Q2 2025 Brightspring Health Services Inc Earnings Call
Good day, ladies and gentlemen, and thank you for standing by. Welcome to the brightspring Health Services Inc, second quarter, 2025 earnings call. At this time, you are in listen-only mode. Later, we will conduct a question and answer session to ask a question at that time. Please press star 1 1 on your touchtone telephone,
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Please stand by our conference will begin shortly. I would now like to hand the conference over to this first Speaker today.
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Good morning. Thank you for participating in today's conference call. My name is David der with investor relations for bright spring. I'm joined on today's call by John, RSO chief executive officer and Jen fips. Chief Financial Officer earlier today, brightspring released Financial results for the quarter ended, June 30th, 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, and 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 in our quarterly report on form 10q. That will be filed with the FCC including the specific risk factors and uncertainties discussed in our form 10K and form 10 Q.
Such factors may be updated from time to time and our periodic filings with the SEC and we do not undertake any duty to update any forward-looking statements except as required by law.
During the call, we will use non-gaap Financial measures when talking about the company's financial performance and financial condition.
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, press release and presentation which again are available on our investor relations website. This webcast is being recorded and will be available for replay on our investor relations website. And with that, I will turn the call over to John Russo chief executive officer.
Good morning, everyone, and thank you for joining BrightSpring. This is the second quarter 2025 earnings call.
I would like to begin by expressing my gratitude to all of our BrightSpring teammates across the country, who work hard to provide high-quality and compassionate care to patients every day.
They make a tremendous impact.
Through the first half of the year, we have executed on our plans across the organization with a high level of focus and discipline. And we are pleased with the performance of our businesses.
Second quarter results, exceeded expectations and have us well, positioned to continue to deliver on our goals for the balance of the year.
We remain committed to discipline growth the company by executing in each of our markets, while leveraging our scale and best practices making smart growth Investments, and continuing to provide the high quality of care to patients.
Before discussing brightspring, second quarter performance. I would like to remind you that the company's financial performance in 2025 guidance.
Principally pertain to the continuing operations and do not include results from the community living business.
At this time, we expect the community living to vesture transaction to close in the fourth quarter of this year subject to regulatory approvals and typical closing conditions and we continue to work with the FTC as they complete, their second review of the transaction.
For the second quarter, bright Springs revenue and adjusted Eva both grew approximately 30% versus last year's comparable quarter.
Is revenue of $358 million increasing 11% year-over-year?
To company adjusted IBA of 143 million, in the quarter. Also, grew 29% compared to the same period last year, driven by strong volume and revenue results across the businesses. Particularly in our enco 360 and caremed Specialty, Pharmacy business.
Eva de margin for the company was 4.5%, which was flat compared to the second quarter of last year.
Every service line in the company experienced solid growth as compared to last year. Reflective of broad-based operational performance.
Given the results in the quarter and with an updated outlook for the remainder of 2025, we are increasing total revenue and adjusted EVA guidance for 2025, with adjusted EBITDA guidance increasing by $20 million at the low and high ends of the prior range communicated in May, to $590 million to $605 million for the year.
As a reminder, this 2025 guidance, excludes Community Living, which is reported at discontinued operations in our financial results.
The $605 million upper end of the guidance range would compare to $460 million in 2024 and $391 million in 2023, excluding the QIP and community living as well.
And at the high end of the range would represent 31.5% growth versus 2024.
General will discuss bright Springs, second quarter Financial results and 2025 Outlook in more detail, shortly.
At brightspring, we prioritize quality services, people and continuous Improvement in operations across the organization to deliver well-coordinated, comparatively lower cost, and timely and highly proximal care to patients in their preferred setting.
We remain committed to leveraging our unique level of complimentary scale while investing in areas that will enable further efficiencies resulting in Innovative and enhanced care services for complex, patient. Populations.
In the past quarter, we continue to grow volumes and win customers due to high patient and provider satisfaction scores.
Our reach, education, and support of prescriber referral sources and reliable end-to-end services for patients.
We have a very high quality standard and work hard every day to ensure our standards are met across the company.
And Home Health, 90% of our locations, achieve 4 or more stars.
And we have a leading 98% timely, initiation of care with services that have lowered patient hospitalizations and Hospital. Readmission rates.
In hospice with a top 5% ranked hospice program in the U.S., our hospice Quality Index score is well above the national average, and we deliver 30% more visits to patients versus the national average.
In rehab, our patient satisfaction score remains at 99%, and our 4.54 satisfaction score out of 5 in Personal Care remains very high.
In infusion, our patient satisfaction score was approximately 95%, and our discharge rate due to completion of therapy was 96%.
While in Home and Community Pharmacy, we had a 99.99% dispense accuracy order, completeness of 99% and on-time delivery of 97%.
last in Specialty Pharmacy, our medication possession ratio was 93% much higher than the national average
Time to first fill was 3.6 days, and our net promoter score in the most recent quarter remained at a best-in-class level, with CareMed. Our growing rare and complex disease pharmacy received a perfect NPS of 100.
