BRIGHT HORIZONS FAMILY SOLUTIONS INC.
For the period ended Dec 31, 2025. Filed Feb 26, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 26, 2026
BFAM$53.52-3.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-27.
0001437578-25-000007
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-26.
0001437578-26-000006
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 106 previous paragraphs and 107 current paragraphs.
49 unchanged; 48 reworded; 10 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
•continue to enhance overall user experience;
Current report
Cost of services in the full service center-based child care segment increased by $116.8 million, or 7%, to $1.8 billion in the year ended December 31, 2025, when compared to the prior year. The increase in cost of services was primarily associated with increased personnel costs, an increase of 8% during the year ended December 31, 2025 compared to the prior year, related to average hourly wage rate increases in the range of 3-4%, higher benefits costs, including medical care expenses, and expanded enrollment. Cost of services also includes impairment and net lease termination costs of $47.0 million and $29.8 million in 2025 and 2024, respectively, primarily related to fixed assets and operating lease right of use assets.
Current report
Cost of services in the educational advisory services segment increased by $1.6 million, or 3%, to $60.2 million in the year ended December 31, 2025, when compared to the prior year due to improved leverage in service delivery.
Current report
•Income from operations for the educational advisory services segment increased $3.7 million, or 16%, in the year ended December 31, 2025 when compared to the same period in 2024 due to revenue increases partially offset by service costs for technology and marketing.
Current report
(e)Other interest costs in the year ended December 31, 2025 consist of $1.6 million in interest incurred related to a pre-acquisition obligation, as well as $1.1 million of debt refinancing costs related to the April 2025 and August 2025 debt refinancings, which were recorded to interest expense.
Current report
Cash used in financing activities was $233.4 million for the year ended December 31, 2025 compared to $183.8 million for 2024. Significant financing activities in the year ended December 31, 2025 included net borrowings under the revolving credit facility of $499.4 million, which were partially offset by the repayment of the outstanding balance of our term loan A facility of $362.5 million, neither of which occurred in the prior year. Additionally, we voluntarily prepaid a total of $133.5 million of the outstanding principal balance on the term loan B and made principal payments of $5.0 million on the term loan A in 2025. Principal payments on the term loans totaled $17.0 million in 2024.
Current report
During the year ended December 31, 2025 we had share repurchases of $225.4 million, compared to $84.6 million in the prior year. In addition, taxes paid related to the net share settlement of stock options and restricted stock increased to $15.5 million for the year ended December 31, 2025, compared to $5.4 million in the prior year. Proceeds received from the exercise of stock options in the year ended December 31, 2025 of $12.1 million decreased from $27.0 million in 2024 due to a lower volume of transactions.
Current report
On August 21, 2025, the Company amended its existing senior secured credit facilities to, among other changes, refinance the existing term loan B and to extend the maturity date. On the closing date, the Company used its revolving credit facility to prepay $50 million of the outstanding principal amount of the existing term loan B.
Current report
On April 17, 2025, we amended our existing senior secured credit facilities to, among other changes, increase the borrowing capacity of our revolving credit facility from $400 million to $900 million and extend the date of maturity. On the closing date, we used proceeds from the revolving credit facility to repay the outstanding balances under the term loan A, which was scheduled to mature on November 23, 2026. On December 11, 2024, we amended our existing senior secured credit facilities to, among other changes, reduce the applicable interest rates of the term loan B.
Current report
The term loan B matures on August 21, 2032 and as a result of voluntary prepayments totaling $133.5 million in 2025, the remaining principal balance of $450 million is due at maturity.
Removed paragraphs (9)
Previous report
Cost of services in the full service center-based child care segment increased by $143.2 million, or 9%, to $1.7 billion in the year ended December 31, 2024, when compared to the prior year. The increase in cost of services was primarily associated with increased personnel costs related to expanded enrollment and wage rate increases. Personnel costs increased 7% during the year ended December 31, 2024 compared to the same period in the prior year. In addition to the personnel costs for the incremental 4% net enrollment increase noted above and premiums associated with the deployment of temporary staff to meet enrollment demands, we continue to invest in higher wages for our center staff, resulting in an increase of approximately 4% to the average hourly wage in 2024 compared to 2023. Cost of services also includes impairment costs of $29.8 million in 2024 and $32.0 million in 2023, primarily related to fixed assets and operating lease right of use assets. Additionally, most of the pandemic-related government support programs for which we were eligible ended September 2023. Funding received from pandemic-related government support programs reduced center operating expenses by $49.4 million in the year ended December 31, 2023. As noted above, a portion of the funding received from government support programs reduced the operating costs in certain employer-sponsored centers, which in turn reduced the operating subsidy revenue due from employers for the related child care centers by $17.5 million in the year ended December 31, 2023.
