Greetings, and welcome to the First Quarter 2020 Earnings Release Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Michael Flanagan, Senior Director of Investor Relations. Thank you. Mr. Flanagan, you may begin.

Thanks, Victor, and hello to everyone on the call. With me on the call today are Stephen Kramer, Chief Executive Officer; and Elizabeth Boland, Chief Financial Officer. I'll turn the call over to Stephen after covering a few administrative matters. Today's call is being webcast, and a recording will be available under the IR section of our website. As a reminder to participants, any forward-looking statements made on this call, including those regarding future business and financial performance, including the impact of COVID-19 on our operations, are subject to the safe harbor statement included in our earnings release. Forward-looking statements inherently involve risks and uncertainties that may cause actual operating and financial results to differ materially and are described in detail in our SEC filings. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statements. We also refer today to non-GAAP financial measures, which are detailed and reconciled to their GAAP counterparts in our earnings release. Stephen will now take us through the review and update on the business.

Thanks, Mike. Hello to everyone on the call, and thank you for joining us this evening. I hope that all of you are staying safe and healthy during these unprecedented times. I would like to take this opportunity to thank the first responders, medical personnel, and others on the front line, who are working tirelessly to ensure that our communities' needs and critical care are being provided. And I want to thank our teachers and all early childhood educators who, in the face of the storm, have provided calm, nurturing, and loving environments for young children. I'm pleased that the field of early childhood education, now more than ever, is seen as an essential support within our society, and the teachers in the classroom are recognized as heroes. They have forever made a difference, and I am truly inspired by their individual and collective dedication. I'm going to begin today's call by briefly recapping our first quarter results. I will then discuss our response to the COVID-19 pandemic and the strategic actions we are taking to navigate the near-term challenges and to maintain positive momentum for the longer term. Elizabeth will provide a more detailed review of the numbers and some further context around the potential impacts from the pandemic before we open it up for your questions. To recap, the first quarter, we delivered revenue of $506 million, an increase of 1% and adjusted EPS of $0.74, a decrease of 9%. These results reflect the COVID-19-related impact to our business that began in March. Leading up to the crisis, our business was trending in line with our expectations for the quarter. In our full-service segment, we added 11 new centers, 9 of which were organic, including client centers for Fifth Third Bank and Verily Life, a subsidiary of Alphabet, and a second center for Pioneer Natural Resources. Our Back-Up Care business also started off exceptionally well, running high-teens growth in the first part of the quarter with over 50 client launches, including Anheuser-Busch, E*TRADE, Micron and Fifth Third, to launch Back-Up Care in connection with its new center opening. And we also added to our educational advisory client base during the quarter, launching services for DaVita, TIAA-CREF, and Gilead. But the strong momentum from fourth quarter 2019 and the early part of Q1 2020 was interrupted by the outbreak of COVID-19 in each of the key geographies in which we operate: the U.S., the U.K. and the Netherlands. While governments and health authorities across these 3 geographies ordered the closure of all nonessential businesses, our child care services have been deemed critical to support essential frontline employees, such as first responders, researchers, health care and medical professionals, who are leading the fight against COVID-19. So in mid-March, in order to best support our clients, families and staff, we began to temporarily close a significant portion of our centers and to concentrate our resources on health care and other essential client centers as well as critical hub centers to support the children of medical and other essential workers. Before I get into the current state of our operations, let me frame my comments by observing that we have weathered many economic cycles over Bright Horizons' 30-plus year history, driven by our value proposition and high-quality services, underpinned by a culture of caring and service. We also have a number of structural advantages driven by our employer-sponsored model in the U.S., significant government support outside the U.S. as well as the diversity of our service offerings. Our employer-sponsored cost-plus centers operate with no financial risk. Our employer-sponsored bottom line centers bear no occupancy costs. And our lease/consortium centers benefit from the support of various employers through Back-Up use and other subsidies. The Back-Up and Ed Advisory segments have continued the growth that they've seen in recent quarters. And with their strong operating margins and cash generation, provide additional support and stability to the overall business. So getting to the specifics. Today, approximately 250 of our nearly 1,100 centers globally remain open. The safety and well-being of our staff and the children in our care have always been and continue to be our first priority. We closely monitor guidance from the CDC and local health authorities and take direction from medical experts, including a direct relationship with a leading physician at Boston Children's Hospital. We have enhanced many of our existing practices and implemented new protocols, including social distancing procedures for pickup and drop-off, daily health checks for staff and children, the use of face masks by all Bright Horizons staff, limited group sizes for older children and enhanced hygiene and cleaning practices. In the U.S., approximately 150 of our 718 centers remain open to essential workforces. Our early childhood professionals are enabling medical staff to treat patients at leading hospital systems, including NewYork-Presbyterian, Johns Hopkins Medical and Mayo Clinic. They are also supporting essential employees at leading organizations such as SC Johnson, Union Pacific, and Cummins Engine. I'm also pleased with our partnership with First Responders First, a collaboration between Arianna Huffington's Thrive Global, the Harvard School of Public Health and the Creative Artists Association, to provide vital child care in communities that have been hit particularly hard by the virus, such as Chicago, Detroit, Seattle and DC. We also continue to do important work with our families enrolled at centers that are currently closed. Our educators have created an online platform where children are able to stay connected to the other children in their class and access a variety of teacher videos made to continue the science, art and reading curriculum while at home. In addition to facilitating virtual