Overall, BrightSpring continues to exhibit excellent quality and patient and customer satisfaction across our business lines every day.
Turning to the company's Financial results, Total Pharmacy Solutions, Revenue grew 32% in the second quarter and adjusted Eva also increased by 32% versus the prior year with Total. Pharmacy script, volume growth of 7% to 10.9 million in the quarter.
In the specialty and infusion business, revenue grew 39% year-over-year, exceeding expectations and underpinned by strong service levels with payer and manufacturing partners, and exceptional patient service.
Continued ldd wins and launches, generic drug conversion and utilization and fee for service and hub growth.
Generic script growth.
we ended Q2 with 131 ldds including 5 LD launches in the quarter, our ldd portfolio, has now expanded to 133 therapies and we expect 16 to 18 additional ldd launches, over the next 12 to 18 months,
In the second quarter, we were selected as the national Pharmacy partner for a number of newly approved therapies and the treatment of advanced cancers and rare genetic disorders.
We are proud of our ability to support these therapies as a preferred Pharmacy partner and are excited about the potential of these groundbreaking therapies to make a positive impact on patient lives.
Turning to infusion the business performed in line with our expectations, in the quarter, with solid revenue, and even die, year-over-year growth and benefiting from improved profitability, operational initiatives and organic. Volume growth under augmented leadership in place in the quarter.
We remain enthusiastic about the opportunity in both acute and chronic therapies, especially as we continue to make operational and technological enhancements in the business.
In Home and Community, Pharmacy, Revenue grew 11% in the quarter driven by increased script volumes and customer wins with solid Eva dog growth year-over-year.
Performance in the quarter. Has been the result of timely and customized delivery of Pharmacy. Services to Assisted Living behavioral, Skilled Nursing and Rehab hospice, pace and at home facilities and settings, along with cost and process Improvement initiatives.
We believe that there exists attractive additional growth potential in these markets.
Moving to the provider segment, we are proud of how the business performed, both in the quarter and so far in 2025.
Provider Revenue, grew 11% year-over-year and segment adjusted ibida. Also grew 11% with a segment. Adjusted ebit dot margin in the quarter of 15.8%.
And Home, Healthcare comprised of the Home Health, hospice, and Primary Care businesses Revenue, which represents 50% of the revenue in the provider segment, proved 17% compared with the second quarter last year.
Average daily census, grew 6% year-over-year to over 30,000 with home, health and hospice census growth of 10%.
Our commitment to leading service quality has resulted in continued high patient satisfaction scores. We remain optimistic about the home-based primary care opportunity and have seen good traction thus far as we continue to leverage proximity and access to patients through our core Pharmacy and Provider Services, building out our value-based care model. More broadly,
In rehab care Revenue that represented, approximately 20% of Provider Revenue in the second quarter, grew 9% year-over-year with 6% growth in persons served in approximately 10% growth in core rehab hours bills.
Results in the business were driven by strong stakeholder satisfaction scores and neuro rehab program and Rehab In Motion. Denovo, location, Editions
Both Home Health Care and Rehab Eva grew well into the double digits year-over-year on a percentage basis.
And personal care, which represented approximately 30% of provider revenue in the second quarter, experienced revenue growth of 4%, driven by steady nominal growth and an increase in persons served.
In the quarter, we continue to provide high-quality patient support services for activities of daily living and saw strong satisfaction scores as a result.
While Community Living is not included in our continuing results and current Guidance, the business continues to perform very well with stronger than ever quality metrics.
Community Living adjusted Eva de has grown well into the double digits. Year-to date on a percentage basis.
I would also like to discuss a few recent industry topics and health, contextualize them, as it relates to our business.
Across the brightspring platform, we provide services for patients who need significant help with disease illness or accident treatment and Recovery.
Our businesses are crucial to the support and outcomes of some of the most acute and complex patients in the healthcare system and our provided a preferred and lower cost settings.
As such these Services have tremendous value as evidenced by extensive studies including many peer-reviewed articles in leading journals.
For example, home and community pharmacy interventions, such as post-discharge medication reviews and follow-up calls, have been shown to be 99% effective in keeping recently discharged patients at home.
55% of readmissions after a SNF to home transitions are due to medication errors, and a pharmacy transitions program reduces readmissions by 23%.
The average cost per day of Home Care is 90% less than hospital care.
And hospice care is 98% less expensive per day than an ICU. Stay
Post-acute Home Health Care. Reduces 90-day medical, spend by 36% and readmission rates by 28%.
80% of acos report that post discharge home visits are critical for Cost Containment of their most complex patients.
Patients who are discharged from the inpatient setting without home health are 43% more likely to die within 90 days compared to patients who do receive home health.
And 36% more likely to be readmitted and 16% more likely to have an ed visit.
Home-based palliative and hospice care is associated with 12,000 dollars, lower cost per patient and the final 3 months of Life largely due to a 35% reduction, in Medicare spending and a 34% reduction in Hospital admissions in the final month.
