BFAM 10-K & 10-Q changes, risk factors and insider trading

Our business strategy largely depends on employers recognizing the value of providing employees with child care, dependent back-up care, workforce education, and other workplace solutions as ana fundamental employee benefit.benefit strategy. The number of employers that view such services as cost-effective or beneficial to their workforcesworkforce may not continue to grow at the levels we anticipate or may diminish. In addition, changes in workplace locations or workforce demographic trends, including the number of dual working parent or working single parent families in the workforce, and the number of children requiring care, may impact the demand for our services from parents and families. Work-from-home or hybrid work options may also shift demand away from locations where we currently offer services resulting in center closures or potential impairments. Such changes could materially and adversely affect our business and operating results.

Even as employers recognize the value of our services, demand may be adversely affected by general economic conditions. Uncertainty or a deterioration in economic conditions, including global inflationary pressures impacting our clients and customers, or increased business expensesexpenses, arisingsuch fromas potentialthose expansionrelating ofto changes to trade policy, including tariff regulation, could lead to reduced demand for our services as employer clients may reduce or eliminate their sponsorship of work and family services,services due to budget priorities, and prospective clients may not commit resources to such servicesservices. or familiesFamilies may also decrease or discontinue the use of our child care services.services due to cost, convenience, reputation or other external factors. A reduction in the size of an employer’s workforce or an increase in the cost of employer subsidies could negatively impact the demand for our services and result in reduced enrollment, failure of our employer clients to renew their contracts or center closures. Additionally, we may not be able to increase the price for our services at a rate consistent with increases in our operating costs. If demand for our services were to decrease, it could disrupt our operations and have a material adverse effect on our business and operating results.

Our reputation and brand are critical to our business. Adverse publicity concerning incidents or allegations of inappropriate, illegal or harmful acts to a child at any child care center or by a caregiver or through a third party provider, whether or not directly relating to or involving Bright Horizons, could result in decreased enrollment at our child care centers or use of back-up care, termination of existing corporate relationships, inability to attract new corporate relationships, or increased insurance costs, all of which could adversely affect our operations. Brand value and our reputation can be severely damaged even by isolated incidents, particularly if the incidentsthey receive considerable negative publicitypublicity, such as recent incidents in both the U.S. and U.K. involving allegations of mistreatment and abuse of children by former employees. In addition, these incidents, including allegations of abuse or mistreatment, may undermine perceptions of the high-quality care that we aim to provide to children and families and have currently, and may in the future, lead to increased regulatory review and oversight, and clients seeking to curtail or terminate our services. Such incidents have, and may in the future, result in substantial litigation.litigation or the suspension or revocation of child care licenses. Despite safeguarding practices, including trainings and policies, background checks and screening, oversight and technology, we may not be effective in preventing or detecting incidents in our centers. These incidents can arise from events that are beyond our ability to control,control (notwithstanding the safeguarding practices in place), such as instances of abuse or actions taken (or not taken) by one or more center managers, teachers, or caregivers relating to the health, safety or welfare of children in our care. The proliferation of social media may increase the likelihood, speed, and magnitude of these negative brand and reputation events. In addition, from time to time, customers and others make claims and take legal action against us and they may adversely affect our reputation and the demand for our services. Such demand could also diminish significantly if any such incidents or other matters erode general confidence in us or our services, which would likely result in lower sales, and could materially and adversely affect our business and operating results. Any reputational damage could have a material adverse effect on our brand value and our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.

As part of our business, we collect, process, use, and store sensitive data and certain personal information from our clients, the families and children we serve, and our employees. We also utilize third-party vendors and electronic payment methods to process and store some of this information, including credit card information. Our business relies on information technology networks and systems to store this data, process financial and personal information, manage a variety of business processes, and comply with regulatory, legal and tax requirements. We are also highly dependent on information technology for the coordination and delivery of our back-up care and educational advisory services. Additionally, we maintain other confidential, proprietary, or otherwise sensitive information relating to our business and from third parties. The information technology networks and systems owned, operated, controlled, or used by us or our third-party vendors may be vulnerable to, among other things, damage, disruptions or shutdowns, software or hardware vulnerabilities, data breaches, cybersecurity incidents, failures during the process of upgrading or replacing software or databases or components thereof, power outages, natural disasters, hardware failures, attacks by computer hackers, telecommunication failures, user errors, user malfeasance, computer viruses, unauthorized access, phishing or social engineering attacks, ransomware attacks, extortion attempts, distributed denial-of-service attacks, brute force attacks, robocalls, and other real or perceived cybersecurity-attacks or catastrophic events, all of which may not be prevented by our efforts to secure our networks and systems. Security incidents can also occur as a result of non-technical issues, including intentional or inadvertent actions by our employees, our third-party vendors or their personnel, or other parties. Security incidents are becoming increasingly prevalent and severe, as well as increasingly difficult to detect. AnyAs we have seen with such incidents in the past, any of these incidents could lead to interruptions or shutdowns of our platforms, disruptions in our ability to process service requests, limit our ability to access data, result in the loss or corruption of data, or unauthorized access to, or acquisition of, personal information or other sensitive information, such as our intellectual property. While we and our vendors maintain policies and practices, operational safeguards, as well as measures and controls aimed at reducing our risks related to cybersecurity threats, none of our or our vendors’ security measures can provide absolute security. We and our vendors may not anticipate, detect, or implement fully effective preventative measures against all cybersecurity threats particularly because the techniques used are increasingly sophisticated tools and constantly evolving. For example, as artificial intelligence (AI) continues to evolve, we expect cyber-attackers toare alsoincreasingly useusing artificial intelligenceAI to develop malicious code and sophisticated phishing attempts. As a result, there can be no assurance that we or our vendors will not suffer a cybersecurity incident, that hackers or other unauthorized parties will not gain access to or exfiltrate personal information or other sensitive data, or that any such data compromise or unauthorized access will be discovered in a timely fashion.

Failure of our systems to operate effectively or a compromise in the security of our systems, or the systems of our affiliates or other third-party that results in unauthorized persons or entities obtaining personal informationdata or other sensitive information, could materially and adversely affect our reputation, operations, operating results, and financial condition. Actual or anticipated cybersecurity threats and attacks have and may cause us to incur costs, including costs to deploy additional personnel and protection technologies, train employees, pay higher insurance premiums, and engage third-party specialists for additional services. Breaches in our data security, those of our affiliates or other third-parties, couldhave and may expose us to risks of data loss, inappropriate disclosure of confidential or proprietary information, potential claims, investigations, regulatory proceedings, litigation penalties and liability, could impede our processing of transactions and our financial reporting, and could result in a disruption of our operations. In addition, we have and may incur other substantial costs in connection with remediating and otherwise responding to any cybersecurity incident, including potential liability for stolen client, customer, or employee data, repairing system damage, or providing credit monitoring or other benefits to clients, customers, or employees affected by the incident. Additionally, if we or our third-party service providers experience security incidents that result in a decline in the performance of our systems, availability problems, or the loss, corruption of, unauthorized access to, or disclosure of personal data or confidential information, clients or individuals may become unwilling to provide us the information necessary to receive our services, and our reputation and market position could be harmed. Existing customers may also decrease their use of our services or cease using our services altogether. The impacts of these security threats, incidents, and other disruptions are difficult to predict. Our insurance coverage for such security threats, incidents, and other disruptions may not be adequate to cover all related costs, and we may not otherwise be fully indemnified for them. This may result in an increase in our costs for insurance or insurance not being available to us on economically feasible terms or at all. Insurers may also deny us coverage as to any future claim. Any of these results could harm our growth prospects, financial condition, business, and reputation.

