CoreCivic, Inc.

Previous wording

the availability of debt and equity financing on terms that are favorable to us, or at all.

Current wording

the availability of debt and equity financing on terms that are favorable to us, or at all; and

Previous wording

our ability to successfully consummate the sales of additional company-owned assets, including the potential sale of additional facilities to ICE, on a timely basis and on commercially favorable terms; and

Current wording

our ability to successfully consummate the sales of additional company-owned assets, including the potential sale of additional facilities to ICE, on a timely basis and on commercially favorable terms.

Previous wording

We are the nation's largest owner of partnership correctional, detention, and residential reentry facilities and one of the largest operators of such facilities in the United States. As of June 30, 2026, through our CoreCivic Residential segment, we operated 64 correctional, detention, and reentry facilities, 60 of which we owned or controlled via a long-term lease, with a total design capacity of approximately 72,000 beds. Through our CoreCivic Services segment, we provided mail order pharmacy services to over 600 correctional facilities, including correctional facilities owned or operated by CoreCivic, across 32 states, as well as transportation and electronic monitoring and case management services. In addition, through our CoreCivic Properties segment, we owned five properties held for lease to government agencies, with a total design capacity of approximately 8,000 beds.

Current wording

We are the nation's largest owner of partnership correctional, detention, and residential reentry facilities and one of the largest operators of such facilities in the United States. As of September 30, 2026, through our CoreCivic Residential segment, we operated 64 correctional, detention, and reentry facilities, 56 of which we owned or controlled via a long-term lease, with a total design capacity of approximately 72,000 beds. Through our CoreCivic Services segment, we provided mail order pharmacy services to over 600 correctional facilities, including correctional facilities owned or operated by CoreCivic, across 32 states, as well as transportation and electronic monitoring and case management services. In addition, through our CoreCivic Properties segment, we owned five properties held for lease to government agencies, with a total design capacity of approximately 8,000 beds.

Previous wording

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, or OBBBA. OBBBA appropriates a total of $75 billion in mandatory funding to ICE for immigration enforcement activities and to increase detention capacity. Specifically, OBBBA appropriates $45 billion for single adult alien detention capacity and family residential center capacity. This funding is a significant increase in funding historically provided to ICE for border security and immigration detention. The funding will remain available through September 30, 2029, and is in addition to base annual appropriations during that time period. The additional funding is also being used by the Department of Homeland Security, or DHS, to hire nearly 10,000 new ICE officers to implement the immigration enforcement initiatives. On June 10, 2026, President Trump signed into law an approximate $70 billion budget reconciliation bill, the "Secure America Act", which secures total funding to the DHS for ICE and Customs and Border Protection, or CBP, through September 30, 2029.

Current wording

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, or OBBBA. OBBBA appropriates a total of $75 billion in mandatory funding to ICE for immigration enforcement activities and to increase detention capacity. Specifically, OBBBA appropriates $45 billion for single adult alien detention capacity and family residential center capacity. This funding is a significant increase in funding historically provided to ICE for border security and immigration detention. The funding will remain available through September 30, 2029, and is in addition to base annual appropriations during that time period. The additional funding is also being used by the Department of Homeland Security, or DHS, to hire nearly 10,000 new ICE officers to implement the immigration enforcement initiatives. On June 10, 2026, President Trump signed into law an approximate $70 billion budget reconciliation bill, the "Secure America Act", which secures total funding to DHS for ICE and Customs and Border Protection, or CBP, through September 30, 2029.

Previous wording

Given the legislative and executive actions mentioned above, among others, we believe the short-term growth opportunities of our business are particularly attractive as federal government agencies consider their emergent needs. During 2025, ICE began to utilize additional bed capacity in our portfolio at facilities with existing contracts, we signed new contracts to activate five previously idled facilities, and we have been in discussion with ICE to activate additional idle facilities. The number of people we care for under contracts with ICE has increased by approximately 6,000 individuals, or 59.6%, from the beginning of 2025 through June 30, 2026. As of June 30, 2026, we had five idle correctional facilities containing approximately 7,000 beds that are operated with a core staffing complement to remain currently available and that are being actively marketed as solutions to the correctional or detention needs of potential customers. On August 3, 2026, we were awarded a new contract with ICE to utilize one of these facilities, our 1,600-bed Prairie Correctional Facility located in Appleton, Minnesota, or the Prairie Facility, a facility that has been idle since 2010.

Current wording

Given the legislative and executive actions mentioned above, among others, we believe the short-term growth opportunities of our business are particularly attractive as federal government agencies consider their emergent needs. During 2025, ICE began to utilize additional bed capacity in our portfolio at facilities with existing contracts, we signed new contracts to activate five previously idled facilities during 2025, and we signed an additional contract to activate our previously idled Appleton Detention Facility in Appleton, Minnesota, or the Appleton Facility, formerly known as the Prairie Correctional Facility, in the third quarter of 2026. The number of people we care for under contracts with ICE has increased by approximately 8,100 individuals, or 80.1%, from the beginning of 2025 through September 30, 2026. As of September 30, 2026, we had four idle correctional facilities containing approximately 5,500 beds that are operated with a core staffing complement to remain currently available and that are being actively marketed as solutions to the correctional or detention needs of potential customers.

Previous wording

Effective March 7, 2025, we entered into a letter agreement with ICE to begin activation efforts at our 1,033-bed Midwest Regional Reception Center in Leavenworth, Kansas, or the Midwest Facility. 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 longer-term contract. On September 29, 2025, we announced that we entered into a new contract with ICE effective September 7, 2025. The City of Leavenworth filed a lawsuit alleging that a Special Use Permit, or SUP, was required to activate the facility, which resulted in a delay in the intake process. In December 2025, we filed an application for the SUP, and subsequently obtained approval for the SUP on March 11, 2026. We began accepting detainees at the Midwest Facility on March 12, 2026. The new agreement, which expires September 6, 2027, provides for a fixed monthly payment plus an incremental per diem payment based on detainee populations. As of June 30, 2026, we cared for 379 individuals at the facility. On August 4, 2026, we sold the Midwest Facility to DHS, and we continue to manage the facility in accordance with the existing management agreement for the Midwest Facility with ICE.

Current wording

Effective March 7, 2025, we entered into a letter agreement with ICE to begin activation efforts at the 1,033-bed Midwest Regional Reception Center in Leavenworth, Kansas, or the Midwest Facility. 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 longer-term contract. On September 29, 2025, we announced that we entered into a new contract with ICE effective September 7, 2025. The City of Leavenworth filed a lawsuit alleging that a Special Use Permit, or SUP, was required to activate the facility, which resulted in a delay in the intake process. In December 2025, we filed an application for the SUP, and subsequently obtained approval for the SUP on March 11, 2026. We began accepting detainees at the Midwest Facility on March 12, 2026. The new agreement, which expires August 31, 2027, provides for a fixed monthly payment plus an incremental per diem payment based on detainee populations. As of September 30, 2026, we cared for 451 individuals at the facility. On August 4, 2026, we sold the Midwest Facility to the United States of America and its assigns, by and through DHS, and we continue to manage the facility in accordance with the existing management agreement for the Midwest Facility with ICE.

