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PART I
Item 1. Business
As used in this report, the terms “we,” “us,” “our,” “GEO” and the “Company” refer to The GEO Group, Inc., its consolidated subsidiaries and its unconsolidated affiliates, unless otherwise expressly stated or the context otherwise requires.
General
We specialize in the ownership, leasing and management of secure facilities, processing centers and reentry facilities and the provision of community-based services in the United States, Australia and South Africa. We own, lease and operate a broad range of secure facilities including maximum, medium and minimum-security facilities, processing centers, as well as community-based reentry facilities. We develop new facilities based on contract awards, using our project development expertise and experience to design, construct and finance what we believe are state-of-the-art facilities. We provide innovative technologies, industry-leading monitoring services, and evidence-based supervision and treatment programs for community-based programs. We also provide secure transportation services domestically and in the United Kingdom through our joint venture GEOAmey Ltd. (“GEOAmey”). As of December 31, 2025, our worldwide operations include the management and/or ownership of approximately 75,000 beds at 95 secure and community-based facilities, including idle facilities, and also includes the provision of reentry and electronic monitoring and supervision services for thousands of individuals, including an array of technology products including radio frequency, GPS, and alcohol monitoring devices.
We provide a diversified scope of services on behalf of our government agency partners:
•our secure facility management services involve the provision of security, administrative, rehabilitation, education, and food services at secure services facilities;
•our reentry services involve supervision of individuals in community-based programs and reentry centers and the provision of temporary housing, programming, employment assistance and other services with the intention of the successful reintegration of residents into the community;
•we provide comprehensive electronic monitoring and supervision services;
•we develop new facilities, using our project development experience to design, construct and finance what we believe are state-of-the-art facilities;
•we provide secure transportation services; and
•our services are provided at facilities which we either own, lease or are owned by our government agency partners.
Business Segments
We conduct our business through four reportable business segments: our U.S. Secure Services segment; our Electronic Monitoring and Supervision Services segment; our Reentry Services segment and our International Services segment. We have identified these four reportable segments to reflect our current view that we operate four distinct business lines, each of which constitutes a material part of our overall business.
Our U.S. Secure Services segment primarily encompasses our U.S.-based public-private partnership secure services business. Our Electronic Monitoring and Supervision Services segment, which conducts its services in the U.S., consists of our electronic monitoring and supervision services. Our Reentry Services segment consists of various community-based and reentry services. Our International Services segment primarily consists of our public-private partnership secure services operations in Australia and South Africa. Financial information about these segments for years 2025, 2024 and 2023 is contained in Note 14 — Business Segments and Geographic Information included in the notes to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Recent Developments
Chief Executive Officer Developments
On February 6, 2026, J. David Donahue, our Chief Executive Officer, provided notice to us of his retirement effective February 28, 2026 (the “Separation Date”).
Mr. Donahue and GEO entered into a Separation Agreement and General Release on February 9, 2026 (the “Separation Agreement”). Pursuant to the terms of the Separation Agreement, Mr. Donahue will be entitled to receive the following in addition to accrued wages: (i) the payment of $104,167 per month commencing on March 1, 2026 and continuing through February 28, 2028 in accordance with the terms of the Consultant Agreement described below; (ii) be entitled to the payment of health insurance premiums for himself and any covered dependents under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for a period ending on the earlier of eighteen (18) months following the Separation Date (or up to twenty-four months if entitled to an extension) or the date he is no longer entitled to receive COBRA continuation coverage; and (iii) the outstanding unvested stock options and restricted stock previously granted to Mr. Donahue will continue to vest in accordance with the applicable performance-based vesting metrics under our long-term equity incentive plan. The Separation Agreement also contains mutual release, cooperation and non-disparagement provisions.
Mr. Donahue and GEO also entered into a Consultant Agreement (the “Consultant Agreement”), effective as of March 1, 2026, for a term continuing through February 28, 2028 (the “Consulting Period”). Pursuant to the terms of the Consultant Agreement, Mr. Donahue will provide consulting services to GEO with respect to secure services business opportunities in the United States and overseas, including business development services and contract administration assistance for existing contracts. In consideration for such services, Mr. Donahue will receive, as previously disclosed in the Separation Agreement, the consulting fee of $104,167 per month during the Consulting Period, payable upon submission of a monthly billing statement, and will be reimbursed for reasonable and necessary documented travel and business expenses incurred in connection with the performance of services, subject to prior approval requirements. The Consultant Agreement also contains provisions related to confidentiality and conflicts of interest.
On February 9, 2026, George C. Zoley, our founder and Executive Chairman, was appointed Chief Executive Officer effective March 1, 2026 (the “Effective Date”). In connection with his appointment, Dr. Zoley and GEO entered into the Second Amendment to Executive Employment Agreement (the “Employment Agreement”) on February 9, 2026 to reflect Dr. Zoley’s new title as Chairman and Chief Executive Officer and amend the compensation terms discussed below beginning on the Effective Date. The term of the Employment Agreement remains the same and ends on April 2, 2029 as may be extended by mutual agreement of the parties on an annual basis subject to the termination provisions in the Employment Agreement. Pursuant to the terms of the Employment Agreement, Dr. Zoley will serve as Chief Executive Officer and report directly to the Board of Directors.
Under the terms of the Employment Agreement, Dr. Zoley will be paid an annual base salary of $1,200,000, subject to the review and potential increase in the sole discretion of the Compensation Committee. Dr. Zoley will also be entitled to receive a target annual performance award of 200% of Dr. Zoley’s base salary and be entitled to receive an annual equity incentive award of restricted stock with a grant date fair value equal to at least 300% of Dr. Zoley’s base salary that shall vest in accordance with the terms of the Company’s equity compensation plan. In addition, Dr. Zoley is entitled to the compensation and benefits provided under the Amended and Restated Executive Retirement Agreement, between Dr. Zoley and GEO, dated May 27, 2021. All other terms and conditions of Dr. Zoley’s Employment Agreement with GEO shall remain unchanged and in full force and effect in accordance with the Executive Chairman Employment Agreement, dated May 27, 2021, as amended by the Amendment to Executive Chairman Employment Agreement, dated July 7, 2025.
Contract Developments
On December 22, 2025, we announced that our wholly-owned subsidiary, BI Incorporated (“BI”), has been awarded a contract by U.S. Immigration and Customs Enforcement (“ICE”) for the provision of skip tracing services. Skip tracing services entail enhanced location research with identifiable information, commercial data verification, and physical observation to verify current address information and investigate alternative address information for individuals on the federal government’s non-detained docket. The new contract has a term of two years, with an initial term of one year, effective December 16, 2025, and an additional one-year period.
On September 30, 2025, we announced that we entered into a two-year contract with ICE for the continued provision of electronic monitoring, case management and supervision services under the Intensive Supervision and Appearance Program ("ISAP"). The contract has an initial term of one-year, effective October 1, 2025, with an additional one-year option period.
On September 16, 2025, we announced that the Florida Department of Corrections has issued Notices of Intent to Award three managed-only contracts to GEO for the assumption of management and support services at the 985-bed Bay Correctional and Rehabilitation Facility and the 1,884-bed Graceville Correctional and Rehabilitation Facility and for the continuation of management and support services at the 985-bed Moore Haven Correctional and Rehabilitation Facility. The three contracts are expected to have an initial term of three years, effective July 1, 2026, with unlimited two-year renewal option periods
On August 28, 2025, we entered into an agreement with another contractor to form an entity to provide management services for the State of Florida at the state-owned 1,310-bed North Florida Detention Facility in Baker County, Florida.
On June 16, 2025, we announced that our wholly-owned subsidiary, GEO Transport, Inc. has entered into a new five-year contract, inclusive of option periods, with the U.S. Marshals Service for the provision of secure transportation and contract detention officer services across three service regions covering 26 federal judicial districts and spanning 14 states.
On June 10, 2025, we announced that the U.S. District Court, Central District of California has approved a settlement in the case of Roman v. Wolf, which allows for immediate full intake at its company-owned, 1,940-bed Adelanto ICE Processing Center in California (the "Adelanto Center"). The court had previously issued several injunction orders, including an intake prohibition order issued more than four years ago, limiting the use of the Adelanto Center based on then-prevailing COVID-19 conditions. ICE and GEO entered into a 15-year contract on December 19, 2019, for the provision of secure residential housing and support services at the Adelanto Center, consisting of a five-year base period followed by two five-year option periods. The current contract option period is effective through December 19, 2029.
On June 9, 2025, we announced that we have entered into a contract modification with ICE, effective June 6, 2025, to activate a federal immigration processing center at our company-owned, 1,868-bed, D. Ray James Facility in Folkston, Georgia under the existing intergovernmental service agreement involving the company-owned, 1,118-bed Folkston ICE Processing Center. Our support services will include the exclusive use of this federal facility by ICE, along with security, maintenance, and food services, as well as access to recreational amenities, medical care, and legal counsel.
On April 21, 2025, we received a notice of termination from the New Mexico Corrections Department for the contract for our company-owned 1200-bed Lea County Correctional Facility effective June 30, 2025.
On March 20, 2025, we announced that we have entered into a contract with ICE for the immediate activation of a federal immigration processing center at our company-owned, 1-800 bed North Lake Facility, in Baldwin Michigan. The contract has a full term expiration of July 20, 2027.
On March 10, 2025, we announced that ICE has entered into a contract modification of the current intergovernmental service agreement (“IGSA”) for our company-owned, 1,328-bed Karnes ICE Processing Center (the "Karnes Center") in Karnes City, Texas to transition the Karnes Center from housing adult males only to housing mixed populations. Subsequently, ICE decided to continue to house single adults at the Karnes ICE Center based on an assessment of the agency’s current needs. GEO provides support services for ICE at the Karnes Center under an IGSA between Karnes County and ICE, that is effective through August 2029. GEO’s support services include the exclusive use of the Karnes Center by ICE, along with security, maintenance, and food services, as well as access to recreational amenities, medical care, and legal counsel.
On February 27, 2025, we announced that we have been awarded a 15-year, fixed-price contract by ICE to provide support services for the establishment of a federal immigration processing center at the company-owned, 1,000-bed Delaney Hall Facility in Newark, New Jersey. GEO's support services include the exclusive use of the Delaney Hall Facility by ICE, along with security, maintenance, and food services, as well as access to recreational amenities, medical care, and legal counsel.
Asset Sale
On June 3, 2025, we entered into a Purchase and Sale Agreement (the “Sale Agreement”) with CPT Operating Partnership L.P. (together with GEO, the “Seller”) and the State of Oklahoma (the “Purchaser”) pursuant to which, subject to the terms of the Sale Agreement, the Seller agreed to sell the 2,388-bed Lawton Correctional Facility located in Lawton, Oklahoma (the “Lawton Facility”) to the Purchaser for a sale price of $312 million. The sale resulted in a gain of approximately $228 million. The Sale Agreement also contained certain customary representations, warranties and covenants that the parties made to each other. The sale of the Lawton Facility closed on July 25, 2025. and we
transitioned facility operations to the Oklahoma Department of Corrections simultaneously on July 25, 2025. We used the net proceeds from the sale, along with cash on hand and available liquidity, to purchase the Western Region Detention Facility, and pay off senior secured debt, including approximately $300 million in floating rate debt.
Asset Purchase
On July 1, 2025, we announced that we have entered into a purchase agreement to acquire the 770-bed Western Region Detention Facility located in San Diego, California for approximately $60 million. We previously leased the Western Region Detention Facility for approximately $5.1 million annually under a lease agreement that was scheduled to expire on March 31, 2029. We have a contract with the U.S. Marshals Service for the exclusive use of the Western Region Detention Facility. The purchase of the Western Region Detention Facility closed on July 31, 2025 and was funded as a like kind real estate property exchange with proceeds from the sale of the Lawton Correctional Facility, which closed on July 25, 2025 as discussed above, resulting in an estimated capital gains cash tax savings of approximately $9.3 million.
Idle Facilities
In our Secure Services segment, as of December 31, 2025, we are marketing 5,896 vacant beds with a net book value of approximately $180.9 million at six of our idle facilities to potential customers. One of the facilities, Cheyenne Mountain Recovery Center, is under a contract which has yet to be activated. In our Reentry Services segment, as of December 31, 2025, we are marketing 750 vacant beds with a net book value of approximately $11.6 million at two of our idle facilities to potential customers. The combined annual carrying cost of these idle facilities in 2026 is estimated to be $23.4 million, including depreciation expense of $12.0 million. We currently do not have any firm commitments or agreements in place to activate these facilities but have ongoing contact with several potential customers. Historically, some facilities have been idle for multiple years before they received a new contract award. The per diem rates that we charge our clients often vary by contract across our portfolio. However, if the eight idle facilities in our Secure Services and Reentry Services segments were to be activated using our Secure Services and Reentry Services average per diem rate in 2025 (calculated as revenue divided by the number of mandays) and based on the average occupancy rate in our facilities for 2025, we would expect to receive annual incremental revenue of approximately $240 million and an increase in annual earnings per share of approximately $0.20 to $0.25 per share based on our average operating margin.
Quality of Operations
We operate each facility in accordance with our company-wide policies and procedures and with the standards and guidelines required under the relevant management contract. For many facilities, the standards and guidelines include those established by the American Correctional Association (“ACA”). The ACA is an independent organization of corrections professionals, which establishes correctional facility standards and guidelines that are generally acknowledged as a benchmark by governmental agencies responsible for correctional facilities. Many of our contracts in the United States require us to seek and maintain ACA accreditation for our facilities. We have sought and received ACA accreditation and re-accreditation for all such facilities. We achieved a median re-accreditation score of 100% as of December 31, 2025. Approximately 86% of our 2025 U.S. Secure Services revenue was derived from ACA accredited facilities for the year ended December 31, 2025. We have been successful in achieving and maintaining accreditation under the National Commission on Correctional Health Care ("NCCHC") in a majority of the facilities that we currently operate. The NCCHC accreditation is a voluntary process which we have used to establish comprehensive health care policies and procedures to meet and adhere to the ACA standards. The NCCHC standards, in most cases, exceed ACA Health Care Standards and we have achieved this accreditation at 25 of our U.S. Secure Services facilities and at one reentry services location.
Business Development Overview
Upon his inauguration on January 20, 2025, President Trump issued nine executive actions intended to secure the borders of the United States and remove illegal immigrants, prioritizing those with criminal histories. These initial orders included the declaration of a national emergency at the United States southern border. Also included in these executive actions was the issuance of an executive order titled "Protecting the American People Against Invasion" which calls on the federal government to faithfully execute the immigration laws of the United States, including the removal of aliens, particularly those who threaten the safety of the American people. This executive order calls on the Secretary of Homeland Security to “take all appropriate action and allocate all legally available resources or establish contracts to construct, operate, control, or use facilities to detain removable aliens” and “ensure the detention of aliens apprehended for violations of immigration law pending the outcome of their removal proceedings or their removal from the country, to the extent permitted by law.” Effectively, this executive order requires an increase in interior enforcement by ICE and directs the DHS to detain those arrested by ICE, pending their removal or adjudication.
In addition, on January 20, 2025, President Trump reversed an executive order issued on January 26, 2021 by then-President Biden that had directed the Attorney General to not renew DOJ, contracts with privately operated criminal detention facilities. Two agencies of the DOJ,
the BOP, and the USMS, utilize our services. The BOP houses inmates who have been convicted, and the USMS is generally responsible for detainees who are awaiting trial. We currently do not operate any prison contracts for the BOP. This executive order only applied to agencies that are part of the DOJ, which includes the BOP and USMS. ICE facilities were not covered by this executive order, as ICE is an agency of the DHS, not the DOJ. It is possible future administrations could issue executive orders restricting the use of private correctional and detention facilities by the federal government.
Further, on January 29, 2025, President Trump signed into law the Laken Riley Act, which had been passed by Congress with bipartisan support. The Laken Riley Act requires ICE to detain certain non-United States nationals who have been charged, arrested, or convicted of crimes including burglary, theft, assault of a law enforcement officer, as well as killing or injuring another person. We believe the Laken Riley Act has contributed to the increased demand for detention beds by ICE, as further described in this Annual Report.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, or OBBBA. OBBBA appropriates a total of $75 billion in mandatory funding to ICE for immigration enforcement activities and to increase detention capacity. Specifically, OBBBA appropriates $45 billion for single adult alien detention capacity and family residential center capacity. This funding is a significant increase in funding historically provided to ICE for border security and immigration detention. The funding will remain available through September 30, 2029, and is in addition to base annual appropriations during that time period. The additional funding is also being used by DHS to hire nearly 10,000 new ICE officers to implement the immigration enforcement initiatives.
Given the recent legislative and executive actions mentioned above, we believe the short-term growth opportunities of our business are particularly attractive as federal government agencies consider their emergent needs. ICE has begun to utilize additional bed capacity in our portfolio at facilities with existing contracts, we have signed new contracts to activate certain previously idled facilities, and we have been in discussion with ICE to activate additional idle facilities.
Our primary potential customers include: governmental agencies responsible for local, state and federal secure facilities in the United States; governmental agencies responsible for secure facilities in Australia and South Africa; federal, state and local government agencies in the United States responsible for reentry services for adult offenders; federal, state and local government agencies responsible for monitoring community-based parolees, probationers and pretrial defendants; and other foreign governmental agencies. We achieve organic growth through competitive bidding that begins with the issuance by a government agency of a request for proposal, or RFP. We primarily rely on the RFP process for organic growth in our U.S. and international secure services operations as well as in our reentry services and electronic monitoring and supervision services business.
For our facility management contracts, our state and local experience has been that a period of approximately 60 to 90 days is generally required from the issuance of a request for proposal to the submission of our response to the request for proposal; that between one and four months elapse between the submission of our response and the agency’s award of a contract; and that between one and four months elapse between the award of a contract and the commencement of facility construction or management of the facility, as applicable.
For our facility management contracts, our federal experience has been that a period of approximately 60 to 90 days is generally required from the issuance of a request for proposal to the submission of our response to the request for proposal; that between 12 and 18 months elapse between the submission of our response and the agency’s award of a contract; and that between four and 18 weeks elapse between the award of a contract and the commencement of facility construction or management of the facility, as applicable.
If the local, state or federal facility for which an award has been made must be constructed, our experience is that construction usually takes between nine and 24 months to complete, depending on the size and complexity of the project. Therefore, management of a newly constructed facility typically commences between 10 and 28 months after the governmental agency’s award.
For the services provided by BI, local, state and federal experience has been that a period of approximately 30 to 90 days is generally required from the issuance of an RFP or Invitation to Bid, or ITB, to the submission of our response; that between one and three months elapse between the submission of our response and the agency’s award of a contract; and that between one and three months elapse between the award of a contract and the commencement of a program or the implementation of program operations, as applicable.
The term of our local, state and federal contracts range from one to five years and some contracts include provisions for optional renewal terms beyond the initial contract term. Contracts can, and are periodically, extended beyond the initial contract term and optional renewal terms through alternative procurement processes including sole source justification processes, cooperative procurement vehicles and agency decisions to add extension time periods.
We believe that our long operating history and reputation have earned us credibility with both existing and prospective customers when bidding on new facility management contracts or when renewing existing contracts.
We also plan to leverage our experience and scale of service offerings to expand the range of public-private partnership services that we provide. We have engaged and intend in the future to engage independent consultants to assist us in developing public-private partnership opportunities and in responding to requests for proposals, monitoring the legislative and business climate, and maintaining relationships with existing customers.
Facility Design, Construction and Finance
We offer governmental agencies consultation and management services relating to the design and construction of new secure facilities and the redesign and renovation of older facilities including facilities we own, lease or manage as well as facilities we do not own, lease or manage.
Contracts to design and construct or to redesign and renovate facilities may be financed in a variety of ways. Governmental agencies may finance the construction of such facilities through any of the following methods:
•a one time general revenue appropriation by the governmental agency for the cost of the new facility;
•general obligation bonds that are secured by either a limited or unlimited tax levy by the issuing governmental entity; or
•revenue bonds or certificates of participation secured by an annual lease payment that is subject to annual or bi-annual legislative appropriations.
We may also act as a source of financing or as a facilitator with respect to the financing of the construction of a facility. In these cases, the construction of such facilities may be financed through various methods including the following:
•cash on hand and/or cash flows from our operations;
•borrowings by us from banks or other institutions (which may or may not be subject to government guarantees in the event of contract termination);
•funds from debt offerings of our notes;
•funds from equity offerings of our stock; or
•lease arrangements with third parties.
If the project is financed using direct governmental appropriations, with proceeds of the sale of bonds or other obligations issued prior to the award of the project, then financing is in place when the contract relating to the construction or renovation project is executed. If the project is financed using project-specific tax-exempt bonds or other obligations, the construction contract is generally subject to the sale of such bonds or obligations. Generally, substantial expenditures for construction will not be made on such a project until the tax-exempt bonds or other obligations are sold; and, if such bonds or obligations are not sold, construction and therefore, management of the facility, may either be delayed until alternative financing is procured or the development of the project will be suspended or entirely canceled. If the project is self-financed by us, then financing is generally in place prior to the commencement of construction.
Under our construction and design management contracts, we generally agree to be responsible for overall project development and completion. We typically act as the primary developer on construction contracts for facilities and subcontract with bonded National and/or Regional Design Build Contractors. Where possible, we subcontract with construction companies that we have worked with previously. We make use of an in-house staff of architects and operational experts from various service disciplines (e.g. security, medical service, food service, programs and facility maintenance) as part of the team that participates from conceptual design through final construction of the project. The staff coordinates all aspects of the development with subcontractors and provides site-specific services.
