federal student financial assistance regulations.
Previous report
ED published a notice of proposed rulemaking on public service loan forgiveness on August 18, 2025, and published the final regulations on October 31, 2025 with an effective date of July 1, 2026. The regulations include provisions that, among other things, amend components of the public service loan forgiveness program. We are currently evaluating these recently published regulations to determine any potential material impact on our business and schools.
Previous report
The second of the two negotiated rulemaking committees (the AHEAD Committee) is scheduled to meet in December 2025 and January 2026 and to consider new regulations on issues such as institutional and programmatic accountability measures (including the financial value transparency and gainful employment regulations and the accountability measures in the OBBBA) and changes to the Pell Grant Program.
Previous report
Congressional Action
Previous report
The U.S. Congress must periodically reauthorize the HEA and other laws governing the Title IV Programs and annually determine the funding level for each Title IV Program, and may pass new laws or revise existing laws at any time. Political and budgetary concerns significantly affect the Title IV Programs. If we cannot comply with the provisions of the HEA, as they may be enforced or amended (including but not limited to the provisions of the OBBBA), or if the cost of such compliance is excessive, or if funding is materially reduced, our revenues or profit margin could be materially adversely affected. See Annual Report at Form 10-K “Education Regulations – Congressional Action.” On October 1, 2025, the federal government entered a shutdown due to the failure of the U.S. Congress to pass regular appropriations bills or a continuing resolution. As a result of the lapse in appropriations and the government shutdown, certain functions of ED, the VA, and other federal agencies have been adversely impacted. Approximately 90% of ED employees have been furloughed during the shutdown. However, ED has stated that it will continue to disburse federal student loans and Pell Grants and that the FAFSA will continue to be processed.
Previous report
The federal government shutdown also has impacted other agencies from which our students receive funding. See Annual Report at Form 10-K “Education Regulations – Other Financial Assistance Programs.” The U.S. Department of Veterans Affairs (“VA”) has announced that the Veterans Benefits Administration will continue to process education benefit claims and pay out veterans’ education benefits during the shutdown.
Previous report
On November 12, 2025, Congress passed a bill subsequently signed by the President ending the federal government shutdown. We cannot predict the duration of any future federal government shutdown, nor can we predict the extent to which such shutdowns could disrupt funding to us and our students from the Title IV programs and other federal financial assistance programs or disrupt services from ED or other federal agencies upon which our institutions and our students depend.
Previous report
Moreover, the regulations are subject to further amendment by ED. As noted above, ED established a negotiated rulemaking committee that is scheduled to meet in December 2025 and January 2026 to consider topics such as financial value transparency and gainful employment as well as separate accountability measures under OBBBA related to the potential loss of Direct Loan eligibility for certain degree programs with low earnings outcomes for two out of three years. See “Regulatory Updates – Negotiated Rulemaking;” see also Annual Report at Form 10-K “Education Regulations – Congressional Action.” We cannot predict whether ED 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 ED may issue on these or other topics. The implementation of recent or amended financial value transparency and gainful employment regulations and new laws and regulations related to other accountability measures could require us to modify or eliminate certain programs to comply with the new laws and regulations and could result in the loss of eligibility for some or all Title IV Programs for programs that fail to comply with the regulations which could have a material adverse effect on our student population and our revenues.
Previous report
Revenue. Our revenue was approximately $19.4 million for the three months ended September 30, 2025 compared to approximately $14.0 million for the three months ending September 30, 2024, an increase of approximately $5.4 million, or approximately 38.5 %. The increase is primarily due to increased enrollment in the current three-month period.
Previous report
Net cash used by financing activities was approximately $0.5 million for the three months ended September 30, 2025, as compared to net cash provided by financing activities of approximately $8.2 million for the three months ended September 30, 2024. Cash used in the three months ended June 30, 2025 was predominantly related to the reduction of debt and lease payments, offset by proceeds from the exercise of stock options. Cash provided by financing activities in the three months ended September 30, 2024 was predominantly related to proceeds from the Company’s IPO, net of offering costs, offset by the reduction of debt and lease payments.
