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; 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.

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 trends and recovery and occupancy in both the United States and outside the United States; our Australia business and operating conditions; 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 business model; our value proposition, client relations and partnerships; seasonality; macroeconomic trends and changing conditions, including uncertainty and inflationary or recessionary pressures; fluctuating interest rates; changes in laws and regulations; investments in segments and strategic opportunities; investments in technology, marketing, user experience and network supply; 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 i…

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, 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.

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; our ability to close underperforming centers; 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; outcome of legal matters, claims, allegations, actual or threatened litigation and regulatory investigations; 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 26, 2026, and other factors disclosed from time to time in our other filings with the Securities and Exchange Commission.

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 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.

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 months ended March 31, 2026, as compared to the three months ended March 31, 2025. 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, 2025.

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 packages in an effort to support employees across life and career stages and to improve recruitment, employee engagement, productivity, retention and career advancement, and we serve the needs of working families directly through our community facing child care centers.

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 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

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.

Current wording

As of March 31, 2026, we operated 988 early education and child care centers with the capacity to serve approximately 112,500 children in the United States, the United Kingdom, the Netherlands, Australia and India.

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 an online marketplace for families and caregivers. Educational advisory services include tuition assistance and student loan repayment program management, workforce education and related educational advising, and college admissions counseling services.

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.

Previous 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.

Current wording

During the three months ended March 31, 2026, we saw strong growth in back-up care with a 12% year-over-year increase in revenue as a result of increased utilization. We also saw year-over-year revenue growth of 6% in our full service center-based child care segment, primarily from tuition rate increases. To track our continued improvement in occupancy rates, we monitor occupancy for a cohort of centers that has been operating since the 2021 fall enrollment cycle, and as of March 31, 2026, this cohort of centers totaled 728 centers. Occupancy represents utilization for each respective center and is calculated as the average full-time enrollment divided by the total operating capacity during the period. For the quarter ended March 31, 2026, 48% of these centers were more than 70% enrolled, 44% were between 40-70% enrolled and 8% 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. 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.

Current wording

While we continue to see year-over-year growth and progress, our operating environment 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 evolving needs of clients, families and children as well as the changes in operating environments, including our Australia full service business, where we have recently experienced more challenging enrollment trends and operating conditions. We will continue to monitor and assess trends and operating conditions in Australia. We continue to assess our portfolio of centers through the evaluation of expected near-term and long-term performance, as well as our partnerships with clients. As a result, we routinely close underperforming centers and expect to close additional underperforming centers identified in these evaluations over the next 12 months.

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 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.

Current wording

We are 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 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.

Previous wording

(1)Adjusted EBITDA, adjusted income from operations and adjusted net income are financial measures that are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), which are commonly referred to as “non-GAAP financial measures.” Refer to “Non-GAAP Financial Measures and Reconciliation” below for a reconciliation of these non-GAAP financial measures to their respective measures determined under GAAP and for information regarding our use of non-GAAP financial measures.

Current wording

(1)Adjusted EBITDA, adjusted income from operations and adjusted net income are financial measures that are not determined in accordance with generally accepted accounting principles in the United States (“GAAP”), which are commonly referred to as “non-GAAP financial measures.” Refer to “Non-GAAP Financial Measures and Reconciliation” below for a reconciliation of these non-GAAP financial measures to their most directly comparable financial measures determined under GAAP and for information regarding our use of non-GAAP financial measures.

Previous 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:

Current wording

Revenue. Revenue for the three months ended March 31, 2026, increased by $46.7 million, or 7%, to $712.2 million from $665.5 million for the same period in 2025. The following table summarizes the revenue and percentage of total revenue for each of our segments for the three months ended March 31, 2026 and 2025:

Previous 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.

Current wording

Revenue generated by the full service center-based child care segment in the three months ended March 31, 2026 increased by $30.1 million, or 6%, when compared to the same period in 2025. Tuition revenue increased by $31.2 million, or 7%, when compared to the prior year, primarily due to average tuition rate increases at our child care centers of approximately 4%, offset by the impact of centers which have closed since December 31, 2024, which reduced revenue by approximately 2.5%, and by lower enrollment in our Australia centers which reduced revenue by approximately 1%. Fluctuations in foreign currency exchange rates for our United Kingdom, Netherlands and Australia operations increased tuition revenue in the three months ended March 31, 2026 by approximately 3%, or $16.5 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 $1.2 million, or 3%, primarily due to higher operating subsidies required to support center operations as enrollment increases.

