Key Takeaways
- Bright Horizons shares fell 17% after it cut its 2026 outlook to about $3.07 billion in revenue and $4.98 to $5.03 in adjusted EPS.
- The trouble is in full-service child care. A U.K. regulator’s safeguarding notice slowed new enrollments, and Australia led to a $294 million impairment.
- Adjusted EPS rose 15% in the third quarter because of buybacks, and some of the money for them was borrowed.
- Management expects the bigger enrollment hit in the fourth quarter, and there’s no date yet for the U.K. notice to lift.
Bright Horizons Family Solutions (BFAM) is down 17% today. It cut its 2026 outlook when it reported third-quarter results after Thursday’s close.
The quarter itself held up
Revenue rose 5% to $841 million. Back-up care grew 13% to $286 million at a 35% adjusted operating margin.
Adjusted EPS jumped 15% to $1.80, though adjusted net income fell 3%. A diluted share count about 15% smaller made up the difference.
TIKR tracks 9 analysts on Bright Horizons Family Solutions. How many say “Buy”?
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Full service is the problem
Full-service child care made up 62% of the quarter’s revenue. It grew just 1%, at a 4% adjusted operating margin.
CEO Stephen Kramer said new family starts this fall were softer than expected, especially in the U.K. In late June, the U.K.’s child care regulator issued a group-wide notice requiring Bright Horizons to strengthen safeguarding across its nurseries there. On the call, he was asked how enrollment recovers once the notice lifts, and he said:
“This is an action that the UK regulator took that is without precedent.”
Which isn’t reassuring. CFO Elizabeth Boland said the larger hit to enrollment lands in the fourth quarter and lasts until the notice is lifted. Australia drove a $294 million impairment after a review of its longer-term outlook.
The new outlook implies roughly $1.14 to $1.19 of adjusted EPS in the fourth quarter. Here’s what analysts expected going in:
Baird downgraded the stock to Neutral this morning and cut its target to $65 from $98. It warned that the weak fourth quarter makes for a tough start to 2027.
The buyback bill
Bright Horizons spent $558 million on 7.7 million shares in the first nine months of 2026. That’s about $72 a share on average, which is above where the stock traded even before today’s drop.
Some of that money was borrowed. Long-term debt rose to $1.07 billion from $748 million at the end of 2025, and third-quarter interest expense climbed 41%.
Wait for the notice to lift
Here’s the stock’s forward P/E against its own range over the last five years:
My take: Back-up care is still a terrific business. But full service brings in most of the revenue, and nobody can say when the U.K. notice lifts. I’d wait for enrollment to turn before buying.
Of course, an early end to the notice would change that. The fourth-quarter report early next year is the next check.
So what is Bright Horizons stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
