BRIGHT HORIZONS FAMILY SOLUTIONS INC.

Previous wording

This Quarterly Report on Form 10-Q includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). The following cautionary statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the “safe harbor” provisions of the Act. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “expects,” “may,” “will,” “should,” “seeks,” “projects,” “approximately,” “intends,” “plans,” “estimates” or “anticipates,” or, in each case, their negatives or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations; financial condition; liquidity; labor, workplace and demographic trends; wage rate increases, personnel costs and labor markets; future center closures and portfolio optimization and impacts; our operations outside the United States; back-up care services and use types; enrollment recovery and occupancy improvement in the United States and outside the United States; our center cohort occupancy levels; cost management and capital spending; investments in employees and wages; contributions and growth in our back-up care segment; the availability or lack of government support programs; tuition rate increases and pricing strategies; leases, terms and expirations; ability to respond to changing or volatile market conditions; our growth and strategic priorities; ability to regain and sustain our business; demand for services; our value proposition, client relations and partnerships; seasonality; macroeconomic trends and changing conditions, including uncertainty and inflationary or recessionary pressures; fluctuating interest rates; changes in laws and regulations; investments in operations and strategic opportunities; investments in technology, marketing and user experience; shared services costs; our opportunities for expansion; acquisitions, contributions and expected synergies; contingent consideration; amortization expense; our fair value estimates; goodwill from business combinations; impairments; fixed assets; estimates and impact of employee equity transactions; unrecognized tax benefits and the impact of uncertain tax positions; our effective tax rate; the outcome of tax audits, settlements and tax liabilities; impact of tax benefits/expense; fluctuations, impact and estimates of foreign currency exchange rates and interest rates; our capital allocation; share repurchase program and fut…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). The following cautionary statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the “safe harbor” provisions of the Act. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “expects,” “may,” “will,” “should,” “seeks,” “projects,” “approximately,” “intends,” “plans,” “estimates” or “anticipates,” or, in each case, their negatives or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report on Form 10-Q and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations; financial condition; liquidity; labor, workplace and demographic trends; wage rate increases, personnel costs and labor markets; future center closures and portfolio optimization and impacts; our operations outside the United States; back-up care services and use types; enrollment recovery and occupancy improvement in the United States and outside the United States; our center cohort occupancy levels; cost management and capital spending; investments in employees and wages; contributions and growth in our back-up care segment; the availability or lack of government support programs; tuition rate increases and pricing strategies; leases, terms and expirations; ability to respond to changing or volatile market conditions; our growth and strategic priorities; ability to regain and sustain our business; demand for services; our value proposition, client relations and partnerships; seasonality; macroeconomic trends and changing conditions, including uncertainty and inflationary or recessionary pressures; fluctuating interest rates; changes in laws and regulations, including the OBBBA and its impacts; investments in operations and strategic opportunities; investments in technology, marketing and user experience; our opportunities for expansion; acquisitions, contributions and expected synergies; contingent consideration; amortization expense; our fair value estimates; goodwill from business combinations; impairments; fixed assets; estimates and impact of employee equity transactions; unrecognized tax benefits and the impact of uncertain tax positions; our effective tax rate and estimates; the outcome of tax audits, settlements and tax liabilities; impact of tax benefits/expense; fluctuations, impact and estimates of foreign currency exchange rates and interest rates; our capital allocation; shar…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The following is a discussion of the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of Bright Horizons Family Solutions Inc. (“we” or the “Company”) for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. This discussion should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

The following is a discussion of the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of Bright Horizons Family Solutions Inc. (“we” or the “Company”) for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024. This discussion should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

As of March 31, 2025, we operated 1,023 early education and child care centers with the capacity to serve approximately 115,000 children in the United States, the United Kingdom, the Netherlands, Australia and India.

Current wording

As of June 30, 2025, we operated 1,020 early education and child care centers with the capacity to serve approximately 115,000 children in the United States, the United Kingdom, the Netherlands, Australia and India.

Previous wording

During the three months ended March 31, 2025, we saw strong growth in back-up care with a 12% year-over-year increase in revenue as a result of increased utilization. We also saw solid year-over-year revenue growth of 6% in our full service center-based child care segment, including net enrollment growth of 2%. To track our continued improvement in occupancy rates, we monitor occupancy for a cohort of centers that has been operating since the 2021 fall enrollment cycle, and as of March 31, 2025, this cohort of centers totaled 766 centers. Occupancy represents utilization for each respective center and is calculated as the average full-time enrollment divided by the total operating capacity during the period. For the quarter ended March 31, 2025, 47% of these centers were more than 70% enrolled, 40% were between 40-70% enrolled and 13% were less than 40% enrolled, which reflects improved occupancy when compared to the same period in the prior year and when compared to the fourth quarter of 2024.