When designing a facility, our architects use, with appropriate modifications, prototype designs we have used in developing prior projects. We believe that the use of these designs allows us to reduce the potential of cost overruns and construction delays, thus controlling costs both to construct and to manage the facility. Our facility designs also maintain security because they increase the area under direct surveillance by correctional officers and make use of additional electronic surveillance.
Competitive Strengths
Long-Term Relationships with High-Quality Government Customers
We have developed long-term relationships with our federal, state and other governmental customers, which we believe enhance our ability to win new contracts and retain existing business. We have provided secure management services to the United States Federal Government for 39 years, the State of California for 37 years, the State of Texas for approximately 38 years, various Australian state government entities for 34 years and the State of Florida for approximately 32 years. These customers accounted for approximately 81% of our consolidated revenues for the fiscal year ended December 31, 2025.
Recurring Revenue with Strong Cash Flow
Our revenue base has historically been derived from our long-term customer relationships. We have historically been able to expand our revenue base by continuing to reinvest our strong operating cash flow into expansionary projects and through strategic acquisitions that provide scale and further enhance our service offerings. Our consolidated revenues were approximately $2.6 billion in 2025. We expect our operating cash flow to be well in excess of our anticipated annual maintenance capital expenditure needs, which would provide us significant flexibility for the repayment of indebtedness.
Sizeable International Business
Our international infrastructure, which leverages our operational excellence in the U.S., allows us to aggressively target foreign opportunities that our U.S. based competitors without overseas operations may have difficulty pursuing. We currently have international operations in Australia, South Africa and the United Kingdom. Our international services business generated approximately $197.1 million of revenues, representing approximately 7% of our consolidated revenues for the year ended December 31, 2025. We believe we are well positioned to continue benefiting from foreign governments’ initiatives to enter into public-private partnerships for secure services including healthcare and transportation services.
Business Strategies
Provide High Quality, Comprehensive Services and Cost Savings Throughout the Corrections Lifecycle
Our objective is to provide federal, state and local governmental agencies with a comprehensive offering of high quality, essential services at a lower cost than they themselves could achieve. We believe government agencies facing budgetary constraints will increasingly seek to outsource a greater proportion of their correctional needs to reliable providers that can enhance quality of service at a reduced cost. We believe our expanded and diversified service offerings uniquely position us to bundle our high-quality services and provide a comprehensive continuum of care for our clients, which we believe will lead to lower cost outcomes for our clients and larger scale business opportunities for us.
Maintain Disciplined Operating Approach
We refrain from pursuing contracts that we do not believe will yield attractive profit margins in relation to the associated operational risks. In addition, although we engage in facility development from time to time without having a corresponding management contract award in place, we endeavor to do so only where we have determined that there is medium to long-term client demand for a facility in that geographical area. We have also elected not to enter certain international markets with a history of economic and political instability. We believe that our strategy of emphasizing lower risk and higher profit opportunities helps us to consistently deliver strong operational performance, lower our costs and increase our overall profitability.
Pursue International Growth Opportunities
As a global provider of public-private partnership secure services, we are able to capitalize on opportunities to operate existing or new facilities on behalf of foreign governments. We have seen increased business development opportunities including opportunities to cross sell our expanded service offerings in recent years in the international markets in which we operate. We will continue to actively bid on new international projects in our current markets and in new markets that fit our target profile for profitability and operational risk.
Intellectual Property and Patents
We have numerous United States and foreign patents issued as well as a number of United States patents pending in the electronic monitoring space. We believe these patents protect our intellectual property rights and provide us with a competitive advantage by seeking to prevent our competitors from duplicating our technology and/or products in the electronic monitoring line of business. The remaining duration of our patents range from 18 months to 2 years.
Facilities and Day Reporting Centers
The following table summarizes certain information with respect to our U.S. and international secure services facilities and our reentry services facilities. The information in the table includes the facilities that we (or a subsidiary or joint venture of GEO) owned, operated under a management contract, had an agreement to provide services, had an award to manage or was in the process of constructing or expanding during the year ended December 31, 2025:
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Facility Name & Location |
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Capacity(1) |
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|
Primary
Customer |
|
Facility
Type |
|
Security
Level |
|
Commencement
of Current
Contract |
|
Base
Period |
|
Renewal
Options |
|
Managed
Leased/
Owned |
Secure Services — Western Region: |
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Adelanto ICE Processing Center, Adelanto, CA |
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1,940 |
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ICE |
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Federal Detention |
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Minimum/Medium |
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December 2019 |
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5 years |
|
Two, five year |
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Owned |
Aurora/CE Processing Center Aurora, CO (2) |
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1,532 |
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|
ICE / USMS |
|
Federal Detention |
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All Levels |
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October 2021 |
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1 year |
|
Four, one-year |
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Owned |
Central Arizona Correctional and Rehabilitation Facility Florence, AZ |
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1,280 |
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AZ DOC |
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State Sex Offender Correctional |
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Minimum/Medium |
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December 2006 |
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10 years |
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Two, Five-year |
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Managed |
Central Valley Annex McFarland, CA (2) |
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|
700 |
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ICE / USMS |
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Federal Detention |
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Medium |
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December 2019/October 2023 |
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5 years/1 month |
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Two, five-year/one, year option plus one, six-month extension, plus one, three-month extension, plus one, six-month extension. |
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Owned |
Cheyenne Mountain Center Colorado Springs, CO |
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700 |
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Idle |
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Owned |
Desert View Annex Adelanto, CA |
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750 |
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ICE |
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Federal Detention |
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Medium |
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December 2019 |
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5 years |
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Two, Five-year |
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Owned |
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Facility Name & Location |
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Capacity(1) |
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|
Primary
Customer |
|
Facility
Type |
|
Security
Level |
|
Commencement
of Current
Contract |
|
Base
Period |
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Renewal
Options |
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Managed
Leased/
Owned |
El Centro Detention Facility, CA |
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512 |
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USMS |
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Federal Detention |
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Medium |
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December 2019 |
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2 years |
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Three, Two-year options, plus nine-month |
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Managed |
Florence West Correctional and Rehabilitation Florence, AZ |
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750 |
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AZ DOC |
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State Correctional |
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Minimum |
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October 2022 |
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5 years |
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One, Five-year |
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Managed |
Golden State Annex McFarland, CA |
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700 |
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ICE |
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Federal Detention |
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Medium |
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December 2019 |
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5 years |
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Two, Five-year |
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Owned |
Guadalupe County Correctional Facility Santa Rosa, NM |
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N/A |
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Third Party Tenant |
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N/A |
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N/A |
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N/A |
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N/A |
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N/A |
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Owned |
Kingman Correctional and Rehabilitation facility, Kingman, AZ |
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3,400 |
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AZ DOC |
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State Correctional Facility |
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Minimum/Medium |
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February 2008 |
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10 years |
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One, five-year plus one, two-year plus one, three-and-a-half month plus one, one-year extension, plus one, one-year, 7-and-a-half-month option |
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Managed |
Lea County Correctional Facility Hobbs, NM |
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1,200 |
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Idle |
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Owned |
McFarland Female Community Reentry Facility McFarland, CA |
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300 |
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Idle |
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Owned |
Mesa Verde ICE Processing Center Bakersfield, CA |
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400 |
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ICE |
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State Correctional |
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Minimum |
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December 2019 |
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5 Years |
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Two, Five-year |
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Owned |
Northwest ICE Processing Center Tacoma, WA |
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1,575 |
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ICE |
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Federal Detention |
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All Levels |
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September 2015 |
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1 Year |
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Four, one-year plus five-year extension, plus two, six-month extensions |
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Owned |
Phoenix West Correctional and Rehabilitation Phoenix, AZ |
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500 |
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AZ DOC |
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State DWI Correctional |
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Minimum |
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July 2022 |
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5 Years |
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None |
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Managed |
Western Region Detention Facility San Diego, CA |
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770 |
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USMS |
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Federal Detention |
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Maximum |
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November 2017 |
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1 Year, 10 Months |
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One, two-year , plus six-month extension, plus three-month extension, plus one fifteen-month option, plus one twenty-five month option, plus two two-year options. |
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Owned |
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Facility Name & Location |
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Capacity(1) |
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Primary
Customer |
|
Facility
Type |
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Security
Level |
|
Commencement
of Current
Contract |
|
Base
Period |
|
Renewal
Options |
|
Managed
Leased/
Owned |
Secure Services — Central Region: |
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Big Spring Correctional Facility Big Spring, TX (4) |
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924 |
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Idle |
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Owned |
Flightline Correctional Facility, TX (4) |
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1,452 |
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Idle |
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Owned |
Brooks County Detention Center, TX (2) |
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652 |
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USMS - IGA |
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Local & Federal Detention |
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Medium |
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March 2013 |
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Perpetual |
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None |
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Owned |
Coastal Bend Detention Center, TX (2) |
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1,176 |
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USMS/Hidalgo County |
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Local & Federal Detention |
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Medium |
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July 2012 |
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Perpetual |
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None |
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Owned |
Eagle Pass Correctional Facility, Eagle Pass, TX (2) |
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661 |
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USMS - IGA |
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Federal Detention |
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Medium |
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October 2020 |
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Perpetual |
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None |
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Owned |
East Hidalgo Detention Center (2) |
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1,346 |
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USMS - IGA |
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Local & Federal Detention |
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Medium |
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July 2012 |
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Perpetual |
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None |
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Owned |
Great Plains Correctional Facility Hinton, OK (4) |
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N/A |
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Third Party Tenant |
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N/A |
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N/A |
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N/A |
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N/A |
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N/A |
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Owned |
Joe Corley Processing Center Conroe, TX (2) |
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1,517 |
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USMS / ICE |
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Local Correctional |
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Medium |
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July 2008/ September 2018 |
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Perpetual/5 Years |
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None /Five-year, plus one, four and one half month extension, plus one, six-month extension, plus two, two-month extensions, plus one, four-month extension |
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Owned |
Karnes County Detention Facility Karnes City, TX (2) |
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679 |
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USMS - IGA |
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Local & Federal Detention |
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All Levels |
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February 1998 |
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Perpetual |
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None |
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Owned |
Karnes County Immigration Processing Center, TX (2) |
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1,328 |
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ICE - IGA |
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Federal Detention |
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All Levels |
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September 2024 |
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5 years |
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None |
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Owned |
Kinney County Detention Center, TX (2) |
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384 |
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USMS - IGA |
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Local & Federal Detention |
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Medium |
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September 2013 |
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Perpetual |
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None |
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Managed |
Montgomery Processing Center Conroe, TX |
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1,314 |
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ICE |
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Local & Federal Detention |
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All levels |
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October 2018 |
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10 months |
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Nine, One-year |
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Owned |
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Facility Name & Location |
|
Capacity(1) |
|
|
Primary
Customer |
|
Facility
Type |
|
Security
Level |
|
Commencement
of Current
Contract |
|
Base
Period |
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Renewal
Options |
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Managed
Leased/
Owned |
Rio Grande Processing Center Laredo, TX |
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1,900 |
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USMS |
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Federal Detention |
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Medium |
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October 2008 |
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5 years |
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Three, Five-year |
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Owned |
South Texas ICE Processing Center Pearsall, TX |
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1,904 |
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ICE |
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Federal Detention |
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All Levels |
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August 2020 |
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1 year |
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Nine, One-year |
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Owned |
Val Verde County Detention Facility Del Rio, TX (2) |
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1,407 |
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USMS - IGA |
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Local & Federal Detention |
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All Levels |
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January 2001 |
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Perpetual |
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None |
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Owned |
Secure Services — Eastern Region: |
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Alexandria Staging Facility Alexandria, LA (2) |
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400 |
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ICE - IGA |
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Federal Detention |
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Minimum/Medium |
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November 2013 |
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Perpetual |
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None |
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Owned |
Blackwater River Correctional and Rehabilitation Facility Milton, FL |
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2,000 |
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FL DMS |
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State Correctional |
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Medium/close |
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October 2010 |
|
3 years |
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Unlimited, Two-year |
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Managed |
Broward Transitional Center Deerfield Beach, FL |
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|
700 |
|
|
ICE |
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Federal Detention |
|
Minimum |
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September 2021 |
|
1 year |
|
Four, One-year |
|
Owned |
Central Louisiana ICE Processing Center Jena, LA (2) |
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1,160 |
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|
ICE - IGA |
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Federal Detention |
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Minimum/Medium |
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November 2013 |
|
Perpetual |
|
None |
|
Owned |
D. Ray James Correctional Facility Folkston, GA (2) |
|
|
1,868 |
|
|
ICE - IGA |
|
Federal Detention |
|
Minimum/Medium |
|
December 2016 |
|
1 year |
|
Four, one-year, plus one, two-month extension, plus one, five year renewal |
|
Owned |
Delaney Hall Facility |
|
|
1,000 |
|
|
ICE |
|
Federal Detention |
|
Minimum |
|
May 2025 |
|
15 years |
|
None |
|
Owned |
Folkston ICE Processing Center Folkston, GA (2) |
|
|
1,118 |
|
|
ICE - IGA |
|
Federal Detention |
|
Minimum |
|
December 2016 |
|
1 year |
|
Four, One-year, plus one, two-month, plus one, five-year |
|
Owned |
Heritage Trail Correctional Facility Plainfield, IN |
|
|
1,066 |
|
|
IN DOC |
|
State Correctional |
|
Minimum |
|
March 2011 |
|
4 years |
|
One, Four-year, plus one, one year, four months and two days, plus one-year, plus five-year |
|
Managed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility Name & Location |
|
Capacity(1) |
|
|
Primary
Customer |
|
Facility
Type |
|
Security
Level |
|
Commencement
of Current
Contract |
|
Base
Period |
|
Renewal
Options |
|
Managed
Leased/
Owned |
Moshannon Valley Correctional Facility Philipsburg, PA |
|
|
1,876 |
|
|
ICE-IGA |
|
Federal Correctional |
|
Medium |
|
September 2021 |
|
5 years |
|
None |
|
Owned |
Moore Haven Correctional and Rehabilitation Facility Moore Haven, FL |
|
|
985 |
|
|
FL DMS |
|
State Correctional |
|
Minimum/ Medium |
|
July 2021 |
|
3 years |
|
Unlimited, Two-year |
|
Managed |
New Castle Correctional Facility New Castle, IN |
|
|
3,196 |
|
|
IN DOC |
|
State Correctional |
|
All Levels |
|
September 2005 |
|
4 years |
|
Three, two-year extensions plus one, four-year and nine-month extension plus one, three-month extension, plus one, nine-month extension plus one, five-year extension with one, four-year option. |
|
Managed |
North Florida Detention Facility Sanderson, FL |
|
|
1,310 |
|
|
ICE |
|
Federal Detention |
|
Minimum/Medium |
|
August 2025 |
|
Perpetual |
|
None |
|
Managed |
North Lake Correctional Facility Baldwin, MI |
|
|
1,800 |
|
|
ICE |
|
Federal Detention |
|
Minimum/Medium |
|
TBD |
|
TBD |
|
None |
|
Owned |
Pine Prairie ICE Processing Center, LA (2) |
|
|
1,094 |
|
|
ICE-IGA |
|
State Correctional |
|
Medium |
|
June 2015 |
|
5 years |
|
One-month extension plus one, fifty-nine month extension, plus one, four-month, plus one, one-month extension, plus one four-month extension |
|
Owned |
Riverbend Correctional and Rehabilitation Facility Milledgeville, GA (5) |
|
|
1,500 |
|
|
GA DOC |
|
State Correctional |
|
Medium |
|
July 2010 |
|
1 year |
|
Forty, One-year |
|
Owned |
Rivers Correctional Facility Winton, NC |
|
|
1,320 |
|
|
Idle |
|
|
|
|
|
|
|
|
|
|
|
Owned |
Robert A. Deyton Detention Facility Lovejoy, GA |
|
|
768 |
|
|
USMS |
|
Federal Detention |
|
Medium |
|
February 2008 |
|
5 years |
|
Three, five-year |
|
Leased |
South Bay Correctional and Rehabilitation Facility South Bay, FL |
|
|
1,948 |
|
|
FL DOC |
|
State Correctional |
|
Medium/Close |
|
July 2009 |
|
3 years |
|
Four, two-year plus six-month extension plus three, two-year extensions |
|
Managed |
South Louisiana ICE Processing Center, LA (2) |
|
|
1,000 |
|
|
ICE-IGA |
|
State Correctional |
|
Medium |
|
June 2015 |
|
5 years |
|
One-month extension plus one, fifty-nine month extension, plus one, four-month, plus one, one-month extension, plus one four-month extension |
|
Owned |
Secure Services — Australia: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fulham Correctional Centre & Nalu Challenge Community Victoria, Australia |
|
|
922 |
|
|
VIC DOJ |
|
State Prison |
