Q1 2025 Brightspring Health Services Inc Earnings Call

Operator: Thank you for standing by and welcome to the Brightspring Health Services first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session.

Okay.

Speaker Change: Thank you for standing by and welcome to the Bright Spring Health services first quarter 2025 earnings Conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone if your question has been answered.

Operator: To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded.

Speaker Change: You'd like to remove yourself from the queue simply press star one again.

Speaker Change: As a reminder, today's program is being recorded and now I'd like to introduce your host for today's program David.

David Deuchler: And now I'd like to introduce your host for today's program, David Deuchler, Investor Relations. Please go ahead. Good morning. Thank you for participating in today's conference call. My name is David Deuchler with Investor Relations for Brightspring. I'm joined on today's call by Jon Rousseau, Chief Executive Officer, and Jen Phipps, Chief Financial Officer.

Speaker Change: Mr Relations. Please go ahead.

David Dye: Good morning, Thank you for participating in today's conference call. My name is David dye.

Investor Relations: Investor Relations for bright spring I'm joined on today's call by John Russo Chief Executive Officer.

David Deuchler: Earlier today, Brightspring released financial results for the quarter ended March 31st, 2025. The copy of the press release and presentation is available on the company's investor relations website. Please note that today's discussion will include certain forward-looking statements that reflect our current assumptions and expectations, including those related to our future financial performance in industry and market conditions. Such forward-looking statements are not guarantees of future performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. We encourage you to review the information in today's press release and presentation, as well as our quarterly report on Form 10-Q that will be filed with the SEC, including the specific risk factors and uncertainties discussed in our Form 10-K and 10-Q.

David Dye: <unk> financial officer.

David Dye: Earlier today <unk> released financial results. This quarter ended March 31.

A copy of the press release and presentation is available.

Speaker Change: Services website.

David Dye: Please note that today's discussion will include certain.

David Dye: Forward looking statements that reflect our current assumptions and expectations.

David Dye: It's related to our future financial performance and industry market conditions, such forward looking statements are not guarantees of future performance.

David Dye: These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations.

Speaker Change: Curt you to review the information in today's press release and presentation as well as our quarterly reports on Form 10-Q that will be filed with the SEC.

David Dye: On the specific risk factors and uncertainties discussed in our Form 10-K and 10-Q.

David Deuchler: Such factors may be updated from time to time in our periodic filings with the SEC, and we do not undertake any duty to update any forward-looking statements except as required by law.

Speaker Change: Such factors may be updated from time to time in our periodic filings with the SEC.

Speaker Change: HGTV in forward looking statements, except as required by law during the call. We will use non-GAAP financial measures in discussing the company's performance and financial condition.

David Deuchler: During the call, we will use non-GAAP financial measures when discussing the company's performance and financial conditions. You can find additional information on these non-GAAP measures and reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures to the extent available without unreasonable effort in today's earnings release and presentation, which again are available on the Investor Relations website.

Speaker Change: You can find additional information on these non-GAAP measures and reconciliations of our non-GAAP financial measures to the most directly comparable GAAP measures and extensive available without unreasonable effort in today's earnings release and presentation, which again are available on the Investor Relations website.

Operator: This webcast is being recorded and will be available for replay on the Investor Relations website.

Speaker Change: The recording will be available for replay of our Investor relations website and with that.

Jon Rousseau: And with that, I'll turn the call over to Jon Rousseau, Chief Executive Officer. Good morning. Thank you for joining Brightspring's first quarter 2025 earnings call. I'd like to start by thanking our employees who work hard to ensure that patients receive proper, high quality, and timely care in home and community settings. I'm grateful for our team at Brightspring and their diligence to each other and patience in their care every day. We're pleased with the start to the year across our businesses, with first quarter results exceeding expectations. In 2025, we remain well-positioned for continued growth while leveraging our scale with an ongoing focus on high-quality operations and disciplined investments to drive efficiency.

John: I will turn the call over to John <unk>, Chief Executive Officer.

Speaker Change: Good morning, Thank you for joining bright spring first quarter 2025 earnings call.

Speaker Change: I'd like to start by thanking our employees, who work hard to ensure that patients receive proper high quality and timely care and home and community settings.

Speaker Change: Grateful for our team and bright spring and our diligence to each other and patients in their care every day.

Speaker Change: We're pleased with the start to the year across our businesses with first quarter results exceeding expectations.

Speaker Change: 2025, we remain well positioned for continued growth, while leveraging our scale with an ongoing focus on high quality operations and disciplined investments to drive efficiency.

Jon Rousseau: At Brightspring, we believe that there is always room to improve and innovate as we strive to deliver the best and most reliable coordinated care as a leader in critically needed and highly valuable home and community-based health care.

Speaker Change: Bright spring, we believe that there is always room to improve and innovate as we strive to deliver the best and most reliable coordinated care as a leader in critically needed and highly valuable omni community based health care.

Jon Rousseau: Before I review the first quarter's performance, a brief update on the planned investiture of the community living business, which we announced in January. We continue to expect the transaction to close in the second half of this year, subject to regulatory approvals and typical closing. We did receive a second request to review from the FTC, and we continue to work with them to advance the transactions approval process. As you may recall, we previously provided 2025 guidance excluding community living, with this business reported in the discontinued operations lines of our financial results. As a result, my remarks related to the company's financial performance on this call principally pertain to the continuing operations and do not include the results from community living.

Speaker Change: Before I review the first quarter's performance a brief update on the planned divestiture of the community living business, which we announced in January.

Speaker Change: We continue to expect the transaction to close in the second half of this year subject to regulatory approvals and typical closing conditions.

Speaker Change: And receive a second request to review from the FTC and we continue to work with them to advance the transaction's approval process as.

Speaker Change: As you May recall, we previously provided 2025 guidance excluding community living with this business reported in the discontinued operations line of our financial results as.

Speaker Change: As a result, my remarks related to the company's financial performance on this call principally pertained to the continuing operations and do not include the results from community lending.

Jon Rousseau: For the first quarter, total company revenue was $2.9 billion, which represented growth of 26% year-over-year. Pharmacy Solutions revenue was $2.5 billion, representing 28% growth year-over-year, while Provider Services revenue was $346 million, representing 12% growth year-over-year. Total company adjusted EBITDA of $131 million grew 28% compared to the same period last year, driven by strong revenue results across the businesses, particularly in our Onco360 and CareMed Specialty Pharmacy business. EBITDA margins for the company increased in the quarter versus last year. These results were achieved notwithstanding the impact from fewer days in Q1 this year versus last year, with 2024 being a leap year, which equated to a negative 3.7 million EBITDA impact as compared to this year's first quarter.

Speaker Change: For the first quarter total company revenue was $2 9 billion, which represented growth of 26% year over year Pharmacy solutions revenue was $2 5 billion, representing 28% growth year over year, while provider services revenue was $346 million, representing 12% growth year over year.

Speaker Change: Total company adjusted EBITDA of $131 million grew 28% compared to the same period last year driven by strong revenue results across the businesses, particularly in our <unk> 360, and care med specialty pharmacy business.

Speaker Change: EBITDA margin for the company increased in the quarter versus last year.

Speaker Change: These results were achieved notwithstanding the impact from fewer days in Q1, this year versus last year with 2020 for being a leap year, which equated to a negative $3 7 million EBITDA impact as compared to this year's first quarter.

Jon Rousseau: Following strong performance in the first quarter and an updated outlook for the balance of the year, we are increasing total revenue and adjusted EBITDA guidance for 2025, with adjusted EBITDA guidance for the year increasing by $25 million at the low and high ends of the prior range communicated in March. And again, for clarity purposes, as before, this guidance excludes community living.

Speaker Change: Following strong performance in the first quarter and an updated outlook for the balance of the year. We are increasing total revenue and adjusted EBITDA guidance for 2025 with adjusted EBITDA guidance for the year, increasing by $25 million at the low and high ends of the prior range communicated in March and again for clarity purposes.

Speaker Change: As before this guidance excludes community.

Jon Rousseau: Jen will speak to Brightspring's first quarter financial results and 2025 Outlook in more detail in a moment. Demand for our services and broad demand for health services in lower cost and preferred home and community settings, combined with our commitment to delivering high quality in these settings, continue to support strong growth in the quarter. We have consistently driven outsized volume growth in our markets, led by responsive and reliable high-quality care, loyal and expanding referral sources, and new market investment. We also continue to see the benefits of leveraging our scale and investing in our business to increase organizational efficiencies and reduce costs.

Speaker Change: John will speak to bright spring first quarter financial results and 2025 outlook in more detail in a moment.

Speaker Change: Demand for our services and broad demand for health services, and lower cost and preferred home and community settings.

Speaker Change: Buying with our commitment to delivering high quality in these settings.

Speaker Change: To support strong growth in the quarter.

Speaker Change: We have consistently driven outsized volume growth in our markets led by responsive and reliable high quality care loyal and expanding referral sources and new market investments.

Speaker Change: We also continue to see the benefits of leveraging our scale and investing in our business to increased organizational efficiencies and reduce costs.

Jon Rousseau: Our investments in process improvement, including new and enhanced technologies, are important to provide modern, coordinated, and best practice approaches to care for complex patient populations. Every year we have dozens of programs with varying scope that help improve the efficiency of care delivery and outcomes for our patients.