Previous report
Cost of services in the educational advisory services segment increased by $1.8 million, or 3%, to $58.5 million in the year ended December 31, 2024, when compared to the prior year due to investments in personnel, product suite and technology to support customer access and user experience. We expect to make additional investments in this segment over the next few years as we further enhance our educational advisory offerings to meet the needs of the modern employer and employee.
Previous report
•Income from operations for the educational advisory services segment decreased $2.8 million, or 11%, in the year ended December 31, 2024 when compared to the same period in 2023 due to personnel, product design, and technology platform investments to support revenue growth and business transformation.
Previous report
(e)Interest on deferred consideration represents the imputed interest on the deferred consideration issued in connection with the July 1, 2022 acquisition of Only About Children. The deferred consideration was paid in January 2024.
Previous report
During the year ended December 31, 2023, we participated in certain government support programs that were enacted in response to the economic impact of the pandemic. With the expiration of the child care stabilization grants on September 30, 2023, most of the pandemic-related government support programs for which we were eligible ended in 2023. During the year ended December 31, 2023, $49.4 million was recorded as a reduction to cost of services in relation to these benefits, of which $17.5 million reduced the operating subsidies paid by employers for the related child care centers. Additionally, during the year ended December 31, 2023, $1.7 million was recorded to revenue related to amounts received for tuition support.
Previous report
Cash used in financing activities was $183.8 million for the year ended December 31, 2024 compared to $91.6 million for the same period in 2023. The increase in cash used in financing activities during the year ended December 31, 2024 was related to payments for deferred and contingent consideration and share repurchases, offset by a decrease in net payments under our revolving credit facility.
Previous report
Additionally, proceeds received from the exercise of employee equity awards increased to $27.0 million in the year ended December 31, 2024 compared to $11.2 million in 2023, an increase of $15.8 million, due to a higher volume of transactions and higher exercise prices.
Previous report
On December 11, 2024, the Company amended its existing senior secured credit facilities to, among other changes, reduce the applicable interest rates of the term loan B facility. The Company incurred $0.8 million in fees associated with this amendment in the year ended December 31, 2024, which were included in selling, general and administrative expenses.
Previous report
The seven-year term loan B matures on November 23, 2028 and requires quarterly principal payments equal to 1% per annum of the aggregate principal amount of the term loan B as of December 11, 2024, the date the Company amended its senior secured credit facility, with the remaining principal balance due at maturity. The five-year term loan A matures on November 23, 2026 and requires quarterly principal payments equal to 2.5% per annum of the original aggregate principal amount of the term loan A in each of the first three years, 5% in the fourth year, and 7.5% in the fifth year. The remaining principal balance is due at maturity.
Reworded paragraphs (48)
Previous wording
We are a leading provider of high-quality education and care, including early education and child care, back-up and family care solutions, and workforce education services that are designed to help families, employers and their employees solve the challenges of the modern workforce and thrive personally and professionally. We provide services primarily under multi-year contracts with employers who offer early education and child care, back-up care, and educational advisory services as part of their employee benefits package in an effort to support employees across life and career stages and to improve recruitment, employee engagement, productivity, retention, and career advancement.
Current wording
We are a leading provider of high-quality early education and child care, comprehensive back-up care solutions, and educational advisory services. Our offerings are designed to support both working families and employers’ workforce strategies by supporting their employees across life and career stages, and improving employee recruitment, engagement, productivity, retention, and career advancement. We provide services primarily under multi-year contracts with employer-clients who offer early education and child care, back-up care, and educational advisory services as part of their employee benefits package.
Previous wording
At December 31, 2024, we operated 1,019 early education and child care centers, consisting of 599 centers in North America and 420 centers internationally. We have the capacity to serve approximately 115,000 children in the United States, the United Kingdom, the Netherlands, Australia and India. We seek to cluster centers in geographic areas to enhance operating efficiencies and to create a leading market presence.
Current wording
At December 31, 2025, we operated 1,010 early education and child care centers, consisting of 597 centers in North America and 413 centers outside North America. We have the capacity to serve approximately 115,000 children in the United States, the United Kingdom, the Netherlands, Australia and India. We seek to cluster centers in geographic areas to enhance operating efficiencies and to create a leading market presence.
