LINC 10-K & 10-Q changes, risk factors and insider trading

Investing in our Common Stock involves a high degree of risk. The risk factors described below and other information included elsewhere in this Annual Report on Form 10-K10-K, including our Consolidated Financial Statements and related notes, are among the numerous risks faced by our Company and should be carefully considered before deciding to invest in, sell or retain shares of our Common Stock. These are factors that, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results and the risks and uncertainties described below are not the only ones we face. Investors should understand that it is not possible to predict or identify all such risks and, as such, should not consider the following to be a complete discussion of all potential risks and uncertainties that may affect the Company. Investors should consider carefully theAdditional risks andthat uncertaintiesmay describednot belowbe inpresently additionknown to otherus informationor containedthat inwe thisdo Annualnot Reportcurrently ondeem Formmaterial 10-K,may includingalso come to materially harm our Consolidated Financial Statementsbusiness and relatedoperations. notes.See “Cautionary Notice Regarding Forward-Looking Statements.”

OurThe for-profit postsecondary education industry in which we operate is highly regulated by the federal government and the state governments in which institutions operate as well as by accrediting agencies and our failure to comply with the resulting extensive regulatorylegal requirements applicable to the our participation in Title IV Programs and our school operationsindustry could result in financial penalties, restrictions on our operations and loss of external financial aid funding,funding and/or eligibility to participate in Title IV Programs which could affect our revenues and impose significant operating restrictions upon us.

OurThe highly regulated industry isin highlywhich regulatedwe byoperate federalrequires andcompliance statewith governmentalextensive agencieslegal requirements andthat by accrediting commissions. The various regulatory agencies applicable to our businessare periodically revise their requirementsrevised and modify their interpretations of existingwhich requirementsare continuously andevolving. restrictions.As Wesuch, we cannot predict with certainty how any of these regulatory requirements will be applied or whether each of our schools will be able to comply with such revised requirementsthem in the future. Given the complex nature of the regulationsrequirements and the fact that they are subject to interpretation, it is reasonablepossible to conclude that in the conduct of our business, we may inadvertently violate such regulations.law. In particular, the HEA and DOE regulations specify extensive criteria and numerous standards requirements that an institution must satisfy toin establishorder to participate in the Title IV Programs. For a description of these federal, state,state and accrediting agency criteria, see Part I, Item 1. “Business - Regulatory Environment.”

If we are found to have not satisfied the HEA or the DOE's requirements for Title IV Programs funding, one or more of our institutions, including its additional locations, could be limited in its access to, or lose, Title IV Program funding, which could adversely affect our revenue, as we received approximately 82% of our revenue (calculated based on cash receipts) from Title IV Programs during the fiscal year ended December 31, 2024, and have a significant impact on our business and results of operations. If we or any of our schools fail to comply with applicable federal, state,state or accrediting agency requirements, our regulators could take a variety of adverse actions against us, and our schools could be subject to, among other things, (a) the loss of, or placement of material restrictions or conditions on (i) state licensure or accreditation, (ii) eligibility to participate in and receive funds under the Title IV Programs Program funding or other federal or state financial assistance programs, or (iii) capacity to grant degrees, diplomas and certificates or (b) the imposition of liabilities or monetary penalties, or a requirement to provide a letter of credit or other financial protection, any of which could have a material adverse effect on academic or operational initiatives, revenues or financial condition, and impose significant operating restrictions upon us. Any of these actions could have a significant impact on our business. If we are found not to have satisfied the HEA’s or the DOE’s requirements for Title IV Program funding, one or more of our institutions, including its additional locations, could be limited in its access to, or lose, Title IV Program funding, which could adversely affect our revenue. As we received approximately 85% of our revenue (calculated based on cash receipts) from Title IV Programs during the fiscal year ended December 31, 2025, loss of Title IV Program funding eligibility could adversely affect our revenue which would have a significant impact on our business and results of operations. See Part I, Item 1. “Business – Regulatory Environment – Compliance with Regulatory Standards and Effect of Regulatory Violations” and “Business – Regulatory Environment – Other Financial Assistance Programs.”

DOE regulations specify extensive criteria that an institution must satisfy to establish that it has the requisite “financial responsibility and administrative capability” to participate in Title IV Programs, and the DOE recently published new regulations that expand the number and scope of these criteria. For a description of these criteria, see Part I, Item 1. “Business - Regulatory Environment – Administrative Capability.”

IfOur we are found notinability to have satisfiedsatisfy the DOE’s “administrative capability” requirements, criteria or to have otherwise failedfail to comply with one or more DOE requirements, one or more of our institutions and its additional locations could be limited in its access to, or lose, Title IV Program funding. This could adversely affect our revenue, asAs we received approximately 82% 85% of our revenue (calculated based on cash receipts) from Title IV Programs during inthe 2024,fiscal year ended December 31, 2025. Loss of Title IV Program funding could adversely affect our revenue, which would have a significant impact impact on our business and results of operations. The DOE has placed all of our institutions in provisional certification status based on findings in recent audits of the institutions’ Title IV compliance that the DOE alleges identified deficiencies in regulations related to DOE regulations regarding an institutions’ level of administrative capability. See Part I, Item 1. “Business - Regulatory Environment – Regulation of Federal Student Financial Aid Programs.”