Current wording

During the three months ended June 30, 2025, we saw strong growth in back-up care with a 19% year-over-year increase in revenue as a result of increased utilization. We also saw solid year-over-year revenue growth of 7% in our full service center-based child care segment, including net enrollment growth of 2%. To track our continued improvement in occupancy rates, we monitor occupancy for a cohort of centers that has been operating since the 2021 fall enrollment cycle, and as of June 30, 2025, this cohort of centers totaled 760 centers. Occupancy represents utilization for each respective center and is calculated as the average full-time enrollment divided by the total operating capacity during the period. For the quarter ended June 30, 2025, 54% of these centers were more than 70% enrolled, 36% were between 40-70% enrolled and 10% were less than 40% enrolled, which reflects improved occupancy when compared to the same period in the prior year and when compared to the first quarter of 2025.

Previous wording

While we continue to see year-over-year growth and progress, we are navigating through a dynamic operating environment that is impacted by increased costs, a tight labor market, varying enrollment demands, shifting work demographics, and challenging and uncertain macroeconomic conditions. We continue to monitor and respond to the changing conditions and operating environments, and the evolving needs of clients, families and children, including the optimization of our portfolio of centers through the routine closure of underperforming centers to accommodate evolving changes in demand in the markets we serve. Where possible, we shift enrollment and teachers to other centers at nearby locations.

Current wording

While we continue to see year-over-year growth and progress, we continue to navigate through a dynamic operating environment that is impacted by increased costs, a tight labor market, varying enrollment demands, shifting work demographics, and challenging and uncertain macroeconomic conditions. We monitor and respond to the changing conditions and operating environments, and the evolving needs of clients, families and children, including the optimization of our portfolio of centers through the routine closure of underperforming centers to accommodate evolving changes in demand in the markets we serve. In the event of a center closure, where possible, we shift enrollment and teachers to other centers at nearby locations.

Previous wording

We remain focused on our strategic priorities to deliver high quality education and care services, connect across our service lines, extend our impact on new customers and clients, and preserve our strong culture. As we continue to navigate this dynamic operating environment, we remain committed to serving the needs of families, clients and our employees. We are confident in our value proposition, business model, the strength of our client partnerships, the strength of our balance sheet and liquidity position, and our ability to continue to respond to changing and volatile market conditions.

Current wording

We remain focused on our strategic priorities to deliver high quality education and care services, connect across our service lines, extend our impact on new customers and clients, and preserve our strong culture and we remain committed to serving the needs of families, clients and our employees. We are confident in our value proposition, business model, the strength of our client partnerships, the strength of our balance sheet and liquidity position, and our ability to continue to respond to changing and unpredictable market conditions.

Previous wording

Revenue. Revenue for the three months ended March 31, 2025, increased by $42.8 million, or 7%, to $665.5 million from $622.7 million for the same period in 2024. The following table summarizes the revenue and percentage of total revenue for each of our segments for the three months ended March 31, 2025 and 2024:

Current wording

Revenue. Revenue for the three months ended June 30, 2025, increased by $61.5 million, or 9%, to $731.6 million from $670.1 million for the same period in 2024. The following table summarizes the revenue and percentage of total revenue for each of our segments for the three months ended June 30, 2025 and 2024:

Previous wording

Revenue generated by the full service center-based child care segment in the three months ended March 31, 2025 increased by $26.9 million, or 6%, when compared to the same period in 2024. Tuition revenue increased by $24.1 million, or 6%, when compared to the prior year, due to a 2% net increase in enrollment and average tuition rate increases at our child care centers of approximately 4-5%. Fluctuations in foreign currency exchange rates for our United Kingdom, Netherlands and Australia operations decreased 2025 tuition revenue by approximately 1%, or $3.8 million. While we expect to be impacted by fluctuations in the foreign currency exchange rates throughout the year, we currently do not expect such fluctuations to have a material impact to the full year net operating results for 2025.

Current wording

Revenue generated by the full service center-based child care segment in the three months ended June 30, 2025 increased by $33.2 million, or 7%, when compared to the same period in 2024. Tuition revenue increased by $32.3 million, or 7%, when compared to the prior year, due to a 2% net increase in enrollment and average tuition rate increases at our child care centers of approximately 4-5%. Fluctuations in foreign currency exchange rates for our United Kingdom, Netherlands and Australia operations increased 2025 tuition revenue by approximately 2%, or $7.9 million. We expect to be impacted by fluctuations in the foreign currency exchange rates throughout the year, although we do not expect the impact on net earnings to be material.