And in our Jamba published study in 2023, our home health combined with Continued Care, RX inhome Med management. Showed a 70% reduction in hospitalizations
These are just a few of the ROI data points out there for our services that demonstrate their value.
Over the last few months. CMS released several preliminary rates for service lines in which we operate including hospice and Home Health.
The preliminary hospice rate was as expected and adequate to cover annual expenses and operational Investments to continue to service patients with high quality Care.
And hospice care represents about two-thirds of our home health care business.
The preliminary Home Health rate was not adequate to cover annual expenses and operational needs to support these patient populations.
It would be disrupted to patients and is in contrast to the voluminous amount of third-party data that demonstrates. The significant patient health and cost outcome benefits from high-quality Home, Health Services.
However, we know that in the future, the rate adjustments, tied to the implementation of pdgm will fall away and Home. Health rates are expected to improve.
With the final rate update, TVD, and coming out in the fall, we also note that home health is only approximately 1.5% of total company revenue today.
We still have relatively modest size and Home Health, and have been growing into the market, in a measured way, and thus, our minimally impacted by any rate changes today, while expecting customary rate increases in the future as we further scale in both home health and hospice, as well as rehab primary care and value based care. And the most attractive markets in pharmacy.
As it relates to recent pharmacy regulation, topics such as pharma tariffs and the IRA, we do not believe that pharmacies are an intended source of economic change through policy.
Pharmacies provide a critical and last mile service that Physicians manufacturers and patience all recognize as being fundamental to the delivery of care.
While policymakers discuss any potential policies, we are confident that they will always be thoughtful. So as to not compromise, patient care or access to essential medications,
We have a very experienced and informed government relations team who is working with state and federal agencies to help educate and inform the discussion on topics related to our services.
Regardless of any policy and industry dynamics at play, BrightSpring is always committed to operating at the highest level, providing exceptional care to patients and using many different growth levers as afforded to us by our differentiated platform.
Every year, our company has some policy or industry issues that are favorable and some that are unfavorable. And we always work through these to deliver for our patients and stakeholders as evidenced by our almost decade-long, 15% revenue and Ava doers, which has been driven by the demand for our high Roi services, and the quality and strong volume growth of our services.
our scale enabled efficiencies and a near 100% success rate on a creative Acquisitions that, expand our Geographic coverage
Higher growth.
And we are enthusiastic about continued momentum and a high level of growth in 2026.
At brightspring, we strive to achieve consistency and quality above Market, volume growth, operational execution, and efficiency and leading performance in accretive acquisitions.
All underpinned by our scale. Platform of complimentary services and deep functional capabilities.
With that, I'll turn the call over to Jeff.
Thank you, John. Before I discuss our results for the second quarter of 2025, I'd like to remind you that in the first quarter of this year, 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 that the presentation of the non-GAAP financials from continuing operations is a useful reflection of our current business performance.
In the second quarter of 2025 total company. Revenue was 3.1 billion. Representing 29% growth from the prior year period, Pharmacy Solutions, segment Revenue in the quarter was 2.8 billion achieving 32% year-over-year growth.
Within the pharmacy segment, Infusion and Specialty Revenue was $2.2 billion, representing growth of 39% compared to the prior year, and Home and Community Pharmacy Revenue was $587 million, representing growth of 11% year-over-year.
We have fielded a few questions about a Home and Community Pharmacy customer that filed for bankruptcy. We plan to continue to service them and will be paid as they undergo the bankruptcy reorganization. Our Pharmacy and Company results in Q2 reflect any impact from this situation, and we are fully reserved. There will be no go-forward charge, and we do not expect this to have any material impact on our ongoing business.
In the Provider Services segment, we reported revenue of $358 million in the second quarter, which represented 11% growth compared to the prior year. Within the Provider Services segment, home healthcare reported $185 million in revenue, growing 17% versus last year.
Rehab revenue was $73 million, growing 9% versus last year, and personal care revenue was $100 million, representing growth of 4% year-over-year.
In the p&l second quarter company growth profit was 375 million representing growth of 20%. Compared with the second quarter of last year. Adjusted Eva for the total company was 143 million in the second quarter growing 29%, compared to the second quarter of 2024 adjusted. EPS for the total company was
22 cents for the second quarter in the second quarter, our procurement and efficiency programs. Across the company, helped contribute to growth and we anticipate continued margin Improvement, throughout the remainder of 2025, as a result of these ongoing operational initiatives.
Turning back to segment performance in the second quarter, Pharmacy Solutions. Gross profit was 234 million growing 28%. Compared with the second quarter of last year, adjusted even though for pharmacy Solutions was 125 million for the second quarter growing. 32% compared to last year representing an adjusted Evas on margin of 4.5% which was in line with our expectations.
