Welcome to KinderCare's First Quarter Earnings Conference Call. Operator provided instructions on the call. It is now my pleasure to introduce Olivia Kirrer, KinderCare's Vice President of Investor Relations. Ms. Kirrer, you may now begin the conference.

Thank you, and good afternoon, everyone. Welcome to KinderCare's First Quarter 2026 Earnings Call. Joining me from the company are Chief Executive Officer, Tom Wyatt, and Chief Financial Officer, Anthony Amandi. Following Tom and Anthony's comments today, we will have a question-and-answer session. During this call, we will be discussing non-GAAP financial measures. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and within the supplemental earnings presentation, both of which are posted on our Investor Relations website at investors.kindercare.com. A reminder that certain statements made today may be forward-looking statements. These statements are made based upon management's current expectations and beliefs concerning future events impacting the company and involve a number of uncertainties and risks, which are explained in detail in the Risk Factors section of our most recent annual report on Form 10-K and other filings with the SEC. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. The actual results of operations or financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. All forward-looking statements are made as of today, and except as required by law, KinderCare undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future developments or otherwise. Before we move on, we'd like to note that management will be holding meetings at Baird's 2026 Global Consumer Technology and Services Conference on June 2. We look forward to connecting with those of you who will be attending. I'll now turn the call over to Chief Executive Officer, Tom Wyatt.

Thank you, Olivia, and good afternoon, everyone. I'm pleased to share with you updates on our first quarter performance. We finished the quarter slightly better than expected. That was supported in part by the efforts of our center and site directors and by our focus on execution. Over the past few months, we've made several changes across the business, and our results reflect the work that is already underway. It is still early, but we are starting to see encouraging signs that those actions are making an impact. Revenue was up modestly, supported by continued strength in our Champions brand and B2B businesses. At the same time, enrollment in our ECE centers remains below prior year levels, down about 3%, an improvement from the fourth quarter when enrollment was down 3.6% year-over-year, but it continues to be a primary pressure point on the business and where we are concentrating our efforts. Enrollment is not something that turns during a single quarter. It's a process of improving execution across a large portfolio of centers. Our focus right now is on putting the right pieces in place so that performance improves as we move throughout the year. Our best opportunity for material progress will be in the back half of the year. Until then, we expect gradual improvements through the first half. Over the last few months, we have increased and refined our marketing investment, and we are seeing that show up in higher inquiry volume over last year. Since we began our investment, we have seen a 15% increase in inquiry in the targeted areas and a 3% increase for KinderCare overall. So more families are engaging with us, and that's important. Just as importantly, we are starting to see early signs that conversion is beginning to improve in certain parts of the business. This is notable at Crème and most pronounced in our Opportunity Region where enrollment during the quarter versus last year increased by 8%. That progress is not yet consistent across the system, but it reinforces something we believe strongly. Demand is there. Our job is to convert it consistently across the system, and that is where our focus is right now. We are putting a dedicated focus on tightening the execution at the center level. This is about how quickly we respond to families, the quality of our tour experience and how effectively we follow up. It is also about making sure our center and site leaders spend their time on the things that matter most. We've taken steps to reduce administrative burden so they can focus more on the families and teachers because that is what ultimately drives performance. In addition to work on enrollment, we are also taking steps to strengthen our real estate portfolio and better position our centers for sustainable long-term performance. Much like any multiunit operator, we evaluate our real estate portfolio on an ongoing basis. And that typically includes closing roughly 1% of our centers each year. We recently completed a more comprehensive network assessment with the goal of enabling