Previous wording

Management fees and operating subsidies from employer sponsors increased by $2.8 million, or 7%, primarily due to higher operating subsidies required to support center operations as enrollment continues to increase.

Current wording

Management fees and operating subsidies from employer sponsors increased by $0.9 million, or 2%, primarily due to higher operating subsidies required to support center operations as enrollment continues to increase.

Previous wording

Revenue generated by back-up care services in the three months ended March 31, 2025 increased by $13.9 million, or 12%, when compared to the same period in 2024. Revenue growth in the back-up care segment was primarily attributable to increased utilization of center-based, in-home and school age programs by new and existing clients.

Current wording

Revenue generated by back-up care services in the three months ended June 30, 2025 increased by $26.2 million, or 19%, when compared to the same period in 2024. Revenue growth in the back-up care segment was primarily attributable to increased utilization of center-based, in-home and school age programs by new and existing clients.

Previous wording

Revenue generated by educational advisory services in the three months ended March 31, 2025 increased by $2.0 million, or 8%, when compared to the same period in 2024 from new and existing clients.

Current wording

Revenue generated by educational advisory services in the three months ended June 30, 2025 increased by $2.1 million, or 8%, when compared to the same period in 2024 from increased utilization from new and existing clients.

Previous wording

Cost of Services. Cost of services increased by $22.2 million, or 5%, to $509.8 million for the three months ended March 31, 2025 from $487.6 million for the same period in 2024.

Current wording

Cost of Services. Cost of services increased by $41.4 million, or 8%, to $549.0 million for the three months ended June 30, 2025 from $507.6 million for the same period in 2024.

Previous wording

Cost of services in the full service center-based child care segment increased by $18.2 million, or 4%, to $422.1 million in the three months ended March 31, 2025 when compared to the same period in 2024. The increase in cost of services was primarily associated with increased personnel costs related to expanded enrollment and wage rate increases. Personnel costs, which generally represent 70% of the costs for this segment, increased 5% during the quarter compared to the same period in the prior year. In addition to the personnel costs to support the incremental 2% net enrollment noted above, we continue to invest in higher wages for our center staff, resulting in an increase of approximately 3-4% to the average hourly wage in 2025 compared to 2024.

Current wording

Cost of services in the full service center-based child care segment increased by $29.8 million, or 7%, to $445.7 million in the three months ended June 30, 2025 when compared to the same period in 2024. The increase in cost of services was primarily associated with increased personnel costs related to expanded enrollment, wage rate increases and higher benefit costs. Personnel costs, which represent approximately 70% of the costs for this segment, increased 10% during the quarter compared to the same period in the prior year. In addition to the personnel costs to support the enrollment growth noted above, we continue to invest in higher wages and benefits for our center staff, resulting in an increase of approximately 3-4% to the average hourly wage in 2025 compared to 2024.

Previous wording

Cost of services in the back-up care segment increased by $3.8 million, or 6%, to $72.7 million in the three months ended March 31, 2025, when compared to the prior year. The increase in cost of services correlates to the increase in revenue and is primarily associated with higher care provider fees generated by the increase in utilization levels of center-based and in-home back-up care over the prior year, and continued investment in technology to support our customer user experience and customer acquisition.

Current wording

Cost of services in the back-up care segment increased by $11.5 million, or 15%, to $88.8 million in the three months ended June 30, 2025, when compared to the prior year. The increase in cost of services correlates to the increase in revenue and is primarily associated with care provider fees to serve the increase in utilization levels of center-based and in-home back-up care over the prior year, and continued investment in technology to support our customer user experience and customer acquisition.

Previous wording

Cost of services in the educational advisory services segment increased by $0.2 million, or 1%, to $14.9 million in the three months ended March 31, 2025 when compared to the prior year.

Current wording

Cost of services in the educational advisory services segment increased by $0.1 million, or 1%, to $14.5 million in the three months ended June 30, 2025 when compared to the prior year, on improved leverage in service delivery.

Previous wording

Gross Profit. Gross profit increased by $20.6 million, or 15%, to $155.7 million for the three months ended March 31, 2025 from $135.1 million for the same period in 2024 primarily due to incremental gross profit contributions from the full service center-based child care segment, resulting from enrollment growth and the associated operating leverage, and from the back-up care segment, resulting from higher utilization of back-up care services. Gross profit margin was 23% of revenue for the three months ended March 31, 2025, an increase of approximately 2% compared to the three months ended March 31, 2024.