|
Minimum/Medium |
|
July 2012 |
|
4 years |
|
Nineteen years, Four months |
|
Managed |
Ravenhall Correctional Centre Melbourne, Australia |
|
|
1,300 |
|
|
VIC DOJ |
|
State Prison |
|
Medium |
|
November 2017 |
|
24 years plus 5 months |
|
None |
|
Managed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility Name & Location |
|
Capacity(1) |
|
|
Primary
Customer |
|
Facility
Type |
|
Security
Level |
|
Commencement
of Current
Contract |
|
Base
Period |
|
Renewal
Options |
|
Managed
Leased/
Owned |
Secure Services — South Africa: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kutama-Sinthumule Correctional Centre Limpopo Province, Republic of South Africa |
|
|
3,024 |
|
|
RSA DCS |
|
National Prison |
|
Maximum |
|
February 2002 |
|
25 years |
|
None |
|
Managed |
Reentry Services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADAPPT, PA |
|
|
64 |
|
|
PA DOC |
|
Community Corrections |
|
Community |
|
May 2024 |
|
4 years, 9 months |
|
None |
|
Owned |
Alabama Therapeutic Education Facility, AL |
|
|
722 |
|
|
AL DOC |
|
Community Corrections |
|
Community |
|
December 2021 |
|
2 years |
|
Three, one-year |
|
Owned |
Arapahoe County Residential Center, CO |
|
|
202 |
|
|
Arapahoe County |
|
Community Corrections |
|
Community |
|
July 2025 |
|
1 year |
|
None |
|
Owned |
Beaumont Transitional Treatment Center Beaumont, TX |
|
|
180 |
|
|
TDCJ |
|
Community Corrections |
|
Community |
|
September 2025 |
|
2 years |
|
Two, One-year |
|
Owned |
Bronx Community reentry Center Bronx, NY |
|
|
172 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
July 2020 |
|
1 year |
|
Nine, One-year |
|
Leased |
Casper Reentry Center, WY |
|
|
342 |
|
|
BOP/WYDOC |
|
Community Corrections |
|
Community |
|
January 2022/July 2024 |
|
1 year/1 years |
|
Four, one-year/Two, one-year options |
|
Owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility Name & Location |
|
Capacity(1) |
|
|
Primary
Customer |
|
Facility
Type |
|
Security
Level |
|
Commencement
of Current
Contract |
|
Base
Period |
|
Renewal
Options |
|
Managed
Leased/
Owned |
Chester County, PA |
|
|
142 |
|
|
PA DOC |
|
Community Corrections |
|
Community |
|
May 2024 |
|
4 years, 9 months |
|
None |
|
Owned |
Coleman Hall, PA |
|
|
350 |
|
|
Idle |
|
|
|
|
|
|
|
|
|
|
|
Owned |
Community Alternatives of El Paso County, CO |
|
|
240 |
|
|
4th Judicial District |
|
Community Corrections |
|
Community |
|
July 2024 |
|
1 year |
|
Four, One-year |
|
Owned |
Community Alternatives of the Black Hills, SD |
|
|
68 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
October 2021 |
|
1 year |
|
Four, One-year |
|
Owned |
Cordova Center Anchorage, AK |
|
|
296 |
|
|
BOP / AK DOC |
|
Community Corrections |
|
Community |
|
June 2019/November 2024 |
|
1 year/8 months |
|
Nine, one-year/Four, one-year |
|
Owned |
El Monte Center El Monte, CA |
|
|
70 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
October 2019 |
|
1 year |
|
Nine, One-year |
|
Leased |
Grossman Center Leavenworth, KS |
|
|
136 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
July 2019 |
|
1 year |
|
Nine, One-year |
|
Owned |
Las Vegas Community Correctional Center Las Vegas, NV |
|
|
124 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
February 2021 |
|
1 year |
|
Four, one-year, plus one 6-month extension |
|
Owned |
Leidel Comprehensive Sanction Center Houston, TX |
|
|
190 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
January 2021 |
|
1 year |
|
Four, one-year plus one six-month extension |
|
Owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility Name & Location |
|
Capacity(1) |
|
|
Primary
Customer |
|
Facility
Type |
|
Security
Level |
|
Commencement
of Current
Contract |
|
Base
Period |
|
Renewal
Options |
|
Managed
Leased/
Owned |
Logan Hall, NJ |
|
N/A |
|
|
Third Party Tenant |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Leased |
Long Beach Community Reentry Center, CA |
|
|
112 |
|
|
CDCR |
|
Community Corrections |
|
Community |
|
July 2024 |
|
09 years |
|
None |
|
Leased |
Marvin Gardens Center Los Angeles, CA |
|
|
60 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
December 2023 |
|
1 year |
|
Four, One-year |
|
Leased |
Mid Valley House Edinburg, TX |
|
|
128 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
December 2020 |
|
1 year |
|
Nine, One-year |
|
Owned |
Midtown Center Anchorage, AK |
|
|
32 |
|
|
AK DOC |
|
Community Corrections |
|
Community Corrections |
|
November 2024 |
|
8 months |
|
Four, One-year |
|
Owned |
New Mexico Mens Recovery Academy, NM |
|
|
124 |
|
|
NM DOC |
|
Community Corrections |
|
Community Corrections |
|
July 2023 |
|
4 years |
|
None |
|
Managed |
New Mexico Womens Recovery Academy, NM |
|
|
60 |
|
|
NM DOC |
|
Community Corrections |
|
Community Corrections |
|
July 2023 |
|
4 years |
|
None |
|
Managed |
Northstar Center Fairbanks, AK |
|
|
120 |
|
|
AK DOC |
|
Community Corrections |
|
Community |
|
July 2022 |
|
1 year |
|
Three, One-year |
|
Leased |
Oakland Center Oakland, CA |
|
|
69 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
February 2020 |
|
1 year |
|
Nine, One-year |
|
Owned |
Parkview Center Anchorage, AK |
|
|
112 |
|
|
AK DOC |
|
Community Corrections |
|
Community |
|
November 2024 |
|
8 months |
|
Four, One-year |
|
Owned |
Philadelphia Residential Reentry Center |
|
|
400 |
|
|
Idle |
|
|
|
|
|
|
|
|
|
|
|
|
Reality House Brownsville, TX |
|
|
94 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
July 2024 |
|
1 year |
|
Four, One-year |
|
Owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility Name & Location |
|
Capacity(1) |
|
|
Primary
Customer |
|
Facility
Type |
|
Security
Level |
|
Commencement
of Current
Contract |
|
Base
Period |
|
Renewal
Options |
|
Managed
Leased/
Owned |
Salt Lake City Center Salt Lake City, UT |
|
|
115 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
June 2019 |
|
1 year |
|
Nine, One-year |
|
Owned |
Scranton Facility, PA |
|
|
100 |
|
|
PA DOC |
|
Community Corrections |
|
Community |
|
May 2024 |
|
Four years, 9 months |
|
None |
|
Leased |
Seaside Center Nome, AK |
|
|
60 |
|
|
AK DOC |
|
Community Corrections |
|
Community |
|
February 2025 |
|
5 months |
|
Four, One-year |
|
Owned |
Southeast Texas Transitional Center Houston, TX |
|
|
500 |
|
|
TDCJ |
|
Community Corrections |
|
Community |
|
September 2025 |
|
2 years |
|
Two One-year |
|
Owned |
The Harbor, NJ |
|
|
260 |
|
|
NJ DOC |
|
Community Corrections |
|
Community |
|
August 2025 |
|
1 year, 11 months |
|
None |
|
Leased |
Toler Hall, NJ |
|
N/A |
|
|
Third Party Tenant |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Leased |
Tully House, NJ |
|
|
344 |
|
|
NJ DOC |
|
Community Corrections |
|
Community |
|
August 2025 |
|
1 year, 11 months |
|
None |
|
Owned |
Taylor Street Center San Francisco, CA |
|
|
240 |
|
|
BOP / CDCR |
|
Community Corrections |
|
Community |
|
April 2021/July 2025 |
|
1 year/3 years |
|
Four, one-year/Two, one-year |
|
Owned |
Tampa Residential Reentry Center Tampa, FL |
|
|
118 |
|
|
BOP |
|
Community Corrections |
|
Community |
|
September 2021 |
|
1 year |
|
Four, One-year |
|
Owned |
Tundra Center Bethel, AK |
|
|
85 |
|
|
AK DOC |
|
Community Corrections |
|
Community |
|
January 2025 |
|
5 months |
|
Four, One-year |
|
Owned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abraxas Academy Morgantown, PA |
|
N/A |
|
Third Party Tenant |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Owned |
Abraxas I Marienville, PA |
|
N/A |
|
Third Party Tenant |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Owned |
Abraxas Ohio Shelby, OH |
|
N/A |
|
Third Party Tenant |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Owned |
Southern Peaks Regional Treatment Center Canon City, CO |
|
N/A |
|
Third Party Tenant |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Owned |
Southwood Interventions Chicago, IL |
|
N/A |
|
Third Party Tenant |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Owned |
Woodridge Interventions Woodridge, IL |
|
N/A |
|
Third Party Tenant |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
Owned |
The following table summarizes certain information with respect to our reentry Day Reporting Centers, which we refer to as DRCs. The information in the table includes the DRCs that we (or a subsidiary or joint venture of GEO) operated under a management contract or had an agreement to provide services as of December 31, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DRC Location |
|
Number of
reporting
centers |
|
|
Type of
Customers |
|
Commencement
of current
contract |
|
Base
period |
|
Renewal
options |
|
Manage only/
lease |
Colorado (3) |
|
|
2 |
|
|
State, County, Local |
|
Various,
2021 – 2026 |
|
1 year |
|
Varies |
|
Lease |
California |
|
|
35 |
|
|
State, County |
|
Various,
2020 – 2028 |
|
3 years |
|
One, One-year or Two One-Year |
|
Lease or Manage only |
New Jersey |
|
|
5 |
|
|
State, County |
|
2027 |
|
4 years |
|
One, One-year |
|
Lease |
Pennsylvania |
|
|
6 |
|
|
State, County |
|
Various,
2020 – 2026 |
|
3 to 5 years |
|
Varies |
|
Lease |
Illinois |
|
|
10 |
|
|
State, County |
|
2024-2029 |
|
5 years |
|
One, Five-year |
|
Lease or Manage
only |
Kansas |
|
|
1 |
|
|
County |
|
2027 |
|
1 year |
|
Four, One-year |
|
Lease |
Louisiana |
|
|
7 |
|
|
State |
|
2025 |
|
3 years |
|
None |
|
Lease |
Tennessee |
|
|
21 |
|
|
State |
|
2026 |
|
5 years |
|
Five, One-year |
|
Lease |
Idaho |
|
|
7 |
|
|
State |
|
2026 |
|
3 years |
|
After base, may be renewed, extended or amended |
|
Lease |
Kentucky |
|
|
1 |
|
|
County |
|
2030 |
|
1 year |
|
Four, One-year |
|
Lease |
Customer Legend:
|
|
|
Abbreviation |
|
Customer |
AL DOC |
|
Alabama Department of Corrections |
AK DOC |
|
Alaska Department of Corrections |
AZ DOC |
|
Arizona Department of Corrections |
BOP |
|
Federal Bureau of Prisons |
CDCR |
|
California Department of Corrections & Rehabilitation |
FL DMS |
|
Florida Department of Management Services |
GA DOC |
|
Georgia Department of Corrections |
ICE |
|
U.S. Immigration & Customs Enforcement |
IN DOC |
|
Indiana Department of Correction |
IGA |
|
Inter-governmental Agreement |
NJ DOC |
|
New Jersey Department of Corrections |
NM DOC |
|
New Mexico Department of Corrections |
NSW |
|
Commissioner of Corrective Services for New South Wales, Australia |
OK DOC |
|
Oklahoma Department of Corrections |
PA DOC |
|
Pennsylvania Department of Corrections |
RSA DCS |
|
Republic of South Africa Department of Correctional Services |
TDCJ |
|
Texas Department of Criminal Justice |
USMS |
|
United States Marshals Service |
VA DOC |
|
Virginia Department of Corrections |
VIC DOJ |
|
Department of Justice of the State of Victoria, Australia |
(1)Capacity as used in the table refers to operational capacity consisting of total beds for all facilities.
(2)GEO provides services at these facilities through various Inter-Governmental Agreements, or IGAs, through the various counties and other jurisdictions.
(3)The Colorado Day Reporting Centers provide many of the same services as the full-service Day Reporting Centers, but rather than providing these services through comprehensive treatment plans dictated by the governing authority, these services are provided on a fee for service basis. Such services may be connected to government agency contracts and would be reimbursed by those agencies. Other
services are offered directly to offenders allowing them to meet court-ordered requirements and are paid by the offender as the service is provided.
(4)GEO treats these facilities as owned due to GEO’s ownership of the facilities and improvements and the long-term ground leases GEO has in place for these facilities.
Government Contracts — Terminations, Renewals and Competitive Re-bids
Generally, we may lose our facility management contracts due to one of three reasons: the termination by a government customer with or without cause at any time; the failure by a customer to renew a contract with us upon the expiration of the then current term; or our failure to win the right to continue to operate under a contract that has been competitively re-bid in a procurement process upon its termination or expiration. Our facility management contracts typically allow a contracting governmental agency to terminate a contract with or without cause at any time by giving us written notice ranging from 30 to 180 days. If government agencies were to use these provisions to terminate, or renegotiate the terms of their agreements with us, our financial condition and results of operations could be materially adversely affected. See “Risk Factors — “We are subject to the loss of our facility management contracts, due to terminations, non-renewals or competitive re-bids, which could adversely affect our results of operations and liquidity, including our ability to secure new facility management contracts from other government customers”.
Aside from our customers’ unilateral right to terminate our facility management contracts with them at any time for any reason, there are two points during the typical lifecycle of a contract which may result in the loss by us of a facility management contract with our customers. We refer to these points as contract “renewals” and contract “re-bids.” Many of our facility management contracts with our government customers have an initial fixed term and subsequent renewal rights for one or more additional periods at the unilateral option of the customer. We count each government customer’s right to renew a particular facility management contract for an additional period as a separate “renewal.” For example, a five-year initial fixed term contract with customer options to renew for five separate additional one-year periods would, if fully exercised, be counted as five separate renewals, with one renewal coming in each of the five years following the initial term. As of December 31, 2025, 44 of our facility management contracts representing approximately 26,000 beds are scheduled to expire on or before December 31, 2026, unless renewed by the customer at its sole option in certain cases, or unless renewed by mutual agreement in other cases. These contracts represented approximately 10% of our consolidated revenues for the year ended December 31, 2025. We undertake substantial efforts to renew our facility management contracts. We cannot assure you that our customers will in fact exercise their renewal options under existing contracts. In addition, in connection with contract renewals, either we or the contracting government agency have typically requested changes or adjustments to contractual terms. As a result, contract renewals may be made on terms that are more or less favorable to us than those in existence prior to the renewals.
We define competitive re-bids as contracts currently under our management which we believe, based on our experience with the customer and the facility involved, will be re-bid to us and other potential service providers in a competitive procurement process upon the expiration or termination of our contract, assuming all renewal options are exercised. Our determination of which contracts we believe will be competitively re-bid may in some cases be subjective and judgmental, based largely on our knowledge of the dynamics involving a particular contract, the customer and the facility involved. Competitive re-bids may result from the expiration of the term of a contract, including the initial fixed term plus any renewal periods, or the early termination of a contract by a customer. Competitive re-bids are often required by applicable federal or state procurement laws periodically in order to encourage competitive pricing and other terms for the government customer. Potential bidders in competitive re-bid situations include us, other private operators and other government entities. While we are pleased with our historical win rate on competitive re-bids and are committed to continuing to bid competitively on appropriate future competitive re-bid opportunities, we cannot in fact assure you that we will prevail in future competitive re-bid situations. Also, we cannot assure you that any competitive re-bids we win will be on terms more favorable to us than those in existence with respect to the expiring contract.
As of December 31, 2025, 29 of our facility management contracts may be subject to competitive re-bid in 2026. These contracts in the aggregate represented approximately 18% and approximately $469 million of our 2025 consolidated revenues. The following table sets forth the number of facility management contracts that we currently believe will be subject to competitive re-bid in each of the next five years and thereafter, and the total number of beds relating to those potential competitive re-bid situations during each period:
|
|
|
|
|
|
|
|
|
Year |
|
Re-bid |
|
|
Total
Number of
Beds up for
Re-bid |
|
2026 |
|
|
29 |
|
|
|
16,486 |
|
2027 |
|
|
16 |
|
|
|
10,913 |
|
2028 |
|
|
14 |
|
|
|
9,433 |
|
2029 |
|
|
18 |
|
|
|
3,005 |
|
2030 |
|
|
8 |
|
|
|
5,469 |
|
Thereafter |
|
|
8 |
|
|
|
9,804 |
|
Total |
|
|
93 |
|
|
|
55,110 |
|
Competition
We compete primarily on the basis of the quality and range of services we offer; our experience domestically and internationally in the design, construction, and management of public-private partnerships for secure service facilities; our reputation; and our pricing. We compete directly with the public sector, where governmental agencies responsible for the operation of secure services, processing services, community-based services and reentry facilities are often seeking to retain projects that might otherwise become a public-private partnership. In the private sector, our U.S. Secure Services and International Services business segments compete with a number of companies, including, but not limited to: Core Civic; Management and Training Corporation; LaSalle Corrections; Allied Universal; Sodexo Justice Services (formerly Kaylx); and Serco. Our Reentry Services and Electronic Monitoring and Supervision Services business segments compete with a number of different small-to-medium sized companies, reflecting the highly fragmented nature of the community-based services industry. BI’s electronic monitoring business competes with a number of companies, including, but not limited to: Allied Universal. Some of our competitors are larger and have more resources than we do. We also compete in some markets with small local companies that may have a better knowledge of the local conditions and may be better able to gain political and public acceptance.
Human Capital Resources
The Company’s key human capital management objectives are to attract, retain and develop the highest quality talent. To support these objectives, the Company’s human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay, benefit, and perquisite programs; enhance the Company’s culture through efforts aimed at making the workplace more engaging and inclusive; acquire talent and facilitate internal talent mobility to create a high-performing, diverse workforce; and evolve and invest in technology, tools, and resources to enable employees at work.
At December 31, 2025, we had approximately 18,000 full-time employees. Of our full-time employees, approximately 400 were employed at our corporate headquarters and regional offices and approximately 17,600 were employed at facilities and international offices. We employ personnel in positions of management, administrative and clerical, security, educational services, human resource services, health services and general maintenance at our various locations.
At December 31, 2025, approximately 8,200 and 1,500 employees are covered by collective bargaining agreements in the United States and at international offices, respectively. GEO welcomes the participation of labor unions in our facilities and respects the rights of individual employees to choose whether or not to join labor organizations. We actively participate in the collective bargaining process, negotiate in good faith and maintain excellent working relationships with each of the unions representing our employees. As a result, over the years, GEO has not experienced any significant or major labor actions, such as strikes or work stoppages.
Training
GEO has a robust training program for staff at all levels of the organization. Our training of managerial, administrative, and security staff is based on the standards set by the American Correctional Association. Training includes classroom learning, practical exercises, course examinations, and on-the-job training. GEO’s corporate policy also mandates that every new employee receive orientation training prior to undertaking any assignments.
Under the laws applicable to most of our operations, and internal company policies, our correctional officers are required to complete a minimum amount of training. We generally require at least 40 hours of pre-service training before an employee is allowed to assume their duties plus an additional 120 hours of training during their first year of employment in our domestic facilities, consistent with ACA standards and/or applicable state laws. In addition to the usual 160 hours of training in the first year, most states require 40 or 80 hours of on-the-job training. Florida law requires that correctional officers receive 520 hours of training. We believe that our training programs meet or exceed all applicable requirements.
Our training program for domestic facilities typically begins with approximately 40 hours of instruction regarding our policies, operational procedures and management philosophy. Training continues with an additional 120 hours of instruction covering legal issues, rights of individuals within our care, techniques of communication and supervision, interpersonal skills and job training relating to the particular position to be held. Each of our employees who has contact with individuals within our care receives a minimum of 40 hours of additional training each year, and each manager receives at least 24 hours of training each year.
At least 160 hours of training are required for our employees in Australia and South Africa before such employees are allowed to work in positions that will bring them into contact with individuals within our care. Our employees in Australia and South Africa receive a minimum of 40 hours of refresher training each year.
With respect to BI and the Intensive Supervision and Appearance Program (“ISAP”) services contract, new employees are required to complete training requirements as outlined in the contract within 14 days of hire and prior to being assigned autonomous ISAP related duties. These employees receive 25 hours of refresher training annually thereafter. Program managers for our ISAP contract must receive 24 hours of additional initial training. BI’s monitoring services maintains its own comprehensive certification and training program for all monitoring service specialists. We require all new personnel hired for a position in monitoring operations to complete a seven-week training program. Successful completion of our training program and a final certification is required of all of our personnel performing monitoring operations. We require that certification is achieved prior to being permitted to work independently in the call center.
Health, Wellness and Employee Resources
GEO’s benefit offerings are designed to meet the varied and evolving needs of a diverse workforce across businesses and geographies. GEO offers a comprehensive employee benefits program that is competitive for each of the various locations in which we operate across the United States which are designed to develop, attract and retain personnel. The variety of our benefit offerings is designed to provide individual employees with the flexibility to choose coverage options and benefits that best meet their needs and address their priorities.
Career Growth and Development
GEO employees and their family members (parent, spouse and child) are eligible to further pursue their educational goals by receiving reduced tuition rates on a variety of accredited on-line degree programs in business, education, healthcare and other disciplines provided at 14 different higher education institutions. A tuition reimbursement program is also available for GEO employees pursuing their education as they work to develop their skills and enhance their job performance. Tuition reimbursement is provided to eligible employees for courses offered by accredited colleges, universities, and secretarial and trade schools. Separately, GEO’s subsidiary, BI, offers an education assistance program to its full-time employees with at least one year of service. Employees who enroll in the program are eligible to receive up to $3,500 a year in tuition reimbursement.
Business Regulations and Legal Considerations
The industry in which we operate is subject to extensive federal, state, and local regulations, including educational, health care, data privacy and security, transportation, telecommunications, and safety regulations, which are administered by many governmental and regulatory authorities. Some of the regulations are unique to the corrections industry, and some target private, for-profit entities by imposing location requirements, compliance requirements, elevated litigation risk and financial penalties only on private, for-profit correction and detention providers. Facility management contracts typically include specific staffing requirements, reporting requirements, supervision, and on-site monitoring by representatives of the contracting governmental agencies. Corrections and reentry personnel are customarily required to meet certain training standards and, in some instances, facility personnel are required to be licensed and subject to background investigation. Certain jurisdictions also require us to award subcontracts on a competitive basis or to subcontract with certain types of businesses, such as small businesses and businesses owned by members of minority groups. Our facilities are also subject to operational and financial audits by the governmental agencies with which we have contracts. In addition, our technological infrastructure is required by federal agencies to undergo a security compliance audit and provide security logs on a monthly basis. Failure to comply with these regulations and contract requirements can
result in material penalties or non-renewal or termination of facility management contracts which could have a material effect on our financial position, results of operations and cash flows, or on our competitive position as a dependable government partner.
Many governmental agencies are required to enter into a competitive bidding procedure before awarding contracts for products or services. The laws of certain jurisdictions may also require us to award subcontracts on a competitive basis or to subcontract or partner with businesses owned by women or members of minority groups.
Certain states, such as Florida, deem correctional officers to be peace officers and require our personnel to be licensed and subject to background investigation. State law also typically requires correctional officers to meet certain training standards.
The failure to comply with any applicable laws, rules or regulations or the loss of any required license could have a material adverse effect on our business, financial condition and results of operations. Furthermore, our current and future operations may be subject to additional regulations as a result of, among other factors, new statutes and regulations and changes in the manner in which existing statutes and regulations are or may be interpreted or applied. Any such additional regulations could have a material adverse effect on our business, financial condition and results of operations.
Under various federal, state, and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under, or in such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. As an owner of real estate assets and as the result of our operation and management of correctional, detention, and residential reentry facilities, we have been, and continue to be, subject to these laws, ordinances, and regulations. Phase I environmental assessments have been obtained on substantially all of the properties we currently own. We are not aware of any environmental matters that are expected to materially affect our financial condition or results of operations; however, if such matters are detected in the future, the costs of complying with environmental laws could have a material effect on our financial position, results of operations and cash flows, or on our competitive position as a dependable government partner.
The Health Insurance Portability and Accountability Act of 1996, as amended and implementing regulations, or HIPAA, require covered entities, which include most health care providers, to protect the privacy and security of individually identifiable health information, known as “protected health information” and establish individual rights related to understanding and controlling how health information is used or disclosed. In the event of breaches of unsecured protected health information, covered entities must notify affected individuals, the U.S. Department of Health and Human Services and, in certain situations involving large breaches, the media. Additionally, we are subject to complex and evolving U.S. federal and state privacy laws and regulations, including those pertaining to the processing of personal data, such as the California Consumer Privacy Act, and similar laws in various states in which we operate. Healthcare providers are also subject to a growing number of requirements intended to promote the interoperability and exchange of patient health information, including information blocking restrictions that prohibit practices that are likely to interfere with the access, exchange or use of electronic health information, with limited exceptions.
