16 October 2025 U.S. Healthcare Services U.S. Healthcare Services: How AI will change the healthcare landscape, a summary of our recent teach-in Lance Wilkes +1 917 344 8501 lance.wilkes@bernsteinsg.com William Robbins +1 917 344 8536 william.robbins@bernsteinsg.com We recently hosted a teach-in on disruptions in healthcare, underlining the key disruptive themes moving forward. In this note, we recap the session and provide our views on where to expect disruption in US healthcare services (see REPLAY, SLIDE ...

Financial Data and Key Metrics Changes - The company reported total revenue for Q2 2025 of $1.4 billion, down from $1.48 billion in Q2 2024, primarily due to lower risk adjustment contributions and unfavorable developments in Part D costs [29][30] - Medical margin for Q2 2025 was negative $53 million, compared to positive $106 million in Q2 2024, driven by underperformance in the burden of illness program [30][33] - Adjusted EBITDA for Q2 2025 was negative $83 million, compared to negative $3 million in Q2 2024, reflecting the impact of lower risk adjustments and unfavorable prior period developments [33] Business Line Data and Key Metrics Changes - Medicare Advantage membership at the end of Q2 2025 was 498,000, down from 513,000 in Q2 2024, reflecting a measured approach to membership growth [28] - ACO REACH membership in Q2 2025 was 116,000, down from 132,000 in 2024, aligning with expectations [28] Market Data and Key Metrics Changes - The company has reduced its exposure to Medicare Part D, with less than 30% of its membership carrying Part D risk in 2025, and aims to further decrease this as it enters 2026 [35] - The company expects its same geography growth rate to align with the broader industry for 2025 [28] Company Strategy and Development Direction - The company is focused on improving contract economics and bid visibility with payers, enhancing its data platform, and reducing variability in its business [36] - The leadership transition aims to drive improved execution and strengthen relationships critical to future success [10][11] - The company is committed to enhancing performance and Agilent's position for sustainable value creation, particularly with the improved Medicare reimbursement model expected to take effect next year [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 is a transition year with industry complexities and headwinds that were more acute than previously expected, leading to underperformance [8][9] - The company is optimistic about realizing the benefits of strategic initiatives in 2026, despite current challenges [7][36] Other Important Information - The company has withdrawn its previously issued full-year 2025 financial guidance due to ongoing market uncertainty [35] - The leadership team is recalibrating the organization's culture to emphasize urgency, accountability, and performance [11] Q&A Session Summary Question: Clarification on potential positive PYD in Q3 and growth rate into 2026 - Management indicated that there was a small amount of favorable development on quality programs, but the most significant pieces of development were unfavorable, particularly related to risk adjustment [40][41][42] Question: Insights on call trends and cost trends - Cost trends for Q1 were around 6%, and Q2 trends were consistent with Q1, but July data was not yet complete [46][47] Question: Commentary on 2026 class and glide path strategy - Management confirmed that growth for 2026 is under review and will be highly selective based on current business performance [59] Question: Insights on bidding for 2026 - Management noted that payers are looking for improved economics as they head into 2026, and negotiations are ongoing [61][62] Question: CEO search criteria - The company is looking for a CEO with multi-market management capability, experience with primary care physicians, and operational rigor [68][69] Question: Quality incentives and their potential impact - Management expects an increase in quality incentive dollars from 2025 to 2026, as payers are more willing to put dollars at risk for higher performance [75][76]

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]

Financial Data and Key Metrics Changes - iRhythm reported Q2 2025 revenue of $186.7 million, reflecting a year-over-year growth of over 26% [7][21] - Adjusted EBITDA margin improved by 500 basis points to 8.4% compared to the previous year [19][24] - Adjusted net loss decreased to $10.2 million, or $0.32 per share, from an adjusted net loss of $18.8 million, or $0.61 per share in the prior year [23][24] Business Line Data and Key Metrics Changes - The core long-term continuous monitoring business saw significant growth, with record new account openings and strong performance from the Zio AT product line [7][10] - New store growth accounted for approximately 68% of year-over-year volume growth, with home enrollment for Zio Services in the U.S. at about 23% of volume [22] Market Data and Key Metrics Changes - International markets showed strong demand, particularly in the UK and Japan, with a broad commercial launch in Japan contributing positively [7][17] - The company has 12 partners under contract covering approximately 2 million potential patients, with a robust pipeline of 40 active discussions for future partnerships [11] Company Strategy and Development Direction - iRhythm's strategic focus is on moving prescribing to