Current wording

Gross Profit. Gross profit increased by $20.2 million, or 12%, to $182.6 million for the three months ended June 30, 2025 from $162.4 million for the same period in 2024 primarily due to incremental gross profit contributions from the back-up care segment, resulting from higher utilization of back-up care services, and the full service center-based child care segment, resulting from enrollment growth, and the associated operating leverage. Gross profit margin was 25% of revenue for the three months ended June 30, 2025, an increase of approximately 1% compared to the three months ended June 30, 2024.

Previous wording

Amortization of Intangible Assets. Amortization expense on intangible assets was $1.6 million for the three months ended March 31, 2025, a decrease from $7.6 million for the three months ended March 31, 2024, primarily due to decreases from intangible assets becoming fully amortized during the period, partially offset by increases from intangible assets acquired in relation to the acquisitions completed in 2024.

Current wording

Amortization of Intangible Assets. Amortization expense on intangible assets was $1.7 million for the three months ended June 30, 2025, a decrease from $5.9 million for the three months ended June 30, 2024, primarily due to decreases from intangible assets becoming fully amortized since the prior year, partially offset by increases from intangible assets acquired in relation to the acquisitions completed in 2024 and 2025.

Previous wording

Income from Operations. Income from operations increased by $22.3 million, or 56%, to $62.3 million for the three months ended March 31, 2025 when compared to the prior year. The following table summarizes income from operations and percentage of revenue for each of our segments for the three months ended March 31, 2025 and 2024:

Current wording

Income from Operations. Income from operations increased by $17.0 million, or 25%, to $86.1 million for the three months ended June 30, 2025 when compared to the prior year. The following table summarizes income from operations and percentage of revenue for each of our segments for the three months ended June 30, 2025 and 2024:

Previous wording

•Income from operations for the full service center-based child care segment increased $11.8 million, or 55%, in the three months ended March 31, 2025 when compared to the same period in 2024, primarily due to increases in tuition revenue from enrollment growth and annual tuition rate increases, partially offset by increased personnel costs.

Current wording

•Income from operations for the full service center-based child care segment increased $7.6 million, or 23%, in the three months ended June 30, 2025 when compared to the same period in 2024, primarily due to increases in tuition revenue from enrollment growth and annual tuition rate increases, as well as decreases in amortization expense, partially offset by increased personnel costs.

Previous wording

Net Interest Expense. Net interest expense was $10.4 million for the three months ended March 31, 2025, a decrease from $13.7 million for the three months ended March 31, 2024, primarily due to lower average borrowings and interest rates applicable to our debt. The weighted average interest rate for the term loans and revolving credit facility was 4.39% for the three months ended March 31, 2025 compared to 5.05% for the three months ended March 31, 2024, inclusive of the effects of the cash flow hedges. Based on our current interest rate projections, we estimate that our overall weighted average interest rate will be in the range of 4.75% to 5.00% for the remainder of 2025 inclusive of the effects of the cash flow hedges.

Current wording

Net Interest Expense. Net interest expense was $10.6 million for the three months ended June 30, 2025, a decrease from $12.0 million for the three months ended June 30, 2024, primarily due to lower interest rates applicable to our debt and lower outstanding debt, partially offset by debt financing costs of $0.6 million related to refinancing our debt facilities in 2025. The weighted average interest rate for the term loans and revolving credit facility was 4.26% for the three months ended June 30, 2025 compared to 4.90% for the three months ended June 30, 2024, inclusive of the effects of the cash flow hedges. Based on our current interest rate projections, we estimate that our overall weighted average interest rate will be in the range of 4.75% and 5.00% for the remainder of 2025 inclusive of the effects of the cash flow hedges.

Previous wording

Income Tax Expense. We recorded income tax expense of $13.9 million during the three months ended March 31, 2025, at an effective income tax rate of 27%, compared to an income tax expense of $9.3 million during the three months ended March 31, 2024, at an effective income tax rate of 35%. The difference between the effective income tax rates as compared to the statutory income tax rates was primarily due to the impact of unbenefited losses in certain foreign subsidiaries and the effects of net excess tax benefit (shortfall tax expense) associated with the exercise or expiration of stock options and vesting of restricted stock. The effective income tax rate may fluctuate from quarter to quarter for various reasons, including changes to income before income tax, jurisdictional mix of income before income tax, unbenefited losses, valuation allowances, jurisdictional income tax rate changes, as well as discrete items such as non-deductible transaction costs, the settlement of foreign, federal and state tax matters and the effects of excess tax benefit (shortfall tax expense) associated with the exercise or expiration of stock options and vesting of restricted stock.