Insurance
The nature of our business exposes us to various types of third-party legal claims, including, but not limited to, civil rights claims relating to conditions of confinement and/or mistreatment, sexual misconduct claims brought by individuals within our care, medical malpractice claims, product liability claims, intellectual property infringement claims, claims relating to employment matters (including, but not limited to, employment discrimination claims, union grievances and wage and hour claims), property loss claims, environmental claims, automobile liability claims, contractual claims and claims for personal injury or other damages resulting from contact with our facilities, programs, electronic monitoring products, personnel or individuals within our care, including damages arising from an escape of an individual in our care or from a disturbance or riot at a facility. In addition, our management contracts generally require us to indemnify the governmental agency against any damages to which the governmental agency may be subject in connection with such claims or litigation. We maintain a broad program of insurance coverage for these general types of claims, except for claims relating to employment matters, for which we carry no insurance. There can be no assurance that our insurance coverage will be adequate to cover all claims to which we may be exposed. It is our general practice to bring merged or acquired companies into our corporate master policies in order to take advantage of certain economies of scale.
On October 1, 2021, GEO formed a wholly owned captive insurance subsidiary, Florina Insurance Company, Inc. (“Florina”), to enhance our risk financing strategies. Florina is incorporated in the state of Vermont and is licensed and regulated by the state of Vermont, including with respect to its insurance programs, levels of liquidity and other requirements. GEO began procuring insurance policies to cover deductibles for workers’ compensation, general liability, automobile liability, medical professional liability and directors' and officers’ liability as well as the option of procuring insurance policies for its excess liability, directors’ and officers’ excess liability and excess medical professional
liability through Florina effective October 1, 2021. Florina holds cash and investments in order to meet solvency requirements and meet financial obligations as presented, including an investment portfolio of marketable fixed income and equity securities.
We currently maintain a general liability policy and excess liability policies with total limits of $75.0 million per occurrence and $95.0 million total general liability annual aggregate limits covering the operations of U.S. Secure Services, Reentry Services and Electronic and Supervision Services through commercial and captive policies. We have a professional liability insurance program with a specific loss limit of $45.0 million per occurrence and in the aggregate related to medical professional liability claims arising out of correctional healthcare services. We are uninsured for any claims in excess of these limits. We also maintain insurance to cover property and other casualty risks including, workers’ compensation, environmental liability, cybersecurity liability and automobile liability.
For most casualty insurance policies, we carry substantial deductibles or self-insured retentions of $4.0 million per occurrence for general liability and $5 million per occurrence for medical professional liability, $2.0 million per occurrence for workers’ compensation, $2.3 million per occurrence for directors' and officers’ liability and $1.0 million per occurrence for automobile liability. In addition, certain of our facilities located in Florida and other high-risk hurricane areas carry substantial windstorm deductibles. Since hurricanes are considered unpredictable future events, no reserves have been established to pre-fund for potential windstorm damage. Limited commercial availability of certain types of insurance relating to windstorm exposure in coastal areas and earthquake exposure mainly in California and the Pacific Northwest may prevent us from insuring some of our facilities to full replacement value.
With respect to operations in South Africa and Australia, we utilize locally-procured insurance to meet contractual insurance requirements and protect us.
Of the insurance policies discussed above, our most significant insurance reserves relate to workers’ compensation, general liability and auto claims. These reserves, which include Florina’s reserves and GEO’s legacy reserves, are undiscounted and were $67.3 million and $56.9 million as of December 31, 2025 and 2024, respectively, and are included in Accrued Expenses in the accompanying Consolidated Balance Sheets. We use statistical and actuarial methods to estimate amounts for claims that have been reported but not paid and claims incurred but not reported. In applying these methods and assessing their results, we consider such factors as historical frequency and severity of claims at each of our facilities, claim development, payment patterns and changes in the nature of our business, among other factors. Such factors are analyzed for each of our business segments. Our estimates may be impacted by such factors as increases in the market price for medical services and unpredictability of the size of jury awards. We also may experience variability between our estimates and the actual settlement due to limitations inherent in the estimation process, including our ability to estimate costs of processing and settling claims in a timely manner as well as our ability to accurately estimate our exposure at the onset of a claim. Because we have high deductible insurance policies, the amount of our insurance expense is dependent on our ability to control our claims experience. If actual losses related to insurance claims significantly differ from our estimates, our financial condition, results of operations and cash flows could be materially adversely impacted.
International Operations
Our international operations for fiscal years 2025, 2024 and 2023 consisted of the operations of our wholly-owned Australian subsidiary and South African Custodial Management Pty. Limited which we refer to as SACM and our consolidated joint venture in South Africa, which we refer to as SACS. In Australia, our wholly owned subsidiary, GEO Australia, currently manages three facilities. We operate one facility in South Africa through SACM. We also provide secure transportation services through our joint venture GEOAmey. See Item 7 for more discussion related to the results of our international operations. Financial information about our operations in different geographic regions appears in Note-14 Business Segments and Geographic Information in the notes to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Business Concentration
Except for the major customers noted in the following table, no other single customer made up greater than 10% of our consolidated revenues for these years.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer |
|
2025 |
|
|
2024 |
|
|
2023 |
|
Various agencies of the U.S. Federal Government: |
|
|
67 |
% |
|
|
62 |
% |
|
|
63 |
% |
Concentration of credit risk related to the major customer above for accounts receivable is as follows:
|
|
|
|
|
|
|
|
|
Customer |
|
2025 |
|
|
2024 |
|
Various agencies of the U.S. Federal Government: |
|
|
78 |
% |
|
|
64 |
% |
The concentrations above relate primarily to the Company's U.S. Secure Services and its Electronic Monitoring Supervision segments.
In addition, our ISAP contract accounted for 9%, 10% and 14% of our consolidated revenues for the years ended December 31, 2025, 2024 and 2023, respectively.
Available Information
Additional information about us can be found at www.geogroup.com. We make available on our website, free of charge, access to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, our annual proxy statement on Schedule 14A and amendments to those materials filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically submit such materials to the Securities and Exchange Commission, or the SEC. In addition, the SEC makes available on its website, free of charge, reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including GEO. The SEC’s website is located at http://www.sec.gov. Information provided on our website or on the SEC’s website is not part of this Annual Report on Form 10-K.
Item 1A. Risk Factors
Summary of Risk Factors
The risk factors summarized and detailed below could materially adversely affect our business, financial condition, or results of operations, impair our future prospects and/or cause the price of our common stock to decline. Additional risks not currently known to us or those we currently deem to be immaterial may also materially and adversely affect our business operations. Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to:
Risks Related to Public-Private Partnerships
•Public and political opposition to the use of public-private partnerships could have a material adverse effect on our business.
Risks Related to Our High Level of Indebtedness
•Our level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt service obligations.
•We are incurring significant indebtedness in connection with substantial ongoing capital expenditures.
•We may still incur more indebtedness which could further exacerbate the risks we face.
•The covenants in the indentures governing our outstanding Secured and Unsecured Notes and our Credit Agreement impose significant operating and financial restrictions.
•An increase in interest rates would adversely affect cash flows.
•We depend on distributions from our subsidiaries to make payments on our indebtedness.
•We may not be able to satisfy our repurchase obligations in the event of a change of control.
•The value of collateral may not be sufficient to satisfy our obligations under the Secured Notes.
Risks Related to Our Business and Services
•The loss of, or a significant decrease in revenues from, our limited number of customers could seriously harm our financial condition and results of operations.
•Efforts to reduce the U.S. federal deficit could adversely affect our liquidity, results of operations and financial condition.
•Fluctuations in occupancy levels or participation in ISAP could cause a decrease in revenues and profitability.
•State budgetary constraints may have a material adverse impact on us.
•Loss of our facility management contracts could adversely affect our results of operations and liquidity.
•Our growth depends on our ability to secure contracts to develop and manage new secure facilities, processing centers, and community based facilities and to secure contracts to provide electronic monitoring services, community based reentry services and monitoring and supervisions services, the demand for which is outside our control.
•Competition for contracts may adversely affect the profitability of our business.
•We are dependent on government appropriations.
•Adverse publicity may negatively impact our ability to retain existing contracts and obtain new contracts.
•We may incur significant start-up and operating costs on new contracts before receiving related revenues.
•Our international operations expose us to risks that could materially adversely affect our financial conditions and results of operations.
•We are dependent upon our senior management and our ability to attract and retain sufficient qualified personnel.
•Adverse developments in our relationship with our employees could adversely affect our business, financial condition or results of operations.
Risks Related to Taxes
•Federal, state and local tax rules can adversely impact our results of operations and financial position.
Risks Related to Real Estate and Construction Matters
•Various risks associated with the ownership of real estate may adversely affect our results of operations.
•Risks related to facility construction and development activities may increase our costs.
Risks Related to the Capital Markets and its Impact on our Business
•Negative conditions in the capital markets could prevent us from obtaining financing.
Risks Related to our Electronic Monitoring Products and Technology
•Technological changes could cause our electronic monitoring products and technology to become obsolete or require a redesign.
•Any negative changes in the level of acceptance of or resistance to the use of electronic monitoring products and services by government customers could have a material adverse effect on our business, financial condition and results of operations.
•An inability to acquire, protect or maintain our intellectual property could harm our ability to compete or grow.
•We may be subject to costly product liability claims from the use of our electronic monitoring products.
Risks Related to Information Technology and Cybersecurity
•The interruption, delay or failure of the provision of our services or information systems could adversely affect our business.
•The failure to comply with data privacy, security and exchange legal requirements could have a material adverse impact on our business.
Risks Related to Acquisitions and Dispositions
•We may not be able to successfully identify or consummate acquisitions or dispositions.
•Our goodwill or other intangible assets may become impaired.
Risks Related to Legal, Regulatory and Compliance Matters
•Failure to comply with regulations and contractual requirements could have a material adverse effect.
•Our business operations expose us to various liabilities for which we may not have adequate insurance, including legal claims and proceedings, and may have a material adverse effect on our business, financial condition or results of operations.
Risks Related to Corporate Social Responsibility
•We are subject to risks related to corporate social responsibility.
Risks Related to Our Common Stock
•The market price of our common stock may vary substantially.
•Expectations about the growth in the utilization of detention beds by the federal government may not be realized, which may adversely impact our stock price.
•Future sales or issuances of shares of our common stock could adversely affect the market price of our common stock and may be dilutive to current shareholders.
•A “short squeeze” due to a sudden increase in demand for shares of our common stock that largely exceeds supply has led to, and may continue to lead to, extreme price volatility in shares of our common stock.
The following are certain risks to which our business operations are subject. Any of these risks could materially adversely affect our business, financial condition, or results of operations. These risks could also cause our actual results to differ materially from those indicated in the forward-looking statements contained herein and elsewhere. The risks described below are not the only risks we face. Additional risks not currently known to us or those we currently deem to be immaterial may also materially and adversely affect our business operations.
Risks Relating to Public-Private Partnerships
Public and political opposition to the use of public-private partnerships for secure facilities, processing centers and community reentry centers could result in our inability to obtain new contracts or the loss of existing contracts, impact our ability to obtain or refinance debt financing or enter into commercial arrangements, which could have a material adverse effect on our business, financial condition, results of operations and the market price of our securities.
The management and operation of secure facilities, processing centers and community reentry centers under public-private partnerships has not achieved complete acceptance by either government agencies or the public. Some governmental agencies have limitations on their ability to delegate their traditional management responsibilities for such facilities and centers to private sector companies or they may be instructed by a governmental agency or authority overseeing them to reduce their utilization or scope of public-private partnerships or undertake additional reviews of their public-private partnerships. Any report prepared by or requested by a governmental agency or public official, investigation or inquiry, public statement by any governmental agency or public official, policy or legislative change by any federal, state or local government, or other similar occurrence or action, that seeks to, or purports to, prohibit, eliminate, or otherwise restrict or limit in any way, the federal government’s (or any state or local government’s) ability to contract with private sector companies for the operation of these facilities and centers, could adversely impact our ability to maintain or renew existing contracts or to obtain new contracts.
On January 20, 2025, President Trump reversed an executive order issued by then-President Biden on January 26, 2021 that directed the United States Attorney General not to renew Department of Justice ("DOJ") contracts with privately operated criminal detention facilities. Two agencies of the DOJ, the BOP and the USMS utilize our services. ICE facilities were not covered by this executive order, as ICE is an agency of the U.S. Department of Homeland Security. It is possible future administrations could issue executive orders or directives relating to federal criminal justice policies and immigration policies which may impact the federal government’s use of public-private partnerships with respect to correctional and detention needs, including with respect to our contracts, and/or may impact the budget and spending priorities of federal agencies, including ICE.
Various state partners have or may choose in the future to undertake a review of their utilization of public-private partnerships. For
example, California enacted legislation aimed at phasing out public-private partnership contracts for the operation of secure facilities within California and facilities outside of the state of California housing state of California inmates. We have public-private partnership contracts in place with ICE and the U.S. Marshals Service relating to facilities located in California. Also, the State of Washington has enacted legislation
similar to the California law. Although GEO was able to prevail in legal actions challenging the constitutionality of such laws in California and Washington, these or other states may propose or adopt similar laws in the future. Immigration reform laws are currently a focus for legislators and politicians at the federal, state, and local level. Legislation has been passed in California, Colorado, and New Jersey, where we operate detention facilities, as well as Maryland, Illinois, Oregon and Washington, that prohibits state and local agencies from contracting to detain immigrants in ICE custody. In addition, legislation has been proposed in New Mexico, a state in which we own facilities, that would prohibit state and local agencies from contracting to detain immigrants in ICE custody. While recent court decisions in California and New Jersey have struck down these restrictions as to direct contracts between ICE and private companies, restrictions on state and local agency contracts to detain immigrants in ICE custody generally remain in place in the states where such laws have been passed.
In addition, the movement toward using public-private partnerships for such facilities and centers has encountered resistance from groups which believe that such facilities and centers should only be operated by governmental agencies. For example, several financial institutions, including some of our lenders, had announced that they will not be renewing existing agreements or entering into new agreements with companies that operate such facilities and centers pursuant to public-private partnerships. Some of these same institutions have ceased their equity analyst coverage of our company. Proposed and future legislation could indirectly impose additional financial restrictions with respect to our business. If other financial institutions or third parties that currently provide us with financing or that we do business with decide in the future to cease providing us with financing or doing business with us, such determinations could have a material adverse effect on our business, financial condition and results of operations. Furthermore, recently proposed legislation in California, Assembly Bill 1633, or AB1633, would impose an annual tax equal to 50% of the gross receipts of private detention facility operators beginning on January 1, 2027, if enacted into law. As a result, if enacted into law, AB1633 would impose the 50% tax on gross receipts we receive in connection with the operation of each of the detention facilities we operate in California. Although it is uncertain whether AB1633 will be enacted into law, we can provide no assurance that it will not be enacted, and if enacted, would not impact our results of operations and cash flows.
Increased public and political opposition to the use of public-private partnerships for our facilities and centers in any of the markets in which we operate, as a result of these or other factors, could have a material adverse effect on our business, financial condition, results of operations and the market price of our securities.
Risks Related to Our High Level of Indebtedness
Our level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt service obligations.
We have a significant amount of indebtedness. Our total consolidated indebtedness as of December 31, 2025 and 2024 was approximately $1.7 billion. As of December 31, 2025 and 2024, we had $44.4 million and $62.9 million, respectively, outstanding in letters of credit and $358.6 million and $110.0 million, respectively, in borrowings outstanding under our revolver. As of December 31, 2025, we had the ability to borrow $47.0 million under our revolver, after applying the limitations and restrictions in our debt covenants and subject to our satisfying the relevant borrowing conditions under our senior credit facility with respect to the incurrence of additional indebtedness. At December 31, 2025, we also had approximately AUD53 million (or approximately $35 million based on exchange rates at December 31, 2025) in letters of credit outstanding under our Australian letter of credit facility in connection with certain performance guarantees related to the Ravenhall facility.
Our substantial indebtedness could have important consequences. For example, it could:
•make it more difficult for us to satisfy our obligations with respect to our senior notes and our other debt and liabilities;
•require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, and other general corporate purposes;
•limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
•increase our vulnerability to adverse economic and industry conditions;
•place us at a competitive disadvantage compared to competitors that may be less leveraged;
•restrict us from pursuing strategic acquisitions or exploiting certain business opportunities;
•limit our ability to borrow additional funds or refinance existing indebtedness on favorable terms; and
•require us to sell assets or take other actions to service our debt obligations.
If we are unable to meet our debt service obligations, we may need to reduce capital expenditures, restructure or refinance our indebtedness, obtain additional equity financing, suspend repurchases under our share repurchase program or sell assets. The revolving credit commitments under our credit agreement mature in April 2029. Our 8.625% senior secured notes due 2029 (“Secured Notes” or “8.625% Secured Notes Due 2029”) and our 10.250% senior notes due 2031 (“Unsecured Notes” or “10.250% Unsecured Notes due 2031”) mature in April 2029 and April 2031, respectively. Beginning in 2019, several financial institutions announced that they would not be renewing existing agreements or entering into new agreements with companies that operate secure services facilities and centers pursuant to public-private partnerships. Certain lenders also have publicly disclosed that they will no longer loan money to one of our key competitors. Although we successfully closed on a debt restructuring transaction that resulted in entering into a new credit agreement and the issuance of the Secured Notes and the Unsecured Notes, financial institutions may be unwilling to engage with us in the future and this may restrict our access to the debt and capital markets to support our operations or refinance our indebtedness, including by obtaining debt financing, equity financing or selling assets on satisfactory terms, or at all. This could materially increase the cost of capital and as a result have a material adverse effect on our business, financial condition and results of operations. In addition, our ability to incur additional indebtedness will be restricted by the terms of our credit agreement, and the indentures governing our Secured Notes and Unsecured Notes.
We are incurring significant indebtedness in connection with substantial ongoing capital expenditures. Capital expenditures for existing and future projects may materially strain our liquidity.
We currently have several active projects that we anticipate spending approximately $120 to $155 million on capital expenditures in 2026. Included in these projects are planned expenditures to deliver expanded detention capacity, secure transportation and electronic monitoring services to ICE. Of these projects, we estimate that approximately $80 to $95 million are related to facility maintenance costs. We intend to finance these and future projects using our own funds, including cash on hand, cash flow from operations and borrowings under the revolver. In addition to these current estimated capital requirements for 2026, we are currently in the process of bidding on, or evaluating potential bids for the design, construction and management of a number of new projects. In the event that we win bids for these projects and decide to self-finance their construction, our capital requirements in 2026 could materially increase. As of December 31, 2025, we had the ability to borrow $47.0 million under the revolver after applying the limitations and restrictions in our debt covenants and subject to our satisfying the relevant borrowing conditions under the senior credit facility. While we believe we currently have adequate liquidity from cash on hand, cash flow from operations and borrowing capacity under our senior credit facility to fund our operations and all of our committed capital expenditure projects, we may need additional borrowings or financing from other sources in order to complete potential capital expenditures related to new projects in the future. We cannot assure you that such borrowings or financing will be made available to us on satisfactory terms, or at all. In addition, the large capital commitments that these projects will require over the next 12-18 month period may materially strain our liquidity and our borrowing capacity for other purposes. Capital constraints caused by these projects may also cause us to have to entirely refinance our existing indebtedness or incur more indebtedness. Such financing may have terms less favorable than those we currently have in place, or not be available to us at all. In addition, the concurrent development of these and other large capital projects exposes us to material risks. For example, we may not complete some or all of the projects on time or on budget, which could cause us to absorb any losses associated with any delays.
Despite current indebtedness levels, we may still incur more indebtedness, which could further exacerbate the risks described above.
The terms of the indentures governing the Secured Notes, Unsecured Notes and our credit agreement restricts our ability to incur, but do not prohibit us from incurring, significant additional indebtedness in the future. As of December 31, 2025, we had the ability to borrow an additional $47.0 million under the revolver portion of our credit agreement after applying the limitations and restrictions in our debt covenants and subject to our satisfying the relevant borrowing conditions under the senior credit facility. Also, we may refinance all or a portion of our indebtedness, including borrowings under our credit agreement, the Secured Notes and the Unsecured Notes. The terms of such refinancing may be less restrictive and permit us to incur more indebtedness than we can now. If new indebtedness is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face related to our significant level of indebtedness could intensify.
Our borrowing costs and access to capital and credit markets could be adversely affected by a downgrade or potential downgrade of our credit ratings.
Rating agencies routinely evaluate us, and their ratings of our long-term and short-term debt are based upon a number of factors, including our cash generating capability, levels of indebtedness, policies with respect to shareholder distributions and financial strength generally, as well as factors beyond our control, such as the then-current state of the economy and our industry generally. Any downgrade of our credit ratings by a credit rating agency, whether as a result of our actions or factors which are beyond our control, can increase our future borrowing costs, impair our ability to access capital and credit markets on terms commercially acceptable to us or at all and result in a reduction in our liquidity. Our borrowing costs and access to capital markets also can be adversely affected if a credit rating agency announces that our ratings are under review for a potential downgrade. An increase in our borrowing costs, limitations on our ability to access the global capital and credit markets or a reduction in our liquidity can adversely affect our financial condition, results of operations and cash flows.
The covenants in the indentures governing the Secured Notes and the Unsecured Notes and the covenants in our Credit Agreement impose significant operating and financial restrictions which may adversely affect our ability to operate our business.
The indentures governing the Secured Notes and the Unsecured Notes and our Credit Agreement impose significant operating and financial restrictions on us and certain of our subsidiaries, which we refer to as restricted subsidiaries. These restrictions limit our ability to, among other things:
•make certain restricted payments;
•incur additional indebtedness or issue preferred stock;
•create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions to us;
•enter into mergers, consolidations or sales of substantially all of our assets;
•enter into transactions with affiliates;
•designate restricted and unrestricted subsidiaries;
•enter into sale and leaseback transactions; and
•engage in business, except as otherwise permitted.
