Bright Horizons Family Solutions — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported Q3 2026 revenue of $841.5 million, a 5% increase from $802.8 million in Q3 2025.
• Reported a GAAP loss from operations of $187.1 million for Q3 2026, compared to income from operations of $120.8 million in Q3 2025.
• Reported a GAAP net loss of $230.7 million for Q3 2026, compared to net income of $78.6 million in Q3 2025.
• Diluted GAAP loss per share was $4.76 in Q3 2026, compared to earnings per share of $1.37 in Q3 2025.
• Non-GAAP Adjusted EBITDA was $163.3 million for Q3 2026, a 5% increase from $156.1 million in Q3 2025.
• Non-GAAP Adjusted income from operations was $130.2 million for Q3 2026, a 5% increase from $124.5 million in Q3 2025.
• Non-GAAP Adjusted net income was $87.5 million for Q3 2026, a decrease from $90.1 million in Q3 2025.
• Non-GAAP diluted adjusted earnings per share were $1.80 in Q3 2026, an increase from $1.57 in Q3 2025.
• Q3 2026 gross profit was $204.8 million (24.3% margin) compared to $217.0 million (27.0% margin) in Q3 2025.
• A $290.0 million goodwill impairment charge was recorded within the international full service operations in Q3 2026.
• Cash from operations for the nine months ended September 30, 2026, was $208.1 million, compared to $202.8 million in the prior year period.
• Cash and cash equivalents were $119.2 million as of September 30, 2026.
• Deferred revenue was $229.6 million as of September 30, 2026, down from $330.6 million as of December 31, 2025.

Guidance and Future Outlook:

• Revised fiscal year 2026 revenue guidance to approximately $3.07 billion.
• Revised fiscal year 2026 diluted adjusted earnings per share guidance to a range of $4.98 to $5.03.

Business Segments and Product Lines:

• Revenue growth in Q3 2026 was driven by a 13% increase in the back-up care segment, partially offset by revenue reductions from closed full-service centers.
• Full service center-based child care segment revenue was $522.0 million in Q3 2026, with an operating loss of $298.1 million (excluding impairments and other adjustments, adjusted income from operations was $19.2 million).
• Back-up care segment revenue was $286.4 million in Q3 2026, with income from operations of $101.2 million.
• Educational advisory services segment revenue was $33.1 million in Q3 2026, with income from operations of $9.8 million.
• As of September 30, 2026, the company operated 979 early education and child care centers with capacity for approximately 112,500 children.

Market and Competitive Landscape:

• The company serves more than 1,450 leading employers globally.
• Operations span the United States, the United Kingdom, the Netherlands, Australia, and India.
• Management cited a constrained labor market for teachers and staff as a key industry challenge, noting the impact of increased compensation and labor costs.
• The company faces risks related to changes in demand for child care, variations in enrollment trends, and lower than expected demand from employer sponsor clients.

Risks and Challenges:

• Significant impairment losses of $294.0 million were recorded in the international full service operations during Q3 2026, primarily due to revised long-term cash flow projections related to Australia operations.
• The company recorded $23.4 million in incremental general liability expense related to safeguarding matters in Q3 2026.
• Higher interest expense and a higher effective tax rate contributed to the net loss in Q3 2026.
• Risks include potential disruptions from acquisitions, inability to pass on increased costs, and the ability to maintain licenses in various jurisdictions.
• The company faces risks regarding government support programs, workforce demographics, and macroeconomic uncertainty including inflation and interest rate fluctuations.

Management Commentary and Tone:

• Stephen Kramer, Chief Executive Officer, stated that Q3 results reflect the strength of the diversified portfolio, highlighting 13% growth in back-up care.
• Management celebrated 40 years of partnering with leading employers to support working families.
• Management expressed gratitude to the global team for their dedication to providing safe, nurturing environments.
• The tone acknowledges the impact of impairment losses while emphasizing the continued contribution of the back-up care segment.

Other Key Points:

• The company repurchased approximately 7.7 million shares totaling $557.7 million in the nine months ended September 30, 2026, compared to 0.9 million shares totaling $106.0 million in the prior year period.
• Net investments totaled $71.8 million for the nine months ended September 30, 2026, compared to $63.5 million in the prior year period.
• The company has $436.0 million available for borrowing under its revolving credit facility as of September 30, 2026.
• The company hosts an investor conference call to discuss results and updated outlook.
• Non-GAAP measures exclude stock-based compensation, impairment losses, incremental general liability expense, debt refinancing costs, and lease termination costs.