Current wording

Income Tax Expense. We recorded income tax expense of $20.7 million during the three months ended June 30, 2025, at an effective income tax rate of 27%, compared to an income tax expense of $17.9 million during the three months ended June 30, 2024, at an effective income tax rate of 31%. The difference between the effective income tax rates as compared to the statutory income tax rates was primarily due to the impact of unbenefited losses in certain foreign subsidiaries and the effects of net excess tax benefit (shortfall tax expense) associated with the exercise or expiration of stock options and vesting of restricted stock. The effective income tax rate may fluctuate from quarter to quarter for various reasons, including changes to income before income tax, jurisdictional mix of income before income tax, unbenefited losses, valuation allowances, jurisdictional income tax rate changes, as well as discrete items such as non-deductible transaction costs, the settlement of foreign, federal and state tax matters and the effects of excess tax benefit (shortfall tax expense) associated with the exercise or expiration of stock options and vesting of restricted stock.

Previous wording

Adjusted EBITDA and Adjusted Income from Operations. Adjusted EBITDA increased $17.3 million, or 23%, and adjusted income from operations increased $22.3 million, or 56%, for the three months ended March 31, 2025 over the comparable period in 2024 primarily due to increased contributions from both the back-up care segment and the full service center-based child care segment.

Current wording

Adjusted EBITDA and Adjusted Income from Operations. Adjusted EBITDA increased $13.0 million, or 13%, and adjusted income from operations increased $17.0 million, or 25%, for the three months ended June 30, 2025 over the comparable period in 2024 primarily due to increased contributions from both the back-up care segment and the full service center-based child care segment.

Previous wording

Adjusted Net Income. Adjusted net income increased $15.1 million, or 51%, for the three months ended March 31, 2025 when compared to the same period in 2024, primarily due to the increase in adjusted income from operations and lower interest expense.

Current wording

Adjusted Net Income. Adjusted net income increased $10.2 million, or 20%, for the three months ended June 30, 2025 when compared to the same period in 2024, primarily due to the increase in adjusted income from operations and lower interest expense.

Previous wording

Selling, General and Administrative Expenses (“SGA”). SGA increased by $4.3 million, or 5%, to $91.9 million for the three months ended March 31, 2025 from $87.5 million for the same period in 2024, due to higher personnel costs. SGA for the three months ended March 31, 2024, included a $2.3 million charge within the back-up care segment related to the early settlement of contingent consideration for a 2021 acquisition. SGA was 14% of revenue for the three months ended March 31, 2025, generally consistent with the same period in 2024.

Current wording

Selling, General and Administrative Expenses. SGA increased $11.7 million, or 7%, to $186.7 million for the six months ended June 30, 2025 from $175.0 million for the same period in 2024, due to higher personnel and technology costs. SGA for the six months ended June 30, 2024 included a $2.3 million charge within the back-up care segment resulting from the early settlement of contingent consideration for a 2021 acquisition. SGA was 13% of revenue for the six months ended June 30, 2025, which is consistent with the same period in 2024.

Previous wording

•Income from operations for the back-up care segment increased $10.4 million, or 65%, in the three months ended March 31, 2025 when compared to the same period in 2024, primarily due to incremental gross profit contributions from expanded utilization of back-up care services. Income from operations for the three months ended March 31, 2024 included a $2.3 million charge related to the early settlement of contingent consideration for a 2021 acquisition.

Current wording

•Income from operations for the back-up care segment increased $19.7 million, or 41%, in the six months ended June 30, 2025 when compared to the same period in 2024, primarily due to incremental gross profit contributions from expanded utilization of back-up care services, partially offset by increases in technology to improve customer experience. Income from operations for the six months ended June 30, 2024 included a $2.3 million charge related to the early settlement of contingent consideration for a 2021 acquisition.

Previous wording

During the three months ended March 31, 2025, the net excess tax benefit from stock-based compensation decreased tax expense by $1.3 million. During the three months ended March 31, 2024, the net shortfall tax expense from stock-based compensation increased tax expense by $0.7 million. For the three months ended March 31, 2025 and 2024, prior to the inclusion of the excess tax benefit (shortfall tax expense), other discrete items and unbenefited losses in certain foreign jurisdictions, the effective tax rate approximated 27% and 28%, respectively.

Current wording

During the six months ended June 30, 2025, the net excess tax benefit from stock-based compensation decreased tax expense by $1.3 million. During the six months ended June 30, 2024, the net shortfall tax expense from stock-based compensation increased tax expense by $0.6 million. For the six months ended June 30, 2025 and 2024, prior to the inclusion of the excess tax benefit (shortfall tax expense), other discrete items and unbenefited losses in certain foreign jurisdictions, the effective tax rate approximated 27%.

