CoreCivic, Inc.

Our results of operations are impacted by the number of correctional and detention facilities we operated, including 40 we owned or controlled via a long-term lease and four owned by our government partners (CoreCivic Safety), the number of residential reentry centers we owned or controlled via a long-term lease (CoreCivic Community), the number of facilities we leased to government agencies (CoreCivic Properties), and the facilities we owned that were not in operation. The following table sets forth the changes in the number of facilities operated for the years ended December 31, 2025 and 2024.

Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024

During the year ended December 31, 2025, net income was $116.5 million, or $1.08 per diluted share, compared with net income of $68.9 million, or $0.62 per diluted share, for the previous year. Financial results for 2025 reflect $3.0 million of expenses associated with mergers and acquisitions, asset impairments of $1.5 million, and a net gain on the sale of real estate assets of $1.0 million. For the year ended December 31, 2025, income tax expense reflects a net benefit of $1.0 million associated with these special items.

Financial results for 2024 reflect a gain on the sale of real estate assets of $3.3 million and $3.1 million of asset impairments. Financial results for 2024 also reflect $31.3 million of expenses associated with debt repayments and refinancing transactions. For the year ended December 31, 2024, income tax expense reflects a net benefit of $9.8 million associated with these special items.

Our Current Operations

Our ongoing operations are organized into three principal business segments:

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CoreCivic Safety segment, consisting of the 44 correctional and detention facilities that are owned or controlled via a long-term lease and managed by CoreCivic, as well as those correctional and detention facilities owned by third parties but managed by CoreCivic. CoreCivic Safety also includes the operating results of our subsidiary that provides transportation services to governmental agencies, TransCor America, LLC, or TransCor.

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CoreCivic Community segment, consisting of the 20 residential reentry centers that are owned or controlled via a long-term lease and managed by CoreCivic. CoreCivic Community also includes the operating results of our electronic monitoring and case management services.

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CoreCivic Properties segment, consisting of the five correctional real estate properties owned by CoreCivic held for lease to government agencies.

For the years ended December 31, 2025 and 2024, our total segment net operating income, which we define as facility revenue (including interest income associated with finance leases) less operating expenses, was divided among our three business segments as follows:

Facility Operations

A key performance indicator we use to measure the revenue and expenses associated with the operation of the correctional, detention, and residential reentry facilities we own or manage is expressed in terms of a compensated man-day, which represents the revenue we generate and expenses we incur for one individual in our care for one calendar day. Revenue and expenses per compensated man-day are computed by dividing facility revenue and expenses by the total number of compensated man-days during the period. A compensated man-day represents a calendar day for which we are paid for the occupancy of an individual in our care. We believe the measurement is useful because we are compensated for operating and managing facilities at a per diem rate based upon actual or minimum guaranteed occupancy levels. We also measure our costs on a per compensated man-day basis, which are largely dependent upon the number of individuals in our care we accommodate. Further, per compensated man-day measurements are also used to estimate our potential profitability based on certain occupancy levels relative to design capacity. Revenue and expenses per compensated man-day for all of the correctional, detention, and residential reentry facilities placed into service that we owned or managed, exclusive of those held for lease, and for TransCor were as follows for the years ended December 31, 2025 and 2024:

Revenue

Total revenue consists of management revenue we generate through CoreCivic Safety and CoreCivic Community in the operation of correctional, detention, and residential reentry facilities, as well as the revenue we generate from TransCor and our electronic monitoring and case management services. Total revenue also consists of lease revenue we generate through CoreCivic Properties from facilities we lease to third-party operators. The following table reflects the components of revenue for the years ended December 31, 2025 and 2024 (in millions):

The $256.8 million, or 13.3%, increase in total management revenue was primarily a result of an increase in revenue of $145.8 million driven primarily by an increase of 7.3% in average revenue per compensated man-day. The increase in average revenue per compensated man-day primarily resulted from the effect of per diem increases at many of our facilities, along with a change in business mix. The increase in total management revenue was also a result of an increase in revenue of $109.6 million driven by an increase in average daily compensated population from 2024 to 2025, net of the effect of one less day of operations due to a leap year in 2024. Revenue generated from our electronic monitoring and case management services during 2025 increased $1.4 million (from $34.8 million during 2024 to $36.2 million during 2025).

