8-K/A: Legacy Education Inc. Completes Acquisition of Contra Costa Medical Career College, Inc.

Legacy Education Inc. amends its previous filing to include historical financial statements and pro forma information related to the acquisition of Contra Costa Medical Career College, Inc.

Summary

• Legacy Education Inc. (LGCY) completed the acquisition of Contra Costa Medical Career College, Inc. (CCMCC) on December 18, 2024.
• The acquisition was made through Legacy Education Antioch, LLC, a wholly-owned subsidiary of Legacy Education Inc.
• The purchase price included $6.6 million in cash, a $400,000 promissory note, and 118,906 shares of LGCY common stock valued at $1 million held in escrow.
• A working capital adjustment resulted in a total purchase price of $7,533,080.
• The filing includes audited financial statements of CCMCC for the years ended December 31, 2023 and 2022, and unaudited financial statements for the nine months ended September 30, 2024 and 2023.
• Pro forma financial information is provided, combining Legacy Education Inc.'s financials with CCMCC's, as if the acquisition occurred on July 1, 2023.
• CCMCC's 90/10 revenue percentage for the year ended December 31, 2023, was 48.63%.
• CCMCC's composite score, as determined by the U.S. Department of Education, was 2.2 for the year ended December 31, 2023.

Sentiment

Score: 7

Explanation: The document provides detailed financial information about the acquisition, including both positive and negative aspects. The sentiment is neutral to slightly positive, reflecting the completion of the acquisition and the potential benefits of the combined entity.

Positives

• The acquisition provides Legacy Education Inc. with a postsecondary institution focused on health services.
• CCMCC has a history of generating revenue and net income.
• CCMCC maintains accreditation from ACCET and ABHES, and is approved to operate in California.
• CCMCC's composite score of 2.2 indicates financial responsibility as defined by the U.S. Department of Education.
• CCMCC's 90/10 revenue percentage of 48.63% indicates that it derives a significant portion of its revenue from non-federal sources.

Negatives

• CCMCC's financial statements for 2023 and 2022 were restated to correct misstatements in revenue recognition.
• The company had a significant deficiency in internal control related to accounting adjustments not identified by the company's internal control procedures.
• The company had an inaccurate calculation of the 90/10 revenue calculation.

Risks

• CCMCC's revenues are substantially dependent on Federal Student Aid (FSA) programs, which are subject to political and budgetary considerations.
• Regulatory violations could have a material effect on the company.
• The company is subject to audits, investigations, claims of noncompliance or lawsuits by government agencies, regulatory bodies, or third parties.
• The pro forma financial information is based on preliminary estimates and assumptions, which are subject to change.
• The company is party to occasional lawsuits, investigations and claims.

Future Outlook

The pro forma financial statements provide an estimate of the combined company's financial performance, but do not reflect potential synergies or cost savings.

Industry Context

The acquisition reflects a trend of consolidation in the for-profit education sector.

Comparison to Industry Standards

• It is difficult to compare CCMCC's results directly to industry standards without knowing the specific segment of health services training they operate in.
• For-profit colleges are often compared on metrics like enrollment, revenue per student, and graduation rates, but this data is not provided in this document.
• Financial responsibility is a key metric for institutions participating in Title IV programs, and CCMCC's composite score of 2.2 suggests they meet the minimum requirements.

Related Party Transactions

• CCMCC has related party transactions with its stockholder, including a note receivable and contributions to Contra Costa Community Outreach Clinic and Laboratory.
• CCMCC leases its teaching and administrative facilities from Evergreen Properties SBLD, LLC, a wholly-owned subsidiary.

Stakeholder Impact

• The acquisition may benefit shareholders of Legacy Education Inc. through increased revenue and earnings.
• Students of CCMCC may experience changes in curriculum, faculty, or administrative policies.
• Employees of CCMCC may experience changes in employment terms or job security.

Next Steps

• Legacy Education Inc. will finalize the acquisition accounting within one year of the acquisition date.
• The company will integrate CCMCC's operations into its existing business.
• The company will monitor CCMCC's compliance with regulatory requirements and financial responsibility standards.

Key Dates

Keywords

acquisition, Legacy Education Inc., Contra Costa Medical Career College, financial statements, pro forma, education, CCMCC, LGCY, assets, revenue