Speaker Change: Our investments in process improvements, including new and enhanced technologies are important to provide modern coordinated and best practice approaches to care for complex patient populations.

Speaker Change: Every year, we have dozens of programs with varying scope that help improve the efficiency of care delivery and outcomes for our patients.

Jon Rousseau: Some quality highlights include the following. In home health, over 80% of the branches are four-star or better. The 60-day hospitalization rate continued to decrease, and our patient satisfaction rate is approximately 90%. In hospice, our visits and time with patients remains 50% higher than the national average, and our hospice quality index score, which is excellent, has never been higher. In rehab, the percent of patients experiencing a catastrophic neuro event who reach independence again rose to 52%, and our patient satisfaction score remained at 98%. In personal care, our 4.6 satisfaction score, out of 5, is the highest ever.

Speaker Change: Some quality highlights include the following.

Speaker Change: At home health over 80% of the branches are four star or better. The 60 day hospitalization rate continued to decrease and our patient satisfaction rate is approximately 90%.

Speaker Change: Hospice, our visits and time with patients remained 50% higher than the national average and our hospice quality index score, which is excellent has never been higher.

Speaker Change: And rehab the percent of patients experiencing a catastrophic narrowed that to reach independent again rose by 52% and our patient satisfaction score remained at 98%.

Speaker Change: In personal care, our four six satisfaction score out of five is the highest ever.

Jon Rousseau: In community living in Q1, we had the lowest number of audit findings ever and 40% better than industry average. In infusion, the discharge rate due to completion of therapy was 96%, with 95% patient satisfaction. and Hospice and Home and Community Pharmacy, we had 99.999% dispense accuracy, 99% order completeness, and local stat delivery times of two hours. and in Specialty Pharmacy, our time to first fill was four days, well below industry average, with a medication possession ratio of 93% versus the industry benchmark of 80%. We continue to demonstrate a capability to meet the needs of a broader set of patients and deliver highly valuable home and community health care across complementary service lines.

Speaker Change: In community living in Q1, we had the lowest number of audit findings ever and 40% better than industry average.

Speaker Change: The infusion of discharge rate due to completion of therapy with 96% with 95% patient satisfaction.

Speaker Change: In hospice and home and community Pharmacy, we had $99 99, 9% dispense accuracy, 99% order completeness and local staff delivery times of two hours.

Speaker Change: And in specialty pharmacy or time to first fill with four days well below industry average with a medication possession ratio of 93%.

Speaker Change: As the industry benchmark of 80%.

Speaker Change: We continue to demonstrate our capability to meet the needs of a broader set of patients and deliver highly valuable omni community healthcare across complementary service lines.

Jon Rousseau: Turning back to the company's financial results, in the pharmacy segment, total revenue grew 28% in Q1 and adjusted EBITDA increased by 31% in Q1 versus prior year, with total pharmacy script volume growth of 10% to 10.9 million. and the specialty and infusion business, revenue growth was 33% year over year with total script volume growth of 20% in the quarter, exceeding our expectation. Specialty and infusion growth continues to be driven by launches across the now 127 LDD drugs in our portfolio, market share driven by high quality scores and service levels, and market education and patient fulfillment supporting generic drug utilization.

Speaker Change: Turning back to the company's financial results and the Pharmacy segment total revenue grew 28% in Q1, and adjusted EBITDA increased by 31% in Q1 versus prior year with total pharmacy script volume growth of 10% to $10 9 million.

Speaker Change: In the specialty and infusion business revenue growth was 33% year over year with total script volume growth of 20% in the quarter.

Speaker Change: Beating our expectations.

Speaker Change: Saline infusion growth continues to be driven by launches across the now 127, LD drugs in our portfolio market share driven by high quality scores and service levels and market education and patient fulfillment supporting generic drug utilization.

Jon Rousseau: We continue to have good visibility into the LDD market opportunity, expecting 16 to 18 additional LDD launches and their corresponding clinical advancements over the next 12 to 18 months. Specialty script growth was 32% in the first quarter, a reflection of innovative new therapies coming to market and our ability to serve as a strong partner to prescribing physicians and patients and their families. In infusion, continued investment in the business has translated into improved volume performance through the quarter and presently, and we remain optimistic about the future of the business over the coming years with the opportunity to treat both acute and chronic health conditions across infusion settings as our strategy.

Speaker Change: We continue to have good visibility into the <unk> market opportunity expecting 15% to 18, additional <unk> launches and their corresponding clinical advancements over the next 12 to 18 months.

Speaker Change: Specialty script growth was 32% in the first quarter, a reflection of the innovative new therapies coming to market and our ability to serve as a strong partner to prescribing physicians and patients and their families.

Speaker Change: And infusion continued investment in the business has translated into improved volume performance during the quarter and presently and we remain optimistic about the future of the business over the coming years with the opportunity to treat both acute and chronic health conditions across infusion settings as our strategy.

Jon Rousseau: At Home and Community Pharmacy, revenue grew 14 percent, primarily driven by increased script volumes and new customers. The business continues to be operationally steady, and there remains opportunity to expand market share, particularly in assisted living, behavioral, hospice, PACE, and at-home pharmacy settings in the future.

Speaker Change: And home and community Pharmacy revenue grew 14%, primarily driven by increased script volumes and new customers.

Speaker Change: The business continues to be operationally steady and there remains opportunity to expand market share, particularly in assisted living behavioral hospice pace and at home pharmacy settings in the future.

Jon Rousseau: Before I turn to our provider segment, I would like to spend a minute discussing a few external regulatory topics. Brightspring has been evaluating scenarios associated with any potential future pharma tariffs. We've been in discussions with manufacturers, wholesalers, payers, and legislators to best understand potential outcomes, all of which are uncertain given there is no significant policy yet in place. While we have a good understanding of our drug sourcing and current supply in the market, there are still unknowns related to when, what, how, and even if materials could be tariffed in the future. Currently, we do not believe that there will be a material impact to Brightspring in 2025, given our contractual relationships and inventory.

Speaker Change: Before I turn to our provider segment I would like to spend a minute discussing a few external regulatory topics.

Speaker Change: Brian Spring has been evaluating scenarios associated with any potential future pharma tariffs, we've been in discussions with manufacturers wholesalers payers and legislators to best understand potential outcomes all of which are uncertain. Given there is no significant policy yet in place.

Speaker Change: We have a good understanding of our drug sourcing and current supply in the market. There are still unknowns related to win what how and even if materials could be tariff in the future.

Speaker Change: Currently we do not believe that there will be a material impact to bright spring of 2025, given our contractual relationships and inventory, we're continuing to monitor and evaluate potential 2026 dynamics in order to mitigate any potential impact chevron, even potentially arise it's worth noting that approximately 50% of our drug supply comes.

Jon Rousseau: We're continuing to monitor and evaluate potential 2026 dynamics in order to mitigate any potential impact, should one even potentially arise. It's worth noting that approximately 50% of our drug supply comes from the U.S. and North America. Reimbursement for brand drugs is tied to cost, for example, as an annual drug price inflation, and there are typically many domestic and global sourcing options for generics in supplier markets that are competitive. On the IRA, the broad intent and understanding of the legislation is to lower prescription drug costs and pharmacies were not and are not expected to bear any financial burden of resulting changes.

Speaker Change: The U S and North America reimbursement for brand drugs is tied to costs. For example, as an annual drug price inflation and there are typically many domestic and global sourcing options for generics and supplier markets that are competitive.

Speaker Change: On the IRI, the broad insight and understanding of the legislation is the lower prescription drug costs and pharmacies were not and are not expected to bear any financial burden of result in changes.

Jon Rousseau: Moreover, regulators acknowledge the crucial role that pharmacies play is the last mile in ensuring patient access to medications and in driving health outcomes and reducing unnecessary hospitalization. While outstanding legal challenges or actions by Congress or the Trump administration may modify implementation of the IRA, we continue to constructively work with our industry partners to educate and eliminate potential unintended consequences of the new law. All in all, our views on the potential impact to our business from the IRA policy have not changed over the past six months. And in a scenario where the IRA remains in place as it is today, we think there is a manageable impact that we would look to mitigate through continued growth and additional operational focus.

Speaker Change: Moreover, regulators acknowledged the crucial role that pharmacies play as the last mile and ensuring patient access to medications and driving health outcomes and reducing unnecessary hospitalizations.

Speaker Change: While outstanding legal challenges or actions by Congress or the Trump administration may modify implementation of the IRA we continue to constructively work with our industry partners to educate and eliminate potential unintended consequences of the new law.

Speaker Change: All in all our views on the potential impact to our business from the IRS policy have not changed over the past six months and in a scenario where the IRA remains in place as it is today. We think there is a manageable impact that we would look to mitigate through continued growth and additional operational focus.