Previous wording
Our reportable segments are comprised of (1) full service center-based child care, (2) back-up care, and (3) educational advisory services. Full service center-based child care includes traditional center-based early education and child care, preschool, and elementary education. Back-up care consists of center-based back-up child care, in-home care for children and seniors, school age programs (including camps and tutoring), pet care, self-sourced reimbursed care, and Sittercity, an online marketplace for families and caregivers. Educational advisory services includes tuition assistance and student loan repayment program management, workforce education, related educational advising, and college admissions counseling services. Effective January 1, 2024, we realigned our organizational structure to better reflect synergies across certain business lines resulting in a change in reportable segments. As a result, the back-up care reportable segment now includes the Sittercity operations, which were previously reported in the educational advisory and other services segment. Segment information for 2023 has been recast to conform to the current year presentation. Additional information about our operations, structure and services is included in “Business — Our Operations” in Item 1 of this Annual Report on Form 10-K. Additional segment information is included in Note 18, Segment and Geographic Information, to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
Current wording
Our reportable segments are comprised of (1) full service center-based child care, (2) back-up care, and (3) educational advisory services. Full service center-based child care includes traditional center-based early education and child care, preschool, and elementary education. Back-up care consists of center-based back-up child care, in-home care for children and seniors, school age programs (including camps and tutoring), pet care, self-sourced reimbursed care, and Sittercity, an online marketplace for families and caregivers. Educational advisory services includes tuition assistance and student loan repayment program management, workforce education, related educational advising, and college admissions counseling services. Additional information about our operations, structure and services is included in “Business — Our Operations” in Item 1 of this Annual Report on Form 10-K. Additional segment information is included in Note 17, Segment and Geographic Information, to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
Previous wording
During the year ended December 31, 2024, we saw solid year-over-year revenue growth, with a 10% increase in revenue for our full service center-based child care segment and net enrollment growth of 4% as centers continue to grow enrollment. To track our continued progress, we monitor same-center occupancy for a cohort of centers that has been operating since the 2021 fall enrollment cycle. Same-center 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. This cohort of centers totaled 768 centers as of December 31, 2024. For the quarter ended December 31, 2024, 39% of these centers were more than 70% enrolled, 45% were between 40-70% enrolled and 16% were less than 40% enrolled, which reflects improved occupancy when compared to the same period in the prior year. We also saw strong growth in back-up care with a 16% year-over-year increase in revenue as a result of increased utilization.
Current wording
During the year ended December 31, 2025, we delivered strong growth in back-up care with a 19% year-over-year increase in revenue as a result of increased utilization and increased revenue in educational advisory services by 9% over the prior year led by contributions from College Coach. We also saw year-over-year revenue growth of 6% for our full service center-based child care segment, including net enrollment growth of 1%. To track our continued progress in full service center-based child care, we monitor same-center occupancy for a cohort of centers that has been operating since the 2021 fall enrollment cycle. Same-center 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. This cohort of centers totaled 746 centers as of December 31, 2025. For the quarter ended December 31, 2025, 40% of these centers were more than 70% enrolled, 48% 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 are navigating a dynamic operating environment that is impacted by increased operating costs, a tight labor market, varying enrollment demands, shifting work demographics, and challenging 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. As a result of changing conditions, there has been an elevated number of center closures in recent years, totaling 56 in 2024 and 49 in 2023, in addition to the impairment of certain assets. While we continue to review the portfolio of centers and monitor workforce changes in certain markets, such as return to office policies, we expect to close fewer centers in 2025. 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 in the overall performance of our full service center-based child care business, we are navigating a dynamic operating environment that is impacted by increased operating costs, a tight labor market, varying enrollment demands, shifting work demographics, and challenging 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. As a result, there has been an elevated number of center closures in recent years, totaling 29 in 2025 and 56 in 2024, in addition to the impairment of certain assets. We continue to review the portfolio of centers and expect to close additional centers in 2026. Where possible, we shift enrollment and teachers to other centers at nearby locations.
Previous wording
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 market conditions. Our ability to continue to increase operating income in the future, will depend upon our ability to continue to regain and sustain the following characteristics of our business and our strategic growth priorities:
Current wording
We are 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 market conditions. Our ability to continue to increase operating income in the future will depend upon our ability to continue to regain and sustain the following characteristics of our business and our strategic growth priorities:
Previous wording
Revenue. Revenue increased by $267.8 million, or 11%, to $2.7 billion for the year ended December 31, 2024 from $2.4 billion for the prior year. The following table summarizes the revenue and percentage of total revenue for each of our segments for the years ended December 31, 2024 and 2023:
Current wording
Revenue. Revenue increased by $247.6 million, or 9%, to $2.9 billion for the year ended December 31, 2025 from $2.7 billion for the prior year. The following table summarizes the revenue and percentage of total revenue for each of our segments for the years ended December 31, 2025 and 2024:
Previous wording
Revenue generated by the full service center-based child care segment in the year ended December 31, 2024 increased by $181.2 million, or 10%, when compared to the prior year. Tuition revenue increased by $166.3 million, or 10%, when compared to the prior year, due to a 4% net increase in enrollment and average tuition rate increases at our child care centers of approximately 5%. Fluctuations in foreign currency exchange rates for our United Kingdom, Netherlands and Australia operations also contributed to our revenue growth, increasing 2024 tuition revenue by approximately $9.2 million.
