Guardian Pharmacy Services, Inc. Q4 FY2025 earnings call

• Fred Burke noted 2025 was a year of broad-based execution and disciplined investment with results ahead of plan, anchored by organic revenue growth, acquisitions, adjusted EBITDA growth, cash generation, and strong return on equity. - Pharmacists performed over 100,000 clinical interventions benefiting ~74,000 residents, proactive insurance optimization program helped residents achieve ~$56 million in cost savings, vaccine clinics administered over 120,000 vaccines with 9% increase in script volumes and material improvement in profitability. - Completed rollout of HIPAA-compliant secure messaging systems. - Focus on future including impact of IRA, industry consolidation, demographic tailwinds, and monitoring market opportunities. - David Morris walked through quarterly financial details, including revenue, gross profit, adjusted SG&A, D&A, adjusted EBITDA, adjusted EPS, balance sheet cash flow, and outlook for 2026.

Fourth quarter: Served over 205,000 residents (up 10% year over year), script volume grew 14% year over year, revenue increased 17% year over year to $397.6 million (top 12% organic growth), gross profit rose 27% to $85.5 million with gross margins expanding to 21.5% from 19.8% a year ago. Vaccine script volumes up 3% year over year with increased profitability due to better vaccine purchasing and reimbursement. Greenfield locations ramping efficiently and performing ahead of initial expectations. Acquisitions contributed to outperformance with purchasing and reimbursement programs implemented sooner. Greenfield startup and acquisitions made over the last two years as a group continue to dampen overall margin by approximately 90 basis points. Plan optimization initiatives helped increase Medicare Part D mix, supporting better coverage and lower out-of-pocket costs for residents and improved reimbursement. Full year 2025: Organic revenue growth of 13%, full-year reported revenue growth 18%, adjusted EBITDA grew 27% year-over-year with margins expanding 50 basis points to 7.9%, increased cash balance by approximately $60 million, full-year return on equity of 27%.

• Raising 2026 adjusted EBITDA guidance to $120 to $124 million reflecting durable drivers and low double-digit growth. - Maintaining revenue forecast of $1.4 to $1.42 billion as new pricing flows through from IRA. - Outlook does not include impact of future acquisitions. - Quarterly distribution of revenue and adjusted EBITDA expected to be similar to 2025. - Stock-based compensation expense expected to step up to quarterly run rate of approximately $3 million following additional annual LTIP grants. - Effective tax rate expected to normalize to approximately 26% in 2026. - Additional branded drug negotiations under IRA expected to have smaller impact in 2027 and 2028, approximately a $65 million revenue headwind in 2027.

• Impact of IRA on pricing, reimbursement dynamics, processes, and payments, including new operational complexity with Medicare transaction facilitator. - Industry consolidation at facility level and increasing operational complexity. - Potential disruption from other industry changes. - Bankruptcy filing by an institutional long-term care pharmacy and monitoring of industry developments.

Q: Can you help us understand what's durable, what was vaccine, what's non-recurring in the quarter?

A: Guiding to run rate ended the year approximately $110 billion of EBITDA, variability in Q4 not projected into base, increasing acuity not in base, vaccine program continued to be significant both revenue and profit-wise with improvement on reimbursement side.

Q: Did the vaccine program contribute more this year than last year?

A: Continued to be significant both revenue and profit-wise in Q4 with improvement on reimbursement and buy side.

Q: Talk about balancing profit contribution between generics and branded to better reflect 90% script volume is generic?

A: Been working on it even before IRA, made progress with several payors in 2025, moving forward in positive manner from aligning gross margin dollars with activity.

Q: Gap between potential margin and realized margin still what it was a couple of quarters ago?

A: A little bit more, closer to 90 basis points in Q4, investment for future locations and accretive profitability.

Q: Faster ramp up in recently acquired facilities and impact on large and regional accounts?

A: Integrated and achieved scale earlier with platforms in Pacific Northwest, varied, and on balance dislocations represent opportunity.

Q: Impact of divestitures or disposition of operations from large regional accounts on continuity of service?

A: Maintained service at all facilities served, opportunity to meet new operating groups and show what we can do.

Q: Remaining opportunity on faster ramp up of recently acquired facilities?

A: Mentioned average time to bring acquisitions up and achieve synergies, but things like operating systems, purchasing platforms, national accounts can come on sooner impacting businesses.