PresentationErin Wilson WrightEquity Analyst Hi. Good afternoon, everyone. I'm Erin Wright, the health care services analyst at Morgan Stanley, and we're happy to have with us BrightSpring Health Services with us -- today. To get started, for more important disclosures, please see the Morgan Stanley website at morganstanley.com/researchdisclosures. And if you do have any questions, please reach out to your Morgan Stanley sales representative. And with that, I'm happy to have BrightSpring's CEO and CFO with ...

BrightSpring Health Services (NasdaqGS:BTSG) FY Conference September 09, 2025 02:35 PM ET Company ParticipantsJennifer Phipps - EVP & CFOJon Rousseau - Chairman, President & CEOConference Call ParticipantsErin Wright - Senior Equity Research Analyst - HealthcareErin WrightHi, good afternoon, everyone. I'm Erin Wright, the Healthcare Services Analyst at Morgan Stanley. We're happy to have with us BrightSpring Health Services today. To get started, for more important disclosures, please see the Morgan Stanley ...

BrightSpring Health Services, Inc. (BTSG) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). This rating change essentially reflects an upward trend in earnings estimates - - one of the most powerful forces impacting stock prices. The change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock. That's partly because of the influence of insti ...

Core Insights - BrightSpring Health Services reported strong Q2 2025 results with GAAP revenue of $3,148 million, exceeding analyst estimates of $2,989.69 million, and adjusted EPS of $0.22, surpassing the estimate of $0.19, marking a 266.7% increase year-over-year [1][2][5] Financial Performance - Revenue grew 29.1% year-over-year, driven primarily by the Pharmacy Solutions segment, which reported revenue of $2,790 million, up 32% [5][6] - Adjusted EBITDA rose 28.8% to $143 million, reflecting effective cost management despite slower gross profit growth of 20.2% [6][7] - Net income from continuing operations remained flat at $8.5 million, indicating ongoing cost pressures, with significant non-cash items impacting profitability [7] Business Strategy - BrightSpring focuses on integrated pharmacy and home-based clinical care, serving over 450,000 patients and filling more than 41 million prescriptions in 2024 [3][4] - The company emphasizes operational excellence, patient satisfaction, and regulatory compliance as critical success factors [4] Service Offerings - Pharmacy Solutions is the largest service line, including specialty pharmacy products and home infusion therapies, with a 32% growth in specialty script volume [10] - Provider Services, which includes home health care and rehabilitation, also saw positive revenue growth and maintained high patient satisfaction [11] Regulatory Environment - The company is monitoring regulatory risks related to drug pricing and reimbursement rates, preparing for potential changes in 2026 [13] Outlook and Guidance - Management raised full-year 2025 revenue guidance to $12,200 million to $12,600 million and adjusted EBITDA guidance to $590–$605 million, attributing increases to strong pharmacy volume and operational gains [14]