Current wording
Revenue generated by the full service center-based child care segment in the year ended December 31, 2025 increased by $119.3 million, or 6%, when compared to the prior year. Tuition revenue increased by $114.8 million, or 6%, when compared to the prior year, due to average tuition rate increases at our child care centers of approximately 4-5% and a 1% net increase in enrollment. Fluctuations in foreign currency exchange rates for our United Kingdom, Netherlands and Australia operations also contributed to our revenue growth, increasing 2025 tuition revenue by approximately $18.6 million.
Previous wording
Management fees and operating subsidies from employer sponsors increased $14.9 million, or 9%, primarily due to higher operating subsidies required to support center operations as enrollment continues to increase, and due to a decrease in funding received from pandemic-related government support programs as most of the programs for which we were eligible expired in September 2023. Funding received from pandemic-related government support programs reduced certain center operating costs, which impact the related operating subsidies. During the year ended December 31, 2023, such funding reduced the operating subsidy revenue due from employers by $17.5 million.
Current wording
Management fees and operating subsidies from employer sponsors increased $4.6 million, or 3%, 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 year ended December 31, 2024 increased by $84.2 million, or 16%, when compared to the prior year. 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 from new and existing clients.
Current wording
Revenue generated by back-up care services in the year ended December 31, 2025 increased by $117.9 million, or 19%, when compared to the prior year. 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 year ended December 31, 2024 increased by $2.4 million, or 2%, when compared to the prior year. Revenue growth in this segment was primarily attributable to increased utilization.
Current wording
Revenue generated by educational advisory services in the year ended December 31, 2025 increased by $10.4 million, or 9%, when compared to 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 $179.9 million, or 10%, to $2.1 billion for the year ended December 31, 2024 from $1.9 billion for the prior year.
Current wording
Cost of Services. Cost of services increased $170.0 million, or 8%, to $2.2 billion for the year ended December 31, 2025 from $2.1 billion for the prior year.
Previous wording
Cost of services in the back-up care segment increased by $34.9 million, or 12%, to $322.2 million in the year ended December 31, 2024, 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 personnel, marketing and technology to support our customer user experience and service offerings. Additionally, cost of services in 2024 also includes impairment costs of $1.1 million. Cost of services in 2023 included value-added tax expense of $4.0 million related to prior periods and impairment costs of $3.9 million related to fixed assets and operating lease right of use assets.
Current wording
Cost of services in the back-up care segment increased by $51.6 million, or 16%, to $373.7 million in the year ended December 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 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. Additionally, cost of services also includes impairment and net lease termination costs of $0.5 million and $1.1 million in 2025 and 2024, respectively, related to fixed assets and operating lease right of use assets.
Previous wording
Gross Profit. Gross profit increased by $87.9 million, or 17%, to $619.6 million for the year ended December 31, 2024 from $531.7 million for the prior year. Incremental gross profit contributions from higher utilization of back-up care services, as well as contributions from our full service center-based child care centers from enrollment growth, tuition price increases, improving operating leverage and lower impairment losses, were partially offset by reduced funding from pandemic-related government support programs. Gross profit margin was 23% of revenue for the year ended December 31, 2024, a 1% increase compared to 22% for the year ended December 31, 2023.
Current wording
Gross Profit. Gross profit increased by $77.6 million, or 13%, to $697.2 million for the year ended December 31, 2025 from $619.6 million for the prior year primarily due to incremental gross profit contributions from the back-up care segment, resulting from higher utilization of back-up care services, as well as contributions from our full service center-based child care segment, resulting from enrollment growth, and the associated operating leverage, partially offset by an increase of $16.6 million in impairment and net lease termination costs. Gross profit margin was 24% of revenue for the year ended December 31, 2025, a 1% increase compared to 23% for the year ended December 31, 2024.
