BRIGHT HORIZONS FAMILY SOLUTIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization— Bright Horizons Family Solutions Inc. (“Bright Horizons” or the “Company”) provides early education and child care, comprehensive back-up care solutions, and educational advisory services for employers and families in the United States, the United Kingdom, the Netherlands, Australia and India. The Company provides services designed to support both working families and employers' workforce strategies by supporting their employees across life and career stages, and improving employee recruitment, engagement, productivity, retention, and career advancement. The Company provides 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.

As of September 30, 2026, the Company operated 979 early education and child care centers.

Basis of Presentation— The accompanying unaudited condensed consolidated balance sheet as of September 30, 2026 and the unaudited condensed consolidated statements of income (loss), comprehensive income (loss), changes in stockholders’ equity, and cash flows for the interim periods ended September 30, 2026 and 2025 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required in accordance with U.S. GAAP for complete financial statements and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.

In the opinion of the Company’s management, the Company’s unaudited condensed consolidated balance sheet as of September 30, 2026 and the unaudited condensed consolidated statements of income (loss), comprehensive income (loss), changes in stockholders’ equity, and cash flows for the interim periods ended September 30, 2026 and 2025, reflect all adjustments (consisting only of normal and recurring adjustments) necessary to present fairly the results of the interim periods presented, except for the non-recurring goodwill impairment of $296.3 million recorded during the nine months ended September 30, 2026, which is described in Note 5, Goodwill and Intangible Assets. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.

During the three months ended September 30, 2026, the Company elected to revise the presentation in the statement of cash flows of routine borrowings and repayments with original maturities of 90 days or less under its revolving credit facility to be presented on a net basis. For the nine months ended September 30, 2026 and 2025, such amounts are included in borrowings under revolving credit facility within financing activities. Prior period amounts have been reclassified to conform to the current period presentation. The reclassification decreased the amount presented in financing activities as borrowings and repayments by $67.5 million for the nine months ended September 30, 2025. The reclassification did not affect total net cash used in financing activities or the ending balance of cash and cash equivalents.

Stockholders’ Equity— The board of directors of the Company authorized a new share repurchase program of up to $600 million (exclusive of fees, commissions or other expenses) of the Company’s outstanding common stock effective March 9, 2026. The new share repurchase program has no expiration date and canceled and replaced the prior share repurchase program of up to $500 million announced in June 2025, of which approximately $127.6 million remained available thereunder. The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities law, including under Rule 10b5-1 plans or accelerated share repurchase programs. During the nine months ended September 30, 2026, the Company repurchased approximately 7.7 million shares for $557.7 million under the repurchase program (resulting in a $5.4 million excise tax liability). During the nine months ended September 30, 2025, the Company repurchased approximately 0.9 million shares for $106.0 million under the repurchase program (resulting in a $0.7 million excise tax liability). Share repurchases are initially recorded to treasury stock at cost. Upon retirement, the par value of the share repurchases are recorded to common stock with the excess of the purchase price over par first recorded against any available additional paid in capital (“APIC”) and the balance recorded to retained earnings. Due to the volume of share repurchases under the authorized share repurchase program during the nine months ended September 30, 2026, the Company has no remaining balance in APIC as of September 30, 2026. All repurchased shares have been retired and, as of September 30, 2026, $244.3 million remained available under the Board-approved repurchase program.

2. REVENUE RECOGNITION

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into segments and geographical regions. Revenue disaggregated by segment and geographical region was as follows:

The classification “North America” is comprised of the Company’s operations in the United States (including Puerto Rico), and the classification “Outside North America” includes the Company’s operations in the United Kingdom, the Netherlands, Australia and India.

Deferred Revenue

The Company records deferred revenue when payments are received in advance of the Company’s performance under the contract, which is recognized as revenue as the performance obligation is satisfied. The Company recognized $295.8 million and $273.1 million as revenue during the nine months ended September 30, 2026 and 2025, respectively, which was included in the deferred revenue balance at the beginning of each respective period.