Reworded paragraphs (25)
Previous wording
We provide career-focused, post-secondary education services to students at all stages of adult life, from recent high school graduates to working parents, through our accredited academic institutions: High Desert Medical College, which we acquired in July 2010, Central Coast College, which we acquired in January 2019, Contra Costa Medical Career College, which we acquired in December 2024, Integrity College of Health, and Contra Costa Medical College, which we acquired in December 2024. On December 31, 2019, we entered into a Membership Interest Purchase Agreement with the sole member of Integrity. We purchased from the sole member of Integrity on that date 24.5% of her interest and obtained an exclusive option to acquire her remaining membership interest upon payment of $100, which was exercised on September 15, 2020. For purposes of our financial statements, the acquisition of Integrity is deemed to have been effective as of December 31, 2019.
Current wording
We provide career-focused, post-secondary education services to students at all stages of adult life, from recent high school graduates to working parents, through our accredited academic institutions: High Desert Medical College, which we acquired in July 2010, Central Coast College, which we acquired in January 2019, Contra Costa Medical Career College, which we acquired in December 2024, and Integrity College of Health. On December 31, 2019, we entered into a Membership Interest Purchase Agreement with the sole member of Integrity. We purchased from the sole member of Integrity on that date 24.5% of her interest and obtained an exclusive option to acquire her remaining membership interest upon payment of $100, which was exercised on September 15, 2020. For purposes of our financial statements, the acquisition of Integrity is deemed to have been effective as of December 31, 2019.
Previous wording
HDMC was established in the State of California in 2002 and began offering classes in 2003. It started with campuses in Lancaster, California, and added its first branch in 2008 in Bakersfield, California. Due to enrollment growth and high demand for its services, HDMC expanded to add a branch campus in Temecula, California campus in order to accommodate 250 to 400 additional students. HDMC offers UT, VN, VN Associate of Applied Science degree program, Associate Degree of Nursing, nursing assistant, MRI Associate of Applied Science, cardiac sonography, pharmacy technician, dental assisting, clinical medical assisting, medical administrative assisting programs, medical billing and coding, veterinary assistant, phlebotomy technician avocational, nursing assistant avocational, UT Associate of Applied Science degree programs, and an EMT program. HDMC also has obtained approval from the Accrediting Council for Continuing Education and Training (“ACCET”), Bureau for Private Postsecondary Education (“BPPE”) and ED to offer a surgical technology Associate of Applied Science program and sterile processing technician program. As of September 30, 2025, HDMC had 2,263 students enrolled in its programs.
Current wording
HDMC was established in the State of California in 2002 and began offering classes in 2003. It started with campuses in Lancaster, California, and added its first branch in 2008 in Bakersfield, California. Due to enrollment growth and high demand for its services, HDMC expanded to add a branch campus in Temecula, California campus in order to accommodate 250 to 400 additional students. HDMC offers UT, VN, VN Associate of Applied Science degree program, Associate Degree of Nursing, nursing assistant, MRI Associate of Applied Science, cardiac sonography, pharmacy technician, dental assisting, clinical medical assisting, medical administrative assisting programs, medical billing and coding, veterinary assistant, phlebotomy technician avocational, nursing assistant avocational, UT Associate of Applied Science degree programs, and an EMT program. HDMC also has obtained approval from the Accrediting Council for Continuing Education and Training (“ACCET”), Bureau for Private Postsecondary Education (“BPPE”) and ED to offer a surgical technology Associate of Applied Science program and sterile processing technician program. As of December 31, 2025, HDMC had 2,033 students enrolled in its programs.
Previous wording
CCC was established in the State of California in 1983. In 1991, CCC moved to its current location in Salinas, California to accommodate growing enrolment numbers and the addition of new training programs.
Current wording
CCC was established in the State of California in 1983. In 1991, CCC moved to its current location in Salinas, California to accommodate growing enrollment numbers and the addition of new training programs.
