KinderCare Learning Companies, Inc.
For the period ended Jun 28, 2025. Filed Aug 12, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 28, 2025 · Filed Aug 12, 2025
KLC$2.10+5.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-29; filed 2025-05-13.
0000950170-25-070494
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-28; filed 2025-08-12.
0000950170-25-107426
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 146 previous paragraphs and 151 current paragraphs.
72 unchanged; 57 reworded; 14 added; 15 removed; 2 previous and 8 current paragraphs rearranged.
Tables are not compared: 9 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Total revenue increased by $10.2 million, or 1.5%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024.
Current report
Selling, general, and administrative expenses increased by $0.1 million, or 0.1%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024. This increase was primarily driven by higher personnel costs related to an increase in the fair value of investments in our deferred compensation plan as well as an increase in stock-based compensation expense due to additional awards granted under the 2022 Incentive Award Plan. These increases were offset by a decrease in meeting and travel expenses primarily attributable to our field leadership summit held during the three months ended June 29, 2024.
Current report
Impairment losses increased by $0.7 million, or 46.9%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024, primarily driven by higher fixed asset impairment due to more centers impaired.
Current report
Comparison of the Six Months Ended June 28, 2025 and June 29, 2024
Current report
Revenue
Current report
Total revenue increased by $23.8 million, or 1.8%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024.
Current report
Revenue from early childhood education centers increased by $16.2 million, or 1.3%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024, of which approximately 2% was from higher tuition rates, partially offset by approximately 1% from lower enrollment.
Current report
Revenue from before- and after-school sites increased by $7.5 million, or 7.7%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024 primarily due to opening new sites.
Current report
Cost of services (excluding depreciation and impairment) increased by $37.9 million, or 3.8%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024. This increase was driven by $12.7 million higher personnel costs due to increased wage rates, partially offset by lower grant-related bonuses and labor hours. The increase was also attributable to $11.6 million lower government assistance driven by a decrease in cost reimbursements, primarily related to the conclusion of certain COVID-19 Related Stimulus funding, partially offset by higher ERC recognized due to the timing of tax statute of limitations and qualifying creditable wages. Additionally, rent expense increased $7.7 million primarily due to new and acquired centers. Lastly, other center operating expenses increased by $6.0 million primarily as a result of operating more centers and sites, driven by higher janitorial and utilities costs, property taxes, as well as food and supplies.
Current report
Other income, net decreased by $1.1 million, or 29.9%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024, primarily due to $1.5 million in gains recognized on miscellaneous insurance claims during the six months ended June 29, 2024.
Current report
Income tax expense increased by $7.6 million for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024. The effective tax rate was 27.2% for the six months ended June 28, 2025 as compared to 35.5% for the six months ended June 29, 2024. Compared to the statutory rate, the differences in the effective tax rates for both the six months ended June 28, 2025 and June 29, 2024 were primarily due to the partial release of the receivable related to uncertain tax positions as a result of the portion of ERC recognized during the respective six months, as well as state income taxes. These impacts were partially offset by the recognition of ERC refunds during the respective six months for which the income tax expense had been previously recognized. The effective tax rate for the six months ended June 29, 2024 was further impacted by additional tax expense related to nondeductible stock-based compensation.
Current report
Includes the unamortized original issue discount and deferred financing costs that were written off in connection with certain lenders that had reduced principal holdings or did not participate in the loan syndication as a result of certain amendments to our senior secured credit facilities. For the three and six months ended June 29, 2024, the loss on extinguishment of long-term debt is the result of the April 2024 repricing amendment to the Credit Agreement. During the three months ended December 28, 2024, management updated the definition of adjusted net income to include loss on extinguishment of long-term debt, net and has adjusted prior periods presented to reflect the updated definition for comparative purposes. Loss on extinguishment of long-term debt, net is not considered by management to be indicative of core operating performance.
Current report
On July 1, 2025, subsequent to the end of the three and six months ended June 28, 2025, we entered into a repricing amendment to the Credit Agreement. As of the effective date of the amendment, the First Lien Term Loan Facility bears interest at a variable rate equal to SOFR plus 2.75% per annum. Additionally, amounts drawn under the First Lien Revolving Credit Facility bear interest at SOFR plus an applicable rate between 2.00% and 2.50% per annum, based on a pricing grid of our First Lien Term Loan Facility net leverage ratio. All other terms under the Credit Agreement remained unchanged.
Current report
Contingent consideration payable of $1.2 million expected to be paid out in six to nine years based on the probability and timing of the continuation of the lease of the related acquired center.
Removed paragraphs (15)
Previous report
Depreciation and amortization
Previous report
Selling, general, and administrative expenses
Previous report
Impairment losses
Previous report
Interest expense
Previous report
Interest income
Previous report
Other expense (income), net
Previous report
Income tax expense
Previous report
Total revenue increased by $13.6 million, or 2.1%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024.