Current wording

Management fees and operating subsidies from employer sponsors remained relatively consistent with the prior year.

Previous 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.

Current wording

Revenue generated by back-up care services in the three months ended March 31, 2026 increased by $16.1 million, or 12%, when compared to the same period in 2025. 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 employees of new and existing clients.

Previous 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.

Current wording

Revenue generated by educational advisory services in the three months ended March 31, 2026 remained relatively consistent with the same period in 2025.

Previous 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.

Current wording

Cost of Services. Cost of services increased by $38.9 million, or 8%, to $548.7 million for the three months ended March 31, 2026 from $509.8 million for the same period in 2025.

Previous 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.

Current wording

Cost of services in the full service center-based child care segment increased by $26.8 million, or 6%, to $448.9 million in the three months ended March 31, 2026 when compared to the same period in 2025. The increase in cost of services was primarily associated with increased personnel costs, which represent approximately 70% of the costs for this segment. Personnel costs increased 7% during the quarter compared to the same period in the prior year, related to average hourly wage rate increases in the range of 3-4%, higher benefits costs, including medical care expenses, and the impact of foreign currency exchange rates.

Previous 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.

Current wording

Cost of services in the back-up care segment increased by $11.8 million, or 16%, to $84.5 million in the three months ended March 31, 2026, 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, service offerings, and marketing outreach. We expect to continue to invest in increasing our network provider supply and in technology to support the growth of this segment.

Previous 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.

Current wording

Gross Profit. Gross profit increased by $7.8 million, or 5%, to $163.5 million for the three months ended March 31, 2026 from $155.7 million for the same period in 2025 primarily due to incremental 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 tuition rate increases and the associated operating leverage. Gross profit margin was 23% of revenue for the three months ended March 31, 2026, consistent with the same period in 2025.

Previous 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.

Current wording

Selling, General and Administrative Expenses (“SGA”). SGA increased by $5.5 million, or 6%, to $97.4 million for the three months ended March 31, 2026 from $91.9 million for the same period in 2025, primarily due to higher personnel costs. SGA was 14% of revenue for the three months ended March 31, 2026, consistent with the same period in 2025.

Previous 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.

Current wording

Amortization of Intangible Assets. Amortization expense on intangible assets was $1.2 million for the three months ended March 31, 2026, a decrease from $1.6 million for the three months ended March 31, 2025, primarily due to decreases from intangible assets becoming fully amortized since the prior year.

Previous 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:

Current wording

Income from Operations. Income from operations increased by $2.7 million, or 4%, to $64.9 million for the three months ended March 31, 2026 when compared to the prior year. The following table summarizes income from operations and percentage of revenue for each of our segments for the three months ended March 31, 2026 and 2025:

Previous wording

The increase in income from operations was primarily due to the following:

Current wording

The change in income from operations was primarily due to the following:

Previous 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.

Current wording

•Income from operations for the full service center-based child care segment increased $3.7 million, or 11%, in the three months ended March 31, 2026 when compared to the same period in 2025, primarily due to increases in tuition revenue from annual tuition rate increases, partially offset by increased personnel costs.

Previous 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.

Current wording

•Income from operations for the back-up care segment decreased $0.8 million, or 3%, in the three months ended March 31, 2026 when compared to the same period in 2025, primarily due to higher investments in technology and marketing to improve customer experience, and change in the mix of services provided, partially offset by incremental gross profit contributions from expanded utilization of back-up care services.

Previous 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.

Current wording

Net Interest Expense. Net interest expense was $12.0 million for the three months ended March 31, 2026, an increase from $10.4 million for the three months ended March 31, 2025, primarily due to higher average borrowings as well as higher interest rates applicable to our debt. The weighted average interest rate for the term loans and revolving credit facility was 4.8% for the three months ended March 31, 2026 compared to 4.4% for the three months ended March 31, 2025, 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 5.0% to 5.3% for the remainder of 2026, inclusive of the effects of the cash flow hedges.

Previous 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.

Current wording

Income Tax Expense. We recorded income tax expense of $18.8 million during the three months ended March 31, 2026, at an effective income tax rate of 36%, compared to an income tax expense of $13.9 million during the three months ended March 31, 2025, at an effective income tax rate of 27%. The difference between the effective income tax rates as compared to the statutory income tax rates was primarily due to the impact of unbenefited losses in certain foreign subsidiaries and the effects of net excess tax benefit (shortfall tax expense) associated with the exercise or expiration of stock options and vesting of restricted stock. The effective income tax rate may fluctuate from quarter to quarter for various reasons, including changes to income before income tax, jurisdictional mix of income before income tax, unbenefited losses, valuation allowances, jurisdictional income tax rate changes, as well as discrete items such as non-deductible transaction costs, the settlement of foreign, federal and state tax matters and the effects of excess tax benefit (shortfall tax expense) associated with the exercise or expiration of stock options and vesting of restricted stock.