Average daily compensated population increased 3,101, or 6.1%, to 54,266 in 2025 when compared to 51,165 in 2024. The increase in average daily compensated population was primarily a result of an increase in occupancy largely due to higher ICE populations, including from new contracts to reactivate the Dilley Immigration Processing Center, our California City Immigration Processing Center, and our West Tennessee Detention Facility. These three facilities, two of which had not yet reached stabilized occupancy as of December 31, 2025, accounted for an increase in average daily compensated population of 402 in 2025 compared with 2024. We currently expect average daily compensated populations to increase in 2026 as a result of these new contracts. The increase in average daily compensated population also resulted from two new management contracts with the state of Montana. In August 2024, we entered into a contract with the state of Montana which contributed to an increase in populations held at our Saguaro Correctional Facility. In addition, on January 16, 2025, we announced that we were awarded a new management contract with the state of Montana to care for additional inmates outside the state of Montana. During 2025, we cared for an average daily population of 214 Montana inmates at our Tallahatchie County Correctional Facility in Mississippi under this new contract. In addition, the increase in average daily compensation in 2025 was impacted by our acquisition of the Farmville Detention Center effective July 1, 2025. At December 31, 2025, we cared for 726 individuals at the Farmville facility. Average compensated occupancy in our Safety and Community segments was 77.2% and 75.0% during 2025 and 2024, respectively. This increase in occupancy occurred despite an increase in average available beds due to the activation and transfer of our 2,560-bed California City Facility from the Properties segment to the Safety segment effective April 1, 2025. We began receiving ICE detainees at our California City Facility during August 2025 and, as of December 31, 2025, we cared for 1,436 individuals at the facility.

The solutions we provide to our federal customers, including primarily ICE and the USMS, continue to be a significant component of our business. The federal customers in our Safety and Community segments generated approximately 54% and 51% of our total revenue in 2025 and 2024, respectively, increasing $191.6 million, or 19.1%, in 2025 from 2024. The increase in federal revenue was primarily a result of increased occupancy at certain facilities, particularly those where we have contracts with ICE, and per diem increases. The increase in federal revenue from 2024 to 2025 was partially offset by the effect of one less day of operations due to a leap year in 2024.

As previously described, several executive and legislative actions have gone into effect since the inauguration of President Trump on January 20, 2025 that have resulted in an increase in the number of people detained by ICE, including in our detention facilities where we have existing contracts. During the first quarter of 2025, we entered into contract modifications at our Northeast Ohio Correctional Center, our Nevada Southern Detention Center, and our Cimarron Correctional Facility to collectively add capacity for up to 784 ICE detainees. We subsequently entered into two additional modifications in the second half of 2025 to collectively add additional capacity at the Cimarron facility for up to nearly 300 ICE detainees.

In addition, as previously mentioned, demand from ICE has resulted in the activation of five previously idled facilities. The following table presents the estimated total annual revenue from each of these facilities and the quarter each activation is expected to reach stabilized occupancy:

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Although we have been successful in hiring staff and have prepared the Midwest Regional Reception Center to accept detainees, the intake process has been delayed by legal challenges previously described herein. The new agreement provides for a fixed monthly payment plus an incremental per diem payment based on detainee populations, both of which commence once the temporary injunction currently prohibiting the intake of detainees is no longer enforceable. However, we cannot predict if or when either our application for a SUP will be approved or the legal challenges will be successfully resolved.

State revenues from contracts at correctional, detention, and residential reentry facilities that we operate increased $36.5 million, or 4.7%, from 2024 to 2025. State revenues increased as a result of per diem increases under a number of our state contracts, as certain states have recognized the need to provide additional funding to address increases in the wages of our employees. Most notably, state revenues increased $13.2 million due to higher utilization from the state of Montana resulting from two new management contracts executed during 2024 and 2025, as previously described herein, as well as higher utilization from other states under existing management contracts. State revenues also increased $14.3 million during 2025 when compared to 2024 from the state of Georgia due to increases in average daily populations as well as the impact of per diem increases in 2025. The increase in state revenues in 2025 was partially offset by the effect of one less day of operations due to a leap year in 2024.

The $7.4 million, or 28.4%, decrease in lease revenue from 2024 to 2025 primarily resulted from the expiration and non-renewal of the lease agreement with the state of California at our California City Facility effective March 31, 2024. The California City Facility transitioned from our Properties segment to our Safety segment during the second quarter of 2025, as we entered into an agreement with ICE to reactivate and operate the facility.

Operating Expenses

Operating expenses totaled $1,692.5 million and $1,493.4 million in 2025 and 2024, respectively. Operating expenses consist of those expenses incurred in the operation and management of correctional, detention, and residential reentry facilities, as well as those expenses incurred in the operations of TransCor and our electronic monitoring and case management services. Operating expenses also consist of those expenses incurred in the operation of facilities we lease to third-party operators.

Operating expenses incurred by CoreCivic Safety and CoreCivic Community in connection with the operation and management of our correctional, detention, and residential reentry facilities, as well as those incurred in the operations of TransCor and our electronic monitoring and case management services, increased $203.4 million, or 13.7%, during 2025 when compared with 2024. Operating expenses increased primarily as a result of wage increases across our portfolio. We achieved higher staffing levels during 2025 when compared with 2024, and we continued to see improvement in our attraction and retention of facility staff in the current labor market. In addition, wages and other operating expenses have increased as a result of an increase in our overall staffing levels in response to the increasing demand from the federal government for capacity at our correctional and detention facilities, particularly from ICE, due to recent changes in immigration policies under the current presidential administration. The increase in operating expenses from the prior year was also due to an increase in transportation services expense, which corresponds with the increased populations at certain of our facilities, as well as an overall increase in transportation needs from ICE. In addition, operating expenses increased from 2024 to 2025 as a result of the acquisition of the Farmville Detention Center on July 1, 2025, as further described herein.