Financial Data and Key Metrics Changes - BrightSpring's total revenue for Q2 2025 was $3,100,000,000, representing a 29% year-over-year growth, while adjusted EBITDA grew by 29% to $143,000,000 [9][30] - The EBITDA margin remained flat at 4.5% compared to the same quarter last year [9] - The company has increased its 2025 revenue and adjusted EBITDA guidance by $20,000,000, with adjusted EBITDA now expected to be between $590,000,000 and $605,000,000 [10][34] Business Line Data and Key Metrics Changes - Pharmacy Solutions revenue grew by 32% year-over-year to $2,800,000,000, with adjusted EBITDA also increasing by 32% [27][31] - Provider Services revenue was $358,000,000, reflecting an 11% growth year-over-year, with home health care revenue growing by 17% [30][16] - Specialty and Infusion business revenue grew by 39% year-over-year, driven by strong service levels and patient satisfaction [14][27] Market Data and Key Metrics Changes - The average daily census in home health care grew by 6% year-over-year, with home health and hospice census growth of 10% [17] - The company reported a 99% patient satisfaction score in rehab care and a 98% timely initiation of care in home health [12][17] - The company has a leading 98% dispense accuracy in home and community pharmacy services [12] Company Strategy and Development Direction - BrightSpring is focused on disciplined growth, leveraging its scale and best practices while investing in areas that enhance operational efficiencies [8][11] - The company aims to continue expanding its specialty pharmacy services, particularly in rare and complex disease therapies, with expectations of 16 to 18 additional launches over the next 12 to 18 months [14][78] - The divestiture of the Community Living business is expected to close in Q4 2025, which will allow the company to focus on its core operations [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth across all segments, particularly in infusion and home health services, driven by operational efficiencies and favorable market conditions [51][52] - The company anticipates that home health rates will improve in the future, despite current challenges [23][63] - Management highlighted the importance of maintaining high-quality care and patient satisfaction as key drivers of growth [11][19] Other Important Information - The company reported a net debt of approximately $2,500,000,000 with a leverage ratio of 3.6 times, aiming to reduce this to 2.0 to 2.5 times in the long term [32][57] - BrightSpring's operational cash flow is expected to exceed $300,000,000 in 2025, providing flexibility for future growth initiatives [32][56] Q&A Session Summary Question: Can you discuss the infusion performance in the quarter? - Management noted that the infusion business had its best quarter in a long time, with expectations for continued growth driven by new leadership and operational improvements [39][40] Question: What factors contributed to the increase in full-year guidance? - Management indicated that higher margins and continued momentum across the company, particularly in the provider segment, contributed to the raised guidance [50][51] Question: Can you provide insights on the growth in the home health business? - Management stated that the home health business is growing steadily, with expectations for improved rates in the future, despite current challenges [63][62] Question: How sustainable is the growth in specialty pharmacy? - Management expressed confidence in the sustainability of growth in specialty pharmacy, driven by strong service levels and ongoing investments [70][71] Question: What is the outlook for M&A activity? - Management indicated a focus on small tuck-in acquisitions while awaiting the outcomes of larger divestitures, maintaining a strong cash position for future opportunities [56][57]