Previous wording
CCC offers the following certificate or degree programs: business administrative specialist, computer specialist: accounting, medical administrative assistant, medical assisting, nursing assistant, UT, UT Associate of Applied Science, veterinary assistant, veterinary technology Associate of Applied Science, VN, surgical technology, dental assisting, sterile processing technician, and pharmacy technician. CCC also offers an avocational phlebotomy technician program. CCC also has obtained approval from ACCET and BPPE to offer an MRI Associate of Applied Science program and a cardiac sonography Associate of Applied Science program. As of September 30, 2025, CCC had 549 students enrolled in its programs.
Current wording
CCC offers the following certificate or degree programs: business administrative specialist, computer specialist: accounting, medical administrative assistant, medical assisting, nursing assistant, UT, UT Associate of Applied Science, veterinary assistant, veterinary technology Associate of Applied Science, VN, surgical technology, dental assisting, sterile processing technician, and pharmacy technician. CCC also offers an avocational phlebotomy technician program. CCC also has obtained approval from ACCET and BPPE to offer an MRI Associate of Applied Science program and has obtained ACCET, BPPE, and ED approvals to offer a cardiac sonography Associate of Applied Science program. As of December 31, 2025, CCC had 556 students enrolled in its programs.
Previous wording
Integrity was established in the State of California in 2007. Integrity’s campus is located in Pasadena, California. Integrity offers VN, VN Associate of Applied Science, Registered Nurse to Bachelor of Science in Nursing (“RN to BSN”), medical assisting, medical billing and coding, veterinary assistant, and Diagnostic Medical Sonography programs. Integrity also plans to offer an emergency medical technician (EMT) program and is in the process of obtaining approvals for the program (for which Integrity is not planning for ED approval to make Title IV funds available for students who enroll in the program). Integrity also has obtained approval from ABHES to offer a sterile processing technician program and will offer this program pending additional approvals. For purposes of our financial statements, Legacy Education, L.L.C. is deemed to have acquired Integrity in December 2019. As of September 30, 2025, Integrity had 220 students enrolled in its programs.
Current wording
Integrity was established in the State of California in 2007. Integrity’s campus is located in Pasadena, California. Integrity offers VN, VN Associate of Applied Science, Registered Nurse to Bachelor of Science in Nursing (“RN to BSN”), medical assisting, medical billing and coding, veterinary assistant, and Diagnostic Medical Sonography programs. Integrity also plans to offer an emergency medical technician (EMT) program and is in the process of obtaining approvals for the program (for which Integrity is not planning for ED approval to make Title IV funds available for students who enroll in the program). Integrity also has obtained approval from ABHES to offer a sterile processing technician program and will offer this program pending additional approvals. For purposes of our financial statements, Legacy Education, L.L.C. is deemed to have acquired Integrity in December 2019. As of December 31, 2025, Integrity had 214 students enrolled in its programs.
Previous wording
Contra Costa was established in the state of California in 2007. Contra Costa’s campus is located in Antioch, California. Contra Costa offers VN, surgical technology, sterile processing technician, pharmacy technician, medical assisting with phlebotomy, clinical medical assisting, dental assisting, diagnostic medical sonography, EKG/ECG technician, medical administrative assistant/billing and coding specialist, and phlebotomy (avocational) programs. As of September 30, 2025, Contra Costa had 463 students enrolled in its programs.
Current wording
Contra Costa was established in the state of California in 2007. Contra Costa’s campus is located in Antioch, California. Contra Costa offers VN, surgical technology, sterile processing technician, pharmacy technician, medical assisting with phlebotomy, clinical medical assisting dental assisting, diagnostic medical sonography, EKG/ECG technician, medical administrative assistant/billing and coding specialist, phlebotomy (avocational) programs. As of December 31, 2025, Contra Costa had 431 students enrolled in its programs.