Previous wording

On April 1, 2025, we entered into a letter agreement with ICE to begin activation efforts at our 2,560-bed California City Detention Facility, or 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 long-term contract. 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 effective September 1, 2025. As of June 30, 2026, we cared for 1,674 individuals at the facility. On November 12, 2025, a putative class action case was filed by seven ICE detainees against ICE, seeking injunctive relief related to operation of the facility. The case was filed by attorneys affiliated with three non-governmental organizations. We are not currently a party to the lawsuit, but moved to intervene to seek appeal of the class certification order. The injunctive relief sought by Plaintiffs could impact operation of the California City Facility. On February 6, 2026, the Northern District of California Court provisionally granted class certification, and ordered ICE to ensure access to medical care, disability accommodations, and recreation opportunities to detainees housed at the California City Facility. On March 30, 2026, the case was transferred to the Eastern District of California. If Plaintiffs continue to pursue injunctive relief and the Court orders such relief as requested, such relief could negatively impact the financial performance of the facility. See Note 8 of the Notes to the Consolidated Financial Statements contained in this

Current wording

On April 1, 2025, we entered into a letter agreement with ICE to begin activation efforts at our 2,560-bed California City Detention Facility, or 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 long-term contract. 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 effective September 1, 2025. As of September 30, 2026, we cared for 1,943 individuals at the facility. On November 12, 2025, a putative class action case was filed by seven ICE detainees against ICE, seeking injunctive relief related to operation of the facility. The case was filed by attorneys affiliated with three non-governmental organizations. We moved to intervene to seek appeal of the class certification order. On February 6, 2026, the Northern District of California Court provisionally granted class certification, and ordered ICE to ensure access to medical care, disability accommodations, and recreation opportunities to detainees housed at the California City Facility. On March 30, 2026, the case was transferred to the Eastern District of California. See Note 8 of the Notes to the Consolidated Financial Statements contained in this Quarterly Report for further discussion of the pending litigation. On July 2, 2026, we sold the California City Facility to the United States of America and its assigns, by and through DHS, and we continue to manage the facility in accordance with the existing management agreement for the California City Facility with ICE.

Previous wording

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 600-bed 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. We began receiving ICE detainees at the West Tennessee facility during September 2025, and as of June 30, 2026, we cared for 523 individuals at the facility.

Current wording

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 600-bed 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. We began receiving ICE detainees at the West Tennessee facility during September 2025, and as of September 30, 2026, we cared for 499 individuals at the facility.

Previous wording

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, expires in September 2029, and may be further extended through bilateral modification. We began receiving detainees in December 2025, and as of June 30, 2026, we cared for 1,522 individuals at the facility.

Current wording

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, expires in September 2029, and may be further extended through bilateral modification. We began receiving detainees in December 2025, and as of September 30, 2026, we cared for 1,950 individuals at the facility.

Previous wording

ICE has also publicly expressed a desire to own detention facilities in certain locations. On July 2, 2026, we completed the sales of our California City Facility and our 1,994-bed Otay Mesa Detention Center in San Diego, California, or the Otay Mesa Facility, to the United States of America and its assigns, by and through DHS for an aggregate gross sales price of $1.5 billion, comprised of $732.6 million for the California City Facility and $739.2 million for the Otay Mesa Facility. After federal and state income taxes of approximately $0.4 billion and transaction expenses, we anticipate net proceeds from the asset sales to be approximately $1.1 billion.

Current wording

ICE has also publicly expressed a desire to own detention facilities in certain locations. On July 2, 2026, we completed the sales of our California City Facility and our 1,994-bed Otay Mesa Detention Center in San Diego, California, or the Otay Mesa Facility, to the United States of America and its assigns, by and through DHS for an aggregate gross sales price of $732.6 million for the California City Facility and $739.2 million for the Otay Mesa Facility. Further, on August, 4, 2026, we completed the sales of the 1,600-bed Appleton Facility and the 1,033-bed Midwest Facility also to the United States of America and its assigns, by and through DHS for an aggregate gross sales price of $495.6 million for the Appleton Facility and $238.4 million for the Midwest Facility. After federal and state income taxes of approximately $0.5 billion and transaction expenses, net proceeds from the four asset sales were approximately $1.6 billion.

Previous wording

We expect to continue to manage the facilities sold to DHS under the existing management contracts with ICE related to each facility, although the terms of the management contracts may be modified to reflect the change in ownership. However, we can provide no assurance that we will continue to manage these facilities in the future, or that the terms of the existing management agreements will remain the same. The management contract for the California City Facility expires in August 2027, and the management contract for the Otay Mesa Facility expires in December 2029 and contains a five-year extension option. The management contracts for the Prairie Facility and the Midwest Facility expire in August 2031 and September 2027, respectively. In addition to these asset sales, we have recently begun discussions with ICE about the potential acquisition of additional detention facilities from the Company. These discussions are in preliminary stages, and we can provide no assurance that any additional sales will occur.

Current wording

We expect to continue to manage the facilities sold to the United States of America and its assigns, by and through DHS under the existing management contracts with ICE related to each facility, although we expect the terms of the management contracts to be modified to reflect the change in ownership. However, we can provide no assurance that we will continue to manage these facilities in the future, or that the terms of the existing management agreements will remain the same. The management contract for the California City Facility expires in August 2027, and the management contract for the Otay Mesa Facility expires in December 2029 and contains a five-year extension option. The management contracts for the Appleton Facility and the Midwest Facility expire in August 2031 and August 2027, respectively. In addition to these asset sales, we have been in discussions with ICE about the potential acquisition of additional detention facilities from the Company. These discussions are in preliminary stages, and we can provide no assurance that any additional sales will occur.

Previous wording

The consolidated financial statements in this Quarterly Report are prepared in conformity with U.S. generally accepted accounting principles, or GAAP. As such, we are required to make certain estimates, judgments, and assumptions that we believe are reasonable based upon the information available which, by their nature, are subject to an inherent degree of uncertainty. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from our estimates. A summary of our significant accounting policies is described in our 2025 Form 10-K. The significant accounting policies and estimates which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include those related to idle facilities and asset impairments and self-funded insurance reserves. For a discussion of our critical accounting policies and estimates, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Notes to Consolidated Financial Statements" presented in our 2025 Form 10-K. There were no newly identified critical accounting policies during the first six months of 2026, nor were there any material changes to the critical accounting policies and estimates discussed in our 2025 Form 10-K.