Jon Rousseau: Regarding Medicaid, approximately 10% of the company's revenue is derived from Medicaid post the community living divestment. with our provider and pharmacy patients served, being seniors and or complex patients, many with behavioral conditions. These are the originally intended Medicaid patients who are not the focus of any Medicaid discussions and in our view, unlikely to be impacted. This is a high-need patient base who has received increased annual rates for over 30 years with our services being critical to support them in home and community settings with quality outcomes that reduce costs to the system. Amidst varying environments, our company has grown at a mid-teens revenue and EBITDA kegger for the past nine years now, based on the strengths of our platform, the clear ROI of what we do, and our complementary diversification and differentiated position in attractive and highly valuable home and community health services markets.

Speaker Change: Regarding Medicaid approximately 10% of the company's revenue is derived from Medicaid postpaid community living divestiture with our provider and pharmacy patient served being seniors <unk> complex patients many with behavioral conditions.

Speaker Change: These are the originally intended Medicaid patients who are not the focus of any Medicaid discussions and in our view unlikely to be impacted.

Speaker Change: This was a high need patient base, who has received increased annual rates for over 30 years with our services being critical to support them at home and community settings with quality outcomes that reduce cost to the system.

Speaker Change: I mean, its varying environment. Our company has grown at a mid teens revenue and EBITDA CAGR for the past nine years now based on the strength of our platform a clear ROI of what we do and our complementary diversification and differentiated position and attractive and highly valuable Amit <unk>.

Speaker Change: Unity Health services markets, and we expect our growth track record to continue into next year and beyond.

Jon Rousseau: and we expect our growth track record to continue in the next year and beyond.

Jon Rousseau: Turning to the provider segment financials, the business delivered solid results in the first quarter despite unfavorable calendar days with 2024 being a leap year and having an extra selling day in more Mondays and Fridays than this year's first quarter. Provider revenue grew 12% year-over-year, and segment-adjusted EBITDA grew 9% year-over-year with a 14.8% margin in the first quarter. As a reminder, we will be discussing three businesses within the provider segment, home health care, rehab care, and personal care. Home health care includes the home health, hospice, and primary care business. and today represents approximately 50% of provider revenue.

Speaker Change: Turning to the provider segment financials, the business delivered solid results in the first quarter. Despite unfavorable calendar days with 2020 for being a leap year and having the extra selling day and more Mondays and Fridays in this year's first quarter.

Speaker Change: Provider revenue grew 12% year over year and segment adjusted EBITDA grew 9% year over year with a 14, 8% margin in the first quarter.

Speaker Change: As a reminder, we will be discussing three businesses within the provider segment.

Speaker Change: Healthcare rehab care and personal care.

Speaker Change: Oh healthcare includes the home health hospice and primary care businesses and today represents approximately 50% of provider revenue.

Jon Rousseau: Revenue in home health care grew 21% year-over-year in the first quarter. The home health and hospice businesses continue to perform well, with average daily census of over 30,000 growing 12% compared with the same period last year. Growth in home health and hospice continues to be driven by strong operational execution, underpinned by leading quality metrics, high levels of patient satisfaction, de novo expansion, and advancing contracts with Medicare Advantage. As we continue to grow and expand our home health and hospice capabilities, home-based primary care remains a large opportunity that we are excited about and further progressing on this year.

Revenue in home health care grew 21% year over year in the first quarter, the home health and hospice businesses continued to perform well with average daily census of over 30000 growing 12% compared with the same period last year.

Speaker Change: Growth in home health and hospice continues to be driven by strong operational execution underpinned by leading quality metrics high levels of patient satisfaction de novo expansion and advancing contracts with Medicare advantage.

Speaker Change: As we continue to grow and expand our home health and hospice capabilities.

Speaker Change: <unk> primary care remains a large opportunity that we're excited about it further progressing on this year.

Jon Rousseau: As the healthcare system continues to face higher costs and an increasingly capacity-constrained infrastructure, payers and regulators are making progress on improving accessibility for home-based care. We are focused on bringing high-quality services, including physician oversight, to the home and community settings to treat patients where they are. In rehab, which represents approximately 20% of provider revenue, we deliver highly clinical and skilled rehab and behavioral therapy to patients with neurorehabilitation needs and psych and behavioral conditions, which significantly lower longer-term costs. Revenue in this operating unit grew 5% in the first quarter, driven by the continued addition of DeNovos through our NeuroRehab and Rehab in Motion programs. In the quarter, we executed on a significant number of new contracts in our Rehab in Motion program, where we began this build out of Rehab for Seniors and Assisted Living later last year.

Speaker Change: As the healthcare system continues to face higher costs, and then increasingly capacity constrained infrastructure payers and regulators are making progress on improving accessibility for home based care.

Speaker Change: We are focused on bringing high quality services, including physician oversight to the home and community settings to treat patients where they are.

Speaker Change: And rehab, which represents approximately 20% of provider revenue, we deliver highly clinical at skilled rehab and behavioral therapy to patients with neuro rehabilitation needs and fake and behavioral conditions with significantly lower longer term cost.

Revenue in this operating unit grew 5% in the first quarter driven by the continued addition of de novo's throughout neuro rehab and rehab and motion programs in the quarter, we executed on a significant number of new contracts in our rehab and motion programs, where we began this build out of rehab for seniors and assisted living later last year another.

Jon Rousseau: Another example of the innovative growth approach of the company that leverages core capabilities and existing customer markets and relationships. In personal care, which represents approximately 30% of provider revenue, we support the activities of daily living care and social determinants of health. The business delivered steady performance in the first quarter, with revenue growth of 3% and modest growth in person served. Overall, we again observe consistent execution and high quality of care across the provider segment, where there continues to be payer support for our services that reduce overall health care costs.

Speaker Change: Example of the innovative broke approach of the company that leverages, our core capabilities and existing customer markets and relationships.

Speaker Change: In personal care, which represents approximately 30% of provider revenue, we support the activities of daily living care and social determinants of health.

Speaker Change: Business delivered steady performance in the first quarter with revenue growth of 3% and modest growth in person served.

Speaker Change: Overall, we again observed consistent execution and high quality of care across the provider segment, where there continues to be payer support for our services that reduce overall healthcare costs.

Jon Rousseau: To conclude, we are pleased with the company's performance in the first quarter. We focus and pride ourselves on our long history of operational execution and high-performing employees that have created organizational best practices. We remain optimistic about our pharmacy and provider businesses over the near, medium, and long term, as we see large opportunities for growth and market expansion across the company. And we are confident in our ability to execute against our increased financial outlook throughout 2025.

Speaker Change: To conclude we are pleased with the company's performance in the first quarter, we focused and pride ourselves on our long history of operational execution and high performing employees that have created organizational best practices.

Speaker Change: We remain optimistic about our pharmacy provider businesses over the near medium and long term as we see large opportunities for growth and market expansion across the company and we are confident in our ability to execute against our increased financial outlook throughout 2025.

Jennifer Phipps: With that, I'll turn the call over to Jen. Thank you, Jon. Before I discuss our results for the first quarter of 2025, I'd like to provide an update on accounting for the quarter. In the first quarter of 2025, we began to record the community living business and discontinued operations, as indicated in the press release and 10-Q, to adhere to accounting standards required on an interim basis. As such, all BrightSpring financial results and forecasts that I will discuss are related to continuing operations and exclude community living. Management believes the presentation of the non-GAAP financials from Continuing Operations is a useful reflection of our current business performance.

Jeff: With that I'll turn the call over to Jeff.

Jeff: Thank you John before I discuss our results for the first quarter of 2025, I'd like to provide an update on accounting for the quarter and the first quarter of 2025, we began to record the community living business and discontinued operations as indicated in our press release and 10-Q to adhere to the accounting standards required on an interim.

Jeff: Basis, as such all bright spring financial results and forecast that I will discuss are related to continuing operations and exclude community living.

Jeff: Management believes the presentation of the non-GAAP financials from continuing operations is a useful reflection of our current business performance.

Jennifer Phipps: In the first quarter of 2025, total company revenue was $2.9 billion, representing 26% growth from the prior year period. Pharmacy solution segment revenue in the quarter was $2.5 billion, achieving 28% year-over-year growth. Within the pharmacy segment, infusion and specialty revenue was $2.0 billion, representing growth of 33% from prior year, and home and community pharmacy revenue was $581 million, representing growth of 14% year-over-year. In the provider services segment, we reported revenue of $346 million in the first quarter, which represented 12% growth compared to the prior year period. Within the provider services segment, home health care reported $178 million in revenue, growing 21% versus last year.

Jeff: In the first quarter of 2025 total company revenue was $2 9 billion, representing 26% growth from the prior year period Pharmacy solutions segment revenue in the quarter with $2 5 billion, achieving 28% year over year growth within the pharmacy segment infusion specialty revenue was $2.

Jeff: <unk> billion, representing growth of 33% from prior year and how many community pharmacy revenue was 581 million representing growth of 14% year over year.

Jeff: And our provider services segment, we reported revenue of $346 million in the first quarter, which represented 12% growth compared to the prior year period within the provider services segment healthcare reported 178 million in revenue growing 21% versus last year rehab revenue was 70 million growing five.

Jennifer Phipps: Rehab revenue was $70 million, growing 5% versus last year. And personal care revenue was $98 million, representing growth of 3% year over year. Moving down the P&L, first quarter company gross profit was $338 million, representing growth of 16% compared with the first quarter of last year. Gross margin in the quarter was impacted by a mix of revenue, given the comparably larger revenue growth in the specialty pharmacy business, which carries lower than corporate average gross margin. Adjusted EBITDA for the total company was $131 million in the first quarter, growing 28% compared to the first quarter of 2024.

