Bright Horizons Posts $230.7 Million Net Loss Despite 5% Revenue Growth
Key Facts
Bright Horizons reported on October 29 results for the third quarter ended September 30, 2026, posting revenue of $841.5 million, up 5% year over year, but recording a net loss of $230.7 million. The company said revenue growth came mainly from backup care, while impairment losses in its international operations affected operating results. Diluted loss per share was $4.76, compared with earnings of $1.37 a year earlier. By contrast, adjusted diluted EPS, a non-GAAP measure, rose to $1.80 from $1.57. Revenue came in below StockStory's estimate of $842.4 million, while adjusted EPS exceeded its estimate of $1.76.
The company said revenue increased $38.7 million from the year-earlier quarter, with growth in backup care, while the increase was limited by the impact of comprehensive-care center closures over the previous twelve months. Chief Executive Stephen Kramer described 5% revenue growth as reflecting the strength of the diversified portfolio, noting that the backup-care segment grew 13%. But that growth did not prevent operating income from falling from $120.8 million in the third quarter of 2025 to an operating loss of $187.1 million. The company attributed this mainly to $294 million in impairment losses on assets in its international comprehensive-care operations. It said higher service levels and backup-care contributions partially offset the impact.
The decline extended to adjusted net income, which fell to $87.5 million from $90.1 million a year earlier, despite adjusted EPS rising to $1.80. The company attributed the decrease in adjusted net income to higher interest expense and a higher adjusted tax rate. The company said the $230.7 million net loss reflected the decline in operating income, along with a higher effective tax rate and interest expense. The results thus showed a divergence between revenue growth and adjusted EPS on one hand, and the large accounting loss on the other. This divergence reflects the impact of asset impairments on reported results, alongside financing and tax costs.
Bright Horizons lowered its fiscal 2026 outlook, projecting revenue of approximately $3.07 billion and adjusted diluted EPS of $4.98 to $5.03. Its previous outlook, issued with second-quarter results, called for revenue of $3.085 billion to $3.115 billion and EPS of $5.05 to $5.15. Investing.com analysts estimated full-year revenue of $3.10 billion and EPS of $5.11, compared with the company's new guidance. The company said the updated outlook is based on current trends and expectations. It also forecast fourth-quarter revenue of $730 million to $740 million and adjusted EPS of $1.14 to $1.19.
On the earnings call, the company said the start of new-family enrollments in the fall was weaker than expected, with the largest change from its enrollment expectations in the U.K. It said the greatest impact on enrollment would appear in the fourth quarter and continue until the regulatory notice is lifted. Ofsted said it had conducted inspections and monitoring at 68 group nurseries, finding requirements violations at 39 of them. The agency then issued an additional notice requiring action on child safety, safeguarding policies and staff supervision. Kramer said the U.K. regulatory action was unprecedented, adding: "So we don't know how quickly things will return to normal."
The stock fell after the results; it closed the October 29 session at $66.98, down 3.33% from the previous close, then dropped to $63 in extended trading, according to an Investing.com report published on October 30. The company's shares had closed at $69.29 on October 28, compared with a 52-week high of $109.86, according to an earlier report by the site. The company hosted an investor call on October 29 at 5 p.m. Eastern Time to discuss results, outlook and strategy. A replay was available through November 12. The company is presenting its fourth-quarter and fiscal 2026 outlook to investors amid weaker fall enrollment and the regulatory notice in the U.K.