The increase in operating expenses during 2025 when compared with 2024 was partially offset by $11.0 million of employee retention credits, or ERCs, recognized during the first half of 2025. The ERCs were made available to eligible businesses that had employees and were affected during the COVID-19 pandemic under the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, which was signed into law in March 2020 and was extended through June 30, 2021. The CARES Act, among other things, incentivized companies to retain employees through an ERC, which compensates employers for wages of employees that were retained and could not perform their job duties at 100% capacity as a result of coronavirus pandemic restrictions. The increase in operating expenses in 2025 was also partially offset by the effect of one less day of operations due to a leap year in 2024.

Total expenses per compensated man-day increased to $83.18 during 2025 from $77.16 during 2024. Expenses per compensated man-day increased as a result of start-up expenses at our California City Facility, our Midwest Regional Reception Center, our West Tennessee Detention Facility, and our Diamondback Correctional Facility. Further, we continue to experience labor shortages and wage pressures in several markets across the country, and have provided customary inflationary wage increases to remain competitive. Although the hiring environment has progressively improved since the COVID-19 pandemic, recruiting remains particularly challenging at certain facilities in particular geographic locations, resulting in incremental expenses to help ensure sufficient staffing levels. While we have been able to reduce the use of these temporary incentives at most facilities due to the improving hiring environment, we expect to continue to incur a certain level of incremental expenses in the future, particularly as demand from the federal government for capacity at our correctional and detention facilities is increasing, particularly from ICE. Incremental expenses include, but may not be limited to, incentive payments to our front-line and field staff, temporary employee housing expenses and other travel related reimbursements, additional paid time off, off-cycle wage increases in certain markets to remain competitive, and registry nursing expenses. These incremental investments have enabled us to increase overall staffing levels, which has contributed to the increase in total expenses per compensated man-day. The increase in total expenses per compensated man-day includes the effect of the termination of the funding of the IGSA associated with the Dilley Facility effective August 9, 2024. The IGSA was subsequently amended and operations resumed at the Dilley Facility in March 2025. These incremental operating expenses were partially offset by the ERCs, as previously mentioned.

We continually monitor compensation levels very closely along with overall economic conditions and will adjust wage levels necessary to help ensure the long-term success of our business. Further, we continually evaluate the structure of our employee benefits package and training programs to ensure we are better able to attract and retain our employees. Salaries and benefits represent the most significant component of our operating expenses, representing approximately 62% and 63% of our total operating expenses during 2025 and 2024, respectively. An inability to attract and retain sufficient personnel could prevent us from caring for additional residential populations for government agencies in need of additional capacity due to an increase in populations or an inability to adequately staff their facilities. An inability to attract and retain sufficient personnel in our existing facilities could also cause our government partners to assess liquidated damages, reduce our residential populations, or in certain circumstances, cancel our contracts. We have also been subjected to revenue deductions for staff vacancies as a result of the labor shortages, which are reflected as reductions to other management revenue. Estimating revenue deduction amounts due to staff vacancies can be complex and subject to management judgment and estimations. Some of our government partners have granted waivers for revenue deductions for staff vacancies in recognition of the unique and challenging labor market, while others have discretionarily adjusted such deductions based on our extraordinary costs, efforts and incentive programs implemented to attract and retain staff.

Variable expenses per compensated man-day increased to $22.19 during 2025 from $20.08 during 2024. The increase in variable expenses per compensated man-day was primarily due to the start-up expenses at four previously idle facilities, combined with the effect of an elevated inflation rate applicable to all of our variable expenses, partially offset by the effect of the termination of the funding of the IGSA associated with the Dilley Facility effective August 9, 2024. The IGSA was subsequently amended and operations resumed at the Dilley Facility on March 5, 2025. In addition, variable expenses per compensated man-day increased from 2024 to 2025 due to an increase in transportation services expense, which corresponds with the increased populations at certain of our facilities, as well as an overall increase in transportation needs from ICE.

Operating expenses incurred by CoreCivic Properties in connection with facilities we lease to third-party operators decreased $4.2 million, or 30.4%, during 2025 when compared with 2024. The decrease was primarily a result of the expiration and non-renewal of the lease agreement at our California City Facility effective March 31, 2024. The California City Facility transitioned from our Properties segment to our Safety segment during the second quarter of 2025, as we entered into an agreement with ICE to reactivate and operate the facility.

