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BrightSpring Health Services, Inc. Enters into Definitive Agreement to Divest Community Living Business to Sevita; Reports Preliminary 2024 Financial Results and Provides 2025 Guidance Excluding Community Living
BTSGBrightSpring Health Services(BTSG) Newsfilter·2025-01-20 23:30

Transaction Overview - BrightSpring Health Services has entered into a definitive agreement to divest its Community Living business, ResCare Community Living, to Sevita for 835millionincashconsideration[1]−Thetransactionisexpectedtoclosein2025,subjecttoregulatoryapprovalsandtypicalclosingconditions[1]−ThedivestedCommunityLivingbusinessisexpectedtogenerateapproximately835 million in cash consideration [1] - The transaction is expected to close in 2025, subject to regulatory approvals and typical closing conditions [1] - The divested Community Living business is expected to generate approximately 1.2 billion in Revenue and 128millionofAdjustedEBITDAin2024[8]Post−DivestitureBusinessFocus−Followingthedivestiture,BrightSpring′sProviderServiceswillfocusonHomeHealthandHospice,PersonalCare,RehabilitationServices,andPrimaryCare[2]−Thestreamlinedserviceofferingsareexpectedtoresultinincreasedstrategicfocus,operationalefficiencies,andgreaterclinicalintegrationacrosstheProviderServicesandPharmacySolutionssegments[4]−ThetransactionisexpectedtobeaccretivetobothCompanyandProviderServicesRevenuegrowthandAdjustedEBITDAgrowth[2]FinancialImpactandUseofProceeds−BrightSpringexpectstorealizeapproximately128 million of Adjusted EBITDA in 2024 [8] Post-Divestiture Business Focus - Following the divestiture, BrightSpring's Provider Services will focus on Home Health and Hospice, Personal Care, Rehabilitation Services, and Primary Care [2] - The streamlined service offerings are expected to result in increased strategic focus, operational efficiencies, and greater clinical integration across the Provider Services and Pharmacy Solutions segments [4] - The transaction is expected to be accretive to both Company and Provider Services Revenue growth and Adjusted EBITDA growth [2] Financial Impact and Use of Proceeds - BrightSpring expects to realize approximately 715 million of after-tax cash proceeds from the transaction [9] - The net proceeds will primarily be used for debt paydown, strengthening the Company's balance sheet and reducing interest expense [9] - The divestiture is expected to increase Company Revenue and EBITDA Growth Rates and Cash Conversion, as well as Provider Services Revenue and EBITDA Growth Rates and Margin [7] Preliminary 2024 Results and 2025 Guidance - BrightSpring expects to report full year 2024 financial results above the guidance previously provided, with Net Revenue of 11,200millionto11,200 million to 11,300 million and Adjusted EBITDA of approximately 588million[16]−For2025,theCompanyisinitiatingguidanceexcludingtheCommunityLivingbusiness,withNetRevenueexpectedtobe588 million [16] - For 2025, the Company is initiating guidance excluding the Community Living business, with Net Revenue expected to be 11,500 million to 12,000millionandAdjustedEBITDAexpectedtobe12,000 million and Adjusted EBITDA expected to be 540 million to $555 million [17] Strategic Rationale - The divestiture allows BrightSpring to focus on a concentrated group of customers, patients, and stakeholders, maximizing exposure to target growth markets such as home health, rehab, primary care, hospice, and specialty and home and community pharmacy [4] - The transaction accelerates the Company's deleveraging path towards the long-term target of less than 3.0x [4] Industry and Company Background - BrightSpring Health Services is a leading provider of home and community-based pharmacy and health services for complex populations, serving over 400,000 customers, clients, and patients daily [19] - Sevita, the acquirer, has over 50 years of experience in providing home and community-based care for individuals with intellectual and developmental disabilities, serving 50,000 individuals in 40 states [20]