Provider Services: Growth profit was $141 million, growing 9% versus the second quarter of last year. Adjusted EBITDA for Provider Services was $56 million for the second quarter, growing 11% versus last year, representing an adjusted EBITDA margin of 15.8%, up 20 basis points versus last year.
Not included in the company's reported adjusted EVA of $143 million, as previously stated, Community Living's adjusted EVA was an additional $35 million in the quarter, an increase of 24% from the prior year in this business.
On a total company basis cash flow from operations, with 49 million in the second quarter.
We continue to expect to deliver over $300 million of annual run rate operating cash flow in 2025, as we remain focused on improving our leverage ratio towards our goal of 3.0 times this year, for former community living to vesture. And towards our long-term target of 2.0 times to 2.5 times, which at current trends could be realized by the end of next year, and excluding acquisitions.
Hash proceeds from the 835 million of gross, cash consideration in the pending community living sales.
As a reminder, net interest expense includes interest income related to cash. Flow Hedges due to our 3 received variable pay fixed interest rate, swap agreements that we have in place set to mature on September 30th 2025 as part of our process to Monitor and address risk 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 to vesture, 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,
Turning to our guidance for 2025. We are increasing our expectations for total revenue and adjusted Eva that was provided in March which excludes the community living business.
Total revenue is expected to be in the range of $12.2 billion to $12.6 billion, including Pharmacy Solutions revenue of $10.75 billion to $11.1 billion and provide our services revenue of $1.45 billion to $1.5 billion. This revenue range reflects 21.1% to 25.1% growth over the full year 2024, excluding community living in both years.
Total adjusted e, but that is expected to be in the range of 590 million to 605 million for full year. 2025, this would reflect 28.2% to 31.5% growth over full year. 2024 excluding community living in both years.
Our increase in total revenue guidance is primarily driven by an improved pharmacy revenue outlook, including growth in LVDS and generic drug conversion and utilization opportunities, as well as consistent growth on the provider side. Our adjusted EVA outlook reflects strong pharmacy growth in the second quarter and through the rest of the year, improved costs across pharmacy and provider from procurement and efficiency initiatives, strong provider performance, and improved profitability trends in infusion, which continues to gain traction as we move throughout the course of the year.
With that, I will now turn it back to John.
Thank you for your time today to go through BrightSpring's second quarter 2025 results.
We will now open up the call for questions, operator.
Certainly, as a reminder to ask a question, please press star, 1 1 1 on your telephone and wait for your name to be announced to withdraw your question. Please press star, 1 1 1 again. Please limit yourself to 1 question and a follow-up, and 1 moment for our first question.
Our first question will be coming from Whit Mayo of Lee rink Partners. Your line is open.
Uh, yeah, uh hey John. Maybe you could start with the infusion performance in the quarter. I think you've referenced some leadership changes in the past and any expectations, uh, for growth over the next few years, and how you're positioning the business for growth within, um, I guess specifically within the acute market. Thanks.
Hey good morning wit uh thank you for the question. Um yeah we were pleased with a lot of the developments in the infusion business in the quarter. I would say uh from a progress perspective and from an operations perspective you know it's the best quarter we've had in a long time.
And we expect more of the same, you know, from a leadership perspective, you know, we do have a new president in that business, who started early in the quarter. Uh, we have a new operations leader. We have a new sales leader. Um, so we have really focused on not only trying to, uh, make the business as efficient as possible to drive. Um, optimal, uh, patient outcomes and and Drug turnaround times. Um, you know, but also to do that, um, hopefully with the best, uh, Talent base that, that we have in the industry as well as ongoing, you know, technological and and process Investments. And so, uh, super excited about the business, the business grew, a double digit on an ibida basis in the quarter, and we expect much more of the same in the future. Uh, it certainly
And nursing services and and optimal payer Relationships by the broad set of services, you do have you know is ultimately a winning strategy, not only across the home but across clinics as well. So you know numerous uh growth levers and infusion going forward. Um you know provides essential services that dramatically reduce costs versus doing these types of procedures and hospital setting and um you know we just continue to focus on the team and the process there. Thank.
Great. And maybe just uh, the follow up on just the growth process. Prescription was up a good bit and um, just any comments around, you know, trying to square that performance would be helpful in the context of maybe what to expect for the, for the rest of the year. Thanks. Yeah, it was mixed. I'll let Jen answer that a little bit more but um the trends we saw in Q2, we see continuing. Yes. As John mentioned in the script.
There was 38% year-over-year growth in our specialty scripts that has um, some of the highest gross profit in, uh, prescript. And so we saw a skewing to that, um, this quarter
Thanks guys.
And one moment for our next question.
Our next question will be coming from A.J. Rice of UBS. A.J., your line is open.
Uh, thanks. Hi everybody. Um, you beat at least relative to consensus by about 5 million dollars in the second quarter and you're raising the full year guidance by 20 million. So clearly some, um, uplift in the back, half numbers, I know you had assumptions about a lot of positives coming into the year, coming into this quarter. What specifically is improved that uh result in that raise in the back half of the year that's different than coming into maybe the quarterly release.