A variety of laws, regulations, industry self-regulatory principles, industry standards or codes of conduct and regulatory guidance relating to privacy, data protection, artificial intelligence,AI, marketing and advertising, selling and sharing, and consumer protection apply to the collection, use, retention, protection, disclosure, transfer, and other processing of certain types of data. As the regulatory environment related to privacy, data collection and protection, artificial intelligence,AI, information security, marketing and advertising, selling and sharing, and consumer protection becomes increasingly rigorous, with new and changing requirements applicable to our business, compliance with such requirements could impose significant limitations, require changes to our business, or restrict our use or storage of personal information,data, which may increase our compliance expenses and make our business more costly or less efficient to conduct. For example, we are subject to various privacy laws in the United States, United Kingdom, European Union, Australia and India, which give data privacy rights to their respective residents and/or impose significant obligations on controllers and processors of personal data. Failure to comply with such regulations could result in enforcement actions, significant fines, penalties, and damages which could materially and adversely affect our business and financial condition. We are also subject to evolving privacy laws on the use of artificial intelligence,AI, certain categories of personal informationdata (such as but not limited to child, medical, financial, and biometric), “cookies” and other similar tracking technologies. In relation to “cookies” and other similar tracking technologies, many countries have adopted, or are in the process of adopting, regulations governing the use of cookies and similar technologies, and requiring individuals to “opt-in” to the placement of cookies used for purposes of marketing. In addition, some regulations and providers of consumer devices and web browsers have implemented, or announced plans to implement, means to make it easier for internet users to prevent the placement of cookies, to block other tracking technologies or to require new permissions from users for certain activities, which could if widely adopted significantly reduce the effectiveness of such practices and technologies. The regulation of the use of cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new customers on cost-effective terms and consequently, materially adversely affect our business, financial condition and operating results.

Our revenue and results of operations fluctuate with the seasonal demands for child care and the other services we provide. Revenue in our child care centers typically declines during the third quarter due to decreased enrollments over the summer months as families withdraw children for vacations and older children transition into elementary schools. In addition, use of our back-up care services tends to be higher when school is not in session and during holiday periods, which can increase the operating costs of the program and impact results of operations. We may be unable to adjust our expenses on a short-term basis to minimize the effect of these fluctuations in revenue. Our quarterly results of operations may also fluctuate based on the number and timing of child care center openings and/or closings, the timing of new client service launches, increases and decreases in back-up care use, acquisitions, the performance of new and existing early education and child care centers, the contractual arrangements under which child care centers are operated,operated and back-up care delivered, the change in the mix of such contractual arrangements, competitive factors and general economic conditions. The inability of existing child care centers to maintain their current enrollment levels and profitability, the failure of newly opened child care centers to contribute to profitability, the failure of clients’ employees to adopt or utilize back-up care, and the failure to maintain and grow our other services could result in additional fluctuations in our future operating results on a quarterly or annual basis.

In recent years, a substantial portion of the workforce, including parents of children we serve at our centers, transitioned from working in traditional office environments to working in “virtual” or “home” offices,offices or in hybrid roles, including in our primary markets of the United States, United Kingdom, Australia, and the Netherlands. While some employers have since required employees return to traditional office environments, this can vary by geography and some employers have permanently transitioned all or a portion of their workforce to a remote or to a hybrid model. While working parents continue to need child care regardless of their work location, there are no assurances that parents who work from home or in a hybrid model will continue to use our centers or use our centers on a full-time basis. A shift in workplace demographics where employees work from home on a part- or full-time basis, has in the past and may in the futurefuture, reduce demand for center-based child care or demand for specific center locations and impact enrollment as well as other service offerings.offerings and result in center closures. We may be unable to successfully meet changed client and parent demands and needs around center locations or center availability on a cost effective basis, which may have a material adverse effect on our business or results of operations and result in future center closures or potential impairments.

We have expanded and are continuing to expand our operations, suite of services and client relationships, which has placed, and will continue to place, significant demands on our management and our operational, human resources, information technology and financial infrastructure. Additionally, our ability to grow in the future will depend on a number of factors, including the ability to develop and expand new and existing client relationships, to continue to provide and expand high-quality services, to hire and train qualified personnel, to expand and grow in existing and future markets, to develop and operationalize new service offerings, and to sustain operational excellence and efficiencies across all lines of business. Achieving and sustaining growth requires the successful execution of our growth strategies, which may require the implementation of enhancements to customer-facing, operational and financial systems, expanded sales and marketing capacity, continuous updates to technology, such as those related to artificial intelligence,AI, improvements to processes and systems, and additional or new organizational resources. Given these challenges, we may be unable to manage our expanding operationsoperations, and the associated costs, effectively, or to maintain our growth, which could have a material adverse effect on our business or results of operations.

Acquisitions are a part of our growth strategy, and we have made, and intend to continue to make, acquisitions to add centers, clients, new service offerings and complementary companies, products, or technologies,technologies andand, from time to timetime, may enter into other strategic transactions such as investments and joint ventures. Acquisitions involve numerous risks, including potential difficulties in the integration of acquired operations, such as bringing new centers through the re-licensing or accreditation processes, retaining families and enrollment, successfully implementing our curriculum programs, integration of systems and technology, diversion of management’s attention and resources in connection with an acquisition and its integration, loss of key employees or key contract arrangements of the acquired operations, and failure of acquired operations to effectively and timely adopt our internal control processes and other policies. Additionally, the acquisition of new service offerings or emerging services may present operational and integration challenges, particularly with respect to companies that have significant or complex operations or that provide services where we do not have significant prior experience. With any acquisition, the financial and strategic goals that were contemplated at the time of the transaction may not be realized due to increased costs, undisclosed liabilities not covered by insurance or by the terms of the acquisition, write-offs or impairment charges relating to goodwill and other intangible assets, and other unexpected integration costs. We also may not have success in identifying, executing and integrating acquisitions in the future. The occurrence of any of these risks could have an impact on our business, results of operation, financial condition or cash flows, particularly in the event of a larger acquisition or concurrent acquisitions. For information on our acquisition growth strategy, see Item 1, “Business — Our Growth Strategy.”