Previous wording
Selling, General and Administrative Expenses (“SGA”). SGA increased $27.5 million, or 8%, to $354.6 million for the year ended December 31, 2024 from $327.1 million for the year ended December 31, 2023, due to higher personnel costs, impairment costs of $3.0 million related to the full service center-based child care segment and 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 approximately 13% of revenue for the year ended December 31, 2024, consistent with 2023.
Current wording
Selling, General and Administrative Expenses (“SGA”). SGA increased $21.8 million, or 6%, to $376.4 million for the year ended December 31, 2025 from $354.6 million for the year ended December 31, 2024, due to higher personnel and technology costs. In addition, SGA for the year ended December 31, 2024 includes net impairment losses of $3.0 million related to the full service center-based child care segment and a $2.3 million charge within the back-up care segment resulting from the early settlement of contingent consideration for a 2021 acquisition, which did not occur in 2025. SGA was approximately 13% of revenue for the year ended December 31, 2025, consistent with 2024.
Previous wording
Amortization of Intangible Assets. Amortization expense on intangible assets was $18.3 million for the year ended December 31, 2024, a decrease from $33.4 million in the prior year, primarily due to certain intangible assets becoming fully amortized during the period, partially offset by increases from intangible assets acquired in relation to the acquisitions completed in 2023 and 2024. Refer to Note 6, Goodwill and Intangible Assets, to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for additional details.
Current wording
Amortization of Intangible Assets. Amortization expense on intangible assets was $6.1 million for the year ended December 31, 2025, a decrease from $18.3 million in the prior year, primarily due to certain intangible assets becoming fully amortized during the period.
Previous wording
Income from Operations. Income from operations increased by $75.4 million, or 44%, to $246.6 million for the year ended December 31, 2024 when compared to the prior year. The following table summarizes income from operations and percentage of revenue for each of our segments for the years ended December 31, 2024 and 2023:
Current wording
Income from Operations. Income from operations increased by $68.0 million, or 28%, to $314.7 million for the year ended December 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 years ended December 31, 2025 and 2024:
Previous wording
•Income from operations for the full service center-based child care segment increased $44.3 million, or 472%, for the year ended December 31, 2024, when compared to the same period in 2023, primarily due to increases in tuition revenue from enrollment growth and tuition rate increases, partially offset by increased personnel costs, and a decrease of approximately $34 million in net contributions from pandemic-related government support as most of the programs for which we were eligible ended by September 30, 2023.
Current wording
•Income from operations for the full service center-based child care segment increased $12.4 million, or 23%, for the year ended December 31, 2025, when compared to the same period in 2024, primarily due to increases in tuition revenue from tuition rate increases and enrollment growth, as well as decreases in amortization expense, partially offset by increased personnel costs and increased impairment and net lease termination costs.
Previous wording
•Income from operations for the back-up care segment increased $33.9 million, or 25%, in the year ended December 31, 2024 when compared to the same period in 2023. Incremental contributions from the expanded utilization of back-up care services were partially offset by the related higher personnel and service provider costs. Additionally, income from operations in 2023 included value-added tax expense of $4.0 million related to prior periods.
Current wording
•Income from operations for the back-up care segment increased $52.0 million, or 31%, in the year ended December 31, 2025 when compared to the same period in 2024. Incremental gross profit contributions from the expanded utilization of back-up care services were partially offset by increases in technology and marketing expense to improve customer experience. Additionally, income from operations in 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.
Previous wording
Net Interest Expense. Net interest expense decreased to $48.8 million for the year ended December 31, 2024 from $51.6 million for the year ended December 31, 2023, due to lower average borrowings, lower outstanding deferred consideration from prior acquisitions, and higher interest income from invested cash balances in the current year. The blended weighted average interest rates for the term loans and revolving credit facility were 4.88% and 4.11% for the years ended December 31, 2024 and 2023, respectively, inclusive of the effects of cash flow hedges. Based on our current interest rate projections, we estimate that our overall weighted average interest rate will approximate 5.00% for 2025 inclusive of the effects of cash flow hedges.
Current wording
Net Interest Expense. Net interest expense decreased to $44.8 million for the year ended December 31, 2025 from $48.8 million for the year ended December 31, 2024, primarily due to lower interest rates applicable to our debt as well as lower average balances in 2025, partially offset by $2.7 million in other interest related to a pre-acquisition obligation and debt refinancing costs recorded in 2025. The blended weighted average interest rates for the term loans and revolving credit facility were 4.42% and 4.88% for the years ended December 31, 2025 and 2024, respectively, inclusive of the effects of cash flow hedges. Based on our current interest rate projections, we estimate that our overall weighted average interest rate will approximate 5.00% for 2026 inclusive of the effects of cash flow hedges.