Yeah, good morning AJ, thank you. Um, you know, we do always have slightly higher margins and ebita contribution in the back half of the year, just due to structural items like, uh, the way Mondays and Fridays in the number of days in the months, in the back, half versus the first half as well as taxes. Uh, that burn off, you know, into April and May throughout the year. Uh, that is part of it, you know, I would say just continued momentum really across the company, you know, characterizing our performance, you know, was not just Pharmacy, but continued real strength on the provider side. You know, this is a business that continues to grow nicely into the double digits, uh, from an iPad dot perspective.
And we've never been more positive about uh, the provider segment of our company as well. So you know, really broad-based growth across the organization. Uh, but as we look at the at the back half, you know, continued momentum. You know, we do have, um, expectations for uh, continued growth, um, across the company. You know, we see infusion continuing to grow more, we see home health and hospice from a volume perspective, continuing to grow more in the second.
You know, we do have quite a few efficiency uh lean and Technology initiatives that have been hitting in Q2 and Q3 that we also expect to continue uh to contribute in the back half and then there's some favorable rate developments in the back half as well, including the hospice rule. Jen, I don't know if you had anything else. Yeah, I would just highlight especially within our home infusion and Long-Term Care. Pharmacy. We've had really focused efforts regarding those efficiency projects
additional procurement initiatives. Those are coming online as John mentioned again it's really strong performance and provider continuing to leverage our scale and just seeing an accretion of March and related to those uh those projects
Okay, great. And maybe my follow-up just to, um, drill down a little bit on the development and m&a. Uh, you know, usually you do about 100 million in the annual spend, obviously this year, you've got the, um, a medicine, uh, domestic deal. Um, pending hopefully that goes through, and you've got some priority on debt reduction on, but most of that is coming from the, uh, your own investor, any updated, thoughts on.
In the pipeline or, uh, deals away from the medicine transactions that you might be looking at.
The administration, you know, we are having, you know, a very strong cashier, our ocf should be comfortably above 300 million and um, you know, we're pleased where we're heading with leverage. I think this gives us you know, more flexibility into the future, you know. Should we choose to um to be a little bit more aggressive any time but as we've been saying now for 20 months our Focus has been on driving. Um the balance sheet to our Target, leverage level, you know assuming the community living to vesture. Again we should be at our below 3 times by the end of the year. And you know, our long-term goal that we've stated as of more recently is 2 to 2 and a half times. You know we think we can be at that long term goal of 2 to 2 and a half times leverage as soon as next year. And so you know we continue to be focused on that with a baseline level of very accretive small tuck and m&a as we await the outcomes of of some of these other transactions.
Okay, great. Thanks so much.
And 1 moment for our next question.
Our next question will be coming from David Larsen of btig. Your line is open.
Hi. Uh, congratulations on the, uh, good quarter, uh, John. Can you talk a little bit about, uh, the growth in the, in the home health business? And, um, you know, I don't view the rule as being that material. I mean, it's less than 2% of total revenue, but I haven't been getting questions on it. Um, I think I heard you mention in your prepared comments, that in 2017, there could be a 500 basis point lift because part of
That proposed reduction is actually temporary. Just any color on growth and that rule, thanks.
Yeah, you're right. David, good morning. Um, you know, we we don't we don't have a material impact from the outcome of the Home Health rule, you know, obviously for the benefit of the industry, uh, and as an interested party, um, you know, we do hope that the final rule better reflects the value that Home Health Services provide uh, the ROI from from home health is just simply uh, unquestionable and profound, um, just Reams and reams of data over the past 30 years. Speaking to the benefit uh on mortality rates on reduced hospitalizations and improved outcomes in lower cost. So hopefully Home Health you know just like many other and most other segments of healthcare services, will get the support it deserves going forward. Um, I think you met 2027, you know, if if the recruitment, you know, does go into place TBD based on the final rule, you know, at some point that will burn off and go away as well. And when it does you'll you'll have a big uplift, right? So, and then we are optimistic and based on some language.
That we saw in the proposed rule that Home, Health rates will start moving up again at some point, you know, in the near to medium-term Future. Uh, you know, our approach to home health is been a steady but very measured growth into the space. You know? Therefore we are not a massive Home Health provider today. We're still a relatively modestly sized provider hospice is the predominance of what we do.
In home health and hospice today. Uh, but we have been growing into it over time and we feel like that strategy and scaling into it over time will dovetail nicely with a return to uh, warranted rate, support in the home health industry. So, we actually believe it's a very interesting time. Uh, to be a provider who's growing into the space and, um, creates a lot of opportunities into the future. But thank you, David, we would agree.
Great, thanks very much. I'll hop back on the queue.
Thank you.
And our next question will be coming from Joanna, gaj of Bank of America. Your line is open.
