The Company tests goodwill for impairment on an annual basis in the fourth quarter, or more frequently if impairment indicators exist. There were no impairment indicators identified during the three months ended July 4, 2026 requiring an interim goodwill impairment test.

During the first quarter of the fiscal year ending January 2, 2027 the Company's market capitalization deteriorated due to a decline in stock price, which was considered to be an impairment indicator for goodwill. The Company used the market approach based on market capitalization and determined the fair value of the early childhood education centers reporting unit did not exceed its carrying value, resulting in an impairment to the reporting unit. The excess of the reporting unit’s carrying value over its fair value of $273.5 million was recognized as an impairment to goodwill within impairment losses in the unaudited condensed consolidated statements of operations and comprehensive (loss) income during the first quarter of the fiscal year ending January 2, 2027. The before- and after-school reporting unit had an estimated fair value that substantially exceeded its carrying value, resulting in no impairment to the reporting unit. As of the April 4, 2026 measurement date, the adjusted balance of goodwill related to the early childhood education centers reporting unit was $644.5 million. No goodwill impairment was recognized during the three months ended July 4, 2026 or the three and six months ended June 28, 2025.

As of July 4, 2026 and January 3, 2026, goodwill recorded on the unaudited condensed consolidated balance sheets is net of accumulated impairment losses of $451.5 million and $178.0 million, respectively.

Adverse changes in the Company’s market capitalization as well as changes in key assumptions, including higher discount rates or weaker operating results, could result in impairment in future periods, which could be material to the unaudited condensed consolidated statements of operations and comprehensive (loss) income. Refer to Note 10, Fair Value Measurements, for further information regarding the inputs utilized in the estimation of reporting unit fair value.