Bright Horizons Family Solutions Inc. (NYSE:BFAM) has been in a steady decline over the past few weeks, struggling to find momentum despite broader market stability. When viewed through the lens of the Adhishthana Principles, the reasons behind this persistent weakness begin to unfold with clarity. Here's a breakdown of the stock and what the cycle reveals.Bright Horizons' Adhishthana CycleThe stock is currently in Phase 18, the final stage of its 18-phase Adhishthana cycle, and has been in a persistent dow ...

Key Takeaways Stride's fiscal 2025 revenues rose 18% y/y to $2.4B, fueled by double-digit enrollment growth.Bright Horizons lifted the 2025 guidance to $2.9-$2.92B in revenues and an EPS of $4.15-$4.25.Stride's ROE of 25.5% surpasses Bright Horizons' 16.9%, underscoring stronger shareholder returns.Stride, Inc. (LRN) and Bright Horizons Family Solutions Inc. (BFAM) are two distinct players in the education space, yet both are leaning on expansion strategies to capitalize on opportunities. Stride has carved ...

Company Overview - Bright Horizons Family Solutions Inc. (NYSE:BFAM) is a provider of early education and childcare, operating in three segments: Full Service Center-Based Child Care, Back-Up Care, and Educational Advisory services [4] Financial Performance - The company is experiencing a recovery phase, surpassing pre-pandemic revenue levels with strong cash flow and a positive growth outlook [2] - DRW Securities LLC recently acquired 3,400 shares of BFAM, valued at approximately $432,000, indicating investor interest [1] Market Trends - The childcare sector has evolved structurally, with increasing female participation in the labor force and the rise of dual-income households driving demand for quality early education [3] - The company is expanding its revenue-generating services, such as backup care and educational advisory, while leveraging B2B contracts to enhance growth [2]

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the period ended June 30, 2025, reflect increased total assets to $3.92 billion, total stockholders' equity to $1.40 billion, and strong revenue and net income growth to $1.40 billion and $92.8 million respectively, with robust operating cash flow [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $3.92 billion from $3.85 billion at year-end 2024, driven by higher cash and goodwill, while total liabilities decreased slightly to $2.52 billion, and total stockholders' equity grew to $1.40 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,919,797** | **$3,850,319** | | Cash and cash equivalents | $179,222 | $110,327 | | Goodwill | $1,824,479 | $1,762,683 | | **Total Liabilities** | **$2,520,676** | **$2,571,923** | | Current portion of revolving credit facility | $101,500 | $— | | Long-term debt — net | $796,956 | $918,449 | | **Total Stockholders' Equity** | **$1,399,121** | **$1,278,396** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q2 2025, revenue grew 9.2% to $731.6 million and net income increased 39.8% to $54.8 million, with six-month revenue reaching $1.40 billion and net income rising 65.3% to $92.8 million, resulting in diluted EPS of $1.61 Statement of Income Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $731,570 | $670,059 | $1,397,097 | $1,292,768 | | Gross Profit | $182,550 | $162,412 | $338,287 | $297,540 | | Income from Operations | $86,052 | $69,059 | $148,324 | $108,996 | | Net Income | $54,775 | $39,174 | $92,824 | $56,163 | | Diluted EPS | $0.95 | $0.67 | $1.61 | $0.96 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operations was $220.4 million, with decreased investing activities and increased financing activities driven by debt repayments and treasury stock purchases, resulting in a net cash increase of $73.4 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $220,374 | $225,750 | | Net cash used in investing activities | ($37,968) | ($64,132) | | Net cash used in financing activities | ($116,087) | ($106,757) | | **Net increase in cash** | **$73,364** | **$54,138** | - Financing activities in H1 2025 included **$405 million** in borrowings under the revolving credit facility, offset by **$451 million** in principal payments on long-term debt and **$60.3 million** in treasury stock purchases[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail operations, revenue recognition, debt, acquisitions, and segment performance, highlighting revenue growth, a new $500 million share repurchase program, a $900 million revolving credit facility, and