Corecivic, Inc. (CXW) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Corecivic, Inc. is the nation's largest owner of partnership correctional, detention, and residential reentry facilities. As of the reporting date, the Company operated 44 correctional and detention facilities (CoreCivic Safety), 20 residential reentry centers (CoreCivic Community), and owned five properties leased to government agencies (CoreCivic Properties). The Company's operations are heavily influenced by federal immigration enforcement policies, with significant revenue growth driven by contracts with U.S. Immigration and Customs Enforcement (ICE).
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $614.7 million | $488.6 million |
| Net Income | $37.9 million | $25.1 million |
| Diluted EPS | $0.38 | $0.23 |
| Operating Cash Flow | $13.8 million | $44.5 million |
| Facility Net Operating Income | $147.0 million | $113.8 million |
| Total Debt (Gross) | $1,406.5 million | $1,230.3 million |
| Cash & Equivalents | $209.7 million | $97.9 million |
| Operating Margin | 24.0% | 23.6% |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 25.8% year-over-year, driven by a 48.4% increase in federal management revenue. This was primarily due to higher occupancy levels (average compensated population increased 11.3% to 57,243) and per diem rate increases.
- Facility Activations: The Company activated five previously idled facilities during 2025, including the Dilley Immigration Processing Center, California City Detention Facility, West Tennessee Detention Facility, and Diamondback Correctional Facility. These activations significantly contributed to the increase in average daily compensated population.
- Acquisitions: The Company acquired the Farmville Detention Center in July 2025, which contributed to revenue and expense increases in Q1 2026.
- Operating Expenses: Operating expenses rose 25.2% to $467.7 million, largely due to wage increases, higher staffing levels to meet federal demand, and start-up costs at newly activated facilities. This was partially offset by $5.6 million in Employee Retention Credits (ERCs).
- Cash Flow: Net cash provided by operating activities decreased to $13.8 million from $44.5 million in the prior year, primarily due to a $78.2 million decrease in working capital balances (specifically accounts receivable and payables) despite higher net income.
Guidance, Outlook, and Risks
- Outlook: Management expects average daily compensated populations to continue increasing in 2026 due to new contracts and federal immigration enforcement initiatives. Capital expenditures for 2026 are estimated at $40.0 million to $45.0 million, primarily for facility activations.
- Subsequent Events: On April 1, 2026, the Company acquired Clinical Solutions Pharmacy (CSP) for approximately $148.0 million. On April 10, 2026, the Company secured a $100.0 million Incremental Term Loan to pay down the revolving credit facility and fund working capital.
- Risks & Contingencies:
- Legal Proceedings: Ongoing litigation regarding detainee labor at the Otay Mesa facility and a class action lawsuit regarding conditions at the California City facility could impact operations or result in financial liability.
- Government Funding: Revenue is dependent on government appropriations. Delays in payments due to government shutdowns or funding uncertainties pose a risk to cash flow.
- Contract Renewals: A substantial portion of contracts expire annually. While renewal rates are historically high, non-renewal or termination for convenience remains a risk.
Investor Verification Checklist
- ICE Population Trends: Verify the stability of ICE detainee populations following the reported decline in late January 2026 due to government shutdowns and leadership changes.
- California City Facility Litigation: Monitor the status of the class action lawsuit regarding the California City facility, as injunctive relief could negatively impact financial performance.
- CSP Integration: Assess the financial impact and integration progress of the Clinical Solutions Pharmacy acquisition in subsequent quarters.
- Debt Covenants: Confirm continued compliance with debt covenants, particularly the total leverage ratio (currently compliant at < 4.50:1.00), given the recent increase in debt levels.
- Working Capital Management: Analyze the reasons for the significant decrease in operating cash flow relative to net income, specifically the changes in accounts receivable and payable.