KinderCare Learning Companies, Inc. (NYSE: KLC) shares fell 20% after the early childhood education provider reported second-quarter earnings that came in below analyst forecasts.
The company posted adjusted earnings per share (EPS) of $0.22, missing the analyst consensus estimate of $0.26.
Revenue for the quarter was $700.1 million, falling short of the $705.72 million estimate but representing a 1.5% increase from $689.9 million in the same quarter last year.
The company attributed the shortfall primarily to softer-than-expected enrollment trends late in the quarter.
While KinderCare reported occupancy of 71% — in line with pre-pandemic levels — the lower enrollment offset approximately 2% growth from higher tuition rates.
“Our second quarter financial results reflect continued revenue growth and the resilience of our business, even as enrollment trends turned softer than anticipated late in the quarter,” said CEO Paul Thompson.
Income from operations fell 14.8% year-over-year to $68.7 million, compared with $80.6 million in the second quarter of 2024.
This decline was largely due to higher personnel costs from increased wage rates and other center operating expenses.
Kindercare’s stock at the time of writing was trading at $7.93, down by 19%, regaining some of the losses.
Updated 2025 Guidance
For fiscal year 2025, KinderCare refined its guidance. The company now expects revenue between $2.75 billion and $2.80 billion and adjusted EPS between $0.77 and $0.82.
The midpoint of this EPS range, $0.795, aligns closely with the analyst consensus estimate of $0.79.
The company highlighted that while enrollment trends softened, revenue growth remained positive due to tuition increases and continued expansion of its network.
As of June 28, 2025, KinderCare operated 1,589 early childhood education centers and 1,043 before- and after-school sites.
The total center and site count reached 2,632, ahead of the average analyst estimate of 2,574.
Segment performance and operational metrics
Breaking down the results by segment, early childhood education centers generated $647.68 million in revenue, below the two-analyst average estimate of $660.3 million.
Before and after-school sites produced $52.44 million in revenue, exceeding the $51 million estimate.
On operational capacity, KinderCare’s early childhood education centers came in at 1,589, slightly above the 1,584 centers estimated by analysts.
The before- and after-school site count was also ahead of expectations, with 1,043 locations versus the average estimate of 990.
The company ended the quarter with $119 million in cash and cash equivalents and $194.4 million in available borrowing capacity.
Despite the softer enrollment and earnings miss, KinderCare emphasized its ongoing commitment to growth and maintaining strong occupancy rates across its network.
While the second-quarter performance reflected certain headwinds, particularly on enrollment, KinderCare’s revised full-year guidance suggests the company expects stable revenue and earnings for the remainder of 2025.
Investors will be watching closely to see if enrollment trends improve and cost pressures ease in the coming quarters.
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