Current wording

The consolidated financial statements in this Quarterly Report are prepared in conformity with U.S. generally accepted accounting principles, or GAAP. As such, we are required to make certain estimates, judgments, and assumptions that we believe are reasonable based upon the information available which, by their nature, are subject to an inherent degree of uncertainty. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from our estimates. A summary of our significant accounting policies is described in our 2025 Form 10-K. The significant accounting policies and estimates which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include those related to idle facilities and asset impairments and self-funded insurance reserves. For a discussion of our critical accounting policies and estimates, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Notes to Consolidated Financial Statements" presented in our 2025 Form 10-K. There were no newly identified critical accounting policies during the first nine months of 2026, nor were there any material changes to the critical accounting policies and estimates discussed in our 2025 Form 10-K.

Previous wording

Our results of operations are impacted by the number of correctional, detention, and reentry facilities we operated, including 60 we owned and four owned by our government partners (CoreCivic Residential), and 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 in operation for the periods presented:

Current wording

Our results of operations are impacted by the number of correctional, detention, and reentry facilities we operated, including 56 we owned and eight owned by our government partners (CoreCivic Residential), and 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 for the periods presented:

Previous wording

Net income was $37.1 million, or $0.37 per diluted share, for the three months ended June 30, 2026, compared with net income of $38.5 million, or $0.35 per diluted share, for the three months ended June 30, 2025. Net income was $75.1 million, or $0.76 per diluted share, for the six months ended June 30, 2026, compared with net income of $63.7 million, or $0.58 per diluted share, for the six months ended June 30, 2025. Financial results for the three and six months ended June 30, 2026 reflect $0.7 million and $3.1 million, respectively, of expenses associated with mergers and acquisitions, as further described hereinafter. For the three and six months ended June 30, 2026, income tax expense reflects a net benefit of $0.2 million and $0.9 million, respectively, associated with this special item. Financial results for the three and six months ended June 30, 2025 reflect $1.5 million of expenses associated with mergers and acquisitions, as further described hereinafter. For the three and six months ended June 30, 2025, income tax expense reflects a net benefit of $0.4 million associated with this special item.

Current wording

Net income was $1,344.1 million, or $14.49 per diluted share, for the three months ended September 30, 2026, compared with net income of $26.3 million, or $0.24 per diluted share, for the three months ended September 30, 2025. Net income was $1,419.2 million, or $14.89 per diluted share, for the nine months ended September 30, 2026, compared with net income of $90.0 million, or $0.83 per diluted share, for the nine months ended September 30, 2025. Financial results for the three and nine months ended September 30, 2026 reflect a gain on the sale of real estate assets of $1,770.7 million, expenses associated with debt repayments and refinancing transactions of $4.0 million, a $22.1 million gain from the decrease in estimated fair value of the contingent consideration associated with the acquisition of a business, and settlement compensation associated with an executive transition of $6.4 million. Financial results for the three and nine months ended September 30, 2026 reflect $0.3 million and $3.4 million, respectively, of expenses associated with mergers and acquisitions. For the three and nine months ended September 30, 2026, income tax expense includes a net expense of $483.6 million and $482.8 million, respectively, associated with these special items. Financial results for the three and nine months ended September 30, 2025 reflect $0.8 million and $2.3 million, respectively, of expenses associated with mergers and acquisitions, an asset impairment of $1.5 million, and a gain on the sale of real estate assets of $2.5 million. For the three and nine months ended September 30, 2025, income tax expense includes a net expense of $0.1 million and a net benefit of $0.4 million, respectively, associated with these special items.

Previous wording

CoreCivic Residential segment, consisting of the 64 correctional, detention, and reentry facilities we manage, 60 of which we owned or controlled via a long-term lease and four of which are owned by third parties, with a design capacity of 72,000 beds. Subsequent to quarter-end, we sold four detention facilities we owned, although we continue to manage these facilities.

Current wording

CoreCivic Residential segment, consisting of the 64 correctional, detention, and reentry facilities we manage, 56 of which we owned or controlled via a long-term lease and eight of which are owned by third parties, with a design capacity of 72,000 beds.

Previous wording

The following table sets forth our segment net operating income for the three and six months ended June 30, 2026 and 2025 as a percentage of total net operating income. For additional information, see Note 10 to the financial statements included in Part I.

Current wording

The following table sets forth our segment net operating income for the three and nine months ended September 30, 2026 and 2025 as a percentage of total net operating income. For additional information, see Note 10 to the financial statements included in Part I.

Previous wording

Total revenue consists of management revenue we generate through CoreCivic Residential in the operation of correctional, detention, and reentry facilities, as well as the revenue we generate through CoreCivic Services from the operations of CSP, TransCor and RMS. 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 by segment for the three and six months ended June 30, 2026 and 2025 (in millions). (The revenue amounts for the Services segment are net of intercompany eliminations):

Current wording

Total revenue consists of management revenue we generate through CoreCivic Residential in the operation of correctional, detention, and reentry facilities, as well as the revenue we generate through CoreCivic Services from the operations of CSP, TransCor and RMS. 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 by segment for the three and nine months ended September 30, 2026 and 2025 (in millions). (The revenue amounts for CoreCivic Services are net of intercompany eliminations.):

Previous wording

Total operating expenses amounted to $536.0 million and $398.3 million for the three months ended June 30, 2026 and 2025, respectively, while total operating expenses for the six months ended June 30, 2026 and 2025, amounted to $1,003.7 million and $773.1 million, respectively. Total operating expenses consist of those expenses incurred in the operation and management of correctional, detention, and reentry facilities, as well as those expenses incurred in the operations of CSP, TransCor and RMS. Total operating expenses also consist of those expenses incurred in the operation of facilities we lease to third-party operators. Salaries and benefits represent the most significant component of our operating expenses, representing approximately 61% of our total operating expenses during both the six months ended June 30, 2026 and 2025.