activities, we offer weekly webinars on key topics, and center director newsletters to keep families informed and up to date. Each of these are valuable ways for everyone in our community to stay connected, and these engagement activities will certainly aid in our reopening process. As we plan for the reopening of our centers across the U.S., we are following federal, state, and local guidelines related to shelter-at-home mandates. As such, we are not setting a single reopening date. Instead, we are engaging our client partners in discussions about their plans and the support they are seeking for their employees. Likewise, we will make decisions about reopening our lease/consortium centers in collaboration with client partners as well as insights gained through pulse surveys of enrolled and prospective families. We have been encouraged by the discussions with clients and early indications from parents about their interest in our reopening of their centers. We believe that the expertise that we have demonstrated in operating child care under COVID-19 protocols will not only allow us to open more safely and quickly, but also to provide the critical reassurance that clients and returning families desire. Turning now to the U.K., approximately 35 of our 313 centers remain open to serve those children of workers critical to the coronavirus response. Similar to the U.S., we are continuously monitoring guidance from the U.K. health authorities and currently anticipate a rolling reopening, which will track the lifting of shelter-in-place mandates. In the Netherlands, where we continue to operate approximately 60 centers, we have seen the most government support and therefore, limited disruption. Since the outbreak, our centers have been serving only parents working in critical professions. But starting next week, we expect they will reopen to all children and families. This is in line with the Dutch government's updated guidance to begin reopening the economy, starting with schools and child care centers. Let me now move to Back-Up Care, which has been a particular bright spot during this crisis. As you might recall, we finished 2019 with strong momentum in the use of our Back-Up Care services, and we saw those trends continue into 2020. As the pandemic spread during March and the need for child care supports became even more acute for both essential workers and for families affected by school closures, we experienced significant increases in demand from both current and new clients. In particular, we've seen increased demand for in-home care and reimbursement for self-source care. Our sales, operations, and technology teams have worked tirelessly to meet the surge in care requests, and we continue to marshal resources, including additional investments in automation. As we approach the summer months, we expect to see continued need for in-home care, increasing demand at our own centers as they reopen and for summer in Richmond care that we will operate along with partners. Looking further out, the increase in registered users that we have served during this crisis represents a new and larger population to whom we will market and ultimately hope to serve through traditional Back-Up Care. Our Ed Advisory business has also continued to deliver solid results. Employers remain committed to education programs and participation by their employees continues to track expectations. For those clients that have furloughed employees, we have introduced a special program, Education Boost, which is a cost-effective, self-paced option for impacted employees to start or continue their educational pursuits. We have also seen increased interest in discussing our student loan repayment program given the tax incentive created by the Cares Act. As we play a critical role in supporting working families during this pandemic, we, at the same time, have been forced to take difficult measures to ensure the financial health of the organization today and over the long term. We are making these hard decisions consistent with our employee-centric culture and our commitment to keeping the well-being of our employees and staff members at the forefront. Although we temporarily furloughed more than 22,000 of our teachers and support staff in connection with center closures, we have ensured that these team members had transition pay, continued health care coverage, and access to ongoing education benefits, such as Education Boost, the Ed Advisory program, which I just mentioned. We have taken a number of additional steps to strengthen our financial position and to preserve cash and liquidity. We've reduced discretionary spending and support costs and have focused our investments to prioritize the most critical operating areas and have suspended our share repurchase program. I have elected to forgo my salary, and our executive team and Board of Directors have also agreed to reductions in compensation until the majority of our centers reopen. Following the quarter's close, we amended and expanded our revolving credit facility to $385 million and raised $250 million through an equity investment from a long-term, well-respected institutional investor. This set of actions ensures that we are on solid footing as the economy begins to restart and recover and that we are well positioned to proactively take steps to reaccelerate our own growth and performance. Before I turn the call over to Elizabeth, I want to say that I'm honored that Bright Horizons continues to make a difference in the fight against COVID-19. And I want to extend a special thanks to those Bright Horizons employees across the world who are working tirelessly as well as to our loyal team members who are currently on furlough. Bright Horizons has been and will always be about our people. And it is the passion and expertise of each and every employee that allows us to collectively impact the lives of children, families and adult learners that we have the privilege to serve through our employer clients. So in summary, I remain very optimistic despite the difficulties presented by COVID-19. These challenging times highlight the best of Bright Horizons. Our vital role in the business continuity plans of our client partners, the value that our unique service offering provides to families and clients we serve and our ability to effectively operate during a crisis. While we are not providing 2020 revenue or earnings guidance at this time, given uncertainty around the duration and scope of the ongoing disruption, we draw great strength and stability from the financial contributions of our Back-Up Care and Ed Advisory services as well as employer support of our centers. It is devastating to consider that a vast number of child care centers may never reopen as a result of the financial hardship created by this pandemic. But for all the reasons I have described, we are confident in our ability to not only reopen but to find future growth opportunities in a post-pandemic environment. We have a strong balance sheet and even more importantly, the agility and ingenuity that has been demonstrated over the last 8 weeks and throughout our history to emerge from this current disruption stronger and more resilient than ever before.