Jeff: 5% versus last year, and personal care revenue was 98 million representing growth of 3% year over year.

Jeff: Moving down the P&L first quarter company gross profit was 338 million representing growth of 16% compared with the first quarter of last year gross margin in the quarter was impacted by mix of revenue given the comparatively larger revenue growth in the specialty pharmacy business, which carries lower than corporate average gross margin.

Jeff: EBITDA for the total company with $131 million in the first quarter growing 28% compared to the first quarter of 2024, adjusted EBITDA margin improvement on a year over year basis was driven by strong execution and offset by some calendar dynamics, including typical first quarter elevated costs, such as tax resets and then on.

Jennifer Phipps: Adjusted EBITDA margin improvement on a year-over-year basis was driven by strong execution and offset by some calendar dynamics, including typical first quarter elevated costs such as tax resets and an unfavorable leap year days compared versus last year. Adjusted EPS for the total company was $0.19 for the first quarter. To highlight, our procurement and lien operational initiatives continue to generate improved efficiencies across the organization. We expect these initiatives will have momentum through the course of the year and support improved margins beginning in the second quarter. Turning back to segment performance in the first quarter, Pharmacy Solutions gross profit was $204 million, growing 20% compared with the first quarter of last year.

Favorable leap year to date compared versus last year.

Jeff: Adjusted EPS for the total company was <unk> 19 for the first quarter to highlight our procurement and lean operational initiatives continue to generate improved efficiencies across the organization. We expect these initiatives will have momentum through the course of the year and support improved margins beginning in the second quarter.

Jeff: Turning back to the segment performance in the first quarter Pharmacy solutions gross profit was 204 million growing 20% compared with the first quarter of last year.

Jennifer Phipps: Adjusted EBITDA for Pharmacy Solutions was $116 million for the first quarter, growing 31% compared to last year, representing an adjusted EBITDA margin of 4.6%, which represented an increase and was in line with our expectations. Provider services gross profit was $134 million, growing 10% versus the first quarter of last year. Adjusted EBITDA for provider services was $51 million for the first quarter, growing 9% versus last year, representing an adjusted EBITDA margin of 14.8%, down 30 basis points versus last year, driven by the previously noted calendar dynamics of days and leap year. Not included in the company's reported adjusted EBITDA, as previously stated, community living's adjusted EBITDA was an additional $32 million in the quarter, an increase of 14% from the prior year in this business.

Jeff: Adjusted EBITDA for Pharmacy solutions was $116 million for the first quarter growing 31% compared to last year, representing an adjusted EBITDA margin of four 6%, which represented an increase and was in line with our expectations provider services gross profit was 134 million growing 10% versus.

Jeff: The first quarter of last year adjusted EBITDA for provider services was 51 million for the first quarter growing 9% versus last year, representing an adjusted EBITDA margin of 14, 8% down 30 basis points versus last year, driven by the previously noted calendar dynamics of days and leap year.

Jeff: Not included in the company's reported adjusted EBITDA as previously stated community living so adjusted EBITDA with an additional $32 million in the quarter, an increase of 14% from the prior year in this business.

Jennifer Phipps: On a total company basis, cash flow from operations was $102 million in the first quarter. We continue to expect to deliver over $300 million of annual run rate operating cash flows in 2025, as we remain focused on improving our leverage ratio towards our goal of 3.0 times this year, pro forma for the community living divestiture, and towards our long-term target of 2.0 times to 2.5 times. As of March 31st, our net debt outstanding was approximately $2.5 billion with a leverage ratio of 3.87 times, which was in line with our internal projections. As previously mentioned in January, we expect approximately $715 million of net cash proceeds of the $835 million of gross cash consideration in the pending community living sales.

Jeff: On a total company basis cash flow from operations was $102 million in the first quarter.

Jeff: We continue to expect to deliver over $300 million of annual run rate operating cash flows in 2025, as we remain focused on improving our leverage ratio towards our goal of 3.0 times. This year pro forma for the community living divestiture and towards our long term target of 2.0 times to two five times.

Jeff: As of March 31, our net debt outstanding was approximately $2 5 billion with a leverage ratio of 387 times, which was in line with our internal projections. As previously mentioned in January we expect approximately $715 million of net cash proceeds of the 835 million of gross cash consideration.

Jeff: In the pending community living sale.

Jennifer Phipps: As a reminder, net interest expense includes interest income related to cash flow hedges due to our three received variable pay fixed interest rate swap agreements that we have in place set to mature on September 30th, 2025. As part of our processes to monitor and address risks, during the first quarter, we entered into an extension of our interest rate hedge, providing stability to our interest rate risk through September 2026. Prior to any proceeds from the pending community living divestiture, quarterly interest expense is still expected to be approximately $43 million per quarter, including approximately $1.2 million of interest expense related to the TEU instrument.

Jeff: As a reminder, net interest expense includes interest income related to cash flow hedges due to our three received variable pay fixed interest rate swap agreements that we have in place set to mature on September 32025, as part of our processes to monitor and address risks during the first quarter, we entered into an extension of our.

Jeff: Our interest rate hedge providing stability to our interest rate risk through September 2026.

Jeff: Prior to any proceeds from the pending community living divestiture quarterly interest expense is still expected to be approximately $43 million per quarter, including approximately $1 2 million of interest expense related to the Teu instrument.

Jennifer Phipps: Turning to our guidance for 2025, we are increasing our expectations for total revenue and adjusted EBITDA that was provided in March, which excludes the community living business. Total revenue is expected to be in the range of $12 billion to $12.5 billion, including pharmacy solutions revenue of $10.55 billion to $11.0 billion, and provider services revenue of $1.45 billion to $1.5 billion. This revenue range reflects 19.1% to 24.1% growth over full year 2024, excluding community living in both years. Total adjusted EBITDA is expected to be in the range of $570 million to $585 million for full year 2025.

Jeff: Turning to our guidance for 2025, we are increasing our expectations for total revenue and adjusted EBITDA that was provided in March which excludes the community living business total revenue is expected to be in the range of 12 billion to $12 5 billion, including pharmacy solutions revenue of $10 $5 5 billion to <unk>.

Jeff: 11.0 billion and provider services revenue of $1 or $5 billion to one 5 billion. This revenue range reflects 19, 1% to 24, 1% growth over full year 2024, excluding community living in both years total adjusted EBITDA is expected to be in the range of 500.

Jeff: $70 million to $585 million for full year 2025. This would reflect 23, 9% to 27, 2% growth over full year 2024, excluding community living in both years.

Jennifer Phipps: This would reflect 23.9% to 27.2% growth over full year 2024, excluding community living in both years. Our increased total adjusted EBITDA outlook reflects better than expected pharmacy revenue performance in the quarter, with associated incremental margins from launched products. Strong provider revenue and operating performance and profitability, and further benefit from enterprise operational initiatives.

Jeff: Our increased total adjusted EBITDA outlook reflects better than expected pharmacy revenue performance in the quarter with associated incremental margins from launched products.

Jeff: Wrong provider revenue and operating performance and profitability and further benefit from enterprise operational initiatives with that I will now turn it back to John.

Jon Rousseau: With that, I will now turn it back to Jon. Thank you for your time today to go through Brightspring's first quarter 2025 results.

Jeff: Thank you for your time today to go through bright spring first quarter 2025 results. We will now open up the call for questions operator.

Operator: We will now open up the call for questions.

Operator: Operator.

Whit Mayo: Certainly, and our first question for today comes from the line of Whit Mayo from LeRink Partners. Your question please. Hey, thanks. Good morning. I guess my first question is just on the gross profit per script. It was very strong in the quarter, Regent Hsu, and I think you hit on maybe some of the factors, but not sure I caught everything exactly. Can you talk about everything that sort of drove that dynamic in the quarter? Yeah, good morning, Whit. Yeah, that was definitely a positive dynamic in the quarter. That would really just be a function of our mix in general, along with, you know, some proactive efforts we've had on the purchasing side of the organization.

Jeff: Certainly and our first question for today comes from the line of with me from Leerink Partners. Your question. Please.

Speaker Change: Hey, Thanks, good morning.

Speaker Change: I guess my first question is just on the gross profit per script. It was very strong in the quarter. Jim I think you hit on maybe some of the factors, but not sure I caught everything exactly can you talk about everything that sort of drove that dynamic in the quarter.

Speaker Change: Yes, good morning.

Speaker Change: Yes that was definitely a positive dynamic in the quarter that would really just be a function of our mix in general along with.

Speaker Change: Some proactive efforts we've had on the purchasing side of the organization, but as you just look at mix of drugs in totality, including brands versus generics and then our efforts on the procurement side internally that would have driven the <unk>.

Jon Rousseau: But as you just look at a mix of drugs in totality, including brands versus generics, and then our efforts on the procurement side internally, you know, that would have driven the increase.

Speaker Change: Kris.