Current wording

Total operating expenses amounted to $586.9 million and $449.6 million for the three months ended September 30, 2026 and 2025, respectively, while total operating expenses for the nine months ended September 30, 2026 and 2025, amounted to $1,590.6 million and $1,222.6 million, respectively. Total operating expenses consist of those expenses incurred in the operation and management of correctional, detention, and reentry facilities, as well as those expenses incurred in the operations of CSP, TransCor and RMS. Total operating expenses also consist of those expenses incurred in the operation of facilities we lease to third-party operators. Salaries and benefits represent the most significant component of our operating expenses, representing approximately 59% and 62% of our total operating expenses during the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

CoreCivic Residential includes the operating results of the correctional, detention, and reentry facilities that we operated during each period. Total revenue generated by CoreCivic Residential increased $91.6 million, or 17.5%, from $523.3 million during the three months ended June 30, 2025 to $614.9 million during the three months ended June 30, 2026, and increased $216.5 million, or 21.7%, from $998.7 million during the six months ended June 30, 2025 to $1,215.2 million during the six months ended June 30, 2026. CoreCivic Residential net operating income increased $1.0 million, or 0.7%, from $136.6 million during the three months ended June 30, 2025 to $137.6 million during the three months ended June 30, 2026, and increased $32.4 million, or 13.1%, from $248.0 million during the six months ended June 30, 2025 to $280.4 million during the six months ended June 30, 2026. During the three and six months ended June 30, 2026, CoreCivic Residential generated 92.4% and 94.7%, respectively, of our segment net operating income, compared with 97.7% and 97.8%, respectively, during the three and six months ended June 30, 2025. The decline in both periods was a result of the acquisition of CSP reported in our CoreCivic Services segment.

Current wording

CoreCivic Residential includes the operating results of the correctional, detention, and reentry facilities that we operated during each period. Total revenue generated by CoreCivic Residential increased $86.2 million, or 15.2%, from $565.7 million during the three months ended September 30, 2025 to $651.9 million during the three months ended September 30, 2026, and increased $302.7 million, or 19.3%, from $1,564.4 million during the nine months ended September 30, 2025 to $1,867.1 million during the nine months ended September 30, 2026. CoreCivic Residential net operating income increased $17.8 million, or 14.0%, from $127.4 million during the three months ended September 30, 2025 to $145.2 million during the three months ended September 30, 2026, and increased $50.2 million, or 13.4%, from $375.4 million during the nine months ended September 30, 2025 to $425.6 million during the nine months ended September 30, 2026. During the three and nine months ended September 30, 2026, CoreCivic Residential generated 92.4% and 93.9%, respectively, of our segment net operating income, compared with 97.3% and 97.6%, respectively, during the three and nine months ended September 30, 2025. The decline in the percentage of net operating income generated in the CoreCivic Residential segment in both the three and nine months ended September 30, 2026 was a result of the acquisition of CSP reported in our CoreCivic Services segment.

Previous wording

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 in our Residential segment 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 reentry facilities placed into service that we owned or managed were as follows for the three and six months ended June 30, 2026 and 2025:

Current wording

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 in our Residential segment 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 reentry facilities placed into service that we owned or managed were as follows for the three and nine months ended September 30, 2026 and 2025:

Previous wording

Revenue. Total revenue in our Residential segment increased $91.6 million, or 17.5%, and $216.5 million, or 21.7%, for the three and six months ended June 30, 2026, respectively, as compared with the same periods in 2025. The increase in both the three- and six-month periods was primarily a result of an increase in revenue of $68.9 million and $139.5 million, respectively, driven primarily by an increase of 12.6% and 13.0%, respectively, in average revenue per compensated man-day. The increase in average revenue per compensated man-day in both periods 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 revenue in both the three- and six-month periods was also a result of an increase in revenue of $22.7 million and $77.0 million, respectively, driven by an increase in average daily compensated population from 2025 to 2026.

Current wording

Revenue. Total revenue in our Residential segment increased $86.2 million, or 15.2%, and $302.7 million, or 19.3%, for the three and nine months ended September 30, 2026, respectively, as compared with the same periods in 2025. The increase in both the three- and nine-month periods was primarily a result of an increase in revenue of $33.8 million and $173.6 million, respectively, driven primarily by an increase of 5.5% and 10.3%, respectively, in average revenue per compensated man-day. The increase in average revenue per compensated man-day in both periods 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 revenue in both the three- and nine-month periods was also a result of an increase in revenue of $52.4 million and $129.1 million, respectively, driven by an increase in average daily compensated population from 2025 to 2026.

Previous wording

Average daily compensated population increased 2,337, or 4.3%, to 56,363 during the three months ended June 30, 2026, compared to 54,026 during the three months ended June 30, 2025. Average daily compensated population increased 4,066, or 7.7%, to 56,801 during the six months ended June 30, 2026, compared to 52,735 during the six months ended June 30, 2025. The increase in average daily compensated population was primarily a result of an increase in occupancy largely due to higher ICE populations resulting from new contracts to reactivate the Dilley Facility, the California City Facility, our West Tennessee Detention facility, our Diamondback Correctional Facility, and the Midwest Facility. These five facilities accounted for an increase in average daily compensated population of 4,621 and 4,715 during the three and six months ended June 30, 2026, respectively, as compared with the same periods in 2025, and accounted for an increase in revenue of $88.0 million and $189.2 million during the three and six months ended June 30, 2026, respectively, as compared with the same periods in 2025. We currently expect average daily compensated populations and revenue to continue to increase in the second half of 2026 as a result of these new contracts. In addition, our acquisition of the Farmville Detention Center effective July 1, 2025 also contributed to the increase in average daily compensated population. At June 30, 2026, we cared for 698 individuals at the Farmville facility. Partially offsetting these increases in average daily compensated population, ICE populations in our care at facilities other than those recently activated declined during both periods as a result of a recent decline in detention populations nationwide, as further discussed hereinafter. Average daily compensated occupancy in our Residential segment was 78.4% and 76.8% during the three months ended June 30, 2026 and 2025, respectively, and was 79.0% and 76.9% during the six months ended June 30, 2026 and 2025, respectively. This increase in average daily compensated occupancy during the six-month period occurred despite an increase in average available beds due to the activation and transfer of the 2,560-bed California City Facility from the Properties segment to the Residential segment effective April 1, 2025. We began receiving ICE detainees at the California City Facility during August 2025 and, as of June 30, 2026, we cared for 1,674 individuals at the facility.

