KinderCare Learning Companies — Second Quarter 2026 Earnings Summary

Financial Performance

• Total revenue for the second quarter of 2026 was $697.5 million, a decrease of 0.4% (or $2.6 million) compared to $700.1 million in the second quarter of 2025.
• Income from operations was $2.4 million for the second quarter of 2026, down from $68.7 million in the second quarter of 2025.
• Net loss was $8.8 million (diluted loss per share of $0.07) for the second quarter of 2026, compared to net income of $38.6 million (diluted income per share of $0.33) in the prior year period.
• Adjusted EBITDA was $63.0 million for the second quarter of 2026, a 23.6% decrease from $82.4 million in the second quarter of 2025.
• Adjusted net income was $9.9 million for the second quarter of 2026, down from $26.0 million in the second quarter of 2025 (adjusted net income per diluted share of $0.08 vs. $0.22).
• Cost of services (excluding depreciation and impairment) increased by $48.0 million to $567.4 million, primarily due to the absence of Employee Retention Credits recognized in the prior year period.
• Impairment losses increased by $20.7 million to $22.9 million for the quarter, driven by center closures and lower operational performance.
• Selling, general, and administrative expenses decreased by $5.6 million to $73.1 million, driven by lower personnel costs and reduced incentive compensation.
• Cash and cash equivalents were $173.7 million as of July 4, 2026.
• Available borrowing capacity under the revolving credit facility was $187.7 million, net of $74.8 million in outstanding letters of credit.
• Cash provided by operating activities for the six months ended July 4, 2026, was $104.5 million.
• Net investments totaled $58.5 million for the six months ended July 4, 2026, primarily for property and equipment purchases.
• Deferred revenue was $54.9 million as of July 4, 2026, up from $49.6 million as of January 3, 2026.
• Long-term debt, net, was $916.1 million as of July 4, 2026, compared to $917.9 million as of January 3, 2026.

Guidance and Future Outlook

• Full-year 2026 revenue guidance is updated to approximately $2.66 billion to $2.70 billion.
• Full-year 2026 adjusted EBITDA guidance is updated to approximately $200 million to $220 million.
• Full-year 2026 adjusted net income per common share, diluted, is expected to be approximately $0.05 to $0.15.

Business Segments and Product Lines

• Revenue from early childhood education centers decreased by 1.5% (or $9.6 million) to the second quarter of 2026, driven by a 4.0% lower enrollment partially offset by a 2.6% increase in tuition rates.
• Revenue from before- and after-school sites increased by 13.4% (or $7.0 million) to the second quarter of 2026, primarily due to higher rates and the opening of new sites.
• The Company operated 1,567 early childhood education centers and 1,128 before- and after-school sites as of July 4, 2026.
• The Company closed 49 early childhood education centers during the second quarter of 2026 as part of an ongoing center optimization initiative.

Market and Competitive Landscape

• The Company reported a 4.0% decrease in enrollment for early childhood education centers, attributed to changing demographics in certain locations and macroeconomic conditions.
• The Company continues to expand access to programs in growing communities and align its center footprint to meet evolving family needs.

Risks and Challenges

• Impairment losses were significantly impacted by reduced operating performance at certain centers, center closures, and early lease termination agreements.
• Goodwill impairment of $273.5 million was recognized during the six months ended July 4, 2026, driven by a decline in market capitalization and stock price.
• The Company faces risks related to attracting and retaining families and employers, as well as potential reductions in government subsidies or tuition reimbursements.
• The Company has a material weakness in its internal control over financial reporting.
• Risks include the potential for adverse publicity, fluctuations in stock price, and conflicts of interest with controlling stockholder Partners Group.

Management Commentary and Tone

• Tom Wyatt, Chairman and CEO, stated the Company remained focused on its mission and long-term strategy, expanding access in growing communities and optimizing the center footprint.
• Management expressed encouragement regarding progress made and a focus on strengthening the company for the long term by supporting educators and delivering high-quality care.
• The tone indicates a strategic shift toward center optimization to better serve families where they live and work.

Other Key Points

• The Company updated its full-year financial outlook during the press release.
• A conference call and webcast were scheduled for August 13, 2026, at 5:00 pm ET to discuss results.
• The Company operates in 42 states and the District of Columbia, providing early learning programs, premium education experiences (Crème School®), and before/after-school programs (Champions®).
• The Company partners with employers nationwide to provide customized family care benefits.
• Non-GAAP financial measures, including Adjusted EBITDA and Adjusted Net Income, are used for budgeting and compensation purposes and exclude items such as impairment losses, stock-based compensation, and COVID-19 related stimulus.