the impact of a new U.S. tax law - The company provides early education, back-up care, and educational advisory services, operating **1,020** early education and child care centers as of June 30, 2025[27](index=27&type=chunk)[28](index=28&type=chunk) Revenue by Segment - Six Months Ended June 30 (in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Full service center-based child care | $1,050,814 | $990,717 | | Back-up care | $291,282 | $251,162 | | Educational advisory services | $55,001 | $50,889 | | **Total** | **$1,397,097** | **$1,292,768** | - In April 2025, the company acquired two centers in the United Kingdom for **$5.1 million**, recording **$3.6 million** in goodwill[41](index=41&type=chunk) - On April 17, 2025, the company amended its credit facilities, increasing the revolving credit facility to **$900 million** and repaying the term loan A facility[49](index=49&type=chunk) - A new U.S. tax law, the One Big Beautiful Bill Act (OBBBA), was signed on July 4, 2025, with the company currently assessing its impact on financial statements[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong H1 2025 performance to growth across all segments, particularly 19% in back-up care, alongside successful debt refinancing, increased liquidity, and a new $500 million share repurchase program, navigating a dynamic environment with strategic focus [Results of Operations](index=25&type=section&id=Results%20of%20Operations) For Q2 2025, revenue increased 9.2% to $731.6 million, driven by 19.2% growth in back-up care and 6.5% in full-service child care, improving gross profit margin to 25.0%, with H1 2025 income from operations rising 36.1% to $148.3 million Q2 2025 vs Q2 2024 Revenue Growth by Segment | Segment | Q2 2025 Revenue | Q2 2024 Revenue | % Change | | :--- | :--- | :--- | :--- | | Full service center-based child care | $540,267 | $507,077 | +6.5% | | Back-up care | $162,670 | $136,490 | +19.2% | | Educational advisory services | $28,633 | $26,492 | +8.1% | | **Total Revenue** | **$731,570** | **$670,059** | **+9.2%** | - Full service child care revenue growth in Q2 was driven by a **2% net increase in enrollment** and average tuition rate increases of **4-5%**[110](index=110&type=chunk) - Personnel costs, representing approximately **70%** of costs for the full service segment, increased **10%** in Q2 year-over-year due to enrollment growth and a **3-4%** increase in average hourly wages[114](index=114&type=chunk) - For the six months ended June 30, 2025, income from operations increased **36%** for the full-service child care segment and **41%** for the back-up care segment compared to the prior year[141](index=141&type=chunk) [Non-GAAP Financial Measures and Reconciliation](index=31&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliation) For Q2 2025, Adjusted EBITDA increased 12.7% to $115.6 million and Adjusted Net Income rose 19.9% to $61.5 million, with six-month Adjusted EBITDA growing 17.1% to $207.9 million and Adjusted Net Income increasing 31.3% to $106.2 million Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $54,775 | $39,174 | $92,824 | $56,163 | | Adjustments | $60,840 | $63,456 | $115,095 | $121,448 | | **Adjusted EBITDA** | **$115,615** | **$102,630** | **$207,919** | **$177,611** | Reconciliation of Net Income to Adjusted Net Income (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $54,775 | $39,174 | $92,824 | $56,163 | | Adjustments | $6,729 | $12,127 | $13,399 | $24,759 | | **Adjusted Net Income** | **$61,504** | **$51,301** | **$106,223** | **$80,922** | [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $179.2 million in cash and $483.3 million available under its upsized $900 million revolving credit facility, supported by a new $500 million share repurchase program and sufficient funds for future obligations - As of June 30, 2025, the company had **$179.2 million** in cash and **$483.3 million** available for borrowing under its revolving credit facility[151](index=151&type=chunk)[152](index=152&type=chunk) - A new **$500 million** share repurchase program was authorized on June 3, 2025. During H1 2025, the company repurchased approximately **0.5 million shares** for **$60.7 million**[156](index=156&type=chunk) - In April 2025, the company amended its credit facilities, increasing the revolving credit facility from **$400 million** to **$900 million** and used proceeds to repay the term loan A facility[166](index=166&type=chunk) - The company uses interest rate caps to