Nido’s $6M Bet on Child Care Services: Can Occupancy Rates Sustain Earnings?
Nido Education Limited has completed the acquisition of two child care services for $6 million, projecting a $1.3 million EBIT boost in 2026. Both services boast occupancy rates above 90%, reinforcing Nido’s incubation growth strategy.
- Two child care services acquired for $6 million
- Combined estimated EBIT impact of $1.3 million in 2026
- Both services maintain occupancy rates above 90%
- Locations in New South Wales and Western Australia
- Acquisitions align with Nido’s incubation growth strategy
Strategic Expansion Through Acquisition
Nido Education Limited (ASX – NDO) has taken a decisive step in expanding its footprint in the early childhood education sector by acquiring two incubator child care services for a total of $6 million. This move, announced on 8 December 2025, marks a continuation of the company’s incubation growth strategy, which focuses on nurturing promising services before bringing them fully into the fold.
Strong Operational Metrics Underpinning the Deal
Both acquired services demonstrate robust operational performance, each maintaining occupancy rates exceeding 90%. One service has been operational for 18 months, while the other has been trading for just over two years. Together, they offer 168 places with an average daily fee of $166 and have been open for an average of 105 weeks. These metrics suggest a well-established demand and efficient management, factors that likely influenced Nido’s decision to proceed with acquisition.
Financial Impact and Growth Prospects
The acquisition is expected to contribute an estimated $1.3 million in earnings before interest and tax (EBIT) in calendar year 2026, before accounting for lease accounting standards (AASB16). This addition aligns with Nido’s target of achieving $5,500 EBIT per place and maintaining at least 80% occupancy over a six-month period to exercise call options at 4.5 times EBIT. The two services are strategically located in New South Wales and Western Australia, broadening Nido’s geographic reach.
Commitment to Incubation Strategy
Nido’s incubation strategy, first outlined in November 2025, involves identifying and nurturing child care services until they meet specific financial and operational benchmarks. This acquisition underscores the company’s confidence in its pipeline and its ability to scale through targeted investments. By focusing on services that demonstrate strong occupancy and profitability, Nido aims to build a sustainable portfolio that can deliver consistent returns.
Looking Ahead
While the acquisition adds immediate value, the real test will be in how these services integrate into Nido’s broader network and whether they can sustain or improve their performance. Investors will be watching closely for updates on occupancy trends, EBIT realization, and any operational challenges that may arise as the company continues to execute its incubation-led growth plan.
Bottom Line?
Nido’s latest acquisitions reinforce its incubation strategy, setting the stage for measured growth and earnings expansion in 2026.
Questions in the middle?
- Will the acquired services maintain their high occupancy rates post-acquisition?
- How will integration impact operational efficiencies and costs?
- What are Nido’s next targets in its incubation pipeline?