Previous report
Depreciation and amortization
Previous report
Selling, general, and administrative expenses
Previous report
Impairment losses
Previous report
Interest expense
Previous report
Interest income
Previous report
Other expense (income), net
Previous report
Income tax expense
Reworded paragraphs (57)
Previous wording
The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by reference to, our unaudited condensed consolidated financial statements and notes thereto for the three months ended March 29, 2025 and March 30, 2024 included elsewhere in this Quarterly Report on Form 10-Q and audited consolidated financial statements and notes thereto for the fiscal year ended December 28, 2024 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 21, 2025. Some of the information included in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this Quarterly Report on Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Current wording
The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by reference to, our unaudited condensed consolidated financial statements and notes thereto for the three and six months ended June 28, 2025 and June 29, 2024 included elsewhere in this Quarterly Report on Form 10-Q and audited consolidated financial statements and notes thereto for the fiscal year ended December 28, 2024 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 21, 2025. Some of the information included in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this Quarterly Report on Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Previous wording
KinderCare Learning Companies, Inc. (“the Company,” “we,” “us,” and “our”) is a leading provider of high-quality early childhood education (“ECE”) in the United States. We are a mission-driven organization, rooted in a commitment to providing all children with the very best start in life. We serve children ranging from six weeks to 12 years of age across our market-leading footprint of 1,582 early childhood education centers with center capacity for 211,767 children and 1,038 before- and after-school sites located in 41 states and the District of Columbia as of March 29, 2025.
Current wording
KinderCare Learning Companies, Inc. (“the Company,” “we,” “us,” and “our”) is a leading provider of high-quality early childhood education (“ECE”) in the United States. We are a mission-driven organization, rooted in a commitment to providing all children with the very best start in life. We serve children ranging from six weeks to 12 years of age across our market-leading footprint of 1,589 early childhood education centers with center capacity for 212,901 children and 1,043 before- and after-school sites located in 41 states and the District of Columbia as of June 28, 2025.
Previous wording
On October 8, 2024, our registration statement on Form S-1, as amended (File No. 333-281971) (“Form S-1”) related to our initial public offering (“IPO”), was declared effective by the SEC, and our IPO was completed on October 10, 2024. In connection with our IPO, the Company converted Class A and Class B common stock, both with a par value of $0.0001 per share, to common stock, with a par value of $0.01 per share, at a ratio of 8.375 shares of Class A and Class B common stock to one share of common stock, which became effective immediately following the effectiveness of our registration statement on Form S-1 for our IPO (“Common Stock Conversion”). As a result, prior periods presented in our unaudited condensed consolidated financial statements and notes thereto as of and for the three months ended March 29, 2025 have been adjusted to retrospectively reflect the Common Stock Conversion. Refer to Note 1 within the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 17 within the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2024 for further information.
Current wording
On October 8, 2024, our registration statement on Form S-1, as amended (File No. 333-281971) (“Form S-1”) related to our initial public offering (“IPO”), was declared effective by the SEC, and our IPO was completed on October 10, 2024. In connection with our IPO, the Company converted Class A and Class B common stock, both with a par value of $0.0001 per share, to common stock, with a par value of $0.01 per share, at a ratio of 8.375 shares of Class A and Class B common stock to one share of common stock, which became effective immediately following the effectiveness of our registration statement on Form S-1 for our IPO (“Common Stock Conversion”). As a result, prior periods presented in our unaudited condensed consolidated financial statements and notes thereto as of and for the three and six months ended June 28, 2025 have been adjusted to retrospectively reflect the Common Stock Conversion. Refer to Note 1 within the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 17 within the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2024 for further information.
Previous wording
Occupancy improvement: We aim to improve occupancy rates across our portfolio. Historically, we increased our average occupancy through a combination of strategic investments in technology and talent, as well as implementing best practices at our centers. We invest significant resources into our technology infrastructure to support our center and site operations and interactions with families. As our occupancy grows, we have an opportunity to gain further operating leverage and improve profitability as we allocate fixed costs over more enrollments.
Current wording
Occupancy improvement: We aim to improve occupancy rates across our portfolio. Historically, we increased our average occupancy through a combination of strategic investments in technology and talent, as well as implementing best practices at our centers to improve timely response to inquiring families and enhance quality tours. We invest significant resources into our technology infrastructure to support our center and site operations and interactions with families. As our occupancy grows, we have an opportunity to gain further operating leverage and improve profitability as we allocate fixed costs over more enrollments.
Previous wording
Expand footprint through greenfield development and strategic acquisitions. Our long-term revenue growth depends on the expansion of our footprint, either through opening new greenfield centers or acquiring centers. We have a rigorous integration approach to transition acquired centers into our portfolio that allow us to deliver a consistent level of quality, as expected by our clients and accreditors. Given the significant fragmentation in our industry, we expect to continue to pursue acquisitions complementary to our existing portfolio. Expansion will require cash investment, but we anticipate a long-term increase in both revenue and profit.