mitigate risk on its variable-rate debt, with agreements covering a total notional value of **$1.15 billion** with various strike rates and expiration dates[169](index=169&type=chunk)[170](index=170&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its exposure to market risks, including interest rate and foreign currency exchange rate fluctuations, since December 31, 2024 - The company is exposed to market risk from changes in interest rates and foreign currency exchange rates, but reports no material changes in this exposure since year-end 2024[175](index=175&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[176](index=176&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[177](index=177&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various ordinary course legal claims and suits, but does not anticipate a material adverse effect on its financial position or results from their resolution - The company is involved in ordinary course legal matters and believes their resolution will not have a material adverse effect on its financial results[178](index=178&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have been made to the company's risk factors as disclosed in its 2024 Form 10-K[179](index=179&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased 348,375 shares of common stock under board-authorized programs, with a new $500 million share repurchase program becoming effective on June 3, 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | April 2025 | 249,178 | $115.48 | 245,654 | | May 2025 | 58,570 | $123.13 | 54,500 | | June 2025 | 48,221 | $122.15 | 48,221 | | **Total** | **355,969** | | **348,375** | - A new **$500 million** share repurchase program was authorized effective June 3, 2025, replacing the prior program. As of June 30, 2025, **$494.1 million** remained available for future repurchases[181](index=181&type=chunk)[185](index=185&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) The company reports that no directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan during the three months ended June 30, 2025[184](index=184&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Refinancing Amendment dated April 17, 2025, officer certifications, and XBRL data files - Exhibits filed include the Refinancing Amendment for the credit facility, CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906, and Inline XBRL documents[186](index=186&type=chunk)

Core Insights - Bright Horizons Family Solutions (BFAM) reported revenue of $731.57 million for the quarter ended June 2025, marking a year-over-year increase of 9.2% and an EPS of $1.07 compared to $0.88 a year ago, exceeding the Zacks Consensus Estimate of $723.73 million by 1.08% [1] - The EPS surprise was +7% against the consensus estimate of $1.00 [1] Revenue Breakdown - Revenue from Back-up care was $162.67 million, surpassing the average estimate of $155.94 million by two analysts, reflecting a year-over-year change of +19.2% [4] - Revenue from Full service center-based child care was $540.27 million, slightly below the estimated $540.39 million, with a year-over-year increase of +6.6% [4] - Revenue from Educational advisory and other services reached $28.63 million, exceeding the average estimate of $27.59 million, representing a year-over-year change of +8.1% [4] Adjusted Income from Operations - Adjusted income from operations for Full service center-based child care was $40.28 million, compared to the average estimate of $36.85 million [4] - Adjusted income from operations for Educational advisory and other services was $4.85 million, exceeding the average estimate of $3.89 million [4] - Adjusted income from operations for Back-up care was $40.92 million, surpassing the average estimate of $37.62 million [4] Stock Performance - Shares of Bright Horizons have returned -6.1% over the past month, while the Zacks S&P 500 composite has changed by +2.7% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Insights - Bright Horizons Family Solutions (BFAM) reported quarterly earnings of $1.07 per share, exceeding the Zacks Consensus Estimate of $1 per share, and up from $0.88 per share a year ago [1] - The company achieved a revenue of $731.57 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.08% and increasing from $670.06 million year-over-year [3] Earnings Performance - The quarterly earnings surprise was +7.00%, and the company has surpassed consensus EPS estimates for four consecutive quarters [2] - In the previous quarter, the company reported earnings of $0.77 per share against an expectation of $0.63, resulting in a surprise of +22.22% [2] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.24 on revenues of $773.76 million, and for the current fiscal year, it is $4.10 on revenues of $2.89 billion [8] - The estimate revisions trend prior to the earnings release was unfavorable, leading to a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [7] Industry Context - The Business - Services industry, to which Bright Horizons belongs, is currently in the top 39% of over 250 Zacks industries, suggesting a favorable industry outlook [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [6]

