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, 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.

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; 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 segments 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; share repurch…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, as well as other factors disclosed from time to time in our other public filings with the SEC.

Current wording

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, changes in the demand for child care, dependent care and other workplace solutions, including variations in enrollment trends and lower than expected demand from employer sponsor clients as well as variations in workforce demographics and work environments; the constrained labor market for teachers and staff and ability to hire and retain talent, including the impact of increased compensation and labor costs; the availability or lack of government support programs, and the impact of available government child care benefit programs; our ability to respond to changing client and customer needs; competition in our industry, the possibility that acquisitions may disrupt our operations and expose us to additional risk; our ability to pass on our increased costs; our indebtedness and the terms of such indebtedness; our ability to withstand seasonal fluctuations in the demand for our services; our ability to implement our growth strategies successfully; changes in general economic, political, business and financial market conditions and other macroeconomic events and uncertainty, including the impact of inflation and interest rate fluctuations; fluctuations in currency exchange rates; the effects of a cyber-attack, data breach or other security incident on our information technology system or software or those of our third party vendors; changes in tax rates or policies; damage or harm to our brand or reputation, including as a result of recent incidents and media coverage; claims, allegations, actual or threatened litigation or insurance risks; changes in laws and regulations; and other risks and uncertainties more fully described in the “Risk Factors” section of our Annual Report on Form 10-K filed on February 27, 2025, and other factors disclosed from time to time in our other filings with the Securities and Exchange Commission.

Previous wording

Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments, except as required by law.

Current wording

Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement that we make in this Quarterly Report speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statements or to publicly announce the results of any revisions to any of those statements to reflect future information, events, developments or otherwise, except as required by law.

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 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.

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 nine months ended September 30, 2025, as compared to the three and nine months ended September 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 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.

Current wording

As of September 30, 2025, we operated 1,013 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 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.

Current wording

During the three months ended September 30, 2025, we saw strong growth in back-up care with a 26% year-over-year increase in revenue as a result of increased utilization. We also saw year-over-year revenue growth of 6% in our full service center-based child care segment, including net enrollment growth of 1%. 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 September 30, 2025, this cohort of centers totaled 753 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 September 30, 2025, 44% of these centers were more than 70% enrolled, 44% were between 40-70% enrolled and 12% were less than 40% enrolled, which reflects improved occupancy when compared to the same period in the prior year.

Previous 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.

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. We continue to review 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 and expect to close additional underperforming centers identified in the review process over the next 12 months. 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 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.

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 and existing 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

The following table sets forth statement of income data as a percentage of revenue for the six months ended June 30, 2025 and 2024:

Current wording

The following table sets forth statement of income data as a percentage of revenue for the nine months ended September 30, 2025 and 2024:

Previous 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:

Current wording

Revenue. Revenue for the three months ended September 30, 2025, increased by $83.7 million, or 12%, to $802.8 million from $719.1 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 September 30, 2025 and 2024:

Previous 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.

Current wording

Revenue generated by the full service center-based child care segment in the three months ended September 30, 2025 increased by $28.9 million, or 6%, when compared to the same period in 2024. Tuition revenue increased by $27.8 million, or 6%, when compared to the prior year, due to a 1% 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 tuition revenue in the three months ended September 30, 2025 by approximately 1%, or $6.1 million. We expect to be impacted by fluctuations in the foreign currency exchange rates throughout the remainder of 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 $0.9 million, or 2%, 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 $1.2 million, or 3%, primarily due to higher operating subsidies required to support center operations as enrollment increases.

Previous 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.

Current wording

Revenue generated by back-up care services in the three months ended September 30, 2025 increased by $51.6 million, or 26%, 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 care, in-home care, and school-age programs by new and existing clients.

Previous 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.

Current wording

Revenue generated by educational advisory services in the three months ended September 30, 2025 increased by $3.2 million, or 10%, 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 $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.

Current wording

Cost of Services. Cost of services increased by $48.2 million, or 9%, to $585.8 million for the three months ended September 30, 2025 from $537.6 million for the same period in 2024.

Previous 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.

Current wording

Cost of services in the full service center-based child care segment increased by $25.0 million, or 6%, to $446.3 million in the three months ended September 30, 2025 when compared to the same period in 2024. The increase in cost of services was primarily associated with increased personnel costs. Personnel costs, which represent approximately 70% of the costs for this segment, increased 8% during the quarter compared to the same period in the prior year, related to expanded enrollment, average hourly wage rate increases in the range of 3-4%, and higher benefits costs, including medical care expenses.

Previous 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.

