BrightSpring Health Services, Inc. Q2 FY2024 earnings call

• Strong second quarter performance with total revenue of $2.7 billion (26% growth YOY) and adjusted EBITDA of $139.1 million (17% growth YOY).
• Strategies include serving large and growing markets of complex patient populations in lower-cost home and community settings, driving outsized volume growth and market share gains through high-quality operations and sales/marketing capabilities, leveraging scale and complementary services for efficiencies, and having a unique payer diversification.
• Pharmacy Solutions: Revenue of $2.1 billion (32% growth YOY) with Infusion and Specialty growing 40% YOY, home and community pharmacy revenue up 13% YOY, and adjusted EBITDA of $94 million (19% growth YOY).
• Provider Services: Revenue of $616 million (8% growth YOY) driven by strength in home health care, home health average daily census up 13% YOY, and adjusted EBITDA of $86 million (16% growth YOY).
• Announcement of planned acquisition of Haven Hospice, expected to close this quarter, to expand services into Florida.

In the second quarter of 2024, total revenue was $2.7 billion, up 26% year-over-year. Pharmacy Solutions revenue was $2.1 billion, growing 32% year-over-year, contributing significantly to the overall revenue. Provider Services revenue was $616 million, growing 8% year-over-year. Pharmacy Solutions adjusted EBITDA was $94 million, up 19% year-over-year, and Provider Services EBITDA was $86 million, up 16% year-over-year. Pharmacy Solutions revenue contribution was substantial due to its 32% growth, while Provider Services contributed 8% of the total revenue.

• Raised adjusted EBITDA guidance for 2024 to $570 million to $580 million, representing 12% to 14% growth, excluding the QIP payment in 2023. The midpoint of the adjusted EBITDA guidance has been increased by nearly $35 million since the start of the year.
• Total revenue is expected to be in the range of $10.45 billion to $10.9 billion, with Pharmacy Solutions revenue $8.0 billion to $8.4 billion and Provider Services revenue $2.45 billion to $2.5 billion.

Q: Hey, good morning, guys. Congrats on a really strong quarter. I guess my question first, Jon, you've seen really good strong traction in specialty, and I think the guidance implies sequential growth in Pharmacy Solutions revenues into the back half of the year. As we look at historical trend in terms of back half, first half, it seems like it's up sequentially but maybe not by quite as much as historical trend. Is this conservatism? Or is there anything we need to be thinking about as it relates to the ramp in Pharmacy Solutions revenue in the back half?

A: Hey, Brian. Good morning. Thanks for the question. No, our growth rate that we're seeing in pharmacy remains really strong. And we've got more momentum on the volume side in that business really than we ever have even at this point in time, seven years in. So we would expect similar growth rates into the second half. And again, we feel more positive about those growth rates than we have. Typically, we get about 53% of our EBITDA in the second half. Due to days and due to taxes and other items, we expect margins to always increase in the second half as well. We're leveraging fixed costs in corporate, which is flat in the second half as we continue to drive volume, but very consistent volume expectations in terms of growth rates for the second half and no reason to believe those will slow down or slow down heading into 2025.

Q: Hi everyone. Thanks for the question. Just the strong Specialty performance can you just comment on areas of growth? Is it new drug just coming online? Are you gaining share? What's driving that? And then, comment on the margin trajectory as that business grows, maybe looking out a little further. On the one hand in Pharmacy Solutions, I guess, the mix shift could pressure margin. But I think as new business improves overtime you'd see margin improvement. So maybe delve into that a little more, if possible.

A: Yeah. Thanks A.J., appreciate the comment about the Specialty growth. I would also note that the growth in the organization that we're seeing is really broad-based. If you look at it really almost every single one of our service lines they are growing in the organization. So we're really seeing very, very strong performance across the entirety of the portfolio. Specialty did see the highest growth rate. It was really driven by everything you mentioned brand growth through continued ramps in LDD drugs both from the last couple of years and even the five LDD drugs we've launched so far this year. Our continued focus on high-value generics and then a very large sales force that's executing out there in the field every day and prescriber offices with clinicians', patients, and family is driving I think strong market share improvement. We continue to win some hub business. And our fee-for-service and data business continues to increase at double-digit rates over here. So it's really broad-based growth in the organization -- and also within Specialty. Specialty's margins picked up a little bit into Q2. We expect that to continue into the back half as well. And we expect the same for the trend dynamic for overall Pharmacy.