Previous wording

(a)Amortization of intangible assets represents amortization expense, including amortization expense of $5.0 million for the three months ended March 31, 2024, associated with intangible assets recorded in connection with our going private transaction in May 2008.

Current wording

(a)Amortization of intangible assets represents amortization expense, including amortization expense of $3.3 million and $8.3 million for the three and six months ended June 30, 2024, respectively, associated with intangible assets recorded in connection with our going private transaction in May 2008.

Previous wording

(c)Adjusted income tax expense represents income tax expense calculated on adjusted income before income tax at an effective tax rate of approximately 28% for both the three months ended March 31, 2025 and 2024. The jurisdictional mix of the expected adjusted income before income tax for the full year will affect the estimated effective tax rate for the year.

Current wording

(d)Adjusted income tax expense represents income tax expense calculated on adjusted income before income tax at an effective tax rate of approximately 27% for the three and six months ended June 30, 2025 and approximately 28% for the three and six months ended June 30, 2024. The jurisdictional mix of the expected adjusted income before income tax for the full year will affect the estimated effective tax rate for the year.

Previous wording

Adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are financial measures that are not calculated in accordance with GAAP (collectively referred to as “non-GAAP financial measures”), and the use of the terms adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. We believe the non-GAAP financial measures provide investors with useful information with respect to our historical operations. We present the non-GAAP financial measures as supplemental performance measures because we believe they facilitate a comparative assessment of our operating performance relative to our performance based on our results under GAAP, while isolating the effects of some items that vary from period to period. Specifically, adjusted EBITDA allows for an assessment of our operating performance and of our ability to service or incur indebtedness without the effect of non-cash charges, such as depreciation, amortization, and stock-based compensation expense, and non-recurring costs, as applicable, such as impairment costs and transaction costs. In addition, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share allow us to assess our performance without the impact of the specifically identified items that we believe do not directly reflect our core operations. These non-GAAP financial measures also function as key performance indicators used to evaluate our operating performance internally, and they are used in connection with the determination of incentive compensation for management, including executive officers. Adjusted EBITDA is also used in connection with the determination of certain ratio requirements under our credit agreement.

Current wording

Adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are financial measures that are not calculated in accordance with GAAP (collectively referred to as “non-GAAP financial measures”), and the use of the terms adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. We believe the non-GAAP financial measures provide investors with useful information with respect to our historical operations. We present the non-GAAP financial measures as supplemental performance measures because we believe they facilitate a comparative assessment of our operating performance relative to our performance based on our results under GAAP, while isolating the effects of some items that vary from period to period. Specifically, adjusted EBITDA allows for an assessment of our operating performance and of our ability to service or incur indebtedness without the effect of non-cash charges, such as depreciation, amortization, and stock-based compensation expense, and non-recurring costs, as applicable, such as debt refinancing costs, impairment costs and transaction costs. In addition, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share allow us to assess our performance without the impact of the specifically identified items that we believe do not directly reflect our core operations. These non-GAAP financial measures also function as key performance indicators used to evaluate our operating performance internally, and they are used in connection with the determination of incentive compensation for management, including executive officers. Adjusted EBITDA is also used in connection with the determination of certain ratio requirements under our credit agreement.

Previous wording

Our primary cash requirements are for the ongoing operations of our existing early education and child care centers, back-up care, educational advisory services, the addition of new centers through development or acquisitions, and debt financing obligations. Our primary sources of liquidity are our existing cash, cash flows from operations, and borrowings available under our revolving credit facility. We had $112.0 million in cash ($124.0 million including restricted cash) at March 31, 2025, of which $59.5 million was held in foreign jurisdictions, compared to $110.3 million in cash ($123.7 million including restricted cash) at December 31, 2024, of which $45.5 million was held in foreign jurisdictions. Operations outside of North America accounted for 28% of our consolidated revenue in the three months ended March 31, 2025 and 2024. The net impact on our liquidity from changes in foreign currency exchange rates was not material for the three months ended March 31, 2025 and 2024. While we expect to be impacted by fluctuations in the foreign currency exchange rates throughout the year, we do not currently expect that the effects of changes in foreign currency exchange rates will have a material net impact on our liquidity, capital resources or results from operations for the remainder of 2025.