Current wording
Expand footprint through greenfield development and strategic acquisitions. Our long-term revenue growth depends on the expansion of our footprint, either through opening new greenfield centers or acquiring centers. We have a rigorous integration approach to transition acquired centers into our portfolio that allows us to deliver a consistent level of quality, as expected by our clients and accreditors. Given the significant fragmentation in our industry, we expect to continue to pursue acquisitions complementary to our existing portfolio. Expansion will require cash investment, but we anticipate a long-term increase in both revenue and profit.
Previous wording
We measure and track the number of centers and sites because, as our number of centers and sites grow, it highlights our geographic expansion and potential growth in revenue. We believe this information is useful to investors as an indicator of revenue growth and operational expansion and can be used to measure and track our performance over time. We define the number of centers as the number of centers at the beginning of the period plus openings and acquisitions, minus any permanent closures for the period. A permanently closed center is a center that has ceased operations as of the end of the reporting period and management does not intend on reopening the center. We define the number of sites as total sites that were operational in the last month of the period.
Current wording
We measure and track the number of centers and sites because, as our number of centers and sites grow, it highlights our geographic expansion and potential growth in revenue. We believe this information is useful to investors as an indicator of revenue growth and operational expansion and can be used to measure and track our performance over time. We define the number of centers and sites as the number of centers and sites at the beginning of the period plus openings and acquisitions, minus any permanent closures for the period. A permanently closed center or site is a center or site that has ceased operations as of the end of the reporting period that management does not intend on reopening. During the three months ended June 28, 2025, management updated the definition of total before- and after-school sites to include sites that are temporarily closed as a result of the summer season to more accurately reflect the total sites that were operating during the year. Prior periods presented were adjusted to reflect the updated definition for comparative purposes.
Previous wording
As of March 29, 2025, we operated 1,582 early childhood education centers with a center capacity for 211,767 children as compared to 1,563 early childhood education centers as of March 30, 2024, with a center capacity for 210,012 children. During the three months ended March 29, 2025, total centers increased by eight due to acquiring five centers and opening five centers, partially offset by two permanent center closures. During the three months ended March 30, 2024, total centers increased by six due to acquiring six centers and opening four centers, partially offset by four permanent center closures.
Current wording
As of June 28, 2025, we operated 1,589 early childhood education centers with a center capacity for 212,901 children as compared to 1,568 early childhood education centers as of June 29, 2024, with a center capacity for 210,618 children. During the six months ended June 28, 2025, total centers increased by 15 due to acquiring 14 centers and opening eight centers, partially offset by seven permanent center closures. During the six months ended June 29, 2024, total centers increased by 11 due to acquiring 15 centers and opening five centers, partially offset by nine permanent center closures.
Previous wording
As of March 29, 2025, we operated 1,038 before- and after-school sites, an increase of 88 sites from 950 before- and after-school sites as of March 30, 2024. Total before- and after-school sites increased by 13 during the three months ended March 29, 2025 due to opening 19 sites, partially offset by six site closures. Total before- and after-school sites increased by two during the three months ended March 30, 2024 as a result of opening 12 sites, partially offset by 10 site closures.
Current wording
As of June 28, 2025, we operated 1,043 before- and after-school sites, an increase of 99 sites from 944 before- and after-school sites as of June 29, 2024. Total before- and after-school sites increased by 18 during the six months ended June 28, 2025 due to opening 47 sites, partially offset by 29 permanent site closures. Total before- and after-school sites decreased by four during the six months ended June 29, 2024 due to permanently closing 33 sites, partially offset by 29 site openings.
Previous wording
Average weekly ECE FTEs for the three months ended March 29, 2025 decreased by 1,104, or 0.8%, as compared to the three months ended March 30, 2024 primarily due to lower FTEs at same-centers and closed centers, partially offset by FTEs at new and acquired centers.
Current wording
Average weekly ECE FTEs for the three months ended June 28, 2025 decreased by 2,107, or 1.4%, as compared to the three months ended June 29, 2024 primarily due to lower FTEs at same-centers, partially offset by FTEs at new and acquired centers.
Previous wording
ECE same-center occupancy decreased by 50 basis points for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024 primarily due to lower enrollment at same-centers.
Current wording
ECE same-center occupancy decreased by 130 basis points for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024 primarily due to lower enrollment at same-centers.
Previous wording
ECE same-center revenue increased by $8.6 million, or 1.4%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. ECE same-center revenue growth of $4.1 million, or 0.7%, was driven by centers that were classified as same-centers as of both March 29, 2025 and March 30, 2024. The remaining $4.5 million increase in ECE same-center revenue growth was driven by the net impact of new and acquired centers not yet classified as same-centers as of March 30, 2024 and center closures as of March 29, 2025.
Current wording
ECE same-center revenue increased by $5.4 million, or 0.9%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024. ECE same-center revenue growth of $0.7 million, or 0.1%, was driven by centers that were classified as same-centers as of both June 28, 2025 and June 29, 2024. Additionally, $4.7 million of the increase in ECE same-center revenue was driven by the net impact of new and acquired centers not yet classified as same-centers as of June 29, 2024 and center closures as of June 28, 2025.
