Mayfield reports improving occupancy as cost pressures continue in Q2 FY26

Mayfield Childcare Limited (ASX: MFD) has released its Appendix 4C and Quarterly Activities Report for the quarter ended 30 June 2026, highlighting gradual operational improvement despite continued pressure from lower occupancy, rising costs and a challenging operating environment. 

The Group reported revenue of $21.4 million for the quarter, down from $22.4 million in the prior corresponding period. Underlying Centre EBITDA declined to $1.8 million, compared with $2.3 million a year earlier, while the underlying centre EBITDA margin softened from 10.1 per cent to 8.6 per cent. Underlying Group EBITDA for the quarter was $0.1 million. The company attributed the softer result primarily to lower attendances across the network, partially offset by improved rostering discipline and wage management. 

Despite the lower financial result, Mayfield reported early signs of recovery in occupancy.

Spot occupancy increased from 52.7 per cent in the week commencing 13 April 2026 to 54.2 per cent in the week commencing 6 July 2026, reflecting gradual improvement across the portfolio. The company said continued investment in marketing, enquiry generation and centre-level accountability had supported the increase. 

During the quarter, responsibility for enrolments was transitioned from head office back to individual centres, providing centre teams with greater ownership of local enquiry conversion and occupancy performance. 

Mayfield also noted that while a number of services are operating above 90 per cent occupancy under favourable lease arrangements, some centres acquired through the 2021 Genius Childcare transaction continue to operate under less favourable lease terms that require ongoing management until renewal opportunities arise. All lease renewal decisions are being assessed against local demand, occupancy, centre economics and long-term sustainability. 

The company reported further progress in managing labour costs, with its centre wage-to-revenue ratio improving from 63 per cent in the first quarter to 60 per cent in Q2, compared with 62 per cent in the prior corresponding period. According to Mayfield, improved rostering discipline, changes to the operating model and stronger centre-level accountability contributed to the improvement. 

However, the broader operating environment continues to present challenges.

Mayfield said providers across the sector remain affected by elevated wage costs, workforce constraints, occupancy volatility and ongoing inflationary pressures across property, food, insurance, utilities and other operating expenses. The company also pointed to increasing regulatory and compliance requirements, together with government wage-support arrangements that require providers to meet employment costs before receiving some funding while limiting fee growth. 

To support cost recovery and improve margins, the Group said it has revised its pricing methodology and expects to implement a further fee increase during the coming month. 

One of the quarter's key developments was the commercial launch of Mayfield 360, the company's allied health business.

Customer billing commenced during the quarter, with the business converting families from its existing waitlist into active participants. Mayfield said the current participant pipeline represents a material revenue opportunity, with anticipated margins of approximately 65 per cent, subject to participant conversion and ongoing service delivery. 

The company is also expanding its clinical workforce and operating model, with plans to increase capacity to approximately 12 times its current level. Mayfield said the business remains on track to obtain National Disability Insurance Scheme approval, which is expected to support broader network expansion. 

Mayfield reported net operating cash inflows of $1.3 million for the quarter, compared with an operating cash outflow of $0.4 million in the previous quarter.

The improvement was driven by higher customer receipts associated with increasing occupancy, together with timing differences in government funding payments. During the quarter, the Group invested $0.4 million in centre improvements and equipment, primarily to meet compliance requirements and maintain ageing services. Financing cash outflows totalled $1.0 million, largely reflecting lease principal repayments, while the drawdown on the working capital facility reduced significantly compared with the previous quarter. 

At 30 June 2026, Mayfield held cash and cash equivalents of $195,000 and had drawn $5.4 million of its available $8.8 million borrowing facilities, leaving approximately $3.4 million available through its redraw facility. 

Mayfield believes conditions across the early childhood education and care sector are beginning to shift.

The company said an oversupply of new services has challenged providers in recent years. However, rising construction costs and increased regulatory requirements are slowing new developments and contributing to the closure of some single-service operators, creating more favourable long-term conditions for established providers. 

Looking ahead, Mayfield said its priorities remain centred on executing its FY26 occupancy recovery plan, strengthening child safety and compliance systems, improving customer experience and revenue recovery, and continuing the rollout of Mayfield 360.

The company cautioned that while occupancy is expected to continue improving, the pace of recovery will depend on family demand, affordability and broader economic conditions. 

Mayfield also confirmed the appointment of Gary Scott as a Non-Executive Director, effective 26 May 2026.

Read the full ASX announcement here.