Current wording

Average daily compensated population increased 5,116, or 9.3%, to 60,352 during the three months ended September 30, 2026, compared to 55,236 during the three months ended September 30, 2025. Average daily compensated population increased 4,421, or 8.3%, to 57,998 during the nine months ended September 30, 2026, compared to 53,577 during the nine months ended September 30, 2025. The increase in average daily compensated population was primarily a result of an increase in occupancy largely due to higher ICE populations resulting from new contracts to reactivate the Dilley Facility, the California City Facility, our West Tennessee Detention facility, our Diamondback Correctional Facility, and the Midwest Facility. These five facilities accounted for an increase in average daily compensated population of 4,775 and 4,735 during the three and nine months ended September 30, 2026, respectively, as compared with the same periods in 2025, and accounted for an increase in revenue of $71.3 million and $260.5 million during the three and nine months ended September 30, 2026, respectively, as compared with the same periods in 2025. We currently expect average daily compensated populations and revenue to continue to increase in the fourth quarter of 2026 as a result of these new contracts. In addition, our acquisition of the Farmville Detention Center effective July 1, 2025 also contributed to the increase in average daily compensated population during the nine-month period. At September 30, 2026, we cared for 677 individuals at the Farmville facility. In addition to these increases in average daily compensated population, ICE populations in our care at facilities other than those recently activated also increased during the three months ended September 30, 2026 as compared to the same period in 2025 as a result of a recent increase in detention populations nationwide. ICE populations in our care at facilities other than those recently activated decreased for the nine-month period of 2026 compared to the same period in 2025 as a result of a decrease in ICE populations nationwide during the second quarter of 2026 resulting from the partial government shutdown that centered around DHS funding, a reorganization of the DHS leadership, and the subsequent impact on enforcement activities, including redeployment of ICE agents to Transportation Security Administration checkpoints. Average daily compensated occupancy in our Residential segment was 84.0% and 76.7% during the three months ended September 30, 2026 and 2025, respectively, and was 80.7% and 76.8% during the nine months ended September 30, 2026 and 2025, respectively. This increase in average daily compensated occupancy during the nine-month period occurred despite an increase in average available beds due to the activation and transfer of the 2,560-bed California City Facility from the Properties segment to the Residential segment effective April 1, 2025. We began receiving ICE detainees at the California …

Excerpt shortened here; the source contains the full paragraph.

Previous wording

On August 3, 2026, we were awarded a new contract with ICE to utilize our 1,600-bed Prairie Facility located in Appleton, Minnesota, a facility that has been idle since 2010. The new contract commences on August 11, 2026, for a term of five years. The agreement provides for a fixed monthly payment plus an incremental per diem payment based on detainee populations. Once the facility is fully activated, we expect this facility to generate total annual revenue of approximately $75.0 million. We expect to begin receiving detainees in the fourth quarter of 2026, with activation estimated to be complete in the second quarter of 2027.

Current wording

On August 3, 2026, we were awarded a new contract with ICE to utilize our 1,600-bed Appleton Facility located in Appleton, Minnesota, a facility that has been idle since 2010. The new contract commenced on August 11, 2026, for a term of five years. The agreement provides for a fixed monthly payment plus an incremental per diem payment based on detainee populations. Once the facility is fully activated, we expect this facility to generate total annual revenue of approximately $75.0 million. We expect to begin receiving detainees in the fourth quarter of 2026, with activation estimated to be complete in the second quarter of 2027. The activation of this facility is expected to weigh on operating margins until the facility reaches stabilized occupancy, currently expected to occur during the second quarter of 2027.

Previous wording

The solutions we provide to our federal customers, including primarily ICE and the U.S Marshals Service, or USMS, continue to be a significant component of our business. The federal customers in our Residential segment generated approximately 53% of our total revenue for both the three months ended June 30, 2026 and 2025, increasing $78.2 million, or 27.2%, during the three months ended June 30, 2026 as compared with the same period in 2025. The federal customers in our Residential segment generated approximately 56% and 52% of our total revenue for the six months ended June 30, 2026 and 2025, respectively, increasing $195.0 million, or 36.9%, during the six months ended June 30, 2026 as compared with the same period in 2025. 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.

Current wording

The solutions we provide to our federal customers, including primarily ICE and the U.S Marshals Service, or USMS, continue to be a significant component of our business. The federal customers in our Residential segment generated approximately 53% and 55% of our total revenue for the three months ended September 30, 2026 and 2025, respectively, increasing $71.3 million, or 22.2%, during the three months ended September 30, 2026 as compared with the same period in 2025. The federal customers in our Residential segment generated approximately 55% and 53% of our total revenue for the nine months ended September 30, 2026 and 2025, respectively, increasing $266.3 million, or 31.3%, during the nine months ended September 30, 2026 as compared with the same period in 2025. 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.

Previous wording

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 activated facilities:

Current wording

In addition, 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 activated facilities:

Previous wording

State revenues from contracts at correctional, detention, and residential reentry facilities that we operate increased $10.0 million, or 5.0%, from the second quarter of 2025 to the second quarter of 2026. State revenues increased $17.1 million, or 4.3%, from the six months ended June 30, 2025 to the comparable period in 2026. State revenues in both periods increased primarily 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. State revenues also increased due to increases in average daily populations at certain of our facilities.

Current wording

State revenues from contracts at correctional, detention, and residential reentry facilities that we operate increased $15.1 million, or 7.4%, from the third quarter of 2025 to the third quarter of 2026. State revenues increased $32.2 million, or 5.3%, from the nine months ended September 30, 2025 to the comparable period in 2026. State revenues in both periods increased primarily 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. State revenues also increased due to increases in average daily populations at certain of our facilities.

Previous wording

Operating Expenses. Operating expenses in the Residential segment increased $90.5 million, or 23.4%, during the second quarter of 2026 as compared with the same period in 2025, and increased $184.0 million, or 24.5%, during the six months ended June 30, 2026 as compared with the same period in 2025. Operating expenses increased primarily as a result of wage increases across our portfolio. 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 changes in immigration policies under the current presidential administration. The increase in operating expenses in both the three- and six-month periods includes start-up related expenses at our Midwest Facility during the first quarter of 2026, when we officially activated the facility and began accepting residential populations from ICE following receipt of an SUP during the quarter. These activation-related expenses continued into the second quarter of 2026. In addition, operating expenses increased during the three and six months ended June 30, 2026 as compared to the same periods in 2025 as a result of the acquisition of the Farmville Detention Center on July 1, 2025.

Current wording

Operating Expenses. Operating expenses in the Residential segment increased $68.4 million, or 15.6%, during the third quarter of 2026 as compared with the same period in 2025, and increased $252.4 million, or 21.2%, during the nine months ended September 30, 2026 as compared with the same period in 2025. Operating expenses increased primarily as a result of wage increases across our portfolio. 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 changes in immigration policies under the current presidential administration. The increase in operating expenses in both the three- and nine-month periods includes start-up related expenses at the Midwest Facility during the first quarter of 2026, when we officially activated the facility and began accepting residential populations from ICE following receipt of an SUP during the quarter. The increase in operating expenses in both periods also includes start-up related expenses at the Appleton Facility which was idle prior to the award of a new contract with ICE at the facility effective August 11, 2026. In addition, operating expenses increased during the nine months ended September 30, 2026 as compared to the same period in 2025 as a result of the acquisition of the Farmville Detention Center on July 1, 2025.