Previous wording
Our revenue is derived primarily from tuition charged for providing early childhood education and care services at our centers and sites. The majority of tuition is paid by individual families and may be partially subsidized by amounts received from government agencies or employer sponsors. Subsidy revenue from government agencies was $240.1 million and $215.8 million during the three months ended March 29, 2025 and March 30, 2024, respectively.
Current wording
Our revenue is derived primarily from tuition charged for providing early childhood education and care services at our centers and sites. The majority of tuition is paid by individual families and may be partially subsidized by amounts received from government agencies or employer sponsors. Subsidy revenue from government agencies was $258.9 million and $241.4 million during the three months ended June 28, 2025 and June 29, 2024, and $499.0 million and $457.2 million during the six months ended June 28, 2025 and June 29, 2024, respectively.
Previous wording
Our depreciation and amortization includes depreciation relating to centers and sites, field management, and corporate facilities as well as amortization related to finance lease right-of-use assets and definite-lived intangibles, such as client relationships and trade names and trademarks.
Current wording
Our depreciation and amortization includes depreciation relating to centers and sites, field management, and corporate facilities as well as amortization related to finance lease right-of-use ("ROU") assets and definite-lived intangibles, such as client relationships and trade names and trademarks.
Previous wording
Our impairment losses relate to property and equipment, operating right-of-use assets, and definite-lived intangible assets.
Current wording
Our impairment losses relate to property and equipment, operating ROU assets, and definite-lived intangible assets.
Previous wording
Other expense (income), net includes sub-lease income, miscellaneous insurance proceeds, contract settlements, and realized and unrealized gains and losses related to investment trust assets.
Current wording
Other income, net includes sub-lease income, miscellaneous insurance proceeds, contract settlements, and realized and unrealized gains and losses related to investment trust assets.
Previous wording
During 2020 and 2021, the United States government approved several incremental stimulus funding programs for ECE providers in response to the coronavirus disease 2019 (“COVID-19”) pandemic, and as a result, we have received grants in the form of revenue or cost reimbursements (“COVID-19 Related Stimulus”). We recognized $0.7 million and $24.1 million during the three months ended March 29, 2025 and March 30, 2024, respectively, in funding for reimbursement of center operating expenses in cost of services (excluding depreciation and impairment). The federal programs funding the COVID-19 Related Stimulus were required to distribute all stimulus funding for stabilization of the child care industry by December 31, 2024, and we do not expect to receive a material amount of funding after that date. The variability of funding provided by COVID-19 Related Stimulus has impacted the comparability of our operating results for the periods presented, and the conclusion of the programs will have an impact on the comparability of future periods.
Current wording
During 2020 and 2021, the United States government approved several incremental stimulus funding programs for ECE providers in response to the coronavirus disease 2019 (“COVID-19”) pandemic, and as a result, we have received grants in the form of revenue or cost reimbursements (“COVID-19 Related Stimulus”). We recognized $0.7 million during the six months ended June 28, 2025 and $14.9 million and $39.0 million during the three and six months ended June 29, 2024, respectively, in funding for reimbursement of center operating expenses in cost of services (excluding depreciation and impairment). There were no amounts recognized during the three months ended June 28, 2025. The federal programs funding the COVID-19 Related Stimulus were required to distribute all stimulus funding for stabilization of the child care industry by December 31, 2024, and we do not expect to receive a material amount of funding after that date. The variability of funding provided by COVID-19 Related Stimulus has impacted the comparability of our operating results for the periods presented, and the conclusion of the programs will have an impact on the comparability of future periods.
Previous wording
The Employee Retention Credit (“ERC”), established by the Coronavirus Aid, Relief and Economic Security Act and extended and expanded by several subsequent governmental acts, allows eligible businesses to claim a per employee payroll tax credit based on a percentage of qualified wages, including health care expenses, paid during calendar year 2020 through September 2021. During the fiscal year ended December 31, 2022, we applied for ERC for qualified wages and benefits paid throughout the fiscal years ended January 1, 2022 and January 2, 2021. Reimbursements of $62.0 million in cash tax refunds for ERC claimed, along with $2.3 million in interest income, were received during the fiscal year ended December 30, 2023. Due to the unprecedented nature of ERC legislation and the changing administrative guidance, not all of the ERC reimbursements received have met our recognition criteria. During the second quarter of the fiscal year ended December 28, 2024, we recognized $23.4 million of ERC in cost of services (excluding depreciation and impairment), along with $0.5 million in interest income. No ERC was recognized during the three months ended March 29, 2025 and March 30, 2024. The timing in recognition of the remaining deferred ERC liabilities will have an impact on the comparability of future periods.
