Bright Horizons Cuts 2026 Outlook to $3.07 Billion After Third-Quarter Losses

Key Facts

Bright Horizons cut its adjusted financial outlook for 2026 on October 29, projecting revenue of about $3.07 billion and adjusted diluted earnings per share of $4.98 to $5.03 after third-quarter results showed significant losses. In its earnings release, the company said it now expects revenue at that level, with that adjusted per-share earnings range, in a revision reflecting pressure on its international business. Its previous outlook, issued in July, called for revenue of $3.085 billion to $3.115 billion and adjusted earnings per share of $5.05 to $5.15. The new cut puts the revenue ceiling below the lower end of the previous outlook and lowers the expected earnings range. The move came as the company continued reviewing strategic alternatives in Australia, without announcing a final decision about the market.

The company reported third-quarter revenue of $841 million, up 5% from the same period in 2025, but posted an operating loss of $187 million and a net loss of $231 million, or $4.76 a diluted share. The company attributed a major part of the losses to goodwill impairment charges, which totaled $290 million during the quarter and $296.3 million in the nine months ended September 30. It said the charges were tied mainly to long-term cash flow expectations for its Australian operations. The results highlight the gap between annual revenue growth and the effect of the accounting valuation of the Australian business on net results. Adjusted earnings per share for the quarter, according to market coverage, was $1.80, topping Wall Street's estimate of $1.76, while revenue came in slightly below expectations.

The company cited weak occupancy and demand in Australia among the factors prompting its review of strategic alternatives in the market, and did not say the review involved a sale of specific assets or had produced a particular option. Across its broader business, Bright Horizons operates early education and child care centers, as well as backup care services, and said it had 979 centers with capacity for about 112,500 children at the end of September. Its financial statements show that cash generated from operations in the first nine months of 2026 was $208.1 million, compared with $202.8 million in the same period of 2025. Cash and cash equivalents totaled $119.2 million on September 30, with $436 million available to borrow under its revolving credit facility. These figures provide financial context for the ongoing review as the company works through differing performance across its markets.

In the United Kingdom, Ofsted issued a welfare requirements notice concerning Bright Horizons' corporate oversight arrangements, not a protection notice as described in the previous draft. The agency said the notice addresses children's safety and well-being, safeguarding policies and procedures, and staff supervision, and that it will continue monitoring implementation of the requirements. Ofsted clarified that the action does not mean there are concerns at every individual center. The agency had conducted follow-up and inspections at 68 nurseries through September 15, 2026; it found that just under half of the nurseries subject to follow-up were now meeting the requirements, while inspectors identified violations at 39 sites. The chief inspector said there was evidence of improvement across the group, but added that further work was needed to ensure the requirements were met consistently.

Bright Horizons shares fell 3.33% during the October 29 session to $66.98, then dropped a further 5.94% in after-hours trading to $63 following the results announcement. Market coverage said the adjusted earnings-per-share beat did not offset the impact of the full-year outlook cut and revenue that came in slightly below expectations. The market reaction therefore reflected a combination of quarterly revenue growth, adjusted earnings above estimates, and the large net loss tied to goodwill charges. The company has not announced a final decision on its options in Australia, and said it would provide additional information about its outlook during its third-quarter earnings call. A replay of the call is available through November 12, 2026.