In our back-up care and educational advisory services segments, we face competition from existing providers and new entrants into the market. We believe our ability to compete in these markets is dependent on prices for services, quality and timeliness of service delivery, service offerings, our ability to fill back-up care requests and meet use demands, our digital platforms and offerings.overall user experience. However, competitors mayare seekseeking to provide alternative offerings or undercutand pricing strategies in these markets.markets that may be more attractive to current and potential clients. If we are unable to maintain our competitive advantage, our growth could be adversely impacted and our future operating results negatively impacted.

National, state or local child care benefit programs comprised primarily of subsidies in the form of tax credits or other direct government financial aid to parents may provide us opportunities for expansion in additional markets. However, a broad-based benefit with governmentally mandated or funded child care or preschool, such as universal pre-K, could reduce the demand for early care services at our existing early education and child care centers due to the availability of lower cost care alternatives, or could place downward pressure on the tuition and fees we charge, which could adversely affect our revenues and results of operations. Some states and local jurisdictions currently offer universal pre-K or preschool programs in which we may or may not participate as a service provider.provider and are looking to expand these programs. If these programs were to significantly expand,expand in new or current markets, or our participation were constrained by access, program limitations or insufficient funding, it could have an adverse effect on our business, financial condition or results of operations. While we receive limited government support, any reduction at the federal, state and local level, including as a result of changes in government policies, priorities or programs, such as grants and other subsidies, could further impact our results of operations. Additionally, changes in government support programs in our international jurisdictions, such as the reduction of government-funded tuition subsidies, or legislation aimed at the cost of child care, such as tuition caps, could reduce the demand for our services in these markets or reduce revenue, adversely impacting our results of operations.

Our business activities subject us to litigation and regulatory risks that may lead to significant reputational damage, monetary damages and other remedies and increase our litigation expense.

BecauseAny of the nature of our business, we are subject to claims and litigation from time to time and may be subject to future claims, including unasserted claims and matters, alleging negligence, inadequate supervision, illegal, inappropriate or abusive behavior, health and safety failures, or other grounds for liability arising from injuries or other harm to the people we serve, primarily children. We are, and in the future may be, subject to employee claims based on, among other things, discrimination, harassment or wrongful termination. These claims and lawsuitsforegoing could result in damages and other costs that our insurance may be inadequate to cover, may inhibit our ability to purchase adequate insurance coverages, may increase future insurance premium costs, or may result in licensing suspensions or revocation. In addition to diverting our management resources, such allegations have resulted and, in the future may result in publicity that may materially and adversely affect us, our brandsbrands, our reputation and client and family demand for our reputation,services, regardless of the validity of any such allegations. Any such claimclaims, allegations, lawsuits, regulatory action or the publicity resulting from these claims may have a material adverse effect on our business, reputation, results of operations and financial condition including, without limitation, adverse effects caused by increased cost or decreased availability of insurance and decreased demand for our services from employer sponsors and families.

We currently maintain the following key types of commercial insurance policies: workers’ compensation, commercial general liability (including coverage for sexual and physical abuse, and student accident coverage), professional liability, automobile liability, excess and “umbrella” liability, commercial property coverage, employment practices liability, commercial crime coverage, fiduciary liability, privacy breach/cyber liability and directors’ and officers’ liability. A portion of our general liability coverage is provided by our wholly-owned captive insurance company. These policies are subject to various limitations, exclusions and deductibles and certain claims may not be covered by such policies and/or exceed policy limits. There is no assurance that our insurance, particularly coverage for sexual and physical abuse, will adequately cover our claims or damages, or continue to be readily available to us in the form or amounts we have been able to obtain in the past. As a consequence of our insurance claims experience, changes in the insurance or reinsurance markets, or other conditions affecting the availability of traditional insurance products to us, our insurance premiums could materially increase, we may need to increase or expand the coverages or limits purchased by our wholly-owned captive insurance company, or we may need to obtain other risk management or insurance program alternatives, all of which could increase costs and materially and adversely affect our business and operating results.

Our early education and child care centers, back-up care, and educational advisory services are subject to numerous national, state and local regulations and licensing requirements. Although these regulations vary greatly from jurisdiction to jurisdiction, government agencies generally review, among other areas, the adequacy of buildings and equipment, licensed capacity, teacher-to-child ratios, educational qualifications and training of staff, record keeping, dietary program, daily curriculum, hiring practices, and compliance with federal and local labor laws and regulations, health and safety standards and requirements, and data privacy statutes. In addition to costs associated with compliance and changing laws and regulations in the Unitedjurisdictions Statesin andwhich internationally,we operate, failure to comply with applicable regulations and requirements could subject us to governmental sanctions, which can include fines, corrective orders, probation or, in more serious cases, suspension or revocation of one or more of our child care centers’ licenses to operate, and could require significant expenditures to bring those centers into compliance. Additionally, in the U.K., our license to operate our child care centers is regulated nationally and therefore the risk of suspension or revocation exists at both a center and a country-wide level. We are, and in the future may be, subject to statutory and regulatory review regarding child safety and safeguarding, such as the Child Safeguarding Practice Review underway in the U.K., which may result in increased inspections of our centers, impacts on client and family demand for our services, the suspension or revocation of our licenses to operate and negative publicity that could materially impact our business. There is an increased focus in some of the jurisdictions in which we operate on safety and safeguarding in the child care industry which may result in new regulations and industry-wide operational changes impacting the broader sector as well as potential heightened scrutiny on government funding and support programs for the industry. Additionally, changes in federal, state and local legislation or regulations regarding human capital management could increase compliance costs and obligations, impede our ability to recruit and retain talent, or our brand or reputation may be harmed.

We are also subject to inherent risks attributed to operating in a global economy. As of December 31, 2024,2025, we had 420413 centers located in four foreign countries - the United Kingdom, the Netherlands, Australia and India. If the international markets in which we compete are affected by changes in political, social, legal, economic, or other factors, such as adverse global economic conditions, including slower growth or recession, higher interest rates, and foreign currency exchange rate fluctuations, our business and operating results may be materially and adversely affected. Our international operations may subject us to additional risks that differ in each country in which we operate, and such risks may negatively affect our results. The factors impacting the international markets in which we operate may include changes in laws and regulations affecting the operation of child care centers, increased regulatory oversight of the child care and early education industry, reduced, decreased or capped parent or tuition subsidies or other government financial support, the imposition of restrictions on currency conversion or the transfer of funds, or increases in the taxes paid and other changes in applicable tax laws.

As a multinationalglobal company, we conduct our business in a variety of markets and are therefore subject to market risk for changes in foreign currency exchange rates. Instability in European and other financial markets, or other geopolitical events, such as adverse global economic conditions, could cause fluctuations in exchange rates that may adversely affect our revenues and net earnings. Approximately 28%29% of our revenue was generated outside theNorth United StatesAmerica in 2024.2025. While most of our revenues, costs and debts are denominated in U.S. dollars, revenues and costs from our operations outside of the United States are denominated in the currency of the country in which the services are provided, and these currencies could become less valuable as a result of exchange rate fluctuations. Such changes in foreign currency exchange rates could materially and adversely affect our business and operating results.

