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Greetings, and welcome to Bright Horizons Family Solutions Fourth Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Michael Flanagan, Vice President, Investor Relations. Thank you. Mr. Flanagan, you may begin.

Thank you, Sherry, and welcome to Bright Horizons' fourth quarter earnings call. Before we begin, please note that today's call is being webcast and a recording will be available under the Investor Relations section of our website, brighthorizons.com. As a reminder to participants, any forward-looking statements made on this call, including those regarding future business, financial performance and outlook 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 should be considered in conjunction with the cautionary statements that are described in detail in our earnings release, 2023, Form 10-K and other 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. Today, we also refer to non-GAAP financial measures, which are detailed and reconciled to the GAAP counterparts in our earnings release, which is available under the IR section of our website at investors.brighthorizons.com. Joining me on today's call is our Chief Executive Officer, Stephen Kramer; and our Chief Financial Officer, Elizabeth Boland. Stephen will start by reviewing our results and provide an update on the business. Elizabeth will follow from our detailed review of the numbers before we open it up to your questions. So with that, let me turn the call over to Stephen.

Thanks, Mike, and good evening to everyone on the call. I am pleased with our strong performance in the fourth quarter and how we finished the year. Total revenue and adjusted EPS exceeded our expectations for the quarter, largely driven by the outstanding performance of our Backup Care segment on the top and bottom line. For the year, total revenue increased by 11%, while adjusted EPS grew by 22%, significantly surpassing our initial projections for the year. We achieved the highest operating income in the company's history, with our Backup Care segment generating $170 million of EBIT, which represents earnings performance in excess of the contribution of our entire Full Service segment prior to the COVID pandemic. This impressive growth spanning more than 1,100 clients and multiple geographies has fundamentally changed and strengthened the overall business mix, and we believe the growth trajectory of Bright Horizons for the years ahead. To get into some of the specifics on the recent quarter. Revenue increased 10% to $674 million in Q4, with adjusted EBITDA up 12% to $111 million and adjusted EPS growing 18% to $0.98 per share. In our Full Service Child Care segment, revenue increased 8% to $485 million. We added seven centers in the fourth quarter, including client centers for Ragon Institute and St. Jude's Hospital and our second center in India for Morgan Stanley. For the full-year, we opened 26 centers of which 17 were for client employers, most of which are new to the Bright Horizons family. Enrollment in centers opened for more than one-year increased at a low single-digit rate in Q4 across our U.S. and international operations with average occupancy percentage in the low 60s, consistent with the prior quarter. As a reminder, Q3 and Q4 are historically our lowest occupancy quarters due to traditional enrollment seasonality. We are pleased to see our top cohort of centers, nearly 40% of our portfolio continue to demonstrate very high levels of occupancy, averaging more than 80% in the fourth quarter. As such, our enrollment growth opportunity continues to be concentrated in our middle and bottom cohorts, which saw mid single-digit enrollment growth in the fourth quarter. With that said, the pace of growth in our underperforming centers remains below our expectations, and we continue to intensify our efforts to drive improved results. In a number of our underperforming centers located in the business district of D.C., New York City and Seattle, we have seen some early signs that return to office policy changes by employers are driving an uptick in enrollment inquiries. I'm encouraged by the shift in trends we have seen at these locations, and we are well suited to accommodate families child care needs as they readjust to return to office mandate. In the UK, we continue to make operational and financial progress in the fourth quarter, narrowing the losses as compared to last year. For the full-year, we delivered much improved financial and operational performance across our UK portfolio on strong enrollment growth, improved center staff retention and lower agency spend. While the UK is still a headwind to our overall full service margins, I'm encouraged by the steady progress and momentum in the business. We see a clear path to earnings breakeven performance in 2025 with continued improvement of results in the years to follow. Let me now turn to Backup Care, which delivered a strong quarter with 15% revenue growth to $157 million. Traditional network use trended higher than our expectations as we ended the year with use in center-based and In-Home care, showing particularly strong growth. We also continue to add to our client base with new employer launches in the fourth quarter, including Harris Health and Lonza. As I mentioned earlier, 2024 was another standout year for Backup Care. Greater adoption of the Backup Care benefit among eligible employees drove revenue topping $600 million with operating income of $170 million. We were pleased to see the continued expansion of the Backup Care benefit with more unique users utilizing the benefit and users consuming more of their annual use payments. This increased adoption has been supported by our marketing initiatives, expanded suite of care type and greater provider availability. With the momentum we saw exiting the year and the outlook we have for 2025, I remain confident that Backup Care will be a significant growth engine for the company's top and bottom line for many years. Our Education Advisory business grew to $32 million in the quarter and operating margin of 29% ticked up slightly from the same quarter last year. We added new clients to the portfolio, notably launching Atlantic Health Systems and United Natural Foods and continue to see more adoption of our student loan repayment products. As this segment continues to execute on its transformation focused on meeting the evolving upskilling and reskilling needs of employers and their employees, we continue to believe in and are investing for the large opportunity available in this market. Before I wrap up, I want to take a moment to express our heartfelt sympathies for those affected by the devastating fires in Los Angeles. While the overall operational impact for Bright Horizons was quite limited, we have many in our communities, employees, families and clients who have been significantly impacted. We share the deep sense of loss that permeates across Southern California. Over the past few months, we have witnessed a series of natural disaster and unimaginable tragedy and I'm very proud of the way our team has stepped up. While our employees are not first responders, they are supporting many who have been called on in the wake of these devastating tragedies. Looking ahead to 2025, I remain excited about our growth prospects, and I continue to have tremendous confidence in the resiliency of our business model, the strength of our more than 1,450 client relationships and our ability to drive long-term value to all stakeholders. We entered 2025 with a strong foundation and expect to deliver a range of $2.85 billion to $2.9 billion of revenue. And on the earnings side, we are projecting adjusted EPS of $3.95 to $4.15 per share or growth of approximately 15% to 20% for the year. With that, I'll turn the call over to Elizabeth, who will dive into the quarterly numbers and share more details around our 2025 outlook.