Current wording

Our primary cash requirements are for the ongoing operations of our existing early education and child care centers, back-up care, educational advisory services, the addition of new centers through development or acquisitions, and debt financing obligations. Our primary sources of liquidity are our existing cash, cash flows from operations, and borrowings available under our revolving credit facility. We had $179.2 million in cash ($197.1 million including restricted cash) as of June 30, 2025, of which $80.5 million was held in foreign jurisdictions, compared to $110.3 million in cash ($123.7 million including restricted cash) as of December 31, 2024, of which $45.5 million was held in foreign jurisdictions. Operations outside of North America accounted for 29% and 28% of our consolidated revenue in the six months ended June 30, 2025 and 2024, respectively. The net impact on our liquidity from changes in foreign currency exchange rates was not material for the six months ended June 30, 2025 and 2024. While we expect to be impacted by fluctuations in the foreign currency exchange rates throughout the year, we do not currently expect that the effects of changes in foreign currency exchange rates will have a material net impact on our liquidity and capital resources for the remainder of 2025.

Previous wording

Our $400 million revolving credit facility is part of our senior secured credit facilities. At March 31, 2025 and December 31, 2024, $384.8 million of the revolving credit facility was available for borrowing. On April 17, 2025, the Company amended its existing senior secured credit facilities to, among other changes, increase its revolving credit facility from $400 million to $900 million and extend the date of maturity. On the closing date, the Company used proceeds from its revolving credit facility to repay the outstanding balances under the term loan A facility. Refer to Note 12, Subsequent Event, for additional information.

Current wording

Our revolving credit facility is part of our senior secured credit facilities. On April 17, 2025, we amended our existing senior secured credit facilities to, among other changes, increase our revolving credit facility from $400 million to $900 million and extend the date of maturity. On the closing date, we used proceeds from our revolving credit facility to repay the outstanding balances under the term loan A facility. As of June 30, 2025 and December 31, 2024, $483.3 million and $384.8 million, respectively, of the revolving credit facility was available for borrowing.

Previous wording

We had a working capital deficit of $295.8 million and $283.4 million at March 31, 2025 and December 31, 2024, respectively. Our working capital deficit has primarily arisen from using cash to make long-term investments in fixed assets and acquisitions, deferred consideration issued in relation to an acquisition and from share repurchases. We anticipate that our cash flows from operating activities will continue to expand as our center enrollment and performance continues to improve. As we continue growing enrollment, we expect to allocate capital to investments that support current operations and strategic opportunities, as well as the principal and interest payments on our debt and revolver, and share repurchases from time to time.

Current wording

We had a working capital deficit of $366.3 million and $283.4 million as of June 30, 2025 and December 31, 2024, respectively. Our working capital deficit has primarily arisen from using cash to make long-term investments in fixed assets and acquisitions, deferred consideration issued in relation to one acquisition, from share repurchases, and short term borrowings on our long-term debt.

Previous wording

As of March 31, 2025, we had $849.8 million in lease liabilities, $103.3 million of which is short term in nature. Refer to Note 3, Leases, to our condensed consolidated financial statements for additional information on leases, including the maturity of the contractual obligations related to our lease liabilities.

Current wording

As of June 30, 2025, we had $852.5 million in lease liabilities, $106.3 million of which is short term in nature. Refer to Note 3, Leases, to our condensed consolidated financial statements for additional information on leases, including the maturity of the contractual obligations related to our lease liabilities.

Previous wording

The board of directors authorized a share repurchase program of up to $400 million of our outstanding common stock, effective December 16, 2021. The share repurchase program has no expiration date. During the three months ended March 31, 2025, we repurchased 0.2 million shares for $19.7 million. During the three months ended March 31, 2024, we did not make any share repurchases under the Board-approved repurchase program. All repurchased shares have been retired and, as of March 31, 2025, $94.0 million remained available for future repurchases.

Current wording

The board of directors authorized a share repurchase program of up to $500 million of our outstanding common stock, effective June 3, 2025. The share repurchase program has no expiration date and replaced and canceled the prior $400 million authorization announced December 2021, of which $58.9 million remained available thereunder. During the six months ended June 30, 2025, we repurchased approximately 0.5 million shares for $60.7 million (resulting in a $0.2 million excise tax liability). During the six months ended June 30, 2024, we did not make any share repurchases under the board-approved repurchase program. All repurchased shares have been retired and, as of June 30, 2025, $494.1 million remained available for future repurchases.

Previous wording

Cash provided by operating activities was $86.2 million for the three months ended March 31, 2025, compared to $116.3 million for the same period in 2024. The decrease in cash provided by operations primarily relates to less cash provided by working capital arising from the timing of billings and payments when compared to the prior year, partially offset by an increase in net income of $21.1 million.

Current wording

Cash provided by operating activities was $220.4 million for the six months ended June 30, 2025, compared to $225.8 million for the same period in 2024. The decrease in cash provided by operations primarily relates to less cash provided by working capital arising from the timing of billings and payments when compared to the prior year, partially offset by an increase in net income of $36.7 million.