Remaining Performance Obligations

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original contract term of one year or less, or for variable consideration allocated to the unsatisfied performance obligation of a series of services. The transaction price allocated to the remaining performance obligations relates to services that are paid or invoiced in advance. The Company’s remaining performance obligations not subject to the practical expedients were not material.

3. LEASES

The Company has operating leases for certain of its full service and back-up early education and child care centers, corporate offices, call centers, and to a lesser extent, various office equipment, in the United States, the United Kingdom, the Netherlands, and Australia. Most of the leases expire within 10 to 15 years and many contain renewal options and/or termination provisions. As of September 30, 2026 and December 31, 2025, there were no material finance leases.

Lease Expense

The components of lease expense were as follows:

(1) Excludes short-term lease expense and sublease income, which were immaterial for the periods presented.

Operating lease expense for the nine months ended September 30, 2026 includes impairment losses on operating lease right-of-use assets of $11.1 million. Refer to Note 9, Fair Value Measurements, and Note 11, Segment Information, for additional information.

Other Information

The weighted average remaining lease term and the weighted average discount rate were as follows:

Maturity of Lease Liabilities

The following table summarizes the maturity of lease liabilities as of September 30, 2026:

As of September 30, 2026, the Company had not entered into any material operating leases that have not yet commenced.

4. ACQUISITIONS

The Company’s growth strategy includes expansion through strategic and synergistic acquisitions. The goodwill resulting from these acquisitions arises largely from synergies expected from combining the operations of the businesses acquired with the Company’s existing operations, including cost efficiencies and leveraging existing client relationships, as well as from benefits derived from gaining the related assembled workforce.

2025 Acquisitions

During the year ended December 31, 2025, the Company acquired three centers in the United Kingdom intwo separate business acquisitions, which were each accounted for as a business combination. The businesses were acquired for aggregate cash consideration of $6.8 million, net of $0.3 million cash acquired, and $0.1 million of deferred consideration, and are subject to adjustments from the settlement of the final working capital. The Company recorded goodwill of $4.9 million related to the full service center-based child care segment for these acquisitions, which will not be deductible for tax purposes. In addition, the Company recorded intangible assets of $0.5 million.

The determination and allocation of purchase price consideration is based on preliminary estimates of fair value; such estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). As of September 30, 2026, the purchase price allocation for one of these acquisitions remains open as the Company gathers additional information regarding the assets acquired and the liabilities assumed. The operating results for the acquired businesses are included in the consolidated results of operations from the date of acquisition and were not material to the Company’s financial results.

5. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill were as follows:

The Company completed its annual goodwill impairment assessment as of October 1, 2026. The Company performed a quantitative goodwill impairment test for its reporting unit within full service center-based child care related to the full service operations outside North America and determined that the carrying value of the reporting unit exceeded its fair value. As a result, the Company recorded goodwill impairment losses of $290.0 million. The impairment losses resulted from a reduction in long-term cash flow projections primarily associated with the Company’s operations in Australia, which was not offset by the expected cash flows of the remaining full service operations outside North America. Fair value was estimated using a discounted cash flow model and market-derived valuation assumptions. The Company performed qualitative assessments for the remaining reporting units in conjunction with its annual impairment assessment as of October 1, 2026, noting that a quantitative test was not required.

During the nine months ended September 30, 2026, the Company identified other indicators of impairment and recorded impairment losses of $6.3 million related to an immaterial foreign reporting unit within full service specializing in tutoring services.

Impairment losses are included in operating income (loss) under the caption “Goodwill impairment.” Refer to Note 9, Fair Value Measurements, and Note 11, Segment Information, for additional information.

The Company also has intangible assets, which consisted of the following as of September 30, 2026 and December 31, 2025:

During the three months ended September 30, 2026, the Company recorded impairment losses of approximately $4.0 million for customer relationships related to our full service center-based child care operations in Australia, which were included in selling, general, and administrative expenses on the income statement.

The Company estimates that it will record amortization expense related to intangible assets existing as of September 30, 2026 as follows:

6. CREDIT ARRANGEMENTS AND DEBT OBLIGATIONS

Senior Secured Credit Facilities

The Company’s senior secured credit facilities consist of a term loan B facility (“term loan B”) and a term loan A facility (“term loan A” and, together with term loan B, the “term loans”), as well as a $1.0 billion multi-currency revolving credit facility (“revolving credit facility”).