Thank you, Stephen. I will now again recap the headlines for the quarter and provide some more detail on what actions we've taken to respond to the challenge of COVID-19. For the first quarter, overall revenue increased $5 million to $506 million. Adjusted operating income decreased $13 million to $49 million or 9.7% of revenue, and adjusted EBITDA of $81.5 million declined $12 million. As Stephen outlined, the COVID-19 impacts have been relatively confined to our full-service segment. Revenue in this segment contracted 1.7% or $7 million as high single-digit growth in the first 2 months was erased by a sharp decline in the final 2 weeks of the quarter as we began the temporary closure of centers beginning mid-March. Adjusted operating income compressed to $22.5 million or 5.4% compared to $41.5 million in 2019. When we closed centers, we determined that we would; one, allow parents to roll forward the partial month tuition as a credit for when centers reopen; and two, support our affected teachers and staff, with 2 weeks of transition pay subsequent to their center close dates, as well as continued health care and education benefits. We believe that both of these actions will support a quicker recovery as centers begin to reopen and as we recall, our teachers from furlough and invite families back to the centers. Our Back-Up Care operations performed well in the quarter, growing the top line 15% to $74 million and generating $22 million of operating income in the quarter, up $5 million from 2019. We continue to have strong utilization levels from both existing and new clients, particularly for in-home care and reimbursements for self-source care. Both of which have proven to be important alternatives to center-based care and school-age programs at this time. Our Ed Advisory business, which is delivered virtually and therefore, not directly impacted by social distancing orders grew revenue by 11% to $21 million in the quarter and generated operating income of $4 million on new client launches and expanded use by the existing base. Interest expense of $10 million in Q1 of '20 was down slightly over 2019 on both lower interest rates and lower average borrowings. The Q1 '20 structural tax rate on adjusted net income of 15% is down from 24% in 2019 on reduced taxable income and proportionately higher tax benefits under ASC 2016-09. Turning to the balance sheet and cash flow. We generated $64 million in cash from operations in the quarter and made modest investments in fixed assets and acquisitions of $13 million compared to $61 million in 2019. We ended the quarter with $49 million in cash and no borrowings outstanding on our revolver. Annual principal payments, which approximate $11 million are on our term loans, which mature in 2023. I'd like to now provide some additional context around the potential ongoing impacts from the COVID-19 pandemic and the mitigating actions that we're taking. As Stephen mentioned, we have a number of structural strengths in our business model, and we've also acted swiftly to rightsize our cost structure. Let me provide a few examples. First, as mentioned, our Back-Up Care and Ed Advisory businesses remain fully operational and growing. Both have been building on our extensive client partnerships and expanding our service offerings to meet new needs arising from the pandemic. Both segments generate strong operating margins, and in the first quarter of 2020, combined to generate $26.5 million in operating income and more than $30 million of adjusted EBITDA. We continue to expect these segments to contribute strong earnings and cash flow in Q2 and for the balance of the year. Second, it's important to remember that our full-service centers are largely employer-sponsored. In these centers, the client sponsor maintains responsibility for the facility costs, contributes to the operating cost of the center, and we earn a management fee. So of our roughly 1,100 centers, nearly half are client centers, where we generate no ongoing fixed expenses. In lease/consortium centers, we do have the responsibility for occupancy costs, which amount to roughly $15 million a month prior to any potential COVID-related rent deferrals or abatements, which we are pursuing. In our European operations, both