Previous wording

Cash used in investing activities was $14.5 million for the three months ended March 31, 2025 compared to $38.1 million for the same period in 2024. This decrease in cash used in investing activities primarily relates to a decrease in net purchases of debt securities and other investments. Net proceeds from debt securities held by our captive insurance entity and other investments were $0.7 million in the three months ended March 31, 2025, compared to net purchases of $16.2 million during the same period in the prior year, a net decrease of cash used of $16.9 million.

Current wording

Cash used in investing activities was $38.0 million for the six months ended June 30, 2025 compared to $64.1 million for the same period in 2024. The decrease in cash used in investing activities primarily relates to a decrease in net purchases of debt securities and other investments. Net proceeds from debt securities held by our captive insurance entity and other investments were $1.2 million in the six months ended June 30, 2025, compared to net purchases of $18.6 million during the same period in the prior year, a net decrease of cash used of $19.8 million.

Previous wording

During the three months ended March 31, 2025, we had net investments of $15.2 million in fixed asset purchases for maintenance and refurbishments in our existing centers, technology, and new child care centers, compared to net investments of $19.4 million during the same period in the prior year. Lastly, during the three months ended March 31, 2024 we invested $2.5 million in acquisitions, compared to having made no acquisitions during the same period in 2025.

Current wording

During the six months ended June 30, 2025, we had net investments of $34.0 million in fixed asset purchases for maintenance and refurbishments in our existing centers, technology, and new child care centers, compared to net investments of $42.0 million during the same period in the prior year. Lastly, during the six months ended June 30, 2025, we invested $5.1 million in acquisitions, compared to an investment of $3.5 million during the same period in 2024.

Previous wording

Cash used in financing activities was $73.4 million for the three months ended March 31, 2025 compared to $97.6 million for the same period in 2024. The decrease in cash used in financing activities was primarily related to payments for deferred consideration made in the three months ended March 31, 2024 that were not made in the three months ended March 31, 2025, partially offset by an increase in payments of long-term debt, share repurchases and taxes paid related to the net share settlement of employee equity awards. During the three months ended March 31, 2024, we made payments for deferred consideration of $97.7 million related to the deferred consideration for the 2022 acquisition of Only About Children, compared to no payments for deferred consideration in the same period in 2025. This decrease in cash used was partially offset by an increase in principal payments related to our long-term debt, which were $49.5 million in the three months ended March 31, 2025 compared to $4.0 million during the three months ended March 31, 2024. In February 2025, we voluntarily prepaid $44.5 million of the outstanding principal balance on our term loan B facility, which satisfies the remaining annual principal payments due until maturity.

Current wording

During the six months ended June 30, 2024, we made payments for deferred and contingent consideration of $103.9 million, of which $97.7 million related to the deferred consideration for the 2022 acquisition of Only About Children and $6.2 million related to the contingent consideration for a 2021 acquisition. We did not make any payments for deferred consideration in the same period in 2025.

Previous wording

Also offsetting the decrease in cash used, during the three months ended March 31, 2025 we used $19.6 million in cash for share repurchases, compared to no repurchases during the same period in 2024, and taxes paid related to the net share settlement of stock options and restricted stock increased to $12.6 million in the three months ended March 31, 2025, compared to $1.5 million in the same period in 2024. Proceeds received from the exercise of stock options in the three months ended March 31, 2025 increased from $5.5 million in the three months ended March 31, 2024 to $8.3 million in the three months ended March 31, 2025 due to a higher volume of transactions and higher exercise prices.

Current wording

During the six months ended June 30, 2025 we used $60.3 million in cash for share repurchases, compared to no repurchases during the same period in 2024, and taxes paid related to the net share settlement of stock options and restricted stock increased to $13.6 million in the six months ended June 30, 2025, compared to $1.8 million in the same period in 2024. Proceeds received from the exercise of stock options in the six months ended June 30, 2025 of $10.2 million increased from $6.9 million in the six months ended June 30, 2024 due to a higher volume of transactions and higher exercise prices.

Previous wording

Our senior secured credit facilities consist of a $600 million term loan B facility (“term loan B”), a $400 million term loan A facility (“term loan A”) and a $400 million multi-currency revolving credit facility (“revolving credit facility”).

Current wording

Our senior secured credit facilities consist of a term loan B facility (“term loan B”) and a $900 million multi-currency revolving credit facility (“revolving credit facility”). Prior to April 17, 2025, the our senior secured credit facilities also included a term loan A facility (“term loan A”).