Previous wording
On July 24, 2025, ED announced it intended to establish two negotiated rulemaking committees: one that will consider changes to the federal student loan programs and one that will consider institutional and programmatic accountability, changes to the Pell Grant Program and other matters. The rulemaking is intended to implement recent changes to the Title IV, HEA programs included in the One Big Beautiful Bill Act (“OBBBA”). See Annual Report at Form 10-K “Education Regulations – Congressional Action.”
Current wording
On July 24, 2025, ED announced it intended to establish two negotiated rulemaking committees: one that would consider changes to the federal student loan programs and one that would consider programmatic accountability metrics, changes to the Pell Grant Program and other matters. The rulemaking is intended to implement recent changes to the Title IV HEA programs included in the One Big Beautiful Bill Act (“OBBBA”). See Annual Report at Form 10-K “Education Regulations – Congressional Action.”
Previous wording
The first of the two negotiated rulemaking committees (the RISE Committee) convened for one session in October and one session in November. On November 6, 2025, the RISE Committee reached consensus on proposed regulations related to topics including, for example, new federal student loan borrowing limits for certain borrowers and educational programs (including reduced limits on PLUS loans taken out by parent borrowers for undergraduate students) and reductions in federal student loan limits for students who are enrolled as less than full-time students. The agreed upon language will be incorporated into a notice of proposed rulemaking, which is expected to be released in January 2026 and will undergo a period of public notice and comment before ED makes any amendments and publishes the final regulations. It is expected that the new regulations will go into effect on July 1, 2026 along with the relevant changes in the OBBBA which become effective on that date. We cannot predict the timing and content of the final regulations, but we are currently evaluating the potential impact of the proposed regulations on the Company and are continuing to monitor the ongoing rulemaking process.
Current wording
The first of the two negotiated rulemaking committees (the RISE Committee) convened for one session in September and October and one session in November. On November 6, 2025, the RISE Committee reached consensus on proposed regulations related to topics including, for example, new federal student loan borrowing limits for certain borrowers and educational programs. The OBBBA and proposed regulations include reduced limits on PLUS loans taken out by parent borrowers for undergraduate students to the amounts of $20,000 annually and $65,000 in the aggregate per dependent child. They also limit aggregate loans over a student borrower’s lifetime, excluding PLUS loans, to $257,500. This limitation does not apply to student borrowers during the expected time to complete their credential if the student is enrolled in a program as of June 30, 2026 and a Direct Loan was made for the program prior to July 1, 2026. Institutions will also be required to reduce federal student loan limits for students who are enrolled as less than full-time students or enrolled in a period of enrollment of less than one full academic year. See Annual Report at Form 10-K “Education Regulations – Congressional Action.” The agreed upon language was incorporated into a notice of proposed rulemaking published January 30, 2026 and will undergo a period of public notice and comment before ED makes any amendments and publishes the final regulations. It is expected that the new regulations will go into effect on July 1, 2026 along with the relevant changes in the OBBBA which become effective on that date. We cannot predict the content of the final regulations, but we are currently evaluating the potential impact of the proposed regulations on our institutions and enrollments and the extent to which alternative sources of funding such as third-party loans may be needed for some of our students.
Previous wording
We expect the new regulations that are expected to emerge from the RISE and AHEAD Committees will impact our institutions and operations, but we cannot predict the ultimate scope, content, and impact of the future ED regulations and guidance including any regulations further implementing the new OBBBA requirements. We are currently assessing, and will continue to assess, the potential impact of the new and proposed requirements on us and our institutions and to monitor the ongoing negotiated rulemaking process. We also cannot predict with certainty the ultimate combined impact of the regulatory changes which have occurred in recent years, nor can we predict the effect of future legislative or regulatory action by federal, state or other agencies regulating our educational programs or other aspects of our operations, how any resulting regulations will be interpreted or whether we and our institutions will be able to comply with these requirements in the future. Any such actions by legislative or regulatory bodies that affect our programs and operations could have a material adverse effect on our student population and our institutions, including the need to cease offering a number of programs.