Thanks, Stephen, and hello to everybody who is able to join the call. To recap the fourth quarter, overall revenue increased 10% to $674 million, adjusted operating income of $79 million or 11.8% of revenue increased 25% over Q4 of 2023, while adjusted EBITDA of $111 million or 16.4% of revenue increased 12% over the prior year. We ended the year with 1,019 centers, having added seven and closed 16 locations in the fourth quarter. To break this down a bit further, full service revenue was $485 million and was up 8% in Q4 on pricing increases, low single-digit enrollment growth and approximately 50 basis points of tailwind from FX. As Stephen mentioned, Q4 occupancy levels across our portfolio of centers that have been opened for more than one-year, increased over the prior year and remained relatively consistent from Q3 levels in the low 60s percent utilization. In the center cohorts we have discussed on prior calls, we continue to increase the number of centers in the top cohorts over the prior year period. In Q4, our top-performing cohort, defined as above 70% occupancy, improved from 36% of these centers in Q4 of 2023 to 39% in Q4 of 2024. In our bottom cohort of centers, those under 40% occupied now represent 16% of centers, improving from 18% in the prior year period. Adjusted operating income of $17 million in the Full Service segment increased $4.5 million over the prior year. Higher enrollment and improved operating leverage, particularly in our U.S. and UK operations helped to drive the growth in earnings. Turning to Backup Care. Revenue grew more than $20 million or 15% in the fourth quarter to $157 million. Strong overall use in Q4 drove the better-than-expected revenue growth as well as the adjusted operating income of $53 million in Q4 of 2024 or 33% of revenue. For the year, revenue grew 16% to $610 million, topping our expectations of 14% to 15% growth. Lastly, our revenue in the Educational Advising segment ticked up to $32.5 million in Q4 and delivered operating margin of 29%, modestly higher than the prior year, reflecting improved operating leverage. Net interest expense in the quarter of $11.5 million was down over the prior year, largely due to incremental interest income on invested cash. The structural effective tax rate on adjusted net income was 27.5% in the quarter, roughly in line with the full-year effective rate. Turning to the balance sheet and cash flow. For the full-year 2024, we generated $337 million in cash from operations compared to $256 million in 2023. We made fixed asset investments totaling $95 million in 2024 as compared to $91 million in 2023. And lastly, with the continued cash build and specifically free cash flow generated in Q4, we repurchased roughly $85 million of stock in the quarter, our first repurchase activity since the summer of 2022. We ended the year with $110 million of cash, a leverage ratio of roughly 2x net debt to adjusted EBITDA and approximately 58.5 million weighted average shares outstanding. Now moving on to our 2025 outlook. In terms of the topline, we currently expect 2025 revenue to be in the range of $2.85 billion to $2.9 billion. This growth of 6% to 8% includes a 115 basis point year-over-year headwind from the strengthening of the U.S. dollar against our foreign currencies. As a result, we expect constant currency revenue to grow approximately 7% to 9%. Looking at a segment level. In Full Service, we expect reported revenue to grow in the range of 4.5% to 6.5%, with constant currency revenue growth of 6% to 8% on enrollment gains and tuition increases, offset by a modest headwind from net center closings. In Backup Care, we expect reported revenue to increase 11% to 13%, driven by the continued expansion of use. And in Ed Advisory, we expect to grow in the low to mid-single digits. As Stephen previewed, in terms of earnings, we expect 2025 adjusted EPS to be in the range of $3.95 to $4.15 a share. Turning now to – specifically to the first quarter of 2025. Our outlook is for total topline growth in the range of 6% to 8% on a reported basis to $660 million to $670 million, reflecting roughly 100 basis points headwind from FX over the prior year. We expect Full Service to grow reported revenue again, in the range of 4.5% to 6.5% or 6% to 8% in constant currency, Backup to grow 11% to 13% and Ed Advisory in the mid single-digit. In terms of earnings, we expect Q1 adjusted EPS to be in the range of $0.63 to $0.68 a share. So with that, Sherry, we are ready to go to Q&A.

