KinderCare Learning Companies, Inc.
For the period ended Apr 4, 2026. Filed May 14, 2026.
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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.
Apr 4, 2026 · Filed May 14, 2026
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 2025-09-27; filed 2025-11-12.
0001193125-25-277937
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-04-04; filed 2026-05-14.
0001193125-26-224168
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 151 previous paragraphs and 103 current paragraphs.
50 unchanged; 40 reworded; 12 added; 58 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 11 previous and 9 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 (12)
Current report
Total revenue increased by $4.3 million, or 0.6%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025.
Current report
The $4.8 million decrease in early childhood education centers revenue for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025 was comprised of $7.4 million lower ECE same-center revenue, partially offset by $3.0 million higher revenue from new and acquired centers not yet classified as same centers.
Current report
Depreciation and amortization
Current report
Selling, general, and administrative expenses
Current report
Selling, general, and administrative expenses decreased by $0.6 million, or 0.8%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. This decrease was driven by lower stock-based compensation expense due to certain awards becoming fully vested in fiscal 2025 combined with the awards granted during the three months ended April 4, 2026 at a lower fair value than previously granted awards.
Current report
Impairment losses
Current report
Impairment losses increased by $290.0 million for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. This increase was driven by a $273.5 million goodwill impairment as a result of testing performed during the first quarter of fiscal 2026 triggered by the further deterioration in our market capitalization from a continued decline in our stock price. Additionally, impairment of long-lived assets increased by $16.5 million due to more centers with reduced cash flow projections as a result of lower operational performance and centers identified for closure during the three months ended April 4, 2026.
Current report
Interest expense
Current report
Interest income
Current report
Other expense, net
Current report
Income tax (benefit) expense
Current report
Cash used in financing activities increased by $1.7 million for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. The increase was primarily due to one principal payment on the First Lien Term Loan made during the three months ended April 4, 2026, while no principal payment was made during the three months ended March 29, 2025 due to the timing of our fiscal period ends.
Removed paragraphs (58)
Previous report
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 nine months ended September 27, 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 report
Factors Affecting Results of Operations
Previous report
The following factors, among others described herein, have been important to our business and we expect them to impact our results of operations and financial condition in future periods:
Previous report
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 report
Pricing model designed for continued growth: We expect to implement regular price increases to support center re-investment and enhance our operational performance. Tuition increases are standard across the industry, and we view them as a reliable component of our business model. Additionally, while we expect rates to increase each year, the out-of-pocket costs paid by parents with children who continue to enroll in our programs decline on an annual basis as tuition costs decrease as children age-up (e.g., three-year olds have lower tuition costs than two-year olds). Assuming consistent enrollment across ages, tuition increases have an immediate positive impact to revenue.
Previous report
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 report
Develop and nurture other revenue streams and expand service offerings. Supporting services adjacent to our ECE business provide diversification and drives incremental revenue. Leveraging our employer relationships, our business-to-business offerings, which include tuition benefits programs and employer-sponsored centers, are poised for growth as employers are increasingly recognizing the importance of supporting their employees with access to quality ECE programs. In the before- and after-school programs market we have contracts with approximately 2% of the nearly 64,000 elementary schools in the United States, providing significant opportunity to continue to grow our footprint.
Previous report
Access to governmental funding and advocacy to support the ECE industry. We receive various forms of federal, state, and local governmental funding to support our operations and serve more families including reimbursements for food costs through the federal Child and Adult Food Care Program as well as grants for capital purchases, teacher compensation, and other center operating costs. In addition, we proactively work with prospective and current families to help them access public subsidy funding. As a market leader, we believe we are well positioned to advocate for continued and increased government support for the broader ECE industry.
