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Childcare operator Nido Education (ASX: NDO) has completed the $9.1 million acquisition of four services from its incubator pipeline, adding 348 licensed places across South Australia and Western Australia as the company works to rebuild earnings after a challenging FY25.
The deal, first flagged in February and completed today, brings Nido's total portfolio to more than 109 owned, operated and managed services nationally.
The four centres have been open for an average of 140 weeks and generate an average daily fee of $197, with an estimated annualised EBITDA of $1.9 million.
The acquisition comes on the back of a softer FY25 in which Nido posted revenue of $169.9 million, up 3.8 per cent on the prior year's $163.6 million, but saw adjusted EBITDA fall 23.4 per cent to $17.0 million.
Statutory net profit after tax dropped 55.7 per cent to $6.5 million compared to a year earlier, with the result impacted by softening demand across the early childhood education sector.
Nido attributed the earnings decline to a combination of falling birth rates, cost-of-living pressures on families, and localised oversupply in some catchments - challenges facing the broader childcare industry.
"While the sector remains challenging from a demand perspective, new services continue to open in line with expectations," says NIDO in an announcement to the ASX this morning.
"The availability of quality sites remains strong, and we are maintaining a disciplined approach to selection, with a clear focus on long-term performance."
Nido is also "actively assessing" acquisition opportunities outside of its greenfields incubation pipeline, with due diligence underway on a number of assets.
"While we expect to complete select acquisitions, we will only proceed where opportunities meet Nido’s commercial and performance requirements while supporting quality outcomes for children and families," says the company.
"Any opportunities progressed will be carefully evaluated to ensure strong alignment with Nido’s operating model, long-term strategy, and our commitment to quality growth in children and families."
Nido, which listed in 2023 following a $99 million IPO, was founded by veteran childcare centre entrepreneur Mathew Edwards. who previously established Think Childcare from the remnants of the failed ABC Learning Centres.
Nido's incubator model - in which new centres are developed or partnered from inception and later acquired once they mature - has been central to the company's growth strategy since it listed.
Edwards said at the time of listing that the model allowed Nido to acquire centres at lower risk and known economics.
In its FY25 annual report, Nido's board struck a cautiously optimistic tone.
Chairman Mark Kerr and Edwards acknowledged the difficult operating environment but pointed to operational improvements including a 23 per cent improvement in staff retention and quality metrics showing 99 per cent of services meeting or exceeding the National Quality Standard in Quality Area 1.
The company also flagged the federal government's 3-Day Guarantee policy, which took effect on 5 January 2026, as a potential tailwind for the sector.
The latest four-service acquisition builds on seven new services Nido opened through its incubator during FY25.
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