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 other labor market impacts; 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 and operating performance; 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 grow 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; future impairment losses; 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 …

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 other labor market impacts; future center closures and additional portfolio consolidation and impacts; our operations outside the United States; back-up care services, use types and utilization; enrollment trends and recovery and occupancy in both the United States and outside the United States, including the U.K.; our Australia business and operating conditions and operating performance; our center cohort occupancy levels; cost management and capital spending; investments in employees, wages, and expanded safeguarding expenditures; 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 grow 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; future impairment losses; 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, settleme…

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; our ability to close underperforming centers or exit unfavorable lease arrangements; 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 or negative public perception, including as a result of incidents and media coverage; outcome of legal matters, claims, allegations, actual or threatened litigation and regulatory investigations and reviews; 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.

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 ability to maintain applicable licenses and registrations in the jurisdictions in which we operate; 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 or exit lease arrangements; 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 or negative public perception, including as a result of incidents and media coverage; outcome of legal matters, claims, allegations, actual or threatened litigation and regulatory investigations and reviews; insurance risks including self-insured risks and excess coverage; 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 six months ended June 30, 2026, as compared to the three and six months ended June 30, 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.

Current wording

The following is a discussion of the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of Bright Horizons Family Solutions Inc. (“we” or the “Company”) for the three and nine months ended September 30, 2026, as compared to the three and nine months ended September 30, 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

As of June 30, 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.

Current wording

As of September 30, 2026, we operated 979 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 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.

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 include 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 June 30, 2026, we saw strong growth in back-up care with a 19% year-over-year increase in revenue as a result of increased utilization. We also saw year-over-year revenue growth of 3% 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 June 30, 2026, this cohort of centers totaled 719 centers. Occupancy represents utilization for each respective center and is calculated as the average full-time enrollment divided by the total operating capacity during the period. For the quarter ended June 30, 2026, 53% of these centers were more than 70% enrolled, 42% were between 40-70% enrolled and 5% were less than 40% enrolled, which reflects improved occupancy and the effect of closing unperforming centers when compared to the same period in the prior year.

Current wording

During the three months ended September 30, 2026, we saw strong growth in back-up care with a 13% year-over-year increase in revenue as a result of increased utilization. We also saw year-over-year revenue growth of 1% in our full service center-based child care segment, reflecting annual tuition rate increases offset by the effects of center closures. 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, 2026, this cohort of centers totaled 712 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, 2026, 42% of these centers were more than 70% enrolled, 49% were between 40-70% enrolled and 9% were less than 40% enrolled, which reflects improved occupancy for the less than 40% enrolled cohort, as well as the effect of closing underperforming centers when compared to the same period in the prior year.

Previous wording

While we continue to see year-over-year growth, our operating environment is impacted by increased operating costs, a tight labor market, varying enrollment demands, shifting work demographics, and challenging macroeconomic conditions. We remain focused on 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 are actively monitoring and assessing the trends and operating conditions in Australia and we continue to focus our efforts on improving the overall operating performance, and where appropriate, close centers that we do not believe have long-term potential. 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 continue to optimize our portfolio and close underperforming centers identified in these evaluations over the next 12 months.

Current wording

While we continue to see year-over-year growth in certain markets, our operating environment is impacted by increased operating costs, a tight labor market, shifting work demographics, challenging macroeconomic conditions, and varying enrollment demands, including in our U.K. and Australia full service business, where we have recently experienced more challenging operating conditions. We continue to assess trends and operating conditions in Australia and are focused on improving the overall operating performance, while exploring strategic alternatives, and where appropriate, closing centers that we do not believe have long-term potential. We continue to assess our global 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 continue to optimize our portfolio through the closure or other exit of centers identified in these evaluations over the next 12 months.

Previous 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.