Facility Management Contracts

We enter into facility management contracts to provide bed capacity and management services to governmental entities in our CoreCivic Safety and CoreCivic Community segments for terms typically ranging from one to five years, with additional renewal periods at the option of the contracting governmental agency. Accordingly, a substantial portion of our facility management contracts are scheduled to expire each year, notwithstanding contractual renewal options that a government agency may exercise. Although we generally expect these customers to exercise renewal options or negotiate new contracts with us, one or more of these contracts may not be renewed by the corresponding governmental agency. Further, our government partners can generally terminate our management contracts for non-appropriation of funds or for convenience.

During 2024, ICE issued a request for proposal, or RFP, for up to 600 beds in New Jersey. We have offered the 300-bed Elizabeth Detention Center under this RFP. Our management contract at the Elizabeth Detention Center has continued under numerous short-term extensions, including most recently through February 28, 2026, with an additional extension option through March 31, 2026. We continue to discuss the terms of a long-term contract with ICE, but can provide no assurance that we will be awarded a new contract, or that ICE will continue to sign extensions. We generated total revenue of $22.6 million at this facility during 2025. At December 31, 2025, we cared for 303 detainees at this facility under terms of the most recently extended contract.

Based on information available as of the date of this Annual Report, we believe we will renew all contracts with our government partners that have expired or are scheduled to expire within the next twelve months that could have a material adverse impact on our financial statements. We believe our renewal rate on existing contracts remains high due to a variety of reasons including, but not limited to, the constrained supply of available beds within the U.S. correctional system, our ownership of the majority of the beds we operate, and the cost effectiveness of the services we provide. However, we can provide no assurance that we will continue to achieve high renewal rates in the future.

CoreCivic Safety

CoreCivic Safety includes the operating results of the correctional and detention facilities that we operated during each period. Total revenue generated by CoreCivic Safety increased $252.6 million, or 13.9%, from $1,816.9 million during 2024 to $2,069.5 million during 2025. CoreCivic Safety's facility net operating income increased $48.5 million, or 11.2%, from $434.3 million during 2024 to $482.8 million during 2025. During 2025 and 2024, CoreCivic Safety generated 91.7% and 91.1%, respectively, of our total segment net operating income.

The following table displays the revenue and expenses per compensated man-day for CoreCivic Safety's correctional and detention facilities placed into service that we own and manage and for the facilities we manage but do not own, inclusive of the transportation services provided by TransCor:

Operating margins in the CoreCivic Safety segment were negatively impacted during 2025 by start-up expenses incurred during the activation of our previously idled 2,560-bed California City Facility, our 1,033-bed Midwest Regional Reception Center, our 600-bed West Tennessee Detention Facility, and our 2,160-bed Diamondback Correctional Facility in advance of receiving detainee populations. These four facilities are currently in various stages of activation, resulting in facility operating losses of $5.7 million during the second half of 2025. We anticipate our California City Facility, West Tennessee facility, and Diamondback facilities will contribute to an increase in operating margins in future quarters. We also expect the Midwest Regional Reception Center to also contribute to an increase in operating margins in future quarters if the temporary injunction currently prohibiting the intake of detainees is no longer enforceable. In December 2025, we filed an application for the SUP. However, we cannot provide assurance that the legal challenges will be successfully resolved, or that the SUP will be approved and therefore, cannot predict if or when we will be able to accept detainee populations. Despite receiving some fixed revenue under letter agreements at the California City Facility and Midwest Regional Reception Center, we still incurred operating losses due to increasing staffing levels and other start-up expenses at these facilities during the second half of 2025. As further described hereinafter, on September 29, 2025, we announced that we entered into new longer-term contracts at both of these facilities that became effective in September 2025. Total revenue at these four facilities was $70.7 million during 2025.

Operating margins were also negatively impacted relative to 2024 by the termination of funding of the IGSA for services at the Dilley Facility, effective August 9, 2024, as previously described herein. The operating margin at the Dilley Facility exceeded the average operating margin of our portfolio due to the size and scalability of expenses, and due to the unique design and specialized services provided at the facility, and was also inflated in 2024 due to the recognition of the deferred revenue balance upon contract termination in August 2024. Accordingly, the termination of funding of the IGSA associated with the Dilley Facility had a negative impact on operating margins following the termination date. On March 5, 2025, we announced that we had agreed under an amendment to the IGSA to resume operations and care for up to 2,400 individuals at the Dilley Facility. The amended IGSA provides for a fixed monthly payment in accordance with a graduated schedule during the first six months of the agreement to correlate with the activation of the five neighborhoods within the facility, each designed to accommodate up to 480 individuals. Activation of the Dilley Facility was completed in September 2025, which is expected to contribute to an increase in operating margins in future quarters. Total revenue at the Dilley Facility increased to $118.1 million in 2025 from $101.2 million in 2024 and total operating expenses increased to $79.1 million in 2025 from $49.6 million in 2024. Total annual revenue generated by the Dilley Facility, as fully activated, is expected to be approximately $180.0 million.