Long-term debt obligations were as follows:

On June 1, 2026, the Company amended its existing senior secured credit facilities to, among other changes, issue a $375 million new term loan A facility as well as increase the borrowing capacity of its revolving credit facility from $900 million to $1.0 billion. On the closing date, the proceeds of the term loan A, together with cash on hand, were used to repay outstanding borrowings under the revolving credit facility, including all outstanding interest and related fees and expenses. In conjunction with the amendment, the Company capitalized $1.8 million in fees that will be amortized over the term of the senior secured credit facilities, of which $1.4 million related to the term loan A that have been recorded as deferred financing costs in long-term debt and $0.4 million related to the revolving credit facility that have been recorded in other assets.

On August 21, 2025, the Company amended its existing senior secured credit facilities to, among other changes, refinance the existing term loan B and to extend the maturity date. On the closing date, the Company used its revolving credit facility to prepay $50 million of the outstanding principal amount of the existing term loan B. In conjunction with the amendment, the Company recorded expense of $1.9 million and capitalized $0.2 million in fees to new lenders that have been recorded as deferred financing costs in long-term debt and will be amortized over the term of the credit facility.

On April 17, 2025, the Company amended its existing senior secured credit facilities to, among other changes, increase the borrowing capacity of its revolving credit facility from $400 million to $900 million and extend the maturity date. On the closing date, the Company used $362.5 million from its revolving credit facility to repay the outstanding balances under the previous term loan A. In conjunction with the amendment, the Company recorded expense of $0.6 million and capitalized $2.9 million in fees that have been recorded in other assets and will be amortized over the term of the revolving credit facility.

All borrowings under the credit facilities are subject to variable interest. The effective interest rate for the term loans was 5.54% and 5.47% as of September 30, 2026 and December 31, 2025, respectively, and the weighted average interest rate was 5.37% and 6.06% for the nine months ended September 30, 2026 and 2025, respectively, prior to the effects of any interest rate hedge arrangements.

The effective interest rate for the revolving credit facility was 5.29% and 4.96% as of September 30, 2026 and December 31, 2025, respectively, and the weighted average interest rate was 5.00% and 5.83% for the nine months ended September 30, 2026 and 2025, respectively, prior to the effects of any interest rate hedge arrangements. The effective interest rate on the revolving credit facility may fluctuate from borrowing to borrowing for various reasons, including changes in the term benchmark or base interest rate, and the selected interest period as terms may vary between under-30 day and over-30 day borrowings.

Term Loan B

As noted above, the terms of the term loan B were amended on August 21, 2025.

The term loan B matures on August 21, 2032. Borrowings under the amended term loan B bear interest at a rate per annum equal to the base rate plus a margin of 0.75% or the term Secured Overnight Financing Rate (“SOFR”) plus a margin of 1.75%. The term SOFR option is one, three or six month SOFR, as selected by the Company, or, with the approval of the applicable lenders, twelve months or less than one month term SOFR, subject to an interest rate floor of 0.50%. The base rate is the highest of (x) the prime rate quoted by The Wall Street Journal, (y) the greater of the federal funds rate and the overnight bank funding rate, in either case, plus 0.50%, and (z) one-month term SOFR plus 1.00%, subject to an interest rate floor of 1.50%.

Prior to the August 2025 amendment, the term loan B required quarterly principal payments equal to 1% per annum of the aggregate principal amount of the term loan B outstanding as of December 11, 2024, the date the Company previously amended its senior secured credit facility, with the remaining principal balance due at maturity. Effective as of December 11, 2024, borrowings under the term loan B bore interest at a rate per annum of 1.00% over the base rate, or 2.00% over the selected term SOFR rate. Effective as of January 2025, borrowings under the term loan B bore interest at a rate per annum of 0.75% over the base rate, or 1.75% over the selected term SOFR rate. The base rate was subject to an interest rate floor of 1.50% and the selected term SOFR rate was subject to an interest rate floor of 0.50%.

