Industry Overview - The Medical Services sector is undergoing significant transformation driven by technological advancements, value-based care adoption, and a focus on patient-centric solutions and precision medicine [1] - The industry includes various service providers such as pharmacy benefit managers, contract research organizations, and healthcare workforce solution providers, moving from volume-based to value-based care [3] Market Trends - The global healthcare analytics market was valued at $53.1 billion in 2024, with a projected CAGR of 21.4% from 2025 to 2034, benefiting various stakeholders [2] - The digital health market is expected to grow at a CAGR of 9.2% from 2024 to 2028, while the big data in healthcare market is estimated to increase from $78 billion in 2024 to $540 billion by 2035, representing a CAGR of 19.20% [4] - The demand for skilled nursing professionals is surging, with a projected shortfall of over 100,000 healthcare workers by 2028, including 73,000 nursing assistants [2] Staffing Challenges - The healthcare staffing shortage is exacerbated by the aging population and the exit of frontline workers due to the COVID-19 pandemic, with WHO projecting a shortfall of 9.9 million healthcare professionals by 2030 [5] - Hospitals have seen a 15.6% increase in labor expenses per adjusted discharge compared to pre-pandemic levels due to rising labor costs [5] Nursing Care Market - The role of nurses is evolving with advancements in medical technologies, and the employment of nurse anesthetists, nurse midwives, and nurse practitioners is projected to grow 40% from 2023 to 2033 [6] Industry Performance - The Medical Services Industry has underperformed compared to its sector and the S&P 500, with a collective loss of 13.4% over the past year [10] - The industry is currently trading at a forward P/E of 14.6X, lower than the S&P 500's 21.9X and the sector's 19.3X [13] Investment Opportunities - GeneDx, CVS Health, and BrightSpring are identified as stocks with strong earnings outlooks, with GeneDx expected to have a 336% earnings growth rate in 2025 [19][20][22][26] - CVS Health is focusing on advanced technological capabilities and has projected earnings growth rates of 12.6% and 14.3% for 2025 and 2026, respectively [22][23] - BrightSpring is improving care quality and is expected to see an 82.1% earnings growth rate in 2025 [26][27]

Financial Data and Key Metrics Changes - The company has outperformed its initial guidance of approximately 8% top-line and EBITDA growth, with pharmacy being a significant contributor to this outperformance [7][10] - From 2018 to 2020, the company achieved revenue growth of 18% and EBITDA growth of 13%, indicating a consistent performance over the years [12] Business Line Data and Key Metrics Changes - The specialty pharmacy business has seen outsized growth, although it has the lowest margins within the company's portfolio [59] - The home health care segment, which includes home health, hospice, and primary care, is expected to continue growing at an outsized rate compared to the market [53][56] - The rehab business is also projected to grow at double-digit rates, driven by specific payer relationships [54] Market Data and Key Metrics Changes - The company is focused on serving senior populations, which are experiencing significant growth, and aims to provide comprehensive services to meet their needs [16][20] - The limited distribution drugs (LDDs) in the oncology space are ramping faster than expected, contributing positively to the growth profile [41][44] Company Strategy and Development Direction - The company is committed to a strategy of leading on volume through high-quality services, which is expected to drive outsized growth [13][14] - There is a strong focus on technology and best practices across all business lines to enhance efficiency and effectiveness [10][11] - The company is actively pursuing accretive tuck-in M&A opportunities to enhance its growth profile [30][32] Management's Comments on Operating Environment and Future Outlook - Management believes that the current operating environment is favorable, with no significant market news impacting the company [4] - The company is optimistic about its ability to achieve long-term growth rates, supported by quality services and strategic expansions [56][57] - Management is cautious about potential impacts from legislative changes, particularly regarding drug pricing, but remains confident in navigating these challenges [47][51] Other Important Information - The company announced the divestiture of its community living business, which was deemed a better fit for a different buyer, allowing the company to focus on its core health services [36][38] - The company has a robust pipeline for M&A, with a focus on small tuck-in acquisitions that enhance its service offerings [30][34] Q&A Session Summary Question: Can you provide context for the confusion in the market yesterday? - Management indicated that there was no significant market news affecting the company, attributing the confusion to a secondary transaction announcement [4] Question: What is KKR's current ownership percentage post-secondary transaction? - KKR's ownership will decrease from 53% to just over 44% if the green shoe is fully executed [6] Question: How should we think about the company's growth trajectory moving forward? - The company aims to maintain its growth trajectory by focusing on quality services and expanding its primary care and rehab businesses [56][57] Question: What are the company's plans regarding alternative payment models? - The company is currently focused on upside-only models and is cautious about taking on risk, aiming to capture value without significant exposure [26][27] Question: What is the rationale behind the community living business divestiture? - The divestiture allows the company to concentrate on its core health services, which align better with its strategic focus [36][38] Question: How does the company plan to address margin pressures? - Management is focused on improving margins in specific areas, particularly long-term care pharmacy and home infusion pharmacy, through operational improvements [62][63]