Hey, good morning. Thanks so much for taking the question. So maybe the first question on the, um, Specialty Pharmacy. Where it keeps? Um, I guess surprising to the upside. I'm not complaining. Uh, but just a question. You know, how much longer can you grow at this space? Would would refer to assume, um,
30% growth in Specialty. Pharmacy, can continue next year.
Hey Joanna. Good morning. Um you know I think what we're seeing today is the benefits of a business in a business model, a value proposition in, a track record from a service and quality perspective. That's now been put in place for close to 15 years. Um, you know, if you look at our service levels and our quality, you know, which is driving a lot of strong relationships with manufacturers and biofarma, if you look at the
Saving therapies that that they need. Um, that's what we've done. And, you know, it's it's it's it's driving, you know, you know, a solid amount of growth into the organization, you know? It's it's a, it's a, it's a broad-based business too. You know, we really try to partner closely and and be the best partner we can with the payers with the pbms and the manufacturers, um, on the brand ldd side, you know, we also try to, uh, make sure that we drive generic utilization, you know, when the opportunity arises, um, we have a, a growing and a thriving fee for service and and hub business as well. And so growth is, is really coming from from all dimensions of that business and we're serving markets in the specialy pharmacy industry that are that are massive, that continue to have huge Innovation pipelines. So, you know, as we sit here today, you know, we do not see anything that changes that growth trajectory, um, you know, we will continue to make the investments in the business and try to execute at the high levels that
that we are, you know, every single day,
thank you. And if I may staying on Pharmacy, um, the recent proposal for Medicare for outpatient hospitals includes, um, provision. Right to equalize rights. For some of the drugs provided by doctors at the hospitals, uh, to get paid on the, uh, fee schedule. Um, so I don't know. Is there some opportunity for, for you guys from from changes like that? Um, would you be willing to comment on that? Thank you.
Yeah, Joanna at this time, you know, we're we're not really sure if that would be an additional opportunity or not. I mean we are serving the Specialty Pharmacy segment of of the market principally, um, you know, which is outside of of the hospital outside of The Physician Office. So you know, that would be something that we'd have to you know, further evaluate into the future but thank you.
Great, thank you so much.
And our next question comes from Brian. Tenquille, your line is open Brian.
Hey, good morning guys, and congrats on the quarter, John, as I think about lgds, I mean, maybe signed back to Joanna's question, right? I mean, you did 5 introduction in Q2, it sounds like and so thinking about the pace and the remaining pipelines for for ldb intros. And I know you talked about kind of new agreements. So just curious what you can share with us in terms of what that pipeline looks like in the runway. Yeah. Hey, good morning Brian. Um, you know, look the the bio the biotech company for the manufacturers, you know, are are doing a terrific job of driving that Innovation pipeline, continuing to bring more and more therapies to Market. It's as deep as ever, you know, a lot of them are more and more specialized and I would say more and more Niche from a patient population perspective. Um, you know, and that's an area that, you know, we have continued to try to be a terrific partner on. You know what, we have continued to say, is we expect 16 to 18, uh, new brand ldd, launches. Most of these are either exclusive or an ultra narrow, you know, 1 of 2 Pharmacy.
Works, uh, 16 to 18 over the next 12 to 18 months and, you know, we've been saying that really for the past 20 months and and that's what we're realizing as well. So, you know, we have a strong conviction um, that we will have another, you know, 16 to 20 ldds, uh, 16 to 18 months from now. And you know, we're really um, honored that we could bring these, you know, groundbreaking and life-changing therapies to patients, you know, as a partner with the innovators.
That makes sense and then hey John I think about, you know, Gene and rare disease in the Specialty, Pharmacy business. I mean, how big of a business is that for you guys right now, out of the, the book? I mean, I know everyone thinks it's an oncology is the area of growth but obviously they're emerging areas in in the drug world that could drive, um, incremental growth and incremental, uh, dollars. So, just curious what you can share with us on that front.
Yeah, no thanks, Brian. I mean, that is a continually emerging area. Um, you know something people probably don't realize too, well is I mean, there is a, there is a solid percentage of our therapies. That would be defined as as rare and orphan. Um, therapies is, is well, um, some of those are in oncology some of those are not. Um, but that is an area that we continue to look at. Um, I would say if you look at our ldd wins in the last year, you know, 30 to 40% of them have been in areas that would be defined as is rare in orphan therapies as well. So we continue to to lean in, um, to that market, um, you know, internally and um, you know, it dovetails
You really don't see as a characteristic in in other markets. And so, you know, we're constantly looking to see where we can leverage our our core capabilities into adjacencies and you know, that's 1 that we have had a lot of success. And, and we will continue to uh meet a good example is now going on about a year ago is we won the injectable for lmbi and you know we have to see how that plays out, but we were an exclusive on that. So, you know, we are always, you know, looking to leverage terrific relationships with biofarma, um, into more areas.
I appreciate that. Thanks John.
1 moment for our next question.
Our next question will be coming from Charles Reed.
Of TD Cohen, your line is open.
