KinderCare Learning Companies Q2 Earnings Call Highlights

Second-quarter results weakened: Revenue fell slightly to $698 million, while the company posted an $8.8 million net loss and adjusted EBITDA declined to $63 million, driven by lower occupancy, enrollment pressure and center closures. Footprint optimization is accelerating: KinderCare closed 49 centers in the quarter and expects 80–85 closures for 2026. The initiative is expected to create a $57 million annualized revenue headwind but deliver $8 million in adjusted EBITDA savings and improve occupancy by roughly 150 basis points. Full-year guidance was reduced: The company now expects revenue of $2.66–$2.70 billion, adjusted EBITDA of $200–$220 million and free cash flow below $10 million. Growth businesses including Champions, employer-sponsored care and enrichment programs continued to perform well, partially offsetting core enrollment challenges.

KinderCare Learning Companies NYSE: KLC reported second-quarter 2026 revenue of $698 million, down slightly from $700 million a year earlier, as enrollment pressure and center closures outweighed growth in its Champions school-age care business and employer-sponsored offerings. The company posted a net loss of $8.8 million, or $0.07 per share, compared with adjusted net income of $26 million, or $0.22 per share, in the prior-year period. Adjusted EBITDA declined to $63 million from $82 million a year earlier, reflecting lower occupancy and operating leverage, as well as roughly $5 million related to adjustments in insurance and legal reserves.

Chief Executive Officer Tom Wyatt said results were largely in line with expectations and highlighted continued efforts to improve execution at the company’s centers, simplify center-director responsibilities and optimize the physical footprint.

Same-center occupancy was 68.6% during the quarter, down 240 basis points from the prior year. However, Chief Financial Officer Tony Amandi said consolidations provided a 70-basis-point benefit to occupancy during the period. Total enrollment declined 4% year over year, reflecting both ongoing enrollment pressure and the impact of center consolidation actions.

KinderCare closed 49 centers during the second quarter, representing about 3% of its total center footprint. Wyatt said the locations were primarily in the company’s fourth and fifth performance quintiles and had average occupancy below 37%. The company expects to close 80 to 85 centers for the full year, with most of the remaining closures anticipated in the fourth quarter.

Amandi said the optimization initiative is expected to create an estimated annualized revenue headwind of about $57 million but provide an $8 million annualized benefit to adjusted EBITDA. Annual rent expense is expected to decline by approximately $7 million, while occupancy is projected to improve by about 150 basis points once the work is complete. Management said the closures are intended to align KinderCare’s footprint with shifting demographics and local demand. The company evaluates centers based on market demographics, inquiries, engagement, financial trends, nearby locations and the potential to transition families to “magnet” centers within a 10- to 15-minute drive.

Amandi said labor availability was generally not a factor preventing enrollment growth. The company expects continued, routine center closures in future years as part of managing a multi-location business, though the current optimization initiative is expected to be completed in 2026. Amandi said KinderCare expects to enter 2027 with a better-aligned footprint, improving occupancy trends and a cost structure better positioned for long-term growth.