BrightSpring Health Services, Inc. Tangible Equity Unit Q1 FY2025 earnings call

• First-quarter results exceeded expectations; 2025 growth continues with focus on high-quality operations and disciplined investments.
• Planned divestiture of community living business expected to close in second half of 2025, pending regulatory approvals.
• Quality highlights: In home health, over 80% of branches are four-star or better; hospice visits/time 50% above national average; rehab patient independence rise; personal care highest satisfaction score; community living had lowest audit findings ever; infusion discharge rate 96% with 95% patient satisfaction; pharmacy dispense accuracy 99.999%.
• Regulatory topics: Evaluating pharma tariffs impact; IRA intended to lower drug costs with no financial burden on pharmacies; Medicaid patients served unlikely to be impacted.
• Provider segment delivered solid results despite calendar days, with home health and hospice growth driven by operational execution and quality metrics, rehab growth from new contracts, and personal care steady performance.

Total company revenue was $2.9 billion, up 26% year over year. Pharmacy Solutions revenue was $2.5 billion, a 28% year-over-year growth, with infusion and specialty revenue at $2 billion (33% growth) and home and community pharmacy revenue at $581 million (14% growth). Provider services revenue was $346 million, a 12% year-over-year growth. Within provider services, home health care revenue was $178 million (21% growth), rehab revenue was $70 million (5% growth), and personal care revenue was $98 million (3% growth). Total company adjusted EBITDA was $131 million, up 28% year over year.

• Increased total revenue guidance to $12 billion to $12.5 billion (19.1%-24.1% growth over 2024, excluding community living).
• Increased adjusted EBITDA guidance to $570 million to $585 million (23.9%-27.2% growth over 2024, excluding community living), driven by better-than-expected pharmacy revenue, strong provider performance, and operational initiatives.

• Uncertainty around pharma tariffs with unknowns on when, what, how, or if materials could be tariffed.
• Potential impact of IRA policy, though views on manageable impact remain; outstanding legal challenges could modify IRA implementation.
• FTC second request to review community living divestiture, adding uncertainty to the closing timeline.

Q: On gross profit per script, what drove the dynamic in the quarter?

A: It was a function of product mix, payer mix, and proactive procurement efforts.

Q: How are you thinking about second-half growth around pharmacy trends and manufacturer behavior related to IRA?

A: No change in view on IRA impact; pharmacy traction growth rate expected to sustain, with confidence in future EBITDA growth regardless of environment.

Q: Potential scenarios around tariffs, if implemented, and inventory days?

A: No meaningful tariffs in place; reimbursed on cost for brands, generic side competitive with many sourcing options; inventory levels not seeing significant impact this year.

Q: On Amedisys deal and M&A strategy, is more deal flow expected?

A: Fits with acquisition philosophy of tuck-ins at accretive multiples; no impact on leverage goals; unique situations like Haven in Florida are examples of past accretive acquisitions.

Q: Guidance update drivers and long-term efficiency opportunities?

A: Strong pharmacy volume growth and margin expansion initiatives drive guidance; efficiency initiatives are ongoing and expected to continue perpetually.