Operating margins in 2025 were also temporarily negatively impacted by labor shortages and increased demand—especially from ICE as a result of changes in federal immigration policy—which required above-average wage increases and additional incentives (such as bonuses, housing, and travel reimbursements) to quickly attract and retain staff. Although some temporary incentives have been reduced, ongoing and potentially increased staffing costs are expected as labor demand continues to rise in order to meet customer demand for additional bed capacity, particularly from ICE. The negative impact of higher labor-related expenses has been largely offset by per diem increases at many of our facilities. We have received per diem increases as a result of additional government appropriations funding to address increases in the wages of our employees, and we have been able to achieve higher per diems under new contracts to help ensure we can hire staff at competitive wage rates in order to accept detainee populations as quickly as possible. Operating margins during 2025 were also positively impacted by ERCs received in the Safety segment amounting to $10.6 million during the first half of 2025.

We currently expect demand from the federal government for correctional and detention facilities in our Safety segment to further increase under the current presidential administration, particularly from ICE, as a result of changes in immigration policy and funding levels of our federal government partners charged with correctional and detention responsibilities, as previously described herein. This anticipated increase in demand could result in even higher utilization of our available capacity under existing contracts, as well as through new contracts utilizing our idle correctional and detention facilities or our other existing capacity. The activation of our idle correctional and detention facilities generally requires three to six months to hire, train, and prepare our facilities to accept residential populations, which, depending on the contract structure, could result in substantial expense before we are able to realize additional revenue. However, it is possible that ICE could continue to seek alternative forms of detention capacity, diverting potential utilization away from our facilities. For example, ICE has increased its use of military bases (domestically and at Guantanamo Bay), soft-sided facilities, idled or under-utilized facilities owned and operated by the BOP, facilities owned by state and local government agencies, international options, and has most recently proposed using warehouse-based real estate assets for use in ICE detention. Therefore, we can provide no assurance that the federal government will continue to increase the utilization of our available capacity, or that it will not decrease utilization of our capacity.

On August 14, 2025, we announced that we had been awarded a new contract through an IGSA with ICE to resume operations at our previously idled West Tennessee Detention Facility in Mason, Tennessee. The West Tennessee facility had been idle since September 2021. The IGSA expires in August 2030 and may be further extended through bilateral modification. The agreement provides for a fixed monthly payment plus an incremental per payment based on detainee populations. We began receiving ICE detainees at the West Tennessee facility during September 2025. Revenue generated at the West Tennessee facility amounted to $13.0 million during 2025. Total annual revenue once the facility is fully activated, expected to be complete by the end of the first quarter of 2026, is anticipated to be approximately $30.0 million.

On December 6, 2022, we received notice from the California Department of Corrections and Rehabilitation, or CDCR, of its intent to terminate the lease agreement for our California City Facility by March 31, 2024, due to the state's declining inmate population. The California City Facility, which was reported at that time in our Properties segment, was idled effective April 1, 2024. Effective April 1, 2025, we entered into a letter agreement with ICE to begin activation efforts at the California City Facility. The letter agreement authorized initial funding up to $10.0 million with maximum funding up to $31.2 million for a six-month period while we worked to negotiate and execute a longer-term contract. Because we are now operating the facility rather than leasing it, the California City Facility transitioned from our Properties segment to our Safety segment during the second quarter of 2025. We began receiving ICE detainees at our California City Facility during August 2025 under terms of the letter agreement. On September 29, 2025, we announced that we entered into a new two-year contract with ICE to utilize the California City Facility, effective September 1, 2025. Revenue generated at the California City Facility amounted to $39.2 million during 2025. As of December 31, 2025, we cared for 1,436 individuals at the facility. We currently expect activation of the facility to be complete in the first quarter of 2026. Total annual revenue once the activation is complete is expected to be approximately $130.0 million.

Effective March 7, 2025, we entered into a letter agreement with ICE to begin activation efforts at our Midwest Regional Reception Center in Leavenworth, Kansas. The letter agreement authorized initial funding up to $5.0 million with maximum funding up to $22.6 million for a six-month period while we worked to negotiate and execute a long-term contract. On September 29, 2025, we announced that we entered into a new two-year contract with ICE to utilize the Midwest Regional Reception Center, effective September 7, 2025. Although we have been successful in hiring staff and have prepared the facility to accept detainees, the intake process has been delayed by a lawsuit filed by the City of Leavenworth alleging that a SUP is required to operate the facility. Following negative court rulings in this matter, which remain under appeal, in December 2025, we filed an application for the SUP. However, we cannot provide assurance that our legal appeal will be successful, or that the SUP will be approved and, therefore, cannot predict if or when we will be able to accept detainee populations. The new agreement, which expires September 6, 2027, provides for a nominal fixed payment intended to partially offset start-up expenses through March 31, 2026 and then a fixed monthly payment plus an incremental per diem payment based on detainee populations, both of which commence once the temporary injunction currently prohibiting the intake of detainees is no longer enforceable. Total revenue generated at the Midwest Regional Reception Center amounted to $14.8 million during 2025. Total annual revenue once the facility is fully activated is expected to be approximately $60.0 million. Newly-hired employees have been offered opportunities to be redeployed at our other activations until matters concerning the SUP are resolved.