In February 2025, the Company voluntarily prepaid $44.5 million of the outstanding principal balance on its term loan B, which satisfied the remaining annual principal payments due until maturity. In May 2025 and August 2025, the Company utilized its revolving credit facility to prepay $39.0 million and $50.0 million, respectively, of the outstanding principal balance on its term loan B to lower borrowing costs.

Term Loan A

As noted above, the Company issued a $375 million term loan A facility on June 1, 2026.

The term loan A matures on April 17, 2030 and requires scheduled quarterly amortization payments equal to 2.5% per annum of the original aggregate principal amount of the term loan A for the period commencing September 30, 2026 through and including June 30, 2028, increasing to 5.0% per annum thereafter through March 30, 2030. The remaining principal balance is due at maturity. Borrowings under the term loan A bear interest at a rate per annum equal to the term SOFR rate plus a margin ranging from 1.25% to 1.75% or base rate plus a margin ranging from 0.25% to 0.75%. The term SOFR option is one, three or six month SOFR, as selected by the Company or, with the approval of the applicable lenders, twelve months or less than one month SOFR, subject to an interest rate floor of 0.00%. The base rate is the highest of (x) the prime rate quoted by The Wall Street Journal, (y) the greater of the federal funds rate and the overnight bank funding rate, in either case, plus 0.50%, and (z) one-month term SOFR plus 1.00%, subject to an interest rate floor of 1.00%.

As noted above, balances outstanding under the previous term loan A facility were repaid on April 17, 2025 using availability under the revolving credit facility. Prior to the April 2025 debt amendment, the previous term loan A was scheduled to mature on November 23, 2026 and required quarterly principal payments equal to 2.5% per annum of the original aggregate principal amount of the previous term loan A in each of the first three years,5.0% in the fourth year, and 7.5% in the fifth year. The remaining principal balance was due at maturity. Borrowings under the previous term loan A bore interest at a rate per annum ranging from 0.50% to 0.75% over the base rate, or 1.50% to 1.75% over the adjusted term SOFR rate. The base rate was subject to an interest rate floor of 1.00% and the adjusted term SOFR rate was subject to an interest rate floor of 0.00%.

Revolving Credit Facility

As noted above, the terms of the revolving credit facility were amended on June 1, 2026 and April 17, 2025.

The revolving credit facility matures on April 17, 2030. However, if there is any additional material indebtedness maturing on or before April 17, 2030, the maturity date will be 91 days prior to the maturity of that material indebtedness, unless the Company satisfies a minimum liquidity threshold test as of that date. As of September 30, 2026, the Company does not hold any material indebtedness maturing before April 17, 2030.

As of September 30, 2026, borrowings outstanding on the revolving credit facility were $543.1 million (composed of $475.0 million, €39.8 million and £17.3 million) and letters of credit outstanding were $20.2 million, with $436.0 million available for borrowing. Since the revolving credit facility has a contractual maturity in excess of 12 months from the balance sheet date and the Company has the ability and intends to renew borrowings of at least $260 million through September 30, 2027, such balance has been presented as long-term on the condensed consolidated balance sheet at September 30, 2026. As of December 31, 2025, borrowings outstanding on the revolving credit facility were $496.5 million (composed of $370.0 million, €71.8 million and £31.4 million) and letters of credit outstanding were $20.2 million, with $383.7 million available for borrowing.

Borrowings held in USD under the revolving credit facility bear interest at a rate per annum ranging from 0.25% to 0.75% over the base rate (as defined in the credit agreement), or 1.25% to 1.75% over the term SOFR rate. The base rate is subject to an interest rate floor of 1.00% and the term SOFR rate is subject to an interest rate floor of 0.00%. Prior to the April 17, 2025 amendment, borrowings under the revolving credit facility bore interest at a rate per annum ranging from 0.50% to 0.75% over the base rate, or 1.50% to 1.75% over the adjusted term SOFR rate.

