Legacy Education Inc.
For the period ended Mar 31, 2026. Filed May 14, 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.
Mar 31, 2026 · Filed May 14, 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 2025-12-31; filed 2026-02-12.
0001493152-26-006392
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-14.
0001493152-26-023050
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 110 previous paragraphs and 119 current paragraphs.
75 unchanged; 27 reworded; 17 added; 8 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 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 (17)
Current report
Borrower Defense to Repayment
Current report
ED’s “borrower defense to repayment” (“BDR”) regulations generally allow federal student loan borrowers to assert a defense to repaying their federal loans based on the conduct of the institution they attended. The amount of loans discharged by ED pursuant to an adjudicated BDR claim may be assessed by ED as a Title IV Program liability against the institution. See Annual Report at Form 10-K “Education Regulations – Borrower Defense to Repayment Regulations.”
Current report
On June 22, 2022, ED reached a settlement with plaintiffs in the case titledSweet v. Cardona, which was filed by student loan borrowers to challenge ED’s adjudication of BDR claims. The settlement resulted in automatic relief of claims pending as of June 22, 2022 that were filed against institutions on a list of about 150 institutions named in the settlement agreement, which did not include any of our institutions. In addition, under the settlement, any borrower who filed a defense to repayment claim between June 22, 2022 and November 15, 2022 are “Post-Class Applicants” whose applications will be adjudicated under the 2016 version of the BDR regulations and should have been decided by January 2026, although ED has filed an appeal of a court ruling denying an extension of this adjudication deadline. HDMC received and timely responded to seven BDR applications from Post-Class Applicants.
Current report
In March 2026, CCC received five BDR applications from ED. CCC timely responded to these BDR applications in May 2026 disputing the validity of the claims. HDMC, Integrity and CCMCC have not received any BDR applications in 2026. ED published guidance on March 30, 2026 explaining that it had resumed adjudicating BDR applications that are not impacted by theSweet v. Cardona settlement. The guidance explains that ED will adjudicate the BDR applications under the currently effective regulations, and that ED will notify institutions of the applications received. It is possible that we could receive additional BDR claims in the future, including because the March 30, 2026 guidance indicates ED had not yet notified institutions of BDR claims that would be adjudicated under the 2019 version of the BDR regulations. If we or our representatives are found to have engaged in certain acts or omissions under the definitions contained in the BDR regulations, or other BDR regulations that could be in place in the future, we could be subject to substantial repayment obligations and subject to other sanctions.
Current report
The versions of the BDR regulations that are currently in effect and that could be in effect in the future, could have a material adverse effect on our business, financial condition, results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate, including a requirement that our institutions to submit a letter of credit based on expanded standards of financial responsibility. See “Education Regulations - Financial Responsibility Standards.”
Current report
In recent years, ED has been more active in processing BDR applications and it may, on its own or in response to other constituencies, allocate additional resources to reviewing and adjudicating BDR applications from federal student loan borrowers. We cannot predict how many BDR applications in total have been filed by our former students, but if we receive additional claims from ED, we may incur significant costs in responding to the borrower allegations and, if adjudicated as valid by ED, defending our institutions in a recoupment action brought by ED or repaying the federal government for the amount of loans discharged pursuant to such claims.
Current report
Return of Title IV Program Funds
Current report
An institution participating in the Title IV Programs must calculate the amount of unearned Title IV Program funds that have been disbursed to students who withdraw from their educational programs before completing them, and must return those unearned funds to ED in a timely manner, which is generally within 45 days from the date the institution determines that the student has withdrawn. The failure to timely return funds can result in liabilities or sanctions. See Annual Report at Form 10-K “Education Regulations – Return of Title IV Program Funds.”
Current report
If an institution is cited in an audit or program review for late returns of Title IV Program funds for 5% or more of the pertinent students within the audit or program review sample, or if an audit identifies a material weakness in the institution’s report on internal controls relating to the return of unearned Title IV Program funds, the institution may be required to submit an acceptable form of financial protection with ED in an amount equal to 25% of the total amount of Title IV Program funds that should have been returned for students who withdrew in the institution’s prior fiscal year. Neither HDMC nor CCC has received such a finding in either of the two most recently completed annual Title IV Program compliance audits submitted to ED. On January 30, 2024, due to a failure to timely return unearned Title IV Program funds to ED, Integrity was required to submit an acceptable form of financial protection for 25% of the refunds that were made for the fiscal year ended June 30, 2023 in the amount of $18,828. On or about February 13, 2025, due to a failure to timely return unearned Title IV Program funds to ED in the 2023 fiscal year (prior to the Company acquiring CCMCC), CCMCC was required to submit an acceptable form of financial protection in the amount of $15,356. Integrity and CCMCC have submitted the required financial protection to ED.
Current report
In January through March 2024, ED conducted negotiated rulemaking to prepare proposed regulations on several topics including the rules pertaining to returns of Title IV Program funds. On July 24, 2024, ED promulgated proposed amended regulations related to return of Title IV calculations. ED published the final regulations on January 3, 2025, with a general effective date of July 1, 2026. The regulations codify ED’s guidance requiring the date of determination of withdrawal to be documented within 14 days after the student’s last date of attendance for institutions that take attendance; remove the option for clock-hour programs to use the “cumulative” method to calculate Title IV earned; and changes Return of Title IV calculations for programs offered in modules. We are continuing to evaluate whether and the extent to which the new regulations may negatively impact our performance of Return of Title IV.