Current wording

Cost of services in the back-up care segment increased by $22.5 million, or 22%, to $123.8 million in the three months ended September 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 care, in-home care, and school-age programs over the prior year, and continued investment in technology to support our customer user experience and customer acquisition. We expect to continue to invest in increasing our network provider supply and in technology to support the growth of this segment.

Previous 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.

Current wording

Cost of services in the educational advisory services segment increased by $0.7 million, or 5%, to $15.7 million in the three months ended September 30, 2025 when compared to the prior year, on improved leverage in service delivery.

Previous 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.

Current wording

Gross Profit. Gross profit increased by $35.5 million, or 20%, to $217.0 million for the three months ended September 30, 2025 from $181.5 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 to a lesser extent, the full service center-based child care segment, resulting from enrollment growth, and the associated operating leverage. Gross profit margin was 27% of revenue for the three months ended September 30, 2025, an increase of approximately 2% compared to the three months ended September 30, 2024.

Previous wording

Selling, General and Administrative Expenses (“SGA”). SGA increased by $7.3 million, or 8%, to $94.8 million for the three months ended June 30, 2025 from $87.5 million for the same period in 2024, due to higher personnel and technology costs. SGA was 13% of revenue for the three months ended June 30, 2025, consistent with the same period in 2024.

Current wording

Selling, General and Administrative Expenses (“SGA”). SGA increased by $5.2 million, or 6%, to $94.7 million for the three months ended September 30, 2025 from $89.5 million for the same period in 2024, due to higher personnel and technology costs and $1.3 million in expenses in the full service segment related to the August 2025 debt refinancing completed during the period. SGA was 12% of revenue for the three months ended September 30, 2025, consistent with the same period in 2024.

Previous 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.

Current wording

Amortization of Intangible Assets. Amortization expense on intangible assets was $1.5 million for the three months ended September 30, 2025, a decrease from $2.6 million for the three months ended September 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 $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:

Current wording

Income from Operations. Income from operations increased by $31.4 million, or 35%, to $120.8 million for the three months ended September 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 September 30, 2025 and 2024:

Previous 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.

Current wording

•Income from operations for the full service center-based child care segment increased $4.3 million, or 34%, in the three months ended September 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. In addition, income from operations for the three months ended September 30, 2025 included $3.7 million of expenses related to net lease termination costs and the August 2025 debt refinancing.

Previous wording

•Income from operations for the back-up care segment increased $9.3 million, or 30%, in the three 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 investments in technology to improve customer experience.

Current wording

•Income from operations for the back-up care segment increased $24.8 million, or 35%, in the three months ended September 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 investments in technology and marketing to improve customer experience.

Previous wording

•Income from operations for the educational advisory services segment in the three months ended June 30, 2025 was consistent with the same period in 2024, due to revenue increases offset by service costs for technology and marketing.

Current wording

•Income from operations for the educational advisory services segment increased $2.3 million, or 36% , in the three months ended September 30, 2025 when compared to the same period in 2024, due to revenue increases and greater leverage of overhead.

Previous 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.

Current wording

Net Interest Expense. Net interest expense was $12.2 million for the three months ended September 30, 2025, an increase from $11.6 million for the three months ended September 30, 2024, primarily due to other interest costs of $2.2 million related to a pre-acquisition obligation and debt refinancing costs, partially offset by lower interest rates applicable to our debt and lower outstanding debt. The weighted average interest rate for the term loans and revolving credit facility was 4.25% for the three months ended September 30, 2025 compared to 4.84% for the three months ended September 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 approximate 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 $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.

Current wording

Income Tax Expense. We recorded income tax expense of $30.1 million during the three months ended September 30, 2025, at an effective income tax rate of 28%, compared to an income tax expense of $22.9 million during the three months ended September 30, 2024, at an effective income tax rate of 29%. 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 and net operating loss carryforwards used 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 $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.

Current wording

Adjusted EBITDA and Adjusted Income from Operations. Adjusted EBITDA increased $35.1 million, or 29%, and adjusted income from operations increased $35.1 million, or 39%, for the three months ended September 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 $25.3 million, or 31%, for the six 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.

Current wording

Adjusted Net Income. Adjusted net income increased $25.2 million, or 39%, for the three months ended September 30, 2025 when compared to the same period in 2024, primarily due to the increase in adjusted income from operations and lower interest expense from our senior secured credit facilities.

Previous wording

Revenue. Revenue increased by $104.3 million, or 8%, to $1.4 billion for the six months ended June 30, 2025 from $1.3 billion for the same period in 2024. The following table summarizes the revenue and percentage of total revenue for each of our segments for the six months ended June 30, 2025 and 2024:

Current wording

Revenue. Revenue increased by $188.0 million, or 9%, to $2.2 billion for the nine months ended September 30, 2025 from $2.0 billion for the same period in 2024. The following table summarizes the revenue and percentage of total revenue for each of our segments for the nine months ended September 30, 2025 and 2024:

Previous wording

Revenue generated by the full service center-based child care segment in the six months ended June 30, 2025 increased by $60.1 million, or 6%, when compared to the same period in 2024. Tuition revenue increased by $56.4 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 increased 2025 tuition revenue by $4.2 million.