Financial Data and Key Metrics Changes - BrightSpring's total revenue for Q2 2025 was $3,100,000,000, representing a 29% year-over-year growth [7][26] - Adjusted EBITDA for the quarter was $143,000,000, also reflecting a 29% increase compared to the same period last year [8][29] - The EBITDA margin remained flat at 4.5% compared to Q2 2024 [8][30] - The company has increased its 2025 revenue guidance to a range of $12,200,000,000 to $12,600,000, indicating a growth of 21.1% to 25.1% over 2024 [33] Business Line Data and Key Metrics Changes - Pharmacy Solutions revenue grew 32% year-over-year to $2,800,000,000, with adjusted EBITDA also increasing by 32% [7][12] - Provider Services revenue was $358,000,000, marking an 11% growth year-over-year, with home health care revenue growing 17% [28][15] - Specialty and Infusion business revenue grew 39% year-over-year, driven by strong service levels and patient satisfaction [13][14] Market Data and Key Metrics Changes - The average daily census in home health care grew 6% year-over-year to over 30,000, with hospice census growth of 10% [16] - Specialty scripts grew 38% in Q2, supported by both brand and generic drug growth [12][13] - The company reported a 99.99% dispense accuracy in home and community pharmacy services [11] Company Strategy and Development Direction - BrightSpring is focused on disciplined growth, leveraging scale and best practices while investing in areas that enhance care services [6][10] - The company aims to improve operational efficiencies and patient outcomes through continuous improvement initiatives [10][24] - BrightSpring is committed to maintaining high-quality services and expanding its market presence in home health, hospice, and specialty pharmacy [10][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth in the second half of 2025, driven by strong performance across all business segments [50][51] - The company anticipates favorable rate developments in hospice and home health services, which could enhance revenue [51][62] - Management highlighted the importance of ongoing investments in technology and operational improvements to sustain growth [50][52] Other Important Information - The Community Living divestiture is expected to close in Q4 2025, which will impact future financial reporting [6][9] - The company has a strong cash flow outlook, expecting to deliver over $300,000,000 in annual operating cash flow in 2025 [31] - BrightSpring's net debt outstanding was approximately $2,500,000,000, with a leverage ratio of 3.6 times [31] Q&A Session Summary Question: Can you discuss the infusion performance in the quarter and expectations for growth? - Management noted that the infusion business had its best quarter in a long time, with expectations for continued growth driven by new leadership and operational efficiencies [35][38] Question: What factors contributed to the increase in full-year guidance? - Management indicated that continued momentum across the company, particularly in the provider segment, and structural factors like the number of operational days contributed to the raised guidance [47][49] Question: Can you provide insights on the growth in the home health business? - Management stated that the home health rule would not have a material impact on the business, and they expect future rate support to improve as they grow into the market [59][62] Question: How sustainable is the growth in specialty pharmacy? - Management expressed confidence in the sustainability of growth in specialty pharmacy, attributing it to strong service levels and ongoing investments [66][69] Question: What is the outlook for generics and their impact on revenue growth? - Management highlighted the importance of driving generic utilization and the investments made in clinical liaison teams to support this growth [85][88]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited condensed consolidated financial statements for Q2 2025 are presented, with Community Living reclassified as discontinued operations Condensed Consolidated Balance Sheet Highlights (as of June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | **Total Current Assets** | $2,647.96 | | **Total Assets** | $5,943.60 | | **Total Current Liabilities** | $1,505.37 | | **Total Liabilities** | $4,198.17 | | **Total Shareholders' Equity** | $1,742.89 | Condensed Consolidated Statement of Operations Highlights (Three Months Ended June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | **Total Revenues** | $3,147.70 | | **Gross Profit** | $374.85 | | **Operating Income** | $48.56 | | **Net Income** | $27.54 | | **Diluted EPS** | $0.13 | Condensed Consolidated Statement of Cash Flows Highlights (Six Months Ended June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | **Net cash provided by operating activities** | $150.67 | | **Net cash used in investing activities** | $(47.43) | | **Net cash used in financing activities** | $(94.26) | - The **Community Living business** has been classified as **discontinued operations** and **held for sale** as of the first quarter of 2025, following a definitive sale agreement, with historical financial data recast to reflect this change[44](index=44&type=chunk)[52](index=52&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2025 financial performance, highlighting 29.1% Q2 revenue growth and a 28.8% Adjusted EBITDA increase [Overview and Key Highlights](index=27&type=section&id=Overview%20and%20Key%20Highlights) BrightSpring plans to divest its Community Living business for $835 million to streamline focus and is no longer a 'controlled company' - The company entered into a definitive agreement to divest its **Community Living business** for **$835 million**, with the transaction expected to close in **late 2025**, intended to streamline service offerings and increase focus on senior and specialty populations[138](index=138&type=chunk)[166](index=166&type=chunk) Q2 2025 Financial Performance Highlights (vs. Q2 2024) | Metric | Q2 2025 | Change | % Change | | :--- | :--- | :--- | :--- | | Revenue | $3,147.7M | +$709.4M | +29.1% | | Net Income | $8.5M | Flat | 0.0% | | Adjusted EBITDA | $142.5M | +$31.9M | +28.8% | | Adjusted EPS | $0.22 | +$0.16 | +266.7% | - Following a secondary offering in June 2025, BrightSpring is **no longer a "controlled company"** under Nasdaq corporate governance standards[142](index=142&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Detailed Q2 2025 consolidated and segment-level financial results show 29.1% revenue growth to $3.15 billion, with flat net income Consolidated Results of Operations (Three Months Ended June 30) | Metric (in millions) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenues** | $3,147.70 | $2,438.25 | +29.1% | | **Gross Profit** | $374.85 | $312.18 | +20.1% | | **Operating Income** | $48.56 | $38.65 | +25.6% | | **Net Income** | $8.54 | $8.49 | +0.6% | - **Pharmacy Solutions segment revenue** grew **32.0% YoY** in Q2 2025 to **$2.79 billion**, primarily due to volume growth in prescriptions, especially specialty branded drugs, with **Segment EBITDA increased 32.0% to $124.7 million**[202](index=202&type=chunk)[203](index=203&type=chunk)[210](index=210&type=chunk) - **Provider Services segment revenue** grew **10.5% YoY** in Q2 2025 to **$357.6 million**, driven by volume growth and rate increases, with **Segment EBITDA increased 11.4% to $56.5 million**[221](index=221&type=chunk)[222](index=222&type=chunk)[227](index=227&type=chunk) [Non-GAAP Financial Measures](index=43&type=section&id=Non-GAAP%20Financial%20Measures) Key non-GAAP measures include EBITDA, Adjusted EBITDA, and Adjusted EPS, with Q2 2025 Adjusted EBITDA at $142.5 million, up 28.8% Reconciliation of Net Income to Adjusted EBITDA (Three Months Ended June 30) | Metric (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $8.54 | $8.49 | | EBITDA | $90.40 | $78.35 | | Total adjustments | $52.12 | $32.28 | | **Adjusted EBITDA** | **$142.52** | **$110.64** | Adjusted EPS (Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Diluted EPS | $0.04 | $0.04 | | **Adjusted EPS** | **$0.22** | **$0.06** | [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity improved to $548.2 million as of June 30, 2025, with H1 2025 operating cash flow at $150.7 million - **Total liquidity** stood at **$548.2 million** as of June 30, 2025, comprising **$70.1 million in cash** and **$478.2 million** available under its credit facilities[252](index=252&type=chunk) - **Net cash provided by operating activities** for the first six months of 2025 was **$150.7 million**, a significant turnaround from a **net cash use of $94.1 million** in the same period of 2024[254](index=254&type=chunk) - The company's **leverage ratio**, as calculated under its First Lien Credit Agreement, improved to **3.64x** at June 30, 2025, from **4.16x** at December 31, 2024[272](index=272&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from inflation on labor and pharmaceutical costs, and interest rate fluctuations on variable-rate debt - The primary impact of **inflation** is on **labor and pharmaceutical drug costs**, with **limited ability to pass on these increased costs** for services to Medicare and Medicaid patients due to **fixed reimbursement rates**[275](index=275&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk) - The company is exposed to **interest rate risk** on its **variable-rate debt**, where a hypothetical **1% increase in interest rates** would **decrease annual net income and cash flows by $5.3 million**, a risk **partially hedged with interest rate swaps**[280](index=280&type=chunk)[281](index=281&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control - Based on an evaluation by management, the company's **disclosure controls and procedures** were concluded to be **effective** as of June 30, 2025[282](index=282&type=chunk) - **No changes** occurred during the quarter ended June 30, 2025, that have **materially affected**, or are reasonably likely to materially affect, the company's **internal control over financial reporting**[283](index=283&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings not expected to materially affect financial condition, and the Silver case was finalized - The company is involved in various legal proceedings arising from the ordinary course of business, which are **not expected to have a material adverse effect** on its financial condition[285](index=285&type=chunk) - The **Silver matter**, a significant legal proceeding against PharMerica, was **finalized with a settlement agreement** in May 2024 and dismissed with prejudice in July 2024, with a total financial impact of **$120.0 million** that has been **fully paid**[118](index=118&type=chunk)[119](index=119&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the 2024 Annual Report on Form 10-K - There have been **no material changes to the risk factors** affecting the company's business from those disclosed in its 2024 Annual Report on Form 10-K[287](index=287&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On February 27, 2025, 26,001 restricted stock units were granted to a legal service provider, exempt from registration - On February 27, 2025, the company granted **26,001 restricted stock units** to a legal service provider in exchange for services, **exempt from registration** under Section 4(a)(2) of the Securities Act[288](index=288&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the period - None[289](index=289&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[290](index=290&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No other information is disclosed for the period - None[291](index=291&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - The report lists various exhibits filed, including the **Certificate of Incorporation**, **Bylaws**, agreements related to the company's **Tangible Equity Units**, and **officer certifications (302 and 906)**[293](index=293&type=chunk)