Current wording
The Employee Retention Credit (“ERC”), established by the Coronavirus Aid, Relief and Economic Security Act and extended and expanded by several subsequent governmental acts, allows eligible businesses to claim a per employee payroll tax credit based on a percentage of qualified wages, including health care expenses, paid during calendar year 2020 through September 2021. During the fiscal year ended December 31, 2022, we applied for ERC for qualified wages and benefits paid throughout the fiscal years ended January 1, 2022 and January 2, 2021. Reimbursements of $62.0 million in cash tax refunds for ERC claimed, along with $2.3 million in interest income, were received during the fiscal year ended December 30, 2023. Due to the unprecedented nature of ERC legislation and the changing administrative guidance, not all of the ERC reimbursements received have met our recognition criteria. During both the three and six months ended June 28, 2025 and June 29, 2024, we recognized $30.1 million and $23.4 million of ERC in cost of services (excluding depreciation and impairment), along with $1.3 million and $0.5 million in interest income, respectively. The timing in recognition of the remaining deferred ERC liabilities will have an impact on the comparability of future periods.
Previous wording
The following table sets forth our results of operations including as a percentage of revenue for the three months ended March 29, 2025 and March 30, 2024 (in thousands, except where otherwise noted):
Current wording
The following table sets forth our results of operations including as a percentage of revenue for the three months ended June 28, 2025 and June 29, 2024 (in thousands, except per share data and percentages):
Previous wording
Revenue from early childhood education centers increased by $9.7 million, or 1.6%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024, of which approximately 2% was from higher tuition rates, partially offset by slightly lower enrollment.
Current wording
Revenue from early childhood education centers increased by $6.5 million, or 1.0%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024, of which approximately 2% was from higher tuition rates, partially offset by approximately 1% from lower enrollment.
Previous wording
The increase in revenue from early childhood education centers was primarily driven by $8.6 million higher ECE same-center revenue. Additionally, revenue from new and acquired centers not yet classified as same-centers increased by $2.0 million during the three months ended March 29, 2025, partially offset by center closures.
Current wording
The increase in revenue from early childhood education centers was primarily driven by $5.4 million higher ECE same-center revenue. Additionally, revenue from new and acquired centers not yet classified as same-centers increased by $2.0 million during the three months ended June 28, 2025, partially offset by center closures.
Previous wording
Revenue from before- and after-school sites increased by $3.9 million, or 7.8%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024 primarily due to opening new sites.
Current wording
Revenue from before- and after-school sites increased by $3.7 million, or 7.5%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024 primarily due to opening new sites.
Previous wording
Cost of services (excluding depreciation and impairment) increased by $18.5 million, or 3.7%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. This increase was driven by a $10.7 million decrease in reimbursements from government assistance, primarily related to the conclusion of certain COVID-19 Related Stimulus funding. The increase was also attributable to $4.7 million higher personnel costs due to increased wage rates, partially offset by lower grant-related bonuses and labor hours. Additionally, rent expense increased by $4.0 million primarily due to new and acquired centers.
Current wording
Cost of services (excluding depreciation and impairment) increased by $19.4 million, or 3.9%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024. This increase was driven by $7.9 million higher personnel costs due to increased wage rates, partially offset by lower grant-related bonuses and labor hours. Other center operating expenses increased by $7.0 million primarily as a result of operating more centers and sites, driven by higher food and supplies, janitorial and utilities costs, and property taxes. Additionally, rent expense increased $3.7 million primarily due to new and acquired centers. Lastly, the increase was also attributable to $0.8 million lower government assistance driven by a decrease in cost reimbursements, primarily related to the conclusion of certain COVID-19 Related Stimulus funding, partially offset by higher ERC recognized due to the timing of tax statute of limitations and qualifying creditable wages.
Previous wording
Depreciation and amortization increased by $1.4 million, or 5.0%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. This increase was primarily driven by higher depreciation expense as a result of assets placed into service from new and acquired centers as well as from capital expenditures in fiscal 2024.
Current wording
Depreciation and amortization increased by $1.9 million, or 6.4%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024. This increase was primarily driven by higher depreciation expense as a result of assets placed into service from new and acquired centers as well as from capital expenditures in fiscal 2024.
Previous wording
Interest expense decreased by $16.3 million, or 44.8%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. This decrease was primarily driven by lower outstanding principal and interest rates on the First Lien Term Loan Facility as a result of the October 2024 repayment and repricing amendment executed in conjunction with the IPO.
Current wording
Interest expense decreased by $23.9 million, or 54.3%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024. This decrease was primarily driven by lower outstanding principal and interest rates on the First Lien Term Loan Facility as a result of the October 2024 repayment and repricing amendment executed in conjunction with the IPO.
Previous wording
Interest income decreased by $1.4 million, or 68.7%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. This decrease was primarily driven by lower cash balances in interest-bearing accounts held at lower average interest rates.
Current wording
Interest income decreased by $0.3 million, or 18.7%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024. This decrease was primarily driven by lower average interest rates on cash balances held in interest-bearing accounts, partially offset by higher interest income from ERC recognition.
Previous wording
Other expense (income), net increased by $3.7 million, or 112.1%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. This increase was primarily due to a $2.1 million net change in realized and unrealized holding losses on deferred compensation plan investment trust assets. The increase was also attributable to $1.5 million in gains recognized on miscellaneous insurance claims during the three months ended March 30, 2024.
