KinderCare Learning Companies, Inc.

Q2 revenue was $698 million versus $700 million last year. Reported net loss was $8.8 million, or a loss of $0.07 per share; adjusted EBITDA was $63 million versus $82 million a year ago; adjusted net income was $9.9 million and adjusted EPS was $0.08 versus $26 million and $0.22 last year. Same-center revenue decreased by $14 million, or 2%; total enrollment declined 4% year over year; same-center occupancy was 68.6%, down 240 basis points. Champions revenue increased 13% year over year. For the full year, KinderCare now expects revenue of $2.66 billion to $2.7 billion, adjusted EBITDA of $200 million to $220 million, and adjusted EPS of $0.05 to $0.15. Q3 guidance is revenue of $660 million to $680 million and adjusted EBITDA of $44 million to $48 million, with occupancy in the mid-60s. Management also expects CapEx of $120 million to $130 million and free cash flow of less than $10 million.

Tom Wyatt emphasized execution, targeted marketing, and simplifying center leaders’ day-to-day responsibilities as the main operational priorities. He said the company is seeing early traction in enrollment inquiry trends, Learning Adventures revenue has almost doubled year over year, and the premium Creme brand and Champions are both growing. He also framed the center consolidations as a deliberate tradeoff to better align the footprint with where families live and work, saying the business should be better positioned for 2027.

Tony Amandi said Q2 revenue of $698 million was pressured by enrollment and closures, but offset in part by Champions, employer-sponsored childcare, Learning Adventures, and newer centers. He quantified closure impacts as about $57 million of annualized revenue headwind and about $8 million of annualized adjusted EBITDA benefit once fully completed, while Q2 included about $3 million of direct closure costs and about $8 million of incremental insurance headwind in the updated outlook. He also highlighted $174 million of cash, $188 million of revolver availability, net debt to adjusted EBITDA of about 3x, and expected lease exit payments of $20 million to $25 million.

Analysts pressed management on the center closures, how the EBITDA math should be understood, and whether more closures could follow in 2027. Management said the closures are driven by demographics, occupancy, inquiry, and center-specific factors, not a single issue like COVID, and noted that 9 out of 10 closed centers so far were in quintile 5. On guidance, management said lower subsidy-related pricing assumptions, about $3 million of closure costs, and the $8 million insurance headwind all pressured the full-year EBITDA outlook, and that benefits from closures should start flowing more in 2027.