Core Insights - BrightSpring Health Services, Inc. (BTSG) is experiencing significant growth in its Home Health Care segment, driven by the expanding global home healthcare market, which is projected to grow at a CAGR of 10.21% from 2025 to 2030 [1] Company Performance - The Home Health Care segment generated $178 million in sales in Q1 2025, reflecting a 21% year-over-year increase, supported by strong operational execution and expanding Medicare Advantage contracts [2][8] - The average daily census across home health and hospice increased to over 30,000, a 12% rise from the previous year, indicating robust demand for services [3] - Approximately 90% patient satisfaction was reported, with over 80% of branches rated 4 stars or higher, and a declining 60-day hospitalization rate [2][3] Strategic Initiatives - BrightSpring is advancing its Homebase Primary Care model to provide physician-led services in cost-effective, in-home settings, and is targeting scalable growth to over 100,000 patients through value-based models like ACOs and SNPs [3] Competitive Landscape - Cardinal Health's at-Home Solutions is expanding its reach in the home healthcare market, serving over 5 million patients in fiscal 2024 and investing in automated distribution centers to enhance capabilities [4] - Addus HomeCare Corporation's home healthcare segment is experiencing modest growth, focusing on selective M&A and leveraging technology for operational synergies [5] Market Valuation - BTSG shares have increased by 98.8% over the past year, significantly outperforming the industry, which saw an 18.9% decline, while the S&P 500 composite grew by 11.8% [6] - The company trades at a forward price-to-earnings ratio of 20.32, above the industry average of 14.25 [9] Earnings Estimates - The Zacks Consensus Estimate for BTSG's earnings has been rising over the past 60 days, with current estimates for Q2 2025 at $0.22 and for the current year at $1.02 [10][11]

Core Viewpoint - BrightSpring Health Services, Inc. announced the pricing of a secondary offering of 14,000,000 shares at $21.75 per share, with proceeds going to the selling stockholders, including KKR affiliates and management members [1] Group 1: Offering Details - The offering is underwritten and will close on June 12, 2025, subject to customary closing conditions [1] - The KKR Selling Stockholder has granted underwriters a 30-day option to purchase an additional 2,100,000 shares [1] - No shares are being sold by BrightSpring itself in this offering [1] Group 2: Underwriters and Managers - Goldman Sachs & Co. LLC, BofA Securities, Jefferies, and Morgan Stanley & Co. LLC are the lead book-running managers for the offering [2] - KKR Capital Markets LLC is acting as the lead managing agent [2] - A number of other firms are participating as bookrunners and co-managers for the offering [2] Group 3: Registration and Compliance - A shelf registration statement was filed with the SEC on June 10, 2025, and became effective upon filing [3] - The offering will be made only by means of a prospectus supplement and accompanying prospectus [4]

Core Viewpoint - BrightSpring Health Services, Inc. announced a secondary offering of 14,000,000 shares of common stock by certain stockholders, including affiliates of Kohlberg Kravis Roberts & Co. L.P. [1] Group 1: Offering Details - The offering will be conducted under a shelf registration statement filed with the SEC, and no shares are being sold by BrightSpring itself [1][3] - The KKR Selling Stockholder plans to grant underwriters a 30-day option to purchase an additional 2,100,000 shares [1] - Goldman Sachs & Co. LLC and BofA Securities are the lead book-running managers for the offering, with KKR Capital Markets LLC acting as the lead managing agent [2] Group 2: Registration and Prospectus - A shelf registration statement on Form S-3 was filed with the SEC on June 10, 2025, and became effective upon filing [3] - The offering will be made only by means of a prospectus supplement and accompanying prospectus [4]