Current wording
Other income, net increased by $2.5 million, or 509.8%, for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024, primarily due to a $2.6 million net change in realized and unrealized holding gains on deferred compensation plan investment trust assets.
Previous wording
Income tax expense increased by $3.5 million for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. The effective tax rate was 27.0% for the three months ended March 29, 2025 as compared to 167.6% for the three months ended March 30, 2024. Compared to the statutory rate, the difference in the effective tax rate for the three months ended March 29, 2025 was primarily due to state income taxes. Compared to the statutory rate, the difference in the effective tax rate for the three months ended March 30, 2024 was primarily driven by tax expense from nondeductible stock-based compensation and state income taxes.
Current wording
Income tax expense increased by $4.1 million for the three months ended June 28, 2025 as compared to the three months ended June 29, 2024. The effective tax rate was 27.3% for the three months ended June 28, 2025 as compared to 26.7% for the three months ended June 29, 2024. Compared to the statutory rate, the differences in the effective tax rates for both the three months ended June 28, 2025 and June 29, 2024 were primarily due to the partial release of the receivable related to uncertain tax positions as a result of the portion of ERC recognized during the respective three months, as well as state income taxes. These impacts were partially offset by the recognition of ERC refunds during the respective three months for which the income tax expense had been previously recognized.
Previous wording
Selling, general, and administrative expenses decreased by $18.7 million, or 20.7%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. This decrease was primarily driven by lower stock-based compensation expense and bonus expense of $16.9 million due to the March 2024 distribution to holders of Class B profit interest units (“PIUs”) of KC Parent, LP (“KC Parent”), our direct parent prior to our IPO, and a related bonus to holders of restricted stock units (“RSUs”) and stock options during the three months ended March 30, 2024, partially offset by expense from additional awards granted under the 2022 Incentive Award Plan in October 2024 and March 2025.
Current wording
Selling, general, and administrative expenses decreased by $18.7 million, or 11.0%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024. This decrease was primarily driven by lower stock-based compensation expense and bonus expense of $16.5 million due to the March 2024 distribution to holders of Class B profit interest units (“PIUs”) of KC Parent, LP (“KC Parent”), our direct parent prior to our IPO, and a related bonus to holders of restricted stock units (“RSUs”) and stock options during the six months ended June 30, 2024, partially offset by expense from additional awards granted under the 2022 Plan. Additionally, meeting and travel expenses decreased by $6.1 million primarily attributable to our field leadership summit held during the six months ended June 29, 2024.
Previous wording
Impairment losses decreased by $2.9 million, or 65.4%, for the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. This decrease was driven by $2.0 million lower right-of-use asset impairment and $0.9 lower fixed asset impairment from fewer centers triggering the need for an impairment assessment during the three months ended March 29, 2025 and fewer centers impaired as a result of higher cash flow projections.
Current wording
Impairment losses decreased by $2.1 million, or 36.3%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024. This decrease was driven by lower ROU asset impairment from fewer centers impaired as a result of higher cash flow projections.
Previous wording
To supplement our consolidated financial statements, which are prepared and presented in accordance with the United States generally accepted accounting principles (“GAAP”), we also provide the below non-GAAP financial measures. EBIT, EBITDA, adjusted EBITDA, adjusted net income, and adjusted net income per common share (collectively referred to as the “non-GAAP financial measures”) are not presentations made in accordance with GAAP, and should not be considered as an alternative to net income or loss, income or loss from operations, or any other performance measure in accordance with GAAP, or as an alternative to cash provided by operating activities as a measure of our liquidity. Consequently, our non-GAAP financial measures should be considered together with our consolidated financial statements, which are prepared in accordance with GAAP.
Current wording
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we also provide the below non-GAAP financial measures. EBIT, EBITDA, adjusted EBITDA, adjusted net income, and adjusted net income per common share (collectively referred to as the “non-GAAP financial measures”) are not presentations made in accordance with GAAP, and should not be considered as an alternative to net income or loss, income or loss from operations, or any other performance measure in accordance with GAAP, or as an alternative to cash provided by operating activities as a measure of our liquidity. Consequently, our non-GAAP financial measures should be considered together with our consolidated financial statements, which are prepared in accordance with GAAP.
Previous wording
EBIT is defined as net income (loss) adjusted for interest and income tax expense. EBITDA is defined as EBIT adjusted for depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for impairment losses, stock-based compensation, management and advisory fee expenses, acquisition related costs, non-recurring distribution and bonus expense, COVID-19 Related Stimulus, net, and other costs because these charges do not relate to the core operations of our business. We present EBIT, EBITDA, and adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe they are useful to securities analysts, investors, and other interested parties. We believe adjusted EBITDA is helpful to investors in highlighting trends in our core operating performance compared to other measures, which can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, and capital investments.