Borrowings held in Euros under the revolving credit facility bear interest at a rate per annum equal to the Euro Interbank Offered Rate “Euribor” subject to an interest rate floor of 0.00% plus applicable margin between 1.25% and 1.75%. Borrowings held in British pounds under the revolving credit facility bear daily interest at a rate per annum equal to the Sterling Overnight Index Average rate, or SONIA, subject to an interest rate floor of 0.00% plus a 0.0326% spread adjustment in addition to an applicable margin between 1.25% and 1.75%.

In 2024, the Company entered into a AU$5 million (USD$3.3 million) uncommitted working capital credit facility in Australia for short-term borrowing purposes. In 2026, the line of credit was increased to AU$9.4 million (USD$6.5 million). As of September 30, 2026, there wereno borrowings outstanding under this facility, and as of December 31, 2025, there were AU$4.5 million (USD$3.0 million) of borrowings outstanding. The effective interest rate as of December 31, 2025 was 5.59% and the weighted average interest rate for the nine months ended September 30, 2026 was 6.36% for this working capital credit facility.

Debt Covenants

All obligations under the senior secured credit facilities are secured by substantially all the assets of the Company’s material U.S. subsidiaries. The senior secured credit facilities contain a number of covenants that, among other things and subject to certain exceptions, may restrict the ability of Bright Horizons Family Solutions LLC (the “Borrower”), the Company’s wholly-owned subsidiary, and its restricted subsidiaries, to: incur liens; make investments, loans, advances and acquisitions; incur additional indebtedness or guarantees; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; engage in transactions with affiliates; sell assets, including capital stock of the Company’s subsidiaries; alter the business conducted; enter into agreements restricting the Company’s subsidiaries’ ability to pay dividends; and consolidate or merge.

In addition, the credit agreement governing the senior secured credit facilities requires Bright Horizons Capital Corp. (the “Guarantor”), the Company’s direct subsidiary, to be a passive holding company, subject to certain exceptions. The Company is the ultimate parent of the Guarantor and the Borrower and the Company’s material assets are held, and operations are conducted, by the Borrower and its subsidiaries. The term loan A and the revolving credit facility require the Borrower and its restricted subsidiaries to comply with a maximum first lien net leverage ratio not to exceed 4.25 to 1.00. A breach of the applicable covenant is subject to certain equity cure rights.

As of September 30, 2026, future principal payments of long-term debt are as follows for the years ending December 31:

Derivative Financial Instruments

The Company is subject to interest rate risk as all borrowings under the senior secured credit facilities are subject to variable interest rates. The Company’s risk management policy permits using derivative instruments to manage interest rates and other risks. The Company uses interest rate caps to manage a portion of the risk related to changes in cash flows from interest rate movements.

In December 2021, the Company entered into interest rate cap agreements with a total notional value of $900 million, designated and accounted for as cash flow hedges from inception. Interest rate cap agreements for $600 million, which had a forward starting effective date of October 31, 2023 and expired on October 31, 2025, provided the Company with interest rate protection in the event the one-month term SOFR rate increased above 2.4%. Interest rate cap agreements for $300 million, which had a forward starting effective date of October 31, 2023 and expire on October 31, 2026, provide the Company with interest rate protection in the event the one-month term SOFR rate increases above 2.9%.

In March and July 2025, the Company entered into additional interest rate cap agreements with a total notional value of $150 million and $100 million, respectively, designated and accounted for as cash flow hedges from inception. The March and July 2025 interest rate cap agreements, both of which had forward starting effective dates of October 31, 2025, provide the Company with interest rate protection in the event the one-month term SOFR rate increases above 3.5% and 3.0%, respectively, and expire on October 31, 2027 and October 31, 2026, respectively.

In February and October 2026, the Company entered into additional interest rate cap agreements with a total notional value of $150 million and $100 million, respectively, designated and accounted for as a cash flow hedge from inception. The February and October 2026 interest rate cap agreements, both of which have a forward starting effective date of October 30, 2026, provide the Company with interest rate protection in the event the one-month term SOFR rate increases above 2.75% and 3.5%, respectively, and expire on October 31, 2027 and October 31, 2028, respectively.