Previous report
Adapt to changes in seasonal demand for child care and other services. Enrollments at centers and before- and after-school sites are generally higher in the spring and fall back-to-school period and lower during the summer and calendar year-end holidays when families may be on vacation or utilizing alternative child care arrangements. As a result, revenue at centers and sites may decline during the third quarter, which overlaps with most of the summer season. To adapt to the changes in seasonal demand, centers offer summer programs and Champions offers day camps for school-age children during the summer and calendar year-end holidays.
Previous report
Average weekly ECE FTEs for the nine months ended September 27, 2025 decreased by 1,998, or 1.4%, as compared to the nine months ended September 28, 2024 primarily due to lower FTEs at same-centers.
Previous report
ECE same-center occupancy decreased by 120 basis points for the nine months ended September 27, 2025 as compared to the nine months ended September 28, 2024 primarily due to lower enrollment at same-centers.
Previous report
Components of Results of Operations
Previous report
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 $252.2 million and $242.6 million during the three months ended September 27, 2025 and September 28, 2024, and $751.2 million and $699.8 million during the nine months ended September 27, 2025 and September 28, 2024, respectively.
Previous report
Our cost of services includes the direct costs related to the operation of our centers and sites and excludes depreciation and impairment. Cost of services consists primarily of personnel costs, rent, food, costs of operating and maintaining facilities, taxes and licenses, marketing, transportation, classroom and office supplies, and insurance. Government assistance, consisting of reimbursements from federal, state, and local agencies, offsets certain operating expenses.
Previous report
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 report
Selling, general, and administrative expenses include costs, primarily personnel related, associated with field management, corporate oversight, support of our centers and sites, and stock-based compensation.
Previous report
Our impairment losses relate to property and equipment, operating ROU assets, and definite-lived intangible assets.
Previous report
Interest expense includes long-term debt interest, gain or loss on interest rate derivatives, amortization of debt issuance costs, and gain or loss on extinguishment of debt.
Previous report
Interest income includes interest earned on cash held in interest-bearing accounts.
Previous report
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 report
Income taxes primarily consist of an estimate of federal and state income taxes based on enacted federal and state tax rates, as adjusted for allowable credits, differences between the United States generally accepted accounting principles (“GAAP”) and tax income and deductions, and the tax effect from uncertain tax positions, as applicable.
Previous report
Factors Affecting the Comparability of our Results of Operations
Previous report
As a result of certain factors, our historical results of operations may not be comparable from period to period and may not be comparable to our financial results of operations in future periods. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.
Previous report
IPO and Related Transactions
Previous report
In October 2024, our IPO was completed. Net proceeds from the IPO were primarily utilized to repay $608.0 million of outstanding principal on our first lien term loan (“First Lien Term Loan Facility”), which provided us the ability to enter into a repricing amendment to the credit agreement, dated as of June 12, 2023 (as subsequently amended and restated) (the “Credit Agreement”), to reduce the interest rates on our senior secured credit facilities. Additionally, we have incurred expenses during our transition to a public company that we had not previously incurred as a private company, including costs associated with public company reporting requirements of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), which have impacted our results of operations.
Previous report
Our IPO, as well as the transactions we entered into in connection with our IPO, have affected the comparability of our operating results for the periods presented and are expected to have an impact on the comparability of future periods. Refer to Note 13 and Note 17 within our 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 report
COVID-19 Related Stimulus
Previous report
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 nine months ended September 27, 2025 and $16.9 million and $55.9 million during the three and nine months ended September 28, 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 September 27, 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 report
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 nine months ended September 27, 2025 and September 28, 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. No ERC was recognized during the three months ended September 27, 2025 and September 28, 2024. The timing in recognition of the remaining deferred ERC liabilities will have an impact on the comparability of future periods.
Previous report
Revenue
Previous report
Revenue from early childhood education centers increased by $0.5 million, or 0.1%, for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024, of which approximately 2% was from higher tuition rates, partially offset by approximately 2% from lower enrollment.
