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    BFAM
    Earnings call· Jun 2026(Q2 FY26)

    BRIGHT HORIZONS FAMILY SOLUTIONS Q2 FY26 earnings call BFAM

    Jul 30, 2026 Source

    Executive summary

    Bright Horizons Family Solutions Q2 FY26 — Strong Back-up Care Growth and Margin Expansion

    Bright Horizons delivered a strong second quarter, driven by robust double-digit growth in its high-margin back-up care segment and overall margin expansion. While the full service segment saw modest growth, it continued to face headwinds from center closures and underperformance in Australia, which the company is actively addressing through portfolio optimization and strategic reviews. The employer-sponsored model remains a key differentiator, enabling cross-service expansion and deepening client relationships.

    Highlights

    5

    • Revenue expanded by 7% to $779 million, driven by growth in both back-up care and full service.

    • Adjusted EPS increased 20% to $1.28, exceeding expectations.

    • Back-up care revenue grew 19% to $194 million, accelerating from 12% growth in Q1.

    • Adjusted operating margins expanded 95 basis points over the prior year quarter to 12.7%.

    • The bottom cohort of centers (below 40% occupied) declined to 5% from 10% in the prior year.

    Concerns

    4

    • Full service revenue growth was partially offset by an approximately 250 basis point headwind from center closures.

    • Continued enrollment headwinds in Australia contributed roughly a 100 basis point headwind to full service enrollment growth.

    • Net interest expense increased $3 million over the prior year due to higher average borrowings and modestly higher effective borrowing rates.

    • The structural effective tax rate on adjusted net income was 28.75%, higher than 2025 due to non-deductible losses in Australia.

    Guidance & targets

    16
    CategoryTargetConfidence
    Full-year revenue
    $3.085 billion to $3.115 billion
    high materiality
    High
    Full-year adjusted EPS
    $5.05 to $5.15 per share
    high materiality
    High
    Full-year Full Service revenue growth
    2.5% to 3%
    medium materiality
    Medium
    Full-year Back-up Care revenue growth
    13% to 15%
    medium materiality
    High
    Full-year Educational Advisory revenue growth
    low single digits
    low materiality
    Medium
    Full-year interest expense
    $58 million to $60 million
    medium materiality
    High
    Full-year adjusted effective tax rate
    28.5%
    medium materiality
    High
    Full-year diluted share count
    51.5 million shares
    medium materiality
    High
    Q3 total revenue
    $835 million to $845 million
    high materiality
    High
    Q3 Full Service reported revenue growth
    50 to 100 basis points
    medium materiality
    Medium
    Q3 Back-up Care revenue growth
    12% to 14%
    medium materiality
    High
    Q3 Educational Advisory revenue growth
    low single digits
    low materiality
    Medium
    Q3 adjusted EPS
    $1.73 to $1.78 per share
    high materiality
    High
    Full-year Back-up Care operating margins
    28% to 30%
    medium materiality
    High
    Full-year Full Service operating margins
    flat-ish
    medium materiality
    Medium
    Full-year Educational Advisory operating margins
    20%
    low materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Back-up Care
    Revenue growth accelerated from 12% in Q1. Growth driven by increased unique users and frequency of use. Margin expansion due to improved operating efficiency.
    Adjusted operating margin: 26% (expanded 80 bps YoY)Usage growth: strong across care typesUsers: more unique usersFrequency of use: slight uptick
    		$194 million19%—$50 million adjusted operating income (26% margin)
    Full Service
    Growth driven by tuition increases, occupancy gains, and favorable FX, partially offset by 250 bps headwind from center closures and Australian enrollment declines. Margin expansion driven by tuition increases and U.K. operations improvement.
    Adjusted operating margin: 7.9% (expanded 50 bps YoY)Centers: 988 (opened 7, closed 7 lease model centers)Enrollment in centers >1 year: approximately 1% increase (excluding Australia)Australia enrollment headwind: approximately 100 bpsOccupancy: high 60% range (70% excluding Australia)Top-performing centers (>70% occupied): 53% of centersBottom cohort centers (<40% occupied): 5% of centers (down from 10% YoY)
    		$557 million3%—$44 million adjusted operating income (7.9% margin)
    Educational Advisory
    Revenue consistent with prior year. Growth in College Coach offset by lower participant engagement in EdAssist.
    		$28 millionConsistent with prior year—16% adjusted operating margin

    Operational metrics

    18
    Adjusted operating income
    $99 millionincreased 15%
    Q2 FY26

    Company-wide adjusted operating income.