On October 1, 2025, we announced that we had been awarded a new contract through an IGSA between the Oklahoma Department of Corrections and ICE to resume operations at our previously idled 2,160-bed Diamondback Correctional Facility in Watonga, Oklahoma. The Diamondback facility had been idle since 2010. The new contract commenced on September 30, 2025, now expires in September 2029, and may be further extended through bilateral modification. We began receiving detainees in December 2025, with stabilized occupancy estimated to be reached in the second quarter of 2026. The agreement provides for a fixed monthly payment plus an incremental per diem payment based on detainee populations. Total annual revenue once the facility reaches stabilized occupancy is expected to be approximately $100.0 million.

During the fourth quarter of 2025, in response to a request from DHS to provide the agency with budgetary savings, we proposed to reduce the term of four management contracts, including the contract at our Diamondback Correctional Facility, by one year, which the agency accepted. The government may nonetheless elect to extend such contracts beyond their new terms.

On July 1, 2025, we acquired the Farmville Detention Center, a 736-bed facility located in Farmville, Virginia. The acquisition of the Farmville Detention Center was consummated through the acquisition of 100% of the membership interests in entities that owned and operated the facility. The aggregate purchase price was $71.4 million, including the acquisition of working capital accounts, but excluding $1.9 million of transaction-related expenses. The Farmville Detention Center provides transportation, care, and civil detention services for adult male non-citizens through an IGSA with ICE, which expires in March 2029, and is expected to result in total annual incremental revenue of approximately $40.0 million. During 2025, we generated total revenue at this facility of $21.8 million.

On August 1, 2024, we entered into a management contract with the state of Montana to care for an unspecified number of inmates at facilities we operate. The contract is scheduled to expire on July 31, 2026, and may be extended by mutual agreement for a total term of up to seven years. As of December 31, 2025, we cared for 361 inmates from the state of Montana at our Saguaro facility under this management contract, along with another similar contract with the state of Montana that was entered into during the fourth quarter of 2023. On January 16, 2025, we announced that we were awarded a new management contract with the state of Montana to care for additional inmates outside the state of Montana. As of December 31, 2025, we cared for 239 inmates from the state of Montana at our Tallahatchie facility in Mississippi under this new contract. This latest contract with Montana expands the geographic range of our facilities that can serve the state of Montana, where we also manage the fully occupied company-owned Crossroads Correctional Center in Shelby, Montana for the state of Montana pursuant to a separate management contract. During 2025, management revenue from the state of Montana at the Saguaro and Tallahatchie facilities increased $12.7 million from 2024.

CoreCivic Community

CoreCivic Community includes the operating results of the residential reentry centers that we operated during each period, along with the operating results of our electronic monitoring and case management services. Total revenue generated by CoreCivic Community increased $4.2 million, or 3.5%, from $118.7 million during 2024 to $122.8 million during 2025. CoreCivic Community's facility net operating income increased $5.0 million, or 23.0%, from $21.7 million during 2024 to $26.7 million during 2025. During 2025 and 2024, CoreCivic Community generated 5.1% and 4.6%, respectively, of our total segment net operating income.

The following table displays the revenue and expenses per compensated man-day for CoreCivic Community's residential reentry facilities placed into service that we own and manage, but exclusive of the electronic monitoring and case management services given that revenue is not generated on a per compensated man-day basis for these services:

Operating margins in our CoreCivic Community segment were positively impacted during 2025 by an increase in average revenue per compensated man-day, which increased from 2024 primarily as a result of per diem increases at several of our facilities, as well as for ERCs received in the Community segment amounting to $0.4 million during the first half of 2025. In addition, variable expenses per compensated man-day decreased as a result of a settlement of a legal matter at a facility in the Community segment recognized during the third quarter of 2024. The effect on operating margins of the increased average revenue per compensated man-day, the ERCs, and the decrease in variable expenses per compensated man-day was partially offset by increased fixed expenses per man-day, which were driven primarily by higher wage rates and inflationary increases in other fixed expenses. Because facilities in our Community segment are typically smaller in size than those in our Safety segment, occupancy fluctuations have a larger impact on operating margin per compensated man-day. Accordingly, modest changes in occupancy can have a notable impact in our Community segment.