Current wording

We remain focused on the evolving needs of clients, families and children and on our strategic priorities of delivering high quality education and care services, connecting across our service lines, expanding our impact on new and existing customers and clients, and preserving our strong culture. We remain committed to serving the needs of families, clients and our employees and to continuing investments in our programs and service quality. To support our commitment to providing high quality services, we regularly review and refine our processes, policies, and training programs, including our safeguarding practices. In 2026, we continued to invest in safeguarding initiatives, including the implementation of cameras across our portfolio of centers, expanded training and oversight of our center based staff, and partnering with an independent, third-party safeguarding expert to augment our dedicated safeguarding team. We expect to continue making these investments, as appropriate, throughout the remainder of 2026 and beyond. 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

The following table sets forth statement of income data as a percentage of revenue for the six months ended June 30, 2026 and 2025:

Current wording

The following table sets forth statement of income data as a percentage of revenue for the nine months ended September 30, 2026 and 2025:

Previous wording

Revenue. Revenue for the three months ended June 30, 2026, increased by $47.6 million, or 7%, to $779.2 million from $731.6 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 June 30, 2026 and 2025:

Current wording

Revenue. Revenue for the three months ended September 30, 2026, increased by $38.7 million, or 5%, to $841.5 million from $802.8 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 September 30, 2026 and 2025:

Previous wording

Revenue generated by the full service center-based child care segment in the three months ended June 30, 2026 increased by $17.0 million, or 3%, when compared to the same period in 2025. Tuition revenue increased by $16.3 million, or 3%, when compared to the prior year, primarily due to average tuition rate increases of approximately 4%, offset by the impact of centers that have closed since March 31, 2025, 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 June 30, 2026 by approximately 1%, or $5.0 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 September 30, 2026 increased by $6.5 million, or 1%, when compared to the same period in 2025. Tuition revenue increased by $5.4 million, or 1%, when compared to the prior year, primarily due to average tuition rate increases of approximately 4%, offset by the impact of centers that have closed since the same period in the prior year, which reduced revenue by approximately 3%, and by lower enrollment in our Australia centers, which reduced revenue by approximately 1%. We expect our center closures to exceed new openings over the next 12 months, and that we will continue to have challenging enrollment trends, including lower than historical average enrollment in our Australia centers.

Previous wording

Revenue generated by back-up care services in the three months ended June 30, 2026 increased by $30.9 million, or 19%, 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.

Current wording

Revenue generated by back-up care services in the three months ended September 30, 2026 increased by $33.0 million, or 13%, 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 June 30, 2026 remained consistent with the same period in 2025.

Current wording

Revenue generated by educational advisory services of $33.1 million in the three months ended September 30, 2026 remained relatively consistent with the same period in 2025.

Previous wording

Cost of services in the full service center-based child care segment increased by $24.1 million, or 5%, to $469.8 million in the three months ended June 30, 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 2% during the quarter compared to the same period in the prior year, related to average hourly wage rate increases of approximately 3%, higher benefits costs, including medical care expenses, and the impact of foreign currency exchange rates, offset by reductions in labor from net center closures since the prior year. Impairment losses of $12.8 million, primarily related to long-lived assets, arising from center closures, changes in market assumptions and reduced operating performance at certain centers, also contributed to the increase in cost of services.

Current wording

Cost of services in the full service center-based child care segment increased by $30.9 million, or 7%, to $477.2 million in the three months ended September 30, 2026 when compared to the same period in 2025. Personnel costs, which represent approximately 70% of the costs for this segment, increased 1% during the quarter compared to the same period in the prior year, related to average hourly wage rate increases of approximately 3%, and higher benefits costs, including medical care expenses, partially offset by reductions in labor from net center closures since the prior year. In addition, cost of services increased due to incremental expense of $23.4 million related to general liability reserves for certain safeguarding matters. Cost of services for the three months ended September 30, 2025, included $2.4 million of net lease termination costs.

Previous wording

Cost of services in the back-up care segment increased by $16.6 million, or 19%, to $105.4 million in the three months ended June 30, 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 the continued investment in technology to support our customer user experience, service offerings, and marketing outreach. We expect to continue investing 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 $20.6 million, or 17%, to $144.4 million in the three months ended September 30, 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 over the prior year, and the continued investment in technology to support our customer user experience, service offerings, and marketing outreach. We expect to continue investing in increasing our network provider supply and in technology to support the growth of this segment.