Thank you. [Operator Instructions] Our first question is from Manav Patnaik with Barclays. Please proceed.

Thank you. Elizabeth, I was hoping you could just break out that 6% to 8% [indiscernible]. I know you said pricing, enrollment and then – and net closure. But I was hoping you could just quantify a little bit what the pricing of those [indiscernible] basically?

So Manav, if I heard your question right, this is for the 2025.

Yes, for the 6% to 8% full center guide specifically?

Yes. Sorry, you were breaking up a little bit. So yes, overall, we would be looking at price increase in the 4% to 5% range, enrollment in the 2.5% to 3.5% range. And then the net closure effect, if you will, the openings offset by the effect of centers we have closed in the 0.5% or so offsetting those two growth items. And then the foreign exchange is 1.5 basis points to 150 basis points headwind.

Okay. Got it. Understood. Helpful. And then just like you have before, could you just help us with the margin perhaps for the full-year in the three segments? I know you've done that before for that in the quarter?

Sure. So this year, we're in the low-ish to mid-single digits for the Full Service segment, so around 4%. We would be looking to improve that to mid-single digits, 150 basis points or so. That comes from some of the leverage from the enrollment and the pricing to cost, et cetera. So that's Full Service in that range. Our Backup business for the year, we would expect it to be similar to what we've delivered in 2024. So in that 20%, 25% to 30% range on the higher end of that, similar to what we did this year. There's a little bit of different phasing for that. It would be mid to high teens for the first quarter specifically. So a little bit of difference versus the full-year, but you can see the trend of that this year, next year as well. And then in the Ed Advising business, overall, again, some phasing throughout the year, but in the mid to high teens operating income for the year.

Thank you.

Sure.

Our next question is from George Tong with Goldman Sachs. Please proceed.

Hi. Thanks. Good afternoon. You mentioned that the occupancy is currently in the low 60s, consistent with 3Q. Can you provide your latest views on how occupancy rates will trend over the course of 2025?

Yes. I mean our expectation is for – overall for enrollment growth in the, call it, 2.5% to 3.5% range, maybe a little bit more, we have harder comps in the first half than the second half, modestly, but fairly steady growth through the year, but maybe weighted slightly to the back end.

And what about the percentage? Would you expect the low 60s to reach mid 60s, to mid to high 60s?

Yes. Sorry, George, it would be in the mid 60s, yes. That's where we [indiscernible].

And I know there's seasonality over the course of the year. How would you expect – I'm assuming the step-up happens in the first half of the year and then step back down in the second half?

Yes, exactly. It would be – because of the enrollment, we would expect the growth to be fairly consistent, it would be higher in the first half like it was this year and then tapering back in the second half.

Got it. Thank you.

Our next question is from Andrew Steinerman with JPMorgan. Please proceed.

Hey, Elizabeth, I thought I heard you say that the number of center closings in 2025, would only drag revenues by 0.5 point. Maybe you could mention how many centers that would be. It just sounds low to me because when I think about the pre-COVID years, the many years of center pruning, which was normal, would drag about 1% or 2% a year. So if it's only 0.5% this year, it just seems like you're not pruning even like kind of a normal amount of pre-COVID centers for a year?