Previous report
The increase in revenue from early childhood education centers was driven by $0.2 million higher ECE same-center revenue and $0.3 million in revenue from closed centers and new and acquired centers that were not classified as same-centers as of each respective three month period.
Previous report
Selling, general, and administrative expenses increased by $7.9 million, or 12.2%, for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024. This increase was driven by $3.9 million higher professional fees primarily related to investments in new technology and digital solutions as well as the July 2025 repricing amendment to the Credit Agreement. The increase was also attributable to $2.8 million higher personnel costs from salary and wage rate increases, partially offset by optimized headcount. Lastly, computer costs increased by $2.0 million due to software license fees and amortization of deferred cloud computing costs in the current period.
Previous report
Impairment losses increased by $2.1 million, or 163.2%, for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024, primarily driven by property and equipment impairment at certain centers with higher carrying values.
Previous report
Comparison of the Nine Months Ended September 27, 2025 and September 28, 2024
Previous report
Revenue
Previous report
Total revenue increased by $29.1 million, or 1.4%, for the nine months ended September 27, 2025 as compared to the nine months ended September 28, 2024.
Previous report
Revenue from early childhood education centers increased by $16.8 million, or 0.9%, for the nine months ended September 27, 2025 as compared to the nine months ended September 28, 2024, of which approximately 2% was from higher tuition rates, partially offset by approximately 1% from lower enrollment.
Previous report
The increase in revenue from early childhood education centers was driven by $16.6 million higher ECE same-center revenue as well as $0.2 million higher revenue from the net impact of closed centers and new and acquired centers that were not classified as same-centers as of each respective nine month period.
Previous report
Revenue from before- and after-school sites increased by $12.3 million, or 8.6%, for the nine months ended September 27, 2025 as compared to the nine months ended September 28, 2024 primarily due to opening new sites.
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Reworded paragraphs (40)
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 and nine months ended September 27, 2025 and September 28, 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 months ended April 4, 2026 and March 29, 2025 included elsewhere in this Quarterly Report on Form 10-Q and audited consolidated financial statements and notes thereto for the fiscal year ended January 3, 2026 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 13, 2026. 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 1,595 early childhood education centers with center capacity for 213,709 children and 1,138 before- and after-school sites located in 41 states and the District of Columbia as of September 27, 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 1,606 early childhood education centers with center capacity for 215,371 children and 1,159 before- and after-school sites located in 41 states and the District of Columbia as of April 4, 2026.
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 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.
Current wording
We measure and track the number of centers and sites because, as our number of centers and sites change, it highlights our geographic footprint and potential growth in revenue. We believe this information is useful to investors as an indicator of opportunity for 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 September 27, 2025, we operated 1,595 early childhood education centers with a center capacity for 213,709 children as compared to 1,573 early childhood education centers as of September 28, 2024, with a center capacity for 210,972 children. During the nine months ended September 27, 2025, total centers increased by 21 due to acquiring 20 centers and opening 13 centers, partially offset by 12 permanent center closures. During the nine months ended September 28, 2024, total centers increased by 16 due to acquiring 16 centers and opening 10 centers, partially offset by 10 permanent center closures.
Current wording
As of April 4, 2026, we operated 1,606 early childhood education centers with a center capacity for 215,371 children as compared to 1,582 early childhood education centers as of March 29, 2025, with a center capacity for 211,767 children. During the three months ended April 4, 2026, total centers increased by five due to opening three centers and acquiring two centers. During the three months ended March 29, 2025, total centers increased by eight due to both acquiring and opening five centers, partially offset by two permanent center closures.
Previous wording
As of September 27, 2025, we operated 1,138 before- and after-school sites, an increase of 120 sites from 1,018 before- and after-school sites as of September 28, 2024. Total before- and after-school sites increased by 113 during the nine months ended September 27, 2025 due to opening 212 sites, partially offset by 99 permanent site closures. Total before- and after-school sites increased by 70 during the nine months ended September 28, 2024 due to opening 155 sites, partially offset by 85 permanent site closures.