Financial Data and Key Metrics Changes - Revenue increased by 9% to $732 million, with adjusted EPS growing by 22% to $1.70, both exceeding expectations [5][15] - Adjusted operating income rose by 25% to $86 million, with operating margins up 150 basis points to 11.8% [15] - Adjusted EBITDA increased by 13% to $116 million, representing an adjusted EBITDA margin of 16% [15] Business Line Data and Key Metrics Changes - Full service segment revenue was $540 million, up 7%, driven by enrollment growth, tuition increases, and new center openings [5][15] - Backup Care revenue grew by 19% to $163 million, reflecting strong client engagement and demand [9][18] - Education Advisory segment revenue increased by 8% to $29 million, with solid participant growth [10][18] Market Data and Key Metrics Changes - In the UK, operational and financial momentum continued, with solid growth in both enrollment and margins [7][9] - Average occupancy in centers increased to the high 60% range, with improvements noted in underperforming centers [6][17] Company Strategy and Development Direction - The company is focused on its "One Bright Horizon" strategy to expand offerings and deepen employer engagement [11][12] - Continued investments in staffing, technology, and programming are aimed at improving efficiency and experience across centers [8][9] - The company is exploring the benefits of the updated 45F program, which emphasizes employer-supported childcare [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued low single-digit enrollment growth and highlighted the importance of enhancing the enrollment process [7][32] - The company raised its full-year revenue guidance to a range of $2.9 billion to $2.92 billion, reflecting an 8% to 9% growth expectation [14][20] - Management noted that the UK segment is on track to break even by the end of the year, supported by improved demand and government funding [66] Other Important Information - The company opened five new centers and closed eight, resulting in a net decrease of three centers for the quarter [63] - Cash generated from operations was $134 million, with $41 million used for stock repurchases [19] Q&A Session Summary Question: Margin expectations by segment for the full year - Management expects backup care margins to be in the range of 25% to 30%, with full service margins expanding by approximately 125 basis points [24][26] Question: Insights on the 45F program - The updated 45F program could significantly benefit existing accounts, although new client demand may not see immediate stimulation [28][29] Question: Enrollment growth specifics - Management anticipates low single-digit growth, around 2%, for the remainder of the year, with strong marketing efforts in place [31][32] Question: Sales cycle dynamics - The company is enhancing the inquiry-to-enrollment process through technology and personalized support [37][38] Question: M&A pipeline status - The company has been less active in M&A, focusing on high-quality programs in strategic locations, with a current imbalance between seller expectations and fair pricing [56][58] Question: UK segment performance - The UK segment is on track to break even, with improved operating execution and demand supported by expanded government funding [66] Question: Backup care growth and client behavior - Growth in backup care is driven by increased user engagement rather than changes in program design, with extended booking windows for summer care [47][48]