Core Insights - BrightSpring Health Services (BTSG) achieved an all-time high stock price of $25.57 on June 9, reflecting a remarkable 120% increase over the past year, contrasting with declines in the broader medical sector [1][8] - The company outperformed competitors Amedisys (AMED) and Option Care Health (OPCH), which saw stock increases of 2.7% and 12.2%, respectively [2][8] Financial Performance - In Q1 2025, BrightSpring reported a 14% year-over-year revenue growth and a 111% increase in adjusted EPS, both exceeding Zacks Consensus Estimates [6][8] - Adjusted EBITDA rose by 19%, supporting management's confidence in achieving continued double-digit growth in revenues and EBITDA for the full year [6] Quality Metrics - Over 80% of BrightSpring's Home Health branches are rated 4 stars or higher, with a declining 60-day hospitalization rate and patient satisfaction around 90% [7][8] - In Hospice services, the company provides 50% more visits and time with patients than the national average, achieving all-time high quality scores [7] - Rehabilitation services reported that 52% of catastrophic neuro event patients regained independence, while Personal Care achieved a satisfaction score of 4.6 out of 5 [7] Valuation - BrightSpring's stock is currently trading at a forward 12-month price-to-sales (P/S) ratio of 0.32, lower than the industry average of 0.39 and below competitors like Amedisys (1.23X) and OPCH (0.90X) [11][12] - Despite being above its one-year median of 0.24X, the stock remains undervalued compared to peers, indicating improved investor sentiment [12] Future Earnings Estimates - The Zacks Consensus Estimate for BrightSpring's 2025 earnings suggests an 82.1% year-over-year improvement [9] - Current estimates for Q1 2025 earnings are 0.22, with projections for the next year at 1.02 [10]

Core Insights - BrightSpring Health Services, Inc. (BTSG) has made significant investments in process improvements and technology enhancements, leading to better care delivery efficiency and patient outcomes [1][4] - The company has achieved high ratings across various segments, with over 80% of Home Health branches rated 4 stars or better and patient satisfaction nearing 90% [1][8] Home Health Segment - Over 80% of Home Health branches achieved a 4-star rating or better, with declining 60-day hospitalization rates [1][8] - Patient satisfaction in the Home Health segment is approaching 90% [1] Hospice Operations - Hospice operations have outperformed, with visit frequency and time spent with patients exceeding the national average by 50% [2] - Quality index scores in the Hospice segment have reached record highs [2] Rehabilitation and Personal Care Segments - Patient satisfaction in the Rehab segment remains strong at 98% [2] - The Personal Care segment achieved its highest-ever rating with a satisfaction score of 4.6 out of 5 [2] Community Living and Infusion Segments - Community Living recorded its lowest number of audit findings to date, which is 40% better than the industry average [2] - The Infusion segment reported a 96% therapy completion discharge rate and a 95% patient satisfaction score [3] Operational Metrics - Home and Community Pharmacy Services achieved near-perfect operational metrics, including 99.999% dispense accuracy and 99% order completeness [3] Competitive Landscape - Amedisys (AMED) maintains a focus on clinical distinction, achieving an average Quality of Patient Care star rating of 4.18 across all providers, with 88% of care centers rated 4 stars or higher [5] - Addus HomeCare Corporation (ADUS) has launched the Care Advantage Program to enhance preventive care and patient satisfaction through a tech-enabled approach [6] Stock Performance and Valuation - Shares of BrightSpring have gained 104.1% in the past year, significantly outperforming the industry, which saw a decline of 21.7% [7] - BTSG trades at a forward price-to-earnings ratio of 21.59, above the industry's 14.25 [9] Earnings Estimates - The Zacks Consensus Estimate for BTSG's earnings has been on the rise over the past 30 days, with current quarter estimates at $0.22 and next year at $1.19 [10][11]

Group 1: Momentum Investing Overview - Momentum investing contrasts with the traditional "buy low and sell high" strategy, focusing instead on "buying high and selling higher" to capitalize on fast-moving stocks [1] - Identifying the right entry point for trending stocks can be challenging, as they may lose momentum if future growth does not justify their high valuations [1] Group 2: Investment Strategy - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [2] - The 'Fast-Paced Momentum at a Bargain' screen helps in spotting fast-moving stocks that remain attractively priced [2] Group 3: BrightSpring Health Services, Inc. (BTSG) Analysis - BrightSpring Health Services, Inc. (BTSG) has shown significant recent price momentum, with a four-week price change of 37.3%, indicating growing investor interest [3] - Over the past 12 weeks, BTSG has gained 20.5%, demonstrating its ability to deliver positive returns over a longer timeframe [4] - BTSG has a beta of 2.06, suggesting it moves 106% higher than the market in either direction, indicating fast-paced momentum [4] Group 4: Valuation and Earnings Estimates - BTSG has a Momentum Score of A, suggesting it is an opportune time to invest in the stock for potential success [5] - The stock has a Zacks Rank 2 (Buy) due to an upward trend in earnings estimate revisions, which typically attracts more investor interest [6] - BTSG is trading at a Price-to-Sales ratio of 0.35, indicating it is relatively cheap, as investors pay only 35 cents for each dollar of sales [6] Group 5: Additional Investment Opportunities - Besides BTSG, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [7] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [8]