These restrictions could limit our ability to finance our future operations or capital needs, make acquisitions or pursue available business opportunities. In addition, our Credit Agreement requires us to maintain specified financial ratios and satisfy certain financial covenants, including maintaining a maximum total leverage ratio, a maximum first lien coverage ratio, a minimum interest coverage ratio and a cap on the amount of unrestricted cash that our foreign subsidiaries may hold as of the last day of any fiscal quarter. We may be required to take action to reduce our indebtedness or to act in a manner contrary to our business objectives to meet these ratios and satisfy these covenants. We could also incur additional indebtedness having even more restrictive covenants. Our failure to comply with any of the covenants under our Credit Agreement, the Secured Notes and the Unsecured Notes, or any other indebtedness could prevent us from being able to draw on the Revolver, cause an event of default under such documents and result in an acceleration of all of our outstanding indebtedness. If all of our outstanding indebtedness were to be accelerated, we likely would not be able to simultaneously satisfy all of our obligations under such indebtedness, which would materially adversely affect our financial condition and results of operations.
Servicing our indebtedness will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control and we may not be able to generate the cash required to service our indebtedness.
Our ability to make payments on our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
Our business may not be able to generate sufficient cash flow from operations or future borrowings may not be available to us under our Credit Agreement or otherwise in an amount sufficient to enable us to pay our indebtedness or debt securities, including the Secured Notes and the Unsecured Notes, or to fund our other liquidity needs. As a result, we may need to refinance all or a portion of our indebtedness on or before maturity. However, we may not be able to complete such refinancing on commercially reasonable terms or at all. If for any reason we are unable to meet our debt service obligations, we would be in default under the terms of the agreements governing our outstanding debt. If such a default were to occur, the lenders under the Credit Agreement, and holders of the Secured Notes and the Unsecured Notes could elect to declare all amounts outstanding immediately due and payable, and the lenders would not be obligated to continue to advance funds under the Credit Agreement. If the amounts outstanding under the Credit Agreement or other agreements governing our outstanding debt, were accelerated, our assets may not be sufficient to repay in full the money owed to our lenders and holders of the Secured Notes, the Unsecured Notes and any other debt holders.
Because portions of our senior indebtedness have floating interest rates, an increase in interest rates would adversely affect cash flows.
Borrowings under our Credit Agreement bear interest at a variable rate using a spread over SOFR. As a result, to the extent our exposure to increases in interest rates is not eliminated through interest rate protection agreements, such increases will result in higher debt service costs which will adversely affect our cash flows. We currently do not have interest rate protection agreements in place to protect against interest rate fluctuations on borrowings under our Credit Agreement. As of December 31, 2025, we had $358.6 million of indebtedness outstanding under our Credit Agreement, and a one percent increase in the interest rate applicable to our Credit Agreement would increase our annual interest expense by approximately $4 million.
We depend on distributions from our subsidiaries to make payments on our indebtedness. These distributions may not be made.
A substantial portion of our business is conducted by our subsidiaries. Therefore, our ability to meet our payment obligations on our indebtedness is substantially dependent on the earnings of certain of our subsidiaries and the payment of funds to us by our subsidiaries as dividends, loans, advances or other payments. Our subsidiaries are separate and distinct legal entities and, unless they expressly guarantee any indebtedness of ours, they are not obligated to make funds available for payment of our indebtedness in the form of loans, distributions or otherwise. Our subsidiaries’ ability to make any such loans, distributions or other payments to us will depend on their earnings, business results, the terms of their existing and any future indebtedness, tax considerations and legal or contractual restrictions to which they may be subject. If our subsidiaries do not make such payments to us, our ability to repay our indebtedness may be materially adversely affected. For the year ended December 31, 2025, our subsidiaries accounted for 51.6% of our consolidated revenues, and as of December 31, 2025, our subsidiaries accounted for 85.6% of our total assets.
We may not be able to satisfy our repurchase obligations in the event of a change of control or fundamental change because the terms of our indebtedness or lack of funds may prevent us from doing so.
Upon a change of control as specified in the indentures governing the terms of our Secured Notes and Unsecured Notes, each holder of the Secured Notes and Unsecured Notes will have the right to require us to repurchase their notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of repurchase. The terms of the Credit Agreement limit our ability to repurchase the notes in the event of a change of control. In addition, the terms of each of the indentures governing the Secured Notes and the Unsecured Notes will limit our ability to repurchase the other series of notes in the event of a change of control. Any future agreement governing any of our indebtedness may contain similar restrictions and provisions. Accordingly, it is possible that restrictions in the Credit Agreement, the indentures governing the Secured Notes and the Unsecured Notes or other indebtedness that may be incurred in the future will not allow the required repurchase of the Secured Notes and the Unsecured Notes upon a change of control. Even if such repurchase is permitted by the terms of our then existing indebtedness, we may not have sufficient funds available to satisfy our repurchase obligations. Our failure to purchase any of the Secured Notes and Unsecured Notes would be a default under the indenture governing such notes, which in turn would trigger a default under the Credit Agreement and the indenture governing the other series of notes.
The Unsecured Notes and the guarantees on the Unsecured Notes (the "Unsecured Note Guarantees") will be effectively subordinated to our and the guarantors’ senior secured indebtedness and structurally subordinated to the indebtedness of our subsidiaries that do not guarantee the Unsecured Notes.
The Unsecured Notes and the Unsecured Note Guarantees will be senior, unsecured obligations of GEO and the guarantors, respectively, and will rank (i) equal in right of payment with all of our and the guarantors’ existing and future senior, unsecured indebtedness and the related guarantees, (ii) effectively junior in right of payment to all of our and the guarantors’ existing and future secured indebtedness, including our obligations under the Credit Agreement and the related guarantees, and the Secured Notes and the guarantees on the Secured Notes, to the extent of the value of the assets securing such indebtedness, (iii) senior in right of payment to any of our and the guarantors’ future subordinated indebtedness, and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, of any of our subsidiaries that do not guarantee the Unsecured Notes.
In the event we or the guarantors become the subject of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding, our assets and the assets of the guarantors securing indebtedness could not be used to pay holders of the Unsecured Notes until after all secured claims against us and the guarantors have been fully paid.
The value of the collateral may not be sufficient to satisfy our obligations under the Secured Notes.
The Secured Notes are secured by a first-priority lien on the collateral, which collateral also secures our obligations under the Credit Agreement and other first lien debt permitted under the Credit Agreement and the indenture governing the Secured Notes (referred to herein as other “Additional Pari Passu Obligations”), and there may not be sufficient collateral to pay the Secured Notes and the Additional Pari Passu Obligations. The rights of the holders of the Secured Notes to the collateral may be diluted by any increase in debt secured by the collateral or a reduction in the collateral. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding against us or any
guarantor, the collateral securing the other Additional Pari Passu Obligations and the Secured Notes must be used to pay the other Additional Pari Passu Obligations and the Secured Notes ratably as set forth in the First Lien Intercreditor Agreement. We may incur Additional Pari Passu Obligations in the future. Any Additional Pari Passu Obligations incurred in the future will adversely affect the relative position of the holders of the Secured Notes with respect to the collateral securing such Secured Notes.
No appraisals of any collateral were prepared in connection with the offering of the Secured Notes. The value of the collateral at any time will depend on market and other economic conditions, including the availability of suitable buyers for the collateral. By their nature, some or all of the pledged assets may be illiquid and may have no readily ascertainable market value. The value of the collateral securing the Secured Notes could be impaired in the future as a result of changing economic conditions, our failure to implement our business strategy, competition and other future events or trends. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, no assurance can be given that the proceeds from any sale or liquidation of the collateral securing the Secured Notes will be sufficient to pay our obligations under the Secured Notes, in full or at all, while also paying the Additional Pari Passu Obligations.
In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding against us or any guarantor, all proceeds from the collateral will be applied first to repay the obligations in respect of the Secured Notes and any Additional Pari Passu Obligations. No assurance can be given that the proceeds from any sale or liquidation of the collateral will be sufficient to pay our obligations under the Secured Notes, in full or at all, while also paying the Additional Pari Passu Obligations. Additionally, with respect to some of the collateral, the Secured Notes collateral agent’s security interest and ability to foreclose will be limited by the need to meet certain requirements, such as obtaining third-party consents and making additional filings.
Accordingly, there may not be sufficient collateral to pay all or any of the amounts due on the Secured Notes. Any claim for the difference between the amount, if any, realized by holders of the Secured Notes from the sale of the collateral securing the Secured Notes and the obligations under the Secured Notes will rank equally in right of payment with all of our other unsecured unsubordinated indebtedness and other obligations, including trade payables.
Risks Related to Our Business and Services
We partner with a limited number of governmental customers who account for a significant portion of our revenues. The loss of, or a significant decrease in revenues from, these customers could seriously harm our financial condition and results of operations.
We currently derive, and expect to continue to derive, a significant portion of our revenues from a limited number of governmental agencies. Of our governmental partners, three federal governmental agencies with correctional and detention responsibilities, the BOP, ICE, and the U.S. Marshals Service, accounted for 66.6% and 61.8% of our total consolidated revenues for the year ended December 31, 2025 and 2024, respectively, through multiple individual contracts, with the BOP accounting for 2.6% and 3.1% of our total consolidated revenues for 2025 and 2024, respectively, ICE accounting for 47.6% and 41.5% of our total consolidated revenues for 2025 and 2024, respectively, and the U.S. Marshals Service accounting for 15.9% and 17.2% of our total consolidated revenues for 2025 and 2024, respectively. No individual contract with these clients accounted for more than 10.0% of our total consolidated revenues for 2025. However, in 2024 our ISAP contract accounted for approximately 10% of our total consolidated revenues.
Our revenues depend on our governmental customers receiving sufficient funding and providing us with timely payment under the terms of our contracts. If the applicable governmental customers do not receive sufficient appropriations to cover their contractual obligations, they may delay or reduce payment to us or terminate their contracts with us. With respect to our federal government customers, any future impasse or struggle impacting the federal government’s ability to reach agreement on the federal budget, debt ceiling or any future federal government shut-downs could result in material payment delays, payment reductions or contract terminations. Additionally, our governmental customers may request in the future that we reduce our per diem contract rates or forego increases to those rates as a way for those governmental customers to control their spending and address their budgetary shortfalls.
Our governmental customers may also from time to time adopt, implement or modify certain policies or directives that may adversely affect our business. Our federal, state or local governmental partners may in the future choose to undertake a review of their utilization of public-private partnerships, or may re-negotiate, cancel or decide not to renew our existing contracts with them. Various state partners have or may choose in the future to undertake a review of their utilization of public-private partnerships.
The loss of, or a significant decrease in, our current contracts with ICE, the U.S. Marshals Service or any other significant customers could seriously harm our financial condition and results of operations. We expect these federal and state agencies and a relatively small group of other governmental customers to continue to account for a significant percentage of our revenues.
ICE, the federal executive agency under the direction of DHS, has recently expanded its methods for physical detention by utilizing non-traditional detention capacity and by obtaining ownership of non-traditional facilities, and such methods could have an adverse impact on our business.
With the extensive funding made available by the OBBBA, in order to boost total available detention beds, accelerate deportation initiatives and explore cost savings, DHS has considered various alternative forms of detention capacity and increased utilization of non-traditional private sector detention facilities. For example, ICE has increased its use of military bases (domestically and at Guantanamo Bay), soft-sided facilities, idled or under-utilized facilities owned and operated by the BOP, facilities owned by state and local government agencies, international options, and has most recently proposed using warehouse-based real estate, and has acquired certain real estate assets for use in ICE detention. If we were to sell one of our owned facilities to a governmental customer, such as ICE, we may be unable to invest the proceeds from the sale in one or more properties that yield as much cash flow as the property sold. Even if we were to be engaged by a governmental customer to operate the facility following the sale, our operation of the facility pursuant to a management agreement may be less profitable than our ownership of the facility, and there can be no assurance that such governmental customer will not terminate the management contract associated with such facility or engage another operator to manage such facility. Utilization of additional forms of detention options, including through governmental ownership of detention facilities, could divert potential occupancy from our facilities, and thereby have an adverse impact on our business, financial condition and results of operations.
Fluctuations in occupancy levels or participation in ISAP could cause a decrease in revenues and profitability.
While a substantial portion of our cost structure is generally fixed, most of our revenues are generated under facility management contracts which provide for per diem payments based upon daily occupancy. Several of these contracts provide fixed-price payments that cover a portion, or all of our fixed costs based on a guaranteed minimum level of occupancy regardless of the actual level of occupancy. During the pandemic, we received these fixed-price payments at a number of our facilities where the actual level of occupancy was below the guaranteed minimum level of occupancy and as a result those facilities experienced a greater amount of profitability. If the levels of occupancy at the facilities subject to a guaranteed minimum level of occupancy were to increase, our costs may increase and therefore result in a decreased amount of profitability at these facilities. However, many of our contracts have no fixed-price payments and simply provide for a per diem payment based on actual occupancy. As a result, with respect to our contracts that have no fixed-price payments, we are highly dependent upon the governmental agencies with which we have contracts to utilize our facilities. Under a per diem rate structure, a decrease in our utilization rates could cause a decrease in revenues and profitability. When combined with relatively fixed costs for operating each facility, regardless of the occupancy level, material fluctuations in occupancy levels at one or more of our facilities could have a material adverse effect on our revenues and profitability, and consequently, on our financial condition and/or results of operations. In addition material fluctuations in participation in ISAP could have a material adverse effect on our revenues and profitability, and consequently, on our financial condition and/or results of operations.
Efforts to reduce the U.S. federal deficit could adversely affect our liquidity, results of operations and financial condition.
Any reductions in government spending in an effort to reduce the U.S. federal deficit could result in a reduction in the utilization of our services or additional pricing pressure. Further, there is ongoing uncertainty regarding the federal budget and federal spending levels, including the possible impacts of a failure to increase the “debt ceiling.” Any U.S. government default on its debt could have broad macroeconomic effects that could, among other things, raise our borrowing costs. Any future shutdown of the federal government or failure to enact annual appropriations could also have a material adverse impact on our liquidity, results of operations and financial condition.
Additionally, considerable uncertainty exists regarding how future budget and program decisions will continue to evolve, including the spending priorities of the U.S. presidential administration and Congress and what challenges any budget reductions will present for us and our industry generally. Pressures on and uncertainty surrounding the U.S. federal government’s budget, and potential changes in budgetary priorities and spending levels, could adversely affect the funding for and delay or eliminate the ability for additional contracting or increased bed capacity.
State budgetary constraints may have a material adverse impact on us.
Long-running pressure on state budgets had eased in the years prior to the COVID-19 pandemic, amid widespread economic growth and tax revenue gains that resulted in the first budget surpluses in years for many states. The COVID-19 pandemic adversely impacted the economic expansion and budget surpluses enjoyed by numerous states. Still, some states were in a stronger position than others as they began to experience a public health emergency and their greatest fiscal and economic tests since the Great Recession of 2007-09. GEO has numerous state clients across the country. If state budgetary conditions deteriorate, our state customers’ ability to pay us may be impaired and/or we may be forced to renegotiate our management contracts with those customers on less favorable terms and our financial condition, results of operations or cash flows could be materially adversely impacted. In addition, budgetary constraints in states that are not our current customers could prevent those states from using public-private partnerships for secure facilities, processing centers or community based service opportunities that we otherwise could have pursued.
From time to time, we may not have a management contract with a client to operate existing beds at a facility or new beds at a facility that we are expanding and we cannot assure you that such a contract will be obtained. Failure to obtain a management contract for these beds will subject us to carrying costs with no corresponding management revenue.
From time to time, we may not have a management contract with a customer to operate existing beds or new beds at facilities that we are currently in the process of renovating and expanding. While we will always strive to work diligently with a number of different customers for the use of these beds, we cannot assure you that a contract for the beds will be secured on a timely basis, or at all. While a facility or new beds at a facility are vacant, we incur carrying costs. In our U.S. Secure Services segment, as of December 31, 2025, we were marketing 5,896 vacant beds with a net book value of approximately $180.9 million at six of our idle facilities to potential customers. In our Reentry Services segment, as of December 31, 2025, we were marketing 750 vacant beds with a net book value of approximately $11.6 million at two of our idle facilities to potential customers. The combined annual carrying cost of these idle facilities in 2026 is estimated to be $23.4 million, including depreciation expense of $12.0 million. Failure to secure a management contract for a facility or expansion project could have a material adverse impact on our financial condition, results of operations and/or cash flows. We review our facilities for impairment whenever events or changes in circumstances indicate the net book value of the facility may not be recoverable. Impairment charges taken on our facilities could require material charges to our results of operations. In addition, in order to secure a management contract for these beds, we may need to incur significant capital expenditures to renovate or further expand the facility to meet potential clients’ needs.
We are subject to the loss of our facility management contracts, due to terminations, non-renewals or competitive re-bids, which could adversely affect our results of operations and liquidity, including our ability to secure new facility management contracts from other government customers.
We are exposed to the risk that we may lose our facility management contracts primarily due to one of three reasons: (i) the termination by a government customer with or without cause at any time; (ii) the failure by a customer to exercise its unilateral option to renew a contract with us upon the expiration of the then current term; or (iii) our failure to win the right to continue to operate under a contract that has been competitively re-bid in a procurement process upon its termination or expiration. Our facility management contracts typically allow a contracting governmental agency to terminate a contract with or without cause at any time by giving us written notice ranging from 30 to 180 days. If government agencies were to use these provisions to terminate, or renegotiate the terms of their agreements with us, our financial condition and results of operations could be materially adversely affected.
As of December 31, 2025, 29 of our facility management contracts, as well as certain of our other management contracts, may be subject to competitive re-bid in 2026. These contracts in the aggregate represented approximately 18% and approximately $469 million of our 2025 consolidated revenues. We cannot in fact assure you that we will prevail in future re-bid situations or that any competitive re-bids we win will be on terms more favorable to us than those in existence with respect to the applicable expiring contract.
Our federal, state or local governmental partners may in the future choose to undertake a review of their utilization of public-private partnerships, or may re-negotiate, cancel or decide not to renew our existing contracts with them. For example, on January 26, 2021, President Biden signed an Executive Order directing the United States Attorney General not to renew DOJ contracts with privately operated criminal detention facilities. While this Executive Order has been revoked, a future administration may implement further executive orders or directives relating to federal criminal justice policies and immigration policies which may impact the federal government’s use of public-private partnerships with respect to correctional and detention needs, including with respect to our contracts, and/or may impact the budget and spending priorities of federal agencies, including ICE.
For additional information on facility management contracts that we currently believe will be competitively re-bid during each of the next five years and thereafter, please see “Business — Government Contracts — Terminations, Renewals and Competitive Re-bids”. The loss by us of facility management contracts due to terminations, non-renewals or competitive re-bids could materially adversely affect our financial condition, results of operations and/or liquidity, including our ability to secure new facility management contracts from other government customers.
Our growth depends on our ability to secure contracts to develop and manage new secure facilities, processing centers and community based facilities and to secure contracts to provide electronic monitoring services, community-based reentry services and monitoring and supervision services, the demand for which is outside our control.
Our growth is primarily dependent upon our ability to obtain new contracts to develop and/or manage secure, processing, and community based facilities under public-private partnerships. Additionally, our growth is generally dependent upon our ability to obtain new contracts to offer electronic monitoring services, provide community-based reentry services and provide monitoring and supervision services.
Demand for new public-private partnership facilities in our areas of operation may decrease and our potential for growth will depend on a number of factors we cannot control, including overall economic conditions, governmental and public acceptance of public-private partnerships, government budgetary constraints, and the number of facilities available for public-private partnerships.
In particular, the demand for our secure facility and processing center services, electronic monitoring services, community-based reentry services and monitoring and supervision services could be affected by changes in existing policies which adversely impact the need for and acceptance of public-private partnerships across the spectrum of services we provide. Various factors outside our control could adversely impact the growth of our Reentry Services business, including government customer resistance to the public-private partnerships for residential community based facilities, and changes to Medicaid and similar reimbursement programs.
We may not be able to meet state requirements for capital investment or locate land for the development of new facilities, which could adversely affect our results of operations and future growth.
Certain jurisdictions have in the past required successful bidders to make a significant capital investment in connection with the financing of a particular project. If this trend were to continue in the future, we may not be able to obtain sufficient capital resources when needed to compete effectively for facility management contracts. Additionally, our success in obtaining new awards and contracts may depend, in part, upon our ability to locate land that can be leased or acquired under favorable terms. Our inability to secure financing and desirable locations for new facilities could adversely affect our results of operations and future growth.
Competition for contracts may adversely affect the profitability of our business.
We compete with government entities and other public-private partnership operators on the basis of cost, bed availability, location of facility, quality and range of services offered, experience in managing facilities, and reputation of management and personnel. Barriers to entering the market for the management of secure and processing facilities and the provision of community reentry programs may not be sufficient to limit additional competition in our industry. In addition, some of our government customers may assume the management of a facility currently managed by us upon the termination of the corresponding management contract or, if such customers have capacity at the facilities which they operate, they may choose to use less capacity at our facilities. Since we are paid on a per diem basis based on actual occupancy under some of our contracts, a decrease in occupancy could cause a decrease in both our revenues and our profitability.
We are dependent on government appropriations, which may not be made on a timely basis or at all and may be adversely impacted by budgetary constraints at the federal, state, local and foreign government levels.