the U.K. and Dutch governments provide substantial support for child care as well. Third, with clients bearing a significant portion of our fixed center cost, our full-service cost structure is highly variable, and we have the ability to flex that as needed. Personnel costs are the primary component of the variable center expenses, and they comprise roughly 70% of total costs. Concurrent with our center closures in mid-March, we made the decision to furlough the majority of our center employees. The result is that our labor expenses have been reduced roughly in proportion to the center closures. These actions were made to preserve the financial health of the organization during the pandemic and to foster a quick return to work for those furloughed employees. Lastly, the contributions from centers that remain operational, coupled with management fees and client coverage of transition labor costs, will also offset a portion of the ongoing costs in our closed locations. Looking ahead to the remainder of 2020, as Stephen mentioned, we're not providing revenue or earnings guidance at this time. As the duration and the scope of the ongoing business disruption, including the pace of reopening and ramping temporarily closed centers cannot be predicted. However, I can share some qualitative color in a few details on areas where we have more control and therefore, visibility. Our current view is that we expect the majority of our centers to remain closed, at least through the end of the second quarter. Given the late onset of the pandemic and only a partial quarter impact in Q1 of '20, we, therefore, expect the negative financial impact to be more pronounced in the second quarter than it was in Q1, with full-service revenue contracting in line with center closures and a related flow through to operating income of around 35% to 40%. As Stephen mentioned, we're continuously monitoring guidance and taking direction from medical experts and government authorities as it relates to reopening. With some stay-at-home orders beginning to be lifted and states and communities starting to reopen for certain businesses, we will look to methodically reopen and re-ramp through the remainder of the year and early 2021. We have prudently planned for a variety of outcomes. And we believe that we have ample liquidity to fund the operations of the business in a number of reopening scenarios, including a more protracted phasing-in of our centers and enrollment, although that is not what we anticipate happening. Regarding liquidity, cash at the quarter end was $49 million, as I mentioned. As we've highlighted, we've taken a number of steps to reduce discretionary spending and overhead costs, including the furloughing of support staff in addition to center employees, reducing executive and Board comp, and cutting nonessential spending. We've also had early success pursuing rent abatements and rent holidays and are taking advantage of various provisions of the Cares Act, including payroll tax deferrals, tax credits for retained employees, and accelerated tax depreciation. We've also reduced our capital expenditures, redirecting our investments to the highest priority areas that support growth and performance and would expect to spend approximately half of our previously guided $110 million to $115 million plan. And finally, as previously disclosed, subsequent to the end of the quarter, we upsized and amended our revolving credit facility to $385 million and added $250 million in equity capital. These actions increase our liquidity as we weather the immediate effects of COVID-19, while also supporting our longer-term plans. The commitment from our employees around the globe, the economic resiliency of our durable employer-sponsored model as demonstrated in prior cycles, our experienced management team that has successfully navigated prior downturns, our financial discipline and our thoughtful approach to capital allocation, all give me great confidence and conviction that we can not only navigate through the current disruption, but also take all the necessary steps so that we emerge from this crisis well positioned to take advantage of both near and long-term growth opportunities. And so with that, Victor, we are ready to go to Q&A.