Current report
Revenue. Tuition and related revenue for the three months ended March 31, 2026, increased by approximately $2.8 million, or 15%, to $21.4 million, compared to $18.6 million for the same period in 2025 driven by new student starts of 1,078 resulting in a 9.4% increase in student enrollment to 3,550.
Current report
Educational services. Educational services expense for the three months ended March 31, 2026 increased by approximately $0.9 million, or 9%, to $11.0 million, compared to $10.1 million in the prior year period. The increase was primarily driven by increased instructional and staffing costs associated with increased student enrollment, including externship fees and non cash compensation charge. As a percentage of revenue, educational expenses declined from 54.4% to 51.7% primarily due to operating efficiencies in employee compensation and facility costs offset by increases in externship fees and non cash compensation.
Current report
Nine Months Ended March 31, 2026 Compared to Nine Months Ended March 31, 2025
Current report
*General and administrative expense.*Our general and administrative expense was approximately $18.4 million for the nine months ended March 31, 2026 compared to approximately $12.9 million for the nine months ended March 31, 2025, an increase of approximately $5.4 million, or approximately 42.1%. The increase was primarily attributable to increased marketing expense, bad debt expense and professional fees. Of the total general and administrative expense, approximately $4.8 million and $3.5 million related to advertising expense for the nine months ended March 31, 2026 and 2025, respectively.
Current report
Accounts receivable increased to approximately $19.2 million as of March 31, 2026 from approximately $15.1 million as of June 30, 2025, primarily due to increased enrollment and tuition billings. The allowance for doubtful accounts increased to approximately $2.7 million from approximately $1.6 million, reflecting increased receivable balances and updated estimates of collectability based on historical experience and current economic conditions.
Current report
Net cash used in investing activities was approximately $1.0 million for the nine months ended March 31, 2026, compared to approximately $6.9 million for the nine months ending March 31, 2025. Cash used in investing activities during both periods primarily related to purchases of property and equipment, while the prior year period also included cash paid in connection with the acquisition of Contra Costa Medical Career College.
Current report
Net cash used in financing activities was approximately $0.5 million for the nine months ended March 31, 2026, compared to net cash provided by financing activities of approximately $9.1 million for the nine months ended March 31, 2025. The prior year increase was primarily attributable to net proceeds received from the Company’s initial public offering completed during the prior fiscal year.
Removed paragraphs (8)
Previous report
Administrative Capability
Previous 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.
Previous report
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 report
Six Months Ended December 31, 2025 Compared to Six Months Ended December 31, 2024
Previous 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.
Previous 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.
Previous report
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 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.
Reworded paragraphs (27)
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 December 31, 2025, HDMC had 2,033 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, Associate of Applied Science, pharmacy technician, dental assisting, clinical medical assisting, medical administrative assisting programs, medical billing and coding, veterinary assistant, phlebotomy technician avocational, UT Associate of Applied Science degree programs, EMT, surgical technology and sterile processing technician programs. As of March 31, 2026, HDMC had 2,244 students enrolled in its 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 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.
Current wording
CCC offers the following certificate or degree programs: 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, Associate of Applied Science, dental assisting, sterile processing technician, pharmacy technician, and MRI Associate of Applied Science. CCC also offers an avocational phlebotomy technician program. CCC also has obtained approval from ACCET, BPPE and ED to offer a Cardiac Sonography Associate of Applied Science. As of March 31, 2026, CCC had 600 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 December 31, 2025, Integrity had 214 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, 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 and BPPE to offer a sterile processing technician program and will offer this program pending additional approval. For purposes of our financial statements, Legacy Education, L.L.C. is deemed to have acquired Integrity in December 2019. As of March 31, 2026, Integrity had 209 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, phlebotomy (avocational) programs. As of December 31, 2025, Contra Costa had 431 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 March 31, 2026, Contra Costa had 497 students enrolled in its programs.
Previous 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.
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, and the agreed upon language was incorporated into a notice of proposed rulemaking published January 30, 2026. After a period of public notice and comment, ED published the final rule in the Federal Register on May 1, 2026. The final rule includes 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 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 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 are currently evaluating the potential impact of the final rule on our institutions, but the implementation of the final rule could impact our 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
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 wording
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. The agreed upon language was incorporated into a notice of proposed rulemaking published March 9, 2026 and ED solicited comments on the proposed rule with such comments due by April 8, 2026. ED will consider these comments before it 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 are evaluating potential opportunities under the proposed regulations.
Previous wording
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 wording
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 consensus language, 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 consensus language also, among other things, describes 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 dis…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
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 wording
The consensus language was incorporated into a notice of proposed rulemaking published April 20, 2026 and will undergo a period of public notice and comment (with such comments due by May 20) 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.