We cannot guarantee that we will repurchase our common stock pursuant to our stockshare repurchase program or that our stockshare repurchase program will enhance long-term stockholder value. StockShare repurchases could also increase the volatility of the price of our common stock and could diminish our cash reserves.

On DecemberJune 16,3, 2021,2025, our board of directors authorized a share repurchase program under which up to $400$500 million of our outstanding common stock may be repurchased, of which $113.7$329.4 million remained available as of December 31, 2024.2025. Although our board of directors has authorized the stockshare repurchase program, the stockshare repurchase program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares and may be suspended or terminated at any time. Stock may be purchased from time to time, in the open market transactions at prevailing market prices, in privateprivately negotiated transactions, or by other means in accordance with federal securities law, including under Rule 10b5-1 plans,plans or byaccelerated othershare means,repurchase subject to market conditions, in compliance with applicable state and federal securities laws.programs. The timing and amount of repurchases, if any, will depend upon several factors, including market and business conditions, restrictions in our debt agreements, the trading price of our common stock and the nature of other investment opportunities. In addition, repurchases of our common stock pursuant to our stockshare repurchase program could affect the market price of our common stock or increase its volatility. The existence of a stockshare repurchase program could cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock. Additionally, our stockshare repurchase program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic opportunities and acquisitions. There can be no assurance that any stockshare repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we determine to repurchase our stock and short-term stock price fluctuations could reduce the program’s effectiveness.

Pursuant to our certificate of incorporation, our board of directors has the authority, without action or vote of our stockholders, to issue all or any part of our authorized but unissued shares of common stock, including shares issuable upon the exercise of options,options or vesting of restricted stock units, or shares of our authorized but unissued preferred stock. Issuances of common stock or voting preferred stock would reduce your influence over matters on which our stockholders vote and, in the case of issuances of preferred stock, would likely result in your interest in us being subject to the prior rights of holders of that preferred stock.

We are a leading provider of high-quality education and care, including early education and child care, comprehensive back-up and family care solutions, and workforceeducational educationadvisory servicesservices. thatOur offerings are designed to helpsupport families,both employersworking families and employers’ workforce strategies by supporting their employees solveacross the challenges of the modern workforcelife and thrivecareer personallystages, and professionally.improving employee recruitment, engagement, productivity, retention, and career advancement. We provide services primarily under multi-year contracts with employersemployer-clients who offer early education and child care, back-up care, and educational advisory services as part of their employee benefits package in an effort to support employees across life and career stages and to improve recruitment, employee engagement, productivity, retention, and career advancement.package.

At December 31, 2024,2025, we operated 1,0191,010 early education and child care centers, consisting of 599597 centers in North America and 420413 centers internationally.outside North America. We have the capacity to serve approximately 115,000 children in the United States, the United Kingdom, the Netherlands, Australia and India. We seek to cluster centers in geographic areas to enhance operating efficiencies and to create a leading market presence.

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. Effective January 1, 2024, we realigned our organizational structure to better reflect synergies across certain business lines resulting in a change in reportable segments. As a result, the back-up care reportable segment now includes the Sittercity operations, which were previously reported in the educational advisory and other services segment. Segment information for 2023 has been recast to conform to the current year presentation. Additional information about our operations, structure and services is included in “Business — Our Operations” in Item 1 of this Annual Report on Form 10-K. Additional segment information is included in Note 18,17, Segment and Geographic Information, to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K.

During the year ended December 31, 2024,2025, we sawdelivered solidstrong year-over-yeargrowth revenuein growth,back-up care with a 10%19% year-over-year increase in revenue as a result of increased utilization and increased revenue in educational advisory services by 9% over the prior year led by contributions from College Coach. We also saw year-over-year revenue growth of 6% for our full service center-based child care segmentsegment, andincluding net enrollment growth of 4% as centers continue to grow enrollment.1%. To track our continued progress,progress in full service center-based child care, we monitor same-center occupancy for a cohort of centers that has been operating since the 2021 fall enrollment cycle. Same-center 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. This cohort of centers totaled 768746 centers as of December 31, 2024.2025. For the quarter ended December 31, 2024,2025, 39%40% of these centers were more than 70% enrolled, 45%48% were between 40-70% enrolled and 16%12% were less than 40% enrolled, which reflects improved occupancy when compared to the same period in the prior year. We also saw strong growth in back-up care with a 16% year-over-year increase in revenue as a result of increased utilization.

While we continue to see year-over-year growth and progress,progress in the overall performance of our full service center-based child care business, we are navigating a dynamic operating environment that is impacted by increased operating costs, a tight labor market, varying enrollment demands, shifting work demographics, and challenging macroeconomic conditions. We continue to monitor and respond to the changing conditions and operating environments, and the evolving needs of clients, families and children, including the optimization of our portfolio of centers through the routine closure of underperforming centers to accommodate evolving changes in demand in the markets we serve. As a result of changing conditions,result, there has been an elevated number of center closures in recent years, totaling 29 in 2025 and 56 in 2024 and 49 in 2023,2024, in addition to the impairment of certain assets. While weWe continue to review the portfolio of centers and monitor workforce changes in certain markets, such as return to office policies, we expect to close feweradditional centers in 2025.2026. Where possible, we shift enrollment and teachers to other centers at nearby locations.

AsWe we continue to navigate this dynamic operating environment, we remainare 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. Our ability to continue to increase operating income in the future,future will depend upon our ability to continue to regain and sustain the following characteristics of our business and our strategic growth priorities:

Revenue generated by the full service center-based child care segment in the year ended December 31, 20242025 increased by $181.2$119.3 million, or 10%,6%, when compared to the prior year. Tuition revenue increased by $166.3$114.8 million, or 10%,6%, when compared to the prior year, due to a 4% net increase in enrollment and average tuition rate increases at our child care centers of approximately 5%.4-5% and a 1% net increase in enrollment. Fluctuations in foreign currency exchange rates for our United Kingdom, Netherlands and Australia operations also contributed to our revenue growth, increasing 20242025 tuition revenue by approximately $9.2$18.6 million.

Revenue generated by back-up care services in the year ended December 31, 20242025 increased by $84.2$117.9 million, or 16%,19%, when compared to the prior year. Revenue growth in the back-up care segment was primarily attributable to increased utilization of center-based,center-based care, in-home care and school-age campprograms back-up care fromby new and existing clients.

Revenue generated by educational advisory services in the year ended December 31, 20242025 increased by $2.4$10.4 million, or 2%,9%, when compared to the prior year. Revenue growth in this segment was primarily attributable to increased utilization.utilization from new and existing clients.