Our first question comes from Andrew Steinerman with JP Morgan.

So my question is, are you willing to share with us April trends, meaning revenue trends for full-service, Education Advisory and Back-Up on a year-over-year basis. Any comment on full-service if the year-over-year trends were different at the end of April than at the beginning of April?

So Andrew, regarding your question about adding detail to the information in the prepared remarks, since we began temporarily closing centers in mid-March, the month of April shows a significant decrease, with approximately 250 centers operating. Consequently, a comparable amount of revenue also declined, along with reduced utilization due to guidelines on the number of children allowed in a center and social distancing measures. Therefore, there was a considerable drop in full-service revenue in April because of these actions. This is the context we can share at this time.

And could you say how much Ed Advisory and Back-Up are up in April?

I would emphasize that our plans for the year are still on track, with a continued shift towards more in-home use of Back-Up Care instead of in-center use due to the available options at centers. We are pleased with the stability observed in both areas as we transitioned from Q1 to Q2.

Our next question comes from Hamzah Mazari with Jefferies.

My first question is just as you come out of this, do you see any structural changes post-COVID that, that would essentially change the growth profile of your business, whether it's work-from-home population doubling or maybe the margin profile as you implement social distancing, et cetera. I know you touched on some of that in the prepared remarks, but any thoughts would be very helpful.

Sure. So thank you. It's a great question. What I would say simply is that we don't expect there to be structural changes coming out of this. Certainly, from a health and safety perspective, we are and we'll continue to have very significant protocols around making sure that we do pick up and drop off in ways that are socially distanced. We'll do health checks certainly for children and staff. We will make sure that we are managing group sizes for some of the older age groups. But in terms of structural changes, we don't see actually that being the case. In terms of the demand side, which you alluded to in terms of more work from home, I think what people have come to realize through this pandemic and working at home with young children is it is incredibly challenging, to work from home and also have your children at home with you. And so I think what we're hearing from our early solicitation of input and feedback from our parent base is they are very much looking forward to having their children come back to the center to continue their milestones and progression and, at the same time, allow parents to get back to work in a more productive way. So I would say that certainly from the perspective of the demand side, we don't see that. And then from the cost structure side, as I said, I think we will certainly implement protocols over time that have small marginal cost differentials. But nothing that will be significant. And at the same time, we see employers willing to step into that additional expense, certainly to protect their employees and their families.

That's very helpful. And just my follow-up question, I'll turn it over. I know you're much bigger than your largest competitors out there. But do you expect to see M&A picking up coming out of COVID, just given not many have the liquidity that you do today with the equity raise and some of the other stuff that you've gotten ahead of? So just any thoughts on M&A coming out of this and what you're hearing competition wise?

Sure. So look, I think that there will certainly be, unfortunately, situations where many other providers do not have the financial wherewithal to make it through this crisis and ultimately reopen. With that, obviously, we expect to see opportunities for operators who have turned the keys back to landlords for us to step into their positions in strategic locations, where we believe there's a good opportunity to operate. In addition to that, as you alluded to, we do believe that there will be M&A opportunities in ways that fit our criteria, which obviously are fitting strategically, fitting geographically and then ultimately, fitting financially in the longer term. So we do believe that coming out of this, as we saw in the last recession, there will be M&A opportunities that present themselves as a result of this really unfortunate crisis.

Our next question comes from Jeff Meuler with Baird.

Have you had any temporarily closed centers reopen? Or do you have reopening dates for any centers? Like I think you have some centers in Georgia. Just any of the states that are starting to reopen. And if you do, I'd love detail on this, otherwise, I just love the perspective on it. But I guess, what are you doing? You talked about digital learning solutions, but to stay engaged with families so that when the centers reopen, it's more like flipping a switch to get the families back in the centers?

Yes. So let me start with that, and then we can double back, Jeff. In terms of parent and child engagement, that has been a high-priority item for us. We believe it's critically important for the well-being of the children, and we also think it's an important engagement tool for the parents. So we have a cadence on a weekly basis of activities where we are continuing to keep engaged with both children and families to ensure that we are supporting them during this difficult time as they try to work from home and also be directly responsible for parenting during the day. What I would say is that we expect that, that will absolutely be an underpinning for our ability to 'reenroll' these families. And as Elizabeth shared in the prepared remarks, as we came into this crisis, we took the approach of pausing enrollment and moving the unused part of their tuition to a credit for when they return. So again, all actions that are helpful as we think about standing these centers back up. In terms of reopening, we are still in the very early planning stages on reopening. We have had a handful of centers that have reopened. But again, our goal is not only to look at the lifting of the shelter in place in certain states, but also to work collaboratively with our clients, get a real sense from parents about their readiness to come back to work in a more traditional way and have their children at the center. So we are approaching it in a very, very methodical way. And early indications, Jeff, are that the families are very excited to come back. And ultimately, employers are looking forward to supporting us to get our centers opened.