Jon Rousseau: And then my follow-up question, just thinking about the IRA and the MOOC changes that we're seeing this year. How are you thinking about the second half growth around the pharmacy trends now, and maybe any color that you have around changes in manufacturer behavior that you care to share, maybe as it relates to patient assistant funds or anything else? Yeah, I would probably refer back to the prepared comments. You know, on IRA, nothing has changed in the last six to nine months in our view. We don't see any change in the pharmacy traction growth rate over the balance of the year.

Speaker Change: Okay.

Speaker Change: And then my follow up question, just thinking about the IRA and the mood changes.

Speaker Change: This year, how are you thinking about second half growth around the pharmacy trends now and maybe any color that you have around changes in manufacturer behavior that you care to share maybe as it relates to patient assistant funds or anything else. Thanks.

Speaker Change: Yes, I would probably refer back to the prepared comments on IRA not nothing has changed in the last six to nine months in our view.

Speaker Change: We don't see any change in the.

Speaker Change: And the pharmacy.

Speaker Change: Traction growth rate over the balance of the year and.

Jon Rousseau: And as I said before, you know, we feel like if we look at our long-term track record of our company, in terms of EBITDA growth, that's something that we're going to be sustaining into the future, you know, regardless of the environment. But IRA has not changed for six to nine months. You know, as mentioned, pharmacies. have not been, are not the target. There are discussions with CMS, with DC around addressing that for pharmacies. But in any scenario, you know, our confidence level in next year remains very strong in what it has been. Thank you.

Speaker Change: And as I said before we feel like if we look at our long term track record of our company in terms of EBITDA growth, that's something that we're going to be sustaining into the future regardless of the environment, but IRA has not changed for six to nine months.

Speaker Change: As mentioned pharmacies.

Speaker Change: Have not been or not the target there are discussions with CMS with DC around addressing that for pharmacies, but in any scenario our confidence level in next year remains.

Speaker Change: <unk> very strong in what at Aspen.

Speaker Change: Thanks.

Ann Hynes: And our next question comes from. of Ann Hynes from Mizzou. Your question, please. Yep, good morning. I'm just staying on the IRA. I, you know, I do think there is, you know, Opinions of the market that the IRA will lead to behavior change on the patient and physician side that could lead to an acceleration of utilization.

Speaker Change: Thank you and our next question comes from the line of.

Ann Hynes: Of Ann Hynes from Mizuho Your question. Please.

Ann Hynes: Yes, good morning.

Ann Hynes: Staying on the IRI.

Ann Hynes: Do think there is.

Ann Hynes: Opinions of the market that they are a well lead to behavior change on the patient and physician side that could lead to an acceleration of utilization how much of that kind of patient behavior change in position changed do you have in your guidance from our IRI or should we think that as maybe upside potential going forward.

Jon Rousseau: How much of that kind of patient behavior change and physician change do you have in your guidance from our IRA, or should we think that as maybe upside potential going forward? Yeah, Ann, I think it's largely, you know, the same that we've talked about. I mean, we don't see a meaningful swing to our business really potentially either way on IRA next year.

Ann Hynes: Yeah, and I think it's largely the same that we've talked about I mean, we don't see a meaningful swing into our business really potentially either way on IRA next year.

Jon Rousseau: And I would just really look at the breadth of the organization in totality, you know, maybe just take a step back and really speak to the quarter again, and really broadly over the last decade, you know, really proud of the quality performance and the organization. You know, we continue to reiterate those metrics, you know, to be able to have industry leading metrics across really all of our service lines. And many of these are just best in class levels. I think speaks to our ability to manage across service lines in a really, in a really high quality way.

Ann Hynes: And I would just really look at the breadth of the organization in totality.

Ann Hynes: Maybe just take a step back and really speak to the quarter again and really broadly over the last decade.

Ann Hynes: Really proud of the quality performance in the organization, we continue to reiterate those metrics.

Ann Hynes: To be able to have industry, leading metrics across really all of our service lines and many of you that just best in class levels I think speaks to our ability to manage across service lines and are really in a really high quality way and then the fact that we're doing that with the home and community focus delivering health care, where people want to be where they are.

Jon Rousseau: And then the fact that we're doing that with a home and community focus delivering healthcare where people want to be, where there's a high ROI, you know, is really just a, you know, an attractive place in the healthcare market. As we see it, and, you know, really ultimately creates those two factors together, create an ability for us to address multiple services for greater growth and scale, I think, comparatively to a lot of other people. So, you know, we look at a nine year track record on revenue and EBITDA in the mid-teens in terms of growth rates.

Ann Hynes: A high ROI.

Ann Hynes: It was really just a an attractive place in the health care market as we see it and really ultimately creates those two factors together created an ability for us to address multiple services for greater growth and scale I think comparatively to a lot of other people. So we look at our nine year track record on revenue and EBITDA in the mid teens.

Jon Rousseau: We expect that to continue as it relates to IRA. There are still some things that need to play out. Our view on that has not changed for a long time. And regardless of the outcome, we feel good about next year and we don't see IRA being a major swing.

Ann Hynes: In terms of growth rates, we expect that to continue as it relates to IRA there are still some things that need to play out our view on that has not changed for a long time and regardless of the outcome. We feel good about next year, and we don't CRA being a major swing factor.

Operator: Thank you.

Ann Hynes: Thank you.

Joanna Gajuk: And our next question comes from the line of Joanne Gajuk from Bank of America. Your question, please. Oh, yes, hi, good morning. Thank you so much for taking the question here. So, I think maybe I missed the first question. Was it about the gross profit per script? Because that was the one number that stood out. So, it sounds like you said there was something about mix and the purchasing efforts. But as we think about the generic launches going forward, should we expect this number to even accelerate when it comes to the gross profit per script growth?

Speaker Change: Thank you and our next question comes from the line of Joanne.

Ann Hynes: From Bank of America. Your question. Please.

Joanne: Yes, hi, good morning. Thank you so much for taking the question here.

Speaker Change: So I.

Speaker Change: I think maybe I missed the first question was it about the gross profit per script because that was the one number that stood out so it sounds like you said there was something about mix and.

Speaker Change: And the purchasing efforts, but as we think about the generic launches going forward should we expect this number to even accelerated when it comes to the gross profit per script growth because it was up like 9%.

Joanna Gajuk: Because it was up like 9%. And this $18.75 or so per script, should we expect this to continue to go higher?

Speaker Change: 18.

Speaker Change: Does 25 cents or so.

Speaker Change: Script.

Should we expect this to continue to go higher.

Jon Rousseau: Yeah, morning, Joanna. You know, your gross profit per script is, you know, is always a function of your product mix, your payer mix, and then what you can do on the procurement side. So, I would say, you know, really from a product mix and procurement perspective, what we can control internally, those were favorable trends. I mean, your gross profit per script and your revenue per script can bounce around over time from quarter to quarter just due to mix. But we're very focused from an execution standpoint, from a sourcing standpoint, you know, managing across our portfolio on the cog side, you know, that continues to be helpful for us.

Speaker Change: Yes morning Joanna.

Speaker Change: Your gross profit per script per script as you know there is always a function of your product mix or payer mix and then.

Speaker Change: What you can do on a procurement side, so I would say really from a product mix and procurement perspective, where we can control internally those were favorable trends I mean, your gross profit per script in and your revenue per script can bounce around over time from quarter to quarter, just due to mix, but were very focused from an execution.

Speaker Change: Standpoint from a sourcing standpoint, managing across our portfolio on the Cogs side.

Speaker Change: That continues to be helpful for us and yet.

Jon Rousseau: And, and yeah, the generics are generally a good thing for everybody. You know, they reduce the cost in healthcare for the system. And, you know, we're, we're an organization, and part of our value as a pharmacy is, is driving generic utilization. And so, I think what you're saying is, you know, us really partner with brand companies to drive innovation in the market with products that improve people's clinical outcomes and prognosis. And at the same time, when generics come available, you know, with our sales force and our, and our service levels and our partnerships, we really try to do what we do, what we can do to accelerate those generic launches.

Speaker Change: Generics are generally a good thing for everybody.

Speaker Change: Zeus the cost in health care for the system and we're an organization and part of our value it as a pharmacist is.

Speaker Change: <unk> generic utilization and so I think what youre seeing is us really partner with brand companies to drive innovation in the market with products that improve people's clinical outcomes in prognosis and at the same time when generics come available with our sales force and our service levels and our partnerships, we really try to do what we do what we can do to accelerate.

Jon Rousseau: And so, you know, those factors all played out as dynamics in the quarter and, you know, resulting in the numbers that, that you saw. And the generic pipeline to your last question, you know, does remain, you know, very robust. The last thing that I would add, Joanna, is specialty obviously, you know, has had significant growth. And when you think about the GP per script, that does, you know, goes to the mix, you know, there, so. also helps.

Speaker Change: Those generic launches and so.

Speaker Change: Those factors all played out.

Speaker Change: Dynamics in the quarter.

Speaker Change: <unk> and the numbers that you saw.

Speaker Change: And the generic and the generic pipeline and the generic pipeline to your last question does remain very robust.

Speaker Change: Last thing that I would ask what exactly is specialty obviously has had significant growth and when you think about the GP per script that does goes to the next.

Speaker Change: So.

Joanna Gajuk: Okay, I see.

Speaker Change: Also helps okay I see anytime.

