BrightSpring Health Services, Inc. Tangible Equity Unit Q4 FY2024 earnings call

• Jon Rousseau thanked the BrightSpring team and introduced Jen Phipps as CFO, noting Jim Mattingly's contributions. - Highlighted 2024 as a year of milestones, quality improvements, and growth, with total revenue growth and adjusted EBITDA growth. - Discussed operational efficiencies, quality metrics (e.g., Net Promoter Scores for pharmacies, hospice care index), and investments in technology and compliance. - Mentioned the divestiture of the community living business, expected to close in 2025, and the focus on remaining provider services businesses.

In the fourth quarter of 2024, Pharmacy Solutions segment revenue was $2.4 billion, achieving 34% year-over-year growth. Within the Pharmacy segment, Infusion And Specialty revenue was $1.8 billion, representing growth of 42% from prior year and home and community pharmacy revenue was $601 million, representing growth of 17% year-over-year. In the Provider Services segment, revenue was $656 million in the fourth quarter, which represented 11% growth compared to the prior year period. Within the Provider Services segment, Home Healthcare reported $280 million in revenue, growing 17% versus last year, and Community and Rehab Care revenue was $376 million, representing growth of 8% year-over-year. For the full year of 2024, total company revenue was $11.3 billion, with Pharmacy Solutions segment revenue at $8.8 billion (34% growth from prior year) and Provider Services segment revenue at $2.5 billion (9% growth from prior year).

• Increased 2025 total revenue guidance to $11.6 billion to $12.1 billion, including Pharmacy Solutions revenue of $10.15 billion to $10.6 billion and provider services revenue of $1.45 billion to $1.5 billion. - Increased adjusted EBITDA guidance for 2025 to $545 million to $560 million, reflecting 18.4% to 21.7% growth over 2024 excluding Community Living. - Aim for long-term leverage ratio of 2 to 2.5x.

• Potential impact of the Inflation Reduction Act (IRA) on pharmacy margins, including uncertainty around drug reimbursement mechanisms. - Regulatory and market uncertainties that could affect business operations and financial performance.

Q: A.J. Rice asked about the limited distribution drug business and pipeline.

A: Jon Rousseau discussed market trends, the company's franchise strength, and the Infusion business's growth potential, noting turnaround times and future growth expectations.

Q: Whit Mayo inquired about internal operating cost savings and margin opportunities.

A: Jon Rousseau talked about the company's focus on process optimization, automation, and efficiency across various functions, with cumulative savings from over 100 projects and continued focus on leveraging these for margin improvement.

Q: Brian Tanquilut questioned the sustainability of growth rates and blended growth.

A: Jon Rousseau cited the company's track record of double-digit growth, the impact of the community living divestiture on growth, and confidence in continuing growth through quality, efficiency, and operational infrastructure.

Q: David Larsen asked about ACO arrangements and Specialty pricing.

A: Jon Rousseau discussed the ACO's role in driving outcomes and shared savings, and stability in Specialty pricing due to portfolio diversity and stakeholder relationships.

Q: Joanna Gajuk inquired about IRA impact.

A: Jon Rousseau explained the two parts of IRA, the potential upside for patients and pharmacies, and the need for resolution on drug reimbursement mechanisms.

Q: Erin Wright asked about business mix refinement and Medicaid.

A: Jon Rousseau discussed streamlining post-community divestiture and the distinct nature of the populations served from Medicaid discussions.

Q: Jamie Perse asked about OpEx investments and M&A allocation.

A: Jon Rousseau talked about OpEx leverage, margin improvement potential, and M&A allocation with a focus on debt paydown and tuck-in acquisitions.

Q: Pito Chickering asked about rare and orphan opportunities.

A: Jon Rousseau explained the company's ability to apply oncology success factors to rare and orphan therapies.

Q: Stephen Baxter asked about margin trends and guidance update.

A: Jon Rousseau discussed margin improvement in Pharmacy businesses due to mix and OpEx per script improvements, and the guidance update reflecting continued momentum.

Q: Matthew Gillmor asked about EBITDA seasonality.

A: Jen Phipps noted prior year seasonality patterns, with Q1 and Q4 being outliers.

Q: Larry Solow asked about staffing, M&A, and hospice acquisition.

A: Jim Mattingly discussed staffing management, M&A plans with 10-15 de novos annually, and the successful integration of the Haven hospice acquisition.