[Second Quarter 2025 Financial Results & Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results%20%26%20Highlights) Bright Horizons reported strong Q2 2025 financial results and highlights, driven by effective execution and increased service utilization [Overview and CEO Commentary](index=1&type=section&id=1.1%20Overview%20and%20CEO%20Commentary) Bright Horizons achieved strong Q2 2025 results, driven by disciplined execution and increased service utilization in education and care - Bright Horizons is a leading provider of high-quality early education and child care, family care solutions, and workforce education services[1](index=1&type=chunk) - CEO Stephen Kramer stated, "We generated strong results this quarter, driven by disciplined execution and a continued focus on delivering high-quality education and care"[2](index=2&type=chunk) - The continued increase in usage of services by client employees underpins the growth of the company's impact and financial performance[2](index=2&type=chunk) [GAAP Financial Performance Summary](index=1&type=section&id=1.2%20GAAP%20Financial%20Performance%20Summary) Bright Horizons reported strong Q2 2025 GAAP performance with significant year-over-year growth in revenue, operating income, net income, and diluted EPS Q2 2025 GAAP Financial Performance (YoY) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :----------------------- | :----------------- | :----------------- | :--------- | | Revenue | $731.6 | $670.1 | 9% | | Income from operations | $86.1 | $69.1 | 25% | | Net income | $54.8 | $39.2 | 40% | | Diluted EPS | $0.95 | $0.67 | 42% | - Revenue increase was primarily due to enrollment gains and tuition price increases at centers, as well as increased utilization of back-up care[3](index=3&type=chunk) - The increase in net income was due to higher income from operations, lower interest expense, and a lower effective tax rate[4](index=4&type=chunk) [Non-GAAP Financial Performance Summary](index=1&type=section&id=1.3%20Non-GAAP%20Financial%20Performance%20Summary) Bright Horizons delivered strong Q2 2025 non-GAAP results, with significant growth in Adjusted EBITDA, adjusted income, and adjusted EPS Q2 2025 Non-GAAP Financial Performance (YoY) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Adjusted EBITDA* | $115.6 | $102.6 | 13% | | Adjusted income from operations* | $86.1 | $69.1 | 25% | | Adjusted net income* | $61.5 | $51.3 | 20% | | Diluted adjusted EPS* | $1.07 | $0.88 | 22% | - Increases in adjusted EBITDA and adjusted income from operations were due to increased contributions from both the back-up care segment and full-service center-based child care segment[5](index=5&type=chunk) - Adjusted net income increased as a result of higher adjusted income from operations and lower interest expense[5](index=5&type=chunk) [Operational Metrics](index=1&type=section&id=1.4%20Operational%20Metrics) Bright Horizons operated 1,020 centers serving 115,000 children, demonstrating strong cash generation and managed investments - As of June 30, 2025, the Company operated **1,020** early education and child care centers[6](index=6&type=chunk) - These centers have the capacity to serve approximately **115,000** children[6](index=6&type=chunk) Cash Flow from Operations and Net Investments (Six Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | | :----------------------------- | :---------------- | :---------------- | | Cash from operations | $220.4 | $225.8 | | Net investments | $38.0 | $64.1 | [2025 Financial Outlook](index=2&type=section&id=2025%20Financial%20Outlook) Bright Horizons provided updated fiscal year 2025 guidance for revenue and diluted adjusted earnings per common share [Fiscal Year 2025 Guidance](index=2&type=section&id=2.1%20Fiscal%20Year%202025%20Guidance) Bright Horizons updated its FY2025 guidance, projecting revenue between $2.9 billion and $2.92 billion and diluted adjusted EPS of $4.15 to $4.25 Fiscal Year 2025 Financial Guidance | Metric | Range | | :-------------------------------- | :---------------------- | | Revenue | $2.9 billion to $2.92 billion | | Diluted adjusted EPS | $4.15 to $4.25 | - The company will provide additional information on its outlook during its earnings conference call[10](index=10&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) Bright Horizons is a leading global provider of education and care services, with investor and media contact information provided [About Bright Horizons Family Solutions Inc.](index=3&type=section&id=3.1%20About%20Bright%20Horizons%20Family%20Solutions%20Inc.) Bright Horizons is a leading global provider of early education, child care, and workforce education services, partnering with over 1,450 employers - Bright Horizons is a leading global provider of high-quality early education and child care, back-up care, and workforce education