Joanna Gajuk: And if I may, on a different topic. So we did show a headline yesterday. that I guess the company was named one of the buyers from some assets that will be divested in the medicines acquisition by United. I don't know if you can give us a sense, like, is it Home Health Hospice or anything else you can give us on that one.

Speaker Change: Topic so.

Speaker Change: Headlines yesterday.

Speaker Change: That I guess.

Speaker Change: The company was named one of the buyers from some assets that will be divested in the Medisoft acquisition by United I don't know if you can give us a sense like you said home health hospice.

Speaker Change: Or anything else. It then.

Jon Rousseau: Thank you. Yeah, Joanna, you know, we're subject to confidentiality with the parties there, so there's really not a lot we can say due to that. I would just say that, you know, this is a unique situation as we observed it to be. It really has been, I would say, our quality and our overall platform strength as an enterprise, you know, that allowed us to be a part of those conversations, you know, as a potential, you know, positive party and solution to work with. And then we also, you know, really have essentially no geographical overlap whatsoever with those locations.

Speaker Change: Give us on that one thank you.

Speaker Change: Yes, Joanna we're subject to confidentiality with the parties. There. So there's really not a lot we can say due to that.

Speaker Change: I would just say that this is this is a unique situation.

Speaker Change: We observed it to be.

Speaker Change: It really has been I would say our quality and our overall platform strength as an enterprise that allowed us to be a part of those conversations.

Speaker Change: As a potential.

Speaker Change: As a potential positive party and solution to work with.

Speaker Change: And then we also.

Speaker Change: Really have essentially no geographical overlap whatsoever with those locations and so.

Jon Rousseau: And so it was a unique situation for us. And, you know, we were glad in that circumstance to be able to be potentially a really positive, you know, party and solution for the other parties. But obviously that transaction between those entities has to consummate and come to completion for our transaction to consummate as Great, thank you.

Speaker Change: It was a unique situation for us.

Speaker Change: We were glad in that circumstance to be able to be.

Speaker Change: So you are really positive.

Speaker Change: Party and solution for the other parties, but obviously.

Speaker Change: That transaction between those entities has to consummate and come to completion for for our transaction to concentrate as well.

Speaker Change: Great. Thank you.

Operator: Thank you.

David Larsen: And our next question comes from the line of David Larsen from BTIG. Your question, please. Hey, congratulations on another very good beat and raise quarter.

Speaker Change: Thank you and our next question comes from the line of David Larsen from <unk>. Your question. Please.

David Larsen: Hey, congratulations on another very good beat and raise quarter.

Jon Rousseau: Jon, can you talk a little bit about the potential sort of scenarios around tariffs? Like if tariffs are implemented, I would imagine this would increase wholesale acquisition cost. Would that simply increase, you know, average wholesale price and those costs be passed through to your customers? And how long would that process take and roughly how many days inventory do you have on hand? Thanks very much.

David Larsen: John can you talk a little bit about the potential sort of scenarios around tariffs like if if tariffs are implemented I would imagine this would increase wholesale acquisition cost would that simply increase average wholesale price and those cost pass through to your customers and how.

David Larsen: With that process taken and roughly how many days of inventory you have on hand, thanks very much.

Jon Rousseau: Yeah, good morning, David. You know, again, I probably refer you back to the comments we made before on that. You know, there really are no meaningful tariffs in place today. You know, I think, as everybody knows, it's a really uncertain environment from day to day. You know, I would say, though, that, you know, on the brand side, you know, we're reimbursed off cost and, you know, that, you know, that happens right away. And on the generic side, you know, there's a lot of choices for drugs across the globe. It's a very, very competitive market. You know, we're very sophisticated in our purchasing capabilities and, you know, on the generic side, we would expect, you know, reimbursement increases as well if there were cost increases.

David Larsen: Yes, good morning, David.

David Larsen: Again.

Speaker Change: We refer you back to the comments, we made before on that.

Speaker Change: There really are no meaningful tariffs in place today, I think as everybody knows its a really uncertain environment from day to day.

Speaker Change: I would say, though that on the brand side, we're reimbursed off cost.

Speaker Change: That happens right away.

Speaker Change: On the generic side.

Speaker Change: There is a lot of choices for drugs across across the globe. It's a very very competitive market, we're very sophisticated in our purchasing capabilities and.

Speaker Change: And on the generic side, we would expect reimbursement increases as well if there were cost increases. So net net that's not something that we're seeing is a significant swing factor at this point in time next year, and we don't see that impacting this year just given inventory levels.

Jon Rousseau: So, you know, net net, that's not something that, you know, we're seeing is a significant swing factor, you know, at this point in time next year. And, you know, we don't see that impacting this year, just given inventory level. Okay, and just just what I heard you say was you're reimbursed on cost on the brand side, and that happens right away. So if prices increase, let's say, August 1, on the brand side, then on August 1, you would be covered for those higher costs right away. Yeah, that's generally how it works. Okay, great. Thanks very much.

Speaker Change: Okay, and just just what I heard you say was year reimbursed on cost on the brand side and that happens right away. So if prices increase let's say August 1st on the brand side than on August 1st you would be covered for those higher costs right away.

Speaker Change: Yes, Thats generally how it works.

Speaker Change: Okay, great. Thanks very much.

Operator: Thank you.

Brian Tanquilut: And our next question comes from the line of Brian Tanquilut from Jefferies. Your question, please. Hey, good morning, guys, and congrats on the quarter. Hey, Jon, so just on the Amethyst's deal acquisition announcement, so curious, more strategically speaking, you know, I know you've been focused on growing the provider side of the business. So is this a sign that we should expect more deal flow in that space? And then maybe the follow-up to that would just be, as we think about your leverage targets, how should we be thinking about that as you potentially ramp up acquisitions in that space?

Speaker Change: Thank you and our next question comes from the line of Brian Brian <unk> from Jefferies. Your question. Please.

Speaker Change: Hey, good morning, guys and congrats on the quarter, Hey, John So just on the medicine deal acquisition announcements, so curious more strategically speaking.

Speaker Change: I know you've been focused on growing the provider side of the business. So is this.

Speaker Change: A sign that we should expect more deal flow in that space and then maybe the follow up to that would just be as we think about your leverage targets, how should we be thinking about that.

Speaker Change: Essentially ramp up acquisitions in that space.

Jon Rousseau: Thanks.

Jon Rousseau: Yeah, good morning, Brian. Yeah, I would say, you know, the only other thing I could probably say about the transaction at this point in time, it is very in line with our acquisitions philosophy, you know, and as we've articulated it previously. over time, you know, we can realize, you know, that's something we'll consider. I mean, I would direct you back to our Haven acquisition in Florida on a hospice, you know, last Q3 or so, you know, that was a unique scenario where we structured it creatively to be able to execute against that transaction. Just given the current state of that company, you know, the multiple was a little bit challenging for us, so we had to be creative in the structuring, and you look at that business today, it is performing exceptionally well in terms of what our team has been able to do to that, do with that, you know, and we very much will work our way into a multiple of four times or less here, you know, probably within the next year, and so, you know, but that was a unique situation that we were able to capitalize on.

Speaker Change: Yes, good morning, Brian, Yes, I would say the only other thing I could probably say about the transaction at this point in time. It is very in line with our acquisition philosophy.

Speaker Change: And as we've articulated previously.

Speaker Change: We've been in a mode for a couple of years of largely doing tuck ins that have been highly accretive at very attractive.

Speaker Change: Pro forma multiples.

Speaker Change: We've always said if there is.

Speaker Change: Each opportunity.

Speaker Change: Something of massive size, but a unique opportunity.

Still at.

Speaker Change: Still at a level from a pro forma perspective that.

Speaker Change: That we think over time.

Speaker Change: We can realize that's something we will consider I mean, I would I would direct you back to our Haven acquisition in Florida on Hospice last Q3 years or so.

Speaker Change: That was a unique scenario, where we structured it creatively.

Speaker Change: To be able to execute against that transaction.

Speaker Change: Given the current state of that company. The multiple was a little bit was a little bit challenging for us. So we have to be creative in structuring and you look at that business today. It is performing exceptionally well in terms of what our team has been able to do to that deal with that and we very much will work our way into.

Speaker Change: A multiple of four times or last year.

Speaker Change: Within the next year, and so but that that was a unique situation that we were able to capitalize on just given.

Jon Rousseau: Just given, you know, our abilities from an integration standpoint, operational standpoint, and our relationships in the market, and we knew that over time, you know, that was going to be, you know, that was going to be the multiple that we'd be very, very pleased with. So I would say, I would say this transaction fits in with our M&A philosophy, and we do not see it impacting our leverage goals whatsoever, really for this year or the long term. You know, there is close to no impact on our leverage as we see this transaction next year. Awesome.

Speaker Change: Our abilities and from an integration standpoint operational standpoint in our relationships in the market.

Speaker Change: And we knew that over time that was going to be that was going to be at a multiple that we'd be very very pleased with so I would say I would say this transaction fits in with our M&A philosophy, and we do not see it impacting our leverage goals whatsoever are really for this year or the long term.

Speaker Change: There is there is close to no impact on our leverage as we see this transaction next year.

