Legacy Education (AMEX: LGCY) shares fell 9.77% to $9.60 in after-hours trading on Thursday after the company reported fourth-quarter earnings per share of $0.13, missing the analyst consensus estimate of $0.15 by 13.33%. The stock had closed the regular session up 3.20% at $10.64.

Despite the quarterly shortfall, Legacy Education reported a record fiscal year 2026 with total revenue increasing 24.8% to $80.1 million from $64.2 million in fiscal 2025. Quarterly sales reached $20.102 million, reflecting an 11.99% year-on-year increase from $17.950 million, though this also missed the consensus revenue estimate of $20.180 million by 0.39%.

Full-Year Performance and Growth Drivers

Legacy Education attributed its full-year growth to strong organic performance and the integration of Contra Costa Medical Career College. Of the $15.9 million increase in annual revenue, $9.9 million came from preexisting brands, which grew 16.5% year over year. Approximately 62% of the year-over-year revenue increase was driven by the preexisting platform.

The company ended fiscal 2026 with 3,377 students, an 8.9% increase from fiscal 2025. New student starts increased 9% to 3,483. Adjusted EBITDA for the full year increased 24.1% to $13.6 million, with an adjusted EBITDA margin of 17%. Net income for the full year increased 21.3% to $9.1 million, while diluted earnings per share rose 11.9% to 66 cents.

Fourth-Quarter Operating Leverage

In the fourth quarter, adjusted EBITDA increased 30.6% to $3.1 million, up from $2.4 million in the prior year. This resulted in an adjusted EBITDA margin expansion of 220 bps to 15.5%. Net income for the quarter rose 53.3% to $1.9 million, while operating income increased 31.3% to $2.6 million.

Educational services expense accounted for 56% of revenue in Q4, up from 52.6% in the prior quarter, reflecting investments in instructional payroll, books, supplies, and facilities. General and administrative expense stood at 29.4% of revenue. Total costs and expenses increased 9.6%, trailing the 12% revenue growth, which supported the quarter's operating leverage.

Balance Sheet and Strategic Outlook

As of June 30, 2026, Legacy Education held $22.7 million in cash and cash equivalents, compared to $20.3 million one year earlier. Working capital stood at $33.4 million, and stockholders' equity was $52.8 million. The company reported minimal debt and no revolving line of credit.

Management outlined three growth pillars for fiscal 2027:

• Expanding existing programs, including Surgical Technology and Sterile Processing Technician courses.
• Adding capacity and geography, with a planned branch campus in Houston, Texas, expected to open in November 2026. The company has signed a lease for this first campus outside California.
• Pursuing strategic acquisitions to expand geographic reach and program portfolios.

Contra Costa Medical Career College received approval for two new degree programs and one certificate program, with launches planned for the second quarter of fiscal 2027. CEO LeeAnn Rohmann noted that student starts dipped 4% year over year in Q4 due to program transition timing but expressed confidence in recovery as new programs mature. CFO Brandon Pope indicated that margins are expected to continue increasing in fiscal 2027, particularly in the second half of the year.

What the Numbers Show

The divergence between strong top-line growth and the bottom-line miss highlights a potential margin compression or higher operating costs relative to prior periods. While revenue expanded nearly 12%, the EPS miss of 13.33% against expectations suggests that profitability did not scale proportionally with sales growth during the quarter. However, the significant jump in adjusted EBITDA (30.6%) versus revenue (12%) indicates improving underlying operational efficiency, even as GAAP EPS lagged behind consensus estimates.

The market reaction underscores investor sensitivity to the quarterly EPS shortfall despite robust annual metrics. Shares have fallen 13.64% over the past 12 months, trading within a 52-week range of $7.94 to $14.70.