Operating margins in the Community segment were also favorably impacted in 2025 relative to 2024 due to the sale of three residential reentry facilities, which performed below our average operating margin. In January 2024, we completed the sale of the 120-bed Dahlia Facility, a residential reentry center in Denver, Colorado. We continued to operate the Dahlia facility through the expiration of the management contract in June 2024. In July 2024, we completed the sale of the idled 390-bed Tulsa Transitional Center, a residential reentry center in Tulsa, Oklahoma. In September 2025, we completed the sale of the idled 60-bed Columbine Facility in Denver, Colorado. During 2024, these three facilities incurred facility net operating losses totaling $0.2 million.

During the third quarter of 2025, we and Boulder County, Colorado entered into a short-term extension through January 2026 of the contract at our Longmont Community Treatment Center in Longmont, Colorado. Upon expiration of the contract in January 2026, Boulder County transferred the residential population to a new sentencing facility it constructed. We have engaged a broker and are committed to a process to sell the Longmont facility resulting in the classification of the facility as held for sale as of December 31, 2025. This facility generated facility net operating income of $0.2 million during 2025.

CoreCivic Properties

CoreCivic Properties includes the operating results of the properties we leased to government agencies during each period. Total revenue generated by CoreCivic Properties decreased $7.4 million, or 28.3%, from $26.1 million during 2024 to $18.7 million during 2025. CoreCivic Properties' facility net operating income decreased $3.2 million, or 25.8%, from $12.3 million during 2024 to $9.1 million during 2025. During 2025 and 2024, CoreCivic Properties generated 3.2% and 4.3%, respectively, of our total segment net operating income.

On December 6, 2022, we received notice from the CDCR of its intent to terminate the lease agreement for our 2,560-bed California City Facility by March 31, 2024, due to the state's declining inmate population. The California City Facility was idled effective April 1, 2024. Effective April 1, 2025, we entered into a letter agreement with ICE to begin activation efforts at the California City Facility, and on September 29, 2025, we announced that we were awarded a new two-year contract at this facility. We began receiving detainees at the California City facility in August 2025, and currently expect the activation to be complete in the first quarter of 2026. Because we are now operating the facility rather than leasing it, the California City Facility transitioned from our Properties segment to our Safety segment during the second quarter of 2025. Rental revenue generated from the CDCR at the California City Facility was $8.5 million during the period the lease was active in 2024. Facility net operating income was $3.8 million during 2024, including carrying expenses we continued to incur following the lease termination. Facility net operating loss was $0.9 million during the first quarter of 2025 at the California City Facility while the facility was still being reported in our Properties segment.

General and administrative expense

For the years ended December 31, 2025 and 2024, general and administrative expenses totaled $169.6 million and $152.1 million, respectively. General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees, and other administrative expenses. General and administrative expenses increased during 2025 when compared to 2024 primarily as a result of an increase in corporate salaries and benefits, which was largely related to higher incentive-based compensation. In addition, general and administrative expenses increased as a result of $3.0 million of expenses incurred in 2025 associated with mergers and acquisitions, primarily related to the acquisition of the Farmville Detention Center on July 1, 2025.

Depreciation and Amortization

For the years ended December 31, 2025 and 2024, depreciation and amortization expense totaled $128.9 million and $128.0 million, respectively. Depreciation and amortization expense increased in 2025 when compared to 2024 primarily as a result of additional expense resulting from the acquisition of the Farmville Detention Center on July 1, 2025. The increase in depreciation and amortization expense was partially offset as a result of certain assets, including certain information technology assets, becoming fully depreciated. Further, we have begun to incur expenses associated with the purchase of "software as a service", or SaaS, technology, which reduces our need to install, maintain, and update certain software applications, but often results in higher operating expenses.

Asset impairments

During the third quarter of 2025, we and Boulder County, Colorado entered into a short-term extension through January 2026 of the contract at our Longmont Community Treatment Center in Longmont, Colorado, a facility in our Community segment. Upon expiration of the contract in January 2026, Boulder County transferred the residential population to a new sentencing facility it constructed. We have engaged a broker and are committed to a process to sell the Longmont facility resulting in the need to test the facility for impairment. As a result, an impairment charge of $1.5 million was recognized during the third quarter of 2025 to reduce the net book value of the Longmont facility to its estimated fair value.

During the third quarter of 2024, we recognized an impairment charge of $3.1 million associated with the terminations of the IGSA and lease agreement with respect to the Dilley Facility effective August 9, 2024.