primary care physicians, which has increased capacity for specialists and enabled proactive monitoring [7][8] - The company is investing in partnerships and technology, including a recent collaboration with Lusim Health to enhance early detection of arrhythmias using AI [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, citing strong performance across core business and innovative channels [32] - The company anticipates continued momentum in the second half of 2025, despite a slight expected decline in Q3 revenue due to seasonality [25][71] Other Important Information - iRhythm is raising its full-year 2025 revenue guidance to $720 million to $730 million, reflecting first-half outperformance [25] - The company expects to remain slightly free cash flow negative for 2025 but anticipates becoming free cash flow positive in 2026 [28] Q&A Session Summary Question: Guidance and Drivers of Growth - Management acknowledged strong momentum across the business, with the core business being the primary driver of outperformance in Q2 [40][41] Question: Volume Contribution from Innovative Channel Partners - Management indicated that innovative channel partners contributed positively, with a significant increase in prescribing physicians [46] Question: Integration with Epic Accounts - Management reported a 20% increase in prescribing patterns post-integration with Epic accounts, indicating strong potential for future growth [53][54] Question: Impact of Innovative Partnerships - Key partnerships with Signify and CenterWell were highlighted as significant contributors to growth, with expectations for repeat monitoring opportunities [63][65] Question: Seasonality Impact on Q3 Revenue - Management explained that Q3 revenue is expected to decline slightly due to seasonality, but overall momentum remains strong [72][74] Question: Market Growth and Share Gains - Management noted that growth is driven by a combination of market expansion, share gains, and increased prescribing in primary care settings [81][84]

Financial Data and Key Metrics Changes - CVS Health reported adjusted operating income of $3.8 billion and adjusted earnings per share (EPS) of $1.81 for Q2 2025, with an increase in full year 2025 adjusted EPS guidance to a range of $6.30 to $6.40, up from $6.00 to $6.20 [3][21][33] - Total revenues for Q2 2025 were nearly $99 billion, reflecting an approximate 8% increase year-over-year, driven by growth across all segments [21][22] - Year-to-date cash flow from operations reached approximately $6.5 billion, with $1.7 billion distributed in dividends [30][31] Business Line Data and Key Metrics Changes - In the health care benefits segment, revenue exceeded $36 billion, an increase of over 11% year-over-year, with adjusted operating income rising nearly 40% to approximately $1.3 billion [22][24] - The health services segment generated revenues of over $46 billion, up over 10% year-over-year, but adjusted operating income decreased approximately 18% to around $1.6 billion due to pricing improvements and higher medical benefit ratios [26][27] - The pharmacy and consumer wellness segment reported revenues of over $33 billion, a 12% increase year-over-year, with adjusted operating income increasing nearly 8% to over $1.3 billion [29][30] Market Data and Key Metrics Changes - Medical membership in the health care benefits segment was approximately 26.7 million, a decrease of about 350,000 members sequentially [22] - Retail pharmacy script share grew to approximately 27.8%, an increase of about 60 basis points from the same period last year, with same-store pharmacy sales growing over 18% [29] Company Strategy and Development Direction - CVS Health aims to address major healthcare challenges such as affordability and access through holistic solutions, leveraging its diverse business model and national footprint [4][5] - The company is focused on margin recovery in its Aetna business while managing pressures in health care delivery, particularly at Oak Street [7][8] - CVS Health is committed to innovation in its pharmacy business, including the introduction of a weight management program that combines drug therapy with behavioral support [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious yet optimistic outlook for the remainder of the year, highlighting opportunities for outperformance despite ongoing challenges in the healthcare environment [4][18] - The company is focused on improving operations through technology investments and enhancing partnerships with payer clients to drive better outcomes [8][9] - Management remains vigilant regarding medical cost trends and is maintaining a prudent view on future expectations [34] Other Important Information - CVS Health announced a commitment of $20 billion over the next decade to transform healthcare, aiming to reduce friction and improve patient experiences [15][17] - The company is transitioning its government business to cost-based pricing models for 2026, which is expected to stabilize reimbursement [14][84] Q&A Session Summary Question: Insights on Aetna's performance and visibility for the second half of the year - Management highlighted the focus on Aetna's recovery and innovation, with strong performance in individual Medicare driving results, while maintaining a cautious outlook on Part D until more data is available [42][46][50] Question: Group Medicare Advantage margins and renewal process - Management indicated that achieving target margins for group Medicare Advantage may take more than one cycle due to the nature of multiyear contracts, but expressed optimism about the renewal process [63][66] Question: Pharmacy segment outlook and reimbursement stabilization - Management noted strong performance in the pharmacy segment, driven by script growth and market share gains, while remaining cautious about consumer spending dynamics and potential lower demand for vaccines [71][76] Question: Medicare results reconciliation between Aetna and Oak Street - Management clarified that the differences in performance are due to the distinct member populations, with Oak Street facing higher acuity and medical costs, while Aetna's broader base showed favorable trends [87][90]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $373 million, a 4% decrease from the prior year, primarily due to an 8% year-over-year decline in membership [11][15] - Average membership for Q1 2025 was approximately 116,000, down from 126,000 in Q1 2024, reflecting a strategic exit from unprofitable plans [14] - Per member funding increased by 8% to $10.63 on a PMPM basis compared to full year 2024, indicating improved capture of disease burden [11][15] - Adjusted operating expenses decreased by 18% sequentially and 11% year over year, reflecting efficiency improvements [7][17] - Adjusted EBITDA for Q1 2025 was a loss of $22 million, with a normalized loss of $13 million after accounting for a single underperforming contract [17][18] Business Line Data and Key Metrics Changes - The ACO reach population now accounts for approximately 15% of total membership, with a 60% increase in ACO membership over the past year [12][14] - The complex care program is projected to deliver over $30 million in savings for 2025 through improved care coordination [10][24] - Medical margin for Q1 2025 was approximately $17 million or $49 PMPM, compared to $37 million or $96 PMPM in Q1 2024 [15][17] Market Data and Key Metrics Changes - Three of the four markets achieved breakeven or better in Q1 2025, with expectations for continued improvement [6][27] - Increased funding across markets by 8% on a PMPM basis, indicating better financial performance [6][28] - The company is experiencing a steady ramp in converting groups into the Tier one category, with Oregon's enrollment expected to reach 60% by Q3 [10] Company Strategy and Development Direction - The company is executing a $130 million operating improvement plan, with a focus on operational efficiency, contracting, and execution [7][19] - Strategic initiatives include renegotiating payer contracts to reduce Part D exposure and improve funding [8][49] - The care enablement model is gaining momentum, aimed at reducing medical expenses and improving outcomes through enhanced data sharing and decision-making tools [9][24] Management's Comments on Operating Environment and Future Outlook - Management remains confident in meeting full-year targets, citing positive progress from strategic initiatives [19][27] - The company is addressing performance issues with a single outlier payer, with expectations for improvements in 2026 [6][27] - Overall, management sees encouraging trends in Medicare Advantage, with improved utilization metrics and funding structures [56][57] Other Important Information - The company ended Q1 2025 with approximately $40 million in cash, actively managing liquidity [20] - The implementation of the Innovaccer system is on schedule for complete deployment by mid-summer, enhancing data infrastructure and analytics capabilities [26] Q&A Session Summary Question: Progress on the $130 million EBITDA initiative - The company achieved roughly one-fifth of the OpEx savings in Q1, with more benefits expected in the latter half of 2025 [33][34] Question: Engagement and satisfaction trends with the RESTORE program - The engagement strategy is working well, with key providers becoming ambassadors for the program [36][37] Question: Details on the outlier payer causing issues - The outlier payer accounts for no more than 22% of overall revenue, with cost pressures primarily related to inpatient services from 2024 [42][44] Question: Trends in Medicare Advantage - The company is seeing improvements in utilization and benefit structures, contrary to negative trends reported by other payers [56][57]

Summary of Addus HomeCare (ADUS) 2025 Conference Call Company Overview - Addus HomeCare is one of the largest providers of personal care services in the U.S. [2] Key Industry Insights - Discussion on potential impacts of Medicaid changes, particularly work requirements for individuals under 64 years old, which may create employment opportunities for caregivers [3][4][5] - The company views itself as a low-cost provider, emphasizing the importance of keeping elderly patients at home rather than in nursing facilities [7][8] - No material changes expected from proposed Medicaid reforms, with ongoing monitoring of government relations [9] Financial Performance and Projections - The acquisition of Gentiva is performing as anticipated, with some challenges in top-line growth due to weather events in Texas [18][19] - Positive trends observed in admissions outpacing discharges, indicating a recovery in Texas [19] - The integration of Gentiva is progressing well, with payroll and benefits integration being notably smooth [20][21] - The company