Operator: Thank you. And as a reminder, if you have a question at this time, please press star one one on your telephone.

Speaker Change: Awesome. Thank you.

Speaker Change: Thank you and as a reminder, if you have a question at this time. Please press star one on your telephone. Our next question comes from the line of Matthew Gillmor from Keybanc. Your question. Please.

Matthew Gilmor: Our next question comes from the line of Matthew Gilmor from KeyBank.

Matthew Gilmor: Your question, please. Hey, thanks for the question.

Matthew Gilmor: I want to ask you about the guidance update. I think the revenue is up $400 million and EBITDA is up $25 million. Nicely above the beat. Jennifer provided some of the drivers. I was hoping maybe you could sort of help us think through which of those drivers are sort of more important if you're able to size them relative to the EBITDA upside on the guide. Yeah.

Speaker Change: Hey, Thanks for the question.

Matthew Gillmor: Wanted to ask you about the guidance update I think the revenues up $400 million and the EBITDA was up $25 million, which is nicely above the beat Jennifer provided some of the drivers, but I was hoping maybe you could sort of help us think through which of those drivers are sort of more important youre able to size them relative to the to the EBITDA upside on the on the guide.

Jennifer Phipps: So, I just reiterate the comments that I made. We have continued to see strong pharmacy volume growth ahead of our expectations. We've adjusted the guidance to reflect that. As we've also discussed over the last several quarters, we have many different initiatives that we've put in place focused on margin expansion. We will see and expect to see some of that in the provider space, especially, as well as in pharmacy, and that is also reflected in our guidance. That's great.

Matthew Gillmor: Yes, so I'd just reiterate the comments that I made we have continued to see strong pharmacy volume growth ahead of our expectations. We've adjusted the guidance to reflect that as we've also discussed over the last several quarters. We have many different initiatives that we've put in place focused on margin expansion, we will see and expect.

Matthew Gillmor: To see some of that in the provider space, especially as well as in pharmacy and that is also reflected in our guidance.

Jennifer Phipps: And then as a follow up on the efficiency initiatives that you discussed, is there a know, a longer term view in terms of what the total opportunity could be over the next couple of years. Just curious how you guys are thinking about Yes, this is an ongoing program that we've had since we entered as management to this organization. We just continue to be focused on these items every single year and would expect that there will be opportunities for us into, we will continue to pursue all of those opportunities into perpetuity. It's just an institutionalized, you know, way we work here going back nine years now and, you know, annual savings have driven continued investments in technology, continued investments in people, you know, offsets, any headwinds in the market, you know, from time to time and, you know, some of it drops to EBITDA.

Matthew Gillmor: That's great and then as a follow up on the efficiency initiatives that you discussed is there.

Matthew Gillmor: Our longer term view in terms of what the total opportunity could be over the next couple of years. Just curious how you guys are thinking about that.

Matthew Gillmor: Yes. This is an ongoing program that we've had since we entered as management to this organization. We just continue to be focused on these these items every single year and we would expect that there will be opportunities for us.

Matthew Gillmor: We will continue to pursue all of those opportunities into perpetuity.

Matthew Gillmor: It's just an institutionalized way we work here going back nine years now and.

Matthew Gillmor: Annual savings have driven continued investments in technology continued investments in people.

Matthew Gillmor: Offsets any headwinds in the market from time to time.

Operator: So, but it's really the way we just work. Got it. Thank you.

Matthew Gillmor: And some of it drops to EBITDA, so, but it's really the way we just worked here.

Matthew Gillmor: Got it thank you.

Matthew Gillmor: Sure.

Larry Solow: And once again, if you have a question at this time, please press star 11 on your telephone.

Matthew Gillmor: Yes.

Speaker Change: Thank you and once again, if you have a question at this time. Please press star one on your telephone. Our next question comes from the line of Larry Solow from CJS Securities. Your question. Please.

Larry Solow: Our next question comes from the line of Larry Solow from CJS Securities. Your question, please. Great.

Larry Solow: Good morning, and I echo the congrats on the good start to the year. Oh, just a couple of follow-up questions.

Speaker Change: Greg Good morning, and I Echo the congrats on the good start to the year.

Jon Rousseau: Could you give us any update just on your efforts in bundled services in value-based care and, you know, where we stand with ACOs currently? Any update there? Yeah, we continue to make steady progress on our primary care business and some of the alternative payment model there's, payment models there. I'd remind folks, you know, that the ACO is zero risk. It's just all upside. If you get savings, then you get some shared savings. You know, last year was the first year of that program. We've been pretty conservative in booking any shared savings to date. You ultimately don't get, you know, those final results from Medicare until even later still this year for last year.

Speaker Change: Just a couple of follow up questions could you give us any update just on your efforts and bundled services and value based care.

Speaker Change: Where we stand with the Acos currently any update there.

Speaker Change: Yes, we continue to make to make to make steady progress on our primary care business and some of the alternative payment model there's payment models there.

Speaker Change: Remind folks that the.

Speaker Change: Zero risk, it's just all upside if you get savings then you get some shared savings.

Speaker Change: Last year was the first year of that program we have.

Speaker Change: Been pretty conservative in booking any shared savings to date.

Speaker Change: Ultimately don't get those final results from Medicare until.

Jon Rousseau: So, we've been pretty conservative there, but we're optimistic. You know, we're going to see double digit savings rates on what we've been able to do for this population at higher quality levels. You know, we do have an ISNIP program that's a managed care plan. It's just on a couple thousand patients. It takes quite a while to get these plans approved state to state, county to county, but hopefully, as we look out five years, we'll be in about fifteen states with that plan. And, you know, we really just need to scale it. You know, we've, we've got, you know, I don't know, some four or five thousand patients in these ACO and managed care plans today, you know, and over time, you know, we want to get that to over a hundred thousand, you know, and three, four or five years.

Speaker Change: Even later still this year for last year, so we've been pretty conservative there, but we're optimistic we're going to see double digit savings rates on what we've been able to do for this population and higher quality levels.

Speaker Change: We do have an Istent program. That's a managed care plan. It's just on a couple of thousand patients. It takes quite a while to get these plans approved state to state County to County.

Speaker Change: But hopefully as we look out five years will be in about 15 states with that plan and we really just need to scale it.

Speaker Change: Got I don't know some four to 5000 patients in these ACO in managed care plans today.

Speaker Change: And over time, we want to get that to over 100.

Jon Rousseau: So, you know, we are making steady progress. You know, there's an outside chance, you know, that could result in eight figures of EBITDA this year. We'll have to see. That's what we're hopeful for. But we have to see how these final numbers come in and, you know, we just continue to lean into that business and think we're in a really unique situation to capitalize on reaching more patients with with these payer models. Just given the access to the hundreds of thousands of patients in our pharmacy and provider business that we have every year. So, you know, great strength in the core businesses.

Speaker Change: 345 years, so we are making steady progress.

Speaker Change: There is an outside chance that could result in eight figures of EBITDA this year.

Speaker Change: We'll have to see that's what we're hopeful for but we have to see how these final numbers come in and we just continue to lean into that business a big we're in a really unique situation.

Speaker Change: Capitalize on reaching more patients with with these payer models just given the access to the hundreds of thousands of patients and our pharmacy provider business that we have every year. So.

Great strength in the core businesses and we've always we've always viewed this as a very unique.

Jon Rousseau: And we've always, we've always viewed. This is a very unique capability we have to scale to scale this leg of the company as well. And, you know, slow and steady progress here. And, you know, hopefully we're gonna really start accelerating into the future.

Speaker Change: Capability, we have the scale to scale this leg of the company as well.

Speaker Change: Slow and steady progress here and hopefully we're going to really start accelerating into the future.

Operator: Great, I appreciate that call.

Jennifer Phipps: And then just a quick follow-up for Jen, just on the cash flow in the quarter, a nice strong start to the year. I think the cash flow from operations was a little over $100 million, and you paid down a little bit, looks like a good amount of it, allow that excess for debt pay down.

Great I appreciate that color and then just a quick follow up for John just on the on the cash flow in the quarter nice strong start to the year I think the cash flow from operations was a little over $100 million.

Speaker Change: <unk> paid down a little what looks like a good amount of use a lot of that excess for debt pay down.

Jennifer Phipps: Is there any seasonality in your business? I don't think so, but maybe just in terms of timing. Is Q1 normally a little bit stronger, maybe just running a little bit ahead of the game? start the year and I guess continue to expect to use most of your free cash flow for debt paid down this year.

Speaker Change: Is there any seasonality in your business, but I don't think so but maybe just in terms of timing.

Speaker Change: Is Q1 normally a little bit stronger, maybe just running a little bit ahead of the game.

Speaker Change: To start the year and I guess continue to expect to use most of your free cash flow for debt pay down this year. Thanks.

Jennifer Phipps: Thanks. Yeah, so Q1 does tend to be a stronger quarter. There is a little bit of seasonality, but it's mostly associated with inventory opportunities that we can have it from time to time in our business. Q2, we do have, you know, tends to be one of our lower cash flow quarters just related to sick payments and some other one-time items in the year that are paid during the second quarter.

Speaker Change: Yes, so Q1 does tend to be a stronger quarter.