Previous wording

During the nine months ended September 30, 2025, the net excess tax benefit from stock-based compensation decreased tax expense by $1.2 million. During the nine months ended September 30, 2024, the net shortfall tax expense from stock-based compensation increased tax expense by $0.9 million. For the nine months ended September 30, 2025 and 2024, prior to the inclusion of the excess tax benefit (shortfall tax expense), other discrete items and unbenefited losses in certain foreign jurisdictions, the effective tax rate approximated 27%.

Current wording

During the three months ended March 31, 2026, the net shortfall tax expense from stock-based compensation increased tax expense by $2.5 million. During the three months ended March 31, 2025, the net excess tax benefit from stock-based compensation decreased tax expense by $1.3 million. For the three months ended March 31, 2026 and 2025, prior to the inclusion of the excess tax benefit (shortfall tax expense), other discrete items and unbenefited losses in certain foreign jurisdictions, the effective tax rate approximated 28% and 27%, respectively.

Previous 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.

Current wording

Adjusted EBITDA and Adjusted Income from Operations. Adjusted EBITDA increased $3.3 million, or 4%, and adjusted income from operations increased $2.7 million, or 4%, for the three months ended March 31, 2026 over the comparable period in 2025 primarily due to increased contributions from the full service center-based child care and back-up care segments, partially offset by an increase in overhead costs.

Previous 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.

Current wording

Adjusted Net Income. Adjusted net income decreased $0.1 million, or 0.2%, for the three months ended March 31, 2026 when compared to the same period in 2025, primarily due to a higher interest expense from our senior secured credit facilities, offset by the increase in adjusted income from operations.

Previous wording

In our quarterly and annual reports, earnings press releases and conference calls, we discuss key financial measures that are not calculated in accordance with GAAP to supplement our consolidated financial statements presented on a GAAP basis. These non-GAAP financial measures of adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are reconciled from their respective measures determined under GAAP as follows:

Current wording

In our quarterly and annual reports, earnings press releases and conference calls, we discuss key financial measures that are not calculated in accordance with GAAP to supplement our consolidated financial statements presented on a GAAP basis. These non-GAAP financial measures of adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are reconciled from their most directly comparable financial measures determined in accordance with GAAP as follows:

Previous wording

(b)Stock-based compensation expense represents non-cash stock-based compensation expense in accordance with Accounting Standards Codification Topic 718, Compensation-Stock Compensation.

Current wording

(a)Stock-based compensation expense represents non-cash stock-based compensation expense in accordance with Accounting Standards Codification Topic 718, Compensation-Stock Compensation.

Previous wording

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

Current wording

(b)Adjusted income tax expense represents income tax expense calculated on adjusted income before income tax at an effective tax rate of approximately 28% for the three months ended March 31, 2026 and 2025. The jurisdictional mix of the expected adjusted income before income tax for the full year will affect the estimated effective tax rate for the year.

Previous wording

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 (“revolving credit facility”). We had $116.6 million in cash ($126.0 million including restricted cash) as of September 30, 2025, of which $82.2 million was held in foreign jurisdictions, compared to $110.3 million in cash ($123.7 million including restricted cash) as of December 31, 2024, of which $45.5 million was held in foreign jurisdictions. Operations outside of North America accounted for 29% and 28% of our consolidated revenue in the nine months ended September 30, 2025 and 2024, respectively. The net impact on our liquidity from changes in foreign currency exchange rates was not material for the nine months ended September 30, 2025 and 2024. While we expect to be impacted by fluctuations in the foreign currency exchange rates throughout the remainder of the year, we do not currently expect that the effects of changes in foreign currency exchange rates will have a material net impact on our liquidity and capital resources for the remainder of 2025.