Congress, the President and the DOE may make changes to the DOE or the laws and regulations applicable to, or reduce funding for, Title IV Programs, or may reduce or disrupt the funding for Title IV Programs or cause a federal government shutdown, which could reduce our student population, revenues and/or profit margin.

The DOE’s Borrower Defense to Repayment regulations establish processes for borrowers to receive from the DOE a discharge of the obligation to repay certain Title IV Program loans based on certain acts or omissions by the institution or a covered party.party for which a loan was obtained. The regulations also establish processes for the DOE to seek recovery from the institution of the amount of discharged loans. The regulations regarding Borrower Defense to Repayment and regarding closed school loan discharges are extensive and generally make it easier for borrowers to obtain discharges of student loans and for the DOE to assess liabilities and other sanctions on institutions based on the loan discharges. The implementation and enforcement of these Borrower Defense to Repayment and closed school loan discharge regulations could have a material adverse effect on our business and results of operations. See Part I, Item 1. “Business - Regulatory Environment – Borrower Defense to Repayment Regulations” and “Business – Regulatory Environment – Closed School Loan Discharges.” As a result of class action litigation in the U.S. District Court for the Northern District of California (Sweet v. Cardona, No. 3:19-cv-3674 (N.D. Cal.)) which has been settled, the DOE estimated that approximately 196,000 student loan borrowers who attended one of the schools identified in the litigation (including our institutions) would receive automatic loan discharges and that approximately 250,000 additional student loan borrowers who submitted borrower defense applications after the litigation commenced (which may include our institutions) would receive decisions within 36 months or else receive automatic student loan discharges. It is not possible at this time to predict whether the settlement will continue to be upheld, what additional actions the DOE might take as the settlement continues to be upheld, or whether the DOE or other agencies might take actions against the Company's institutions. It is possible that all claims by our students might be forgiven either affirmatively by the DOE or automatically under the settlement agreement. Such actions could have a material adverse effect on our business and results of operations. We believe that the DOE already may have discharged some or all of the pending applications. See Part I, Item I. “Business – Regulatory Environment – Borrower Defense to Repayment Regulations.”

TheOur failure to comply with the DOE’s Gainfulgainful Employmentemployment and accountability regulations could haveresult ain significantadditional impactdisclosure on our businessrequirements and resultspossible loss of operations.Title IV Program eligibility.

On October 10, 2023, theThe DOE published final gainful employment and financial value transparency regulations, regulations which had a general effective date of July 1, 2024 and which establishestablished rules for annually evaluating each of our educational programs based on the calculation of debt-to-earnings rates (an annual debt-to-earnings rateratio that compares the median annual earnings and a median discretionary debt-to-earningsearnings rateof graduates who received federal financial aid to the median annual payment on loan debt borrowed for the program) and an earnings premium measuretest that compares the median annual earnings of graduates from a program that received federal financial aid to an “earnings threshold” based on a antypical evaluationhigh ofschool mediangraduate annual earningsin their state (or in some cases nationally) and within a certain age range in the labor force under complex regulatory formulas outlined in the regulations. See Part I, Item 1. “Business - Regulatory Environment – Gainful Employment.Employment and Accountability Metrics.” Earlier this year, proposed regulations were published intended to implement the accountability metric imposed by the OBBB Act, which conditions Direct Loan eligibility on whether program completers earn more than working adults with only a high school diploma or GED. The proposed regulations would amend the gainful employment and financial value transparency regulations. If one or more of our educational programs were to yield debt-to-earnings ratesratios or an earnings premium measure that do not comply with regulatory benchmarks for two of three consecutive years, we would lose Title IV Program eligibility for each of the impacted educational programs. The regulations will also require us to provide warnings to current and prospective students for programs in danger of losing of Title IV Program eligibility (which could deter prospective students from enrolling and current students from continuing their respective programs). and Theto regulationsprovide alsoto include provisionsthe for providingDOE certifications and reporting data and to theprovide DOEto students and providingcertain required student disclosures related to gainful employment.

The DOE hasperiodically changedamends its regulations, regulations and mayissues makenew other changes in the future,regulations in a manner which could require us to incur additional costs in connection with our administration of Title IV Programs, affect our ability to remain eligible to participate in Title IV Programs, impose restrictions on our participation in Title IV Programs, affect the rate at which students enroll in our programs, or otherwise have a significant impact on our business and results of operations.

The DOE periodically issues new regulations and guidance that can have an adverse effect on our institutions.guidance. We cannot predict the timing and content of any new regulations or guidance that the DOE may seek to impose or whether and to what extent the DOE may issue new regulations and guidance that could adversely impact for-profit postsecondary schools including our institutions. The DOE recently published new regulations on a variety of topicstopics. withIt aalso generalrecently effective date of July 1, 2024 and other regulations with a general effective date of July 1, 2026 and could engageengaged in additionaltwo negotiated rulemaking processes that resulted in a consensus among the futurerulemaking committees thaton couldproposed result in new regulations that could adversely impact institutions including our institutions.regulations. See Part I, Item 1. “Business – Regulatory Environment – Negotiated Rulemaking.”