Previous wording

The increase in operating expenses during the three and six months ended June 30, 2026, as compared with the same periods in 2025, was also a result of employee retention credits, or ERCs, received in the amount of $8.3 million and $11.0 million during the three and six months ended June 30, 2025, respectively, compared with $5.6 million received during the first quarter of 2026, which represented the final payment expected to be received related to ERCs. 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.

Current wording

The increase in operating expenses during the nine months ended September 30, 2026, as compared with the same period in 2025, was also a result of employee retention credits, or ERCs, received in the amount of $11.0 million during the first six months of 2025, compared with $5.6 million received during the first quarter of 2026, which represented the final payment expected to be received related to ERCs. 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.

Previous wording

Total expenses per compensated man-day increased to $93.05 during the three months ended June 30, 2026 from $78.66 during the three months ended June 30, 2025, and increased to $90.92 during the six months ended June 30, 2026 from $78.66 during the same period in the prior year. Expenses per compensated man-day increased in both periods as a result of start-up expenses at the California City Facility, our Midwest Facility, our West Tennessee Detention Facility, and our Diamondback Correctional Facility, as we had not yet reached stabilized occupancy at these facilities. 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 also a result of the timing of ERCs received, as previously mentioned.

Current wording

Total expenses per compensated man-day increased to $91.26 during the three months ended September 30, 2026 from $86.25 during the three months ended September 30, 2025, and increased to $91.04 during the nine months ended September 30, 2026 from $81.29 during the same period in the prior year. Expenses per compensated man-day increased in both periods as a result of start-up expenses at the California City Facility, the Midwest Facility, our West Tennessee Detention Facility, and our Diamondback Correctional Facility, as we had not yet reached stabilized occupancy at these facilities. Expenses per compensated man-day also increased in both periods as a result of start-up expenses at the Appleton Facility. 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 also a result of the timing of ERCs received, as previously mentioned.

Previous wording

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. 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.

Current wording

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. 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 deduction for staff vacancies as a result of labor shortages, which are reflected in reductions to other management revenue. Estimating revenue deduction amounts due to staff vacancies can be complex and subject to management estimates.

Previous wording

Variable expenses per compensated man-day increased to $24.78 during the three months ended June 30, 2026, from $21.27 during the same period in the prior year, or 16.5%, and increased to $24.38 during the six months ended June 30, 2026 from $21.15 during the same period in the prior year, or 15.3%. The increase in variable expenses per compensated man-day in both periods was primarily due to the start-up expenses at four previously idle facilities and the resumption of operations at our Dilley Facility on March 5, 2025, combined with the effect of an elevated inflation rate applicable to our variable expenses.

Current wording

Variable expenses per compensated man-day increased to $24.65 during the three months ended September 30, 2026, from $22.82 during the same period in the prior year, or 8.0%, and increased to $24.47 during the nine months ended September 30, 2026 from $21.73 during the same period in the prior year, or 12.6%. The increase in variable expenses per compensated man-day in both periods was primarily due to the start-up expenses at five previously idle facilities, including the Appleton Facility, and the resumption of operations at our Dilley Facility on March 5, 2025, combined with the effect of an elevated inflation rate applicable to our variable expenses. In addition, variable expenses per compensated man-day increased from the prior year periods 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.

Previous wording

Operating Margins. Operating margins during the three and six months ended June 30, 2026 were negatively impacted by the decrease in ERCs received during the three and six months ended June 30, 2026 as compared to the same periods in 2025. In addition, operating margins were negatively impacted by a recent decline in ICE populations in our care at facilities other than those we recently activated, as further discussed below. Operating margins in the CoreCivic Residential segment were positively impacted during the three and six months ended June 30, 2026 by the activations of our previously idled 2,560-bed California City facility, our 600-bed West Tennessee facility, our 2,160-bed Diamondback facility, and our 1,033-bed Midwest Facility. While these four facilities continue to be in various stages of activation, they generated operating income of $21.1 million and $32.0 million during the three and six months ended June 30, 2026, respectively, in the aggregate. We anticipate these facilities will continue to contribute to an increase in operating margins in future quarters as we expect the occupancy at these facilities to continue to increase. Total revenue at these four facilities was $80.1 million and $142.0 million during the three and six months ended June 30, 2026, respectively. We expect the activation of the Prairie Facility to negatively impact margins during the second half of 2026 as we hire staff and incur expenses to prepare to receive detainees.

Current wording

Operating Margins. Operating margins in the CoreCivic Residential segment were 22.3% and 22.5% in the three months ended September 30, 2026 and 2025, respectively. Although occupancy increased during the three-month period ended September 30, 2026, the increase in occupancy was substantially attributable to the four facilities under activation. The operating margin excluding these facilities decreased slightly due to higher operating expenses, as previously described herein. Operating margins during the nine months ended September 30, 2026 and 2025 were 22.8% and 24.0%, respectively and were negatively impacted by a decline during the first half of 2026 in ICE populations in our care at facilities other than those we recently activated, resulting from the partial government shutdown that centered around DHS funding, a reorganization of the DHS leadership, and the subsequent impact on enforcement activities, including redeployment of ICE agents to Transportation Security Administration checkpoints. In addition, operating margins during the nine months ended September 30, 2026 were negatively impacted by the decrease in ERCs received during the nine months ended September 30, 2026 as compared to the same period in 2025. Operating margins in the CoreCivic Residential segment were positively impacted during the three and nine months ended September 30, 2026 by the activations of our previously idled West Tennessee facility, our Diamondback facility, the California City Facility, and the Midwest Facility. While these four facilities continue to be in various stages of activation, they are therefore not yet generating operating margins at fully activated margin percentages; however they nonetheless generated aggregate net operating income of $19.9 million and $51.8 million during the three and nine months ended September 30, 2026, respectively. Total revenue at these four facilities was $83.5 million and $225.4 million during the three and nine months ended September 30, 2026, respectively. Operating margins in the future could also be negatively impacted by modifications to our management contracts with ICE at the four recently sold detention facilities in order to reflect the change in ownership. Modifications, if any, to the management contracts have not yet occurred, but we expect these management contracts to be modified in the future to reflect the change in ownership.

Previous wording

Operating margins were also positively impacted during the first six months of 2026 as compared to the same period of 2025 by the resumption of operations at the Dilley Facility. On March 5, 2025, we announced that we had agreed under an amendment to an 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. Previously, after nearly ten years of operation, we received notification from ICE on June 10, 2024 of its intent to terminate funding of the IGSA for services at the Dilley Facility effective August 9, 2024. We did not operate the Dilley Facility from August 9, 2024 until the resumption of operations at the facility on March 5, 2025. The operating margin at the Dilley Facility exceeds 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. Total revenue at the Dilley Facility increased to $46.2 million and $92.1 million during the three and six months ended June 30, 2026, respectively, from $26.3 million and $31.8 million during the same periods in 2025.