long-term health and growth for all of our centers. To achieve this goal in 2026, we expect to have a higher number of center closures than usual. We understand that any closures can be disruptive to families and staff. Whenever possible, we proactively help families and employees transfer to nearby locations to maintain continuity of care. This is disciplined portfolio management. It will result in stronger, more productive centers and higher overall occupancy over time, both of which support our mission to offer high-quality care to families. To be clear, these are not easy decisions; they will create some near-term variability as we execute across the year. However, we are confident that they are the right decisions to drive beneficial outcomes in the long term. We'll keep you updated in the coming quarters on our progress. Before turning to more detailed business results, I want to spend a few minutes on the subsidy landscape. I have spent time this quarter meeting with state and federal lawmakers to advocate for families and the critical role child care plays in this country, from Colorado to Massachusetts to Washington, D.C. The feedback has been constructive and encouraging. We continue to see strong bipartisan support for child care at all levels of government. Federally, an additional $85 million in CCDBG funding was approved in February. At the state level, while we are seeing different approaches, the overall direction remains constructive. For example, Indiana is deploying approximately $200 million to support the families of 14,000 additional children. We applaud the state's leaders for taking action to support the children and families of Indiana. More broadly, we are seeing constructive developments in several other states. There are supportive actions in New Jersey and in Maryland to reach more subsidy families and reduce their program rate lists. Overall, while conditions vary by market, we are encouraged by the recent directions many states are taking. Turning back to the business, we spent this quarter taking steps to drive week-to-week enrollment improvement in the first half of the year, so we can build momentum in the second half. For our flagship brand, KinderCare, our work continues to enable center directors to spend more time engaging in person with teachers and families. We are also evolving how we manage inquiries, allowing our directors to stay focused on families, particularly in centers with high inquiry and lower occupancy. The data consistently tells us that when family and teacher engagement improves, outcomes improve across the board for children, teachers and enrollment, leading to stronger center performance. We are also placing more emphasis this year on our in-center small group enrichment programs, which provide incremental revenue. These are programs we have had for quite some time, which offer families additional options for their children like comics, languages, music and STEM. We are creating amazing experiences for children in our centers and expanding this enrichment into our summer camps as well. Early results are encouraging, and we're pleased with the momentum we see in engagement, retention, educational enrichment and the value these programs bring to our centers. At Crème, our new brand positioning is starting to resonate. We are preparing for upcoming specialty summer camps and we see families enjoying our updated curriculum, which launched in the first quarter. We are seeing better conversion of stronger inquiries, especially in younger students, and are encouraged by the progress we are making. Champions continues to be a strong performer for us. Our 70% growth reflects both new site additions and the strength of our existing sites, and we see continued opportunity in both. In our B2B offering, we continue to see strong employer interest in supporting their employees. We signed 12 new tuition benefit clients in the quarter, including a large public university in Florida and multiple professional organizations. All told, we are seeing increasing demand for more integrated solutions across our services. These relationships are becoming a more meaningful and complementary part of our business and a strong growth driver going forward. We continue to make positive progress in our real estate growth during the quarter by opening three new centers and acquiring another two. So when you step back, the picture to us is clear. We feel good about the progress we're seeing. We are proud of the growth from B2B and Champions, and we're seeing solid improvement at Crème. We're also seeing traction from our marketing investment and from the changes we've made within our KinderCare centers. We still have work to do. So we have a clear path forward and are focused on continuing our progress into the second half of the year. With that, I will turn it over to Anthony.