The fair value of the derivative financial instruments was as follows for the periods presented:

The effect of the derivative financial instruments on other comprehensive income (loss) was as follows:

During the next 12 months, the Company estimates that a net gain of $2.2 million, pre-tax, will be reclassified from accumulated other comprehensive loss and recorded as a reduction to interest expense related to these derivative financial instruments.

7. EARNINGS (LOSS) PER SHARE

The following tables set forth the computation of basic and diluted earnings (loss) per share:

For the three and nine months ended September 30, 2026 and 2025, basic and diluted earnings (loss) per share were calculated using the treasury method. Due to the Company’s net loss for the three and nine months ended September 30, 2026, all potentially dilutive securities were excluded from the calculation of diluted net loss per share, as their inclusion would have been anti-dilutive. Equity awards outstanding to purchase or receive approximately 1.9 million shares of common stock were excluded from diluted earnings per share for both the three and nine months ended September 30, 2026. Equity awards outstanding to purchase or receive approximately 1.2 million and 1.0 million shares of common stock were excluded from diluted earnings per share for the three and nine months ended September 30, 2025, respectively, because their effect would have been anti-dilutive.

8. INCOME TAXES

The Company’s effective income tax rates for the three and nine months ended September 30, 2026 were not meaningful due to the impact of the non-deductible goodwill impairment and resulting pretax loss. For the three and nine months ended September 30, 2025, the effective income tax rates were 27.7% and 27.4%, respectively. 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, which is included in tax expense.

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. During the nine months ended September 30, 2026, the net shortfall tax expense from stock-based compensation increased tax expense by $3.3 million. During the nine months ended September 30, 2025, the net excess tax benefit from stock-based compensation decreased tax expense by $1.2 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 income tax rate approximated 28% and 27%, respectively. For the nine 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 income tax rate approximated 28% and 27%, respectively.

The Company’s unrecognized tax benefits were $1.1 million and $1.0 million as of September 30, 2026 and December 31, 2025, respectively, inclusive of interest.

The Company and its domestic subsidiaries are subject to U.S. federal income tax as well as tax in multiple state jurisdictions. U.S. federal income tax returns are typically subject to examination by the Internal Revenue Service and the statute of limitations for federal tax returns is three years. The Company’s filings for the tax years 2022 through 2024 are subject to audit based upon the federal statute of limitations.

State income tax returns are generally subject to examination for a period of three to four years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. The Company’s filings for the tax years 2021 through 2024 are subject to audit based upon the statute of limitations.

The Company is also subject to corporate income tax for its subsidiaries located in the United Kingdom, the Netherlands, Australia, India, and Puerto Rico. The tax returns for the Company’s subsidiaries located in foreign jurisdictions are subject to examination for periods ranging from one to six years.

9. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified using a three-level hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The Company uses observable inputs where relevant and whenever possible. The three levels of the hierarchy are defined as follows:

Level 1 — Fair value is derived using quoted prices from active markets for identical instruments.

Level 2 — Fair value is derived using quoted prices for similar instruments from active markets or for identical or similar instruments in markets that are not active; or, fair value is based on model-derived valuations in which all significant inputs and significant value drivers are observable from active markets.

Level 3 — Fair value is derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued expenses approximate their fair values due to their short-term nature.

Financial instruments that potentially expose the Company to concentrations of credit risk consist mainly of cash and accounts receivable. The Company mitigates its exposure by maintaining its cash in financial institutions of high credit standing. The Company’s accounts receivable are derived primarily from the services it provides, and the related credit risk is dispersed across many clients in various industries with no single client accounting for more than 10% of the Company’s net revenue or accounts receivable. No significant credit concentration risk existed as of September 30, 2026.

Long-term Debt— The Company’s term loans are recorded at adjusted cost, net of original issue discounts and deferred financing costs. The fair value of the Company’s term loans is based on current bid prices or prices for similar instruments from active markets and is classified as Level 2. The Company's revolving credit facility is recorded at cost, and its fair value is classified as Level 2. As of September 30, 2026 and December 31, 2025, the estimated fair value approximated the carrying value of the total long-term debt.