Previous wording

Gross Profit. Gross profit increased $14.2 million, or 4%, to $352.5 million for the six months ended June 30, 2026 from $338.3 million for the same period in 2025 primarily due to incremental gross profit contributions from the back-up care segment, resulting from higher utilization of back-up care services, partially offset by impairment losses related to the full service center-based child care segment. Gross profit margin was 24% of revenue for the six months ended June 30, 2026, relatively consistent with the six months ended June 30, 2025.

Current wording

Gross Profit. Gross profit decreased by $12.2 million, or 6%, to $204.8 million for the three months ended September 30, 2026 from $217.0 million for the same period in 2025 primarily due to contributions from the back-up care segment, resulting from higher utilization of back-up services which were offset by incremental general liability expense for certain safeguarding matters in the full service center-based child care segment. Gross profit margin was 24% of revenue for the three months ended September 30, 2026, a decrease of approximately 3% from the same period in 2025.

Previous wording

Amortization of Intangible Assets. Amortization expense on intangible assets was $1.1 million for the three months ended June 30, 2026, a decrease from $1.7 million for the three months ended June 30, 2025, primarily due to decreases from intangible assets becoming fully amortized since the prior year.

Current wording

Amortization of Intangible Assets. Amortization expense on intangible assets was $1.1 million for the three months ended September 30, 2026, a decrease from $1.5 million for the three months ended September 30, 2025, primarily due to decreases from intangible assets becoming fully amortized since the prior year.

Previous wording

Income from Operations. Income from operations decreased by $6.2 million, or 7%, to $79.8 million for the three months ended June 30, 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 June 30, 2026 and 2025:

Current wording

Income (Loss) from Operations. Income from operations decreased by $308.0 million, to a loss from operations of $187.1 million for the three months ended September 30, 2026 when compared to the prior year. The following table summarizes income (loss) from operations and percentage of revenue for each of our segments for the three months ended September 30, 2026 and 2025:

Previous wording

•Income from operations for the back-up care segment increased $9.4 million, or 23%, in the three months ended June 30, 2026 when compared to the same period in 2025, primarily due to incremental gross profit contributions from expanded utilization of back-up care services, partially offset by higher investments in technology and marketing to improve the customer experience.

Current wording

•Income from operations for the back-up care segment increased $5.9 million, or 6%, in the three months ended September 30, 2026 when compared to the same period in 2025, primarily due to incremental gross profit contributions from expanded utilization of back-up care services, partially offset by higher investments in technology and marketing to enhance the customer experience.

Previous wording

Net Interest Expense. Net interest expense was $14.0 million for the three months ended June 30, 2026, an increase from $10.6 million for the three months ended June 30, 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 4.91% for the three months ended June 30, 2026 compared to 4.26% for the three months ended June 30, 2025, inclusive of the effects of the cash flow hedges. Based on the current interest rate projections, we estimate that our overall weighted average interest rate will be in the range of 5.25% to 5.5% for the remainder of 2026, inclusive of the effects of the cash flow hedges.

Current wording

Net Interest Expense. Net interest expense was $17.2 million for the three months ended September 30, 2026, an increase from $12.2 million for the three months ended September 30, 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 4.99% for the three months ended September 30, 2026 compared to 4.25% for the three months ended September 30, 2025, inclusive of the effects of the cash flow hedges. Based on the current interest rate projections, we estimate that our overall weighted average interest rate will be in the range of 5.5% to 5.75% 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 $25.2 million during the three months ended June 30, 2026, at an effective income tax rate of 38%, compared to an income tax expense of $20.7 million during the three months ended June 30, 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.

Current wording

Income Tax Expense. We recorded income tax expense of $26.4 million during the three months ended September 30, 2026, compared to an income tax expense of $30.1 million during the three months ended September 30, 2025, at an effective income tax rate of 28%. The effective tax rate for the three months ended September 30, 2026 was not meaningful due to the impact of the non-deductible goodwill impairment and resulting pretax loss. The difference between the effective income tax rates as compared to the statutory income tax rates was primarily due to the non-deductible goodwill impairment, 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 (loss) before income tax, jurisdictional mix of income (loss) before income tax, unbenefited losses, valuation allowances, jurisdictional income tax rate changes, as well as discrete items such as non-deductible 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 three months ended June 30, 2026 and 2025, the net shortfall tax expense from stock-based compensation increased tax expense by $0.5 million and $0.1 million, respectively. For the three months ended June 30, 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 27%.