Speaker Change: There is a little bit of seasonality, but it's mostly associated with inventory opportunities that we can have it from time to time.

Speaker Change: In our business Q2, we do have tends to be one of our lower.

Speaker Change: Cash flow quarters, just related to stick payments and some other onetime items in the year that are paid during the second quarter, but other than that.

Jennifer Phipps: But other than that, it's pretty steady. Yeah, I'd say on Provider 2 with that leap year last year, you know, that was an extra day. And there, you know, and that was like 3.6% of growth of growth rate that, you know, that we were impacted by because last year had that extra day. So, and a lot of that, most of that was on the provider side. So, and if you look at that leap year, you know, from a provider standpoint, I mean, that was like 4 to 5% growth on the provider side that we were impacted by because of the extra day last year.

Speaker Change: It's pretty pretty steady, yes, I'd say a provider to with that leap year last year that was an extra day and they are.

Speaker Change: And that was like three 6% a growth of growth rate.

Speaker Change: That we were impacted by because last year had that extra day, so and a lot of that most of that was on the provider side. So.

If you look at that leap year from a provider standpoint, I mean that was like 4% to 5% growth on the provider side.

Speaker Change: That we were impacted by because of the because of the extra day last year, and then last year had a lot of cash.

Jennifer Phipps: And then last year had a lot of, had more Mondays and through Fridays and just the way the business works, how we book revenue, how we expense labor, you know, that was a favorable dynamic last year versus this year too. So, you know, as we get through the balance of the year, you know, those Mondays and Fridays always even out. And, you know, that should be a little bit helpful as we get through the rest of the year.

Speaker Change: <unk> had more Mondays through Fridays and just the way the business works, how we book revenue, how we how we expense labor.

Speaker Change: That was a favorable dynamic last year versus this year or two.

So as we get through the balance of the year, those Mondays and Fridays always even out.

Speaker Change: That should be that should be a little bit helpful. As we get through the rest of the year.

Operator: Great, thank you, I appreciate it.

Speaker Change: Great. Thank you I appreciate it.

A.J. Rice: Thank you.

A.J. Rice: And our next question comes from the line of A.J. Rice from UBS. Your question, please.

Speaker Change: Thank you and our next question comes from the line of a J rice from UBS. Your question. Please.

A.J. Rice: Hi, everybody. Maybe first to ask, just on the infusion side of the business, I know you'd spent the last 18 months or so really repositioning that business internally, resource-wise and externally, and have some pretty optimistic views about how much that might grow multiple times of its current size. Can you comment on how you feel that is unfolding? I know it's still early, but just are you on pace to accomplish that kind of growth? And how much is CVS's exit quorum from the market providing a tailwind? Yeah, good morning, AJ. Yeah, I would say largely what we saw from from any exit in the market by quorum, it was probably all been kind of baked in at this point.

Speaker Change: Hi, everybody.

Speaker Change: Maybe first ask just on the infusion side of the business I know.

Speaker Change: Yes.

Speaker Change: The last 18 months or so really repositioning that business internally resource wise and externally.

Speaker Change: It has some pretty optimistic views about how much that might grow multiple times of its current size can.

Speaker Change: Can you comment on how you feel that there is unfolding I know, it's still early but just where are.

Speaker Change: Are you on pace to accomplish that kind of growth and how much is the Cvs as exit calm.

Speaker Change: From the market, providing a tailwind.

Speaker Change: Yes, good morning, a J.

Speaker Change: Yes, I would say largely what we saw from for many exited the market by corium.

Speaker Change: It's probably all but kind of baked in at this point I mean, thats starting to really happening in Q4, I would just say with infusion we continue to work away there.

Jon Rousseau: I mean, that started really happening in Q4. Yeah, I would just say with infusion, we continue to work away there. Very, very positive thoughts just on the overall infusion market in general. A ton of opportunity there. We have a good platform. And at this point in time, we still feel good about hitting our internal budget.

Speaker Change: Very very positive thoughts on the overall infusion market in general a ton of opportunity there.

Speaker Change: We have a good platform and at this point in time, we still feel good about hitting our internal budget for the year.

Jon Rousseau: Okay. And on the M&A comment, I think you typically talk about deploying about $100 million in capital in M&A. Is that a MEDICIS deal basically? Additive to that or is that part of the overall goal for the You know, again, I've got to be measured here in terms of, you know, some of the confidentiality we have with all the parties. But I think what I would say is that, you know, sort of, you know, what we've always done historically with our, you know, Tuck and M&A, you look back over six years, you know, an effective pro forma EBITDA multiple, we've realized of, you know, about four or four and a half times.

Speaker Change: Okay.

And on the M&A comment I think you typically talk about deploying about 100 million and capital and M&A.

Speaker Change: Is that a medicine deal basically.

Speaker Change: Additive to that or is that part of the overall.

Speaker Change: Our goal for the year.

Speaker Change: Again, I've got to be measured here in terms of some of the confidentiality we have with all the parties but.

Speaker Change: I think I think what I would say is that sort of what we've always done historically with our.

Speaker Change: Tuck in M&A, you look back over six years and effective pro forma EBITDA multiple we've realized.

Speaker Change: You know of about 445 times.

Jon Rousseau: You know, that has been, you know, the mode we've been in, that will continue to be the mode we be in, we will be in for the balance of the year. You know, but from time to time, there can be some unique situations like Haven was last year. I would say this is a unique situation, you know, that we fold into that strategy and that philosophy. But at the same time, as I said before, you know, we don't view this as impacting what we've said from a leverage perspective, really this year or next year. And, you know, I look forward to sharing a lot more details when we can, you know, assuming that transaction on their side goes through.

Speaker Change: That has been the mode, we've been in and that will continue to be the mode. We'd be at we will be in for the balance of the year.

Speaker Change: But from time to time, there can be some unique situations like haven with last year.

Speaker Change: I'd say this is a unique situation.

Speaker Change: That we fold into that strategy and that philosophy, but at the same time as I said before.

Speaker Change: We don't view this as <unk>.

Speaker Change: Impacting what we've said from a from a leverage perspective really this year or next year and I look forward to sharing a lot more details when we can assuming that transaction on their side goes through.

A.J. Rice: Okay. All right. Thanks, Juan. Sure.

Speaker Change: Okay, alright, thanks, a lot sure.

Erin Wright: Thank you. And our next question comes to the line of Erin Wright from Morgan Stanley. Your question, please. Thank you.

Erin Wright: Thank you and our next question comes on line of Erin Wright from Morgan Stanley. Your question. Please.

Speaker Change: Okay.

Linda Bolduc: This is Linda Bolduc on for Erin Wright and congrats again on another strong quarter. So today we want to inquire further on cadence for 2025, building on the prior cash flow comments that you just answered. So are there additional unique quarterly dynamics that we should think through as we progress through the remainder of the year, perhaps margin expansion across both segments, utilization, or generic launches? Thank you. Yeah, so I just reiterate what I said earlier in the prepared remarks, which is we do expect our operating cash flow to be ahead of $300 million for the year, which, obviously, from a balance of the year perspective, as operating cash flow was $102 million, would reflect a couple of quarters that are less than what we saw in Q1, so if that's helpful.

Linda Bolduc: Thank you this is Linda Bolduc answer.

Speaker Change: Congrats again on another strong quarter. So today, we wanted to inquire further on cadence for 2025 building on the prior cash flow comment.

Speaker Change: You just answered so are there unique.

Speaker Change: The quarterly dynamics that we should thank you.

Speaker Change: Progressing through the remainder of the year, perhaps margin expansion across both segments.

Speaker Change: Thanks, Shannon or generic launches.

Speaker Change: Yes.

Speaker Change: Yes, so I'd just reiterate what I said earlier in the prepared remarks, which is we do expect our operating cash flow to be ahead of $300 million for the year, which obviously from a from a balance of the year perspective.

Speaker Change: As operating cash flow was 102 million what would reflect a couple of quarters that are less than what we saw in Q1. So that's helpful. We do again continue to expect strong management, we are focused on improving our DSO our days inventory on hand, but providing opportunities to allow us.

Jennifer Phipps: We do, again, continue to expect strong management. We are focused on improving our DSO, our days inventory on hand, but providing opportunities to allow flexibility to invest in inventory bills and other strategic items as necessary, so we feel really good about our ability to deliver on that this year. Thank you.

Speaker Change: <unk> ability to invest in inventory builds and other strategic items as necessary. So we feel really good about our ability to deliver on that.

Speaker Change: This year.

Operator: And this does conclude the question and answer session of today's program.

Speaker Change: Thank you. Thank you.

Speaker Change: This does conclude the question and answer session of today's program I'd like to hand, the program back to John Russo for any further remarks.

Jon Rousseau: I'd like to hand the program back to Jon Rousseau for any further remarks. Thank you, Jonathan. We appreciate everybody's time today. Thank you for the questions. Thank you for joining the call, and we look forward to talking with you again next quarter. Have a great day.

Speaker Change: Thank you Jonathan we appreciate everybody's time today. Thank you for the questions. Thank you for joining the call and we look forward to talking with you again next quarter have a great day.

Operator: Thank you, ladies and gentlemen, for your participation at today's conference. This does conclude the program. You may now disconnect. Good day.

Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].