Legacy Education Inc.

The post-secondary education market in the United States is large, fragmented, and competitive. According to the National Center for Education Statistics, as of the 2022-23 school year, degree granting career colleges served approximately 1.7 million undergraduate students, which was approximately 8.0% of the estimated 21.5 million total undergraduates in degree programs ¹. Total enrollments in all higher education sectors increased 2.4% and 3.2% in the spring of 2024 and 2025, respectively, while enrollment at proprietary colleges increased 5.1% and 3.7% in the same periods ². The industry is heavily dependent on the continued availability of federal student financial assistance under Title IV of the Higher Education Act, and concerns about potential reductions in such funding could negatively affect demand for higher education. Demographic, economic, and social trends may support growth in demand for career-focused postsecondary education, including the fact that in 2024, approximately 64.0 million adults age 25 and older had a high school diploma or equivalent as their highest level of educational attainment, and approximately 32.2 million had some college experience but no college degree ³. Employment in the healthcare and social assistance industry is projected to grow 8.4% from 2024 to 2034, resulting in over 1.9 million new jobs ⁴.

The for-profit, post-secondary education industry is highly competitive and highly fragmented with no single participant controlling a significant market share. The company competes for students with traditional public and private two-year and four-year degree-granting accredited colleges and universities, other proprietary degree-granting accredited schools, and alternatives to higher education, including massive open online courses. Some local competitors include San Joaquin Valley College, Career Care Institute, UEI College, Bakersfield College, American Career College, and the Pima Medical Institute, which may have greater financial resources and greater brand recognition. Public institutions receive government subsidies and other financial sources not available to for-profit schools. Key factors affecting competitive position include the quality of programs, reputation, cost and perceived value, employment rates of graduates, and the quality of campus facilities and online platforms.

Legacy Education Inc. provides career-focused, post-secondary education services to students at all stages of adult life, from recent high school graduates to working parents, through its accredited academic institutions: High Desert Medical College, Central Coast College, Integrity College of Health, and Contra Costa Medical Career College. The company generates revenue primarily from tuition and lab fees, which are recognized over time as services are rendered, and from books, registration, and other fees, which are recognized at the point in time when the goods or services are provided. The company's students rely heavily on federal student financial assistance under Title IV Programs, and the company derives a substantial portion of its revenue and cash flows from these programs. The company enrolls students continuously throughout the year, with the largest classes enrolling in late summer or early fall following high school graduation.

High Desert Medical College (HDMC) was established in California in 2002 and began offering classes in 2003. It has campuses in Lancaster, Bakersfield, and Temecula, California, and offers programs including Ultrasound Technician, vocational nursing, Associate Degree of Nursing, Nursing Assistant, MRI, Cardiac Sonography, Pharmacy Technician, Dental Assisting, Clinical Medical Assisting, Medical Administrative Assisting, Medical Billing and Coding, Veterinary Assistant, Phlebotomy Technician, EMT, Surgical Technology, and Sterile Processing Technician. As of June 30, 2026, HDMC had 2,097 students enrolled in its programs ⁵. Central Coast College (CCC) was established in 1983 and is located in Salinas, California, offering certificate and degree programs such as Computer Specialist: Accounting, Medical Administrative Assistant, Medical Assisting, Nursing Assistant, UT, Veterinary Assistant, Veterinary Technology, VN, Surgical Technology, Dental Assisting, Sterile Processing Technician, Pharmacy Technician, MRI, and Cardiac Sonography. As of June 30, 2026, CCC had 576 students enrolled ⁶. Integrity College of Health, established in 2007 and located in Pasadena, California, offers VN, RN to BSN, Medical Assisting, Medical Billing and Coding, Veterinary Assistant, Sterile Processing Technician, and Diagnostic Medical Sonography programs. As of June 30, 2026, Integrity had 196 students enrolled ⁷. Contra Costa Medical Career College (CCMCC), established in 2007 and located in Antioch, California, offers certificate and degree programs including VN, Surgical Technology, Sterile Processing Technician, Pharmacy Technician, Diagnostic Medical Sonography, Medical Assisting with Phlebotomy, Dental Assisting, Clinical Medical Assisting, EKG/ECG Technician, Medical Administrative Assistant/Billing and Coding Specialist, and Phlebotomy. As of June 30, 2026, CCMCC had 508 students enrolled ⁸.

The company's growth strategies include planning for moderate growth in existing programs, approval of registered nursing programs in Bakersfield and Salinas, new programs in dental hygiene, continued launch of new program offerings including online offerings, launching new branch campuses in California and beyond including CCC's planned campus in Houston, Texas, and acquiring new institutions outside of California, including in Texas, Nevada, Colorado, and New Mexico, and programs in trades to increase national footprint. In December 2024, the company acquired the assets of Contra Costa Medical Career College ⁹. In September 2026, CCC entered into a lease for a new, additional location in Houston, Texas, which CCC currently projects to open in November 2026, subject to receipt of the required regulatory and accreditation approvals ¹⁰. The company also plans to offer an Emergency Medical Technician program at Integrity, for which it has filed an application with the California Bureau for Private Postsecondary Education and expects to begin offering in late 2026 ¹¹. CCMCC has obtained approval to offer programs in Cardiac Sonography, Veterinary Assistant, and MRI, and plans to begin offering them in the second quarter of fiscal 2027 ¹².