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 (“revolving credit facility”). We had $133.4 million in cash ($136.7 million including restricted cash) as of March 31, 2026, of which $69.5 million was held in foreign jurisdictions, compared to $140.1 million in cash ($143.2 million including restricted cash) as of December 31, 2025, of which $66.3 million was held in foreign jurisdictions. Operations outside of North America accounted for 31% and 28% of our consolidated revenue in the three months ended March 31, 2026 and 2025, respectively. The net impact on our liquidity from changes in foreign currency exchange rates was not material for the three months ended March 31, 2026 and 2025. While we expect to be impacted by fluctuations in the foreign currency exchange rates throughout the remainder of the year, we do not currently expect that the effects of changes in foreign currency exchange rates will have a material net impact on our liquidity and capital resources for the remainder of 2026.

Previous 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 repay $89.0 million of principal under the term loan B facility during the nine months ended September 30, 2025. As of September 30, 2025 and December 31, 2024, $411.8 million and $384.8 million, respectively, of the revolving credit facility was available for borrowing.

Current wording

Our revolving credit facility is part of our senior secured credit facilities. On April 17, 2025, we amended our existing senior secured credit facilities to, among other changes, increase our revolving credit facility from $400 million to $900 million and extend the date of maturity. On the closing date, we used proceeds from our revolving credit facility to repay the outstanding balances under the term loan A facility. As of March 31, 2026 and December 31, 2025, $250.2 million and $383.7 million, respectively, of the revolving credit facility was available for borrowing.

Previous wording

We had a working capital deficit of $386.4 million and $283.4 million as of September 30, 2025 and December 31, 2024, respectively. Our working capital deficit has primarily arisen from using cash to make long-term investments in fixed assets and acquisitions, from share repurchases, and short-term borrowings on our long-term debt.

Current wording

We had a working capital deficit of $498.0 million and $462.2 million as of March 31, 2026 and December 31, 2025, respectively. Our working capital deficit has primarily arisen from using cash to make long-term investments in fixed assets and acquisitions, from share repurchases, and short-term borrowings on our long-term debt.

Previous wording

As of September 30, 2025, we had $831.7 million in lease liabilities, $107.3 million of which is short-term in nature. Refer to Note 3, Leases, to our condensed consolidated financial statements for additional information on leases, including the maturity of the contractual obligations related to our lease liabilities.

Current wording

As of March 31, 2026, we had $790.1 million in lease liabilities, $110.5 million of which is short-term in nature. Refer to Note 3, Leases, to our condensed consolidated financial statements for additional information on leases, including the maturity of the contractual obligations related to our lease liabilities.

Previous wording

The board of directors authorized a share repurchase program of up to $500 million of our outstanding common stock, effective June 3, 2025. The share repurchase program has no expiration date and replaced and canceled the prior $400 million authorization announced December 2021, of which $58.9 million remained available thereunder. During the nine months ended September 30, 2025, we repurchased approximately 0.9 million shares for $106.0 million (resulting in a $0.7 million excise tax liability). During the nine months ended September 30, 2024, we did not make any share repurchases under the board-approved repurchase program. All repurchased shares have been retired and, as of September 30, 2025, $448.8 million remained available for future repurchases.

Current wording

Effective March 9, 2026, the board of directors authorized a new share repurchase program under which up to an aggregate of $600 million of our outstanding common stock may be repurchased. The share repurchase program has no expiration date and canceled and replaced the prior $500 million share repurchase authorization announced in June 2025, of which $127.6 million remained available thereunder. During the three months ended March 31, 2026, we repurchased approximately 2.9 million shares for $224.8 million (resulting in a $2.1 million excise tax liability). During the three months ended March 31, 2025, the Company repurchased approximately 0.2 million shares for $19.7 million under the repurchase program. All repurchased shares have been retired and, as of March 31, 2026, $577.1 million remained available for future repurchases.

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. Subject to market conditions, we regularly evaluate opportunities with respect to our capital structure and may choose to raise additional funds at any time through debt financing arrangements or potential refinancing of our outstanding indebtedness, which may or may not be needed for additional working capital, capital expenditures, share repurchases, or other strategic investments. Additionally, 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 or refinancing on reasonable terms, or at all.

Previous wording

Cash provided by operating activities was $202.8 million for the nine months ended September 30, 2025, compared to $216.8 million for the same period in 2024. The decrease in cash provided by operations primarily relates to changes in working capital arising from the timing of billings and payments when compared to the prior year, partially offset by an increase in net income of $60.3 million.

Current wording

Cash provided by operating activities was $107.7 million for the three months ended March 31, 2026, compared to $86.2 million for the same period in 2025. The increase in cash provided by operations primarily relates to changes in working capital arising from the timing of billings and payments when compared to the prior year.