G8 Education (GEM) H1 2026 earnings summary

Executive summary

• The first half of 2026 saw challenging sector conditions, including affordability pressures, lower birth rates, and increased supply, resulting in a statutory net loss after tax of $38.8 million, mainly due to a $47.1 million impairment expense from suspending operations at 40 centres.

• Revenue declined 11.1% year-over-year to $413.6 million, with occupancy falling 7.5% to 57%.

• Key operational improvements included team retention at 80% (a six-year high), a 7-point increase in family NPS to 58, and 97% of centres meeting or exceeding National Quality Standards.

• Operational KPIs improved, but earnings were impacted by macroeconomic and sector-wide pressures.

• Decisive actions included suspending operations at 40 centres, restructuring the support office, and ongoing procurement efficiencies, targeting at least $10 million in annual cost savings.

Financial highlights

• Operating revenue for H1 2026 was $409.1 million, down 12% year-over-year; statutory revenue was $413.6 million, down 11.1%.

• Operating EBIT was $14.7 million, down 63.7% year-over-year; operating NPAT was $6.7 million, down 73.7%.

• Reported net loss after tax was $38.8 million, impacted by $47.1 million in impairment expenses from centre suspensions.

• Operating cash flow remained positive at $49.4 million, but down 42.2% year-over-year.

• EPS declined to a loss of 5.1 cents per share.

Outlook and guidance

• Trading conditions remain challenging, with spot occupancy at 61.9% and year-to-date occupancy at 58%, both below prior year.

• No interim dividend will be paid; share buyback program has concluded.

• Full-year capital expenditure is expected to be approximately $15 million, with a focus on safety and operational priorities.

• Sector support continues with government initiatives, and anticipated birth rate improvements are expected to aid demand.

• Near-term focus includes improving quality, safety, compliance, family engagement, team retention, and occupancy.