Current wording
We also cannot predict with certainty the ultimate combined impact of the regulatory changes which have occurred in recent years, nor can we predict the effect of future legislative or regulatory action by federal, state or other agencies regulating our educational programs or other aspects of our operations, how any resulting regulations will be interpreted or whether we and our institutions will be able to comply with these requirements in the future. Any such actions by legislative or regulatory bodies that affect our programs and operations could have a material adverse effect on our student population and our institutions, including the need to cease offering a number of programs.
Previous wording
Financial Value Transparency and Gainful Employment Regulations
Current wording
Financial Value Transparency and Gainful Employment Regulations and Proposed Accountability Regulations
Previous wording
On May 19, 2023, ED published a notice of proposed rulemaking on financial value transparency and gainful employment, and on October 10, 2023, ED published final regulations which became effective on July 1, 2024. Multiple lawsuits were filed challenging these regulations, and these were consolidated into one case in the U.S. District Court for the Northern District of Texas. See Annual Report at Form 10-K “Education Regulations - Financial Value Transparency and Gainful Employment Regulations.” ED subsequently filed a motion for summary judgment, which was granted by the court on October 2, 2025, upholding the validity of the regulations. The regulations will apply to us unless they are challenged successfully in future litigation such as if the plaintiffs appeal the summary judgment ruling and the Fifth Circuit Court of Appeals decides in their favor. However, we cannot predict whether the plaintiffs will appeal, nor can we predict the outcome of such appeal.
Current wording
On May 19, 2023, ED published a notice of proposed rulemaking on financial value transparency and gainful employment, and on October 10, 2023, ED published final regulations which became effective on July 1, 2024. Multiple lawsuits were filed challenging these regulations and these were consolidated into one case in the U.S. District Court for the Northern District of Texas. See Annual Report at Form 10-K “Education Regulations – Financial Value Transparency and Gainful Employment Regulations.” ED subsequently filed a motion for summary judgment, which was granted by the court on October 2, 2025, upholding the validity of the regulations. On November 24, 2025, the plaintiffs appealed the summary judgment ruling. We cannot predict the outcome of the appeal at the Fifth Circuit Court of Appeals.
Previous wording
Tuition revenue is primarily derived from postsecondary education services provided to students. Generally, tuition and other fees are paid upfront and recorded in contract liabilities in advance of the date when education services are provided to the student. A tuition receivable is recorded for the portion of tuition not paid in advance. In some instances, instalment billing is available to students which reduces the amount of cash consideration received in advance of performing the service. The contractual terms and conditions associated with instalment billing indicate that the student is liable for the total contract price, therefore mitigating the Company’s exposure to losses associated with nonpayment. Tuition revenue is recognized ratably over the instruction period. The Company generally uses the time elapsed method, an input measure, as it best depicts the simultaneous consumption and delivery of tuition services. Revenue associated with distinct course materials is recognized at the point of time when control transfers to the student, generally when the materials are delivered to the student. Revenue associated with lab services is recognized over the period of time when the service is performed.
Current wording
Tuition revenue is primarily derived from postsecondary education services provided to students. Generally, tuition and other fees are paid upfront and recorded in contract liabilities in advance of the date when education services are provided to the student. A tuition receivable is recorded for the portion of tuition not paid in advance. In some instances, installment billing is available to students which reduces the amount of cash consideration received in advance of performing the service. The contractual terms and conditions associated with installment billing indicate that the student is liable for the total contract price, therefore mitigating the Company’s exposure to losses associated with nonpayment. Tuition revenue is recognized ratably over the instruction period. The Company generally uses the time elapsed method, an input measure, as it best depicts the simultaneous consumption and delivery of tuition services. Revenue associated with distinct course materials is recognized at the point of time when control transfers to the student, generally when the materials are delivered to the student. Revenue associated with lab services is recognized over the period of time when the service is performed.
Previous wording
We evaluate the recoverability of our long-lived assets for impairment, other than goodwill, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows. We had no long-lived asset impairments as of September 30, 2025 or June 30, 2025, respectively.