Interest expense, net and expenses associated with debt repayments and refinancing transactions

Interest expense is reported net of interest income and capitalized interest for the years ended December 31, 2025 and 2024. Gross interest expense, net of capitalized interest, was $76.0 million and $79.7 million in 2025 and 2024, respectively. Gross interest expense was based on outstanding borrowings under our revolving credit facility, or Revolving Credit Facility, our outstanding term loan, or Term Loan, or collectively, our Bank Credit Facility, our outstanding senior unsecured notes, and our outstanding non-recourse mortgage note, as well as the amortization of loan costs and unused facility fees. Gross interest income was $13.8 million and $12.3 million in 2025 and 2024, respectively. Gross interest income is earned on notes receivable, investments, cash and cash equivalents, and restricted cash. Interest income also includes interest income associated with the 20-year finance receivable associated with the Lansing Correctional Facility lease to the Kansas Department of Corrections, which commenced in January 2020, and amounted to $8.1 million and $8.3 million, in 2025 and 2024, respectively. During 2025, interest income also included $3.7 million for interest collected from the Internal Revenue Service on our ERCs. Total capitalized interest was $0.5 million during 2025. Net interest expense during 2025 decreased when compared to 2024 as a result of a decrease in the interest rates associated with our debt, as further described hereinafter, along with interest income associated with the ERCs.

On March 12, 2024, we completed an underwritten registered public offering of $500.0 million aggregate principal amount of 8.25% senior unsecured notes due in April 2029, or the 8.25% Senior Notes. During March and April 2024, we used the net proceeds from the offering, along with cash on hand, to tender and redeem in full our remaining 8.25% senior unsecured notes due in April 2026, amounting to $593.1 million. During 2024, we recorded charges totaling $31.3 million associated with the cash tender offer and redemption of such senior unsecured notes.

Based on our total leverage ratio, during the first quarter of 2024, interest on loans under our Bank Credit Facility bore interest at a base rate plus a margin of 2.25% or at the Secured Overnight Financing Rate, or Term SOFR, plus a margin of 3.25%, and a commitment fee equal to 0.45% of the unfunded balance of the Revolving Credit Facility. Based on our total leverage ratio as of March 31, 2024, during the second quarter of 2024, the interest rate spread for base rate loans declined to 2.00%, the interest rate spread for Term SOFR loans was reduced to 3.00%, and the commitment fee decreased to 0.40%. Based on our total leverage ratio as of June 30, 2024 and each quarter since then, the interest rate spread for base rate loans further declined to 1.75%, the interest rate spread for Term SOFR loans was reduced to 2.75%, and the commitment fee decreased to 0.35%.

Gain/Loss on sale of real estate assets, net

On September 30, 2025, we completed the sale of our idled 60-bed Columbine Facility in Colorado that was reported in our Community segment for a net sales price of $3.7 million, resulting in a net gain on sale of real estate assets of $2.5 million. On May 3, 2024, we entered into a purchase and sale agreement for the sale of our idled 240-bed Leo Chesney Correctional Center in California that was reported in our Safety segment. The sale had been extended several times and during the fourth quarter of 2025, we agreed to sell the facility for $1.2 million. The sale was completed in the fourth quarter of 2025, which resulted in a loss on sale of real estate assets of $1.5 million.

Gain on sale of real estate assets, net during 2024, includes a $1.2 million gain on the sale of our idled 390-bed Tulsa Transitional Center in July 2024 and a $0.5 million gain on the sale of our 120-bed Dahlia Facility in January 2024, both reported in our Community segment. During 2024, we also sold two unused parcels of land in Texas generating net sales proceeds of $1.9 million and resulting in an aggregate gain on sale of $1.6 million.

Income tax expense

We recorded income tax expense of $40.7 million and $23.1 million during the years ended December 31, 2025 and 2024, respectively, and increased due to an increase in pre-tax income in 2025 compared with 2024. The income tax expense related to operations for 2025 and 2024 was net of an income tax benefit associated with stock-based compensation vesting generally during the first quarter of each year and amounted to $2.5 million and $2.3 million during 2025 and 2024, respectively. Income tax expense related to operations for 2025 was net of an income tax benefit of $1.0 million associated with asset impairments and the acquisition of the Farmville Detention Center, net of the gain on sale of real estate assets, all as previously described herein. In addition, income tax expense related to operations for 2024 was net of an income tax benefit of $9.8 million for expenses associated with asset impairments and refinancing transactions, net of the gain on sale of real estate assets, all as previously described herein.

Our effective tax rate could fluctuate in the future based on changes in estimates of taxable income, the implementation of additional tax planning strategies, changes in federal or state tax rates or laws affecting tax credits available to us, changes in other tax laws, limits on certain deductible expenses, changes in estimates related to uncertain tax positions, or changes in state apportionment factors, as well as changes in the valuation allowance applied to our deferred tax assets that are based primarily on the amount of state net operating losses and tax credits that could expire unused.

Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023

Pursuant to Regulation S-K item 303, a detailed review of our performance for the year ended December 31, 2024 compared to our performance for the year ended December 31, 2023 is set forth in "Part 2, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 21, 2025.