services[16](index=16&type=chunk) - For over **35 years**, the company has partnered with employers to support workforces by providing services that help working families and employees thrive[16](index=16&type=chunk) - Bright Horizons operates more than **1,000** early education and child care centers in the United States, the United Kingdom, the Netherlands, Australia, and India, serving over **1,450** of the world's leading employers[16](index=16&type=chunk) [Investor and Media Contacts](index=3&type=section&id=3.2%20Investor%20and%20Media%20Contacts) Contact information is provided for investor relations, including CFO and Group VP, and for media inquiries with the VP of Communications - Investors can contact Elizabeth Boland (CFO) or Michael Flanagan (Group VP - Strategic Finance)[17](index=17&type=chunk) - Media inquiries can be directed to Ilene Serpa (VP - Communications)[17](index=17&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's condensed consolidated statements of income, balance sheets, and cash flows [Statements of Income](index=4&type=section&id=4.1%20Statements%20of%20Income) The condensed consolidated statements of income detail financial performance for the three and six months ended June 30, 2025 and 2024 [Three Months Ended June 30](index=4&type=section&id=4.1.1%20Three%20Months%20Ended%20June%2030) Condensed Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2025 (Thousands) | % of Revenue | 2024 (Thousands) | % of Revenue | | :--------------------------------- | :--------------- | :----------- | :--------------- | :----------- | | Revenue | $731,570 | 100.0% | $670,059 | 100.0% | | Cost of services | $549,020 | 75.0% | $507,647 | 75.8% | | Gross profit | $182,550 | 25.0% | $162,412 | 24.2% | | Income from operations | $86,052 | 11.8% | $69,059 | 10.3% | | Net income | $54,775 | 7.5% | $39,174 | 5.8% | | Diluted EPS | $0.95 | - | $0.67 | - | [Six Months Ended June 30](index=5&type=section&id=4.1.2%20Six%20Months%20Ended%20June%2030) Condensed Consolidated Statements of Income (Six Months Ended June 30) | Metric | 2025 (Thousands) | % of Revenue | 2024 (Thousands) | % of Revenue | | :--------------------------------- | :--------------- | :----------- | :--------------- | :----------- | | Revenue | $1,397,097 | 100.0% | $1,292,768 | 100.0% | | Cost of services | $1,058,810 | 75.8% | $995,228 | 77.0% | | Gross profit | $338,287 | 24.2% | $297,540 | 23.0% | | Income from operations | $148,324 | 10.6% | $108,996 | 8.4% | | Net income | $92,824 | 6.6% | $56,163 | 4.3% | | Diluted EPS | $1.61 | - | $0.96 | - | [Balance Sheets](index=6&type=section&id=4.2%20Balance%20Sheets) The condensed consolidated balance sheets present the company's financial position as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Thousands) | Item | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $179,222 | $110,327 | | Total current assets | $472,796 | $496,031 | | Fixed assets — net | $591,152 | $572,939 | | Goodwill | $1,824,479 | $1,762,683 | | Total assets | $3,919,797 | $3,850,319 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Current portion of revolving credit facility | $101,500 | — | | Total current liabilities | $839,102 | $779,399 | | Long-term debt — net | $796,956 | $918,449 | | Total liabilities | $2,520,676 | $2,571,923 | | Total stockholders' equity | $1,399,121 | $1,278,396 | | Total liabilities and stockholders' equity | $3,919,797 | $3,850,319 | - Cash and cash equivalents increased from **$110.3 million** at December 31, 2024, to **$179.2 million** at June 30, 2025[23](index=23&type=chunk) - Long-term debt (net) decreased from **$918.4 million** to **$797.0 million**[23](index=23&type=chunk) [Statements of Cash Flows](index=7&type=section&id=4.3%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows detail cash generated from operating, investing, and financing activities for H1 2025 and 2024 Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, Thousands) | Activity | 2025 | 2024 | | :--------------------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $220,374 | $225,750 | | Net cash used in investing activities | $(37,968) | $(64,132) | | Net cash used in financing activities | $(116,087) | $(106,757) | | Net increase in cash, cash equivalents and restricted cash | $73,364 | $54,138 | | Cash, cash equivalents and restricted cash — end of period | $197,079 | $143,589 | - Cash from operations slightly decreased from **$225.8 million** in 2024 to **$220.4 million** in 2025[25](index=25&type=chunk) - Net