Current wording
EBIT is defined as net income adjusted for interest and income tax expense. EBITDA is defined as EBIT adjusted for depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for impairment losses, stock-based compensation, management and advisory fee expenses, acquisition related costs, non-recurring distribution and bonus expense, COVID-19 Related Stimulus, net, and other costs because these charges do not relate to the core operations of our business. We present EBIT, EBITDA, and adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe they are useful to securities analysts, investors, and other interested parties. We believe adjusted EBITDA is helpful to investors in highlighting trends in our core operating performance compared to other measures, which can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, and capital investments.
Previous wording
The following table shows EBIT, EBITDA, and adjusted EBITDA for the periods presented, and the reconciliation to its most comparable GAAP measure, net income (loss), for the periods presented (in thousands):
Current wording
The following table shows EBIT, EBITDA, and adjusted EBITDA for the periods presented, and the reconciliation to its most comparable GAAP measure, net income, for the periods presented (in thousands):
Previous wording
Adjusted net income is defined as net income (loss) adjusted for income tax expense, amortization of intangible assets, impairment losses, stock-based compensation, management and advisory fee expenses, acquisition related costs, non-recurring distribution and bonus expense, COVID-19 Related Stimulus, net, loss on extinguishment of long-term debt, net, other costs, and non-GAAP income tax expense because these charges do not relate to the core operations of our business. Adjusted net income per common share is defined as the amount of adjusted net income per weighted average number of common shares outstanding. We present adjusted net income and adjusted net income per common share because we consider them to be important measures used to evaluate our operating performance internally. We believe the use of adjusted net income and adjusted net income per common share provides investors with consistency in the evaluation of the Company as they offer a meaningful comparison of past, present, and future operating results, as well as more useful financial comparisons to our peers. We believe these supplemental measures can be used to assess the financial performance of our business without regard to certain costs that are not representative of our continuing operations.
Current wording
Adjusted net income is defined as net income adjusted for income tax expense, amortization of intangible assets, impairment losses, stock-based compensation, management and advisory fee expenses, acquisition related costs, non-recurring distribution and bonus expense, COVID-19 Related Stimulus, net, loss on extinguishment of long-term debt, net, other costs, and non-GAAP income tax expense because these charges do not relate to the core operations of our business. Adjusted net income per common share is defined as the amount of adjusted net income per weighted average number of common shares outstanding. We present adjusted net income and adjusted net income per common share because we consider them to be important measures used to evaluate our operating performance internally. We believe the use of adjusted net income and adjusted net income per common share provides investors with consistency in the evaluation of the Company as they offer a meaningful comparison of past, present, and future operating results, as well as more useful financial comparisons to our peers. We believe these supplemental measures can be used to assess the financial performance of our business without regard to certain costs that are not representative of our continuing operations.
Previous wording
The following table shows adjusted net income and adjusted net income per common share for the periods presented and the reconciliation to the most comparable GAAP measure, net income (loss) and net income (loss) per common share, respectively, for the periods presented (in thousands, except per share data):
Current wording
The following table shows adjusted net income and adjusted net income per common share for the periods presented and the reconciliation to the most comparable GAAP measure, net income and net income per common share, respectively, for the periods presented (in thousands, except per share data):
Previous wording
Represents non-cash stock-based compensation expense in accordance with Accounting Standards Codification (“ASC”) 718, Compensation: Stock Compensation, and excludes cash-settled, liability-classified stock-based compensation expense. The three months ended March 30, 2024 excludes $14.3 million in expense included within “Non-recurring distribution and bonus expense” as described in explanation (5) below.
Current wording
Represents non-cash stock-based compensation expense in accordance with Accounting Standards Codification (“ASC”) 718, Compensation: Stock Compensation, and excludes cash-settled, liability-classified stock-based compensation expense. The six months ended June 29, 2024 excludes $14.3 million in expense included within “Non-recurring distribution and bonus expense” as described in explanation (5) below.
Previous wording
Represents costs incurred in connection with planned and completed acquisitions, including due diligence, transaction, integration, and severance related costs. During the three months ended March 30, 2024, these costs were incurred related to the acquisition of Crème School.
Current wording
Represents costs incurred in connection with planned and completed acquisitions, including due diligence, transaction, integration, and severance related costs. During the six months ended June 29, 2024, these costs were incurred related to the acquisition of Crème School.
Previous wording
Includes expense reimbursements and revenue arising from the COVID-19 pandemic, net of pass-through expenses incurred as a result of certain grant requirements. We recognized $0.7 million and $24.1 million during the three months ended March 29, 2025 and March 30, 2024, respectively, in funding for reimbursement of center operating expenses in cost of services (excluding depreciation and impairment). COVID-19 Related Stimulus is net of pass-through expenses incurred as stipulated within certain grants of $4.6 million during the three months ended March 30, 2024. We did not incur COVID-19 Related Stimulus pass-through expenses during the three months ended March 29, 2025.