Okay. And just Elizabeth, I think you said a 30% to 40% decremental EBIT margin and full-service revenue down proportional to close center count. So I just want to make sure that I have the mathematical equation that on a run rate basis, you're currently at a modest negative EBIT position consolidated. Is that the correct calculation from the segment level disclosure you gave us?

I think what I said was 35% to 40%, just to clarify on that. But regarding the combined EBIT in Q2, what was your question?

Is consolidated, yes, EBIT trending currently modestly negative just based on all the color you gave us at the segment level, then running the math through it?

Yes. I mean with that portion, with a large portion of the business in full-service as beneficial as Back-Up and Ed Advisory are and their margins, of course, are substantially higher than what full-service margins are in a regular quarter. So they do contribute disproportionately to their revenue. But with 75% to 80% of the full-service centers closed, then there is a decremental, yes, overall.

Our next question comes from Manav Patnaik with Barclays.

Just kind of like a medium-term looking question, I guess. Firstly, the 150 centers that you currently have open serving the essential employees, what is utilization at those centers look like? And is that kind of a glimpse of what we might see in the new future with all social distancing rules and guidelines? Just curious on your thoughts there.

Yes. So first, Manav, just to put a fine point, we have 250 centers that are opened globally.

And 150 is just in the U.S.

150 is here in the U.S., just to clarify. In terms of how those are operating, I think it's important to focus on the fact that the population that we are serving across those 250 centers is strictly health care and other essential workers. And so when we have limited who we are serving through this, obviously, the utilization rates in these centers is quite a bit lower than what we would see at steady state, coming out of this pandemic. So again, if we think about the addressable group of families that we are looking to serve, given how much smaller that is than from our total addressable, we are certainly running at utilization levels that are a decrement from what we will expect to see coming out.

Got it. And then kind of tied to that, the lease/consortium strategy, if there's a view that everyone from the city is going to run away to Suburbia now or space and et cetera. Like any early thoughts on whether that continues or you slow that down or too early to tell?

Yes. It's a great question, Manav. It is not a trend, obviously, that we can opine on because certainly, it's too early days. What I would say is that we have had this lease/consortium strategy over the last number of years. We have about 100 that are really focused on the urban area. But our expectation is that young families will continue to persist in the urban area. And certainly, we don't expect to see employers change course and move out of urban areas. And so taken together, given our employer-centric model, we have great confidence in how that strategy will continue to perform over time.

Our next question comes from Gary Bisbee with Bank of America Securities.

I'd like to follow up on the topic of utilization. Considering the job losses in the U.S. and the historical correlation between center utilization and unemployment, how should we view the potential impact of a decrease in utilization on your business's profitability moving forward? There was a notable decline in utilization during the financial crisis, and today, with higher fixed costs associated with your real estate strategy, should we anticipate that it will take longer to return to pre-COVID profitability compared to when all centers fully reopened? Alternatively, are there strategies you can employ to enhance your business operations and get closer to historical performance?

Sure. So thanks, Gary. So why don't I start on sort of how we're thinking about it strategically and then Elizabeth can follow up with a little bit more quantification. As we think about the unemployment that is likely to be an outcome of this economic challenge, we are seeing those employers with a lot of frontline employees being the first to furlough and likely separate. So when you think about some of the harder hit industries like retail, energy, those are not the industries that we have ever had particular focus. And so as we see this crisis unfold, whether it be retail or hospitality or other industries that have a lot of frontline that ultimately will be displaced, those are not either our employer clients or typically the families we serve. So different from the financial crisis, back a number of years now, we expect that the unemployment challenge is going to be really focused in an area where we don't currently serve. And therefore, we don't expect the same implications in that way.