Yes. So I think that the factor there, Andrew, I mean, it's a – we're trying to quantify the point about it, but I think it's net, of course, of the openings. So that was intended to be a net unit revenue factor. So closings will be higher than that. So call it, if closings are 2% and openings are or 2.25% and openings are 1% and 1.25% then that shapes down to less than 1% net. We do have – I think I'll point out one thing, though, about that, which is that the newer – we are opening centers. We opened 26 centers here in 2024. We would expect a similar number of openings based on what is in the pipeline and in development right now. Those centers open and they are ramping up and delivering sort of a more typical historic ramp profile. The centers we are closing have been under enrolled there at a revenue level that is already somewhat tapered down. So the effect of it is a headwind on revenue, but perhaps not completely representative of what you might have seen in the past.

Right. And what was in the fourth quarter, the same question, what was the revenue drag from center closing in the fourth quarter just reported?

Yes, from a gross basis, it was about a 250 basis point headwind from center closing. We've got some new centers. So the net was closer to…

100 basis points in Q4.

100 basis point drag.

Okay. Thank you.

Our next question is from Jeff Meuler with Baird. Please proceed.

Yes. Thank you. Good afternoon. Stephen, you mentioned just the disappointment with the underperforming centers and intensifying efforts. Can you go into more detail on what the intensifying efforts part means? Like what are you doing differently going into 2025 that you've been doing throughout the COVID recovery just from an operational side to drive that up in full service?

Yes. So I think a lot of it – Jeff, thank you for the question. I think a lot of it is really focused on continuing to refine the prospect family experience. So again, I think what we have continued to do and are, again, redoubling our efforts on are things like how a prospective family is handled as an inquiry. And so really making sure that we're intensifying the personal touch that those families are receiving through the process. I think we continue to improve our tour experience and making sure that we are providing greater visibility into the great experience that family will have once they enroll in the center. And then I would say that we are also improving our ability to leverage the backup care use within our own centers and using more systems to convert backup users into full-time enrollment and really providing them that first experience through a backup use and then ultimately, having them enroll on a permanent basis. So I would say a lot of it is down to how we're managing that funnel and making sure that the family has as many opportunities to see the great work that happens within our centers and expose them to that, so they can differentiate with other options in the community.

Got it. And then just on Backup Care, could you just talk about client budget discussions or annual budget adjustments going into 2025 as we think about that as a growth driver versus driving up allowance of the existing use banks and new clients? Thanks.

Yes, sure. So first of all, just to take a step back, obviously, we're really pleased with how backup performed throughout 2024 growing 16%, which, again, gives us the confidence to guide to 11% to 13% for 2025. I would say specifically related to the renewal season, we had really positive conversations in this third and fourth quarter as it relates to the conversations and discussions we had with our existing client base. Obviously, they invested more than they had in the prior year. We got really good signals from our clients through both renewal as well as anecdotal evidence that they are interested in continuing to grow those investments. Again, their focus as is ours, is on continuing to grow the number of unique users. So in terms of the lever that we see as the important one and our employer clients are aligned with, we are looking to broaden the base of users within our client base. And only in a really small incremental way grow the number of uses per user. And so we're not seeing many changes as it relates to the use banks that employers are offering. But instead, they are continuing to allow for a broader set of unique users that ultimately will come with additional use. So we felt really good about Q3 and Q4 in terms of the renewal season, feel good about our ability to continue to drive marketing and other efforts as well as supply against the increased demand.

Got it. Thank you.

Thank you.

Our next question is from Josh Chan with UBS. Please proceed.

Hi. Good afternoon. Thanks for taking my questions. Stephen, I think you mentioned the return to office potentially being a little bit of a tailwind. How important of a factor is that to you? Would you attribute that factor to explain much of the difference between your current occupancy and your pre-COVID occupancy? Just kind of, kind of the ballpark, how impactful office might be to you in your mind?