Cost of services in the back-upfull service center-based child care segment increased by $34.9$116.8 million, or 12%,7%, to $322.2$1.8 millionbillion in the year ended December 31, 2024,2025, when compared to the prior year. The increase in cost of services correlates to the increase in revenue and iswas primarily associated with higherincreased carepersonnel providercosts, feesan generatedincrease byof 8% during the increaseyear inended utilizationDecember levels31, of2025 center-basedcompared and in-home back-up care overto the prior year, andrelated continuedto investmentaverage hourly wage rate increases in personnel,the marketingrange of 3-4%, higher benefits costs, including medical care expenses, and technologyexpanded toenrollment. support our customer user experience and service offerings. Additionally, costCost of services in 2024 also includes impairment costs of $1.1 million. Cost of services in 2023 included value-added tax expense of $4.0 million related to prior periods and impairmentnet lease termination costs of $3.9$47.0 million and $29.8 million in 2025 and 2024, respectively, primarily related to fixed assets and operating lease right of use assets.

Cost of services in the educational advisory services segment increased by $1.8$1.6 million, or 3%, to $58.5$60.2 million in the year ended December 31, 2024,2025, when compared to the prior year due to investmentsimproved leverage in personnel,service product suite and technology to support customer access and user experience. We expect to make additional investments in this segment over the next few years as we further enhance our educational advisory offerings to meet the needs of the modern employer and employee.delivery.

Gross Profit. Gross profit increased by $87.9$77.6 million, or 17%,13%, to $619.6$697.2 million for the year ended December 31, 20242025 from $531.7$619.6 million for the prior year.year Incrementalprimarily due to incremental gross profit contributions from the back-up care segment, resulting from higher utilization of back-up care services, as well as contributions from our full service center-based child care centerssegment, resulting from enrollment growth, tuitionand pricethe increases, improvingassociated operating leverage and lower impairment losses, wereleverage, partially offset by reducedan fundingincrease fromof pandemic-related$16.6 governmentmillion supportin programs.impairment and net lease termination costs. Gross profit margin was 23%24% of revenue for the year ended December 31, 2024,2025, a 1% increase compared to 22%23% for the year ended December 31, 2023.2024.

Selling, General and Administrative Expenses (“SGA”). SGA increased $27.5$21.8 million, or 8%,6%, to $376.4 million for the year ended December 31, 2025 from $354.6 million for the year ended December 31, 20242024, fromdue $327.1to millionhigher personnel and technology costs. In addition, SGA for the year ended December 31, 2023,2024 dueincludes to higher personnel costs,net impairment costslosses of $3.0 million related to the full service center-based child care segment and a $2.3 million charge within the back-up care segment resulting from the early settlement of contingent consideration for a 2021 acquisition.acquisition, which did not occur in 2025. SGA was approximately 13% of revenue for the year ended December 31, 2024,2025, consistent with 2023.2024.

Amortization of Intangible Assets. Amortization expense on intangible assets was $18.3$6.1 million for the year ended December 31, 2024,2025, a decrease from $33.4$18.3 million in the prior year, primarily due to certain intangible assets becoming fully amortized during the period, partially offset by increases from intangible assets acquired in relation to the acquisitions completed in 2023 and 2024. Refer to Note 6, Goodwill and Intangible Assets, to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for additional details.period.

•Income from operations for the full service center-based child care segment increased $44.3$12.4 million, or 472%,23%, for the year ended December 31, 2024,2025, when compared to the same period in 2023,2024, primarily due to increases in tuition revenue from enrollment growth and tuition rate increases,increases and enrollment growth, as well as decreases in amortization expense, partially offset by increased personnel costs,costs and aincreased decreaseimpairment of approximately $34 million inand net contributionslease fromtermination pandemic-related government support as most of the programs for which we were eligible ended by September 30, 2023.costs.

•Income from operations for the back-up care segment increased $33.9$52.0 million, or 25%,31%, in the year ended December 31, 20242025 when compared to the same period in 2023.2024. Incremental gross profit contributions from the expanded utilization of back-up care services were partially offset by theincreases relatedin higher personneltechnology and servicemarketing providerexpense costs.to improve customer experience. Additionally, income from operations in 20232024 included value-addeda tax$2.3 expensemillion charge within the back-up care segment resulting from the early settlement of $4.0contingent millionconsideration relatedfor toa prior2021 periods.acquisition.

•Income from operations for the educational advisory services segment decreasedincreased $2.8$3.7 million, or 11%,16%, in the year ended December 31, 20242025 when compared to the same period in 20232024 due to personnel,revenue productincreases design,partially offset by service costs for technology and technology platform investments to support revenue growth and business transformation.marketing.

Net Interest Expense. Net interest expense decreased to $44.8 million for the year ended December 31, 2025 from $48.8 million for the year ended December 31, 20242024, from $51.6 million for the year ended December 31, 2023,primarily due to lower averageinterest borrowings,rates applicable to our debt as well as lower outstanding deferred consideration from prior acquisitions, and higher interest income from invested cashaverage balances in the2025, currentpartially year.offset by $2.7 million in other interest related to a pre-acquisition obligation and debt refinancing costs recorded in 2025. The blended weighted average interest rates for the term loans and revolving credit facility were 4.88%4.42% and 4.11%4.88% for the years ended December 31, 20242025 and 2023,2024, respectively, inclusive of the effects of cash flow hedges. Based on our current interest rate projections, we estimate that our overall weighted average interest rate will approximate 5.00% for 20252026 inclusive of the effects of cash flow hedges.

Income Tax Expense. We recorded an income tax expense of $57.7$76.8 million during the year ended December 31, 2024,2025, at an effective income tax rate of 29%,28%, compared to income tax expense of $45.4$57.7 million, at an effective income tax rate of 38%,29%, during the prior year. The difference between the effective income tax rates as compared to the statutory income tax rates was primarily due to the impact of unbenefited losses and net operating loss carryforwards used in certain foreign jurisdictions and the effects of excess (shortfall) tax benefit (shortfall tax expense) associated with the exercise or expiration of stock options and vesting of restricted stock. Net excess tax benefit decreased tax expense by $1.2 million in 2025 and net shortfall tax expense increased tax expense by $1.0 million in 20242024, and by $2.9 million in 2023,primarily due to lowerthe volumeimpact of equitythe transactionsstock and less tax shortfall realizedprice on eachthe transactiondate inof 2024.grant compared to the vesting date of restricted stock. Refer to Note 15,14, Stockholders’ Equity and Stock-based Compensation, to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for additional details. The effective income tax rate would have approximated 27% andfor 28%each forof the years ended December 31, 20242025 and 2023, respectively,2024, prior to the inclusion of the excess (shortfall) tax benefit (shortfall tax expense), other discrete items,items and unbenefited losses/net operating loss utilization in certain foreign jurisdictions.