Second Quarter 2025 Earnings Presentation August 1, 2025 1 Forward-Looking Statements; Non-GAAP Financial Information Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. These forward-lo ...

Core Insights - BrightSpring Health Services, Inc. (BTSG) reported quarterly earnings of $0.22 per share, exceeding the Zacks Consensus Estimate of $0.19 per share, and showing a significant increase from $0.10 per share a year ago, resulting in an earnings surprise of +15.79% [1] - The company achieved revenues of $3.15 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 5.40%, and up from $2.73 billion in the same quarter last year [2] - BrightSpring Health Services has outperformed the S&P 500, with shares increasing approximately 21.3% since the beginning of the year compared to the S&P 500's gain of 7.8% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.28 on revenues of $3.16 billion, and for the current fiscal year, it is $0.90 on revenues of $12.29 billion [7] - The estimate revisions trend for BrightSpring Health Services was favorable ahead of the earnings release, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Medical Services industry, to which BrightSpring belongs, is currently ranked in the top 35% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8]

BrightSpring Health Services, Inc. Reports Second Quarter 2025 Financial Results and Increases Full Year 2025 Guidance LOUISVILLE, Ky., August 1, 2025 — BrightSpring Health Services, Inc. ("BrightSpring" or the "Company") (NASDAQ: BTSG), a leading provider of home and community-based health services for complex populations, today announced financial results for the second quarter ended June 30, 2025, and increased Revenue and Adjusted EBITDA 1 guidance. Financial Highlights (note: all figures exclude the Co ...