Yes. Look, I think that as we have grown the enrollment across the base of centers. Clearly, there have been a number of factors that have gone into us continuing to be able to increase and improve enrollment. I would say with some of the most stubborn of enrollment challenges. So think about the ones that are in the third cohort. There are a selection of those. And I think I alluded to them in the prepared remarks, which is there is a selection of those in that bottom cohort that are in urban business district. So think about D.C., think about Midtown to Downtown Manhattan, think about Downtown Seattle. And in those isolated markets, certainly return to office appears to be something that at this point, could have an unlock. We're starting to see increased inquiries in some of those markets that historically have been particularly stubborn. I wouldn't say it's the key driver in terms of our enrollment progress to date nor going forward. But there are a selection of the centers that certainly will and hopefully will get assisted by return to office policies.

Great. Thank you for the color there. In the UK, I think you mentioned a path to breakeven. Does that mean that you expect to fully get to breakeven for the full-year? And if so, what are some of the initiatives beyond the ones that kind of led to last year's improvement that you're undertaking this year to drive that kind of result in the UK. Thank you.

Sure. So I think we had shared in previous calls that we had an expectation of a loss within the full service segment in the UK of 15 million, and it's going to be actually closer to 10 million this year, 2024. And certainly, in 2025, our expectation is we're going to be able to get that to breakeven. I think what allowed us to do better in 2024 and start to see the kinds of improvements that we saw was down to enrollment growth. So our team in the UK did a really nice job of growing our enrollment. They certainly work really diligently on getting better and more efficient staffing. And as a result, we're able to really reduce our reliance on agency third-party staffing accommodations. We will continue to roll all of those efforts forward into this year 2025. And then the only other sort of additional piece of the puzzle for 2025 is that we have an expectation given that the government has announced that for zero to three year olds, there will be increased numbers of hours. So they're going to go from 15 hours of free entitlement to 30 hours of free entitlement. And so our expectation is that, that will create some additional velocity in Q3 and Q4.

Great. Thank you for the color there and good luck in 2025.

Thank you.

Thank you.

Our next question is from Toni Kaplan with Morgan Stanley. Please proceed.

Thank you. I wanted to start out with enrollment trends in third quarter and fourth quarter. You had the low single-digit enrollment and you've guided to about 2.5% to 3.5% for the coming year. And this was all laid out last quarter. So I don't feel like there was a lot new here. But just what do you think has driven this lower enrollment than you had seen previously? Just thinking about it in the post-COVID period, I guess, enrollment was a lot higher because you were still sort of seeing people come back to center care. But just wanted to get your thoughts on the enrollment trends? Thanks.

Yes. Thanks, Toni. I think the parsing it a little bit is helpful in terms of where we are actually seeing the opportunity for enrollment growth. So our best-performing centers, we are over 80% occupied. Those centers are – they may for a period of time, gain some enrollment. But ultimately, when you've got a center that's that full, there will always be cycling out of older children into elementary school, et cetera. So maintaining those centers in the same enrollment level means not much enrollment growth from that cohort at all. The real growth opportunity is in those centers that are sub 70% enrolled, and that's where we have seen good improvement in the middle, sort of the middle cohort that we've characterized as 40% to 70% occupied, mid-single digits. We are in the stage of enrollment in those centers where it's always a little bit difficult to piece the age of children and the availability of spaces together in all cases. Where Stephen mentioned it and we talked a little bit earlier, not as in reflecting on where the improvement has been slower, slower than we would have expected, even though the most underperforming centers have a high percentage of enrollment gain. They're still stubbornly below 40%. And that is, in some cases, it's down to where they are located in a very urban work-centric environment where there has been less opportunity to enroll families who are coming to that area. They've made other choices closer to their home. But it is also – I think that the environment during the pandemic recovery for families who can afford child care, they've explored other options, and we're needing to grow back an awareness and an interest level in this kind of solution in some of these environments. So we're serving a population that is higher income has other choices. We are serving generally in urban, near urban environments. And we continue to see, as we've talked about, we continue to see good enrollment at our client centers tend to be more enrolled. Centers that have been open longer tend to be more enrolled. And so those that are under enrolled may have characteristics of being what I just described or even just newer to open or reopen.

Terrific. Then in Backup Care, you mentioned the strength in In-Home Care. I was wondering if the financials of that are sort of higher revenue with lower margin or how to think about the profile there? And is that large enough within Backup Care to move the needle or is it still just a very nascent offering that you're providing? Thanks.