Current wording
We evaluate the recoverability of our long-lived assets for impairment, other than goodwill, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows. We had no long-lived asset impairments as of December 31, 2025 and June 30, 2025, respectively
Previous wording
Educational services. Our educational services expense was approximately $10.3 million for the three months ending September 30, 2025 compared to approximately $7.2 million for the three months ended September 30, 2024, an increase of approximately $3.1 million, or approximately 43.3%. The increase was primarily attributable to the increased instructional and staffing required to support the increase in enrollments as well as increased rent, externship fees and non-cash compensation charge.
Current wording
Educational services. Our educational services expense was approximately $10.3 million for the three months ended December 31, 2025 compared to approximately $7.5 million for the three months ended December 31, 2024, an increase of approximately $2.8 million, or approximately 37.6%. The increase was primarily attributable to the increased instructional and staffing required to support the increase in enrollments as well as increased rent, externship fees and non-cash compensation charge.
Previous wording
*General and administrative expense.*Our general and administrative expense was approximately $6.1 million for the three months ending September 30, 2025 compared to approximately $4.0 million for the three months ended September 30, 2024, an increase of approximately $2.1 million, or approximately 54%. The increase was primarily attributable to increases in marketing costs, professional fees, bad debt and insurance costs. Of the total general and administrative expense $1.6 million and $1.2 million relate to marketing expenses for fiscal 2026 and 2025, respectively.
Current wording
*General and administrative expense.*Our general and administrative expense was approximately $6.1 million for the three months ended December 31, 2025 compared to approximately $4.3 million for the three months ended December 31, 2024, an increase of approximately $1.8 million, or approximately 40.4%. The increase was primarily attributable to an increase in marketing expense, professional fees and bad debt expense. Of the total general and administrative expense, $1.5 million and $1.2 million relate to marketing expense for the three months ended December 31, 2025 and 2024, respectively.
Previous wording
Depreciation and amortization. Our depreciation and amortization expense was approximately $0.12 for the three months ended September 30, 2025 compared to approximately $0.08 million for the three months ended September 30, 2024.
Current wording
Depreciation and amortization. Our depreciation and amortization expense was approximately $0.2 million for the three months ended December 31, 2025 compared to approximately $0.1 million for the three months ended December 31, 2024.
Previous wording
Income tax expense. Our income tax expense was approximately $0.8 million for the three months ended September 30, 2025 compared to approximately $0.8 million for the three months ended September 30, 2024.
Current wording
Income tax expense. Our income tax expense was approximately $0.8 million for the three months ended December 31, 2025 compared to approximately $0.5 million for the three months ended December 31, 2024.
Previous wording
*Net Income.*Our net income was approximately $2.2 million for the three months ended September 30, 2025 compared to approximately $2.1 million for the three months ended September 30, 2024, an increase of approximately $0.1 million, or approximately 0.05%, due to the reasons mentioned above.
Current wording
*Net Income.*Our net income was approximately $2.0 million for the three months ended December 31, 2025 compared to approximately $1.4 million for the three months ended December 31, 2024, an increase of approximately $0.6 million, or approximately 46%, due to the reasons mentioned above.
Previous wording
Our cash and cash equivalents were approximately $20.6 million and $21.5 million as of September 30, 2025 and 2024, respectively.
Current wording
Our cash and cash equivalents were approximately $21.1 million and $20.3 million as of December 31, 2025, and June 30, 2025, respectively.
Previous wording
Capital expenditures were approximately $0.2 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively.
Current wording
Capital expenditures were approximately $0.8 million and $0.4 million for the six months ended December 31, 2025, and 2024, respectively.
Previous wording
Cash Flow Activities for the Three Months Ended September 30, 2025 and 2024
Current wording
Cash Flow Activities for the Six Months Ended December 31, 2025 and 2024
Previous wording
Net cash provided by operating activities was approximately $1.1 million and $3.2 million for the three months ended September 30, 2025, and 2024, respectively. The decrease of approximately $2.1 million is primarily attributable to increase to accounts receivable, prepaid expenses and other receivables, offset by an increase in income taxes payable and a reduction to deferred unearned tuition.