We cannot predict how the DOE would will interpret and enforce current or future regulations or how these regulations, or any regulations that, may arise out of a negotiated rulemaking process or any other regulations that DOE may promulgate, may impact our schools’ participation in Title IV Programs; however, failure to comply with current or future regulations could have a material adverse effect on our schools’ business and results of operations, and the broad sweep of the recent rules and the rules that the DOE is currently developing may, in the future, require our schools to submit a letter of credit based on expanded standards of financial responsibility.

ProgrammaticProgram accreditation is the process through which specific programs are reviewed and approved by industry- and program-specific accrediting entities. Although programmaticprogram accreditation is not generally necessary for Title IV Program eligibility, such accreditation may be required to allow students to sit for certain licensure exams or to work in a particular profession or career or to meet other requirements. Failure to obtain or maintain such programmaticprogram accreditation may lead to a decline in enrollments in such programs.

OurUnder the DOE’s 90/10 Rule, our institutions would lose their eligibility to participate in Title IV Programs if the percentage of their revenues derived from those programs exceeds 90%, which could reduce our student population and revenues.

In March 2021, the ARPA amended the 90/10 Rule by treating other “federal funds that are disbursed or delivered to or on behalf of a student to be used to attend such institution” in the same way as Title IV funds are currently treated in the 90/10 Rule calculation. See Part I, Item 1. “Business – Regulatory Environment – 90/10 Rule.” The ARPA states that the amendments to the 90/10 Rule apply to institutional fiscal years beginning on or after January 1, 2023 and are subject to the HEA’s negotiated rulemaking process. The DOE published new final 90/10 Rule regulations on October 28, 2022 with a general effective date of July 1, 2023. The 90/10 Rule regulations could have a materiallymaterial adverse effect on us and other schools like ours. See Part I, Item 1. “Business – Regulatory Environment – 90/10 Rule” and “Business – Regulatory Environment – Negotiated Rulemaking.”. We cannot be certain that the changes we make to our operations in the future to address the new 90/10 Rule regulations will succeed in maintaining our institutions’ 90/10 Rule percentages below required levels or that the changes will not materially impact our business operations, revenues, and operating costs. It also is possible that Congress or the DOE could amend the 90/10 Rule in the future to lower the 90% threshold, change the calculation methodology, or make other changes to the 90/10 Rule that could make it more difficult for our institutions to comply with the 90/10 Rule. If any of our institutions loses eligibility to participate in Title IV Programs, that loss would also adversely affect our students’ access to various government-sponsored student financial aid programs, and would have a significant impact on the rate at which our students enroll in our programs and on our business and results of operations.

Our institutions would lose their eligibility to participate in Title IV Programs if their former students defaulteddefault on repayment of their federal student loans in excess of specified levels, which could reduce our student population and revenues.

An institution may lose its eligibility to participate in some or all Title IV Programs if the rates at which the institution's current and former students default on their federal student loans exceed specified percentages. We expect borrower defaults to increase substantially during periods after the expiration of a temporary suspension of repayment obligations and interest accruals on federal student loans during the COVID-19 pandemic, which we expect will result in higher cohort default rates in the future particularly if borrowers do not successfully resume timely repayment of their federal student loans. We cannot predict how high our cohort default rates will increase in the future as a result of the expiration of the temporary suspension or whether our efforts to assist students and prevent student defaults will be successful. See Part I, Item 1. “Business - Regulatory Environment – Student Loan Defaults.” If former students defaulteddefault on repayment of their federal student loans in excess of specified levels, our institutions would lose eligibility to participate in Title IV Programs, Programs. This would also adversely affect our students’ access to various government-sponsored student financial aid programs,programs andwhich would have a significant impact on the rate at which our students enroll in our programs and on our business and results of operations.

Adverse publicity arising from scrutiny of us or other for-profit postsecondarypost-secondary schools may negatively affect us or our schools.

In recent years, Congress, the DOE, state legislatures, accrediting agencies, the CFPB, the FTC, state agencies and attorneys general and the media have scrutinized the for-profit postsecondarypost-secondary education sector. See Part I, Item 1. “Business – Regulatory Environment – Consumer Protection Laws and Scrutiny of the For-Profit PostsecondaryPost-Secondary Education Sector.” Adverse publicity regarding any past, pending, or future investigations, claims, settlements, and/or actions against us or other for-profit postsecondarypost-secondary schools could negatively affect our reputation, student enrollment levels, revenue, profit, and/or the market price of our Common Stock. Unresolved investigations, claims, and actions, or adverse resolutions or settlements thereof, could also result in additional inquiries, administrative actions or lawsuits, increased scrutiny, the loss or withholding of accreditation, state licensure, or eligibility to participate in the Title IV Programs or other financial assistance programs, and/or the imposition of other sanctions by federal, state, or accrediting agencies which, individually or in the aggregate, 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.

Our strategic plans for future expansion are based, in part, on our ability to open new schools as additional locations of our existing institutions, to add new educational programs at our existing schools, and take into account the applicable approval requirements of the DOE and our other regulatory agencies for adding new locations and educational programs. See Part I, Item 1. “Business - Regulatory Environment - Opening Additional Schools and Adding Educational Programs”. Our institutions are provisionally certified and required to obtain prior DOE approval of new locations and of new educational programs. If an institution erroneously determines that thata new location or an educational program is eligible for purposes of Title IV Programs, the institution would likely be liable for repayment of Title IV Program funds provided to students in that educational program. The failure to obtain applicable approvals from the DOE and other applicable regulators without delay or material condition in connection with the addition of a new location or educational program could have a significant impact on our business and results of operations.

Public health pandemics, epidemics or outbreaks, such as the COVID-19 pandemic, and the resulting containment measures to be taken in response to such events have caused and may in the future cause economic and financial disruptions globally. The extent to which any rapidly spreading contagious illness may impact our business and operations will depend on a variety of factors beyond our control, including the actions of governments, businesses and other enterprises in response thereto, the effectiveness of those actions, and vaccine availability, distribution and adoption, all of which cannot be predicted with any level of certainty. We believe that the spread of such illnesses could adversely impact our business and operations, including as a result of workforce limitations and travel restrictions and related government actions. If a significant percentage of our workforce is unable to work, including because of illness or travel or government restrictions in connection with pandemics or disease outbreaks, our operations and enrollment may be negatively impacted. Finally, state and federal regulators, including the DOE, are augmenting existing regulatory processes, waiving others, and overseeing various emergency relief and aid programs. It is highly uncertain how long such regulatory accommodations will continue, or how long and in what amount emergency relief and aid funds will continue to be available. We also cannot predict the types of conditions that may be attached to participation in emergency relief and aid programs, and whether and to what extent compliance with such conditions will be monitored and enforced. If further outbreaks occur and students elect to take a leave of absence, withdraw, or do not make up the required in person labs on a timely basis, our future revenues could be impacted.

The postsecondarypost-secondary education market is highly competitive. We compete for students and faculty with traditional public and private two-year and four-year colleges and universities and other proprietary schools, many of which have greater financial resources than we do. Some traditional public and private colleges and universities, as well as other private career-oriented schools, offer programs that may be perceived by students to be similar to ours. Most public institutions are able to charge lower tuition than our schools, due in part to government subsidies and other financial resources not available to for-profit schools. Some of our competitors also have substantially greater financial and other resources than we have which may, among other things, allow our competitors to secure strategic relationships with some or all of the companies with which we have existing relationships or develop other high profile strategic relationships, or devote more resources to expanding their programs and their school network, or provide greater financing alternatives to their students, all of which could affect the success of our marketing programs. In addition, some of our competitors have a larger network of schools and campuses than we do, enabling them to recruit students more effectively from a wider geographic area. This strong competition could adversely affect our business.

We may be required to reduce tuition or increase spending in response to competition in order to retain or attract students or pursue new market opportunities. As a result, our market share, revenues and operating margin may be decreased. We cannot be surecertain thatof weour will be ableability to compete successfully against current or future competitors or that the competitive pressures we face will not adversely affect our revenues and profitability.

Our financial performance depends in part on our abilityeffectiveness toat continue to developdeveloping awareness and acceptance of our programs among high school graduates and working adults looking to return to school.

The awareness of our programs among high school graduates and working adults looking to return to school is critical to the continued acceptance and growth of our programs. OurIneffectiveness inabilityat todeveloping continue to developsuch awareness of our programs could reduce our enrollments and impair our ability to increase our revenues or maintain profitability. The following are some of the factors that could prevent us from successfully marketing our programs:

Our students and their families have benefitted from historic lows on student loan interest rates in prior years. Much of the financing that our students receive is tied to floating interest rates. Recently,More recently, student loan interest rates have been higher, making borrowing for education more expensive. Increases in interest rates result in a corresponding increase in the cost to our existing and prospective students of financing their education, which could result in a reduction in the number of students attending our schools and could adversely affect our results of operations and revenues. Higher interest rates could also contribute to higher default rates with respect to our students' repayment of their their educational loans. Higher default rates may in turn adversely impact our eligibility for Title IV Program participation or the willingness of private lenders to make private loan programs available to students who attend our schools, which could result in a reduction in our student population.

Business Activities— Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our”, and “us”, as applicable) provide diversified career-oriented postsecondary education to recent high school graduates and working adults. The Company, which currently operates 2122 campuses in 12 states, has entered into leases for two new campuses: one in Houston, Texas, with programs expected to begin in the second half of 2025, and one in Hicksville, New York, with programs expected to begin by the end of 2026.2026, Lincolnand Educationalone Services Corporationin Rowlett, Texas, a northern suburb of Dallas, where the lease commenced in the fourth quarter of 2025, and programs are expected to begin in the first quarter of 2027. The Company offers programs in skilled tradestrades, (whichautomotive, includehealth Heating Ventilation and Air Conditioning (“HVAC”), welding and computerized numerical control and electrical and electronic systems technology, among other programs), automotive technology, healthcare services (which include nursing, dental assistant and medical assistant, among other programs) and hospitality servicessciences and information technology (which include culinary and aesthetics and information technology programs).technology. The schools operate under the brands Lincoln Technical Institute, Lincoln College of Technology and Nashville Auto Diesel College.

Most of the Company’s campuses serve major metropolitan markets and each typically offers courses in multiple areas of study. Five of theour campuses are destination schools, which attract students from across the United States and, in some cases, from abroad. The Company’s other campuses primarily attract students from their local communities and surrounding areas. All of theour campuses are nationally accredited and are eligible to participate in federal financial aid programs administered by the U.S. Department of Education (the “DOE”) and applicable state education agencies and accrediting commissions which allow students to apply for and access federal student loans as well as other forms of financial aid. The Company was incorporated in New Jersey in 2003 as the successor-in-interest to various acquired schools including Lincoln Technical Institute, Inc. which opened its first campus in Newark, New Jersey in 1946.

The Company’s business is organized into two reportable business segments: Campus Operations and Transitional. The Company manages its business, evaluates performance and allocates resources based on twothese reportable business segments, Campus Operations and Transitional:segments.

Campus Operations - The Campus Operations segment includes campuses that are continuing in operation and contribute to the Company’s core operations and performance. All of theour campuses continuing in operation are classified in this segment. The majorityAll of theour campuses offer programs across various areas of study.

Transitional – TheHistorically, the Company classified certain campuses as part of a Transitional segment referswhen tosuch campuses that arewere marked for closureclosure, andheld are currently being taught-out, in addition to campuses that are held-for-salefor sale, or sold.taught out. As of December 31, 2025, the Company had no campuses classified as Transitional. As of December 31, 2024, the net assets for the Summerlin, Las Vegas campus were classified as held for sale, with operating results classified within the Transitional segment. The sale of the Summerlin campus was consummated effective January 1, 2025. In addition, the Company closed the Somerville, Massachusetts campus in the prior year. It was fully taught-out as of December 31, 2023. This campus is classified in the Transitional segment in the prior year’s statement of operations.

We believe that we provide our students with the highest qualityhigh-quality career-oriented training available for our areas of study in our markets thereby serving students, local employers and their communities. The skills gap continues to expand as talent retires faster than new employees are hired and as the need for education and training increases in all careers with the accelerating pace of technological change.

The majority of students enrolled at our schools rely on funds received under various government-sponsored student financial aid programs to pay a substantial portion of their tuition and other education-related expenses. The largest of these programs are Title IV Programs which represented approximately 82%, 81%,85% and 74%82% of our revenue on a cash basis during fiscal years 2025 and 2024, respectively, while the remainder iswas primarily derived from state grants and cash payments made by students during fiscal years 2024, 2023, and 2022, respectively.students. The HEA requires institutions to use the cash basis of accounting when determining its compliance with the 90/10 Rule. See Part I, Item 1. “Business - Regulatory Environment.”

On November 11, 2024, the Company entered into an agreement with DVMD LLS (IntelliTec College) for the sale of the Summerlin, Las Vegas (“Euphoria”) campus. As a result of the intended sale, the Company recorded the carrying amount of the net assets totaling $1.2 million as held for sale on the Consolidated Balance Sheets. The net assets related to the Summerlin, Las Vegas campus consisted of $2.1 million in assets and $0.9 million in liabilities. The sale of the Summerlin campus was consummated effective January 1, 2025.

On September 28, 2023, the Company purchased a 90,000 square foot property located at 311 Veterans Highway, Levittown, Pennsylvania for approximately $10.2 million and subsequently on January 30, 2024 entered into a sale-leaseback transaction for the same property. As of December 31, 2023, this property was classified as held-for-sale on the Consolidated Balance Sheets. During the year ended December 31, 2024,2025, the Company invested has invested approximately $11.7$13.6 million in capital investments.

Our discussions of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America,America or GAAP.("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the period. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, bad debts, goodwill and impairment of long-lived assets and income taxes. Actual results could differ from those estimates. The critical accounting policies discussed herein are not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not result in significant management judgment in the application of such principles. We believe that the following accounting policies are most critical to us in that they represent the primary areas where financial information is subject to the application of management's estimates, assumptions and judgment in the preparation of our Consolidated Financial Statements.

Revenue recognition. Substantially all of our revenues are considered to be revenues from contracts with students. We determine standalone selling price based on the price at which the distinct services or goods are sold separately. The related accounts receivable balances are recorded in our balance sheets as student accounts receivable. We do not have significant revenue recognized from performance obligations that were satisfied in prior periods, and we do not have any transaction price allocated to unsatisfied performance obligations other than in our unearned tuition. We record revenue for students who withdraw from our schools only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. In addition, to reduce the amount of outstanding accounts receivable balances due from our students, the Company employs a continuous collection effort. Unearned tuition represents contract liabilities primarily related to our tuition revenue. We have elected not to provide disclosure about transaction prices allocated to unsatisfied performance obligations if original contract durations are less than one-year, or if we have the right to consideration from a student in an amount that corresponds directly with the value provided to the student for performance obligations completed to date in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contract with Customers. We have assessed the costs incurred to obtain a contract with a student and determined them to be immaterial.

Allowance for Credit Losses. OnWe Januarydefine 1,student 2023,receivables theas Companya adoptedportfolio Accountingsegment Standardsunder Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. As a result of the adoption, the Company has revised the way in which it calculates reserves on outstanding student accounts receivable balances. Details considered by management in the estimate include the following:

Our bad debt expense as a percentage of revenues for the fiscal years ended December 31, 2024, 2023,2025, and 20222024 was 12.9%, 11.0%,11.2% and 10.0%,12.9%, respectively. A 1% increase in our bad debt expense as a percentage of revenues for the fiscal years ended December 31, 2024, 2023,2025, and 20222024, would have resulted in an increase in bad debt expense of $5.2 million and $4.4 million, $3.8 million, and $3.5 million, respectively.

Goodwill. Goodwill represents the excess of purchase price over the fair value of tangible net assets and identifiable intangible assets of the businesses acquired. LincolnThe Company tests goodwill for impairment annually, in the fourth quarter of each year, unless there are events or changes in circumstances that indicate an impairment may have occurred. Impairment may result from deterioration in performance, adverse market conditions, adverse changes in laws or regulations, the restriction of activities associated with the acquired business, and/or a variety of other circumstances. If we determine that impairment has occurred, we record a write-down of the carrying value and charge the impairment as an operating expense in the period the determination is made.

When we perform our annual goodwill impairment assessment we have the option to perform a qualitative assessment based on a number of factors impacting our reporting units (Step 0).units. When a qualitative assessment is performed, a number of factors are evaluated to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Our qualitative assessment is subjective. It includes a review of macroeconomic and industry factors, review of financial and non-financial performance measures, including projected student starts and assessment of adverse events that may negatively impact a reporting units carrying value. Adverse events would include, but are not limited to, difficulty in accessing capital, a greater competitive environment, decline in market-dependent multiples or metrics, regulatory or political developments, change in key personnel, strategy, or customers, or litigation. If we conclude based on our qualitative review that it is more likely than not that the fair value of the reporting unit is less than the carrying value, we proceed with a quantitative impairment test.

When we perform our quantitative impairment test we believe that the most critical assumptions and estimates in determining the estimated fair value of our reporting units include, but are not limited to, future tuition revenues, operating costs, working capital changes, capital expenditures and a discount rate. The assumptions used in determining our expected future cash flows consider various factors such as historical operating trends particularly in student enrollment and pricing and long-term operating strategies and initiatives.

For the yearyears ended December 31, 2025 and 2024, there were no impairments related to goodwill.

For the yearyears ended December 31, 2025 and 2024, there were no impairments related to long-lived assets.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the fiscal years ended December 31, 2024, 2023,2025, and 2022,2024, we did not record any interest and penalties expense associated with uncertain tax positions, as we do not have any uncertain tax positions.

Revenue. Revenue increased $62.0 million,$78.2, or 16.4%17.8% to $440.1$518.2 million for the fiscal year ended December 31, 20242025 from $378.1$440.1 million in the prior year. Revenue growth was drivenprimarily bydue severalto factorsa including an 11.5%15.2% increase in average student population, driven in part by beginning the year with 7.1%, or 882 more students than in the prior year and student start growth up 15.2% over the prior year. Included in the increase over the prior year was $9.6 million of revenue generated from the recently opened East Point, Georgia campus.population.

Educational services and facilities expense. Our educationalEducational services and facilities expense increased $19.5$23.6 million, or 12.0%13.0% to $181.8$205.4 million for the fiscal year ended December 31, 20242025 from $162.3$181.8 million in the prior year. The increase over the prior year includes approximately $4.3 million in preopening costs for the new Houston, Texas campus, which is expected to begin classes in the second half of 2025, costsreduction related to the relocationTransitional ofsegment, eachwhich ofincurred theexpenses Nashville,only Tennesseein prior year. On a comparable basis, educational services and Levittown,facilities Pennsylvaniaexpense campuses,increased whichby are$27.9 expected to open in the first half of 2025 and the second half of 2025, respectively, and investments to implement and expand new programs at existing campuses. Additional costs of $4.8 million are included in the current year as a result of the new East Point, Georgia campus that opened during the first quarter of 2024.million.

Educational services and facilities expense, asAs a percentage of revenue, instructional expenses decreased to 41.3%19.0% from 42.9%20.6% for the fiscal years ended December 31, 20242025, and 2023,2024, respectively. TheSimilarly, decreaseeducational services and facilities expense as a percentage of revenue declined to 39.6% from 41.3% in the prior year wascomparable most notableperiod. inThose theimprovements instructionaldemonstrate expenses,continued whichmargin demonstratesexpansion anas increasewe inscale operational efficiencies year-over-year.operations.

In addition to the other information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our Form 10-K and those contained in our previously filed Form 10-Qs, which could affect our business, financial condition, or operating results. The risks we describe in our periodic reports are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, or operating results. ForDuring the quarter ended MarchJune 31,30, 2026, the Company is did not become aware of any specific new and additional risk factors that were not previously disclosed.

This discussion may contain forward-looking statements,statements that are based on management's current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statementsstatements, of operations thatwhich are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects, and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “may,” “will,” “forecast,” “outlook,” “plan,” “project,” or similar words and include, without limitation, statements relating to future enrollment, revenues, revenues per student, earnings growth, operating expenses, capital expenditures, and the effect of pandemics and its ultimate effect on the Company’s business and results. These statements are based on the Company’s current expectations and are subject to a number of assumptions, risks and uncertainties. Additional factors that could cause or contribute to differences between our actual results and those anticipated include, but are not limited to, those described in the “Risk Factors” section of our Form 10-K and in our other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this Form 10-Q and in our other reports filed with the SEC that advise interested parties of the risks and factors that may affect our business.

The Company’s business is organized into two reportable business segments: Campus Operations; and Transitional. The Campus Operations segment includes campuses that are continuing in operation and contribute to the Company’s core operations and performance. The Transitional segment refers to campuses that have been marked for closure and are being taught out. As of MarchJune 31,30, 2026 no campuses were classified in the Transitional segment.

Lincoln Educational Services Corporation and its subsidiaries (collectively, the “CompanyCompany,”, “wewe,”, “ourour,”, and “usus,”, as applicable) provide diversified career-oriented postsecondary education to recent high school graduates and working adults. The Company, which currently operates 22 campuses in 12 states, recently entered into leases for twothree new campuses: one in Hicksville, New York, with programs expected to begin by the end of 2026, and2026; one in Rowlett, Texas, a northern suburb of Dallas, where the lease commenced in the fourth quarter of 2025, andwith programs are expected to begin in the first quarter of 2027; and one in Suitland, Maryland, located in the Washington, D.C. metropolitan area with programs expected to begin in the fourth quarter of 2027. The Company offers programs in skilled trades, automotive, health sciences and information technology. The schools operate under the brands Lincoln Technical Institute, Lincoln College of TechnologyTechnology, and Nashville Auto Diesel College.

Most of the Company’s campuses serve major metropolitan markets and each typically offers courses in multiple areas of study. Five of our campuses are destination schools, which attract students from across the United States and, in some cases, from abroad. The Company’s other campuses primarily attract students from their local communities and surrounding areas. All of our campuses are nationally accredited and are eligible to participate in federal financial aid programs administered by the U.S. Department of Education (the "DOE”) and applicable state education agencies and accrediting commissionscommissions, which allow students to apply for and access federal student loans as well as other forms of financial aid. The Company was incorporated in New Jersey in 2003,2003 as the successor-in-interest to various acquired schools including Lincoln Technical Institute, Inc.Inc., which opened its first campus in Newark, New Jersey in 1946.

Expand Geographically. We plan to open new campuses and enter new markets using existing resources or acquisitions. We opened a new campus in Houston, Texas in August 2025, and have signed leases for new campuses in Hicksville, New York, where programs are expected to begin by the end of 2026, and2026; Rowlett, Texas, which is expected to open in the first quarter of 2027, and Suitland, Maryland, with programs expected to begin in the fourth quarter of 2027. We continue to evaluate opportunities to expand our footprint in markets that support our long-term growth objectives.

Expand Teaching Platform. We are transitioning to a hybrid teaching platform, Lincoln 10.0, the implementation of which has been substantially completed and is expected to be finalized by the end of 2026 for all planned programs, except for our Licensed Practical Nurse program which should be completed by the end of 2027. This platform is designed to provide greater flexibility, efficiency, and value to students, while supporting a more scalable and standardized academic delivery model.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Revenue. Revenue increased $26.5$26.1 million, or 22.5%22.4% to $144.0$142.6 million for the three months ended MarchJune 31,30, 2026, from $117.5$116.5 million in the prior year comparable period. Revenue growth was primarily due to a 18.2%14.5% increase in average student population driven by 19.5% start growth,population, with the remainder attributable to tuition increases.

Educational services and facilities expense. Educational services and facilities expense increased by $11.0$12.8 million, or 23.2%,27.4%, to $58.4$59.6 million for the three months ended MarchJune 31,30, 2026, compared to $47.4$46.8 million for the sameprior periodyear incomparable 2025.period. This includes a $2.9 million increase in costs related to our new campuses in Houston, Hicksville, and Rowlett.

The increase was primarily driven by costs associated with a larger student population.population as well as higher books and tools expense primarily due to the timing of program starts. The remaining increase was attributable to $3.9$3.1 million in higher depreciation expense, including $0.8 million related to new campuses, largely resulting from capital investments to support our growth initiatives.

Selling, generalEducational services and administrativefacilities expenses continued to declineexpense as a percentage of revenue increased to 55.0%41.8% forfrom 40.2% in the threeprior monthsyear endedcomparable March 31, 2026, compared to 56.9% for the same period in 2025.period.

Sales and marketing expense increased by $4.2$5.9 million, or 21.3%,31.1%, including $1.2 million related to our new campuses, resultingdue fromto plannedhigher investmentsstudent andacquisition the timing of the marketing activities.costs.

Provision for credit losses. While the provision increased inby absolute$2.9 terms,million, it declinedwas slightly lower as a percentage of revenue fromat 10.1%11.2% compared to 9.5%11.3% year-over-yearin reflectingthe continuingprior efficiencies from our financial aid processes and stronger collections.year.

Income taxes. Income tax provision was $1.2$0.3 million for the three months ended MarchJune 31,30, 2026, representing an effective tax rate of 22.2%13.9% of pre-tax income, compared to $0.9 millionan income tax provision of $0.5 million and an effective tax rate of 31.2%25.1% infor the prior year comparable period. The lower effective tax rate in the current period was primarily due to a discrete tax benefit related to restricted stock vesting.

This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $21.3$18.2 million for the three months ended MarchJune 31,30, 2026, compared to $18.3$16.4 million in the prior year comparable period. The increase was primarily driven by higher salaries and benefits due to workforce expansion to support a larger student population and tothe executeexecution of our growth initiatives.

Our primary capital requirements are for maintenance and expansion of our facilities and the development of new programs. Our principal source of liquidity has been cash provided by operating activities. The following chart summarizes the principal elements of our cash flow for each of the threesix months ended MarchJune 31,30, 2026, and 2025:

As of MarchJune 31,30, 2026, the Company had $16.7$44.2 million in cash and cash equivalents, compared to $28.7 $16.7 million in cash and cash equivalents as of MarchJune 31,30, 2025. The change in cash position from the prior year comparable period was primarily driven by higher net cash provided by operating activities, along with increased capitalnet expendituresborrowings dueunder tothe campusCompany's expansion,financing arrangements, partially offset by higher cashcontinued inflowscapital fromexpenditures operatingrelated activities.to campus expansion.

Operating cash flow resultsis generated primarily from cash received from our students, offset by changes in working capital demands. Working capital can vary at any point in time based on several factors including seasonality, timing of cash receipts and payments and vendor payment terms.

Net cash provided by operating activities was $4.6 million for the threesix months ended MarchJune 31,30, 2026,2026 was $26.7 million, compared to net cash used in operating activities of $8.4$8.1 million in the prior year comparable period. The increase in cash position wasperiod, primarily driven by favorable changes in working capitalcapital, depreciation and amortization, and the provision for credit losses, as well as higher net income.

Net cash used in investing activities was $14.6$29.1 million for the threesix months ended MarchJune 31,30, 2026,2026 compared to $19.6$45.8 million in the prior year comparable periodperiod, primarily drivenrelated by higherto capital expenditures associated with growth initiatives.

Capital expenditures for the threesix months ended June 30, 2026 were $14.6$29.1 million compared to $19.9$46.3 million in the prior year comparable period. The decrease resulted from a shift in the timing of planned capital expenditures which includes the buildout for the new Houston, Texas Rowlett, Texas and Hicksville, New York campuses. In addition, we continue to invest to expand programs at existing campuses whichthat demonstrate high market demand and successful student outcomes. We expect to fund future capital expenditures with cash generated from operating activities andactivities, cash on hand.hand, and utilization of the credit facility.

Net cash usedprovided in by financing activities for the threesix months ended MarchJune 31,30, 2026,2026 was $1.8 $18.1 million, compared to $2.6$11.3 million in the prior year comparable period. The decrease in cash used wasperiod, primarily due to higher an increase in net borrowings in the current period, partially offset by higher cash outflows related to net share settlementsettlements offor equity-based compensation.

The Company maintains a revolving credit facility to support working capital and general corporate purposes. In April 2026, the Company entered into an amended and restated credit agreement, which increased total borrowing capacity from $60.0 million to $125.0 million and extended the maturity of the Facilitycredit facility from March 7, 2028 to April 11, 2031.

As of MarchJune 31,30, 2026, the Company had $5.0$26.0 million outstanding under the Facility,credit which has now been repaid in connection with the replacement of the Facility with the Amended and Restated Facility.facility. For additional information regarding the terms of the Company’s credit facility, see Note 7, Long-Term Debt.

Current portion of Long-Term Debt, Long-Term Debt and Lease Commitments. As of MarchJune 31,30, 2026, the Company had $5.0$26.0 million in debt outstanding under the Facility.revolving Wecredit leasefacility. The Company leases offices, educational facilities and various items of equipment for varying periods through the year 2045 at basic annual rental rates (excluding taxes, insurance, and other expenses under certain leases).

As of MarchJune 31,30, 2026, the Company had outstanding loan principal commitments to our active students of $59.2$62.1 million. These are institutional loans, and no cash is advanced to students. The full loan amount is not guaranteed unless the student completes the program. The institutional loans are considered commitments because the students are required to fund their education using these funds and they are not reported on our financial statements.

In 2025, the DOE announced its intention to establish two negotiated rulemaking committees.committees: Thethe Reimagining and Improving Student Education (RISE) Committee wouldand considerthe Access through Demand-driven Workforce Pell (AHEAD) Committee. The RISE Committee considered changes to the federal student loan programs and the Accountability in Higher EducationEducation, and Accessthe through Demand-driven Workforce Pell (AHEAD) Committee would considerconsidered changes to institutional and programmatic accountability, the Pell Grant Program, and other changes to the Title IV Programs. This rulemaking iswas necessary to implement recent statutory changes to the Title IV and HEA programs included in the One Big Beautiful Bill Act ("OBBB Act") as well as to propose other changes. See 10-K “Regulatory Environment – Negotiated Rulemaking” and “Regulatory Environment – Gainful Employment and Accountability.”