Derivative Financial Instruments— The Company’s derivative financial instruments, comprised of interest rate cap agreements, are recorded at fair value and estimated using market-standard valuation models. Such models project future cash flows and discount the future amounts to a present value using market-based observable inputs. Additionally, the fair value of the interest rate caps included consideration of credit risk. The Company used a potential future exposure model to estimate this credit valuation adjustment (“CVA”). The inputs to the CVA were largely based on observable market data, with the exception of certain assumptions regarding credit worthiness. As the magnitude of the CVA was not a significant component of the fair value of the interest rate caps, it was not considered a significant input. The fair value of the interest rate caps is classified as Level 2. As of September 30, 2026, the fair value of the interest rate cap agreements was $4.5 million, of which $0.3 million was recorded in prepaid expenses and other current assets and $4.2 million was recorded in other assets on the consolidated balance sheet. As of December 31, 2025, the fair value of the interest rate cap agreements was $2.2 million, of which $1.8 million was recorded in prepaid expenses and other current assets and $0.4 million was recorded in other assets on the consolidated balance sheet.

Debt Securities— The Company’s investments in debt securities, which are classified as available-for-sale, primarily consist of U.S. Treasury and U.S. government agency securities, corporate bonds and certificates of deposits. These securities are held in escrow by the Company’s wholly-owned captive insurance company and were purchased with restricted cash. As such, these securities are not available to fund the Company’s operations.

Debt securities are recorded at fair value. As of September 30, 2026, the fair value of the available-for-sale debt securities was $40.8 million and was classified based on the instruments’ maturity dates, with $12.7 million included in prepaid expenses and other current assets and $28.1 million in other assets on the consolidated balance sheet. As of December 31, 2025, the fair value of the available-for-sale debt securities was $39.5 million, with $15.4 million included in prepaid expenses and other current assets and $24.1 million in other assets on the consolidated balance sheet. As of September 30, 2026, debt securities classified as Level 1 and Level 2 had a fair value of $28.3 million and $12.5 million, respectively. As of December 31, 2025, debt securities classified as Level 1 and Level 2 had a fair value of $30.9 million and $8.6 million, respectively.

As of September 30, 2026 and December 31, 2025, the amortized cost was $41.4 million and $39.3 million, respectively. The debt securities held at September 30, 2026 had remaining contractual maturities ranging from less thanone year to approximately 14 years. Unrealized gains and losses, net of tax, on available-for-sale debt securities were immaterial for the three and nine months ended September 30, 2026 and 2025.

Nonrecurring Fair Value Estimates— During the nine months ended September 30, 2026, the Company recognized impairment losses of $313.1 million associated with its full service center-based child care segment. This includes $296.3 million related to goodwill, and $16.8 million related to operating lease right-of-use assets, fixed assets, and intangible assets. The Company continues to monitor developments in certain markets which could lead to additional future impairments.

In performing the quantitative analysis for goodwill, the Company compares the fair value of the reporting unit with its carrying amount. Fair value for each reporting unit is determined by estimating the present value of expected future cash flows, which are forecasted for each of the next 15 years, applying a long-term growth rate to the final year, discounted using the applicable discount rate. The Company classified goodwill as a Level 3 fair value measurement due to the lack of observable inputs used in the model.

The estimated fair value of the applicable long-lived assets was based on the fair value of the asset groups, calculated using a discounted cash flow model, with unobservable inputs. The fair value of the fixed assets and intangible assets was insignificant given the current and expected cash flows for the related centers, and the valuation of the lease right-of-use-assets considered the amount a market participant would pay for use of the asset. The Company classified the long-lived assets as Level 3 fair value measurements due to the lack of observable inputs used in the models.

Refer to Note 3, Leases, Note 5, Goodwill and Intangible Assets, and Note 11, Segment Information, for additional information about impairment losses.

10. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss, which is included as a component of stockholders’ equity, is comprised of foreign currency translation adjustments and unrealized gains (losses) on cash flow hedges and investments, net of tax.

The changes in accumulated other comprehensive income (loss) by component were as follows:

(1)Taxes are not provided for the currency translation adjustments related to the undistributed earnings of foreign subsidiaries that are intended to be indefinitely reinvested.