Current wording

Operating margins were also positively impacted during the first nine months of 2026 as compared to the same period of 2025 by the resumption of operations at the Dilley Facility. On March 5, 2025, we announced that we had agreed under an amendment to an 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. Previously, after nearly ten years of operation, we received notification from ICE on June 10, 2024 of its intent to terminate funding of the IGSA for services at the Dilley Facility effective August 9, 2024. We did not operate the Dilley Facility from August 9, 2024 until the resumption of operations at the facility on March 5, 2025. The operating margin at the Dilley Facility exceeds 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. Total revenue at the Dilley Facility increased to $47.0 million and $139.1 million during the three and nine months ended September 30, 2026, respectively, from $40.6 million and $72.4 million during the same periods in 2025.

Previous wording

In late January 2026, nationwide ICE detention populations were at a historical high of approximately 70,800 individuals, an increase of approximately 1,000 individuals from the end of the fourth quarter of 2025. However, the government shutdown that centered around DHS funding, a reorganization of DHS leadership, and the subsequent impact to enforcement activities, including redeployment of ICE agents to Transportation Security Administration checkpoints, led to a decrease of approximately 10,500 in detention populations nationwide by early April 2026 to approximately 60,300. Since April 2026, ICE detention populations have increased to approximately 65,600 individuals. ICE populations in our care declined by approximately 2,500 individuals from late January 2026 through March 31, 2026. However, while we are still below the January 31, 2026 population level, ICE populations in our care increased by approximately 1,500 individuals from March 31, 2026 through June 30, 2026. While we cannot predict if and how quickly ICE populations will continue to grow, we believe the current presidential administration's commitment to border security and deportation remains unchanged. For example, on June 10, 2026, President Trump signed into law an approximate $70 billion budget reconciliation bill, the "Secure America Act", which secures total funding to the DHS for ICE and CBP through September 30, 2029. Accordingly, we expect demand from the federal government for correctional and detention facilities in our Residential segment will ultimately increase from current levels. This anticipated increase in demand could result in 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, such as at the Prairie Facility resulting from a new management contract with ICE as previously mentioned, 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 considered 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.

Current wording

In late January 2026, nationwide ICE detention populations were at a historical high of approximately 70,800 individuals, an increase of approximately 1,000 individuals from the end of the fourth quarter of 2025. However, the partial government shutdown that centered around DHS funding, a reorganization of DHS leadership, and the subsequent impact to enforcement activities, including redeployment of ICE agents to Transportation Security Administration checkpoints, led to a decrease of approximately 10,500 in detention populations nationwide by early April 2026 to approximately 60,300. Since April 2026, ICE detention populations have increased to approximately 65,800 individuals in July 2026. ICE populations in our care declined by approximately 2,500 individuals from late January 2026 through March 31, 2026. However, ICE populations in our care increased by approximately 3,600 individuals from March 31, 2026 through September 30, 2026 and increased by approximately 1,100 individuals from January 31, 2026 through September 30, 2026. While we cannot predict if, or how quickly, ICE populations will continue to grow, we believe the presidential administration's commitment to border security and deportation remains unchanged. For example, on June 10, 2026, President Trump signed into law an approximate $70 billion budget reconciliation bill, the "Secure America Act", which secures total funding to DHS for ICE and CBP through September 30, 2029. Accordingly, we expect demand from the federal government for correctional and detention facilities in our Residential segment will continue to increase from current levels. This anticipated increase in demand could result in 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, such as at the Appleton Facility resulting from a new management contract with ICE, 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.

Previous wording

During 2024, ICE issued a request for proposal, or RFP, for up to 600 beds in New Jersey. We 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 May 31, 2026. During the second quarter of 2026, we agreed to extend the contract with ICE at this facility through May 31, 2031. However, we lease the Elizabeth facility from a third party under a lease agreement scheduled to expire on June 30, 2027. We can provide no assurance that we will be able to extend the lease, which could result in the termination of our contract with ICE if we are unable to extend the lease agreement or identify an alternative place of performance acceptable to ICE. We generated total revenue of $5.6 million and $11.2 million at this facility during the three and six months ended June 30, 2026, respectively. At June 30, 2026, we cared for 256 detainees at this facility under terms of the most recently extended contract.

Current wording

During 2024, ICE issued a request for proposal, or RFP, for up to 600 beds in New Jersey. We 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. During the second quarter of 2026, we agreed to extend the contract with ICE at this facility through May 31, 2031. However, we lease the Elizabeth facility from a third party under a lease agreement scheduled to expire on June 30, 2027. We can provide no assurance that we will be able to extend the lease, which could result in the termination of our contract with ICE if we are unable to extend the lease agreement or identify an alternative place of performance acceptable to ICE. We generated total revenue of $5.9 million and $17.2 million at this facility during the three and nine months ended September 30, 2026, respectively. At September 30, 2026, we cared for 258 detainees at this facility.

Previous wording

We continue to manage the California City Facility and the Otay Mesa Facility, two facilities we sold on July 2, 2026, and the Prairie Facility and the Midwest Facility, two facilities we sold on August 4, 2026, under the existing management contracts with ICE related to each facility, although the terms of the management contracts may be modified in the future to reflect the change in ownership. However, since all of our contracts with ICE provide it with the ability to terminate our contracts for non-appropriation of funds or for convenience, we can provide no assurance that we will continue to manage these facilities in the future or that the terms will remain the same. The management contract for the California City Facility expires in August 2027, and the management contract for the Otay Mesa Facility expires in December 2029 and contains a five-year extension option. The management contracts for the Prairie Facility and the Midwest Facility expire in August 2031 and September 2027, respectively. In addition to these asset sales, we have recently begun discussions with ICE about the potential acquisition of additional detention facilities from the Company. These discussions are in preliminary stages, and we can provide no assurance that any additional sales will occur.

Current wording

We continue to manage the California City Facility and the Otay Mesa Facility, two facilities we sold on July 2, 2026, and the Appleton Facility and the Midwest Facility, two facilities we sold on August 4, 2026, under the existing management contracts with ICE related to each facility, although we expect the terms of the management contracts to be modified in the future to reflect the change in ownership. However, since all of our contracts with ICE provide it with the ability to terminate our contracts for non-appropriation of funds or for convenience, we can provide no assurance that we will continue to manage these facilities in the future or that the terms will remain the same. The management contract for the California City Facility expires in August 2027, and the management contract for the Otay Mesa Facility expires in December 2029 and contains a five-year extension option. The management contracts for the Appleton Facility and the Midwest Facility expire in August 2031 and August 2027, respectively. In addition to these asset sales, we have been in discussions with ICE about the potential acquisition of additional detention facilities from the Company. These discussions are in preliminary stages, and we can provide no assurance that any additional sales will occur.