Current wording
As of April 4, 2026, we operated 1,159 before- and after-school sites, an increase of 121 sites from 1,038 before- and after-school sites as of March 29, 2025. Total before- and after-school sites increased by six during the three months ended April 4, 2026 due to opening 17 sites, partially offset by 11 permanent site closures. 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 permanent site closures.
Previous wording
Average weekly ECE FTEs for the three months ended September 27, 2025 decreased by 2,783, or 1.9%, as compared to the three months ended September 28, 2024 primarily due to lower FTEs at same-centers.
Current wording
Average weekly ECE FTEs for the three months ended April 4, 2026 decreased by 4,294, or 3.0%, as compared to the three months ended March 29, 2025 primarily due to lower FTEs at same-centers, partially offset by FTEs at new and acquired centers.
Previous wording
ECE same-center occupancy is a measure of the utilization of center capacity. We define same-center to be centers that have been operated by us for at least 12 months as of the period end date or, in other words, centers that are starting their second year of operation. Excluded from same-centers are any closed centers at the end of the reporting period and any new or acquired centers that have not yet met the same-center criteria. We calculate ECE same-center occupancy as the average weekly ECE same-center full-time enrollment divided by the total of the ECE same-centers’ capacity during the period. Center capacity is determined by regulatory and operational parameters and can fluctuate due to changes in these parameters, such as changing center structures to meet the demands of enrollment or changes in regulatory standards. This metric is used by management and we believe is useful to investors as it measures the utilization of our centers’ capacity in generating revenue.
Current wording
ECE same-center occupancy is a measure of the utilization of center capacity. We calculate ECE same-center occupancy as the average weekly ECE same-center full-time enrollment divided by the total of the ECE same-centers’ capacity during the period. Center capacity is determined by regulatory and operational parameters and can fluctuate due to changes in these parameters, such as changing center structures to meet the demands of enrollment or changes in regulatory standards. This metric is used by management and we believe is useful to investors as it measures the utilization of our centers’ capacity in generating revenue.
Previous wording
ECE same-center occupancy decreased by 160 basis points for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024 primarily due to lower enrollment at same-centers.
Current wording
ECE same-center occupancy decreased by 310 basis points for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025 primarily due to lower enrollment.
Previous wording
ECE same-center revenue increased by $0.2 million, or 0.0%, for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024. ECE same-center revenue growth of $5.8 million was driven by the net impact of new and acquired centers not yet classified as same-centers as of September 28, 2024 and center closures as of September 27, 2025. This growth was partially offset by a decrease of $5.6 million, or 0.9%, in revenue at centers that were classified as same-centers as of both September 27, 2025 and September 28, 2024.
Current wording
ECE same-center revenue decreased by $7.4 million, or 1.2%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. ECE same-center revenue decrease of $15.4 million was driven by centers that were classified as same-centers as of both April 4, 2026 and March 29, 2025. This decrease was partially offset by $8.0 million in ECE same-center revenue growth driven by the net impact of new and acquired centers not yet classified as same-centers as of March 29, 2025 and center closures as of April 4, 2026.
Previous wording
Total revenue increased by $5.4 million, or 0.8%, for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024.
Current wording
Revenue from early childhood education centers decreased by $4.8 million, or 0.8%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. The decrease was driven from 3.0% lower enrollment, partially offset by 2.2% increase from higher tuition rates.
Previous wording
Revenue from before- and after-school sites increased by $4.8 million, or 10.7%, for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024 primarily due to opening new sites.
Current wording
Revenue from before- and after-school sites increased by $9.1 million, or 17.1%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025 primarily due to opening new sites and higher tuition rates.
Previous wording
Increase revenues through improved occupancy and consistent price increases. Our future revenue growth is in part dependent on us continuing to grow revenues across our portfolio of centers. We invest in developing our brands, which have become widely recognized in the ECE market. Although we expect marketing activities to increase our cost of services, we expect them to positively impact our results of operations in the future.