Thanks, Tom. I'll walk through the quarter and then go over how we are thinking about the year. Starting with income. Revenue was $673 million in the first quarter, up modestly compared to last year. Same center revenue decreased by $7 million from last year, driven primarily by lower enrollment, while contributions from newer centers and higher tuition rates helped offset some of that pressure. Pricing contributed about 2% to ECE revenue growth despite continued lower subsidy reimbursement rates, which we expect to persist at least through the current state budget cycles. This 2% increase from tuition contribution was offset by lower overall enrollment, down 3% year-over-year. While that represents an improvement from the 3.6% decline in the fourth quarter, enrollment continues to weigh on results. As a reminder, enrollment typically builds through the first half of the year and will decline with the transition to summer before we build back up during back-to-school. Same-center occupancy for the quarter was 66%, up 150 basis points from the fourth quarter and down 310 basis points from the first quarter of last year. Our Champions before- and after-school business continued to perform well as revenue increased 17%, driven primarily by new site openings and incremental pricing. Beyond near-term performance, we see Champions and by extension, our B2B business, as an increasingly important and diversifying part of our mix. We opened three new centers and acquired two new centers during the quarter. Cash consideration for the acquisitions in Q1 was about $0.5 million funded completely ahead of the $1.1 million in free cash flow generated in the quarter. New and acquired centers contributed approximately $12 million in revenue since the start of the year, an increase of 35% from the same period a year ago. Similar to the fourth quarter, we recorded a noncash impairment related to the decline in our stock price in Q1. This drove a reported net loss of $290 million and reported EPS loss of $2.45 and does not impact our liquidity or outlook. Adjusted EBITDA was $52 million for the quarter compared to $83 million in the first quarter last year. Adjusted net income was $4.2 million, and adjusted EPS was $0.04 compared to $27 million and $0.23, respectively, in the prior year period. The drivers here are relatively straightforward. Lower occupancy continues to be the largest factor. Since we must maintain minimum teacher-to-student ratios, our labor inputs are not as flexible in our current position in the margin; as occupancy improves, we will be able to drive better overall operating leverage. As Tom outlined, the path to improvement is through enrollment. The early signs we are seeing in inquiries and conversion are important, and we're now looking for consistency as we move through the year. SG&A was 10.6% of revenue, down slightly from last year. As we look ahead, we expect to see additional improvement coming from a continued focus on efficiency and cost discipline. Interest expense was $18 million for the quarter, down from $20 million in the prior year, driven by our repricing last summer. Moving on to the balance sheet. We ended the quarter with $133 million in cash and $190 million of available capacity under our revolving credit facility. Net debt to adjusted EBITDA was just under 3x and within our targeted range. We expect leverage to be around this level as we work through the enrollment pressure and EBITDA recovery consistent with our current operating profile. We have been taking a closer look to identify centers that should exit our real estate portfolio. We've examined center-level trends for local market demographics, occupancy, engagement, lease terms and other factors. To that end, we've identified a set of potential centers for action and are working through timing and approach. Ideally, we want to avoid as much disruption to families and employees as possible while also consolidating families and teachers into nearby centers where it makes sense. This work is in process, and we do not have more specific details to share right now. Other than to say, we will close more than the usual 15 to 20 centers we normally see each year. When we speak with you to discuss Q2 results, we'll be at a point to provide more detail. We expect some adjustment in 2026 as we work through this process, but it will result in a stronger, more resilient portfolio and improved focus going forward. We'll keep you updated on our progress with our Q2 update and in the quarters ahead. Moving on to our outlook. We are raising our full year adjusted EBITDA and adjusted EPS guidance to reflect our first quarter performance. We continue to expect revenue to be between $2.7 billion and $2.75 billion; we now expect adjusted EBITDA to be in the range of $215 million to $235 million and adjusted EPS to be between $0.15 and $0.25. This outlook reflects the early signs of progress we are seeing in the business while continuing to assume gradual momentum building into the second half of the year. We are maintaining our revenue building block assumptions for the full year: tuition and occupancy are expected to have offsetting contributions at plus 3% and minus 3%, respectively. Champions and B2B are expected to contribute about 1% with new center openings and acquisitions contributing about 50 basis points each. Since the work on optimizing our portfolio is not yet finalized, we are not including any related closure assumptions in our full year outlook beyond the typical 1% offset we expect in a given year. Consistent with our first quarter remarks, CapEx this year will be approximately 5% of revenue and free cash flow will be between $35 million and $40 million. For modeling purposes, the effective tax rate is to be 27% for the year. Given the impact of current occupancy levels on our margin profile and profitability, we will provide additional direction for the second quarter. For Q2, we expect revenue to be between $690 million and $700 million, and adjusted EBITDA to between $63 million and $67 million. We are doing the work today to drive improvement throughout the year. The progression we are focused on is tied to execution, particularly around enrollment and conversion, and we expect those efforts to build momentum in the back half of the year. Our targeted marketing investments have been effective at generating additional inquiry. How effectively we convert the new and existing demand into enrollment will be an important indicator of how the business is tracking to stronger performance. To wrap things up, our focus is on execution, improving the performance of the core business and positioning the company for stronger results as we move into the back half of the year. Now let's go ahead and open up the call for questions.