Our cash flow is subject to the receipt of sufficient funding of and timely payment by contracting governmental entities. If the contracting governmental agency does not receive sufficient appropriations to cover its contractual obligations, it may terminate our contract or delay or reduce payment to us. Any delays in payment, including as a result of the most recent government shutdown or a future government shutdown, or the termination of a contract, could have a material adverse effect on our cash flow and financial condition, which may make it difficult to satisfy our payment obligations on our indebtedness, including the Secured Notes, Unsecured Notes and the Credit Agreement, in a timely manner. In addition, domestically, federal, state and local governments have encountered, and may continue to encounter, unusual budgetary constraints. As a result, a number of federal, state and local governments may be under pressure to control additional spending or reduce current levels of spending which could limit or eliminate appropriations for the facilities that we operate. Additionally, as a result of these factors, we may be requested in the future to reduce our existing per diem contract rates or forego prospective increases to those rates. Budgetary limitations may also make it more difficult for us to renew our existing contracts on favorable terms or at all. Further, a number of states and foreign governments in which we operate may experience budget constraints for fiscal year 2026. We cannot assure you that these constraints would not result in reductions in per diems, delays in payment for services rendered or unilateral termination of contracts.
Adverse publicity may negatively impact our ability to retain existing contracts and obtain new contracts.
Any negative publicity about an escape, riot, other disturbance, pandemic outbreak, death or injury of a detainee, or perceived conditions and access to health care and other services at a facility, including any work program at a facility, under a public-private partnership, any failures experienced by our electronic monitoring services and any negative publicity about a crime or disturbance occurring during a failure of service or the loss or unauthorized access to any of the data we maintain in the course of providing our services may result in publicity adverse to us and public-private partnerships in general. Any of these occurrences or continued trends may make it more difficult for us to renew existing contracts or to obtain new contracts or could result in the termination of an existing contract or the closure of one or more of our facilities, which could have a material adverse effect on our business. Such negative events may also result in a significant increase in our liability insurance costs.
We may incur significant start-up and operating costs on new contracts before receiving related revenues, which may impact our cash flows and not be recouped.
When we are awarded a contract to manage a facility, we may incur significant start-up and operating expenses, including the cost of constructing the facility, purchasing equipment and staffing the facility, before we receive any payments under the contract. These expenditures could result in a significant reduction in our cash reserves and may make it more difficult for us to meet other cash obligations, including our payment obligations on the Secured Notes, Unsecured Notes and the Credit Agreement. In addition, a contract may be terminated prior to its scheduled expiration and as a result we may not recover these expenditures or realize any return on our investment.
We may face community opposition to facility locations, which may adversely affect our ability to obtain new contracts.
Our success in obtaining new awards and contracts sometimes depends, in part, upon our ability to locate land that can be leased or acquired, on economically favorable terms, by us or other entities working with us in conjunction with our proposal to construct and/or manage a facility. Some locations may be in or near populous areas and, therefore, may generate legal action or other forms of opposition from residents in areas surrounding a proposed site. When we select the intended project site, we attempt to conduct business in communities where local leaders and residents generally support the establishment of a new project. Future efforts to find suitable host communities may not be successful. In many cases, the site selection is made by the contracting governmental entity. In such cases, site selection may be made for reasons related to economic development interests.
Natural disasters, pandemic outbreaks, global political events and other serious catastrophic events could disrupt operations and otherwise materially adversely affect our business and financial condition.
As an owner and operator of secure facilities, processing centers and community reentry centers with operations in many states throughout the United States and multiple foreign countries, we are subject to numerous risks outside of our control, including risks arising from natural disasters, pandemic outbreaks, such as the COVID-19 pandemic, and other global health emergencies or disruptive global political events, including terrorist activity and war, or similar disruptions that could materially adversely affect our business and financial performance. Such occurrences can result in destruction or damage to our secure facilities, processing centers and community reentry centers and our information systems, disruption of our operations, require the evacuation of detainees or our personnel, and require the adoption of specific health protocols or treatments to safeguard the health of our detainees or personnel. Although it is not possible to predict such events or their consequences, these events could materially adversely affect our reputation, business and financial condition.
Our international operations expose us to risks that could materially adversely affect our financial condition and results of operations.
For the years ended December 31, 2025 and 2024, our international operations accounted for approximately 7% and 9%, respectively, of our consolidated revenues from operations. We face risks associated with our operations outside the United States. These risks include, among others, political and economic instability, exchange rate fluctuations, taxes, duties and the laws or regulations in those foreign jurisdictions in which we operate. In the event that we experience any difficulties arising from our operations in foreign markets, our business, financial condition and results of operations may be materially adversely affected.
We conduct certain of our operations through joint ventures or consortiums, which may lead to disagreements with our joint venture partners or business partners and adversely affect our interest in the joint ventures or consortiums.
We conduct our operations in South Africa through our consolidated joint venture, SACM, and through our 50% owned and unconsolidated joint venture South African Custodial Services Pty. Limited, referred to as SACS. We conduct our escort and related custody services in the United Kingdom through our 50% owned and unconsolidated joint venture in GEOAmey Limited, which we refer to as GEOAmey. We may enter into additional joint ventures in the future. Although we have the majority vote in our consolidated joint venture, SACM, through our ownership of 62.5% of the voting shares, we share equal voting control on all significant matters to come before SACS. We also share equal voting control on all significant matters to come before GEOAmey. These joint venture partners, as well as any future partners, may have interests that are different from ours which may result in conflicting views as to the conduct of the business of the joint venture or consortium. In the event that we have a disagreement with a joint venture partner or consortium business partner as to the resolution of a particular issue to come before the joint venture or consortium, or as to the management or conduct of the business of the joint venture or consortium in general, we may not be able to resolve such disagreement in our favor and such disagreement could have a material adverse effect on our interest in the joint venture or consortium or the business of the joint venture or consortium in general.
The rising cost and increasing difficulty of obtaining adequate levels of surety credit on favorable terms could adversely affect our operating results.
We are often required to post performance bonds issued by a surety company as a condition to bidding on or being awarded a facility development contract. Availability and pricing of these surety commitments is subject to general market and industry conditions, among other factors. If we are unable to effectively pass along surety costs to our customers, any increase in surety costs could adversely affect our operating results. In addition, we may not continue to have access to surety credit or be able to secure bonds economically, without additional collateral, or at the levels required for any potential facility development or contract bids. If we are unable to obtain adequate levels of surety credit on favorable terms, we would have to rely upon letters of credit under our Credit Agreement, which would entail higher costs even if such borrowing capacity was available when desired, and our ability to bid for or obtain new contracts could be impaired.
We are dependent upon our senior management and our ability to attract and retain sufficient qualified personnel.
We are dependent upon the continued service of each member of our senior management team, including George C. Zoley, Ph.D., our current Executive Chairman and Chairman and Chief Executive Officer effective March 1, 2026, Mark J. Suchinski, our Chief Financial Officer, Paul Laird, our Senior Vice President and President, Secure Services, Matthew Albence, our Senior Vice President, Client Relations and our other executive officers. The unexpected loss of Dr. Zoley, Mr. Suchinski or any other key member of our senior management team could materially adversely affect our business, financial condition or results of operations.
In addition, the services we provide are labor-intensive. When we are awarded a facility management contract or open a new facility, depending on the service we have been contracted to provide, we may need to hire operating, management, correctional officers, security staff, physicians, nurses and other qualified personnel. Our business is labor intensive, and some of our operations may experience a high rate of employee turnover from time to time. We believe there is currently a labor shortage impacting both publicly operated and privately operated secure facilities, processing centers and community reentry centers. It can be challenging for us to find appropriately skilled and qualified personnel at affordable rates. We may be unable to hire and retain a sufficiently skilled labor force to support our operating needs, our contractual requirements and our growth strategy. A labor shortage could negatively affect our ability to efficiently operate our facilities and our overall business. Any such shortage may adversely impact our ability to serve our customers effectively. Our labor and training expenses could increase as a result of a shortage in the supply of skilled personnel and an increase in the compensation we will need to pay to attract and retain such personnel and such compensation expenses may not be covered by our governmental customers, which could adversely affect our profitability. The success of our business requires that we attract, develop and retain our personnel. Our inability to hire sufficient qualified personnel on a timely basis or the loss of significant numbers of personnel at existing facilities could have a material effect on our business, financial condition or results of operations. If we were to be unable to fully staff or fill vacancies on a timely basis in our secure facilities, processing centers and community reentry centers, it could result in negative consequences, including requests by our government customers to provide a plan of correction, assessments of fines or other penalties under our contracts, or contract cancellations or non-renewals.
Adverse developments in our relationship with our employees could adversely affect our business, financial condition or results of operations.
At December 31, 2025, approximately 54% of our workforce was covered by collective bargaining agreements and, as of such date, collective bargaining agreements with approximately 9% of our employees were set to expire in less than one year. While approximately 54% of our workforce is covered by collective bargaining agreements, increases in organizational activity or any future work stoppages could have a material adverse effect on our business, financial condition, or results of operations.
Our profitability may be materially adversely affected by inflation.
Many of our facility management contracts provide for fixed management fees or fees that increase by only small amounts during their terms. While a substantial portion of our cost structure is generally fixed, if, due to inflation or other causes, our operating expenses, such as costs relating to personnel, utilities, insurance, medical and food, increase at rates faster than increases, if any, in our facility management fees, then our profitability could be materially adversely affected.
Risks Related to Taxes
Federal, state and local tax rules can adversely impact our results of operations and financial position.
We are subject to federal, state and local taxes in the United States, as well as in Australia, Canada, South Africa and the UK. Significant judgment is required in determining the provision for income taxes. We believe our income tax estimates are reasonable, but such estimates assume no changes in current tax rates. In addition, if the Internal Revenue Service or other taxing authority disagrees on a tax position we have taken and upon final adjudication we are required to change such position, we could incur additional tax liability, including interest and penalties. Such costs and expenses could have a material adverse impact on our financial condition, results of operations, and cash flows. Additionally, the taxability of our services is subject to various interpretations within the taxing jurisdictions in which we operate. Consequently, in the ordinary course of business, a jurisdiction may contest our reporting positions with respect to the application of its tax code to our operations. A conflicting position taken by a state or local taxation authority on the taxability of our operations could result in additional tax liabilities and could negatively impact our competitive position in that jurisdiction. If we fail to comply with applicable tax laws and regulations, we could suffer civil or criminal penalties in addition to the delinquent tax assessment. In the taxing jurisdictions where our services have been determined to be subject to tax, the jurisdiction may increase the tax rate assessed on such operations. We seek to pass-through to our customers such tax increases. In the event we are not able to pass-through any portion of the tax increase, our results of operations, financial condition and cash flows could be adversely impacted.
Risks Related to Real Estate and Construction Matters
Various risks associated with the ownership of real estate may increase costs, expose us to uninsured losses and adversely affect our financial condition and results of operations.
Our ownership of secure and processing facilities subjects us to risks typically associated with investments in real estate. Investments in real estate, and in particular, secure and processing facilities, are relatively illiquid and, therefore, our ability to divest ourselves of one or more of our facilities promptly in response to changed conditions is limited. Investments in secure and processing facilities, in particular, subject us to risks involving potential exposure to environmental liability and uninsured loss. Our operating costs may be affected by the obligation to pay for the cost of complying with existing environmental laws, ordinances and regulations, as well as the cost of complying with future legislation. In addition, although we maintain insurance for many types of losses, there are certain types of losses, such as losses from hurricanes, earthquakes, riots and acts of terrorism, which may be either uninsurable or for which it may not be economically feasible to obtain insurance coverage, in light of the substantial costs associated with such insurance. As a result, we could lose both our capital invested in, and anticipated profits from, one or more of the facilities we own. Further, even if we have insurance for a particular loss, we may experience losses that may exceed the limits of our coverage.
Risks related to facility construction and development activities may increase our costs related to such activities.
When we are engaged to perform construction and design services for a facility, we typically act as the primary contractor and subcontract with other companies who act as the general contractors. As primary contractor, we are subject to the various risks associated with construction (including, without limitation, shortages of labor and materials, work stoppages, labor disputes and weather interference) which could cause construction delays. In addition, we are subject to the risk that the general contractor will be unable to complete construction within the level of budgeted costs or be unable to fund any excess construction costs, even though we typically require general contractors to post construction bonds and insurance. Under such contracts, we are ultimately liable for all late delivery penalties and cost overruns.
Risks Related to the Capital Markets and its Impact on our Business
Negative conditions in the capital markets could prevent us from obtaining financing, which could materially harm our business.
Our ability to obtain additional financing is highly dependent on the conditions of the capital markets, among other things. The capital and credit markets have experienced significant periods of volatility and disruption since the Great Recession of 2007-2009, and more recently during 2020 and 2021 due to the impact of the COVID-19 pandemic. During this time period, the economic impacts observed have included a downturn in the equity and debt markets, a tightening of the credit markets, a general economic slowdown and other macroeconomic conditions, volatility in stock prices and currency exchange rates, inflation, concerns over sovereign debt levels abroad and in the U.S. and concerns over the failure to adequately address the federal deficit and the debt ceiling. If those macroeconomic conditions continue or worsen in the future, we could be prevented from raising additional capital or obtaining additional financing on satisfactory terms, or at all. If we need, but cannot obtain, adequate capital as a result of negative conditions in the capital markets or otherwise, our business, results of operations and/or financial condition could be materially adversely affected. Additionally, such inability to obtain capital could prevent us from pursuing attractive business development opportunities, including new facility constructions or expansions of existing facilities, and business or asset acquisitions.
Risks Related to our Electronic Monitoring Products and Technology
Technological changes could cause our electronic monitoring products and technology to become obsolete or require the redesign of our electronic monitoring products, which could have a material adverse effect on our business.
Technological changes within the electronic monitoring business in which we conduct business may require us to expend substantial resources in an effort to develop and/or utilize new electronic monitoring products and technology. We may not be able to anticipate or respond to technological changes in a timely manner, and our response may not result in successful electronic monitoring product development and timely product introductions. If we are unable to anticipate or timely respond to technological changes, our business could be adversely affected and could compromise our competitive position, particularly if our competitors announce or introduce new electronic monitoring products and services in advance of us. Additionally, new electronic monitoring products and technology face the uncertainty of customer acceptance and reaction from competitors.
Any negative changes in the level of acceptance of or resistance to the use of electronic monitoring products and services by governmental customers could have a material adverse effect on our business, financial condition and results of operations.
Governmental customers use electronic monitoring products and services to monitor low risk offenders as a way to help reduce overcrowding in secure facilities, as a monitoring tool, and to promote public safety by imposing restrictions on movement and serving as a deterrent for alcohol usage. If the level of acceptance of or resistance to the use of electronic monitoring products and services by governmental customers were to change over time in a negative manner so that governmental customers decide to decrease their usage levels and contracting for electronic monitoring products and services, this could have a material adverse effect on our business, financial condition and results of operations.
We depend on a limited number of third parties to manufacture and supply quality infrastructure components for our electronic monitoring products. If our suppliers cannot provide the components or services we require and with such quality as we expect, our ability to market and sell our electronic monitoring products and services could be harmed.
If our suppliers fail to supply components in a timely manner that meets our quantity, quality, cost requirements, or technical specifications, we may not be able to access alternative sources of these components within a reasonable period of time or at commercially reasonable rates. A reduction or interruption in the supply of components, or a significant increase in the price of components, could have a material adverse effect on our marketing and sales initiatives, which could adversely affect our financial condition and results of operations.
An inability to acquire, protect or maintain our intellectual property and patents in the electronic monitoring space could harm our ability to compete or grow.
We have numerous United States and foreign patents issued as well as a number of United States patents pending in the electronic monitoring space. There can be no assurance that the protection afforded by these patents will provide us with a competitive advantage, prevent our competitors from duplicating our products, or that we will be able to assert our intellectual property rights in infringement actions.
In addition, any of our patents may be challenged, invalidated, circumvented or rendered unenforceable. There can be no assurance that we will be successful should one or more of our patents be challenged for any reason. If our patent claims are rendered invalid or unenforceable, or narrowed in scope, the patent coverage afforded to our products could be impaired, which could significantly impede our ability to market our products, negatively affect our competitive position and harm our business and operating results.
There can be no assurance that any pending or future patent applications held by us will result in an issued patent, or that if patents are issued to us, that such patents will provide meaningful protection against competitors or against competitive technologies. The issuance of a patent is not conclusive as to its validity or its enforceability. The United States federal courts or equivalent national courts or patent offices elsewhere may invalidate our patents or find them unenforceable. Competitors may also be able to design around our patents. Our patents and patent applications cover particular aspects of our products. Other parties may develop and obtain patent protection for more effective technologies, designs or methods. If these developments were to occur, it could have an adverse effect on our sales. We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by consultants, vendors, former employees and current employees, despite the existence of nondisclosure and confidentiality agreements and other contractual restrictions. Furthermore, the laws of foreign countries may not protect our intellectual property rights effectively or to the same extent as the laws of the United States. If our intellectual property rights are not adequately protected, we may not be able to commercialize our technologies, products or services and our
competitors could commercialize our technologies, which could result in a decrease in our sales and market share that would harm our business and operating results.
Additionally, the expiration of any of our patents may reduce the barriers to entry into our electronic monitoring line of business and may result in loss of market share and a decrease in our competitive abilities, thus having a potential adverse effect on our financial condition, results of operations and cash flows.
Our electronic monitoring products could infringe on the intellectual property rights of others, which may lead to litigation that could itself be costly, could result in the payment of substantial damages or royalties, and/or prevent us from using technology that is essential to our products.
There can be no assurance that our current products or products under development will not infringe any patent or other intellectual property rights of third parties. If infringement claims are brought against us, whether successfully or not, these assertions could distract management from other tasks important to the success of our business, necessitate us expending potentially significant funds and resources to defend or settle such claims and harm our reputation. We cannot be certain that we will have the financial resources to defend ourselves against any patent or other intellectual property litigation.
In addition, intellectual property litigation or claims could force us to do one or more of the following:
•cease selling or using any products that incorporate the asserted intellectual property, which would adversely affect our revenue;
•pay substantial damages for past use of the asserted intellectual property;
•obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; or
•redesign or rename, in the case of trademark claims, our products to avoid infringing the intellectual property rights of third parties, which may not be possible and could be costly and time-consuming if it is possible to do.
In the event of an adverse determination in an intellectual property suit or proceeding, or our failure to license essential technology, our sales could be harmed and/or our costs could increase, which would harm our financial condition.
We license intellectual property rights in the electronic monitoring space, including patents, from third party owners. If such owners do not properly maintain or enforce the intellectual property underlying such licenses, our competitive position and business prospects could be harmed. Our licensors may also seek to terminate our license.
We are a party to a number of licenses that give us rights to third-party intellectual property that is necessary or useful to our business. Our success will depend in part on the ability of our licensors to obtain, maintain and enforce our licensed intellectual property. Our licensors may not successfully prosecute any applications for or maintain intellectual property to which we have licenses, may determine not to pursue litigation against other companies that are infringing such intellectual property, or may pursue such litigation less aggressively than we would. Without protection for the intellectual property we license, other companies might be able to offer similar products for sale, which could adversely affect our competitive business position and harm our business prospects.
If we lose any of our rights to use third-party intellectual property, it could adversely affect our ability to commercialize our technologies, products or services, as well as harm our competitive business position and our business prospects.
We may be subject to costly product liability claims from the use of our electronic monitoring products, which could damage our reputation, impair the marketability of our products and services and force us to pay costs and damages that may not be covered by adequate insurance.
Manufacturing, marketing, selling, testing and the operation of our electronic monitoring products and services entail a risk of product liability. We could be subject to product liability claims to the extent our electronic monitoring products fail to perform as intended. Even unsuccessful claims against us could result in the expenditure of funds in litigation, the diversion of management time and resources, damage to our reputation and impairment in the marketability of our electronic monitoring products and services. While we maintain liability insurance, it is possible that a successful claim could be made against us, that the amount of our insurance coverage would not be adequate to cover the costs of defending against or paying such a claim, or that damages payable by us would harm our business.
Risks Related to Information Technology and Cybersecurity
The interruption, delay or failure of the provision of our services or information systems could adversely affect our business.
Certain segments of our business depend significantly on effective information systems. As with all companies that utilize information technology, we are vulnerable to negative impacts if information is inadvertently interrupted, delayed, compromised or lost. A significant disruption or failure of our information technology systems may have a significant impact on our operations, potentially resulting in service interruptions, security violations, regulatory compliance failures and other operational difficulties. We routinely process, store and transmit large amounts of data for our clients. We continually work to update and maintain effective information systems. Despite the security measures we have in place and any additional measures we may implement in the future, our facilities and systems, and those of our third-party service providers, could be vulnerable to security breaches, computer viruses, lost or misplaced data, programming errors, human errors, acts of vandalism, or other events. For example, we disclosed in November 2020 that we had begun the process of notifying current and former employees and would provide additional notifications as required by applicable state and federal law regarding a ransomware attack that impacted a portion of our information technology systems and a limited amount of data that contained personally identifiable information and protected health information. Any security breach or event resulting in the interruption, delay or failure of our services or information systems, or the misappropriation, loss, or other unauthorized disclosure of client data, employee and former employee data or confidential information, whether by us directly or our third-party service providers, could damage our reputation, expose us to the risks of litigation and liability, disrupt our business, result in lost business or otherwise adversely affect our results of operations.
