6. Debt and Derivatives

We are required to disclose the fair value of financial instruments for which it is practicable to estimate the fair value, even though these instruments are not recognized at fair value in the consolidated balance sheets. The following table presents the carrying value and estimated fair values of the Company’s debt obligations as of June 30, 2026 (in millions):

The following discussion summarizes the debt agreements and related modification for the six months ended June 30, 2026 and the year ended December 31, 2025.

First Lien Credit Agreement

On March 5, 2019, the Company entered into a First Lien Credit Agreement (the “First Lien”), with Morgan Stanley Senior Funding, Inc., as the Administrative Agent and the Collateral Agent.

On December 11, 2024, we amended the First Lien to refinance the outstanding principal by establishing a Tranche B-5 Term Loan (“Tranche B-5”) in an aggregate principal amount of $2,553.2 million at a rate equal to Secured Overnight Financing Rate (“SOFR”) plus 2.50% or Alternate Base Rate (“ABR”) plus 1.50% with a maturity date of February 21, 2031. Principal payments were due on the last business day of each quarter, which commenced in the first fiscal quarter of 2025 and equated to 0.25% of the principal at issuance, with a balloon payment due February 21, 2031.

On May 28, 2026, we used a portion of the net proceeds received from the Community Living divestiture to repay $300.0 million of the borrowing under Tranche B-5 and amended the First Lien to establish a new Tranche B-6 Term Loan (“Tranche B-6”) in an aggregate principal amount of $2,214.9 million. The proceeds from Tranche B-6 borrowings were used to refinance the equivalent amount of the remaining Tranche B-5, after the aforementioned debt paydown, at a rate equal to SOFR plus 2.00% or ABR plus 1.00% with a maturity date of February 21, 2031. The transaction was accounted for as a debt modification. Principal payments are due on the last business day of each quarter, which will commence in the third fiscal quarter of 2026 and equate to 0.25% of the principal at issuance, with a balloon payment due February 21, 2031.

Revolving Credit Facility

The First Lien also extends credit in the form of a Revolving Credit Facility with a borrowing capacity of $475.0 million (the “Revolver”), of which up to $50.0 million is available as swingline loans and up to $82.5 million is available as letters of credit (the “LC Sublimit”). The Revolver will mature on June 30, 2028. In connection with the First Lien debt modification on May 28, 2026, borrowings of the Revolver bear interest at a rate equal to SOFR (with a floor of 0.00%) plus 2.00% for the Revolving Credit Loans or ABR (with a floor of 0.00%) plus 1.00% for the Swingline Loans. Prior to the debt modification, borrowings bore interest at a rate equal to SOFR (with a floor of 0.00%) plus 2.75% for the Revolving Credit Loans and ABR (with a floor of 0.00%) plus 1.75% for the Swingline Loans. As of June 30, 2026 and December 31, 2025, the Company had $475.0 million of borrowing capacity available under the Revolver as there were no borrowings under the Revolver or letters of credit outstanding.

The Company’s First Lien also provides for an additional $65.0 million of letter of credit commitments (the “LC Facility”), which are not subject to the LC Sublimit and do not reduce the Revolver borrowing capacity. As of June 30, 2026, there were $63.9 million of letters of credit outstanding under the LC Facility, resulting in an available borrowing capacity of $1.1 million. As of December 31, 2025, there were $62.8 million of letters of credit outstanding under the LC Facility, resulting in an available borrowing capacity of $2.2 million.

Derivative Financial Instruments

To manage fluctuations in cash flows resulting from changes in the variable interest rates, the Company entered into receive-variable, pay-fixed interest rate swap agreements. The following table summarizes our interest rate swaps designated as cash flow hedges (in millions):

The net fair value of the cash flow hedges as of June 30, 2026 and December 31, 2025 was a $14.3 million asset and a $0.4 million liability, respectively, and is reflected in prepaid expenses and other current assets, other assets, accrued expenses and long-term liabilities, as applicable, in the unaudited condensed consolidated balance sheets. Refer to Note 9 for details. The fair values of our interest rate swaps are based upon Level 2 inputs, which include valuation models. The key inputs for the valuation models are quoted market prices, interest rates, forward yield curves, and credit risk adjustments that are necessary to reflect the probability of default by the counterparty or us.

Amounts reported in accumulated other comprehensive income (“AOCI”) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Net interest received, including payments made or received under the cash flow hedges, was $0.4 million and $1.0 million for the three and six months ended June 30, 2026, respectively, as compared to $4.4 million and $8.8 million for the three and six months ended June 30, 2025, respectively. The Company expects approximately $6.5 million of pre-tax gains to be reclassified out of AOCI into earnings within the next twelve months.

The debt modification did not impact the effectiveness of the cash flow hedge arrangements outstanding as of June 30, 2026.