Adjusted EBITDA and Adjusted Income from Operations. Adjusted EBITDA and adjusted income from operations increased $57.2$78.2 million, or 16%,19%, and $65.2$85.7 million, or 31%, respectively, for the year ended December 31, 20242025 over the comparable period in 20232024 primarily due to the incremental gross profit contributions from the back-up care segment resulting from increased utilization and from the full service center-based child care segment resulting from enrollment growth and tuition price increases and fromenrollment the back-up care segment resulting from increased utilization.growth.

Adjusted Net Income. Adjusted net income increased $38.9$58.3 million, or 24%,29%, for the year ended December 31, 20242025 when compared to the same period in 2023,2024, primarily due to the increase in adjusted income from operations and lower interest expense.expense and effective tax rate.

(a)Amortization of intangible assets represents amortization expense, including amortization expense of approximately $8.5 million and $20.0 million for the yearsyear ended December 31, 2024 and 2023, respectively,2024, associated with intangible assets recorded in connection with our going private transaction in May 2008.

(b)Impairment lossesand net lease termination costs represent impairment costs, primarily for long-lived assets, associated with our annual impairment assessment arising from center closures, changes in market assumptions and reduced operating performance at certain centers. For the year ended December 31, 2025, impairment and net lease termination costs totaled $47.5 million, of which $47.0 million related to the full service center-based child care segment and $0.5 million related to the back-up care segment. For the year ended December 31, 2024, impairment lossesand recognizednet inlease thetermination fourth quartercosts totaled $30.3 million, of which $29.2 million related to the full service center-based child care segment and $1.1 million related to the back-up care segment. For the year ended December 31, 2023, impairment losses recognized in the fourth quarter totaled $35.9 million, of which $32.0 million related to the full service center-based child care segment and $3.9 million related to the back-up care segment.

(f)Adjusted income tax expense represents income tax expense calculated on adjusted income before income tax at an effective tax rate of approximately 27% and 28% for each of the years ended December 31, 20242025 and 2023.2024, respectively.

Adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share are financial measures that are not calculated in accordance with GAAP (collectively referred to as the “non-GAAP financial measures”), and the use of the terms adjusted EBITDA, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. We believe the non-GAAP financial measures provide investors with useful information with respect to our historical operations. We present the non-GAAP financial measures as supplemental performance measures because we believe they facilitate a comparative assessment of our operating performance relative to our performance based on our results under GAAP, while isolating the effects of some items that vary from period to period. Specifically, adjusted EBITDA allows for an assessment of our operating performance and of our ability to service or incur indebtedness without the effect of non-cash charges, such as depreciation, amortization, and stock-based compensation expense, and non-recurring costs, such as impairment losses,and net lease termination costs, debt refinance costs, value-added tax expense related to prior periodscosts and at times, other non-recurring costs, such as transaction costs. In addition, adjusted income from operations, adjusted net income and diluted adjusted earnings per common share allow us to assess our performance without the impact of the specifically identified items that we believe do not directly reflect our core operations. These non-GAAP financial measures also function as key performance indicators used to evaluate our operating performance internally, and they are used in connection with the determination of incentive compensation for management, including executive officers. Adjusted EBITDA is also used in connection with the determination of certain ratio requirements under our credit agreement.

Our primary cash requirements are for the ongoing operations of our existing early education and child care centers, back-up care, educational advisory services, the addition of new centers through development or acquisitions, and debt financing obligations. Our primary sources of liquidity are our existing cash, cash flows from operations, and borrowings available under our $900 million multi-currency revolving credit facility. We had $140.1 million in cash ($143.2 million including restricted cash) at December 31, 2025, of which $66.3 million was held in foreign jurisdictions, compared to $110.3 million in cash ($123.7 million including restricted cash) at December 31, 2024, of which $45.5 million was held in foreign jurisdictions, compared to $71.6 million in cash ($89.5 million including restricted cash) at December 31, 2023, of which $32.1 million was held in foreign jurisdictions. Operations outside of North America accounted for 28%29% and 27%28% of our consolidated revenue for the years ended December 31, 20242025 and 2023,2024, respectively. The net impact on our liquidity from changes in foreign currency exchange rates was not material for the years ended December 31, 20242025 and 2023.2024.

We had a working capital deficit of $283.4$462.2 million and $352.5$283.4 million at December 31, 20242025 and December 31, 2023,2024, respectively. Our working capital deficit has primarily arisen from using cash to make long-term investments in fixed assets and acquisitions, deferredshare consideration issued in relation to an acquisitionrepurchases and fromshort-term shareborrowings repurchases.on our long-term debt and revolving credit facility. We anticipate that our cash flows from operating activities will continue to expand asalongside our back-up services business growth and the ongoing improvement of our center enrollment and performanceoperating continues to improve.performance. As we continue growing enrollment, expanding sales and increasing utilization of back-up services, we expect to allocate capital to investments that support current operations and strategic opportunities, as well as the principal andmake interest payments on our debt, including voluntary prepayments,prepayments of principal on our debt and revolver,revolver balances and share repurchases from time to time.

The board of directors authorized a share repurchase program of up to $400$500 million of our outstanding common stock, effective DecemberJune 16,3, 2021.2025. The share repurchase program has no expiration date.date and replaced and canceled the prior $400 million authorization. During the year ended December 31, 2025, we repurchased 2.1 million shares for $225.4 million (resulting in a $1.9 million excise tax liability). During the year ended December 31, 2024, we repurchased 0.8 million shares for $84.6 million (resulting in a $0.4 million excise tax liability). There were no share repurchases during the year ended December 31, 2023. All repurchased shares have been retired, and at December 31, 2024,2025, $113.7$329.4 million remains available for future repurchases under the Board-approved repurchase program.

We believe that funds provided by operations, our existing cash balances and borrowings available under our revolving credit facility will be adequate to fund all obligations and liquidity requirements for at least the next 12 months. However, if we were to experience disruption from events not in our control, such as a global health crisis,control or if we were to undertake any significant acquisitions or make investments in the purchase of facilities for new or existing centers, we could require financing beyond our existing cash and borrowing capacity, and it could be necessary for us to obtain additional debt or equity financing. We may not be able to obtain such financing on reasonable terms, or at all.

Cash provided by operating activities was $337.5$350.7 million for the year ended December 31, 2024,2025, compared to $256.1$337.5 million for 2023.2024. The increase in cash provided by operations primarily relatesrelated to the increase in net income of $66.0$52.9 million, aspartially well as higher cash providedoffset by changes in working capital arising from the timing of billings and payments when compared to the prior year.

Cash used in investing activities was $117.8$103.8 million for the year ended December 31, 2024,2025, compared to $126.9$117.8 million for the prior year, a decrease of $9.1$14.0 million. The decrease in cash used in investing activities was primarily related to a decrease in paymentsnet purchases of debt securities and other investments. Net purchases of debt securities held by our captive insurance entity and other investments were $5.7 million for acquisitions. During the year ended December 31, 2024, we invested $8.3 million in acquisitions,2025, compared to annet investmentpurchases of $39.6$14.2 million duringfor the prior year.year, a net decrease in cash used of $8.5 million.