Current wording

During each of the three months ended September 30, 2026 and 2025, the net shortfall tax expense from stock-based compensation increased tax expense by $0.1 million. For the three months ended September 30, 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 $14.9 million, or 13%, and adjusted income from operations increased $12.9 million, or 15%, for the three months ended June 30, 2026 compared to the same period in 2025 primarily due to increased contributions from the back-up care segment.

Current wording

Adjusted EBITDA and Adjusted Income from Operations. Adjusted EBITDA increased $7.2 million, or 5%, and adjusted income from operations increased $5.7 million, or 5%, for the three months ended September 30, 2026 compared to the same period in 2025, primarily due to increased service levels and contributions from the back-up care segment.

Previous wording

Adjusted Net Income. Adjusted net income increased $4.8 million, or 7.9%, for the three months ended June 30, 2026 when compared to the same period in 2025, primarily due to the increase in adjusted income from operations noted above, partially offset by higher interest expense from our senior secured credit facilities.

Current wording

Adjusted Net Income. Adjusted net income decreased $2.6 million, or 2.9%, for the three months ended September 30, 2026 when compared to the same period in 2025, as a result of higher interest expense and an increase to the adjusted effective tax rate, partially offset by the increase in adjusted income from operations noted above.

Previous wording

Revenue. Revenue increased by $94.3 million, or 7%, to $1.5 billion for the six months ended June 30, 2026 from $1.4 billion for the same period in 2025. The following table summarizes the revenue and percentage of total revenue for each of our segments for the six months ended June 30, 2026 and 2025:

Current wording

Revenue. Revenue increased by $133.0 million, or 6%, to $2.3 billion for the nine months ended September 30, 2026 from $2.2 billion for the same period in 2025. The following table summarizes the revenue and percentage of total revenue for each of our segments for the nine months ended September 30, 2026 and 2025:

Previous wording

Revenue generated by the full service center-based child care segment in the six months ended June 30, 2026 increased by $47.1 million, or 4.5%, when compared to the same period in 2025. Tuition revenue increased by $47.4 million, or 5%, when compared to the prior year, primarily due to average tuition rate increases of approximately 4%, offset by the impact of centers that 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 2026 tuition revenue by approximately 2%, or $21.5 million.

Current wording

Revenue generated by the full service center-based child care segment in the nine months ended September 30, 2026 increased by $53.6 million, or 3.4%, when compared to the same period in 2025. Tuition revenue increased by $52.8 million, or 3.7%, when compared to the prior year, primarily due to average tuition rate increases of approximately 4%, partially offset by the impact of centers that have closed since the same period in the prior year, which reduced revenue by 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 2026 tuition revenue by approximately 2%, or $22.9 million in nine months ended September 30, 2026.

Previous wording

Revenue generated by back-up care services in the six months ended June 30, 2026 increased by $47.0 million, or 16%, 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 new and existing clients.

Current wording

Revenue generated by back-up care services in the nine months ended September 30, 2026 increased by $80.0 million, or 15%, 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 new and existing clients.

Previous wording

Revenue generated by educational advisory services in the six months ended June 30, 2026 remained consistent with the same period in the prior year.

Current wording

Revenue generated by educational advisory services in the nine months ended September 30, 2026 remained consistent with the same period in the prior year.

Previous wording

Cost of Services. Cost of services increased $80.1 million, or 8%, to $1.1 billion for the six months ended June 30, 2026 when compared to the same period in 2025.

Current wording

Cost of Services. Cost of services increased $131.0 million, or 8%, to $1.8 billion for the nine months ended September 30, 2026 when compared to the same period in 2025.