Current wording
Cost of services (excluding depreciation and impairment)
Previous wording
Cost of services (excluding depreciation and impairment) increased by $22.0 million, or 4.2%, for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024. This increase was driven by $8.0 million lower government assistance due to a decrease in cost reimbursements, primarily related to the conclusion of certain COVID-19 Related Stimulus funding. The increase was also attributable to $6.0 million higher personnel costs due to increased wage rates and health insurance costs, partially offset by lower labor hours and grant-related bonuses. Additionally, rent expense increased $5.2 million primarily due to new and acquired centers.
Current wording
Cost of services (excluding depreciation and impairment) increased by $34.7 million, or 6.7%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. This increase was driven by $18.3 million higher food, supplies, utilities, and janitorial costs, partially due to operating more centers and sites, combined with an increase in marketing spend. Rent expense increased $8.2 million due to new and acquired centers and sites as well as contractual rent increases. The increase was also attributable to $4.8 million higher personnel costs due to increased wage rates. Lastly, cost reimbursements from government assistance was $3.4 million lower following the conclusion of certain COVID-19 stimulus funding.
Previous wording
Depreciation and amortization increased by $1.4 million, or 4.6%, for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024. This increase was primarily driven by higher depreciation expense as a result of assets placed into service from new and acquired centers.
Current wording
Depreciation and amortization increased by $1.1 million, or 3.7%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. This increase was primarily driven by higher depreciation expense as a result of assets placed into service from new and acquired centers.
Previous wording
Interest expense decreased by $15.4 million, or 38.9%, for the three months ended September 27, 2025 as compared to the three months ended September 28, 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 subsequent repricing amendments in October 2024 and July 2025, partially offset by a loss on extinguishment of debt recognized in connection with the July 2025 repricing.
Current wording
Interest expense decreased by $1.9 million, or 9.4%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. This decrease was primarily driven by lower interest rates on the First Lien Term Loan Facility as a result of the July 2025 repricing amendment and lower outstanding principal, partially offset by losses on interest rate derivative contracts reclassified into net loss during the three months ended April 4, 2026 compared to gains reclassified into net income during the three months ended March 29, 2025.
Previous wording
Other income, net remained relatively consistent for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024 and was primarily comprised of net changes in realized and unrealized holding gains on deferred compensation plan investment trust assets.
Current wording
Other expense, net remained relatively consistent for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025 and was primarily comprised of net changes in realized and unrealized losses from investments held in deferred compensation asset trusts.
Previous wording
Income tax expense decreased by $2.5 million for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024. The effective tax rate was 26.7% for the three months ended September 27, 2025 as compared to 22.9% for the three months ended September 28, 2024. Compared to the statutory rate, the differences in the effective tax rates for both the three months ended September 27, 2025 and September 28, 2024 were primarily due to state income taxes. Additionally, the effective tax rate for the three months ended September 28, 2024 was partially offset by the benefit of tax credits.
Current wording
Income taxes decreased $8.4 million to an income tax benefit for the three months ended April 4, 2026 as compared to income tax expense for the three months ended March 29, 2025. The effective tax rate was 0.2% for the three months ended April 4, 2026 as compared to 27.0% for the three months ended March 29, 2025. Compared to the statutory rate, the difference in the effective tax rate for the three months ended April 4, 2026 was primarily due to nondeductible goodwill impairment, partially offset by state and local taxes. The effective tax rate for the three months ended March 29, 2025, was primarily driven by state and local taxes, nondeductible compensation and fringe benefit expenses, as well as changes in uncertain tax reserves.
Previous wording
they do not reflect income tax expense or the cash requirements for income tax liabilities;
Current wording
they do not reflect income tax (benefit) expense or the cash requirements for income tax liabilities;
Previous 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.
