KinderCare Learning Companies Q1 Earnings Call Highlights

KinderCare Learning Companies NYSE: KLC reported modest first-quarter revenue growth while management said lower enrollment in its early childhood education centers continued to pressure profitability.

On the company’s first-quarter 2026 earnings call, Chief Executive Officer Tom Wyatt said KinderCare finished the quarter “slightly better than expected,” helped by execution efforts at its centers and sites. However, he said enrollment in the company’s early childhood education, or ECE, centers remained below prior-year levels, down about 3% year over year.

That was an improvement from a 3.6% decline in the fourth quarter, but Wyatt said enrollment remains “a primary pressure point on the business.”

“Enrollment is not something that turns during a single quarter,” Wyatt said. “It’s a process of improving execution across a large portfolio of centers.”

Revenue Edges Higher, But Profitability Declines

Chief Financial Officer Tony Amandi said first-quarter revenue was $673 million, up modestly from a year earlier. Same-center revenue fell by $7 million, primarily because of lower enrollment, while newer centers and higher tuition rates helped offset some of the pressure.

Amandi said pricing contributed about 2% to ECE revenue growth, despite lower subsidy reimbursement rates that the company expects to persist at least through current state budget cycles. Overall enrollment was down 3% year over year.

Same-center occupancy was 66% in the quarter, up 150 basis points from the fourth quarter but down 310 basis points from the prior-year quarter.

KinderCare reported a net loss of $290 million, or a loss of $2.45 per share, which Amandi attributed to a non-cash impairment related to the decline in the company’s stock price. He said the charge does not affect liquidity or the company’s outlook.

Adjusted EBITDA was $52 million, down from $83 million a year earlier. Adjusted net income was $4.2 million, or $0.04 per share, compared with $27 million, or $0.23 per share, in the prior-year period.

Amandi said lower occupancy was the largest driver of the decline in adjusted earnings, noting that KinderCare must maintain minimum teacher-to-student ratios, limiting labor flexibility at current occupancy levels.

Marketing Efforts Drive Inquiry Growth

Management said KinderCare is seeing early signs that recent operational and marketing changes are improving demand generation. Wyatt said targeted marketing investments have led to a 15% increase in inquiries in targeted areas and a 3% increase across KinderCare overall.

In response to a question from BMO Capital Markets analyst Jeff Silber, Wyatt said paid search investments have been effective and that KinderCare is beginning to see those inquiries convert into enrollment.

“There is not a lack of demand for children that need childcare,” Wyatt said. “And we’re gonna get them. That’s what our plan is.”

The company is also trying to reduce administrative work for center directors so they can spend more time with families and teachers. Wyatt said the goal is to improve response times to families, tour quality and follow-up practices.

Executives highlighted progress in KinderCare’s “Opportunity Region,” a group of historically challenged centers where enrollment increased 8% year over year during the quarter. Wyatt credited focused leadership, lower no-show rates and improved family experiences.

Champions and B2B Continue to Grow

KinderCare said its Champions before- and after-school business remained a strong performer. Amandi said Champions revenue increased 17% in the quarter, driven primarily by new site openings and incremental pricing.

In the question-and-answer portion of the call, Amandi said Champions ended the quarter with 1,159 sites, up from 1,038 a year earlier, representing about 10% growth in site count.

Wyatt said the quality of new sites being evaluated by Champions has improved year over year, adding that many potential new sites are additional schools from existing clients.

The company’s business-to-business offering also showed momentum. Wyatt said KinderCare signed 12 new tuition benefit clients during the quarter, including a large public university in Florida and multiple professional organizations. He said employer interest in childcare support remains strong and that these relationships are becoming “a more meaningful and complementary part” of the business.

KinderCare opened three new centers and acquired two during the quarter. Amandi said cash consideration for the acquisitions was about $500,000, funded from $1.1 million in free cash flow generated in the quarter. New and acquired centers contributed about $12 million in revenue since the start of the year, up 35% from the same period a year earlier.

Company Plans More Center Closures Than Usual

Wyatt said KinderCare has completed a more comprehensive review of its real estate network and expects to close more centers in 2026 than its typical annual rate of about 1% of centers. Amandi said the company normally closes about 15 to 20 centers each year, but will exceed that level this year.

The company has reviewed center-level trends, local demographics, occupancy, engagement, lease terms and other factors. Amandi said KinderCare is still working through timing and lease discussions and expects to provide more detail when it reports second-quarter results.

Management said the current full-year outlook includes only the typical 1% closure assumption, not the incremental closures being evaluated.

Wyatt said closures are difficult because of their impact on families and employees, but the company will seek to transfer families and staff to nearby locations where possible.

“This is disciplined portfolio management,” Wyatt said. “It will result in stronger, more productive centers and higher overall occupancy over time.”

Guidance Raised for Adjusted EBITDA and EPS

KinderCare maintained its full-year revenue outlook of $2.7 billion to $2.75 billion. The company raised its full-year adjusted EBITDA guidance to a range of $215 million to $235 million and adjusted EPS guidance to $0.15 to $0.25.

Amandi said the revised outlook reflects first-quarter performance and early signs of progress, while still assuming gradual momentum into the second half of the year. The company continues to expect tuition to contribute about 3% to revenue, offset by a 3% occupancy headwind. Champions and B2B are expected to contribute about 1%, with new center openings and acquisitions each contributing about 50 basis points.

For the second quarter, KinderCare expects revenue of $690 million to $700 million and adjusted EBITDA of $63 million to $67 million. Capital expenditures are expected to be approximately 5% of revenue for the year, and free cash flow is forecast at $35 million to $40 million.

Wyatt said KinderCare’s focus remains on improving execution, converting inquiries into enrollment and building momentum ahead of the back-to-school season.

“The demand is there,” Wyatt said in closing remarks. “We have the opportunity.”

About KinderCare Learning Companies NYSE: KLC

KinderCare Learning Companies Inc is a provider of high-quality early childhood education by center capacity. KinderCare Learning Companies Inc is based in PORTLAND, Ore.

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