Australia’s largest private childcare centre operator, G8 Education, is planning to close up to 40 centres – nearly 10 per cent of its operations – in response to an ongoing occupancy slump, rising costs and the fallout from last year’s childcare sex abuse scandal.
Ahead of its shareholder meeting in Brisbane on Wednesday, G8 told investors it will suspend operations at around 40 underperforming centres while it considers “longer-term options for those centres including lease surrender, divestment or other alternatives”.
After the meeting, the company said seven of the centres to close were in NSW, 12 were in Victoria, 12 were in Western Australia, five were in Queensland, and four were in South Australia.
G8 said it would look at transitioning families to nearby centres and redeploying employees “where possible.”
“The fundamentals of the business remain strong, and G8 Education is in good shape,” G8 chair Debra Singh said.
“Our focus remains on disciplined execution, strengthening performance, and delivering sustainable value for shareholders.”
The company’s shares slumped to a 17-year low of 15.5¢ on Wednesday. They have dived more than 87 per cent over the last year after charges were laid against accused paedophile Joshua Brown over alleged sexual abuse of children in his care at centres in Victoria, which included G8 Education centres.
G8 is not expecting a swift recovery from a slump which has seen occupancy levels across the childcare sector drop compared to 2024 and 2025. The group blames sustained affordability pressures, falling birth rates, rising supply of long day care, but also “confidence being impacted by serious child safety incidents”.
The childcare operator said it is also looking at procurement and cost-saving initiatives which do not impact safety, compliance or the capacity of its team to deliver high-quality education and care.
“While the operating environment means G8 Education does not expect a material recovery in occupancy relative to [the prior corresponding period] this year, we will continue to review and adjust the operating model and cost base of the group where appropriate,” G8 chief executive Pejman Okhovat said.
The company’s trading update on Wednesday confirmed that the alarming exodus from its centres has continued since it reported problems early this year. As of April 24, G8 said spot occupancy levels at its centres were 56.4 per cent, down 7 percentage points from the prior period, while year-to-date occupancy dropped 7.9 percentage points to 56.1 per cent.
“In response, G8 Education has proactively assessed its network to ensure we remain sustainable, resilient and well positioned to continue delivering safe, high quality early education and care over the long term. We have carefully considered where our resources can be most effectively allocated to support quality early education and care outcomes,” Okhovat said.
RBC Capital analyst Wei-Weng Chen said this level of decline in occupancy levels would typically result in a $40 million impact to earnings before interest and tax (EBIT) on an unmitigated basis.
“None of G8’s mitigation steps announced are quantified, so at present it is difficult to accurately ascertain the full earnings impact,” he said.
G8 is also getting hit with soaring regulatory and compliance costs in response to the scandal, which include installing CCTV cameras across its centres.
Earlier this year, Australia’s education ministers said NSW and Victoria “will increase annual service fees by up to tenfold for services owned by large for-profit providers … to reflect increases in the volume, risk and complexity of regulatory activities”.
In February, G8 wrote down the value of its centres by $350 million based on their “projected future occupancy” and “current and expected supply and demand levels” as occupancy levels dropped below COVID levels. It also announced plans to conserve its cash.
At the time, RBC noted the impact of accused paedophile Brown’s arrest in the second half of 2025 on G8’s occupancy levels, and expressed concern that G8’s dismal performance might be a continuation of that trend rather than a seasonal demand issue.
“To underscore the scale of the challenges being faced by G8 right now, we note even through the COVID period, G8’s occupancy remained above 60 per cent and never saw a half-year occupancy decline more than 4.5 percentage points,” RBC said at the time.
G8 is losing the support of investors too.
Last year, Vision Super sold out of the childcare operator and put the company on its excluded investments list, alongside tobacco companies and weapons manufacturers.
“The media coverage of the incidents at G8 Education has been deeply disturbing,” said Michael Wyrsch, the super fund’s chief investment officer.
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect via email.