The failure to comply with data privacy, security and exchange legal requirements could have a material adverse impact on our business, financial position, results of operations, cash flows and reputation.
We are subject to complex and evolving U.S. federal and state privacy laws and regulations, which sometimes conflict among the various jurisdictions where we do business. For example, we are subject to HIPAA, which requires us to protect the privacy and security of individually identifiable health information, known as “protected health information” and recognize individual rights related to understanding and controlling how health information is used or disclosed. Various states have passed laws pertaining to the processing of personal data that require companies, including us, to provide new disclosures and options to such persons about data collection, use and sharing practices. Some of these laws are already in effect, while others will go into effect during 2026 and 2027. HIPAA and state laws require us to report data breaches to affected individuals, government regulators, and in certain cases involving large breaches, the media. Further, the U.S. federal government and a significant number of additional states are considering expanding or passing privacy laws in the near term. We are also subject to increasing legal requirements with respect to the use of artificial intelligence and machine learning applications and tools (including in relation to hiring and employment practices) and biometric information. These legal requirements are rapidly changing and are subject to uncertain application, interpretation and enforcement standards. Our current or future use of artificial intelligence or machine learning tools in our business operations could expose us to new or additional costs and risks, including the potential introduction of new vulnerabilities or cybersecurity risks within our information technology systems and the potential inadvertent or unauthorized release of confidential or protected health information resulting from the use (whether or not authorized) of artificial intelligence or machine learning tools by our employees, contractors, agents, representatives or affiliates. In addition, the artificial intelligence tools we may incorporate into certain aspects of our operations may not generate the intended efficiencies and may impact our business results.
The increasingly complex, restrictive and rapidly evolving regulatory environment at the federal and state level related to data privacy and data protection, including with respect to protected health information and the use of artificial intelligence, may require significant continued effort and cost, changes to our business and data processing practices and impact our ability to obtain and use data. These laws provide for civil penalties for violations, and some confer a private right-of-action to certain individuals for data breaches. Federal and state regulatory bodies, including the Federal Trade Commission and the California Privacy Protection Agency are engaging in enforcement investigations and actions with respect to privacy and data protection. There is no assurance that our security controls, training of employees on data privacy and data security, and policies, procedures and practices will prevent the improper use or disclosure of personal data. Our inability to adapt or comply with such legal requirements, or the improper use or disclosure of personal data in violation of data privacy laws could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions, or result in private litigation against us, which could result in loss of revenue, increased costs, liability for monetary damages, fines and/or criminal prosecution, all of which could have a material adverse impact on our business, financial position, results of operations and cash flows.
Risks Related to Acquisitions and Dispositions
We may not be able to successfully identify or consummate acquisitions or dispositions.
We pursue select acquisitions that meet our criteria for growth and profitability when market opportunities arise. We pursue select dispositions of assets and businesses that meet our criteria for maximizing the realization of value for such assets or businesses and for
furthering our goal of deleveraging our balance sheet and reducing funded recourse debt. The pursuit of acquisitions or dispositions may pose certain risks to us. We may not be able to identify acquisition candidates that fit our criteria for growth and profitability. We may not be able to identify purchasers for the sale of any of our assets or businesses or we may not be able to obtain a purchase price for such assets or businesses that we feel is reflective of the quality of such assets or businesses. Even if we are able to identify such candidates or purchasers, we may not be able to acquire such targets or dispose of such assets or businesses on terms satisfactory to us. We will incur expenses and dedicate attention and resources associated with the review of acquisition or disposition opportunities, whether or not we consummate such acquisitions or dispositions.
Additionally, even if we are able to acquire suitable targets on agreeable terms, we may not be able to successfully integrate their operations with ours. Achieving the anticipated benefits of any acquisition will depend in significant part upon whether we integrate such acquired businesses in an efficient and effective manner. We may not be able to achieve the anticipated operating and cost synergies or long-term strategic benefits of our acquisitions within the anticipated timing or at all. For example, elimination of duplicative costs may not be fully achieved or may take longer than anticipated. For at least the first year after a substantial acquisition, and possibly longer, the benefits from the acquisition will be offset by the costs incurred in integrating the businesses and operations. We may also assume liabilities in connection with acquisitions that we would otherwise not be exposed to. An inability to realize the full extent of, or any of, the anticipated synergies or other benefits of an acquisition as well as any delays that may be encountered in the integration process, which may delay the timing of such synergies or other benefits, could have an adverse effect on our business and results of operations.
Additionally, even if we are able to dispose of any assets or businesses on agreeable terms, we may not achieve the anticipated benefits of such disposition within the contemplated timing or at all. A disposition of any assets or businesses may result in decreased earnings, revenue, or cash flow. We may also be subject to claims from the purchasers of such assets or businesses relating to liabilities or indemnification obligations in connection with such dispositions. An inability to realize the full extent of, or any of, the anticipated benefits of a disposition as well as any delays that may be encountered in the disposition process, could have an adverse effect on our business, results of operations and our ability to deleverage our balance sheet and reduce funded recourse debt.
As a result of our acquisitions, we have recorded and will continue to record a significant amount of goodwill and other intangible assets. In the future, our goodwill or other intangible assets may become impaired, which could result in material non-cash charges to our results of operations.
We have a substantial amount of goodwill and other intangible assets resulting from business acquisitions. As of December 31, 2025, we had $873.4 million of goodwill and other intangible assets. At least annually, or whenever events or changes in circumstances indicate a potential impairment in the carrying value (as defined by Generally Accepted Accounting Principles in the United States of America, or U.S. GAAP), we will evaluate this goodwill for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Estimated fair values could change and/or decline if there are changes in our capital structure, cost of debt, interest rates, capital expenditure levels, operating cash flows, market capitalization, and the political and regulatory environment. For example, our stock price has experienced volatility and periods of significant decline over the course of the last several years. A future decline or prolonged decline in the value of our stock price may result in material impairment charges. Impairments of goodwill or other intangible assets could require material non-cash charges to our results of operations.
Risks Related to Legal, Regulatory and Compliance Matters
Failure to comply with extensive government regulation and applicable contractual requirements could have a material adverse effect on our business, financial condition or results of operations.
The sector in which we operate is subject to extensive federal, state and local regulation, including educational, environmental, health care and safety laws, rules and regulations, which are administered by many regulatory authorities. Some of the regulations are unique to the sector, and the combination of regulations affects all areas of our operations. Corrections officers are customarily required to meet certain training standards, and, in some instances, facility personnel are required to be licensed and are subject to background investigations. Certain jurisdictions also require us to award subcontracts on a competitive basis or to subcontract with businesses owned by members of minority groups. We may not always successfully comply with these and other regulations to which we are subject and failure to comply can result in material penalties or the non-renewal or termination of facility management contracts. In addition, changes in existing regulations could require us to substantially modify the manner in which we conduct our business and, therefore, could have a material adverse effect on us.
In addition, public-private partnerships are increasingly subject to government legislation and regulation attempting to restrict the ability of private sector companies to operate facilities housing certain classifications of individuals, such as individuals from other
jurisdictions or individuals at higher security levels. Legislation has been enacted in several states and has previously been proposed in the United States House of Representatives, containing such restrictions.
Governmental agencies may investigate and audit our contracts and, if any improprieties are found, we may be required to refund amounts we have received, to forego anticipated revenues and we may be subject to penalties and sanctions, including prohibitions on our bidding in response to RFPs from governmental agencies to manage secure facilities. Governmental agencies we contract with have the authority to audit and investigate our contracts with them. As part of that process, governmental agencies may review our performance of the contract, our pricing practices, our cost structure and our compliance with applicable laws, regulations and standards. For contracts that actually or effectively provide for certain reimbursement of expenses, if an agency determines that we have improperly allocated costs to a specific contract, we may not be reimbursed for those costs, and we could be required to refund the amount of any such costs that have been reimbursed. If we are found to have engaged in improper or illegal activities, including under the United States False Claims Act, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeitures of profits, suspension of payments, fines and suspension or disqualification from doing business with certain governmental entities. An adverse determination in an action alleging improper or illegal activities by us could also adversely impact our ability to bid in response to RFPs in one or more jurisdictions.
In addition to compliance with applicable laws and regulations, our facility management contracts typically have numerous requirements addressing all aspects of our operations which we may not be able to satisfy. For example, our contracts require us to maintain certain levels of coverage for general liability, workers’ compensation, vehicle liability, and property loss or damage. If we do not maintain the required categories and levels of coverage, the contracting governmental agency may be permitted to terminate the contract. In addition, we are required under our contracts to indemnify the contracting governmental agency for all claims and costs arising out of our management of facilities and, in some instances, we are required to maintain performance bonds relating to the construction, development and operation of facilities. Facility management contracts also typically include reporting requirements, supervision and on-site monitoring by representatives of the contracting governmental agencies. Failure to properly adhere to the various terms of our customer contracts could expose us to liability for damages relating to any breaches as well as the loss of such contracts, which could materially adversely impact us.
Our business operations expose us to various liabilities for which we may not have adequate insurance and may have a material adverse effect on our business, financial condition or results of operations.
The nature of our services exposes us to various types of third-party allegations and legal claims, including, but not limited to, civil rights claims relating to conditions of confinement and/or mistreatment, sexual misconduct claims brought by individuals within our care, medical malpractice claims, claims relating to the federal Trafficking and Victims Protection Act, claims relating to our COVID-19 response procedures, breach of fiduciary duty claims, shareholder derivative claims, product liability claims, intellectual property infringement claims, claims relating to employment matters (including, but not limited to, employment discrimination claims, union grievances and wage and hour claims), property loss claims, environmental claims, automobile liability claims, contractual claims and claims for personal injury or other damages resulting from contact with our facilities, programs, electronic monitoring products, personnel or detainees, including damages arising from an inmate’s escape or from a disturbance or riot at a facility. In addition, our management contracts generally require us to indemnify the governmental agency against any damages to which the governmental agency may be subject in connection with such claims or litigation.
We maintain insurance coverage for these general types of claims, except for claims relating to employment matters, for which we carry no insurance. However, we generally have high deductible payment requirements on our primary insurance policies, including our general liability insurance, and there are also varying limits on the maximum amount of our overall coverage. As a result, the insurance we maintain to cover the various liabilities to which we are exposed may not be adequate. Any losses relating to matters for which we are either uninsured or for which we do not have adequate insurance could have a material adverse effect on our business, financial condition or results of operations. In addition, any losses relating to employment matters could have a material adverse effect on our business, financial condition or results of operations. To the extent the events serving as a basis for any potential claims are alleged or determined to constitute illegal or criminal activity, we could also be subject to criminal liability. Such liability could result in significant monetary fines and could affect our ability to bid on future contracts and/or retain our existing contracts.
During the fourth quarter of 2021, we received an unfavorable jury verdict and combined $23.2 million judgments in the retrial of two cases, State of Washington v. GEO Group and Nwauzor et al. v. GEO Group, in U.S. District Court for the Western District of Washington, which judgment amounts were subsequently increased by a further award against the Company of attorney’s fees, costs, and pre-judgment interest in the amount of $14.4 million. On January 16, 2025, the Ninth Circuit Court of Appeals issued an Opinion by a 2-1 vote affirming the lower court’s decision. That Opinion includes a 24-page dissenting opinion. On February 6, 2025, GEO timely filed its Petition for Rehearing En Banc. On August 13, 2025, the Ninth Circuit issued an order denying GEO’s Petition for Rehearing En Banc. That order included six dissenting opinions. On September 2, 2025, the Ninth Circuit granted GEO’s motion to stay the issuance of the Court’s mandate pending
GEO’s Petition for Writ of Certiorari to the Supreme Court. A final mandate has not been issued by the Ninth Circuit, and the appeal remains pending until resolution of GEO's Petition for Writ of Certiorari to the Supreme Court.
On January 9, 2026, GEO filed its Petition for Writ of Certiorari to the Supreme Court of the United States. Although the Company strongly disputes this claim and continues to vigorously defend itself, the Company accrued a reserve of approximately $37.6 million. If GEO were not to prevail in these cases, it could have an adverse effect on GEO's business and results of operations.
The results of these claims or proceedings, or other litigation matters, cannot be predicted with certainty, and an unfavorable resolution of one or more of these claims or proceedings could have a material adverse effect on the Company's financial condition, results of operations or cash flows. The Company's accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company does not accrue for anticipated legal fees and costs but expenses those items as incurred.
We may not be able to obtain or maintain the insurance levels required by our government contracts.
Our government contracts require us to obtain and maintain specified insurance levels. The occurrence of any events specific to our company or to our industry, or a general rise in insurance rates, could substantially increase our costs of obtaining or maintaining the levels of insurance required under our government contracts, or prevent us from obtaining or maintaining such insurance altogether. If we are unable to obtain or maintain the required insurance levels, our ability to win new government contracts, renew government contracts that have expired and retain existing government contracts could be significantly impaired, which could have a material adverse effect on our business, financial condition and/or results of operations.
Failure to comply with anti-bribery and anti-corruption laws could subject us to penalties and other adverse consequences.
As we operate both domestically and abroad, we are subject to the United States Foreign Corrupt Practices Act (“FCPA”), the U.K.
Bribery Act, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, and other anti-corruption and anti-bribery laws and regulations in the jurisdictions in which we do business, both domestic and abroad. These laws and regulations generally prohibit improper payments or offers of improper payments to government officials, political parties, or commercial partners for the purpose of obtaining or retaining business or securing an improper business advantage.
We have operations, deal with and enter into contracts with governmental or quasi-governmental entities in the United States and in
non-U.S. countries, including Australia, the U.K. and South Africa, and further expansion of our services abroad may involve additional regions. Corruption issues pose a risk in every country and jurisdiction, but in many countries, particularly in countries with developing economies, it may be more common for businesses to engage in practices that are prohibited by the FCPA or other applicable laws and regulations, and our activities in these countries pose a heightened risk of unauthorized payments or offers of payments by one of our employees or third-party business partners, representatives, and agents that could be in violation of various laws including the FCPA. The FCPA, U.K. Bribery Act and other applicable anti-bribery and anti-corruption laws also may hold us liable for acts of corruption and bribery committed by our third-party business partners, representatives, and agents. We and our third-party business partners, representatives, and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of our employees or such third parties even if we do not explicitly authorize such activities. The FCPA or other applicable laws and regulations also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions.
While we have implemented policies and procedures to address compliance with such laws, we cannot ensure that our employees or
other third parties working on our behalf will not engage in conduct in violation of our policies or applicable law for which we might ultimately be held responsible. Violations of the FCPA, the U.K. Bribery Act, and other laws may result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, as well as severe criminal or civil sanctions, including suspension or debarment from U.S. government contracting, and we may be subject to other liabilities and adverse effects on our reputation, which could negatively affect our business, results of operations, financial condition, and growth prospects. In addition, responding to any enforcement action may result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees. Our exposure for violating these laws increases as our non-U.S. presence expands and as we increase operations in foreign jurisdictions.
Risks Related to Corporate Social Responsibility
We are subject to risks related to corporate social responsibility.
The consideration of corporate social responsibility or ESG factors in making investment and voting decisions is relatively new, and frameworks and methods used by investors for assessing corporate social responsibility or ESG policies are not fully developed and vary considerably among the investment community. We have published reports and policies that relate to corporate social responsibility or ESG, including human rights, ESG, and our political and lobbying activities in the past and may continue to do so in the future.
These policies, practices and reports, whether it be the standards we set for ourselves or ESG criteria established by third parties, whether or not we meet such standards, and the level of disclosure we provide in our reports may influence our reputation. For example, the perception held by our governmental partners, vendors, suppliers, shareholders, other stakeholders, the communities in which we do business or the general public may depend, in part, on the standards we have chosen to aspire to meet, whether or not we meet these standards on a timely basis or at all, whether or not we meet external ESG factors they deem relevant and the level of disclosure we provide relating to human rights, ESG, and our political and lobbying activities. The subjective nature and wide variety of frameworks and methods used by various stakeholders, including investors, to assess a company with respect to ESG criteria can result in the application or perception of negative ESG factors or a misrepresentation of our corporate social responsibility or ESG policies and practices. Our failure to meet human rights or ESG criteria set by third parties, or provide the disclosure relating to human rights, ESG, political and lobbying activities which any third parties may believe is necessary or appropriate could adversely affect our business, financial condition and/or results of operations.
When we elect to publicly report on corporate social responsibility or ESG, our business may face increased scrutiny. As a result, our reputation could be adversely impacted if we fail to act responsibly in the areas in which we report. Any harm to our reputation resulting from setting these standards or our failure or perceived failure to meet such standards could impact: the willingness of our governmental partners, vendors and suppliers to do business with us or the quality of our relationships with our governmental partners, vendors and suppliers; our ability to access capital in the debt or equity markets; our investors willingness or ability to purchase or hold our securities; and employee retention and the quality of relations with our employees, any of which could adversely affect our business, financial condition and/or results of operations.
Certain states have proposed legislation to direct or prevent pension investments and financial institutions from basing their investment
decisions on ESG standards and ratings. To the extent that we are performing favorably measured against a pension investment's or financial institution's ESG standards and ratings, the enactment of such legislation could have an adverse effect on us and impact an investor's ability to purchase or hold our securities.
Risks Related to Our Common Stock
The market price of our common stock may vary substantially.
The market price of our common stock may vary substantially. Factors that could affect the market price of our common stock include the following:
•actual or anticipated variations in our quarterly results of operations;
•changes in market valuations of companies in our industry;
•announcements by us or our competitors of changes to capital allocation strategy, acquisitions, dispositions, investments or strategic alliances;
•changes in expectations of future financial performance or changes in estimates of securities analysts;
•fluctuations in stock market prices and volumes;
•issuances of common stock or other securities convertible into common stock in the future;
•the addition or departure of key personnel; and
•changes in the prospects of public-private partnerships.
Expectations about growth in the utilization of detention beds by the federal government may not be realized, which could negatively impact our stock price.
We currently expect demand from the federal government for our correctional and detention facilities to increase under the new presidential administration, particularly from ICE, as a result of anticipated changes in immigration policy and funding levels of our federal government partners charged with correctional and detention responsibilities. This anticipated increase in demand could result in higher utilization of our available capacity under existing contracts, as well as through new contracts utilizing our idle correctional and detention
facilities or our other existing capacity. However, we can provide no assurance that the federal government will increase the utilization of our available capacity. Further, the activation of our idle correctional and detention facilities generally requires four to six months to hire, train, and prepare our facilities to accept residential populations, which could result in substantial expenses before we are able to realize additional revenue. If the demand from the federal government for our correctional and detention facilities is not realized or does not increase to levels generally expected in the marketplace, our stock price could decline.
Future sales or issuances of shares of our common stock could adversely affect the market price of our common stock and may be dilutive to current shareholders.
Sales or issuances of shares of our common stock, or the perception that such sales or issuances could occur, could adversely affect the price for our common stock. As of December 31, 2025, there were 225,000,000 shares of common stock authorized under our Articles of Incorporation, of which 136,242,983 shares were outstanding. Our Board of Directors may authorize the issuance of additional authorized but unissued shares of our common stock or other authorized but unissued securities of ours at any time, including pursuant to our equity incentive plan and our employee stock purchase plan.
On October 30, 2023, the Company filed an automatic shelf registration statement on Form S-3ASR with the SEC that enables the Company to offer for sale, from time to time and as the capital markets permit, an unspecified amount of common stock, preferred stock, debt securities, guarantees of debt securities, warrants and units. Each time the Company offers to sell securities under the registration statement, the Company will provide a prospectus supplement that will contain specific information about the terms of that offering and the securities being offered. The shelf registration statement became automatically effective upon filing and is valid for three years.
We are not restricted from issuing additional shares of our common stock or other instruments exchangeable or convertible into our common stock. We cannot predict the size of future issuances or the effect, if any, that they may have on the market price for our common stock. If we issue more of our common stock or additional instruments exchangeable or convertible into or exercisable for our common stock, it may materially and adversely affect the price of our common stock. An offering or issuance of shares of our common stock may have a dilutive effect on our earnings per share and funds from operations per share after giving effect to the issuance of such shares of common stock and the receipt of the expected net proceeds. The actual amount of dilution from any offering of our equity securities cannot be determined at this time. The market price of our common stock or other such instruments could decline as a result of sales of a large number of shares of our common stock in the market pursuant to an offering, or otherwise, or as a result of the perception or expectation that such sales or issuances could occur.
Various anti-takeover protections applicable to us may make an acquisition of us more difficult and reduce the market value of our common stock.
We are a Florida corporation and the anti-takeover provisions of Florida law impose various impediments to the ability of a third party to acquire control of our company, even if a change of control would be beneficial to our shareholders. In addition, provisions of our articles of incorporation may make an acquisition of our company more difficult. Our articles of incorporation authorize the issuance by our Board of Directors of “blank check” preferred stock without shareholder approval. Such shares of preferred stock could be given voting rights, dividend rights, liquidation rights or other similar rights superior to those of our common stock, making a takeover of our company more difficult and expensive. In addition to discouraging takeovers, the anti-takeover provisions of Florida law and our articles of incorporation may have the impact of reducing the market value of our common stock.
Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have an adverse effect on our business and the trading price of our common stock.
If we fail to maintain the adequacy of our internal controls, in accordance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as such standards are modified, supplemented or amended from time to time, our exposure to fraud and errors in accounting and financial reporting could materially increase. Also, inadequate internal controls would likely prevent us from concluding on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Such failure to achieve and maintain effective internal controls could adversely impact our business and the price of our common stock.