Current wording
EBIT is defined as net (loss) income adjusted for interest and income tax (benefit) expense. EBITDA is defined as EBIT adjusted for depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for impairment losses, stock-based compensation, 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, 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 (loss) income, for the periods presented (in thousands):
Previous 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.
Current wording
Adjusted net income is defined as net (loss) income adjusted for income tax (benefit) expense, amortization of intangible assets, impairment losses, stock-based compensation, COVID-19 Related Stimulus, 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 and net income 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 (loss) income and net (loss) income per common share, respectively, for the periods presented (in thousands, except per share data):
Previous wording
Represents impairment charges for long-lived assets as a result of center closures and reduced operating performance at certain centers due to the impact of changing demographics in certain locations in which we operate and current macroeconomic conditions on our overall operations.
Current wording
Represents impairment charges for goodwill and long-lived assets. Goodwill impairment recognized during the three months ended April 4, 2026 was $273.5 million and was driven by the further deterioration in our market capitalization from a continued decline in our stock price. Impairments of long-lived assets for the periods presented was a result of reduced operating performance at certain centers due to the impact of changing demographics in certain locations in which we operate and current macroeconomic conditions on our overall operations, as well as centers closed or identified for closure. Refer to Note 4 of our unaudited condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q for further information on our goodwill impairment analysis.
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 nine months ended September 28, 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.
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 during the nine months ended September 27, 2025 and $16.9 million and $55.9 million during the three and nine months ended September 28, 2024, respectively, in funding for reimbursement of center operating expenses in cost of services (excluding depreciation and impairment). Additionally, during the nine months ended September 27, 2025 and September 28, 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 the nine months ended September 27, 2025 and $2.3 million and $11.4 million during the three and nine months ended September 28, 2024, respectively.
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 three months ended March 29, 2025 in funding for reimbursement of center operating expenses in cost of services (excluding depreciation and impairment).
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 both the three and nine months ended September 27, 2025, other costs includes $0.7 million in transaction costs associated with repricing our First Lien Term Loan Facility and for the nine months ended September 27, 2025, other costs also includes $0.2 million in costs related to our IPO. For the three months ended September 28, 2024, other costs includes expenses incurred, offset by a refund for costs expensed in a prior period resulting in a net credit to expense, for professional fees related to our IPO. For the nine months ended September 28, 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 $0.7 million in costs related to our IPO. 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. For the three months ended March 29, 2025, other costs include $0.2 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 and nine months ended September 27, 2025 and September 28, 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 months ended April 4, 2026 and March 29, 2025. Our statutory rate is re-evaluated at least annually.
Previous wording
In July 2025, we entered into a repricing amendment to the Credit Agreement. As of the effective date of the amendment, the applicable rates for the First Lien Term Loan Facility and for amounts drawn under the First Lien Revolving Credit Facility were reduced by 0.50%. As a result of the amendment, the First Lien Term Loan Facility bears interest at a variable rate equal to the Secured Overnight Financing Rate (“SOFR”) plus 2.75% per annum. In addition, 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 the Company's First Lien Term Loan Facility net leverage ratio. All other terms under the Credit Agreement remain unchanged as a result of the amendment.
Current wording
The First Lien Term Loan Facility bears interest at a variable rate equal to the Secured Overnight Financing Rate (“SOFR”) plus 2.75% per annum. In addition, 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 the Company's First Lien Term Loan Facility net leverage ratio.
Previous wording
As of September 27, 2025, there were no outstanding borrowings under the First Lien Revolving Credit Facility and we had an available borrowing capacity of $194.4 million after giving effect to the outstanding letters of credit under the Credit Agreement of $68.1 million.
Current wording
As of April 4, 2026, there were no outstanding borrowings under the First Lien Revolving Credit Facility and we had an available borrowing capacity of $189.7 million after giving effect to the outstanding letters of credit under the Credit Agreement of $72.8 million.