So the In-Home Care is – it's a really important part of the overall solution. Many families appreciate that alternative. But the majority of our care is actually – is center-based. It's our own centers, primarily that’s the top group and then our network partners is the next group. So In-Home Care, it's not nascent or incidental. It's an important portion of our service delivery. And it is – it's more expensive than providing care within our own centers or a center-based solution, but it's an important part of the overall solution in terms of providing optionality and having to meet the needs of the parent population. So we see it as continuing to grow that in-home capacity. But along with that, having enough of our own center-based capacity and/or our network partners is certainly where economics are most optimal, but because the service delivery in the round is critical. We want to have as many care types as we can to serve the needs that the end consumer has.

Thank you.

[Operator Instructions] Our next question is from Jeff Silber with BMO Capital Markets. Please proceed.

Thanks so much. I wanted to shift gears and talk a little bit about labor supply and more specifically, wage inflation. I know we started to see a tick up generally, I'm just wondering what you are seeing. And if it does go higher, do you have an opportunity to raise prices maybe midyear to offset any increase going forward?

Yes. So I think that we're comfortable with the estimates that we have at this point. Again, we've made some significant wage investments over the last four years. So we feel good about where our employees are being compensated. Again, in addition to wage itself, we obviously invest in benefits and other ways in which we enrich the package for those in our employee. I would say that in terms of seeing wage inflation that is greater than what we expect, first, we don't expect that, but in the event where that was the case. We always have the opportunity, especially for new families to consider that, although, again, at this point, that's not our expectation.

Okay. That's really helpful. And you had mentioned the share repurchase in the quarter. I know it's been a first time in a little while. I'm just curious if you can just talk about your thought process behind that. What drove you to do that this quarter as opposed to using it for other purposes?

Yes. I mean we have been in the last couple of years, both between our investments in our business in Australia and sort of making sure that the overall performance has stabilized. We've been building cash over the course of this year, certainly have visibility to continued cash flow generation in the coming years and thought – we are as opportunistic as we can be. The plan has been out there, and we've just been, I think, being judicious about capital deployment. But we've got very well-priced debt, and it's a good option for us to be active in that plan at this time.

Okay. Very helpful. Thanks so much.

You're welcome.

Thank you.

Our next question is from Faiza Alwy with Deutsche Bank. Please proceed.

Yes. Hi. Thank you. So I know you have talked about potential store closings. And I'm curious, where do you think the utilization cohort that's below 40% utilized would be next year around this time?

Yes. So we are – as mentioned on the call, we are about 16% or so of that group of centers that are in that bottom cohort. Pre-COVID, we always have had centers in a sort of suboptimal performance group. And so getting to somewhere between 16% and probably 5% or so of the portfolio is where we would target at the end of 2025 based on what we would expect enrollment to grow this year. And we do have some continued pruning expected. We may not be all the way to that 5% threshold but certainly expect to see at least a few points of improvement in the overall cohort group. I think it's a matter of improving those by enrollment gains in the centers that have been most affected. But I think overall, the look there would be that we also will have some centers that are opening and ramping. So I don't want you to think that, that number would ever be getting to zero.

Okay. Okay. Understood. And then just on the full service margin expansion, I know you talked about 150 basis points just coming from enrollment, et cetera. But I'm curious, like, I know we talked about the margins within each of these utilization cohorts. And so could you give us an update on sort of how to think about those margins in the above 70% utilization cohort versus the 40% to 70% at this point?

Yes. I mean, broadly speaking, the best – the most enrolled centers, the group that's above 70% is essentially back to pre-COVID operating margin level. So we were in the full service business, we were at 10% or so EBIT margins, and those centers are certainly back to that level even better. They were the better performers and so doing well. The middle cohort enrolled in that 40% to 70% are less than that. They're positive, but call it more like our overall average in the mid-single digits range. It's the underperforming group that's 16% we were just talking about that is they are actually losing money. And so as a group, they lose some level. So we're not quoting – it's not really that relevant to quote it as a percentage of revenue. They're under enrolled. The revenue isn't that representative of where they would be if they were performing, but they are – they're losing on a unit basis, they're losing money. So that's where the headwind and the improvement to margins will come from getting those to breakeven and then positive. And then ultimately, the bigger opportunity really is almost in that middle group of centers where, call it, 45% or so of the centers are in that middle group and have the opportunity to move from mid-single digits back closer to that 10% level.

Great. Thank you so much.

You are welcome.

Thank you. Okay. Thank you all very much for joining us this evening and wishing you all a great time.

Thanks, everyone. Take care.