Bright Horizons Weighs Options For Australian Business After $290 Million Goodwill Writedown
The child-care provider says it is "moving with urgency" on Australia, where occupancy sits at multi-year lows, and it cut its full-year outlook.
Bright Horizons Family Solutions is "actively reviewing strategic alternatives" for its Australian child-care business, CEO Stephen Kramer said on the company's third-quarter earnings call Thursday, after it booked a $290 million non-cash goodwill impairment tied to the unit that includes Australia.
Australia: no sign of a turn
Bright Horizons, which provides employer-sponsored child care, back-up care and educational advisory services, said Australia's problems come from developer-driven supply growth colliding with softer demand. Kramer said that mix has pushed industry and company occupancy to multi-year lows.
Third-quarter results there matched expectations, he said, but "we have not seen signs that conditions will improve in the near term." The company will hold further comment until it has "something definitive to share," though it is "moving with urgency."
CFO Elizabeth Boland said the company also took a $4 million intangible asset charge, both tied to the international full-service reporting unit where Australia is grouped.
What Australia cost the quarter
Full-service revenue rose 1.3% to $522 million, Boland said. Australian enrollment declines were about a 100 basis point (one percentage point) headwind, and net center closures about 200 basis points. Four of the 11 centers closed in the quarter were Australian.
Full-service adjusted operating margin fell 25 basis points to 3.7%. Excluding Australia, Boland said, it would have risen 40 basis points.
The adjusted tax rate of 28.25% is higher than in 2025, mainly because Australian losses are not currently deductible, she said.
A lower outlook, led by the UK
Overall third-quarter revenue grew 5% to $841 million and adjusted earnings per share rose 15% to $1.80. Back-up care revenue climbed 13% to $286 million.
The company now expects full-year revenue of about $3.07 billion and adjusted EPS of $4.98 to $5.03. That implies fourth-quarter revenue of $730 million to $740 million and EPS of $1.14 to $1.19.
Kramer said fall enrollment starts were softer than expected, most of all in the UK, where the child care regulator issued a safeguarding notice in late June and extended its review in mid-September. He expects the larger enrollment hit in the fourth quarter and until the notice is lifted. Back-up care growth should also cool as many employees have used much of their annual allotment.
The company ended the quarter with 979 centers and has repurchased $560 million of stock through September.
Boland said the company will give a fuller 2027 outlook in February, and expects to be closing more centers than it opens in the U.S. next year.
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
