Back-Up Care Drives Bright Horizons Growth as Core Slows
Adjusted earnings rose 20% to $1.28 a share, while a $19.1 million center impairment weighed on GAAP results.
Bright Horizons Family Solutions (BFAM), the child-care and education-services provider, posted a 7% increase in second-quarter revenue as faster growth in back-up care offset a slower advance in its full-service centers.
The growth rate held level with the first quarter but cooled from 9% in the fourth quarter of 2024 and 12% in the third. Revenue increased about 9% sequentially from the first quarter, reaching $779.2 million.
GAAP diluted earnings fell 17% to $0.79 a share, while net income declined 26% to $40.6 million. Adjusted earnings rose 20%, accelerating from 6% growth in the first quarter, as adjusted operating gains and a lower diluted share count offset a higher tax rate and interest expense.
Back-up care revenue climbed 19% to $193.6 million after rising 12% in the prior quarter. Full-service child-care revenue increased about 3% to $557.3 million, slowing from 6% growth, while educational advisory services revenue slipped about 1% to $28.3 million.
The back-up care segment's operating income increased about 23% to $50.3 million, and its margin widened to 26% from 25%. Full-service child care's adjusted operating margin expanded to 8% from 7%, while educational advisory operating income fell about 8% and its margin narrowed to 16%.
A $19.1 million impairment tied to center closures, changed market assumptions and weaker performance at certain locations pulled GAAP operating income down 7% to $79.8 million. Excluding the charge, adjusted operating income rose 15% to $99.0 million, and adjusted operating margin expanded to 13% from 12%. Adjusted EBITDA increased 13% to $130.6 million after growing 4% in the first quarter.
Bright Horizons now expects 2025 revenue of $3.085 billion to $3.115 billion and adjusted diluted earnings of $5.05 to $5.15 a share. The company had reaffirmed its original outlook after the first quarter.
Bright Horizons repurchased 6.6 million shares for $473.2 million during the first half, up from $60.7 million a year earlier, while operating cash flow declined 8%. Long-term debt rose to $1.07 billion from $747.6 million at year-end after the company issued a $375 million term loan, leaving it with more leverage as its center portfolio remained below year-end levels.