We may issue additional debt securities that could limit our operating flexibility and negatively affect the value of our common stock.
In the future, we may issue additional debt securities which may be governed by an indenture or other instrument containing covenants that could place restrictions on the operation of our business and the execution of our business strategy in addition to the restrictions on our business already contained in the agreements governing our existing debt. In addition, we may choose to issue additional debt that is
convertible or exchangeable for other securities, including our common stock, or that has rights, preferences and privileges senior to our common stock. Because any decision to issue debt securities will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any future debt financings and we may be required to accept unfavorable terms for any such financings. Accordingly, any future issuance of debt could dilute the interest of holders of our common stock and reduce the value of our common stock.
The Company could be negatively affected as a result of the actions of activist or hostile shareholders.
Shareholder activism, which could take many forms and arise in a variety of situations, has experienced an increase in prior years among publicly traded companies. Shareholder activism, including potential proxy contests, requires significant time and attention by management and the Board of Directors, potentially hindering the Company’s ability to execute its strategic plan and negatively affecting the trading value of our common stock. Additionally, shareholder activism could give rise to perceived uncertainties as to the Company’s future direction, adversely affect its relationships with key executives, customers and other business partners, or make it more difficult to attract and retain qualified personnel. Also, the Company may in the future be required to incur significant legal fees and other expenses related to activist shareholder matters. Any of these impacts could materially and adversely affect the Company and operating results.
A “short squeeze” due to a sudden increase in demand for shares of our common stock that largely exceeds supply has led to, and may continue to lead to, extreme price volatility in shares of our common stock.
Investors may purchase shares of our common stock to hedge existing exposure or to speculate on the price of our common stock. Speculation on the price of our common stock may involve long and short exposures. To the extent aggregate short exposure exceeds the number of shares of our common stock available for purchase on the open market, investors with short exposure may have to pay a premium to repurchase shares of our common stock for delivery to lenders of our common stock. Those repurchases may in turn, dramatically increase the price of shares of our common stock until additional shares of our common stock are available for trading or borrowing. This is often referred to as a “short squeeze.” A large proportion of our common stock has been in the past and may continue to be traded by short sellers which may increase the likelihood that our common stock will be the target of a short squeeze. A short squeeze has led and could continue to lead to volatile price movements in shares of our common stock that are unrelated or disproportionate to our operating performance or prospects and, once investors purchase the shares of our common stock necessary to cover their short positions, the price of our common stock may rapidly decline. Investors that purchase shares of our common stock during a short squeeze may lose a significant portion of their investment.
None.
Item 1C. Cybersecurity
As a government contractor, GEO routinely processes, stores, and transmits large amounts of “Personally Identifiable Information”. As such, we understand the criticalness of having a robust cybersecurity program that protects company assets as well as our clients’ data. Our customers, suppliers, service providers, subcontractors, and joint venture partners face similar cybersecurity threats, and a cybersecurity incident impacting us or any of these entities could materially adversely affect our operations, performance, and results of operations.
The Board, through its Cybersecurity and Environmental Oversight Committee, oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives. Senior leadership, including our Chief Information Security Officer (CISO), quarterly or as needed briefs the Board of Directors on our cybersecurity and information security posture, and the Board of Directors is apprised of cybersecurity incidents deemed to have a moderate or higher business impact, even if immaterial to us.
Our corporate information security organization, led by our CISO, is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response. Our current CISO has extensive information technology and program management experience and has served many years in our corporate information security organization. In addition, our CISO has a certificate in Cybersecurity Oversight from the Carnegie Mellon University Software Engineering Institute. The corporate information security organization oversees, manages, and continually enhances a robust enterprise security structure with the goal of preventing cybersecurity incidents to the extent feasible, while simultaneously increasing our system resilience to minimize the business impact should an incident occur. Employees outside of our corporate information security organization also have a role in our cybersecurity defenses and they are immersed in a corporate culture that supports information security, which we believe improves our cybersecurity.
The corporate information security organization has implemented a governance structure and processes to assess, identify, manage, and report cybersecurity risks. The underlying controls of the cyber risk management program are based on recognized best practices and standards for cybersecurity and information technology, including the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework
(“CSF”) and the Center for Internet Security controls. In addition, GEO has robust policies and procedures related to cybersecurity and general IT practices that include but are not limited to encryption standards, antivirus protection, remote access, multifactor authentication, confidential information and the use of the internet, social media, email, and wireless devices. These policies go through an internal review process and are approved by appropriate members of management.
Assessing, identifying, and managing cybersecurity related risks are integrated into our overall enterprise risk management (ERM) process. These initiatives are supported by a Managed Security Service Provider ("MSSP") that provides continuous intelligence and threat assessments, including such risks from cybersecurity threats associated with our use of any third-party service provider. Also, as part of the program, GEO engages third party cybersecurity organizations to perform bi-annual assessments of the environment. Identified cybersecurity related risks are included in the risk universe that the ERM function evaluates to assess top risks to the enterprise on an annual basis. To the extent the ERM process identifies a heightened cybersecurity related risk, risk owners are assigned to develop risk mitigation plans, which are then tracked to completion. The ERM process’s annual risk assessment is presented to the Board.
Notwithstanding the extensive approach we take to prevent cybersecurity breaches, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse financial impact to our business. While GEO maintains cybersecurity insurance, the costs related to cybersecurity threats or disruptions may not be fully insured. See Item 1A. “Risk Factors” for a discussion of cybersecurity risks. There have been no risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect GEO, including its business strategy, results of operations, or financial condition.
Item 2. Properties
The Company owns and leases its corporate offices, which are both located in Boca Raton, Florida. The Company purchased land in Boca Raton, Florida to construct a new corporate office building which was completed in the first quarter of 2019. The Company's lease on its additional corporate office space expires in December 2028 and has two 5-year renewal options which if exercised will result in a maximum term ending in December 2038. In addition, we lease office space for our eastern regional office in Charlotte, North Carolina; our central regional office in San Antonio, Texas; and our western regional office in Los Angeles, California. We are also currently leasing office space in Boulder, Colorado and Aurora, Illinois in connection with our BI subsidiary. We also lease office space in Sydney and Melbourne, Australia, and in Sandton, South Africa, through our overseas affiliates to support our Australian, and South African operations, respectively. We consider our office space adequate for our current operations.
See the Facilities and Day Reporting Centers listed under Item 1 for a list of the correctional, detention and reentry properties we own or lease in connection with our operations and specifically our U.S. Secure Services segment, our Reentry Services segment and our International Services segment.
Item 3. Legal Proceedings
Immigration Detainee Litigation
Civil immigration detainees at the Aurora ICE Processing Center filed a class action lawsuit on October 22, 2014, against the Company in the U.S. District Court for the District of Colorado. The complaint alleges that the Company was in violation of the Colorado Minimum Wage Act ("CMWA") and the Federal Trafficking Victims Protection Act (“TVPA”). The complaint also claims that the Company was unjustly enriched based on the level of payment the detainees received for work performed in a Voluntary Work Program ("VWP") the Company is required to implement at the facility under the terms of its contract with the federal government. On July 6, 2015, the court found that detainees were not employees under the CMWA and dismissed this claim. On February 27, 2017, the court granted the plaintiffs' motion for class certification on the TVPA and unjust enrichment claims. The plaintiffs' class seeks actual damages, compensatory damages, exemplary damages, punitive damages, restitution, attorneys’ fees and costs, and such other relief as the court may deem proper. On October 18, 2022, the court issued an order granting plaintiffs’ motion for summary judgment on the Company’s affirmative defenses, denying the Company’s motion for summary judgment, motion to dismiss, and motion for decertification of the class, narrowing the class period for plaintiffs’ TVPA claims, and otherwise ruling against the Company’s motions for relief. All trial dates were stayed by court order pending appeal of certain of GEO's defenses to the Tenth Circuit Court of Appeals. Oral argument before the Tenth Circuit was held on September 18, 2023. On October 22, 2024, the Tenth Circuit issued an Order finding appellate review of GEO’s claim of immunity was premature and, therefore, the Tenth Circuit was currently without jurisdiction to consider the merits of GEO’s claimed immunity. On January 13, 2025, GEO filed a Petition for Writ of Certiorari with the United States Supreme Court seeking review of the Tenth Circuit's decision. On June 2, 2025, the United States Supreme Court granted GEO’s Petition for Writ of Certiorari. Oral argument before the Supreme Court was held on November 10, 2025. On February 25, 2026, the Supreme Court issued a decision affirming the decision of the Tenth Circuit and finding that there is no immediate right to appellate review of a ruling on GEO’s Yearsley defense. The Supreme Court further stated that the holding still allows immediate appellate review of a ruling on a Yearsley defense via a separate appellate certification process.
The first of two State of Washington lawsuits, Nwauzor v. GEO Group, was filed on September 26, 2017, by immigration detainees against the Company in the U.S. District Court for the Western District of Washington. The second lawsuit was filed on September 20, 2017, by the State Attorney General against the Company in the Superior Court of the State of Washington for Pierce County, which the Company removed to the U.S. District Court for the Western District of Washington on October 9, 2017. The plaintiffs claimed that State of Washington minimum wage laws should be enforced with respect to detainees who volunteer to participate in a VWP administered by GEO at the Northwest ICE Processing Center (the "Center") as required by the U.S. Department of Homeland Security under the terms of GEO’s contract. The Center houses people in the custody of federal immigration authorities while the federal government is determining their immigration status. In October 2021, an unfavorable jury verdict and court judgment resulting in a combined $23.2 million judgment entered against the Company in the retrial of the two cases, which judgment amounts were subsequently increased by a further award against the Company of attorney’s fees, costs, and pre-judgment interest in the amount of $14.4 million. Post-judgment interest is accruing on these judgments in accordance with Washington law. The trial court waived the necessity to post a supersedeas bond for the combined judgments and has stayed enforcement of the verdict and judgments while GEO’s appeal to the U.S. Court of Appeals for the Ninth Circuit is pending. Oral argument before the Ninth Circuit was held on October 6, 2022.
On March 7, 2023, the Ninth Circuit certified certain state law questions to the Washington Supreme Court. Oral argument before the Washington Supreme Court was held on October 17, 2023. On December 21, 2023, the Washington Supreme Court issued an opinion answering the questions certified by the Ninth Circuit. Under the Ninth Circuit’s March 7, 2023, order certifying the above questions to the Washington Supreme Court, the Ninth Circuit resumed control and jurisdiction over the State of Washington lawsuits. On February 21, 2024, the United States Department of Justice filed its Brief for the United States as Amicus Curiae in Support of GEO, arguing that the State of Washington judgments should be reversed because the Supremacy Clause precludes application of the Washington Minimum Wage Statute to work programs for federal detainees. In its Brief, the Department of Justice asserted that application of the Washington law independently contravened intergovernmental immunity because it would make federal detainees subject to provisions that do not apply, and never have applied, to persons in state custody, singling out a contractor with the federal government for obligations Washington does not itself bear. The Department of Justice also contended that the immigration statutory structure approved by Congress does not contemplate a role for states or state law in governing the VWP for federal detainees. On January 16, 2025, the Ninth Circuit issued an Opinion by a 2-1 vote affirming the lower court’s decision. That Opinion includes a 24-page dissenting opinion.
On February 6, 2025, GEO timely filed its Petition for Rehearing En Banc. On March 20, 2025, the United States filed an Amicus Brief with the Ninth Circuit in which it argued that the January 16, 2025 decision of the Ninth Circuit is incorrect in multiple respects, runs contrary to Circuit precedent, and creates significant tension with the case law of other circuits. The United States argued that the application of the state minimum-wage law to federal immigration detainees in the voluntary work program is preempted by a federal appropriation statute that sets the minimum allowance for detainee participants at $1 per day. Additionally, the United States argued that the application of the state minimum-wage law to federal immigration detainees likewise impermissibly discriminates against the federal government in violation of intergovernmental-immunity principles.
On August 13, 2025, the Ninth Circuit issued an order denying GEO’s Petition for Rehearing En Banc. That order included six dissenting opinions. On September 2, 2025, the Ninth Circuit granted GEO’s motion to stay the issuance of the Court’s mandate pending GEO’s Petition for Writ of Certiorari to the Supreme Court.
A final mandate has not been issued by the Ninth Circuit, and the appeal remains pending until resolution of GEO's Petition for Writ of Certiorari to the Supreme Court. On January 9, 2026, GEO filed its Petition for Writ of Certiorari to the Supreme Court. Although the Company strongly disputes this claim and continues to vigorously defend itself, the Company accrued a reserve of approximately $37.6 million, which is included in Other Non-Current Liabilities in the accompanying consolidated balance sheets, in accordance with Accounting Standards Codification No. 450 - Contingencies during the third quarter of 2025.
In California, a class action lawsuit was filed on December 19, 2017, by immigration detainees against the Company in the U.S. District Court, Eastern Division of the Central District of California. The California lawsuit alleges violations of the state’s minimum wage laws, violations of the TVPA and California's equivalent state statute, unjust enrichment, unfair competition and retaliation. The California court has certified a class of individuals who have been civilly detained at the Company's Adelanto Facility from December 19, 2014, until the date of final judgment. On March 31, 2022, the court entered a stay until the Ninth Circuit rules on the State of Washington lawsuits, which is stayed pending resolution of GEO’s Petition in Nwauzor v. GEO Group for Writ of Certiorari to the United States Supreme Court.
Current and former detainees of the Mesa Verde ICE Processing Center and the Golden State Annex ICE Processing Center filed a class action lawsuit on July 13, 2022, against the Company in the U.S. District Court for the Eastern District of California, Fresno Division. The complaint alleges that federal detainees who volunteer to participate in the VWP at GEO’s Mesa Verde and Golden State Annex ICE facilities are employees of GEO and entitled to the state’s minimum wage. Plaintiffs also make claims for unfair competition, unjust
enrichment, human trafficking, forced labor, California's Private Attorneys General Act, and retaliation. GEO filed both a motion to stay the action pending the Ninth Circuit's decision in the State of Washington lawsuits and a motion to dismiss the action in its entirety. On July 10, 2023, the court entered a stay until the Ninth Circuit rules on the State of Washington lawsuits. On February 10, 2025, the Court denied plaintiffs’ request to lift the stay until the Ninth Circuit rules on GEO’s Petition for Rehearing En Banc, which is stayed pending resolution of GEO’s Petition in Nwauzor v. GEO Group for Writ of Certiorari to the United States Supreme Court.
GEO believes it operates the VWP in full compliance with its contract with ICE and all applicable laws, regulations, and standards. GEO strongly disputes the claims made in these lawsuits and intends to take all necessary steps to vigorously defend itself from these lawsuits. GEO has not recorded any accruals relating to these lawsuits, other than in connection with the Nwauzor case discussed above, at this time as losses are not considered probable nor reasonably estimable. If GEO were not to prevail in these cases, it could have an adverse effect on GEO's business and results of operations.
Challenges to State Legislation that Conflict with Federal Contracts
On July 13, 2023, the Company filed a lawsuit in the U.S. District Court for the Western District of Washington against the State of Washington for declaratory and injunctive relief challenging the State of Washington’s newly enacted law – House Bill 1470. House Bill 1470 purports to empower state agencies with new rule making, inspection, investigation, and testing powers over the Northwest ICE Processing Center. House Bill 1470 also creates a statutory regime of civil penalties applicable to private detention facilities for violations of House Bill 1470 detention standards, and purports to create a private right of action for detainees aggrieved by violations of the statute. On March 8, 2024, the U.S. District Court for the Western District of Washington entered an order preliminarily enjoining the enforcement of House Bill 1470 against GEO as the operator of the Northwest ICE Processing Center. On April 29, 2024, the State of Washington filed a Notice of Appeal of the order preliminarily enjoining the enforcement of House Bill 1470. On February 14, 2025, the U.S. Court of Appeals for the Ninth Circuit heard arguments on the State of Washington’s appeal. On May 23, 2025, GEO filed a motion to dismiss the appeal as moot based on a newly enacted statute that amended portions of HB 1470. On August 18, 2025, the Ninth Circuit denied GEO’s motion to dismiss the appeal, vacated the District Court’s grant of a preliminary injunction, and remanded the case to the District Court for further proceedings. On September 16, 2025, GEO filed a Petition for Rehearing En Banc. On February 11, 2026, the Ninth Circuit denied GEO’s Petition for Rehearing En Banc, with eight justices of the Ninth Circuit joining a harshly worded dissent from that decision. On February 16, 2026, GEO filed a Rule 41 motion with the Ninth Circuit seeking a stay of the mandate pending GEO’s Petition for Writ of Certiorari to the Supreme Court of the United States.
On April 15, 2024, the Company filed a lawsuit in the U.S. District Court for the District of New Jersey against the State of New Jersey for declaratory and injunctive relief challenging the State of New Jersey’s Assembly Bill 5207 – that purports to prohibit the operation of "private detention facilities" in the state, which would prevent the United States from using privately contracted detention facilities to house detainees in the custody of ICE. On April 25, 2024, the U.S. District Court for the District of New Jersey entered an order preliminarily enjoining the State of New Jersey from enforcing Assembly Bill 5207 against a private detention facility-including any owned by Plaintiff GEO until a further Order of the Court. On July 22, 2025, the Third Circuit Court of Appeals affirmed a U.S. District Court for the District of New Jersey decision in a similar case finding Assembly Bill 5207 unconstitutional. On August 22, 2025, the District Court entered an order permanently enjoining the Defendants from enforcing Assembly Bill 5207 against GEO with respect to GEO negotiating or contracting with the United States government to operate immigration detention facilities in New Jersey.
On October 22, 2024, the Company filed a lawsuit in the U.S. District Court for the Eastern District of California against the State of California and the Kern County Public Health Department for declaratory and injunctive relief challenging the State of California’s newly enacted law – Senate Bill 1132. Senate Bill 1132 purports to empower state agencies with new inspection and investigation powers over GEO’s California facilities providing contracted services to ICE. Senate Bill 1132 also purports to impose standards prescribed by the Board of State and Community Corrections on GEO’s provision of contracted services to ICE in California. The State of California and Kern County filed a motion to dismiss on December 20, 2024. The U.S. District Court heard arguments on GEO’s motion for declaratory and injunctive relief and the defendants’ motion to dismiss on March 3, 2025. On May 5, 2025, the U.S. District Court for the Eastern District of California entered an order finding Senate Bill 1132 does not impose any standards on GEO’s provision of contracted services to ICE and dismissing GEO’s suit with leave to amend.
Other Litigation
The nature of the Company's business also exposes it to various other legal claims or litigation, including, but not limited to, civil rights claims relating to conditions of confinement and/or mistreatment, sexual misconduct claims brought by individuals in its care, medical malpractice claims, claims related to deaths in custody, product liability claims, intellectual property infringement claims, claims relating to employment matters (including, but not limited to, employment discrimination claims, union grievances and wage and hour claims), property
loss claims, environmental claims, automobile liability claims, indemnification claims by its customers and other third-parties, contractual claims and claims for personal injury or other damages resulting from contact with the Company's facilities, programs, electronic monitoring products, personnel or detainees, including damages arising from the escape of an individual in its care or from a disturbance or riot at a facility. Legal proceedings with respect to our facilities are unpredictable and, where material, can cause adverse effects, such as prompting modification or even termination of the underlying facility management contracts.
Other Assessment
A New Mexico non-income tax audit completed in 2016 included tax periods for which the state tax authority had previously processed a substantial tax refund. At the completion of the audit fieldwork, the Company received a notice of audit findings disallowing deductions that were previously claimed by the Company that was approved by the state tax authority and served as the basis for the approved refund claim. In early January 2017, the Company received a formal Notice of Assessment of Taxes and Demand for Payment from the taxing authority disallowing the deductions. The Company appealed the administrative ruling. In February 2024, the Company received notice that the New Mexico Court of Appeals had ruled against its appeal. The Company appealed this ruling to the New Mexico Supreme Court by timely filing a Petition for Writ of Certiorari on April 19, 2024. On July 8, 2024, the New Mexico Supreme Court denied the Company's Petition for Writ of Certiorari. The Company had established an estimated liability (inclusive of both the audit period and the post-audit period) based on its estimate of the most probable loss based on the facts and circumstances known and the advice of outside counsel in connection with this matter. In July 2024, the Company made a payment of approximately $18.9 million towards the estimated liability related to the assessment for the audited period. Following the submission of an application in September 2024, the Company was accepted to participate in the State's managed audit program and entered into a Managed Audit Agreement (the "Agreement") with the New Mexico Taxation and Revenue Department for the post-audit period. The Agreement provides for a waiver of penalties and interest and as such, the Company recorded a favorable adjustment for penalties and interest related to the post-audit period of approximately $6.3 million in the third quarter of 2024. The managed audit is ongoing at this time.
Accruals for Legal Proceedings
The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred, and the amount of the loss can be reasonably estimated. However, the results of these claims or proceedings cannot be predicted with certainty, and an unfavorable resolution of one or more of these claims or proceedings could have a material adverse effect on the Company's financial condition, results of operations or cash flows, including the modification or loss of one or more facility management contracts, or could result in a material impairment of the Company’s assets. The Company's accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. The Company generally does not accrue for anticipated legal fees and costs but expenses those items as incurred.
Item 4. Mine Safety Disclosures
Not applicable.