is actively looking for further acquisitions, particularly in Texas, to expand clinical capabilities [22][36] Value-Based Care Strategy - The company is focusing on building relationships with payers to enhance value-based care offerings, starting from personal care services [25][26][30] - Current contracts with payers are being formalized to create a more robust value-based component [29] Operational Updates - Personal care services saw a 2% year-over-year growth in hours, with expectations for continued growth in census numbers by year-end [41][42] - Technology adoption among caregivers is improving, with a significant percentage of caregivers using the new application rolled out in Illinois [46][47] - Hiring remains strong, particularly in personal care, with wage pressures being manageable due to collective bargaining agreements [51][53] Market Conditions and Recession Impact - Minimal impact from potential recession on clinical services, as home health and hospice care are essential regardless of economic conditions [55] - The company is cautiously optimistic about growth in home health and hospice services, particularly in Texas [60] Reimbursement and Regulatory Environment - Ongoing discussions regarding reimbursement rates for home health services, with expectations for potential changes from the new administration [57][58] - The company is actively pursuing increases in per visit rates and exploring episodic contracts with payers [62][64] Hospice Care Growth - Hospice services are expected to grow at a rate of 5% to 7%, with Q1 performance exceeding expectations [66][68] Cash Flow and Capital Deployment - Consistent cash flow expected, with a conversion rate of 75% to 80% of GAAP EBITDA to cash [70] - Plans to continue paying down debt while remaining opportunistic in M&A activities [71]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 reached $211.8 million, a 214% increase from $67.5 million in Q1 2024 [6][14] - Adjusted EBITDA was $72.8 million, up from a negative $0.4 million in the same quarter last year [6][20] - Net income attributable to Newtek Health was $14.6 million or $2.65 per basic share, compared to a net loss of $0.4 million or a loss of $0.08 per basic share in Q1 2024 [6][19] - Cash in the bank increased to $87.7 million from $43.5 million at year-end 2024 [7][20] - Net cash flow from operating activities was $51 million, compared to $3.1 million in the same period in 2024 [7][21] Business Line Data and Key Metrics Changes - The hospital division generated $203.9 million in revenue, a 240% increase from $60 million in Q1 2024, with $105 million tied to arbitration efforts [14] - Mature hospitals saw a revenue increase of 860.5% compared to the same period in 2024 [14] - The population health division revenue increased by 5.4% to $7.8 million from $7.4 million in Q1 2024 [15][28] Market Data and Key Metrics Changes - Total patient visits reached 48,269, a 20.5% increase from 40,068 in Q1 2024 [5][29] - Mature hospitals experienced a 5.3% increase in visits, indicating sustained demand for services [5][15] Company Strategy and Development Direction - The company plans to open three additional hospitals in 2025, with a pipeline extending to 2028 that includes over 10 projects [12][25] - The growth strategy focuses on increasing patient volume, expanding services, optimizing revenue through efficient management, and maintaining disciplined cost control [12][33] - The micro hospital model is emphasized as a key growth area, providing efficient access and high-quality care [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the arbitration process, noting an 80% win rate and increased facility collections [9][11] - The company is well-positioned for continued growth, leveraging its experience and strong balance sheet [12][33] - Management highlighted the importance of community engagement and business development in driving patient volume [30][76] Other Important Information - The arbitration process has been refined, with a significant percentage of billable visits submitted through the arbitration portal [8][9] - Legislative developments, such as the proposed Murphy Act, could enhance payment timeliness and revenue [11][72] Q&A Session Summary Question: Is Q1 performance repeatable in future quarters? - Management indicated that while Q1 shows positive trends, it is still early in Q2 to predict consistency [37][43] Question: How is the company managing prior quarter revenue recognition? - Management noted that they are improving accuracy in revenue recognition based on historical data and ongoing trends [56][60] Question: Will the addition of new arbitrators accelerate the process? - Management believes that adding more arbitrators will help reduce backlog and improve the arbitration process [62][63] Question: How does arbitration revenue impact future comparisons? - Management clarified that there is currently no penalty for timely payments, but future legislative changes could enhance revenue [71][72] Question: Was there any seasonality impact on hospital visits? - Management confirmed that this year's flu season was longer, contributing to increased visits, but overall growth is attributed to improved community awareness [75][76] Question: What is the timeline for opening new hospitals? - The three new hospitals are expected to open in the third and fourth quarters of 2025, all located in Texas [80]