BrightSpring Health Services, Inc. Q4 FY2024 earnings call

• Jon thanked the BrightSpring team and welcomed Jen Phipps as CFO. - 2024 was a year of milestones with continued quality improvements and growth. Pharmacy Solutions saw growth in Infusion and Specialty (42% growth in Q4) and Home and Community Pharmacy (17% growth in Q4). Provider Services had segment revenue growth of 11% in Q4 with margin expansion. - Focus on operational efficiencies, quality improvements like high Net Promoter Scores in specialty pharmacies, on-time delivery in home and community pharmacy, and high hospice care index. - Community living business divestiture is on track, expected to close in 2025, which will streamline the organization.

In the fourth quarter of 2024, Pharmacy Solutions segment revenue was $2.4 billion, achieving 34% year-over-year growth. Full year 2024 Pharmacy Solutions revenue was $8.8 billion, representing 34% growth year-over-year. Provider Services segment revenue in Q4 2024 was $656 million, a 11% growth compared to the prior year period, and full year 2024 provider services revenue was $2.5 billion, 9% growth year-over-year. In Q4, Pharmacy Solutions adjusted EBITDA was $113 million, growing 22% compared to last year, with an adjusted EBITDA margin of 4.7%. Provider Services adjusted EBITDA was $99 million for the fourth quarter, growing 16% versus last year, representing an adjusted EBITDA margin of 15.2%, up 70 basis points versus last year.

BrightSpring is increasing 2025 revenue and adjusted EBITDA guidance. Total revenue is expected to be in the range of $11.6 billion to $12.1 billion (15.2% to 20.1% growth over 2024 excluding Community Living), with Pharmacy Solutions revenue $10.15 billion to $10.6 billion and provider services revenue $1.45 billion to $1.5 billion. Total adjusted EBITDA is expected to be in the range of $545 million to $560 million (18.4% to 21.7% growth over 2024 excluding Community Living).

• Risks related to IRA implementation, including potential impact on home and community pharmacy margin if reimbursement moves to MFP on certain drugs. - Market dynamics and regulatory approvals affecting the community living divestiture and other business operations.

Q: Talk about the competitive landscape for limited distribution drug business and pipeline A: No material shift in market, long history of focusing on operational process and service levels, trend towards more niche micro therapies, and BrightSpring has been a chosen partner.

Q: Growth trajectory and margin of Infusion business A: Last two years focused on operational improvements, new team in place, seeing good progress, turnaround times at 10-11 days (best-in-class), hopeful to grow about 20% in 2025 Q: Internal operating cost saving opportunities A: Amalgamation across many areas, lean and PMO focus, cutting across procurement, RPA, automation, AI applications, over 100 projects in last 15 months, benefits drive back into business for growth Q: Sustainability of growth rates and blended growth going forward A: Nine-year track record of double-digit growth, community living divestiture enhances growth rate, focus on quality, operational infrastructure, efficiency, and people to drive volume above market growth Q: Specialty pricing and potential slowdown A: Stability in Specialty market, revenue per script and margin from diverse portfolio of brands and generics, stable relationships with payers and PBMs Q: IRA impact on growth A: Two parts, lowering out-of-pocket for patients is helpful, but need to see how reimbursement for eight drugs in home and community pharmacy plays out, could be a swing factor on downside but company expects to absorb Q: Business mix refinement and Medicaid exposure A: Streamlining post community living divestiture, Medicaid populations served are different from discussed work requirements, not in relevant conversations Q: OpEx investments and leverage targets A: Leverage in business, OpEx per script expected to improve in Pharmacy businesses, M&A spend around $100 million, long-term leverage target 2 to 2.5x Q: Rare and orphan opportunity A: Focus on oncology continues, rare and orphan therapies leverage critical success factors of BrightSpring, team can apply best practices to expand in relevant therapeutic spaces Q: Pharmacy margin pacing and guidance update A: Mix and growth in Pharmacy businesses influence margin, stability to upticking margins expected, guidance update based on continued momentum across organization Q: Seasonality of EBITDA A: Prior years reflect seasonality, Q1 has payroll tax reset, Q4 is typically strong Q: Staffing, M&A, and acquisition progress A: Staffing managed with focus on retention, M&A spend around 10-15 de novos per year, Haven hospice acquisition in 2024 is ahead of plan