Previous wording
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 wording
A negotiated rulemaking committee met in April and will meet again in 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. The topics under consideration could change, but include institutions switching from one accreditor to another, the recognition criteria for accrediting agencies, and accrediting agencies’ standards and requirements regarding acceptance of transfer credit, institutional outcomes, academic freedom, and violations of federal and state law. 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.
Previous wording
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 wording
ED has published new proposed regulations 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.”
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*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.
Current wording
*General and administrative expense.*Our general and administrative expense was approximately $6.2 million for the three months ended March 31, 2026 compared to approximately $4.6 million for the three months ended March 31, 2025, an increase of approximately $1.5 million, or approximately 33.5%. The increase was primarily attributable to an increase in marketing expense, bad debt and professional fees. Of the total general and administrative expense, approximately $1.5 million and $1.2 million related to advertising expense for the three months ended March 31, 2026 and 2025, respectively.
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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.
Current wording
Depreciation and amortization. Our depreciation and amortization expense was approximately $0.2 million for the three months ended March 31, 2026 compared to approximately $0.1 million for the three months ended March 31, 2025. The increase was primarily attributable to capital expenditures associated with campus expansion and equipment purchases to support program growth.
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Interest expense. Our interest expense was approximately $0.0 million for the three months ended December 31, 2025 compared to approximately $0.0 million for the three months ended December 31, 2024.
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Interest expense. Interest expense. Our interest expense was approximately $0.0 for the three months ended March 31, 2026 compared to approximately $0.0 for the three months ended March 31, 2025. The decrease was primarily attributable to repayments of outstanding debt balances.
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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.
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Income tax expense. Our income tax expense was approximately $1.2 million for the three months ended March 31, 2026 compared to approximately $1.1 million for the three months ended March 31, 2025.
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*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.
Current wording
*Net Income.*Our net income was approximately $3.0 million for the three months ended March 31, 2026 compared to approximately $2.8 million for the three months ended March 31, 2025, an increase of approximately $0.2 million, or approximately 7.5%, due to the reasons mentioned above.
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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:
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The following table sets forth our consolidated statements of income data as a percentage of revenue for the nine months ended March 31, 2026 and 2025:
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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.
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*Revenue.*Tuition and related revenue for the nine months ended March 31, 2026 increased by approximately $13.7 million, or 29.7%, to $60.0 million, compared to $46.2 million for the same period in 2025 driven by a 12.7% increase in new student starts to 2,788 from 2,473 last year resulting in a 9.4% increase in student enrollment.
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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.
Current wording
Educational services. Educational services expense for the nine months ended March 31, 2026, increased by approximately $6.9 million, or 28%, to $31.7 million compared to $24.8 million for the same period in 2025. The increase was primarily driven by increased instructional and staffing costs required to support increased student enrollment, as well as rent, externship fee and non cash compensation charge. As a percentage of revenue, educational expenses declined from 53.6% to 52.8% primarily due to operating efficiencies in employee compensation and facility costs offset by increases in externship fees and non cash compensation.
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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 wording
Depreciation and amortization. Our depreciation and amortization expense was approximately $0.5 million for the three months ended March 31, 2026 compared to approximately $0.3 million for the three months ended March 31, 2025. The increase was primarily attributable to capital expenditures associated with campus expansion and equipment purchases to support program growth.
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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.
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Interest expense. Our interest expense was approximately $0.1 for the nine months ended March 31, 2026 compared to approximately $0.1 for the nine months ended March 31, 2025. The decrease was primarily attributable to repayments of outstanding debt balances.
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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 wording
Income tax expense. Our income tax expense was approximately $2.8 million for the nine months ended March 31, 2026 compared to approximately $2.5 million for the nine months ended March 31, 2025, an increase of approximately $0.4 million, or approximately 15.0%. The increase is primarily attributable to an increase in overall revenue period over period.
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*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 wording
*Net Income.*Our net income was approximately $7.3 million for the nine months ended March 31, 2026 compared to approximately $6.3 million for the nine months ended March 31, 2025, an increase of approximately $1.0 million, or approximately 15.1%, due to the reasons mentioned above.
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Our cash and cash equivalents were approximately $21.1 million and $20.3 million as of December 31, 2025, and June 30, 2025, respectively.
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Our cash and cash equivalents were approximately $21.7 million and $20.3 million as of March 31, 2026, and June 30, 2025, respectively.
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Capital expenditures were approximately $0.8 million and $0.4 million for the six months ended December 31, 2025, and 2024, respectively.
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Capital expenditures were approximately $1.0 million and $0.8 million for the nine months ended March 31, 2026, and 2025, respectively.
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Cash Flow Activities for the Six Months Ended December 31, 2025 and 2024
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Cash Flow Activities for the Nine Months Ended March 31, 2026 and 2025
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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.
Current wording
Net cash provided by operating activities was approximately $2.9 million and $4.8 million for the nine months ended March 31, 2026, and 2025, respectively. The decrease of approximately $1.9 million was primarily attributable to increases in accounts receivable, prepaid expenses and other receivables, partially offset by increases in deferred unearned tuition and income taxes payable.
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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.
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We believe that inflation has not had a material impact on our results of operations for the three or nine months ended March 31, 2026, and 2025. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.