Uh, yeah. Thanks for for taking the question, John, I wanted to drill down on some of your comments. I know we a lot of people have asked about the LEDs, um, but you know, obviously when you look at some of the, uh, data from like a QV, we, we saw, uh, improving. Um, also generic as well just maybe anything that you're seeing there. We saw generic, you know, uh, penetration rates improving, uh, for uh, oncology as well. Anything that you'd specifically call out in the quarter. And, you know, it seems like when you look at the script growth and the and the revenue growth as well, maybe it's mostly LTD launches, but just curious of, uh, how much generous might have had played a, a part in sort of the, uh, upside the quarter.
Yeah, thanks Charles, good morning. Um you know look in in terms of our value, proposition across, Pharmacy of you know, driving better, men, adherence which you know without that is 1 of the 2 lead causes of hospitalization and um and driving generic utilization, all of this drives outcomes and cost reduction and the value chain. Um you know we do focus on on exactly that in the latter of generic utilization when they're, when there is the opportunity. Um, you know, I think 1 thing that's interesting to note is, you know, over the last 6 7 years we've continued to increase our our investment into that clinical liaison team out in the field, covering thousands and thousands of of doctor's offices and oncology offices every day. And you know what that really does is is makes us the defacto sales force for generic drugs, right? When a drug goes from Brand to generic you know a lot of the detailing goes away from the brand and so but we have invested in a very large clinical liaison force. That is out there every day.
With decades, long relationship with prescribers and we were we are able to, you know, effectual you know that conversion is rapidly as as we can and and to drive that market share. And so you know there is a business model that has been in place for a long time that we continue to try to um that we continue to try to refine even further every year. Um but with some of the generic launches that occurred going back, several years ago, you know, 1 significant 1 in Q4 we've now had
About 3 already in um, in this year, we've got several more including Palace next year. You know, we are just really trying to do our part to drive utilization and pull through when those events happen.
I'm sorry. Yeah, thanks, I appreciate that. Uh, just maybe as a follow-up. Um, obviously the other day the the president announced or apparently wrote some letters to to form a kind of Revival or the the discussion around most favored nation, pricing, obviously that's really aimed at the drug industry, but you know, I know that folks have thought through maybe potential indirect effects, that it might have Downstream just curious as you've, uh, maybe evaluated in the past whether that's the executive order that was signed back in May, or, you know, just thinking through potential. Um,
You know, unintended consequences of of some of these uh, measures, uh, may maybe you can kind of apply on sort of your thoughts on, uh, how this might affect, uh, bright spring or and or just Pharmacy, the pharmacy World in general.
Sure, sure. Well look, I mean, I, I would say, I would say at the outset, it's very difficult for us to comment on, on this topic. And is it as it is all extremely uncertain. Um, we did not see yesterday, is is any new news, um, you know, clearly there are ongoing negotiation between the administration and the pharmacy industry. Um, yesterday's letter was was just the latest all
Be in public position, which has been very similar, you know, to the executive order, previously, a couple months ago, you know. I think the biofarm industry has made many public commitments is, is part of this negotiation process, you know, you know, we we, we certainly don't have, you know, insight into it. I think it would be reasonable to assume that these discussions, you know, are going to continue
uh, again we don't
believe, just give
Eric utilization, you know, we do not believe that that the pharmacies or other providers of critical services to patients are an intended target of of any of these negotiations. Um you know in any any outcomes from you know the government and Industry that are being discussed you know are really likely probably to play out if any, you know, over a very, very long period of time. So I mean I guess the only other sort of comments here is you know Ira is is already going to be in effect um, and Ira really gets that a lot or most of of what this is about. Um, you know and we've already we've already, you know, sort of bracketed in a downside. What we think, you know, that impact could be, which is extremely manageable and, you know, we are continuing to work um, with policy makers to try to make sure that the pharmacies are not impacted by that. And that work is on, is ongoing, you know, from a Medicaid perspective. Medicaid Medicaid you know drug rates are already
Extremely low, um, and states and patients do uh realize, you know, other cost reductions vehicles and access programs today. Um, I would say as it relates to our company, we are extremely Diversified uh generics make up. You know the vast majority of of what we do here. You know, from a I would say from a profitability standpoint, they make up the majority of what we do. We continue to drive generics and, you know, ultimately,
Ely and it's extremely uncertain. But if if there were changes, you know, in the in drug pricing models, you know, into the future, um, you know, we just believe that um, payment models would ultimately evolved to address that um, you know, Cost Plus, you know, dispensing fees, professional fees. Like many other parts of Health Care are reimbursed. You know, the payment system would just would just naturally adjust, you know, I'd also just call out idiosyncratic lead to our company. You know, we are getting to a place of having an extremely strong balance sheet. Um, as I said before, you know, we're optimistic about potentially reaching our long-term, leverage goal, you know, of 2, to 2 and a half times is as soon as next year. Uh, we're also a scale provider which gives us a lot of m&a opportunities. And so um, you know, regardless of the policies that are out there, um, we have an extremely strong value. Proposition that I think all policy makers really realize and um, regardless of the environment
That we feel like we will be able to effectively navigate that and we just continue to be proactive and, and educating, um, all parties as to, uh, the value and the benefits of of the pharmacy and the value chain.