Yes. Reflecting on the last major recession we experienced around 2009 and 2010, we saw a significant drop in enrollment during that period, approximately 10 points, leading to most of the utilization decrease. However, due to the variable nature of our costs, we managed to largely maintain our full-service margin profile, with margins contracting by only about 1 percentage point. We continued to grow through new center openings and acquisitions, with all elements of our growth strategy playing a role in our performance. We effectively managed costs despite the decline in enrollment. Currently, a different aspect of our business involves a higher share of revenue coming from lease and consortium centers, where we bear the occupancy costs, resulting in a different cost structure. I would like to address your question by stating that it will take time to return to pre-COVID enrollment levels. Enrollment will rebound for various societal reasons we are aware of. However, as time progresses, we will need to re-enroll children who have outgrown their previous age groups. Therefore, we will be focusing on re-enrolling over time, which means there will be a period of re-ramping required. It will take a while to achieve those margin levels again, but the foundational elements contributing to our cost stability, along with client centers enhancing our bottom line and opportunities in lease and consortium centers, will all play a part in accelerating that growth over time, each in their own way.

Great. And then just one follow-up, if I could, on Back-Up, that's encouraging to hear that continues to do quite well, even with a lot of the in-house capacity, obviously being closed. I guess as we think about the mix shifting to in-home and then also this concept of reimbursed self-chosen care however you framed it, which I know is Bank of America's third offering, by the way. But should we think that there's major profitability differences? Or is it pretty similar? And as part of that, is this concept of reimbursing self-chosen care. Is that new? Did you do that sort of because of this? And is that a new opportunity? Or is that something you've done in the past that I've just never heard about?

Yes. And so if we start with the reimbursed self-sourced care, which we call Crisis Care Assist, that is something that we have had, but it typically has been both episodic and very focused. So if you think back to Hurricane Katrina or the wildfires in California, we have supported employers and their employees with reimbursements for self-source care. In our history, clearly, we have whenever...

When care is disrupted....

Yes. We have never experienced a need like this during the current pandemic, which is more widespread across the country than ever before. Self-sourced care that is reimbursed to us has been something we've done, and while it has historically been a modest contributor, we are seeing unprecedented demand for it now. This, along with our in-home care services, has effectively supported both employees and their employers. We appreciate Bank of America for being a great client, as many of our clients have embraced this approach, especially given that centers and schools are closed, making it a viable option for both employers and employees. Regarding the margin profile, the economics of in-home care are not as robust compared to center-based care due to the increased costs. However, in many client contracts, there is a difference in the reimbursement rates. Additionally, for Crisis Care Assist, we will report the revenue on a net basis since the reimbursement to the employee is essentially a pass-through. Consequently, the revenue per care instance is lower, but the associated margin more closely reflects what we see traditionally in that business line.

You may notice that the effects will offset each other, resulting in no significant difference.

Our next question comes from Jeff Silber with BMO Capital Markets.

You had mentioned that you opened up some new centers in the quarter. Can we talk about the new center pipeline for the rest of the year? I'm assuming, right now, that's on hold, but if you could just confirm that, that will be great. And just wondering how discussions are going for future center build-outs?

Yes. So on the existing center pipeline, what we are finding is our employer clients who are in process, who have made the commitment and are in the process of construction. They continue to persist with their projects. And so we will continue to see centers open up on that basis. Because obviously, as we always talk about, there's a longer sales cycle, but there is also a development process of opening up a new center. And so you'll continue to see us open new centers that were in-flight and started pre-COVID. The second thing that I would observe is that as we look out into our sort of 'newer' pipeline, we are, as we saw in the last economic downturn, we saw a pivot of our opportunities away a bit from new capital and new centers that would be being sold to those that were going to be transitioned. So we see both health care and university opportunities, in particular, where they self-operate centers, have found it incredibly challenging to operate those centers in the current environment and have instigated conversations with us about taking over the management of those programs post-COVID.

Okay. That's helpful. I appreciate that. And you mentioned in your prepared remarks how the company has been through a number of economic cycles. And obviously, we're in unchartered waters here. But I'm just curious how do you think your business is different going into and coming out of this crisis when we compare it to the Great Recession? I know you are private, but just in terms of the business overall.