Current wording
Net cash provided by operating activities was approximately $2.1 million and $3.8 million for the six months ended December 31, 2025, and 2024, respectively. The decrease of approximately $1.7 million is primarily attributable to increase to accounts receivable, prepaid expenses and other receivables, offset by an increase in income taxes payable and a reduction to deferred unearned tuition.
Previous wording
Net cash used in investing activities remained constant and was approximately $0.2 million for the three months ended September 30, 2025, and approximately $0.2 million for the three months ended September 30, 2024 with cash used for purchases of property and equipment in each of the respective reporting periods.
Current wording
Net cash used in investing activities was approximately $0.8 million for the six months ended December 31, 2025, and approximately $6.6 million for the six months ended December 31, 2024 with cash used for purchases of property and equipment in each of the respective reporting periods. During the six months ended December 31, 2024, the Company spent approximately $6.1 million to the acquisition of CCMCC.
Previous wording
We believe that inflation has not had a material impact on our results of operations for the three months ended September 30, 2025, and 2024. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.
Current wording
We believe that inflation has not had a material impact on our results of operations for the three or six months ended December 31, 2025, and 2024. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.
Previous wording
In November 2023, the FASB issued ASU 2023-07,Segment Reporting—Improvements to Reportable Segment Disclosures(“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. There are aspects of ASU 2023-07 that apply to entities with one reportable segment. The Company adopted this guidance in the fiscal fourth quarter of 2025. The adoption of ASU 2023-07 is reflected in Note 2, “Summary of Significant Accounting Policies - Segment Reporting.”.
Current wording
In November 2023, the FASB issued ASU2023-07,Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. There are aspects of ASU 2023-07 that apply to entities with one reportable segment. The Company adopted this guidance in the fiscal fourth quarter of 2026. The adoption of ASU 2023-07 is reflected in Note 2, “Summary of Significant Accounting Policies – Segment Reporting.”
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
The consensus regulatory language will be incorporated into a notice of proposed rulemaking which is expected to be released in the coming months and will undergo a period of public notice and comment before ED makes any amendments and publishes the final regulations. It is expected that the new regulations will go into effect on July 1, 2026 along with the relevant changes in the OBBBA which become effective on that date. It is expected that the first accountability measure calculations will take place in 2027 and “failures” can be determined beginning in July 2027, although programs would not lose eligibility until July 1, 2028. These dates are subject to change. We cannot predict the content of the final regulations, but we are currently evaluating the potential impact of the proposed regulations on the Company and are continuing to monitor the ongoing rulemaking process. If one or more of our programs fail to comply with the new requirement, those programs could lose access to Title IV Direct Loans, and potentially Pell Grant eligibility, which could have a material adverse effect on our student population and our revenues. The new regulations could also require us to modify or eliminate programs to comply with the new regulations.
Current report — wording carried from elsewhere
We expect the new regulations that are expected to emerge from the RISE and AHEAD Committees will impact our institutions and operations, but we cannot predict the ultimate scope, content, and impact of the future ED regulations and guidance including any regulations further implementing the new OBBBA requirements. We are currently assessing, and will continue to assess, the potential impact of the new and proposed requirements on us and our institutions and to monitor the ongoing negotiated rulemaking process.
Current report — wording carried from elsewhere
The following table sets forth our consolidated statements of income data as a percentage of revenue for the six months ended December 31, 2025 and 2024:
Current report — wording carried from elsewhere
Educational services. Our educational services expense was approximately $20.6 million for the six months ended December 31, 2025 compared to approximately $14.7 million for the six months ended December 31, 2024, an increase of approximately $5.9 million, or approximately 40.4%. The increase was primarily attributable to the increased instructional and staffing required to support the increase in enrollments as well as increased rent, externship fees and non-cash compensation charge. As a percentage of revenue, educational expenses declined from 54.9% to 53.6% primarily due to operating efficiencies in employee compensation offset by increases in externship fees and non cash compensation.