cash used in investing activities decreased significantly from **$64.1 million** in 2024 to **$38.0 million** in 2025[25](index=25&type=chunk) [Segment Information](index=8&type=section&id=Segment%20Information) This section details revenue and income from operations across the company's various business segments [Three Months Ended June 30](index=8&type=section&id=5.1%20Three%20Months%20Ended%20June%2030) All segments showed revenue growth in Q2 2025, with 'Full service center-based child care' leading revenue and 'Back-up care' demonstrating strong operating income margin Segment Revenue and Income from Operations (Three Months Ended June 30, 2025 vs 2024, Thousands) | Segment | 2025 Revenue | 2024 Revenue | 2025 Income from Operations | 2024 Income from Operations | | :-------------------------------- | :----------- | :----------- | :-------------------------- | :-------------------------- | | Full service center-based child care | $540,267 | $507,077 | $40,280 | $32,644 | | Back-up care | $162,670 | $136,490 | $40,923 | $31,593 | | Educational advisory services | $28,633 | $26,492 | $4,849 | $4,822 | | Total | $731,570 | $670,059 | $86,052 | $69,059 | - Back-up care segment's income from operations as a percentage of revenue was **25%** in Q2 2025, up from **23%** in Q2 2024, indicating strong profitability[27](index=27&type=chunk) - Full service center-based child care segment's income from operations as a percentage of revenue increased from **6%** to **7%** year-over-year[27](index=27&type=chunk) [Six Months Ended June 30](index=8&type=section&id=5.2%20Six%20Months%20Ended%20June%2030) All segments continued growth in H1 2025, with 'Full service center-based child care' leading revenue and 'Back-up care' maintaining a strong operating income margin Segment Revenue and Income from Operations (Six Months Ended June 30, 2025 vs 2024, Thousands) | Segment | 2025 Revenue | 2024 Revenue | 2025 Income from Operations | 2024 Income from Operations | | :-------------------------------- | :----------- | :----------- | :-------------------------- | :-------------------------- | | Full service center-based child care | $1,050,814 | $990,717 | $73,534 | $54,088 | | Back-up care | $291,282 | $251,162 | $67,307 | $47,576 | | Educational advisory services | $55,001 | $50,889 | $7,483 | $7,332 | | Total | $1,397,097 | $1,292,768 | $148,324 | $108,996 | - Back-up care segment's income from operations as a percentage of revenue increased from **19%** in H1 2024 to **23%** in H1 2025[27](index=27&type=chunk) - Full service center-based child care segment's income from operations as a percentage of revenue improved from **5%** to **7%** over the six-month period[27](index=27&type=chunk) [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) This section details the company's use and reconciliation of non-GAAP financial measures for performance evaluation [Presentation and Definition of Non-GAAP Measures](index=2&type=section&id=6.1%20Presentation%20and%20Definition%20of%20Non-GAAP%20Measures) Bright Horizons uses non-GAAP measures like Adjusted EBITDA and Adjusted EPS for internal performance and compensation, with definitions and reconciliation provided - Non-GAAP financial measures are used as key performance indicators for evaluating internal performance and determining incentive compensation[13](index=13&type=chunk) - Adjusted EBITDA is defined as GAAP EBITDA adjusted for stock-based compensation expense and non-recurring costs[7](index=7&type=chunk) - The company does not provide forward-looking GAAP reconciliation for diluted adjusted EPS due to the unpredictability of certain items like tax benefits, impairments, and transaction costs[14](index=14&type=chunk) [Non-GAAP Reconciliations Table](index=9&type=section&id=6.2%20Non-GAAP%20Reconciliations%20Table) This table reconciles GAAP net income to various non-GAAP measures, including EBITDA, Adjusted EBITDA, and Adjusted EPS, for Q2 and H1 2025 and 2024 Non-GAAP Reconciliations (Three and Six Months Ended June 30, Thousands, except share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------- | :-------- | :-------- | :-------- | :-------- | | Net income (GAAP) | $54,775 | $39,174 | $92,824 | $56,163 | | EBITDA | $108,786 | $94,525 | $192,933 | $162,095 | | Adjusted EBITDA | $115,615 | $102,630 | $207,919 | $177,611 | | Adjusted income from operations | $86,052 | $69,059 | $148,324 | $108,996 | | Adjusted net income | $61,504 | $51,301 | $106,223 | $80,922 | | Diluted