We expect that in 20252026 we will continue to spend on fixed asset additions related to new child care centers, maintenance and refurbishments in our existing centers, and continued investments in technology and equipment. As part of our growth strategy, we also expect to continue to makeseek selective acquisitions.

During the year ended December 31, 2024, we made payments for deferred and contingent consideration of $103.9 million, of which $97.7 million related to the deferred consideration for the 2022 acquisition of Only About Children and $6.2 million related to the contingent consideration for a 2021 acquisition,acquisition. comparedThere towere $0.2no millionpayments for payments of contingentdeferred consideration during the same period in 2023. During the year ended December 31, 2024, we used $84.6 million in cash for share repurchases, compared to no repurchases in 2023. These increases in cash used were partially offset by a decrease in net payments related to our revolving credit facility, which were $84.0 million during the ended December 31, 2023, compared to zero in the year ended December 31, 2024.2025.

Our senior secured credit facilities consist of a $600 millionour term loan B facility (the “term loan B”), a $400 million term loan A facility (“term loan A”), and aour $400$900 million multi-currency revolving credit facility (the “revolving credit facility”). Prior to April 17, 2025, our senior secured credit facilities also included our term loan A facility (the “term loan A”).

On DecemberAugust 11,21, 2024,2025, the Company amended its existing senior secured credit facilities to, among other changes, reducerefinance the applicable interest rates of theexisting term loan B facility.and Theto extend the maturity date. On the closing date, the Company incurredused $0.8its revolving credit facility to prepay $50 million in fees associated with this amendment inof the yearoutstanding endedprincipal Decemberamount 31,of 2024,the whichexisting wereterm includedloan in selling, general and administrative expenses.B.

Borrowings under theour credit facilities are subject to variable interest. We mitigate our interest rate exposure with interest rate cap agreements. In June 2020, we entered into interest rate cap agreements with a total notional value of $800 million to provide us with interest rate protection in the event the one-month term SOFR rate increases above 0.9%. Interest rate cap agreements for $300 million notional value had an effective date of June 30, 2020 and expired on October 31, 2023, while interest rate cap agreements for another $500 million notional amount had an effective date of October 29, 2021 and expired on October 31, 2023. In December 2021, we entered into additional interest rate cap agreements with a total notional value of $900 million. Interest rate cap agreements for $600 million, which had a forward starting effective date of October 31, 2023 and expireexpired on October 31, 2025, provideprovided the Company with interest rate protection in the event the one-month term SOFR rate increasesincreased 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.

The blended weighted average interest rate for the term loans and revolving credit facility was 4.88%,4.42%, and 4.11%4.88% for the years ended December 31, 20242025 and 2023,2024, respectively, including the impact of the cash flow hedges. The weighted average interest rate of the Australian uncommitted working capital credit facility was 5.55% for the year ended December 31, 2025. Based on our current interest rate projections, we estimate that our overall weighted average interest rate will approximate 5.00% for 2025,2026, inclusive of the effects of cash flow hedges. Based on the interest rates in effect as of December 31, 2024,2025, interest payments on the outstanding principal balance of the term loans,loan B, including commitment fees on the revolving credit facility, are expected to range between $30$20 million and $60$30 million annually over the remaining term, prior to the inclusion of the effects of cash flow hedges. However, actual interest paid may be different from these estimates based on changes in interest rates and borrowings outstanding.

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 marketsmarket 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 regaingrow 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; impairmentsfuture 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 estimates of foreign currency exchange rates and interest rates; our capital allocation; share repurchase program and future activity; the outcome of litigation, legal proceedings/claims and our insurance coverage; debt securities; our interest rates, weighted average interest rate, expense and impact of our interest rate cap agreements; credit risk; the use of derivatives or other market risk sensitive instruments; critical accounting policies and estimates; impact of new accounting pronouncements; our indebtedness; borrowings under our senior secured credit facilities; the need for additional debt or equity financing, including raising additional funds or refinancing our outstanding indebtedness, and our ability to obtain such financing; contractual and actual maturities; our sources, drivers and uses of cash flows; our ability to fund operations and make capital expenditures and payments with cash and cash equivalents and borrowings; and our ability to meet financial obligations and comply with covenants of our senior secured credit facilities.

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,reputation or negative public perception, including as a result of recent 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.

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 MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 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.

As of MarchJune 31,30, 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.

During the three months ended MarchJune 31,30, 2026, we saw strong growth in back-up care with a 12%19% year-over-year increase in revenue as a result of increased utilization. We also saw year-over-year revenue growth of 6%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 MarchJune 31,30, 2026, this cohort of centers totaled 728719 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 MarchJune 31,30, 2026, 48%53% of these centers were more than 70% enrolled, 44%42% were between 40-70% enrolled and 8%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.

While we continue to see year-over-year growth and progress,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 continueremain tofocused monitor and respond toon 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 willare continueactively to monitormonitoring and assessassessing the trends and operating conditions in Australia.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 additional underperforming centers identified in these evaluations over the next 12 months.

The following table sets forth statement of income data as a percentage of revenue for the three months ended MarchJune 31,30, 2026 and 2025:

Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

Revenue. Revenue for the three months ended MarchJune 31,30, 2026, increased by $46.7$47.6 million, or 7%, to $712.2$779.2 million from $665.5$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 MarchJune 31,30, 2026 and 2025:

Revenue generated by the full service center-based child care segment in the three months ended MarchJune 31,30, 2026 increased by $30.1$17.0 million, or 6%,3%, when compared to the same period in 2025. Tuition revenue increased by $31.2$16.3 million, or 7%,3%, when compared to the prior year, primarily due to average tuition rate increases at our child care centers of approximately 4%, offset by the impact of centers whichthat have closed since DecemberMarch 31, 2024,2025, 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 MarchJune 31,30, 2026 by approximately 3%,1%, or $16.5$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.

Revenue generated by back-up care services in the three months ended MarchJune 31,30, 2026 increased by $16.1$30.9 million, or 12%,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.

Revenue generated by educational advisory services in the three months ended MarchJune 31,30, 2026 remained relatively consistent with the same period in 2025.

Cost of Services. Cost of services increased by $38.9$41.2 million, or 8%, to $548.7$590.2 million for the three months ended MarchJune 31,30, 2026 from $509.8$549.0 million for the same period in 2025.

Cost of services in the full service center-based child care segment increased by $26.8$24.1 million, or 6%,5%, to $448.9$469.8 million in the three months ended MarchJune 31,30, 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 7%2% during the quarter compared to the same period in the prior year, related to average hourly wage rate increases in the range of 3-4%,approximately 3%, higher benefits costs, including medical care expenses, and the impact of foreign currency exchange rates.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.