Previous wording
The interest rates effective as of September 27, 2025 were 7.04% on the First Lien Term Loan Facility, 2.00% on outstanding letters of credit as well as a 0.125% fronting fee on outstanding letters of credit, and 0.25% on the unused portion of the First Lien Revolving Credit Facility.
Current wording
The interest rates effective as of April 4, 2026 were 6.45% on the First Lien Term Loan Facility, 2.00% on outstanding letters of credit in addition to a 0.125% fronting fee, and 0.25% on the unused portion of the First Lien Revolving Credit Facility.
Previous wording
The weighted average interest rate during the nine months ended September 27, 2025 for the First Lien Term Loan Facility was 7.41%.
Current wording
The weighted average interest rate during the three months ended April 4, 2026 for the First Lien Term Loan Facility was 6.42%.
Previous wording
In February 2024, we entered into a credit facilities agreement, dated as of February 1, 2024, which allows for $20.0 million in letters of credit to be issued (“LOC Agreement”). We pay an interest rate of 5.95% on any outstanding balance and 0.25% on any unused portion. The LOC Agreement matures in December 2026. Upon entering into the LOC Agreement, we issued $20.0 million in letters of credit and cancelled $16.7 million of outstanding letters of credit under the First Lien Revolving Credit Facility. As of September 27, 2025, there were $20.0 million outstanding letters of credit under the LOC Agreement.
Current wording
In February 2024, we entered into a credit facilities agreement, dated as of February 1, 2024, which allows for $20.0 million in letters of credit to be issued (“LOC Agreement”). We pay an interest rate of 5.95% on any outstanding balance and 0.25% on any unused portion. The LOC Agreement matures in December 2026. As of April 4, 2026, there were $20.0 million outstanding letters of credit under the LOC Agreement.
Previous wording
Cash provided by operating activities increased by $77.5 million for the nine months ended September 27, 2025 as compared to the nine months ended September 28, 2024. Net income, adjusted for non-cash items, increased by $27.7 million primarily driven by lower interest expense, partially offset by a decrease in cost reimbursements from government assistance. The net changes in operating assets and liabilities resulted in a $49.8 million increase in cash primarily due to the timing of rent payments combined with a change in tax position from prior periods. Additionally, the increase was driven by lower spend on our enterprise resource planning software system due to implementation in early fiscal 2025 and increased collections on subsidy accounts receivable balances. These increases were partially offset by lower accrued interest compared to prior periods.
Current wording
Cash provided by operating activities decreased by $67.4 million for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. Cash provided by net (loss) income, adjusted for non-cash items, decreased by $19.1 million primarily driven by increased costs to operate more ECE centers and before- and after-school sites, including increased rent expense, higher personnel costs, and increased food, supplies and janitorial costs, combined with decreased cost reimbursements from government assistance. The net changes in operating assets and liabilities resulted in a $48.3 million decrease in cash provided by operating activities primarily driven by lower accrued compensation due to the timing of our fiscal quarter ends combined with being in a prepaid tax position versus an accrued position in the prior period. These decreases in cash were partially offset by the timing of insurance premiums and vendor payments.
Previous wording
Cash used in investing activities increased by $5.7 million for the nine months ended September 27, 2025 as compared to the nine months ended September 28, 2024. The increase was driven by $7.0 million increased payments for acquisitions and $2.7 million higher capital expenditures net of proceeds from disposals. These increases were partially offset by a $4.0 million change in deferred compensation asset trusts as a result of decreased deposits and increased redemptions.
Current wording
Cash used in investing activities increased by $0.3 million for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. The increase was driven by $6.6 million higher capital expenditures, partially offset by a $5.5 million decrease in payments for acquisitions.
