Bright Horizons Cuts 2026 Outlook To $3.07 Billion In Revenue As UK Safeguarding Notice Slows Fall Starts
The child care provider now sees fourth-quarter revenue of $730 million to $740 million, with the bigger enrollment hit still ahead.
Bright Horizons Family Solutions, which runs employer-sponsored child care centers and back-up care, lowered its full-year outlook to about $3.07 billion in revenue after fall new-family starts came in softer than planned, CEO Stephen Kramer said on the company's Thursday earnings call. The biggest miss against expectations was in the UK, where a regulator's safeguarding notice is weighing on parents' decisions.
A UK notice, and a bigger fourth-quarter hit
Kramer said the UK child care regulator published a group-wide notice in late June requiring Bright Horizons to strengthen safeguarding governance and oversight across its UK nurseries. The effect was limited over the quieter summer months, he said, but the company "did not sufficiently anticipate the duration or full effect" on families' fall choices.
An updated notice in mid-September recognized the company's progress but extended the review period. Because fall enrollment only began late in the third quarter, Kramer said the larger impact will land in the fourth quarter and last until the notice is lifted.
The UK is not the whole story. CFO Elizabeth Boland said enrollment in centers open at least a year, excluding Australia, fell about 50 basis points (half a percentage point), mostly in the US, and the shortfall was in new starters while retention stayed good. Kramer called UK circumstances "more acute" and said the US is subject to the broader market.
Asked by an analyst from Goldman Sachs how fast enrollment would recover once the notice lifts, Kramer called the regulator's action "without precedent" and said the pace is "really tough for us to know for sure." He expects recovery to follow the lifting of the notice, since the market is strong and the problem is "unique to Bright Horizons."
Quarter numbers and the lowered guide
Third-quarter revenue rose 5% to $841 million and adjusted earnings per share rose 15% to $1.80. Back-up care revenue grew 13% to $286 million, while full-service revenue rose 1.3% to $522 million.
The company now expects fourth-quarter revenue of $730 million to $740 million and adjusted EPS of $1.14 to $1.19, putting full-year adjusted EPS at $4.98 to $5.03. Full-service revenue is expected to grow about 2% this year and back-up care about 13%; Kramer said back-up growth will be dampened late in the year because many employees have already used much of their annual allotment. Boland called that primarily timing.
Boland also reported a non-cash goodwill impairment of $290 million and a $4 million intangible charge, tied to the international full-service unit that includes Australia. Kramer said the company is reviewing strategic alternatives there and moving "with urgency."
New safeguards and a smaller footprint
Answering a Morgan Stanley analyst, Kramer said cameras are already rolling out in US and UK centers, the company is partnering with an outside safeguarding expert, and it is adding oversight of classroom technology.
The company ended the quarter with 979 centers after opening two and closing 11. Boland said 42 centers have closed through September, with roughly 20 more likely by year-end, and she expects a net closing position in the US in 2027. Tuition increases next year are expected at the lower end of the historical 3% to 4% range. Management plans to give 2027 guidance in February.
Boland said the company had $119 million in cash at quarter-end and repurchased $560 million of stock through September.
Management will give fuller 2027 guidance in February, with the UK notice still in place until the regulator lifts it.
Sources
- Bright Horizons Non-GAAP EPS of $1.80 beats by $0.04, revenue of $841M misses by $2.07M (BFAM:NYSE) | Seeking Alpha — seekingalpha.com
- Bright Horizons: Q3 Earnings Snapshot | king5.com — Associated Press
- Bright Horizons Family Solutions (BFAM): Reallocating Capital Following Australian Performance Setbacks — Yahoo Finance
- Bright Horizons Family Solution (BFAM) Stock Forecasts — Yahoo Finance
- Bright Horizons Family Solutions Reports Financial Results for the Third Quarter of 2026 — businesswire.com