Cost of services in the back-up care segment increased by $11.8$16.6 million, or 16%,19%, to $84.5$105.4 million in the three months ended MarchJune 31,30, 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 to investinvesting in increasing our network provider supply and in technology to support the growth of this segment.

Cost of services in the educational advisory services segment increased by $0.4$0.5 million, or 3%, to $15.3$15.0 million in the three months ended MarchJune 31,30, 2026 when compared to the prior year, consistent with the increase in revenue.year.

Gross Profit. Gross profit increased by $7.8$6.4 million, or 5%,4%, to $163.5$189.0 million for the three months ended MarchJune 31,30, 2026 from $155.7$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, andpartially offset by impairment losses related to the full service center-based child care segment, resulting from tuition rate increases and the associated operating leverage.segment. Gross profit margin was 23%24% of revenue for the three months ended MarchJune 31,30, 2026, consistenta withdecrease of approximately 1% from the same period in 2025.

Selling, General and Administrative Expenses (“SGA”). SGA increased by $5.5$13.2 million, or 6%,14%, to $97.4$108.0 million for the three months ended MarchJune 31,30, 2026 from $91.9$94.8 million for the same period in 2025, primarily due to 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, and higher personnel costs. SGA was 14% of revenue for the three months ended MarchJune 31,30, 2026, consistenta with1% increase from the same period in 2025.

Amortization of Intangible Assets. Amortization expense on intangible assets was $1.2$1.1 million for the three months ended MarchJune 31,30, 2026, a decrease from $1.6$1.7 million for the three months ended MarchJune 31,30, 2025, primarily due to decreases from intangible assets becoming fully amortized since the prior year.

Income from Operations. Income from operations increaseddecreased by $2.7$6.2 million, or 4%,7%, to $64.9$79.8 million for the three months ended MarchJune 31,30, 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 MarchJune 31,30, 2026 and 2025:

•Income from operations for the full service center-based child care segment increaseddecreased $3.7$15.2 million, or 11%,38%, in the three months ended MarchJune 31,30, 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,increases partiallyand offsetenrollment by increased personnel costs.gains.

•Income from operations for the back-up care segment decreasedincreased $0.8$9.4 million, or 3%,23%, in the three months ended MarchJune 31,30, 2026 when compared to the same period in 2025, primarily due to higher investments in technology and marketing to improve customer experience, and change in the mix of services provided, partially offset by incremental gross profit contributions from expanded utilization of back-up care services.services, partially offset by higher investments in technology and marketing to improve the customer experience.

•Income from operations for the educational advisory services segment decreased $0.2$0.4 million, or 6%,8%, in the three months ended MarchJune 31,30, 2026 when compared to the same period in 2025, due to increased overhead costs, partially offset by revenue increases.2025.

Net Interest Expense. Net interest expense was $12.0$14.0 million for the three months ended MarchJune 31,30, 2026, an increase from $10.4$10.6 million for the three months ended MarchJune 31,30, 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 4.8%4.91% for the three months ended MarchJune 31,30, 2026 compared to 4.4%4.26% for the three months ended MarchJune 31,30, 2025, inclusive of the effects of the cash flow hedges. Based on ourthe current interest rate projections, we estimate that our overall weighted average interest rate will be in the range of 5.0%5.25% to 5.3%5.5% for the remainder of 2026, inclusive of the effects of the cash flow hedges.

Income Tax Expense. We recorded income tax expense of $18.8$25.2 million during the three months ended MarchJune 31,30, 2026, at an effective income tax rate of 36%,38%, compared to an income tax expense of $13.9$20.7 million during the three months ended MarchJune 31,30, 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.

During the three months ended MarchJune 31,30, 2026,2026 and 2025, the net shortfall tax expense from stock-based compensation increased tax expense by $2.5$0.5 million.million Duringand the$0.1 threemillion, months ended March 31, 2025, the net excess tax benefit from stock-based compensation decreased tax expense by $1.3 million.respectively. For the three months ended MarchJune 31,30, 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.27%.

Adjusted EBITDA and Adjusted Income from Operations. Adjusted EBITDA increased $3.3$14.9 million, or 4%,13%, and adjusted income from operations increased $2.7$12.9 million, or 4%,15%, for the three months ended MarchJune 31,30, 2026 overcompared to the comparablesame period in 2025 primarily due to increased contributions from the full service center-based child care and back-up care segments, partially offset by an increase in overhead costs.segment.

Adjusted Net Income. Adjusted net income decreasedincreased $0.1$4.8 million, or 0.2%,7.9%, for the three months ended MarchJune 31,30, 2026 when compared to the same period in 2025, primarily due to athe increase in adjusted income from operations noted above, partially offset by higher interest expense from our senior secured credit facilities, offset by the increase in adjusted income from operations.facilities.

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

(bd)Adjusted income tax expense represents income tax expense calculated on adjusted income before income tax at an effective tax rate of approximately 29% and 28% for the three and six months ended MarchJune 31,30, 20262026, respectively, and of approximately 27% for both the three and six months ended June 30, 2025. The jurisdictional mix of the expected adjusted income before income tax for the full year will affect the estimated effective tax rate for the year.

Our primary cash requirements are for the ongoing operations of our existing early education and child care centers, back-up care, educational advisory services, the addition of new centers through development or acquisitions, and debt financing obligations. Our primary sources of liquidity are our existing cash, cash flows from operations, and borrowings available under our $900$1.0 millionbillion multi-currency revolving credit facility (“revolving credit facility”). We had $133.4$163.7 million in cash ($136.7$167.8 million including restricted cash) as of MarchJune 31,30, 2026, of which $69.5$75.5 million was held in foreign jurisdictions, compared to $140.1 million in cash ($143.2 million including restricted cash) as of December 31, 2025, of which $66.3 million was held in foreign jurisdictions. Operations outside of North America accounted for 31% and 28%29% of our consolidated revenue in the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The net impact on our liquidity from changes in foreign currency exchange rates was not material for the threesix months ended MarchJune 31,30, 2026 and 2025. While we expect to be impacted by fluctuations in the foreign currency exchange rates throughout the remainder of the year, we do not currently expect that the effects of changes in foreign currency exchange rates will have a material net impact on our liquidity and capital resources for the remainder of 2026.

Our revolving credit facility is part of our senior secured credit facilities. On AprilJune 17,1, 2025,2026, we amended our 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 our revolving credit facility from $400$900 million to $900$1.0 million and extend the date of maturity.billion. On the closing date, we used the proceeds from our revolving credit facility to repay the outstanding balances underof the term loan AA, facility.together with cash on hand, to repay outstanding borrowings under the revolving credit facility, including all outstanding interest and related fees and expenses. As of MarchJune 31,30, 2026 and December 31, 2025, $250.2$520.1 million and $383.7 million, respectively, of the revolving credit facility was available for borrowing.