Previous wording

Cost of services in the full service center-based child care segment increased by $50.8 million, or 6%, to $0.9 billion in the six months ended June 30, 2026 when compared to the same period in 2025. The increase in cost of services was primarily associated with increased personnel costs, an increase of 5% during the six months ended June 30, 2026 compared to the same period in the prior year, related to average hourly wage rate increases of approximately 3%, higher benefits costs, including medical care expenses, and the impact of foreign currency exchange rates, offset by reductions in labor from net center closures since the prior year. Impairment losses of $12.8 million, primarily related to long-lived assets, arising from center closures, changes in market assumptions and reduced operating performance at certain centers, also contributed to the increase in cost of services.

Current wording

Cost of services in the full service center-based child care segment increased by $81.7 million, or 6%, to $1.4 billion in the nine months ended September 30, 2026 when compared to the same period in 2025. The increase in cost of services was primarily associated with increased personnel costs, an increase of 4% during the nine months ended September 30, 2026 compared to the same period in the prior year, related to average hourly wage rate increases of approximately 3%, higher benefits costs, including medical care expenses, and the impact of foreign currency exchange rates, offset by reductions in labor from net center closures since the prior year. Impairment losses of $12.8 million, related to long-lived assets, arising from center closures, changes in market assumptions and reduced operating performance at certain centers, and incremental expense of $23.4 million related to general liability reserves for certain safeguarding matters, also contributed to the increase in cost of services. Cost of services for the nine months ended September 30, 2025, included $2.4 million of net lease termination costs.

Previous wording

Cost of services in the back-up care segment increased $28.4 million, or 18%, to $189.9 million in the six months ended June 30, 2026 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 the continued investment in technology to support our customer user experience, service offerings, and marketing outreach.

Current wording

Cost of services in the back-up care segment increased $49.0 million, or 17%, to $334.3 million in the nine months ended September 30, 2026 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 over the prior year, and the continued investment in technology to support our customer user experience, service offerings, and marketing outreach.

Previous wording

Gross Profit. Gross profit increased by $6.4 million, or 4%, to $189.0 million for the three months ended June 30, 2026 from $182.6 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, partially offset by impairment losses related to the full service center-based child care segment. Gross profit margin was 24% of revenue for the three months ended June 30, 2026, a decrease of approximately 1% from the same period in 2025.

Current wording

Gross Profit. Gross profit increased $2.0 million to $557.3 million for the nine months ended September 30, 2026 from $555.3 million for the same period in 2025 primarily due to incremental gross profit contributions from the back-up care segment, resulting from higher utilization of back-up care services, partially offset by impairment losses and incremental general liability expense in the full service center-based child care segment. Gross profit margin was 24% of revenue for the nine months ended September 30, 2026, a decrease of approximately 1% from the nine months ended September 30, 2025.

Previous wording

Selling, General and Administrative Expenses. SGA increased $18.7 million, or 10%, to $205.4 million for the six months ended June 30, 2026 from $186.7 million for the same period in 2025, due to higher personnel and technology costs, and impairment losses of $6.3 million related to goodwill in the full service center-based child care segment attributable to an immaterial foreign reporting unit specializing in tutoring services. SGA was 14% of revenue for the six months ended June 30, 2026, which is relatively consistent with the same period in 2025.

Current wording

Selling, General and Administrative Expenses. SGA increased $18.5 million, or 7%, to $299.9 million for the nine months ended September 30, 2026 from $281.4 million for the same period in 2025, due to higher personnel and technology costs, and impairment losses of $4.0 million related to long-lived assets in the full service center-based child care segment. SGA for the nine months ended September 30, 2025 included $1.3 million within the full service segment in expenses related to the August 2025 debt refinancing. SGA was 13% of revenue for the nine months ended September 30, 2026, which is consistent with the same period in 2025. Refer to Note 6, Credit Arrangements and Debt Obligations, for additional information on the August 2025 debt refinancing.

Previous wording

Amortization of Intangible Assets. Amortization expense on intangible assets of $2.3 million for the six months ended June 30, 2026, decreased from $3.3 million for the six months ended June 30, 2025 primarily due to certain intangible assets becoming fully amortized since the prior year.