Previous wording
Income Tax Expense. We recorded an income tax expense of $57.7 million during the year ended December 31, 2024, at an effective income tax rate of 29%, compared to income tax expense of $45.4 million, at an effective income tax rate of 38%, during the prior year. 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 jurisdictions and the effects of excess (shortfall) tax benefit (expense) associated with the exercise or expiration of stock options and vesting of restricted stock. Net shortfall tax expense increased tax expense by $1.0 million in 2024 and by $2.9 million in 2023, due to lower volume of equity transactions and less tax shortfall realized on each transaction in 2024. Refer to Note 15, Stockholders’ Equity and Stock-based Compensation, to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for additional details. The effective income tax rate would have approximated 27% and 28% for the years ended December 31, 2024 and 2023, respectively, prior to the inclusion of the excess (shortfall) tax benefit (expense), other discrete items, and unbenefited losses in certain foreign jurisdictions.
Current wording
Income Tax Expense. We recorded an income tax expense of $76.8 million during the year ended December 31, 2025, at an effective income tax rate of 28%, compared to income tax expense of $57.7 million, at an effective income tax rate of 29%, during the prior year. 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 jurisdictions and the effects of excess tax benefit (shortfall tax expense) associated with the exercise or expiration of stock options and vesting of restricted stock. Net excess tax benefit decreased tax expense by $1.2 million in 2025 and net shortfall tax expense increased tax expense by $1.0 million in 2024, primarily due to the impact of the stock price on the date of grant compared to the vesting date of restricted stock. Refer to Note 14, Stockholders’ Equity and Stock-based Compensation, to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for additional details. The effective income tax rate would have approximated 27% for each of the years ended December 31, 2025 and 2024, prior to the inclusion of the excess tax benefit (shortfall tax expense), other discrete items and unbenefited losses/net operating loss utilization in certain foreign jurisdictions.
Previous wording
Adjusted EBITDA and Adjusted Income from Operations. Adjusted EBITDA and adjusted income from operations increased $57.2 million, or 16%, and $65.2 million, or 31%, respectively, for the year ended December 31, 2024 over the comparable period in 2023 primarily due to the incremental gross profit contributions from the full service center-based child care segment resulting from enrollment growth and tuition price increases and from the back-up care segment resulting from increased utilization.
Current wording
Adjusted EBITDA and Adjusted Income from Operations. Adjusted EBITDA and adjusted income from operations increased $78.2 million, or 19%, and $85.7 million, or 31%, respectively, for the year ended December 31, 2025 over the comparable period in 2024 primarily due to the incremental gross profit contributions from the back-up care segment resulting from increased utilization and from the full service center-based child care segment resulting from tuition price increases and enrollment growth.
Previous wording
Adjusted Net Income. Adjusted net income increased $38.9 million, or 24%, for the year ended December 31, 2024 when compared to the same period in 2023, primarily due to the increase in adjusted income from operations and lower interest expense.
Current wording
Adjusted Net Income. Adjusted net income increased $58.3 million, or 29%, for the year ended December 31, 2025 when compared to the same period in 2024, primarily due to the increase in adjusted income from operations and lower interest expense and effective tax rate.
Previous wording
(a)Amortization of intangible assets represents amortization expense, including amortization expense of approximately $8.5 million and $20.0 million for the years ended December 31, 2024 and 2023, respectively, 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 approximately $8.5 million for the year ended December 31, 2024, associated with intangible assets recorded in connection with our going private transaction in May 2008.
Previous wording
(b)Impairment losses represent impairment costs, primarily for long-lived assets, associated with our annual impairment assessment arising from center closures, changes in market assumptions and reduced operating performance at certain centers. For the year ended December 31, 2024, impairment losses recognized in the fourth quarter totaled $30.3 million, of which $29.2 million related to the full service center-based child care segment and $1.1 million related to the back-up care segment. For the year ended December 31, 2023, impairment losses recognized in the fourth quarter totaled $35.9 million, of which $32.0 million related to the full service center-based child care segment and $3.9 million related to the back-up care segment.
Current wording
(b)Impairment and net lease termination costs represent impairment costs, primarily for long-lived assets, arising from center closures, changes in market assumptions and reduced operating performance at certain centers. For the year ended December 31, 2025, impairment and net lease termination costs totaled $47.5 million, of which $47.0 million related to the full service center-based child care segment and $0.5 million related to the back-up care segment. For the year ended December 31, 2024, impairment and net lease termination costs totaled $30.3 million, of which $29.2 million related to the full service center-based child care segment and $1.1 million related to the back-up care segment.
