Editor’s Note: This article has been updated to include a response from a KinderCare spokesperson.

KinderCare Learning Companies Inc ( KLC ) is under fire Thursday following a new report from The Bear Cave, which alleges safety failures, regulatory concerns and a deteriorating reputation at the nation's largest private childcare provider.

What Happened: The Bear Cave released a short report on KinderCare Thursday, alleging the company is plagued by operational failures that could threaten its stock performance.

"Recent investigations reveal alarming safety incidents, including children left unsupervised, instances of abuse and regulatory violations that raise serious concerns about KinderCare's ability to operate responsibly," the short seller said.

A KinderCare spokesperson told Benzinga that the reported events are isolated incidents and are not reflective of the company’s values.

“In the event that incidents do happen in our centers, we have a strict protocol to promptly notify families and licensing agencies. We also work quickly to resolve issues directly with families by taking accountability and addressing what went wrong. To that end, in each of these referenced incidents, we conducted an investigation and have taken all actions necessary to ensure the safety of the children in our care, including the termination of teachers who were at fault,” a spokesperson for KinderCare said.

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KinderCare operates roughly 1,500 childcare centers across 41 states and relies heavily on government funding. The company went public in 2022, positioning itself as a leader in early childhood education.

The Bear Cave’s report cites troubling incidents, including a case where an 11-month-old tested positive for cocaine at a KinderCare center in Wisconsin. Other reports detail children escaping facilities, being locked inside after closing hours and experiencing mistreatment by staff.

“In sum, The Bear Cave believes KinderCare is a broken business that harms the children and families it claims to help,” the short seller said.

The Bear Cave reported that KinderCare has faced repeated scrutiny from regulatory agencies. The short seller believes growing concerns could impact its ability to secure funding and expand operations.

The short seller also highlighted online complaints from parents and former employees, with some alleging understaffing, inadequate training and neglect.

KLC Price Action: KinderCare shares are falling by 10.8 % during Thursday’s session, trading at $11.40 at the time of publication. According to data from Benzinga Pro, KinderCare has a 52-week high of $29.89 and a 52-week low of $10.91 after making new lows for the year in Thursday’s session.

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