Operator provided instructions on the call. Your first question comes from Jeff Silber of BMO Capital Markets. Please go ahead.

In your prepared remarks, you talked about the higher inquiry rate that you're seeing from a marketing perspective. Can you give us a little bit more color on what you think is driving that? Is this something that can continue?

Yes, I'd be happy to, and I know Anthony will speak to this too. It starts with the work that we did in center operations, the fact that the administrative detail and stuff that was distracting our center directors is, in essence, going away, primarily starting with the second quarter, but also the work that we've done in paid search has paid off. The numbers that we quoted earlier, 3% all KinderCare in the quarter, plus 15% in targeted areas, are year-over-year increases. So we are getting more inquiry than we got last year, and we're starting to see that enroll. So very positive. Paid search candidly has been particularly effective for us, which goes back to a comment I made: there is not a lack of demand for children that need child care. And we're going to get them. This is what the plan is.

Okay. That's great to hear. And one follow-up I want to focus on same-center occupancy. It's down on a year-over-year basis. But what is embedded in your guidance to get to the revenue and adjusted EBITDA level? Where should we be seeing occupancy by the end of the year?

Yes. Jeff, as we stated in our remarks, we're still holding our guide at that 3% enrollment decline for the year. Same-center occupancy was down 310 basis points in the quarter, and that was an improvement from the 360 basis point decline in the fourth quarter. So we are seeing a little bit of a positive trajectory, but our guidance still reflects a 3% decline for the full year.

Your next question comes from the line of Faiza Alwy of Deutsche Bank.

Tom, you talked about the improvement at Crème and the Opportunity Region where enrollment increased by 8%. Just remind us and give us some context around the variability that you've seen historically and maybe discuss a little bit more on why these particular centers are doing better than others in your view?

Well, let me start with the Opportunity Region. That is, as you know, a set of centers that have been challenged with occupancy for a number of years, candidly. We moved them into a different region structure, and we put one of our most effective regional leaders over that region. She literally put together her own strategy around what we do, how we do it, how we are going to increase the momentum of inquiry and take advantage of that to enrollment and, candidly, work on retention as well. She's done a phenomenal job. She's kept a very low nose in those centers. They've been very focused on growth. They've been very focused on creating the best possible experience for the families that come in and visit with us, and it's paid off. The 8% increase speaks for itself. So we feel really, really good about that. In the case of Crème, Crème is quite a success story. We had a very rough year last year going through a rebranding of that business, changing out some leadership and, candidly, just making it much more center focused than it had been in the past. And it's really worked exceptionally well. I also need to share, and we said it in the prepared remarks, that the launch of the new curriculum and the impact that we've had on our teachers and their positive experience with it — but even more importantly, the families — has been remarkable. In the 14 years I've been here, we've never gotten the kind of impact and response from parents that we've gotten in this launch, which is very exciting because in Crème, families are paying a premium for a premium experience. It's great to see that the new curriculum that we gave them, which is a far more advanced proprietary curriculum than the curriculum being used when we acquired the company, is significantly different, and people are noticing that. So we feel very, very good about that. The other part of it is the paid search increases that we're seeing in Crème have been significantly higher than the average that we mentioned earlier. So it's a combination of a much better experience for the families, a much better tour experience for the parents, ultimately a better experience for our teachers with a new curriculum, and that's playing through the resilience of the families and ultimately paid search.

Great. And then just as a follow-up on Champions in the before- and after-school side. You had really nice acceleration in 1Q. I know you talked about a higher number of center openings. Maybe just give us some context around how much of that contribution came from new centers. I know you didn't change your guide or the contribution that you're expecting for the year. Is there a timing factor there? Is there anything else to consider?

Yes. No, Faiza, no real changes to consider. As we talked about last year, Champions was slightly underperforming where we would have liked to see them, but we are seeing them come back to where we expect. Frankly, their Q1 was right where we expected it to be and they continue to be on that path for the year. They ended the quarter at 1,159 sites, up about 10% from 1,038 sites last year. That growth is coming largely from the new sites added, including additions we made this past fall, but we're also seeing some nice low single-digit same-site growth at Champions as well. So it's both net additions and improving performance at existing sites. Champions continues to be an important growth engine and we expect it to return to consistent double-digit growth over time.

Just on that subject, we are also seeing the quality of the additional sites that they're looking at improve year-over-year. So we not only see the momentum that we've seen so far this year picking up, but also the quality of the size and the locations of the schools. Many of them are additional schools at already existing clients of ours. So it feels really good for us long term.

Your next question comes from the line of Jeff Meuler of Baird.

The Opportunity Region enrollment growth is really impressive. To what extent do you think the growth you're seeing there now relative to the rest of the portfolio is because you took action there sooner, and therefore you're seeing the payback now versus it being a richer opportunity for improvement from the baseline, or is it more intensive in terms of the initiatives being applied?

So let me start. The Opportunity Region literally just hit its one-year anniversary of being structured that way. There is something about pulling that group out, having a really strong leader, a leader who would get into the level of detail with those center directors to focus on enrollment and growth. We also put a few tools in place that we're now spreading through the organization that I think are helpful as well. It's a combination of things. We weren't investing marketing correctly in some of those centers before, so now they are getting some of the additional spend. The leader has kept the centers focused on what matters: tour experience, family engagement, quality of the teachers and execution. That focus has driven the improvement we're seeing. We've been rolling those learnings across the fleet, and we expect the impact to broaden as we scale those practices.