Company Overview - Amedisys (AMED) is part of the Medical group, which consists of 997 companies and is currently ranked 5 within the Zacks Sector Rank [2] - Amedisys operates in the Medical - Outpatient and Home Healthcare industry, which includes 17 individual stocks and is ranked 73 in the Zacks Industry Rank [5] Performance Analysis - Year-to-date, Amedisys has returned 3.1%, outperforming the average loss of 6.8% in the Medical sector [4] - The Zacks Consensus Estimate for Amedisys's full-year earnings has increased by 1.5% over the past quarter, indicating improved analyst sentiment [3] - In comparison, BrightSpring Health Services, Inc. has returned 34.6% year-to-date and has a consensus EPS estimate increase of 23.8% over the past three months [4][5] Industry Context - The Medical - Outpatient and Home Healthcare industry has seen an average gain of 2.6% this year, with Amedisys performing better than this average [5] - The broader Medical Services industry, which includes BrightSpring Health Services, has declined by 5.5% this year and is ranked 65 [6]

Summary of BrightSpring Health Services (BTSG) Conference Call Company Overview - **Company**: BrightSpring Health Services (BTSG) - **Industry**: Healthcare, specifically home and community health care and pharmacy services Key Points and Arguments Financial Performance - **Q1 Performance**: The company reported a strong Q1, beating expectations and raising guidance, primarily driven by specialty pharmacy performance [2][4] - **Historical Growth**: The company has achieved a mid-teens CAGR in EBITDA and revenue over nearly a decade, with broad-based growth across service lines [4][5] - **Volume Growth**: Volume growth is supported by quality service across all lines, operational efficiencies, and accretive mergers and acquisitions (M&A) [5][6] Specialty Pharmacy Growth - **Oncology and Rare Diseases**: Specialty pharmacy, particularly in oncology and rare diseases, has seen significant growth, with a reported 30% growth year-over-year for the last three years [9][10] - **Innovation in Therapies**: Continuous innovation in therapies is driving demand, with expectations of 12 to 18 new products entering the market in the next 18 months [13] Service Lines and Market Dynamics - **Home and Community Focus**: BrightSpring aims to be a leading provider in home and community health care, with strong demand for services [6][17] - **Provider Business Growth**: The provider business experienced around 10% year-over-year growth, even with fewer days in the quarter compared to the previous year [7] - **Pharmacy Services**: The pharmacy business is expected to grow in the mid-single digits, with potential for double-digit growth in specific areas like infusion and specialty oncology [25][26] M&A Strategy - **Acquisition Focus**: The company has executed several smaller tuck-in acquisitions and plans to continue this strategy, particularly in home health, hospice, and rehab [15][58] - **Community Living Divestiture**: The divestiture of the community living business is expected to close by the end of the year, which will help improve leverage ratios [54][55] Regulatory Environment - **Impact of Inflation Reduction Act (IRA)**: The IRA has both positive and negative implications for the company, particularly concerning drug pricing and access to medications [35][38] - **Tariffs on Drugs**: Potential tariffs on drugs are being monitored, with the company confident in its supply chain resilience due to a significant portion of drugs being sourced domestically [42][46] Operational Efficiency - **EBITDA Margin Target**: The company targets a 6% EBITDA margin, focusing on lean operations and technology to enhance efficiency across business lines [34] - **Integrated Care Opportunities**: The company is exploring integrated care models that combine various services to improve patient outcomes and reduce hospitalizations [31][33] Future Outlook - **Leverage Reduction**: The company aims to reduce leverage to around three times by the end of the year, supported by cash generation and growth [55][56] - **Market Positioning**: BrightSpring is positioned to leverage its scale and operational capabilities to navigate regulatory changes and market dynamics effectively [50][51] Additional Important Insights - **Quality and Compliance**: The company emphasizes its commitment to quality and compliance, which has resulted in better performance metrics compared to industry averages [22] - **Patient-Centric Approach**: The focus on delivering high-quality, patient-centered services is seen as a key driver for growth and market share [20][21]