11. SEGMENT INFORMATION

The Company’s reportable segments are comprised of (1) full service center-based child care, (2) back-up care, and (3) educational advisory services. The full service center-based child care segment includes traditional center-based early education and child care, preschool, and elementary education. The Company’s back-up care segment 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. The Company’s educational advisory services segment consists of tuition assistance and student loan repayment program management, workforce education, related educational advising, and college admissions counseling services.

Intercompany activity is eliminated in the segment results. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; therefore, no segment asset information is produced or included herein.

Revenue, cost of services, other segment items and income (loss) from operations by reportable segment were as follows:

(1)As a result of recent safeguarding matters and associated claims, the Company incurred incremental expense of $23.4 million in the three months ended September 30, 2026, related to general liability reserves for legal matters and insurance claims. This incremental expense is included in cost of services for the full service center-based child care segment. The liability recorded reflects the minimum amount of loss that can be reasonably estimated based on the information currently available. The range of possible losses cannot be reasonably estimated at this time, and additional losses may be incurred for such claims in future periods. For the three months ended September 30, 2025, cost of services includes $2.4 million of net lease termination costs allocated to the full service center-based child care segment.

(2)During the three months ended September 30, 2026, the Company recorded goodwill impairment losses of $290.0 million as a result of its annual goodwill impairment assessment, which related to the full service center-based child care segment. Refer to Note 5, Goodwill and Intangible Assets, and Note 9, Fair Value Measurements, for additional information about impairment losses.

(3)Other segment items for each reportable segment includes selling, general and administrative expenses and amortization expense. For the three months ended September 30, 2026, selling, general and administrative expenses includes $4.0 million of long-lived asset impairment losses related to the full service center-based child care segment. Refer to Note 5, Goodwill and Intangible Assets, and Note 9, Fair Value Measurements, for additional information on impairment losses. For the three months ended September 30, 2025, selling, general and administrative expenses includes $1.3 million of costs incurred in connection with the August 2025 debt refinancing. Refer to Note 6, Credit Arrangements and Debt Obligations, for additional information on the August 2025 debt refinancing.

(1)As a result of recent safeguarding matters and associated claims, the Company incurred incremental expense of $23.4 million in the nine months ended September 30, 2026, related to general liability reserves for legal matters and insurance claims. This incremental expense is included in cost of services for the full service center-based child care segment. The liability recorded reflects the minimum amount of loss that can be reasonably estimated based on the information currently available. The range of possible losses cannot be reasonably estimated at this time, and additional losses may be incurred for such claims in future periods. Cost of services for the nine months ended September 30, 2026, also includes $12.8 million of long-lived asset impairment losses related to the full service center-based child care segment. Refer to Note 3, Leases, Note 5, Goodwill and Intangible Assets, and Note 9, Fair Value Measurements, for additional information on impairment losses. For the nine months ended September 30, 2025, cost of services includes $2.4 million of net lease termination costs allocated to the full service center-based child care segment.

(2)During the nine months ended September 30, 2026, the Company recorded goodwill impairment losses of $296.3 million as a result of interim and annual goodwill impairment assessments, which related to the full service center-based child care segment. Refer to Note 5, Goodwill and Intangible Assets, and Note 9, Fair Value Measurements, for additional information about impairment losses.

(3)Other segment items for each reportable segment includes selling, general and administrative expenses and amortization expense. For the nine months ended September 30, 2026, selling, general and administrative expenses includes $4.0 million of long-lived asset impairment losses related to the full service center-based child care segment. Refer to Note 5, Goodwill and Intangible Assets, and Note 9, Fair Value Measurements, for additional information on impairment losses. For the nine months ended September 30, 2025, selling, general and administrative expenses includes $1.3 million of costs incurred in connection with the August 2025 debt refinancing. Refer to Note 6, Credit Arrangements and Debt Obligations, for additional information on the August 2025 debt refinancing.

Depreciation and amortization expense was $25.2 million and $24.0 million for the three months ended September 30, 2026 and 2025, respectively, and $73.0 million and $68.7 million for the nine months ended September 30, 2026 and 2025, respectively. Approximately 85% of depreciation and amortization expense in each period related to the full service center-based child care segment.