Previous wording

CoreCivic Services includes the operating results of the complementary services we provide to the corrections industry, including CoreCivic, through our wholly-owned subsidiaries, CSP, TransCor, and RMS. CSP was acquired on April 1, 2026, contributing to the increases in revenues, operating expenses, and net operating income over the comparable periods in 2025. Total revenue, before intercompany eliminations, generated by CoreCivic Services increased $69.6 million, from $19.2 million during the three months ended June 30, 2025 to $88.7 million during the three months ended June 30, 2026, and increased $76.4 million, from $37.0 million during the six months ended June 30, 2025 to $113.4 million during the six months ended June 30, 2026. CoreCivic Services' facility net operating income, also before intercompany eliminations, increased $8.3 million, from $0.7 million during the three months ended June 30, 2025 to $9.0 million during the three months ended June 30, 2026, and increased $9.3 million, from $1.6 million during the six months ended June 30, 2025 to $10.9 million during the six months ended June 30, 2026. During the three and six months ended June 30, 2026, CoreCivic Services generated 6.1% and 3.7%, respectively, of our segment net operating income, compared with 0.5% and 0.6%, respectively, during the three and six months ended June 30, 2025.

Current wording

CoreCivic Services includes the operating results of the complementary services we provide to the corrections industry through our wholly-owned subsidiaries, CSP, TransCor, and RMS. CSP was acquired on April 1, 2026, contributing to the increases in revenues, operating expenses, and net operating income over the comparable periods in 2025. Total revenue, before intercompany eliminations, generated by CoreCivic Services increased $89.0 million, from $21.1 million during the three months ended September 30, 2025 to $110.1 million during the three months ended September 30, 2026, and increased $165.4 million, from $58.1 million during the nine months ended September 30, 2025 to $223.5 million during the nine months ended September 30, 2026. CoreCivic Services' net operating income, also before intercompany eliminations, increased $8.5 million, from $1.1 million during the three months ended September 30, 2025 to $9.6 million during the three months ended September 30, 2026, and increased $17.8 million, from $2.7 million during the nine months ended September 30, 2025 to $20.5 million during the nine months ended September 30, 2026. During the three and nine months ended September 30, 2026, CoreCivic Services generated 6.1% and 4.5%, respectively, of our segment net operating income, compared with 0.9% and 0.7%, respectively, during the three and nine months ended September 30, 2025.

Previous wording

On April 1, 2026, we acquired CSP, one of the largest providers of mail order pharmacy services to correctional facilities in the United States, serving over 600 correctional facilities, including correctional facilities owned or operated by CoreCivic, across 32 states. The acquisition was consummated through the acquisition of 100% of the ownership interests of CS Solutions Intermediate Holdings, LLC. The aggregate purchase price of $199.8 million, includes an estimated earn-out and the acquisition of working capital accounts, but excludes $3.1 million of transaction-related expenses incurred through June 30, 2026. The initial purchase price of $148.0 million, excluding the earn-out, was funded with cash on hand and borrowings under our revolving credit facility. The earn-out, which is based on specified financial targets in 2026, was estimated at a fair value of $51.8 million at June 30, 2026, and the fair value will be remeasured each reporting period until settled in cash, expected in the first half of 2027. The results of operations for this business combination have been included in our consolidated financial statements from the date of the acquisition on April 1, 2026.

Current wording

On April 1, 2026, we acquired CSP, one of the largest providers of mail order pharmacy services to correctional facilities in the United States, serving over 600 correctional facilities, including correctional facilities owned or operated by CoreCivic, across 32 states. The acquisition was consummated through the acquisition of 100% of the ownership interests of CS Solutions Intermediate Holdings, LLC. The estimated purchase price of $199.6 million, includes an estimated earn-out and the acquisition of working capital accounts, but excludes $4.2 million of transaction-related expenses incurred through September 30, 2026. The initial purchase price of $148.0 million, excluding the earn-out, was funded with cash on hand and borrowings under our revolving credit facility. The earn-out, which is based on specified financial targets in 2026, was estimated at a fair value of $29.5 million at September 30, 2026, compared with $51.6 million as of the acquisition date, resulting in a gain on contingent consideration of $22.1 million in the third quarter of 2026. The fair value of the earn-out will be remeasured each reporting period until settled in cash, expected in the first half of 2027. The results of operations for this business combination have been included in our consolidated financial statements from the date of the acquisition on April 1, 2026.

Previous wording

CoreCivic Properties includes the operating results of the properties we leased to government agencies during each period. Total revenue generated by CoreCivic Properties stayed the same at $4.7 million during the three months ended June 30, 2026 and 2025, and increased $0.1 million, from $9.3 million during the six months ended June 30, 2025 to $9.4 million during the six months ended June 30, 2026. CoreCivic Properties' facility net operating income decreased $0.2 million, from $2.5 million during the three months ended June 30, 2025 to $2.3 million during the three months ended June 30, 2026, and increased $0.6 million, from $4.1 million during the six months ended June 30, 2025 to $4.7 million during the six months ended June 30, 2026. During the three and six months ended June 30, 2026, CoreCivic Properties generated 1.5% and 1.6%, respectively, of our segment net operating income, compared with 1.8% and 1.6% during the three and six months ended June 30, 2025, respectively.

Current wording

CoreCivic Properties includes the operating results of the properties we leased to government agencies during each period. Total revenue generated by CoreCivic Properties was $4.7 million during both the three months ended September 30, 2026 and 2025, and increased $.1 million, from $14.0 million during the nine months ended September 30, 2025 to $14.1 million during the nine months ended September 30, 2026. CoreCivic Properties' net operating income was $2.4 million during both the three months ended September 30, 2026 and 2025 and increased $0.7 million, from $6.4 million during the nine months ended September 30, 2025 to $7.1 million during the nine months ended September 30, 2026. During the three and nine months ended September 30, 2026, CoreCivic Properties generated 1.5% and 1.6%, respectively, of our segment net operating income, compared with 1.8% and 1.7% during the three and nine months ended September 30, 2025, respectively.

Previous wording

On December 6, 2022, we received notice from the California Department of Corrections and Rehabilitation 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. Because we are now operating the facility rather than leasing it, the California City Facility transitioned from our Properties segment to our Residential segment during the second quarter of 2025. 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.

Current wording

On December 6, 2022, we received notice from the California Department of Corrections and Rehabilitation 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. Because we are now operating the facility rather than leasing it, the California City Facility transitioned from our Properties segment to our Residential segment during the second quarter of 2025. 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.