Bright Horizons Family Solutions Q4 Earnings Call Highlights

Key Points

• Bright Horizons beat expectations in Q4 with revenue up 9% to $734 million and adjusted EPS up 17% to $1.15, while full-year revenue was $2.93 billion, adjusted EPS $4.55, margin expansion of ~200 bps and $225 million of share repurchases in 2025.
• Back‑Up Care drove momentum — Q4 revenue rose 17% to $183 million (FY +19% to $728 million) with a Q4 segment margin of 32% and deeper penetration across more than 1,100 employer clients as utilization increases.
• For 2026 management guided revenue of $3.075–3.125 billion (5–6.5% growth) and adjusted EPS of $4.90–5.10, expecting Back‑Up Care growth of 11–13%, Full Service roughly 3.5–4.5% but facing ~200 bps headwind from net center closings and about 45–50 expected closures next year with occupancy remaining around mid‑60%.

Bright Horizons Family Solutions NYSE: BFAM reported what executives called a “strong finish” to 2025, with fourth-quarter results that topped internal expectations and reflected continued strength in its Back-Up Care segment alongside steady performance in its Full Service child care centers and Educational Advisory offerings.

Fourth-quarter results top expectations

Revenue in the fourth quarter increased 9% year over year to $734 million, while adjusted EPS rose 17% to $1.15, both ahead of management’s expectations, CEO Stephen Kramer said. CFO Elizabeth Boland added that adjusted operating income climbed 14% to $91 million, with adjusted operating margin rising about 60 basis points to 12.3%. Adjusted EBITDA increased 12% to $123 million, representing a 17% margin.

For the full year, Bright Horizons posted revenue of $2.93 billion, up 9% year over year, and adjusted EPS of $4.55, a 31% increase. Kramer said the company expanded adjusted operating margins by 200 basis points during 2025 and repurchased $225 million of shares for the year, including about $120 million in the fourth quarter.

Back-Up Care drives growth as utilization deepens

Back-Up Care continued to be the standout growth driver. Fourth-quarter revenue rose 17% to $183 million, supported by utilization across center-based, in-home, and school-age programs. Management said demand included both unplanned disruptions and predictable needs such as school breaks and holiday coverage.

For 2025, Back-Up Care revenue grew 19% to $728 million. Boland said segment operating margin was 32% in the fourth quarter, reflecting higher second-half volumes, “disciplined expense management,” and a favorable utilization mix. Kramer noted the service now spans more than 1,100 employer clients and “millions of eligible employees globally,” and that existing clients generated double-digit growth in back-up users even as eligible populations were relatively flat—evidence, he said, of deeper penetration.

On the Q&A, Kramer addressed whether employers are pushing back as employee usage rises. He said Bright Horizons has emphasized the productivity return on investment for employers, and that while growth is significant for Bright Horizons, the benefit remains a “pretty modest line item” within corporate benefits budgets. He added that employee feedback on the benefit remains strong and said the company is not seeing broad tightening of allowed use cases.

Asked about employers reducing the number of covered days after COVID-era expansions, management said such program changes were not the norm, and that the company’s growth algorithm remains centered on expanding unique users and increasing usage frequency. Kramer added that most employees who use back-up care do not fully use their allotted bank of days.

Full Service growth offset by portfolio rationalization

Full Service revenue increased 6% to $515 million in the fourth quarter, driven by tuition increases and modest enrollment gains, partially offset by center closures tied to Bright Horizons’ ongoing portfolio rationalization. Boland said foreign exchange provided an approximate 175 basis point tailwind, while centers closed since the fourth quarter of 2024 represented an approximate 200 basis point headwind to reported growth.

Enrollment at centers open more than one year rose about 1% in the quarter, with occupancy averaging in the mid-60% range. Management highlighted improvement in lower-occupancy locations: centers operating below 40% occupancy declined to 12% of the portfolio from 16% a year earlier. Boland said adjusted operating income in Full Service was $20 million, with the segment margin rising about 45 basis points to 4% as improved leverage in the U.S. and U.K. helped offset higher benefits costs.

Kramer also pointed to a milestone in the U.K., where the Full Service business produced a positive operating profit for the year, a turnaround from about $30 million in annual losses two years earlier. He attributed the improvement to higher occupancy, more consistent staffing, and expanded government supports that improved affordability.

During the quarter, Bright Horizons added six new centers, including four client centers, three of which were management transitions for Stormont Vail Health and Cone Health.

Management provided additional detail on closures, saying the company expects about 45–50 closures in 2026 and had already closed more than 20 early in the year. Executives said closure decisions generally involve underperforming centers, often near lease-end, where economics do not justify continuing operations. In some cases, centers are closed despite years remaining on a lease, which can create a “tail” of ongoing costs if the company cannot sublease the space. Bright Horizons said it aims to move families and staff to nearby centers when possible.

On margins, management said it expects 25–50 basis points of Full Service margin improvement in 2026, noting that most closures are “loss-making” centers, though some costs can persist post-closure.

Educational Advisory adds clients; guidance sets 2026 expectations

Educational Advisory revenue rose 10% to $36 million in the fourth quarter, with operating margin at 30%, consistent with the prior-year quarter. For 2025, segment revenue increased 9% to $125 million. Kramer said College Coach supported margin performance as more families used college counseling services, while EdAssist expanded its participant base. The company also cited new employer client launches including Samsung, Estée Lauder, and Becton Dickinson.

For 2026, management guided to revenue of $3.075 billion to $3.125 billion (5% to 6.5% growth) and adjusted EPS of $4.90 to $5.10. Boland broke out expectations by segment:

• Full Service: reported revenue growth of 3.5%–4.5% from enrollment gains and tuition increases, offset by roughly 200 basis points headwind from net center closings.
• Back-Up Care: reported revenue growth of 11%–13%, driven by expanded use.
• Educational Advisory: growth in the mid-single digits.

Boland said average tuition increases for 2026 are expected to be about 4%, with overall enrollment expected to improve by roughly 100 basis points. She also discussed segment margin expectations, citing Back-Up Care’s long-term operating margin range of 25%–30% and saying 2026 is expected to land in the “upper half” of that range, while Educational Advisory margins are expected to be in the low 20s for the year.

For the first quarter of 2026, Bright Horizons forecast total revenue growth of 6%–7.5% and adjusted EPS of $0.75 to $0.80, with segment growth expectations of 5.5%–6.5% for Full Service, 11%–13% for Back-Up Care, and low- to mid-single-digit growth for Educational Advisory.

Executives also discussed expected occupancy seasonality in Full Service, with higher occupancy in the first half of the year—peaking in the second quarter—and a return to mid-60% occupancy levels in the second half. Management said that with projected enrollment gains of around 100 basis points, it does not expect to exit 2026 meaningfully above mid-60% occupancy, though it views the longer-term trajectory as upward, particularly as low-occupancy centers continue to improve or exit the portfolio.

About Bright Horizons Family Solutions NYSE: BFAM

Bright Horizons Family Solutions, Inc NYSE: BFAM is a leading provider of employer-sponsored child care and early education services, offering a range of solutions designed to support working families and organizations. Through a network of on-site, near-site and center-based programs, the company partners with corporate and nonprofit clients to deliver infant, toddler, preschool and school-age care. Services emphasize age-appropriate curriculum, developmental milestones and community engagement to ensure high-quality learning experiences.

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