Current wording
Includes expense reimbursements and revenue arising from the COVID-19 pandemic, net of pass-through expenses incurred as a result of certain grant requirements. We recognized $0.7 million during the six months ended June 28, 2025 and $14.9 million and $39.0 million during the three and six months ended June 29, 2024, respectively, in funding for reimbursement of center operating expenses in cost of services (excluding depreciation and impairment). Additionally, during both the three and six months ended June 28, 2025 and June 29, 2024, we recognized $30.1 million and $23.4 million of ERC offsetting cost of services (excluding depreciation and impairment) as well as $2.1 million and $2.6 million in professional fees in selling, general, and administrative expenses, respectively, as a result of calculating and filing for ERC. COVID-19 Related Stimulus is net of pass-through expenses incurred as stipulated within certain grants of $1.9 million during both the three and six months ended June 28, 2025 and $4.5 million and $9.2 million during the three and six months ended June 29, 2024, respectively.
Previous wording
Includes certain professional fees incurred for both contemplated and completed debt and equity transactions, as well as costs expensed in connection with prior contemplated offerings. For the three months ended March 29, 2025, other costs include $0.2 million in costs related to our IPO. For the three months ended March 30, 2024, other costs include $2.2 million in transaction costs associated with our incremental first lien term loan borrowing. These costs represent items management believes are not indicative of core operating performance.
Current wording
Includes certain professional fees incurred for both contemplated and completed debt and equity transactions, as well as costs expensed in connection with prior contemplated offerings. For the six months ended June 28, 2025, other costs include $0.2 million in costs related to our IPO. For the three months ended June 29, 2024, other costs includes $1.4 million in costs related to our IPO and $0.7 million in transaction costs associated with our repricing on our senior secured credit facilities. For the six months ended June 29, 2024, other costs includes $2.9 million in transaction costs associated with our incremental first lien term loan and repricing on our senior secured credit facilities and $1.4 million in costs related to our IPO. These costs represent items management believes are not indicative of core operating performance.
Previous wording
Includes the tax effect of the non-GAAP adjustments, calculated using the appropriate federal and state statutory tax rate and the applicable tax treatment for each adjustment. The non-GAAP tax rate was 25.8% for the three months ended March 29, 2025 and March 30, 2024. Our statutory rate is re-evaluated at least annually.
Current wording
Includes the tax effect of the non-GAAP adjustments, calculated using the appropriate federal and state statutory tax rate and the applicable tax treatment for each adjustment. The non-GAAP tax rate was 25.8% for the three and six months ended June 28, 2025 and June 29, 2024. Our statutory rate is re-evaluated at least annually.
Previous wording
The outstanding shares and per share amounts for the three months ended March 30, 2024 have been retrospectively adjusted to reflect the Common Stock Conversion. Refer to Note 1 within the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.
Current wording
The outstanding shares and per share amounts for the three and six months ended June 29, 2024 have been retrospectively adjusted to reflect the Common Stock Conversion. Refer to Note 1 within the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.
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Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
Average weekly ECE FTEs for the six months ended June 28, 2025 decreased by 1,605, or 1.1%, as compared to the six months ended June 29, 2024 primarily due to lower FTEs at same-centers, partially offset by FTEs at new and acquired centers.
Current report — wording carried from elsewhere
ECE same-center occupancy decreased by 100 basis points for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024 primarily due to lower enrollment at same-centers.
Current report — wording carried from elsewhere
ECE same-center revenue increased by $14.4 million, or 1.2%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024. ECE same-center revenue growth of $5.6 million, or 0.5%, was driven by centers that were classified as same-centers as of both June 28, 2025 and June 29, 2024. Additionally, $8.8 million of the increase in ECE same-center revenue was driven by the net impact of new and acquired centers not yet classified as same-centers as of June 29, 2024 and center closures as of June 28, 2025.
Current report — wording carried from elsewhere
The following table sets forth our results of operations including as a percentage of revenue for the six months ended June 28, 2025 and June 29, 2024 (in thousands, except per share data and percentages):
Current report — wording carried from elsewhere
The increase in revenue from early childhood education centers was primarily driven by $14.4 million higher ECE same-center revenue. Additionally, revenue from new and acquired centers not yet classified as same-centers increased by $3.1 million during the six months ended June 28, 2025, partially offset by center closures.
Current report — wording carried from elsewhere
Depreciation and amortization increased by $3.3 million, or 5.7%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024. This increase was primarily due to higher depreciation expense as a result of assets placed into service from new and acquired centers as well as from capital expenditures in fiscal 2024.
Current report — wording carried from elsewhere
Interest expense decreased by $40.2 million, or 50.0%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024. This decrease was primarily driven by lower outstanding principal and interest rates on the First Lien Term Loan Facility as a result of the October 2024 repayment and repricing amendment executed in conjunction with the IPO.
Current report — wording carried from elsewhere
Interest income decreased by $1.8 million, or 46.0%, for the six months ended June 28, 2025 as compared to the six months ended June 29, 2024. This decrease was primarily driven by lower cash balances in interest-bearing accounts held at lower average interest rates, partially offset by higher interest income from ERC recognition.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Cost of services (excluding depreciation and impairment)
Previous report — wording carried elsewhere
Cost of services (excluding depreciation and impairment)