The company had 3,377 students enrolled as of June 30, 2026, an increase of 8.9% compared to 3,101 students as of June 30, 2025 ¹³. The average monthly program retention rate was 98.1% ¹⁴. As of June 30, 2026, the average placement rate was 72.7%, with individual rates of 73.2% for HDMC, 72.0% for CCC, 73.4% for CCMCC, and 67.5% for Integrity ¹⁵. Students achieved an 82.4% NCLEX Pass Rate and a 60.0% Veterinary Technician National Exam Pass Rate ¹⁶. The company's diverse student population was comprised of 60% Hispanic, 11% Black/African American, 14% White, 6% Asian, 5% Two or More Races, 1% Native Hawaiian or Other Pacific Islander, and 1% American Indian or Alaska Native, with 2% Race and Ethnicity unspecified ¹⁷. The age distribution shows 48% of students are 25 and older, while 52% are 24 or younger, with 86% being women and 13% being men and 1% Gender unspecified ¹⁸.

A major growth vector is geographic expansion, including CCC's planned new campus in Houston, Texas, which is projected to open in November 2026, subject to regulatory and accreditation approvals ¹⁹. The company also plans to launch new branch campuses in California and beyond, and to acquire new institutions outside of California, including in Texas, Nevada, Colorado, and New Mexico, and programs in trades to increase its national footprint. The geographic footprint of the company's colleges extends from Southern to Central California, home to approximately 24 million people, including an aging population who will depend on the skills students provide as healthcare workers ²⁰.

Another growth vector is the expansion of program offerings, including new programs in dental hygiene, registered nursing programs in Bakersfield and Salinas, and continued launch of new program offerings including online offerings. CCMCC has obtained approval to offer programs in Cardiac Sonography, Veterinary Assistant, and MRI, and plans to begin offering them in the second quarter of fiscal 2027 ²¹. Integrity plans to offer an Emergency Medical Technician program, for which it has filed an application and expects to begin offering in late 2026 ²². The company also plans to pursue initial programmatic accreditation with ABHES for the Surgical Technology Associate of Applied Science program at CCC and HDMC, with decisions expected in mid-February 2027 and August 2027, respectively ²³.

The company's margin and cost outlook is influenced by its ability to maintain compliance with extensive federal and state regulations, including the 90/10 Rule, gainful employment and earnings premium metrics, and limits on cohort default rates. The company is evaluating the potential impact of new regulations, including the One Big Beautiful Bill Act, which establishes limits on Title IV loans, including a limit of $20,000 annually and $65,000 in total for PLUS loans taken out by parent borrowers for undergraduate programs, and a lifetime loan limit of $257,500 for all borrowers ²⁴. The company is also assessing the impact of new accountability measures based on graduate earnings compared to earnings of working adults without degrees, which could affect program eligibility for Title IV Direct Loans.

The company's operational outlook includes plans to open new campuses and add new educational programs, which require approvals from ED and state and accrediting agencies. The company is subject to extensive regulation by federal, state, and accrediting agencies, and must maintain eligibility to participate in Title IV Programs. The company's institutions are authorized to operate by the California Bureau for Private Postsecondary Education, and CCC must obtain approval from the Texas Workforce Commission to operate its planned new campus in Houston, Texas. The company also plans to expand its relationship-based marketing efforts and personalize the prospective student experience.

The company's capital allocation strategy includes investing in innovation, student success, academic infrastructure, and new business models. The company does not intend to pay cash dividends. The company's growth strategy includes acquiring new institutions, which may require significant capital expenditures. The company has entered into equipment loans and promissory notes to finance equipment purchases, and has a line of credit with a related party. The company's cash and cash equivalents as of June 30, 2026 were $23.486 million ²⁵.

The company faces structural headwinds from the highly regulated nature of the post-secondary education industry, including potential reductions in Title IV funding, changes in regulations, and increased scrutiny from government agencies. The company's institutions are subject to recertification by ED, and HDMC and CCC have program participation agreements expiring on September 30, 2026, with applications for recertification pending ²⁶. CCMCC is operating under a temporary provisional program participation agreement, and Integrity is under a provisional program participation agreement. The company also faces risks from potential changes in accreditation standards and the recognition of accrediting agencies by ED.

The company faces execution risks related to opening new campuses and integrating acquired schools, including the need to obtain regulatory approvals and maintain compliance with accreditation standards. The company's planned expansion into Texas requires approvals from the Texas Workforce Commission and the Texas Higher Education Coordinating Board, and there is no assurance that these approvals will be received in a timely manner or at all. The company also faces risks from potential changes in the political and regulatory environment, including efforts to dissolve or reduce the role of the U.S. Department of Education.

The company's business is highly dependent on continued eligibility to participate in Title IV Programs, and a failure to maintain compliance with ED's financial responsibility or administrative capability requirements could result in loss of eligibility, which would have a material adverse effect on operations. The company's institutions are subject to the 90/10 Rule, which limits the percentage of revenues derived from federal educational assistance programs, and a failure to comply could result in loss of Title IV eligibility. The company faces risks from new regulations, including the earnings premium measure, which could cause programs to lose access to Title IV Direct Loans if they fail the measure in two out of three consecutive award years. The company also faces risks from potential changes in accreditation standards and the recognition of accrediting agencies by ED, which could impact the institutions' ability to participate in Title IV Programs. Additionally, the company's planned expansion into Texas is subject to regulatory approvals, and there is no assurance that these approvals will be obtained in a timely manner or at all.

Management's message emphasizes a focus on student and graduate success, which is believed to drive financial results. The company's strategic priorities include focusing on student and graduate success, improving retention rates while maintaining high standards of academic quality and rigor, maintaining and improving the ability to offer affordable degrees, expanding and optimizing relationship-based marketing efforts, and further strengthening and expanding the product offering and alignment with employer needs. Management also emphasizes operational priorities including curriculum and assessment, graduate success, relationship-based marketing, and innovation and diversification. The company is committed to delivering a superior academic, professionally aligned, real-world education to its students, and seeks to develop a deep understanding of the professions it serves and the competencies required of skilled professionals in these fields.