Lincoln Educational Services (NASDAQ:LINC) raised its 2026 revenue forecast after third-quarter student starts and revenue grew at double-digit rates, though the career education provider left its earnings guidance unchanged amid higher costs and investments in student retention.
Revenue rose 12.6% to $159.2 million in the quarter ended September 30, driven primarily by a 10.9% increase in average student population. Net income increased 24% to $4.7 million, or $0.15 per diluted share, from $3.8 million a year earlier.
Adjusted earnings before interest, taxes, depreciation and amortization rose 30.8% to $17.4 million, and the adjusted EBITDA margin expanded by 1.5 percentage points to approximately 11%. The company said its 2026 adjusted EBITDA calculation no longer adds back pre-opening and first-year operating losses at new campuses. Those losses totaled $2 million in the quarter, compared with $2.7 million a year earlier.
Student Starts Rebound as Marketing Costs Rise
Student starts increased 14.2% in the third quarter, while the ending student population grew by approximately 2,100, or 11%, from a year earlier. Organic starts rose nearly 5%; Lincoln’s definition includes campuses and programs that have been in place for more than a year. New programs and the company’s Houston campus contributed the remaining growth.
For the starts comparison, Lincoln adjusted the prior-year third-quarter figure to exclude classes that began July 1, 2025, after an academic calendar shift moved a start date that typically fell in late June.
President and CEO Scott Shaw said improved conversion of prospective students into enrollments and starts, along with changes to financial aid processing, helped the company recover from challenges in the second quarter. He said the rate at which enrolled students started classes improved by a couple of hundred basis points in the third quarter.
Lincoln continues to face higher costs for generating prospective student leads. Shaw said cost per lead remained up around 20% from a year earlier, a level the company is forecasting going forward. Improved conversion kept the overall cost per start relatively flat in the third quarter, but Chief Financial Officer Brian Meyers said Lincoln expects that measure to rise above prior-year levels in the near term.
Shaw said changes in search behavior and the use of artificial intelligence models continue to create marketing challenges, even as Lincoln invests in other channels, including social media and student referrals. High school students account for a little more than 20% of starts, he said, while the military channel represents about 6%.
Revenue Outlook Rises, Earnings Forecast Holds
Lincoln now expects full-year revenue of $600 million to $605 million, up from its prior range of $590 million to $600 million. It narrowed its forecast for student start growth to 10% to 12% from 10% to 14%.
The company maintained its forecasts for adjusted EBITDA of $76 million to $80 million, net income of $23 million to $26 million and diluted earnings per share of $0.74 to $0.83. It also reiterated capital expenditure guidance of $95 million to $100 million. The adjusted EBITDA outlook includes approximately $10 million of new-campus losses.
Asked why the higher revenue forecast did not translate into a higher adjusted EBITDA forecast, Shaw cited increased costs across categories including marketing, laptops and medical expenses, as well as investments intended to improve student retention and graduation outcomes.
Shaw also reiterated Lincoln’s longer-term objectives of approximately $850 million in revenue and $150 million in EBITDA by 2030.
Campus Expansion and Share Repurchases
Lincoln completed development of its Hicksville, New York, campus during the quarter and expects its first class to start in November. It is also developing campuses in Rowlett, Texas, and Tempe, Arizona, as well as a smaller, focused-program campus in Suitland, Maryland.
Shaw said the Suitland facility is expected to cost approximately $10 million to develop, compared with about $25 million for a traditional build-out. Once fully ramped, it is expected to serve approximately 500 students and generate about $15 million in annual revenue and $5 million in EBITDA.
The company also completed expansions at its East Point, Georgia, and Melrose Park, Illinois, campuses. Lincoln purchased the previously leased Melrose Park property for $17.4 million, primarily financed with a $15 million mortgage loan.
Operating cash flow rose to $34.9 million in the third quarter, up $11 million from a year earlier. Lincoln ended the quarter with $20.6 million in cash and $115 million available under its revolving credit facility, with $10 million outstanding.
Lincoln repurchased approximately 871,000 shares for about $21 million during the quarter. Its board extended the repurchase program through May 2028 and increased the authorization by $30 million, leaving more than $37 million available. Meyers said future purchases will depend on market conditions, capital needs and other factors.
About Lincoln Educational Services (NASDAQ:LINC)
Lincoln Educational Services Corporation, doing business primarily under the Lincoln Tech name, provides career-oriented postsecondary education and training in the United States. The company prepares students for employment in fields such as automotive technology, skilled trades, healthcare, information technology, culinary arts and cosmetology.
Lincoln Tech offers diploma, certificate and degree programs through campus-based and online or hybrid learning formats, depending on the program.