I'll just add one thing. I'm most impressed by and encouraged about the rest of the fleet seeing what the RVP over the Opportunity Region, Christine, has done. She cleared the decks for the center directors over a year ago, which we didn't even begin to do across the rest of the fleet until mid-first quarter. She created very little noise around what was important: the tour experience, the family experience, the quality of the teachers, the quality of the classroom and ultimately driving growth through inquiry and enrollment. That part is the most encouraging because we have now applied similar discipline across more of our centers. The second quarter and certainly the back half of this year, we feel much stronger about than we did 90 days ago.

Got it. And then when you're talking about the 15% inquiry increase among the targeted centers and 3% overall, what percentage of centers are you doing elevated paid search for? And given that you're seeing the returns on it, are you considering expanding that to more of your geography?

Jeff, it's a single-digit percent of our centers where we've focused elevated paid search. We wanted to target specific markets to see what happens when we use different marketing tools at a localized level. Overall, it's been positive. We've learned that a couple of states haven't been as rich in return, and that allows us to reallocate spend to stronger markets. We don't have a direct plan to announce today to expand immediately across the whole portfolio, but we will continue to evaluate and use the data to inform where marketing spend is most effective.

One more thing on that subject: we've changed emphasis within the first quarter. We adjusted specific paid search targets and stopped some broader initiatives to focus our spend. That has paid off. We're getting smarter about the vehicles and tactics we use, and we feel we are making progress.

Your next question comes from the line of Toni Kaplan of Morgan Family.

You talked a lot in the prepared remarks about analyzing the portfolio, and it sounds like you might be planning to close a bunch of centers this year — is it more than you were expecting? I ask because you kept the revenue guidance the same. I was wondering if there were offsetting factors that led you to keep that same revenue level even though closing centers is on the table and maybe incremental.

Good question, Toni. At this point, our guidance is still assuming the typical roughly 1% of centers will close as part of normal portfolio churn. We are working through an analysis of additional centers that may exit the portfolio, but several next steps are required: determining the right timing for the community and for us, and many of those decisions depend on lease discussions. We will see closures happen throughout the rest of the year. That's why today we're holding to the roughly 1% assumption in our guidance. When we talk to you for Q2, we'll have a much clearer picture and be able to firm up the impacts of those closures on both revenue and the bottom line for the year.

And then I wanted to ask about pricing. I think in the quarter, it was a little over 2%. I know the full-year guide is for 3%. Are you seeing any positives from discounting or similar tactics? Has that been a factor in some of the increased conversion? And given you're expecting 3% for the year, do you expect to incrementally raise prices as you go through the rest of the year?

Good question, Toni. Parse that a bit. On the private-pay side, our pricing actions took effect January 1 for new enrollments, and we're seeing those prices hold as strongly as we have in the past. Those private-pay rates are above the 3% for the year as we expected. We have not been doing incremental discounting beyond our normal practices. The biggest driver of price resilience is the value we provide: engagement, quality and retention. We have also seen our enrichment programs — small group enrichment, STEM, language, music — gaining momentum, which is positive for retention and incremental revenue. On the subsidy side, we continue to see impacts from state budget cycles in a few states, which we expect to normalize as those cycles resolve. We are starting to see positive actions like Indiana and others that should help in the back half of the year. Overall, these dynamics drive our 3% pricing expectation for the full year.

Your next question comes from the line of Manav Patni of Barclays.

This is Roman Canady on for Manav. Can I please confirm how you're thinking about the role of closures versus turnaround efforts with all the initiatives underway? Is there a threshold for exiting underperforming centers versus endeavoring to improve them with these initiatives, and how has that evolved?

We truly review centers on a case-by-case basis. We completed a center-by-center analysis considering demographics, leadership, engagement and lease economics. For some centers that check the boxes for potential improvement, we may hold and give them time to benefit from the operational changes and marketing investments, perhaps through another back-to-school period. Other centers, where we don't see a viable long-term path, will be candidates for exit if consolidations make sense for families and employees. Many centers have different characteristics; for example, a center near another strong center could have families and staff consolidated with minimal disruption. Our guiding principle is to exit centers that we don't expect to be part of our portfolio in the next three to five years so we end up with the strongest portfolio possible.