    Adjusted operating margin
    12.7%expanded 95 bps
    Q2 FY26

    Company-wide adjusted operating margin.

    Adjusted EBITDA
    $131 millionincreased 13%
    Q2 FY26

    Company-wide adjusted EBITDA.

    Adjusted EBITDA margin
    17%
    Q2 FY26

    Company-wide adjusted EBITDA margin.

    Fixed asset investments
    $19 million
    Q2 FY26

    Capital expenditures.

    Net interest expense
    $14 millionincreased $3 million YoY
    Q2 FY26

    Increased due to higher average borrowings and modestly higher effective borrowing rates.

    Structural effective tax rate on adjusted net income
    28.75%higher than 2025
    Q2 FY26

    Higher due to losses in Australia that are not currently deductible.

    Full Service FX tailwind
    100 bps
    Q2 FY26

    Favorable impact from foreign exchange on full service revenue.

    Full Service FX tailwind
    125 bps
    FY26

    Expected favorable impact from foreign exchange on full service revenue for the full year.

    Full Service FX impact
    -25 bps
    H2 FY26

    Expected tapering of FX tailwind in the second half of the year.

    Full Service net center closings headwind
    225 bps
    Q3 FY26

    Expected headwind to full service revenue growth from net center closings.

    Back-up care summer camp use
    25% to 30%
    Annual

    Percentage of total network use for summer camp.

    Full Service average price increase
    4%
    FY26

    Average tuition increase for the year.

    Full Service occupancy
    mid-60s
    H2 FY26

    Expected occupancy trend for the second half of the year.

    Full Service centers candidates for closure
    25 to 50
    Beyond FY26

    Number of centers identified as not likely to be viable over the long term.

    Australia underperformance (loss)
    $20 million to $25 million
    FY26

    Expected loss from Australian operations for the full year.

    Australia underperformance (margin headwind)
    150 bps
    FY26

    Impact of Australia's underperformance on overall full service operating margin.

    Center closure lease exit costs (margin headwind)
    50 bps
    FY26

    Impact of costs to fully exit leases and facility costs for closed centers on overall full service operating margin.

    Industry KPIs

    7
    MetricValueDetails
    EPS$1.28USD
    Revenue$779 millionUSD
    Operating margin12.7%%
    Adjusted EBITDA ebita$131 millionUSD
    Operating income EBIT$99 millionUSD
    Cash investments balance$164 millionUSD
    Share buyback capital return$250 millionUSD

    Product announcements

    1
    ProductTypeDetails
    Employer Camps (Steve & Kate's)expansion

    Deals & partnerships

    4
    Leading academic medical centerTransition of management for three full service centers

    The academic medical center had self-operated these centers for over 20 years and previously was a College Coach client. Bright Horizons assumed management with ongoing financial support, illustrating transition opportunities within employer-sponsored care.

    Fortune 500 global consumer companyNew back-up care client

    New client win for back-up care services, demonstrating broad relevance of care solutions.

    Fortune 500 global industrial companyNew back-up care client

    New client win for back-up care services, demonstrating broad relevance of care solutions.

    Leading financial services companyAdded College Coach services

    A long-time back-up care client expanded its relationship by adding College Coach to support employees and their families, demonstrating the 'One Bright Horizons' strategy.

    Risks & headwinds

    4
    Enrollment headwinds in AustraliaOngoing (Q2 FY26, FY26)

    Approximately 100 basis points headwind to full service enrollment growth; $20 million to $25 million expected loss for FY26; 150 bps margin headwind for FY26.

    Mitigation: Aligning staffing with enrollment levels, improving enrollment, considering center closures, exploring broader strategic options for the geography.

    Headwind from center closuresOngoing (Q2 FY26, Q3 FY26, FY26)

    Approximately 250 basis points headwind to full service revenue growth (Q2 FY26); approximately 200 basis points headwind for FY26; approximately 225 basis points headwind for Q3 FY26.

    Mitigation: Optimizing the portfolio, closing underperforming centers, working to fully exit leases and facility costs.