I really appreciate the comments. Thanks a lot.
1 moment for our next question.
Our next question, will be coming from Aaron Wright of Morgan, Stanley, your line is open Aaron.
Hi, good morning. Um to in terms of underlying market, share gains and competitors getting out of the market. We've known about that for sometimes. Been going on for some time whether it's Quorum or otherwise. But
How do you think about that as a driver going forward? You know, maybe in in going to what you were just saying, in terms of like m&a opportunities on the back of any sort of, you know, regulatory, you know, type of disruption to Across the market. Could that bring opportunities for you? And, um, and yeah, how do you think about kind of organic opportunities as well as we think think about other kind of getting out of the market and how long of a tail? You have their thanks.
Yeah, good morning Aaron. Um, you know, certainly, you looked at some of the things that happened on the acute side of the market in infusion the last couple of years. You know, those have been opportunities for, uh, for us and, and others in the market, you know, as I as I said before, you know, we do believe the that the acute Market in infusion is an attractive 1. Um, I don't know, exactly, but it is some, you know, 8 to 10 billion dollar, you know, sort of Market size, which creates tremendous opportunity. You know, if you can move your market share say from, you know, 10 15% to 30, to 35%. Um, and that's something that that we are really focused on, you know.
Acquisitions, um, and grow them, um, post-close. So, um, our base case for the industry on the pharmacy side is really no significant disruption. Um, but I think our platform positions us extremely well. As I've said before, um, we just really believe in healthcare moving forward that you do have to be a scale provider that can drive more sophisticated care, innovation leveraging technology, and driving efficiency. That's just a necessity, and it's been beneficial, um, in so many different ways. And, you know, I think we continue to realize, um, you know, the, uh, the benefits of that.
And 1 quick 1 just on your mix on the, on the Specialty Pharmacy, side to have you given and maybe I've missed it in my notes or or in your remarks in the past. But have you given a generic penetration rate?
Uh, I do not believe that we have that we have.
Okay.
Thank you.
I would say that, you know, we have continued to say that, you know, as a pharmacy, a key part of our value proposition is driving generic utilization. We're very proud of that. You know, generics are good for everybody, and, um, you know, that is the majority of our business on the pharmacy side across our platforms.
Okay, thank you. Appreciate it.
Yeah.
And our next question will be coming from Matthew Gilmour of KeyBank. Your line is open. Matthew.
Hey, thanks. Um, I wanted to see if you could provide some details on the Puree efforts that you've mentioned. I appreciate it's probably a, you know, normal art of managing the business.
Is there anything in particular happening this year? That makes procurement more of an opportunity, maybe in terms of your scale, or in terms of just contracts that are up?
Yeah, good morning. Um, I would say when we refer to quote unquote, procurement it goes across, literally almost everything we're buying in this company. Um, you know, it's it's not just delivery, it's not just drugs, it's not just supplies, you know, we have a very robustly sized procurement team. Uh, we use um, ongoing monitoring and tracking, uh, with our Data Systems and Technology, you know, to literally constantly be looking at everything. We are buying and leveraging our scale as much as we can. So, you know, it's it, it's a team that is working on 20 to 30 projects at all times and, um, it really spans across, you know, every dimension of what we buy in the company and, you know, it continues to to drive savings every year, um, I think, will that, that will just continue more into the future. Um, you know, obviously if you look at our company, you know, we start with the biggest spend in the company. You can probably think about what that is. And then we go down from there and and we
Work on on all of it. And we try to do that in a very constructive way with our partners. And as we have continued to scale the company in very high volume rates. You know, that has continued to benefit us on the cost side and driving more and more efficiencies. But you know, it really goes beyond just um, you know, trying to buy better. Um, you know, we are looking at continuous Improvement that is in our culture across all of our processes and something that, you know, we were we were close to saying, um, in our in our prepared, uh, remarks. But we did not, I think in the next quarter or 2, you know, we might say a little bit more about it but, you know, we really continue to lean into technology and Automation and now ai at the company as well. Um, you know, we've continued to make a lot of really terrific hires in the organization through the year. You know, while we're experiencing this growth and continued growth, we want to continue to invest for years out um and plant more and more seeds for growth 3 to 5 years from now. And
You know, part of that is reflected in the amount of key hires that we just continue to make from the outside in terms of a plus people, you know, through and through the organization. We've done that in infusion. We've done that in Home and Community Pharmacy and we're doing that in our it shop as well. I mean, you look at our emrs intake Webb cycle, scheduling operations, patient management, in every 1 of those areas we have ongoing Automation and AI initiatives right now and we're really excited about that. You know, we look at something like Home and Community Pharmacy and you know, we see a
Hundred million dollars of cost opportunity. