LINC Q2 Deep Dive: Mixed Market Reaction Despite Operational Growth and Raised Guidance

Education company Lincoln Educational (NASDAQ:LINC) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 13.2% year on year to $116.5 million. The company’s full-year revenue guidance of $495 million at the midpoint came in 1.2% above analysts’ estimates. Its non-GAAP profit of $0.09 per share was significantly above analysts’ consensus estimates.

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StockStory’s Take

Lincoln Educational’s second quarter showed notable operational progress, with management highlighting robust student start growth and expanding campus footprints as central drivers. CEO Scott Shaw pointed to nearly 22% student start growth and strong returns from investments in the Lincoln 10.0 hybrid teaching model, as well as successful program replications at new and relocated campuses. While management emphasized momentum in skilled trades programs and efficiencies from digital learning, they were cautious about underperformance in the healthcare segment, citing ongoing restructuring and a slower pace of investment.

Looking forward, Lincoln Educational’s updated guidance reflects confidence in continued growth from new campus development and program expansion, with management prioritizing investments in high-demand skilled trades and further rollout of the Lincoln 10.0 model. CFO Brian Meyers stated, “We are raising our full year guidance” due to positive enrollment trends and improved operating leverage. However, management acknowledged some uncertainty in the healthcare segment, noting that growth there will depend on restructuring and achieving degree-granting status in key states. Management emphasized that future growth hinges on replicating their current campus model and capturing demand in underserved metropolitan areas.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to strong demand for skilled trades, operational efficiencies from hybrid learning, and successful campus expansions, while acknowledging headwinds in healthcare program growth.

• Skilled trades programs outperformed: Management noted transportation-related skilled trades, including automotive, HVAC, electrical, and welding, drove most of the enrollment growth, especially at new campuses like East Point, which reached enrollment targets much faster than expected.
• Hybrid model efficiencies: The Lincoln 10.0 blended learning model, combining on-campus and online instruction, allowed students more flexibility and accelerated program completion, while also generating instructional and space efficiencies that contributed to improved margins.
• Healthcare segment under review: Management openly discussed ongoing restructuring in healthcare programs, particularly nursing, which remains less profitable than skilled trades. New leadership has been appointed, and further investments are planned only after achieving better profitability and degree-granting status in several states.
• Marketing effectiveness: The company achieved a 13% reduction in marketing cost per student start, attributed to improved messaging and increased receptivity among prospective students, which also boosted conversion rates and overall student interest in skilled trades careers.
• Expansion and campus investment: Lincoln opened or relocated several campuses, including Levittown and Houston, and plans to incrementally increase the number of new campuses developed each year to address unmet demand in additional metropolitan markets. Management expects new campuses to reach significant revenue and EBITDA targets by their fourth year of operation.

Drivers of Future Performance

Lincoln Educational’s outlook is focused on scaling its campus network, optimizing program mix, and addressing healthcare segment performance.

• Growth through campus expansion: Management plans to add two new campuses annually, targeting underserved metropolitan areas and replicating successful programs like automotive, HVAC, electrical, and welding. The expectation is for each new campus to reach $25–$30 million in annual revenue and $7–$10 million in EBITDA within four years, supporting overall revenue and margin growth.
• Healthcare restructuring as a growth lever: The company is prioritizing restructuring and degree-granting authorization in healthcare programs, particularly nursing. Management expects meaningful contribution from this segment only after operational improvements and regulatory approvals are secured, likely impacting growth in 2026 and beyond.
• Capital allocation and margin focus: Lincoln is increasing capital expenditures to support new campus builds and expansions but is mindful of unit-level returns and margin sustainability. Management highlighted recent campus investments, such as East Point, which achieved profitability ahead of schedule, reinforcing the company’s return-on-investment expectations.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be monitoring (1) the pace and profitability of new campus openings and program launches, (2) progress in restructuring and scaling healthcare programs as regulatory milestones are achieved, and (3) ongoing marketing efficiency and student conversion rates. Additionally, we will track whether recent capital investments deliver the expected improvements in margin and returns, particularly as more campuses reach maturity.

Lincoln Educational currently trades at $20.92, down from $23.74 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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