In 1969 Perry Mendel opened KinderCare Nursery Schools. KinderCare Learning Centers went public in 1972. By the 1980s, KinderCare filed for bankruptcy. In October, KinderCare disclosed it would follow Oregon companies to the New York Stock Exchange with an initial public offering.
The new KinderCare IPO filing is likely a placeholder for now. The previous IPO plans were to raise upwards of $500 million by offering 25.8 million shares at a price range of $18 to $21 per share. Yet, there is no hard date set and much of the filing is still unclear at the moment.
KinderCare on Wednesday filed an amended S-1 after originally filing an S-1 in October. KinderCare filed in October to go public 16 years after a $1B buyout. Founded in 1969, KinderCare bills itself as America’s largest childcare provider in terms of capacity at its centers. The company again said it plans to list on the New York Stock Exchange under the ticker symbol “KLC,” but provided few other details.
Financial Struggles and IPO Setbacks
Why can’t the largest company in the childcare business make a profit? KinderCare has lost money for four consecutive years. Is it realistic for KinderCare to think it can continue to raise rates 2%-5% per year? Is KinderCare’s $1.4 billion in debt a problem? Whatever the regulatory issues were, they forced the company to very publicly walk back its plans. KinderCare appeared to be very close to actually completing the deal.
In its IPO pitch, KinderCare said that its size helps it offer more flexible options for parents and employers. Earlier this month, KinderCare said in a regulatory filing that it planned to offer 25.8 million shares at a price range of $18 to $21. “We’ve received healthy interest from investors and positive feedback on KinderCare’s potential," the company said.
KinderCare’s Market Presence and Plans
At this point, not many details about the KinderCare IPO have been released. Pricing per share hasn’t been announced. The date of the KinderCare IPO isn’t yet known. The official start of the proposed sale of shares to the public will be “as soon as practicable after the registration statement becomes effective.”
KinderCare Learning Centers, LLC is an American operator of for-profit child care and early childhood education facilities founded in 1969 and currently owned by KinderCare Education based in Portland, Oregon. The company provides educational programs for children from six weeks to 12 years old. In 39 states, some 200,000 children are enrolled in more than 1,250 early childhood education community centers.
Is KinderCare in debt?
The previous IPO plans aimed to raise over $500 million by offering 25.8 million shares from $18 to $21 per share. On Wednesday, KinderCare filed an amended S-1 after originally filing in October. Few other details about the IPO have been released. Pricing per share and the date aren’t yet known. The sale of shares to the public will start “as soon as practicable after the registration statement becomes effective.”
Why can’t the largest childcare company make a profit? KinderCare has lost money for four straight years. It faces competition from companies like Bright Horizons, Primrose, and Learning Care Group.
KinderCare’s expectations of long-term debt and interest falling to $237 million from $590 million post-IPO will be pivotal. In exchange for debt forgiveness, creditors will own 86.5% of common stock. This strategy gives KinderCare a potential path to "more flexibility to grow."
The childcare industry, essential for enabling parents to work, is projected to steadily grow 6.4% yearly as more women enter the labor force. KinderCare’s ability to address its debt, competition, and control weaknesses will determine if its IPO succeeds.