Current wording

Revenue generated by the full service center-based child care segment in the nine months ended September 30, 2025 increased by $89.0 million, or 6%, when compared to the same period in 2024. Tuition revenue increased by $84.1 million, or 6%, when compared to the prior year, due to a 1% 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 $10.2 million.

Previous wording

Management fees and operating subsidies from employer sponsors increased by $3.7 million, or 4%, primarily due to higher operating subsidies required to support center operations on expanded enrollment.

Current wording

Management fees and operating subsidies from employer sponsors increased by $4.9 million, or 4%, primarily due to higher operating subsidies required to support center operations on expanded enrollment.

Previous wording

Revenue generated by back-up care services in the six months ended June 30, 2025 increased by $40.1 million, or 16%, 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 camp back-up care by new and existing clients.

Current wording

Revenue generated by back-up care services in the nine months ended September 30, 2025 increased by $91.7 million, or 20%, 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 care, in-home care, and school-age programs by new and existing clients.

Previous wording

Revenue generated by educational advisory services in the six months ended June 30, 2025 increased by $4.1 million, or 8%, when compared to the same period in the prior year. Revenue growth in this segment was primarily attributable to increased utilization from new and existing clients.

Current wording

Revenue generated by educational advisory services in the nine months ended September 30, 2025 increased by $7.3 million, or 9%, when compared to the same period in the prior year. Revenue growth in this segment was primarily attributable to increased utilization from new and existing clients.

Previous wording

Cost of Services. Cost of services increased $63.6 million, or 6%, to $1.1 billion for the six months ended June 30, 2025 from $1.0 billion for the same period in 2024.

Current wording

Cost of Services. Cost of services increased $111.8 million, or 7%, to $1.6 billion for the nine months ended September 30, 2025 from $1.5 billion for the same period in 2024.

Previous wording

Cost of services in the full service center-based child care segment increased by $48.0 million, or 6%, to $0.9 billion in the six 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 increased 8% during the six months ended June 30, 2025 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.

Current wording

Cost of services in the full service center-based child care segment increased by $73.0 million, or 6%, to $1.3 billion in the nine months ended September 30, 2025 when compared to the same period in 2024. The increase in cost of services was primarily associated with increased personnel costs, an increase of 8% during the nine months ended September 30, 2025 compared to the same period in the prior year, related to expanded enrollment, average hourly wage rate increases in the range of 3-4%, and higher benefits costs, including medical care expenses.

Previous wording

Cost of services in the back-up care segment increased $15.3 million, or 10%, to $161.5 million in the six 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 service offerings.

Current wording

Cost of services in the back-up care segment increased $37.8 million, or 15%, to $285.3 million in the nine months ended September 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 provider fees to serve the increase in utilization levels of center-based care, in-home care, and school-age programs over the prior year, and continued investment in technology to support our customer user experience and service offerings.

Previous wording

Cost of services in the educational advisory services segment increased by $0.3 million, or 1%, to $29.5 million in the six months ended June 30, 2025 when compared to the prior year, on improved leverage in service delivery.

Current wording

Cost of services in the educational advisory services segment increased by $1.0 million, or 2%, to $45.1 million in the nine months ended September 30, 2025 when compared to the prior year, on improved leverage in service delivery.

Previous wording

Gross Profit. Gross profit increased $40.8 million, or 14%, to $338.3 million for the six months ended June 30, 2025 from $297.5 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 from the full service center-based child care segment, resulting from enrollment growth, and the associated operating leverage. Gross profit margin was 24% of revenue for the six months ended June 30, 2025, an increase of approximately 1% compared to the six months ended June 30, 2024.

Current wording

Gross Profit. Gross profit increased $76.2 million, or 16%, to $555.3 million for the nine months ended September 30, 2025 from $479.1 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 from 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 nine months ended September 30, 2025, an increase of approximately 1% compared to the nine months ended September 30, 2024.

Previous 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.

Current wording

Selling, General and Administrative Expenses. SGA increased $16.9 million, or 6%, to $281.4 million for the nine months ended September 30, 2025 from $264.5 million for the same period in 2024, due to higher personnel and technology costs. SGA for the nine months ended September 30, 2025 included $1.3 million within the full service segment in expenses related to the August 2025 debt refinancing. SGA for the nine months ended September 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 nine months ended September 30, 2025, which is consistent with the same period in 2024.