Previous wording
(d)Other costs in the year ended December 31, 2024 consist of costs incurred in connection with the December 2024 debt refinancing of $0.8 million allocated to the full service center-based child care segment. Other costs in the year ended December 31, 2023 consist of value-added tax expense of $5.5 million related to prior periods, of which $4.0 million was associated with the back-up care segment and $1.5 million was associated with the full service center-based child care segment.
Current wording
(d)Other costs in the year ended December 31, 2025 consist of $1.3 million related to the August 2025 debt refinancing recorded to selling, general and administrative expenses and allocated to the full service center-based child care segment. Other costs in the year ended December 31, 2024 consist of costs incurred in connection with the December 2024 debt refinancing of $0.8 million recorded to selling, general and administrative expenses and allocated to the full service center-based child care segment.
Previous wording
(f)Adjusted income tax expense represents income tax expense calculated on adjusted income before income tax at an effective tax rate of approximately 28% for each of the years ended December 31, 2024 and 2023.
Current wording
(f)Adjusted income tax expense represents income tax expense calculated on adjusted income before income tax at an effective tax rate of approximately 27% and 28% for the years ended December 31, 2025 and 2024, respectively.
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 the “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, such as impairment losses, debt refinance costs, value-added tax expense related to prior periods and at times, other non-recurring costs, such as 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 the “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, such as impairment and net lease termination costs, debt refinance costs and at times, other non-recurring costs, such as 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 $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, compared to $71.6 million in cash ($89.5 million including restricted cash) at December 31, 2023, of which $32.1 million was held in foreign jurisdictions. Operations outside of North America accounted for 28% and 27% of our consolidated revenue for the years ended December 31, 2024 and 2023, respectively. The net impact on our liquidity from changes in foreign currency exchange rates was not material for the years ended December 31, 2024 and 2023.
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 $900 million multi-currency revolving credit facility. We had $140.1 million in cash ($143.2 million including restricted cash) at December 31, 2025, of which $66.3 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 29% and 28% of our consolidated revenue for the years ended December 31, 2025 and 2024, respectively. The net impact on our liquidity from changes in foreign currency exchange rates was not material for the years ended December 31, 2025 and 2024.
Previous wording
Our $400 million revolving credit facility is part of our senior secured credit facilities. At December 31, 2024 and 2023, $384.8 million and $380.7 million of the revolving credit facility was available for borrowing, respectively.
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. In addition, our revolving credit facility was used to voluntarily prepay $89.0 million of principal under the term loan B facility during the year ended December 31, 2025. At December 31, 2025 and 2024, $383.7 million and $384.8 million of the revolving credit facility was available for borrowing, respectively.
Previous wording
We had a working capital deficit of $283.4 million and $352.5 million at December 31, 2024 and December 31, 2023, 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, including voluntary prepayments, and revolver, and share repurchases from time to time.
Current wording
We had a working capital deficit of $462.2 million and $283.4 million at December 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, share repurchases and short-term borrowings on our long-term debt and revolving credit facility. We anticipate that our cash flows from operating activities will continue to expand alongside our back-up services business growth and the ongoing improvement of our center enrollment and operating performance. As we continue growing enrollment, expanding sales and increasing utilization of back-up services, we expect to allocate capital to investments that support current operations and strategic opportunities, as well as make interest payments on our debt, voluntary prepayments of principal on our debt and revolver balances and share repurchases from time to time.
Previous wording
As of December 31, 2024, we had $845.7 million in lease liabilities, $102.1 million of which is short term in nature. Refer to Note 4, Leases, to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for additional information on leases, including the maturity of the contractual obligations related to our lease liabilities.
Current wording
As of December 31, 2025, we had $813.1 million in lease liabilities, $110.2 million of which is short term in nature. Refer to Note 4, Leases, to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K 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 year ended December 31, 2024, we repurchased 0.8 million shares for $84.6 million (resulting in a $0.4 million excise tax liability). There were no share repurchases during the year ended December 31, 2023. All repurchased shares have been retired, and at December 31, 2024, $113.7 million remains available for future repurchases under the Board-approved repurchase program.
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. During the year ended December 31, 2025, we repurchased 2.1 million shares for $225.4 million (resulting in a $1.9 million excise tax liability). During the year ended December 31, 2024, we repurchased 0.8 million shares for $84.6 million (resulting in a $0.4 million excise tax liability). All repurchased shares have been retired, and at December 31, 2025, $329.4 million remains available for future repurchases under the Board-approved repurchase program.