I believe one key difference between this crisis and the Great Recession is the nature of the economic impact. While we are currently experiencing a broad-based economic effect, we have the opportunity to show our clients what we can offer, potentially leading them to adopt more services from us sooner. The recession of 2009-2010 saw a gradual decline followed by a slow recovery, during which we were significantly expanding our Back-Up business and entering into new European markets, such as the Netherlands. Those efforts laid a solid foundation for strong growth as we emerged from that recession. Now, I think we have even better foundational strengths to build on while managing our current business and looking toward future opportunities. A key factor to consider will be the timing and pace of the shutdown and subsequent reopening, which remains uncertain. However, because the contraction has happened so rapidly, we might see quicker decision-making as a result. Additionally, we have a larger presence in Europe compared to before, providing us with more diversification in our service offerings, which is another positive aspect.

Yes. I think the only thing that I would add to that is there is a tremendous appreciation from working parents about how difficult it is to both work and care for their children. And so certainly, we are in a position where we are hearing from our families and from our employer clients about their keen interest to get back to a situation where they are able to get back to work. And at the same time, their children are able to have the kinds of experiences that they can only have at a Bright Horizon center.

Our next speaker is Toni Kaplan with Morgan Stanley.

You mentioned signing 50 new clients for Back-Up Care. Could you discuss the expected contribution from that and the duration of the arrangements? Are these temporary until employers return to their original care arrangements, or is there potential for longer-term relationships?

These clients are typical new Back-Up clients that we've started working with. An average Back-Up client usually has an annual contract value between $100,000 and $250,000. So that's a general idea of what we see when launching these clients. These agreements are not temporary; they are standard new additions to the Back-Up portfolio.

Okay. That's great. And then just my second question is around pricing. I guess as we're sort of in this challenging environment, does pricing become more challenging post-COVID? I guess how are you thinking about you usually get about 3% to 4% pricing a year, just wondering how you're thinking about that going forward this year?

Sure. So absolutely, we are spending a lot of time thinking about pricing. And as you'll know, we are very disciplined about ensuring that there is a differential, typically 1% between our price increases and our wage increases. And so we continue to be focused on that metric that we have over the last 30 years to continue to perpetuate. It is not completely clear at this point where on the scale our price increases will be and where the wage increases will be. On the other hand, we continue to be confident that we'll be able to have a differential between those two.

Our next question comes from George Tong with Goldman Sachs.

I appreciate the helpful update on the business. Can you maybe elaborate on what kind of guidance you're currently receiving from your medical experts and the CDC and when it would be appropriate to begin reopening your centers?

Yes. So we are in very close contact. So first and foremost, we're following the guidance from the CDC. We have a medical expert that we have retained, who has been incredibly helpful in our COVID protocols and is also helping us to think about our reopening. What I would say is that the protocols that we're focused on look a lot like what we have been operationalizing to date through the last 8 weeks. So again, not huge differences between how we're operating in the current environment into sort of this next phase. So overall, again, the guidance is really around making sure that we're doing social distancing at pickup and drop-off that we're doing health checks to make sure those who are entering the centers, both staff and children are well. We're making sure that our staff are wearing masks. We're making sure that we are appropriately limiting group sizes, which really only has impacted the older age groups. Because in the younger age groups, the typical group size is smaller than the sizes that are being recommended by the CDC and our medical expert. So I think all in, we feel really good about the experience that we've had through this and truly believe that we'll be able to operate in a safe and healthy way going forward.

Got it. If the centers in the Netherlands be opened as planned and centers in the U.S. and the U.K. stay closed through the end of the second quarter, what would the potential revenue impact be in the second quarter? In other words, what would be a good downside-case scenario for revenues?

I think the thumbnail I'd use is that, that's about 80% of our centers. So the proportionate revenue would be contracting in that way.

And that's even taking into account the different business models between cost plus, P&L, lease/consortium and other mix factors that could differentiate the number of centers versus the revenue flow-through?

Yes, there are certainly many factors affecting the number of children being served, including which centers are open, their locations, tuition levels, and client support. I believe this reflects a broad overview of what you're asking, but we aren't providing more detailed guidance at this point due to the numerous variables involved.

Wonderful. All right. Well, thank you all very much for participating this evening. We hope you and your families stay safe and healthy. And I look forward to being in touch soon. Have a good night.

Thanks very much. Take care.

Ladies and gentlemen, this concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.