adjusted EPS | $1.07 | $0.88 | $1.84 | $1.39 | - Adjustments to GAAP net income include interest expense, income tax expense, depreciation, amortization of intangible assets, and stock-based compensation expense[29](index=29&type=chunk) - Other costs in 2025 include **$0.6 million** related to the April 2025 debt refinancing, impacting adjusted income before income tax[30](index=30&type=chunk) [Additional Information](index=2&type=section&id=Additional%20Information) This section provides conference call details and important disclosures regarding forward-looking statements and associated risks [Conference Call Details](index=2&type=section&id=7.1%20Conference%20Call%20Details) Bright Horizons hosted an investor conference call on July 31, 2025, to discuss Q2 results and outlook, with replays available - An investor conference call was held on **July 31, 2025**, at **5:00 pm ET**[11](index=11&type=chunk) - Replays of the call are available through **August 14, 2025**, via phone or webcast on the Investor Relations section of the company's website[11](index=11&type=chunk) [Forward-Looking Statements](index=2&type=section&id=7.2%20Forward-Looking%20Statements) This press release contains forward-looking statements subject to risks and uncertainties, including demand changes, labor conditions, and economic factors - This press release includes forward-looking statements that involve risks and uncertainties, which can cause actual results to vary significantly[12](index=12&type=chunk) - Key risks include changes in demand for child care, dependent care and other workplace solutions, constrained labor market for teachers and staff, and the impact of increased compensation and labor costs[12](index=12&type=chunk) - Other risks include competition, ability to pass on increased costs, indebtedness, seasonal fluctuations, general economic conditions, and cybersecurity incidents[12](index=12&type=chunk)

Company Overview - Bright Horizons Family Solutions (BFAM) is expected to report a year-over-year increase in earnings due to higher revenues for the quarter ended June 2025, with a consensus outlook indicating a positive earnings picture [1][3] - The earnings report is anticipated to be released on July 31, and the stock may move higher if the results exceed expectations, while a miss could lead to a decline [2] Earnings Estimates - The consensus EPS estimate for Bright Horizons is $1.01 per share, reflecting a year-over-year change of +14.8%, with revenues projected at $723.73 million, an increase of 8% from the previous year [3] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst assessments [4] Earnings Surprise Prediction - The Most Accurate Estimate for Bright Horizons is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +0.50%, suggesting a bullish outlook from analysts [12] - However, the stock carries a Zacks Rank of 4, complicating predictions of an earnings beat [12] Historical Performance - Bright Horizons has a history of beating consensus EPS estimates, having done so in the last four quarters, with a notable surprise of +22.22% in the last reported quarter [13][14] Industry Comparison - In comparison, SPS Commerce (SPSC) is expected to post earnings of $0.90 per share for the same quarter, indicating a year-over-year change of +12.5%, with revenues expected to reach $185.27 million, up 20.6% [18][19] - SPS Commerce has a higher Earnings ESP of +0.89% and a Zacks Rank of 3, indicating a stronger likelihood of beating the consensus EPS estimate [19][20]

Group 1 - The company experienced a significant decline during the pandemic but is projected to recover and exceed previous figures by 2024, with current revenue nearing $3 billion and healthy cash flow [1] - The analysis approach focuses on triangulation between valuation by multiples, discounted cash flow (DCF), and dividend yield, emphasizing a bottom-up methodology [1] - The company prioritizes smaller capitalization stocks in the Consumer Discretionary and Consumer Staples sectors, where there is greater potential for asymmetries and alpha generation [1] Group 2 - The investment philosophy combines income and value investing strategies, requiring an adequate margin of safety in multiples and projected cash flow [1] - Dividend yield is considered a fundamental component for generating returns and mitigating risks, especially in low coverage stocks [1] - The analysis aims to produce in-depth, rational, data-driven insights to support informed investment decisions [1]