COVID-19 fuels highest private K-12 utilisation rates to date
Spring operates in both the mid-level early childhood and mid-level/premium K-12 segments, but needs to “figure out where they want to operate and focus all their time and attention there”, we heard in an Interview.
COVID-19 has stifled growth in the mid-level early childhood segment and, after months of closures, an “interesting pattern” has emerged. “With the PPP funding and the CARES grant funding that were available for independently owned and operated small businesses, a lot of the premium childcare providers were able to secure that,” the expert explained.
Although the mid-level space is recovering, premium childcare is growing at the fastest rate. “The majority of premium childcare centres are operating somewhere in [the region of] 90% up to upwards to 105% of where they were pre-COVID, and part of that has to do with the fact of being able to secure federal funding,” the specialist added.
By contrast, those institutions that had to furlough their employees have not been able to recover as easily. Bright Horizons, for example, posted its “largest decline ever in Q1 and Q2 of this year, astronomical declines, and they’re closing numerous schools”, according to the Interview.
Like premium childcare, the private K-12 space is on a strong growth path and showing some of the “highest utilisation rates ever to date”. With public schools closed for months during the worst of the pandemic, families became increasingly frustrated and concerned about their children’s education and turned to the private sector. For the first time ever, most US private schools had a wait list for the 2020-21 academic year.
In light of this, Spring would do well to focus exclusively on the K-12 space, moving its mid-level schools into the premium space, according to the specialist. However, this would require a significant level of investment to ensure its institutions truly reflect premium provision. The expert also explained why Spring could do the opposite — divest K-12 to focus on premium childcare.
Essentially, it’s “almost impossible” to operate in both, we heard. “Spring Education has touted itself as being exclusive for doing so, but the reality is they don’t do either well.”
To access all the human insights in Third Bridge Forum’s Spring Education Group – regional drivers in for-profit secondary education Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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