![]() The market for early education and childcare services is highly fragmented. ![]() On the other hand, the hybrid working setup, which could be a more permanent change to the office occupying pre-pandemic situation, could decrease the appeal for the employees to have a childcare center close to the office instead of home. In 2020, the company's per-center gross profit margin dropped from the usual 20-25% to 14%.īFAM Operating Exp vs Earnings (Calculated and Charted by Waterside Insight with data from the company) And its earnings from operation took a hit and is still in the process of recovering. Managing precautionary and preventive measures and disrupted staff availability has increased its operating expenses by over 10-20% compared to pre-pandemic. The most immediate risks to Bright Horizons' steady-as-she-goes growth model have been the Covid-19 pandemic and the subsequent change of a hybrid working model.ĭuring the depth of the pandemic, the company's enrollment growth became challenging, and costs rose. than its closes competitor.īFAM Care Center Return Analysis (BFAM Q3 Presentation) Weakness/Risks The company estimated that it has about six times more employer-sponsored centers in the U.S. With quality and scalability, it has been able to turn the typical low-return childcare services into a sustainably profitable operation with enrollments from both its sponsors and the local community. This focus on quality has to be the backbone for a long-term investment. It not only has continuous in-house training for its staff, but also supports the teachers in obtaining nationally-recognized certifications through training and educational programs. It institutionalizes the childcare service and develops its in-house educational model to meet or exceed applicable accreditation and rating standards in all its key markets, including U.S., U.K, and Europe. The company is in the premier price range as a private early education provider for children aged from infant to pre-k. As an investor, when examining a company in the nature of caring for people, especially children, we believe its quality of service should be first and foremost focused. Of course, most of all, Bright Horizons' strength has to be providing high-quality caring services. Simply put, it has no other competitors on site. So once a Bright Horizons center is set up and operating, it is at little risk of losing clients even when the contracts are due for renewal after multi-year operations. Most of the centers have lease terms ranging from 10 to 15 years, with renewal options. They are usually spacious and have large outdoor areas that can accommodate a capacity of 128 children in their U.S. The facilities the company's childcare centers are situated in are usually leased or owned by the sponsors, being part of a large office building where the sponsor's office is located.īFAM Operating Models (BFAM Q3 Presentation) The strength of this service model is that most of these contracts are at multi-year lengths. Its business model is centered around this employer-sponsored model, in which a single employer or consortium of employers enter into a long-term contract to provide child care at a center located at or near the employer sponsor's worksite. Strengthīright Horizons is one of the largest providers of employer-sponsored childcare services around. It serves more than 1,350 large enterprise employers. It has approximately 1,100 early education and childcare centers in the U.S., U.K., the Netherlands, Australia, and India. ![]() The company partners with employers to support workforces by providing child care services to help their employees personally. Company Overviewīright Horizons Family Solutions, founded in 1986, is a global provider of high-quality early education, child care, backup care, and workplace education services. We remain optimistic about its long-term growth but would re-assess its prospect with slower growth in the near term. However, we see challenges remain in its near-term cash flow and long-term supply/demand dynamics from its clients due to the societal changes following the pandemic. SolStock/E+ via Getty Images Investment Thesisīright Horizons ( NYSE: BFAM), facing down the challenges in 2020 brought by the pandemic, has been on a healthy recovery path.
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