BrightSpring Health Services, Inc. Q1 FY2024 earnings call

• BrightSpring had strong first quarter performance across home and community health service lines, with revenue and adjusted EBITDA exceeding plan.
• Raised full-year guidance driven by growth in large and growing markets, valuable services reducing costs and improving outcomes, strong quality and service levels, and strategic growth efforts.
• Pharmacy Solutions saw 35% revenue growth due to strength in infusion, specialty, and Home and Community Pharmacy. Specialty delivery grew above sub-segment rate, and Home and Community Pharmacy had 15% y-o-y growth.
• Provider Services had 7% revenue growth from strong home health care, rehab, and community living performance. Home health care average daily census grew 11% y-o-y, and core billable hours in rehab grew at a high-teens rate.
• Adjusted EBITDA in Provider Services grew 25% y-o-y with margin expansion from cost efficiencies, scale, and volume growth.
• BrightSpring's operational prowess includes high quality metrics like 99.9% generic efficiency in pharmacy, 84% reduction in readmission for IDD patients in home-based primary care, and high customer satisfaction scores in various segments.

For the first quarter, BrightSpring's revenue was $2.6 billion, up 27% year-over-year. Pharmacy Solutions generated $2 billion in revenue, representing 35% growth year-over-year. Within Pharmacy Solutions, infusion and specialty business grew 44% year-over-year, and Home and Community Pharmacy revenue grew 15% year-over-year. The Provider Services segment generated $600 million in revenue, 7% growth year-over-year. Within Provider Services, Home Healthcare had $242 million in revenue, 9% growth, and Community and Rehab Care had $358 million, 6% growth. Adjusted EBITDA for Pharmacy Solutions was $88 million, 7% growth year-over-year. Adjusted EBITDA for Provider Services was $82 million, 25% growth year-over-year.

• Total revenue expected to be in the range of $10.3 billion to $10.8 billion, with Pharmacy Solutions at $7.85 billion to $8.3 billion and Provider Services at $2.45 billion to $2.5 billion.
• Adjusted EBITDA now expected to be in the range of $555 million to $570 million, excluding a certain quality incentive payment. Previously, the range included a $16 million contribution from that payment. The midpoint of the new range represents a like-for-like increase of approximately $20 million.
• Expect margin expansion throughout the rest of the year, with company margin excluding specialty higher in 2024 compared to 2023.

• Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially.
• Specific risk factors and uncertainties can be found in SEC filings, including potential impacts from healthcare regulations and cybersecurity incidents.

Q: Could you walk us through where the upside in the pharmacy business came from specifically?

A: Overall growth was broad-based. Specialty Pharmacy had explosive growth, Home and Community Pharmacy also grew at 14% y-o-y. Driven by volume across the board, with almost 10% script growth on pharmacy side. Continued wins from limited distribution drugs (LDDs) and execution on targeted therapies with a leading sales force.

Q: How are you thinking about the sustainability of robust growth?

A: Expect specialty growth rate to stay elevated well above 30%, infusion in double digits, and Home and Community in double digits for foreseeable future. Broad-based growth across organization, underpinned by operational execution, efficiency, volume outpacing market growth, quality, operational excellence, and sales and marketing investments.

Q: Can you talk about deals and their impact?

A: Closed one small transaction in Q1 with deminimis impact. Have several more deals under definitive to close in Q2. Deals are complementary, consistent with historical strategy, including home health care, rehab, and tuck-in pharmacies. Guidance doesn't include future M&A yet, but M&A pipeline remains active.