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| Statement |
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| It is not a revenue enhancer per se because the funding is to support the parents' tuition, but it is an opportunity to drive more demand |
| enrollment was up 10% and international enrollment increased in the mid-single digits over the prior year |
| Revenue grew 24% in the fourth quarter to $135 million, well ahead of the expectations we had to finish the year and adjusted operating income was 30% of revenue or $41 million, growing 25% over the prior year |
| We expect the reduced operating costs associated with the footprint rationalization along with improved staffing and enrollment gains in the remaining portfolio to drive the improved operating performance in the later part of '24 and then into 2025 |
| to better position our portfolio and to improve operating performance over time |
| So certainly, we're excited about the 26% growth that we achieved in 2023 |
| I am really pleased with how we finished the year, achieving better-than-expected revenue and EPS results in the fourth quarter |
| In the center cohorts that we have discussed previously, we continue to show improvement over the prior year period |
| It's not that we saw or are seeing a significant increase based on this trend, but it is something that ultimately has upward positive benefit to it |
| increased -- improved modestly in Q4 compared to Q3, and we have seen that progress continue into the early part of 2024 |
| to ensure focus on centers with the greatest long-term viability and improved momentum in regaining operating profitability over time |
| And so ultimately, we feel good about the portfolio that we have and footprint that we have in this evolving landscape |
| Performance for the full year results are strong, with Full Service revenue expanding nearly 20% and Back-Up Care revenue surpassing the $500 million mark, up an impressive 26% in 2023 |
| Revenue increased 24% to $135 million on strong utilization across our more than 1,100 clients |
| And so on the margin, we have had stronger occupancy in our client-based centers actually over many quarters now because there is a real reason for our clients' employees to leverage the high-quality opportunity to use their on-site centers |
| So we certainly see the opportunity to continue to drive 10% to 12% growth over many years |
| We do continue to see solid growth across all care types |
| We're encouraged by the growth opportunity from the newer use cases that we have introduced in the last couple of years as this broader portfolio enables us to serve a wider set of eligible client employees |
| We entered 2024 on a solid footing and with good momentum, and we expect to see revenue growth of approximately 10%, resulting in revenue of $2.6 billion to $2.7 billion |
| I believe we executed well against our near-term goals in 2023 while also making investments to strengthen our foundation to drive our success in the years to come |
| I'm very encouraged by our ability to capture demand and operationally deliver for families in need of care |
| but really see quite a large opportunity in the concept of supporting our employer clients to upskill and reskill their employees and believe that we're particularly well positioned |
| Using Bright Horizons Centers, network centers and in-home were all strong, and these use cases continue to be the primary drivers for the Back-Up business |
| Even as Full Service continues its enrollment and earnings recovery, Back-Up Care is poised to be a structurally larger contributor to our go-forward earnings profile, and we are very excited about the continued growth opportunity in this segment |
| These accomplishments were driven by the focus, dedication and execution of our talented teams who continue to work tirelessly to deliver our high-quality services |
| We made significant progress in rebuilding our staffing levels, increasing enrollment, expanding capacity and capabilities to support backup growth and in the continued build-out of the infrastructure for our One Bright Horizons vision |
| At a segment level, we expect Full Service to increase roughly 8% to 12% on enrollment gains and tuition increases |
| To break this down a bit further, Full Service revenue of $447 million, was up 15% in Q4 at the high end of our expectations on increased enrollment in pricing |
| So we really see it as something where we have the ability to continue to increase the penetration among the eligible lives along with continuing to broaden the number of use cases being a predominance of the growth |
| We saw record interest and record use |
| Statement |
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| continues to be challenging and a headwind to the performance of the overall Full Service segment, enrollment growth in the U.K |
| And for Ed Advisory, the last couple -- 2 quarters, the margins were down year-over-year |
| So as Elizabeth stated, our expectation in 2024 is that we'll run at a 20% margin, and that represents a degradation in margin with a clear focus on investing in this particular segment |
| Full Service business had operated at margins in the high single digits in the years leading up to the pandemic, but has been unprofitable in the last several years, losing approximately $30 million in adjusted operating income in 2023 |
| the core challenge really stems from that |
| And then, of course, the bottom cohort is not positive yet |
| I mentioned in the prepared remarks that the cessation, if you will, of the ARPA funding, so that's a $34 million headwind and all in the Full Service segment |
| And on the Full Service side, I think you called out the EBIT headwind from the U.K |
| So we did call that out and it was around a $30 million -- was a loss at that level in 2023 |
| And given the long lease life on some of centers, it's actually quite costly to close them, whether you're going to be waiting through this more challenging time in the interval |
| We do expect a year-over-year earnings headwind from these 2 items to ease as we move through the year with the combined headwinds falling from $18 million in Q1 to approximately $12 million headwind in each of Q2 and Q3 and then only $2 million by the time we get to Q4 of '24 |
| In the full year 2024, we expect those 2 items to account for an approximate $0.55 a share headwind to growth for the full year, reflecting the last claims from approximately $34 million ARPA funding for P&L centers that we received in 2023 and an estimated increase of $10 million in interest expense |
| Although the operating environment in the U.K |
| We have had some impairments over the last couple of years as we've continued to refine the book that we are operating and the portfolio as we see it evolving over the years of recovery, but it is certainly an outsized expense that is not predictable |
| And regarding the discrete items that I mentioned above, we expect to have $3 million more in interest expense and a $15 million headwind from the ARPA support we had received in Q1 of 2023 |
| And so we're mindful of that |
| may impact demand in certain areas, but that's the main rationalization that we see |
| So this is sort of a double year of increasingly difficult comps |
| So I would just observe that some of it is about the macro environment as well as some of the competitive pressures that may ease over the next 12 to 18 months in both geographies |
| So it is called , that's an overstatement of what it is |
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