KinderCare Learning Companies NYSE: KLC reported second-quarter 2026 revenue of $698 million, down slightly from $700 million a year earlier, as enrollment pressure and center closures outweighed growth in its Champions school-age care business and employer-sponsored offerings.
The company posted a net loss of $8.8 million, or $0.07 per share, compared with adjusted net income of $26 million, or $0.22 per share, in the prior-year period. Adjusted EBITDA declined to $63 million from $82 million a year earlier, reflecting lower occupancy and operating leverage, as well as roughly $5 million related to adjustments in insurance and legal reserves.
Chief Executive Officer Tom Wyatt said results were largely in line with expectations and highlighted continued efforts to improve execution at the company’s centers, simplify center-director responsibilities and optimize the physical footprint.
Occupancy, Enrollment and Footprint Changes
Same-center occupancy was 68.6% during the quarter, down 240 basis points from the prior year. However, Chief Financial Officer Tony Amandi said consolidations provided a 70-basis-point benefit to occupancy during the period. Total enrollment declined 4% year over year, reflecting both ongoing enrollment pressure and the impact of center consolidation actions.
KinderCare closed 49 centers during the second quarter, representing about 3% of its total center footprint. Wyatt said the locations were primarily in the company’s fourth and fifth performance quintiles and had average occupancy below 37%.
The company expects to close 80 to 85 centers for the full year, with most of the remaining closures anticipated in the fourth quarter. Amandi said the optimization initiative is expected to create an estimated annualized revenue headwind of about $57 million but provide an $8 million annualized benefit to adjusted EBITDA. Annual rent expense is expected to decline by approximately $7 million, while occupancy is projected to improve by about 150 basis points once the work is complete.
Management said the closures are intended to align KinderCare’s footprint with shifting demographics and local demand. The company evaluates centers based on market demographics, inquiries, engagement, financial trends, nearby locations and the potential to transition families to “magnet” centers within a 10- to 15-minute drive. Amandi said labor availability was generally not a factor preventing enrollment growth.
The company expects continued, routine center closures in future years as part of managing a multi-location business, though the current optimization initiative is expected to be completed in 2026. Amandi said KinderCare expects to enter 2027 with a better-aligned footprint, improving occupancy trends and a cost structure better positioned for long-term growth.
Growth Areas and Enrollment Initiatives
While the core KinderCare brand faced enrollment pressure, the company cited several areas of growth. Champions revenue increased 13% year over year, driven by 85 net new sites since the second quarter of 2025 and higher average revenue per site. Wyatt said the business has now delivered four consecutive quarters of double-digit revenue growth.
KinderCare for Employers added several new partners during the quarter, according to management. The company said its national footprint across 42 states supports its ability to provide employer-sponsored childcare and tuition-benefit programs. Wyatt cited the company’s provision of 24-hour childcare for public safety employees in Dallas during the World Cup as an example of a tailored employer solution.
The company’s Learning Adventures enrichment programs, which include subjects such as phonics, STEM and Spanish, generated revenue that nearly doubled from a year earlier, Wyatt said. KinderCare is expanding those offerings to additional centers and seasonal programs.
Management also reported improving performance at its premium Crème de la Crème brand. Enrollment in Crème de la Crème summer camps increased approximately 26% from a year earlier. Shortly after the quarter ended, the company opened its first Crème de la Crème location in California, in Irvine’s Great Park area.
KinderCare opened new centers in Bentonville, Arkansas, and Ridgefield, Washington, during the quarter, entering its 42nd state with the Bentonville opening. It also acquired five centers for about $500,000 in cash consideration. New and acquired centers contributed approximately $2.6 million in revenue year to date, Amandi said.
Wyatt said targeted marketing initiatives have increased year-over-year inquiries every week since their launch in the first quarter. The company added marketing spending ahead of the back-to-school season and recently introduced an artificial-intelligence program designed to evaluate the quality of tours, parent interactions, calls and follow-up by center directors.
Updated Outlook
KinderCare lowered its full-year outlook to account for the footprint optimization effort and lower expected subsidy-related pricing benefits. The company now expects:
- Revenue of $2.66 billion to $2.70 billion.
- Adjusted EBITDA of $200 million to $220 million.
- Adjusted earnings per share of $0.05 to $0.15.
- Capital expenditures of $120 million to $130 million.
- Free cash flow of less than $10 million, primarily due to elevated optimization-related cash costs.
The company expects occupancy to decline approximately 3% for the year, with reduced capacity from closures partly offsetting enrollment pressure. Tuition is expected to contribute about 2.5% to revenue growth, down from the company’s previous 3% expectation because state subsidy reimbursement rate increases have been slower than anticipated.
Champions and business-to-business operations are expected to contribute about 1% to revenue growth, while new centers and acquisitions are each expected to contribute roughly 50 basis points. Consolidations are projected to represent a 1.5% headwind to full-year revenue growth.
For the third quarter, KinderCare forecast revenue of $660 million to $680 million and adjusted EBITDA of $44 million to $48 million, with occupancy expected in the mid-60% range.
The company ended the quarter with $174 million in cash, $188 million of available revolving-credit capacity and net debt of approximately three times adjusted EBITDA. It has identified about 36 lease exits that could require $20 million to $25 million in payments. Amandi said some lease-related cash costs may extend into 2027, depending on negotiations and the timing of lease resolutions.
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.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Continue following MarketBeat
Add MarketBeat as your preferred source on Google to see our latest stories in your feed.
Before you consider KinderCare Learning Companies, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and KinderCare Learning Companies wasn't on the list.
While KinderCare Learning Companies currently has a Reduce rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The AI boom is creating opportunities across semiconductors, cloud computing, enterprise software, infrastructure, cybersecurity, and automation.
Inside this report, you’ll find 10 companies positioned to benefit as artificial intelligence moves from hype to real-world deployment and becomes a core growth driver for corporate America.
Get This Free Report