Previous wording
Total lease obligations, including imputed interest, of $2.3 billion expected to be paid out as follows: $73.9 million for the remainder of fiscal 2025, $592.3 million in two to three years, $517.8 million in four to five years, and $1.2 billion thereafter through the maturity of our lease agreements. Refer to Note 6 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Current wording
Total lease obligations, including imputed interest, of $2.4 billion expected to be paid out as follows: $211.0 million for the remainder of fiscal 2026, $587.5 million in years two to three, $508.7 million in years four to five, and $1.1 billion thereafter through the maturity of our lease agreements. Refer to Note 5 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Previous wording
Long-term debt obligations, including interest, of $1.3 billion expected to be paid out as follows: $39.2 million for the remainder of fiscal 2025, $139.0 million in two to three years, $118.4 million in four to five years, and $960.2 million thereafter through June 2030 when the First Lien Term Loan Facility matures. Refer to Note 9 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Current wording
Long-term debt obligations, including interest, of $1.2 billion expected to be paid out as follows: $55.5 million for the remainder of fiscal 2026, $142.3 million in years two to three, and $1,014.3 million in years four to five through June 2030 when the First Lien Term Loan Facility matures. Refer to Note 6 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Previous wording
Self-insurance obligations of $77.0 million expected to be paid out as claims are settled and cash outflows cannot be estimated reliably.
Current wording
Self-insurance obligations of $121.8 million expected to be paid out as claims are settled and cash outflows cannot be estimated reliably.
Previous wording
Deferred compensation plan of $42.5 million expected to be paid out based on the individual plan participant and cash outflows cannot be estimated reliably.
Current wording
Deferred compensation plan of $41.3 million expected to be paid out based on the individual plan participant and cash outflows cannot be estimated reliably.
Previous wording
Service arrangements which include certain information technology (“IT”), labor software, and maintenance services of $57.7 million expected to be paid out as follows: $3.8 million for the remainder of fiscal 2025, $23.1 million in two to three years, $17.1 million in four to five years, and $13.7 million thereafter.
Current wording
Service arrangements which include certain information technology (“IT”), labor software, and maintenance services of $67.9 million expected to be paid out as follows: $14.7 million for the remainder of fiscal 2026, $31.6 million in years two to three, $12.5 million in years four to five, and $9.1 million thereafter.
Previous wording
Certain agreements may have cancellation penalties for which, if we were to cancel, we would be required to pay up to approximately $5.6 million. Other cancellation penalties cannot be estimated as we cannot predict the occurrence of future agreement cancellations. Refer to Note 11 and Note 14 of our audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2024 for additional detail related to our contractual obligations.
Current wording
Certain agreements may have cancellation penalties for which, if we were to cancel, we would be required to pay up to approximately $5.2 million. Other cancellation penalties cannot be estimated as we cannot predict the occurrence of future agreement cancellations. Refer to Note 11 and Note 13 of our audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2026 for additional detail related to our contractual obligations.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
We define same-center to be centers that have been operated by us for at least 12 months as of the period end date or, in other words, centers that are starting their second year of operation. Excluded from same-centers are any closed centers at the end of the reporting period and any new or acquired centers that have not yet met the same-center criteria.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
ECE same-center revenue increased by $16.6 million, or 0.9%, for the nine months ended September 27, 2025 as compared to the nine months ended September 28, 2024. ECE same-center revenue growth of $0.7 million, or 0.0%, was driven by centers that were classified as same-centers as of both September 27, 2025 and September 28, 2024. Additionally, $15.8 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 September 28, 2024 and center closures as of September 27, 2025.
Previous report — wording carried elsewhere
The following table sets forth our results of operations including as a percentage of revenue for the nine months ended September 27, 2025 and September 28, 2024 (in thousands, except per share data and percentages):
Previous report — wording carried elsewhere
Depreciation and amortization increased by $4.7 million, or 5.4%, for the nine months ended September 27, 2025 as compared to the nine months ended September 28, 2024. This increase was primarily due to higher depreciation expense as a result of assets placed into service from new and acquired centers.