Previous wording
We believe that funds provided by operations, our existing cash balances and borrowings available under our revolving credit facility will be adequate to fund all obligations and liquidity requirements for at least the next 12 months. However, if we were to experience disruption from events not in our control, such as a global health crisis, or if we were to undertake any significant acquisitions or make investments in the purchase of facilities for new or existing centers, we could require financing beyond our existing cash and borrowing capacity, and it could be necessary for us to obtain additional debt or equity financing. We may not be able to obtain such financing on reasonable terms, or at all.
Current wording
We believe that funds provided by operations, our existing cash balances and borrowings available under our revolving credit facility will be adequate to fund all obligations and liquidity requirements for at least the next 12 months. However, if we were to experience disruption from events not in our control or if we were to undertake any significant acquisitions or make investments in the purchase of facilities for new or existing centers, we could require financing beyond our existing cash and borrowing capacity, and it could be necessary for us to obtain additional debt or equity financing. We may not be able to obtain such financing on reasonable terms, or at all.
Previous wording
Cash provided by operating activities was $337.5 million for the year ended December 31, 2024, compared to $256.1 million for 2023. The increase in cash provided by operations primarily relates to the increase in net income of $66.0 million, as well as higher cash provided by working capital arising from the timing of billings and payments when compared to the prior year.
Current wording
Cash provided by operating activities was $350.7 million for the year ended December 31, 2025, compared to $337.5 million for 2024. The increase in cash provided by operations primarily related to the increase in net income of $52.9 million, partially offset by changes in working capital arising from the timing of billings and payments when compared to the prior year.
Previous wording
Cash used in investing activities was $117.8 million for the year ended December 31, 2024, compared to $126.9 million for the prior year, a decrease of $9.1 million. The decrease in cash used in investing activities was primarily related to a decrease in payments for acquisitions. During the year ended December 31, 2024, we invested $8.3 million in acquisitions, compared to an investment of $39.6 million during the prior year.
Current wording
Cash used in investing activities was $103.8 million for the year ended December 31, 2025, compared to $117.8 million for the prior year, a decrease of $14.0 million. The decrease in cash used in investing activities was primarily related to a decrease in net purchases of debt securities and other investments. Net purchases of debt securities held by our captive insurance entity and other investments were $5.7 million for the year ended December 31, 2025, compared to net purchases of $14.2 million for the prior year, a net decrease in cash used of $8.5 million.
Previous wording
This decrease in cash used in investing activities was partially offset by an increase in net purchases of debt securities and other investments in 2024. Net purchases of debt securities by our captive insurance entity, using restricted cash, and other investments were $14.2 million in the year ended December 31, 2024, compared to net proceeds of $3.5 million during the prior year, a net increase in cash used of $17.7 million. In addition, during the year ended December 31, 2024, we had net investments of $95.3 million in fixed asset purchases for maintenance and refurbishments in our existing centers, technology across all segments, and new child care centers, compared to net investments of $90.8 million during the prior year, a net increase of $4.5 million.
Current wording
In addition, for the year ended December 31, 2025, we had net investments of $91.3 million in fixed asset purchases for maintenance and refurbishments in our existing centers, technology, and new child care centers, compared to net investments of $95.3 million in the prior year, a net decrease of $4.0 million. Lastly, during the year ended December 31, 2025, we invested $6.8 million in acquisitions, compared to an investment of $8.3 million in the prior year.
Previous wording
We expect that in 2025 we will continue to spend on fixed asset additions related to new child care centers, maintenance and refurbishments in our existing centers, and continued investments in technology and equipment. As part of our growth strategy, we also expect to continue to make selective acquisitions.
Current wording
We expect that in 2026 we will continue to spend on fixed asset additions related to new child care centers, maintenance and refurbishments in our existing centers, and continued investments in technology and equipment. As part of our growth strategy, we also expect to continue to seek selective acquisitions.
Previous wording
During the year ended December 31, 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, compared to $0.2 million for payments of contingent consideration during the same period in 2023. During the year ended December 31, 2024, we used $84.6 million in cash for share repurchases, compared to no repurchases in 2023. These increases in cash used were partially offset by a decrease in net payments related to our revolving credit facility, which were $84.0 million during the ended December 31, 2023, compared to zero in the year ended December 31, 2024.
Current wording
During the year ended December 31, 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. There were no payments for deferred consideration during the year ended December 31, 2025.
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 our term loan B facility (the “term loan B”) and our $900 million multi-currency revolving credit facility (the “revolving credit facility”). Prior to April 17, 2025, our senior secured credit facilities also included our term loan A facility (the “term loan A”).
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