I'll add that the process starts with the Opportunity Region. We move centers there that we believe have potential to improve. Christine's work has shown these centers can grow with the right leadership and focus. We want to avoid closures when possible and do everything we can to improve centers first. If we can't see a path forward after these efforts, then we make the decision to close. That approach helps minimize disruption and gives us clarity on which centers to retain.

A follow-up on adjusted EBITDA margin drivers: occupancy is clearly primary. Can you help us think about the relative contributions of the 3% enrollment decline versus pricing and then wage inflation and other costs? How much occupancy improvement is needed to restore operating leverage and how should we think about the threshold for meaningful margin recovery?

Good question. Tuition increases are contributing about 2% to revenue and are offsetting some labor cost pressure, but labor is still a larger pressure point. Tuition increases and price actions are helping and account for roughly 70 to 80 basis points of benefit versus wage inflation, but the majority of margin pressure is occupancy-driven. A commonly referenced threshold in our industry is around 70% occupancy, where classroom staffing becomes more efficient on average — essentially fewer instances of two full teacher sets for a given class. Getting back toward that 70% occupancy level would meaningfully restore operating leverage. We're a couple of percentage points away from that threshold today, so the path to margin improvement is gaining consistent enrollment and occupancy improvement across the portfolio.

Your next question comes from the line of George Tong of Goldman Sachs.

You're expecting gradual enrollment improvement in the first half and a more meaningful recovery in the second half. Can you elaborate on why enrollment performance should materially improve in the second half and specifically what gives you confidence that the second half will be the turning point and not some point in 2027?

George, my confidence comes from the cumulative effect of the changes we've implemented. We've cleared administrative burdens, focused center leaders on enrollment execution, invested in targeted paid search and improved the tour and family experience. These things take time to scale across a large organization with many centers and employees. The increase we saw in the first quarter was encouraging and suggests the actions are working. Back-to-school is always a pivotal period for us. If we retain expected enrollments and sustain improved conversion and inquiry through our summer programs and into back-to-school, we expect the back half to show more meaningful recovery compared to the front half. It's a progression tied to execution at scale.

To add on the guidance change: we raised the full-year adjusted EBITDA largely to reflect a modest outperformance in Q1 versus our prior expectations. There were a couple of items, like slightly stronger-than-expected demand in some channels and modest labor timing benefits, that contributed to that improvement. We don't believe those exact items will repeat at the same magnitude each quarter, so we incorporated the Q1 results but remain focused on the execution-driven momentum building into the back half.

Your next question comes from the line of Josh Chan of UBS.

I was wondering how you would contextualize the 3% enrollment decline versus the 3.6% in Q4. Would that be mostly the Opportunity Region? And relatedly, how are enrollment trends in the non-Opportunity Region centers trending?

Yes, Josh, the Opportunity Region contributed meaningfully to the improved trajectory. A decent portion of the improvement is coming from that region. There were also modest capacity changes that account for a small portion of the improvement. Outside of the Opportunity Region, most centers have remained relatively consistent, with small single-digit basis point improvements in some areas.

On the incremental closures — I know that's not included in the guide — is there a way to frame the potential impact, since it will affect the 2027 base as you complete this program? Can you box that in a little?

Josh, we're still in the process, and many decisions depend on lease negotiations and timing. We don't have the precision to provide an accurate estimate today. We expect to have much more detail by our Q2 update in August, at which point we should be able to discuss the expected impact on 2026 and the implications for 2027 more concretely. The expectation is that exiting underperforming centers will be a headwind in the short term but should improve portfolio health and performance going into 2027.

There are no further questions at this time. I will now turn the call back to Tom Wyatt, Chief Executive Officer, for closing remarks.

Thanks, and thanks to all of you. I appreciate the questions — very high-quality questions today. Since I joined the company in December, and particularly over the past few months, what we set out to do was to execute better, reduce complexity in our centers and invest in paid search to help drive the inquiry we need. We're doing that and we've seen good signs across our businesses. It's all about execution. The demand is there. We have the opportunity. We have the largest brand in the marketplace and the trust of families in our centers. There is a lot more to do, but we're very encouraged by what we've seen and we're looking forward to updating you on progress in the next quarter and beyond. Thank you and have a great evening.

This concludes today's call. Thank you for attending. You may now disconnect.