Bright Horizons Family Solutions Q1 Earnings Call Highlights

07 May 2026, 10:14 by Renee Jackson · The Cerbat Gem

Bright Horizons Family Solutions (NYSE:BFAM) reported first-quarter 2026 results that management described as a “positive start” to the year, with revenue up 7% and adjusted earnings slightly ahead of the company’s expectations. On the company’s earnings call, executives pointed to double-digit growth in Back-Up Care, margin expansion in the Full Service child care segment, and continued efforts to reposition the Educational Advisory business.

First-quarter results and reaffirmed full-year guidance

CEO Stephen Kramer said revenue grew 7% in the first quarter “in line with our expectations,” while earnings “came in slightly ahead.” CFO Elizabeth Boland reported revenue of $712 million, adjusted operating income of $65 million (9.1% of revenue), and adjusted EBITDA of $96 million (13.4% of revenue). Adjusted EPS was $0.82, up 6% year over year and above the company’s prior guidance range of $0.75 to $0.80.

The company reaffirmed its full-year 2026 guidance, calling for:

Revenue of $3.075 billion to $3.125 billion
Adjusted EPS of $4.90 to $5.10

Boland added that the guidance does not include the effects of any additional share repurchases on interest expense or share count.

Back-Up Care: growth momentum and higher outlook

Back-Up Care revenue rose 12.5% to $145 million. Kramer said growth was driven by “continued expansion in unique users with solid use across all care types,” and he highlighted early reservations heading into peak summer utilization for school-age programs. Boland noted the segment posted its “16th consecutive quarter of double-digit top-line growth.”

Adjusted operating margin in Back-Up Care was 18% in the quarter. Boland said that result is typical for the seasonally lower-use first quarter, and the company still expects full-year margins to reach its 28% to 30% target as utilization rises in subsequent quarters. Asked about the year-over-year margin decline, Boland attributed it to care-type and provider-network mix during a low-use quarter.

Management raised its full-year Back-Up Care revenue growth outlook to 12% to 14%, up from the prior 11% to 13%. In response to a question from Baird’s Jeffrey Meuler, Kramer said the increase reflects “conviction around the momentum that we have around active users as well as their use patterns,” supported by visibility from reservation windows for many clients heading into summer.

Kramer also said the company updated its longer-term Back-Up Care growth framework. Responding to Goldman Sachs analyst George Tong, he pointed to an updated long-term algorithm of 11% to 13% growth, which he called an upgrade from prior historical targets.

Full Service: occupancy improvement, closures, and Australia headwinds

Full Service revenue increased 6% to $541 million. Kramer said growth reflected tuition increases and a foreign exchange tailwind, “partially offset by center closures as we continue to rationalize the portfolio.” The company opened two centers in the quarter—one in the Netherlands and a third location for Toyota in the U.S.—and closed 24 centers, consistent with plans discussed on its February call.

Boland said net closures were 22 during the quarter, leaving 988 centers at quarter-end. Occupancy averaged in the “mid-60% range,” improving from the fourth quarter of 2025 and the prior-year period.

Management also provided detail on occupancy cohorts. Boland said the portion of centers above 70% occupancy improved slightly year over year, while the share of centers below 40% occupancy improved more meaningfully—from 13% a year ago to 8% this quarter—reflecting enrollment progress and the impact of closing underperforming centers.

Adjusted operating income for Full Service was $37 million, up $4 million year over year, and adjusted operating margin expanded 30 basis points to 6.8%. Boland said tuition increases ahead of average wage costs and progress in the U.K. supported margin expansion, but Australia meaningfully constrained reported improvement.

Australia was a recurring topic on the call. Kramer said the company’s Australian portfolio—78 centers—experienced a sharper-than-expected enrollment decline in the quarter. He described an environment of increasing supply post-COVID and higher childcare “saturation rates,” particularly in key markets where the company operates. He also noted that in the first quarter, which typically sees school transitions and backfilling, the company “didn’t see the level of new starters.” Boland added that Australia is expected to be “a larger headwind” to Full Service reported margin than previously expected.

Boland quantified the impact in response to Deutsche Bank’s Faiza Alwy, stating Australia has “around $140 million of revenue” annually with losses of “$20 million-$25 million,” representing about 150 basis points of headwind to Full Service. She said that without Australia, Full Service margin expansion would be 25 to 50 basis points, but “with the effect of Australia,” the company expects “an element of call it flat margin growth or so this year.”

Educational Advisory: modest growth and new client launches

Educational Advisory revenue rose 2% to $27 million, and adjusted operating margin was 9%, which Boland said was broadly consistent with the prior year. Kramer highlighted new client launches including NXP Semiconductors, Visa, and Huntington Bank, and said the company remains focused on driving participant growth and usage across College Coach and assist services.

Capital allocation, taxes, and the Q2 outlook

Bright Horizons generated $108 million in operating cash flow and invested $20 million in net fixed assets, resulting in $88 million of free cash flow. Over the last 12 months, free cash flow totaled $276 million, which Boland said represented 106% conversion relative to adjusted net income.

The company repurchased $225 million of stock in the quarter, funded by free cash flow and incremental revolver borrowings. Boland said $577 million remained on the repurchase authorization announced in March. The company ended the quarter with $133 million of cash and a leverage ratio of 1.9x net debt to adjusted EBITDA.

Interest expense rose to $12 million from $10 million a year ago due to higher rates and higher borrowings tied to share repurchases. Boland also raised the company’s estimated adjusted effective tax rate for the year to 28% to 28.5%, up about 100 basis points from the prior guide, and said the non-deductibility of losses in Australia amplifies the earnings impact.

For the second quarter, the company expects total revenue growth of 5.25% to 6.5% and adjusted EPS of $1.17 to $1.22. Segment outlook for Q2 includes Full Service revenue growth of 2.5% to 3.5%, Back-Up Care growth of 15% to 17%, and Educational Advisory growth in the low single digits.

About Bright Horizons Family Solutions (NYSE:BFAM)

Bright Horizons Family Solutions, Inc (NYSE: BFAM) is a leading provider of employer-sponsored child care and early education services, offering a range of solutions designed to support working families and organizations. Through a network of on-site, near-site and center-based programs, the company partners with corporate and nonprofit clients to deliver infant, toddler, preschool and school-age care. Services emphasize age-appropriate curriculum, developmental milestones and community engagement to ensure high-quality learning experiences.