Current wording

Amortization of Intangible Assets. Amortization expense on intangible assets of $3.5 million for the nine months ended September 30, 2026, decreased from $4.7 million for the nine months ended September 30, 2025 primarily due to certain intangible assets becoming fully amortized since the prior year, partially offset by increases from intangible assets acquired in relation to the acquisitions completed in 2025.

Previous wording

Income from Operations. Income from operations decreased by $3.6 million, or 2%, to $144.8 million for the six months ended June 30, 2026 when compared to the same period in 2025. The following table summarizes income from operations and percentage of revenue for each of our segments for the six months ended June 30, 2026 and 2025:

Current wording

Income (Loss) from Operations. Income from operations decreased by $311.5 million, or 116%, to a loss from operations of $42.4 million for the nine months ended September 30, 2026 when compared to the same period in 2025. The following table summarizes income from operations and percentage of revenue for each of our segments for the nine months ended September 30, 2026 and 2025:

Previous wording

•Income from operations for the full service center-based child care segment decreased $15.2 million, or 38%, in the three months ended June 30, 2026 when compared to the same period in 2025, primarily due to impairment losses of $19.1 million related to long-lived assets and goodwill, arising from center closures, changes in market assumptions and reduced operating performance at certain centers, and increased personnel costs, partially offset by increases in tuition revenue from annual tuition rate increases and enrollment gains.

Current wording

•Income from operations for the full service center-based child care segment decreased $326.4 million in the nine months ended September 30, 2026 when compared to the same period in 2025, primarily due to impairment losses of $313.1 million related to goodwill and long-lived assets, and $23.4 million of incremental general liability expense, partially offset by the net contribution of increased tuition revenue from annual tuition rate increases and increased personnel costs for the service delivery. In addition, income from operations for the nine months ended September 30, 2025 included $3.7 million of expenses related to net lease termination costs and the August 2025 debt refinancing.

Previous wording

•Income from operations for the back-up care segment increased $8.5 million, or 13%, in the six months ended June 30, 2026 when compared to the same period in 2025, primarily due to incremental gross profit contributions from expanded utilization of back-up care services, partially offset by increases in technology and marketing investments to improve the customer experience.

Current wording

•Income from operations for the back-up care segment increased $14.4 million, or 9%, in the nine months ended September 30, 2026 when compared to the same period in 2025, primarily due to incremental gross profit contributions from expanded utilization of back-up care services, partially offset by increases in technology and marketing investments to enhance the customer experience.

Previous wording

•Income from operations for the educational advisory services segment decreased $0.5 million, or 7%, in the six months ended June 30, 2026 when compared to the same period in 2025.

Current wording

•Income from operations for the educational advisory services segment increased $0.5 million, or 3%, in the nine months ended September 30, 2026 when compared to the same period in 2025.

Previous wording

Net Interest Expense. Net interest expense was $26.0 million for the six months ended June 30, 2026, an increase from net interest expense of $20.9 million for the same period in 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 4.87% for the six months ended June 30, 2026 compared to 4.32% for the same period in 2025, inclusive of the effects of the cash flow hedges.

Current wording

Net Interest Expense. Net interest expense was $43.2 million for the nine months ended September 30, 2026, an increase from net interest expense of $33.1 million for the same period in 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 4.91% for the nine months ended September 30, 2026 compared to 4.30% for the same period in 2025, inclusive of the effects of the cash flow hedges.

Previous wording

Income Tax Expense. We recorded income tax expense of $44.0 million for the six months ended June 30, 2026 at an effective income tax rate of 37%, compared to an income tax expense of $34.6 million during the six months ended June 30, 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 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 $70.3 million for the nine months ended September 30, 2026, compared to an income tax expense of $64.7 million during the nine months ended September 30, 2025, at an effective income tax rate of 27%. The effective tax rate for the nine months ended September 30, 2026 was not meaningful due to the impact of the non-deductible goodwill impairment and resulting pretax loss. The difference between the effective income tax rates as compared to the statutory income tax rates was primarily due to the non-deductible goodwill impairment, the impact of unbenefited losses 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 (loss) before income tax, jurisdictional mix of income (loss) before income tax, unbenefited losses, valuation allowances, jurisdictional income tax rate changes, as well as discrete items such as non-deductible 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.