    Higher net interest expenseQ2 FY26

    Increased $3 million over prior year (Q2 FY26).

    Mitigation: Not explicitly stated, but management noted comfort with current leverage ratios (2.2x net debt to adjusted EBITDA).

    Higher effective tax rateQ2 FY26

    28.75% (Q2 FY26), higher than 2025.

    Mitigation: Primarily due to losses in Australia that are not currently deductible; mitigation tied to improving Australia operations.

    What to watch in Q3 FY26

    5

    Australia operations strategic review

    Next quarter and intermediate term
    CurrentUnderperforming, contributing $20M-$25M loss for FY26
    TargetProgress on strategic options and operational improvements

    Why it matters

    Australia's underperformance is a significant headwind to full service margins and overall profitability, and management is exploring strategic options.

    And then over the intermediate term, we obviously are looking at strategic options as it relates to how we think about that particular geography broadly.

    Q&A highlights

    6

    How much is summer camp usage driving back-up care growth, and what are the assumptions for back-to-school enrollment in full service?

    Summer camp is a component of back-up care, typically 25-30% of total network use annually, but growth is broad across care types. Full service enrollment was stable in H1, with slight positive growth ex-Australia, but backfill for graduating preschoolers takes time, and Q3/Q4 comparisons are against strong prior-year U.K. operations.

    “For the overall year, we generally see summer camp use in sort of the 25% to 30% of total use. So it is still just one of the components of our network use care types.”

    asked by Andrew Steinerman · answered by Stephen Kramer

    2 min read6 chapters

    Detailed Narrative

    01

    Back-up Care Growth Drivers and Performance

    Back-up care revenue grew 19% to $194 million, accelerating from Q1, driven by increased unique users and frequency of use. The company highlighted three growth levers: deepening penetration within existing clients, expanding its ecosystem of care solutions (e.g., employer camps), and winning new logos. Investments in technology and network expansion, including instant book capability, are enhancing service delivery and competitive advantage, positioning back-up care for continued double-digit growth.

    02

    Full Service Center Strategy and Occupancy Trends

    Full service revenue grew 3% to $557 million, in line with expectations, driven by tuition increases and favorable FX, partially offset by center closures and Australian enrollment headwinds. The company opened 7 centers, including 5 for employer clients, demonstrating growth through transitioning self-operated programs and partnering on new worksite locations. Occupancy averaged in the high 60% range (70% excluding Australia), with the lowest occupied centers (<40%) declining to 5% from 10% year-over-year, indicating portfolio optimization.

    03

    Addressing Underperformance in Australia Operations

    Australia operations continued to be a headwind, impacting full service enrollment by approximately 100 basis points and contributing to a higher effective tax rate due to non-deductible losses. Management is focused on aligning staffing with enrollment levels, improving enrollment, and considering center closures to optimize the portfolio. The company is also exploring broader strategic options for the Australian geography to get it back on track, similar to past efforts in the U.K.

    04

    Educational Advisory Segment and Engagement

    Educational advisory revenue was $28 million, consistent with the prior year. Growth in College Coach, driven by demand for expert college admissions and financial aid guidance, was offset by lower participant engagement in EdAssist. The focus for EdAssist is to increase engagement by strengthening its technology platform, expanding solution relevance, and making education benefits more accessible to working learners.

    05

    One Bright Horizons Strategy and Client-Centricity

    The 'One Bright Horizons' strategy aims to extend the reach and value of the service portfolio by engaging more employees and employers across all solutions. This involves leveraging existing trust to expand relationships (e.g., a College Coach client transitioning to full service centers) and helping employees utilize available benefits. This client-centric approach drives deeper penetration at both employer and employee levels, reinforcing the strength of the employer-sponsored model.

    06

    Capital Allocation and Share Repurchases

    The company generated $95 million in cash from operations and made $19 million in fixed asset investments during the quarter. It executed $250 million in share repurchases in Q2, following $225 million in Q1, demonstrating an opportunistic approach to capital allocation. With a trailing net leverage ratio of 2.2x net debt to adjusted EBITDA, management expressed comfort with current ratios and willingness to be opportunistic, though no further repurchases are contemplated in current guidance.

    AI-generated summary of the company’s earnings call. Not investment advice.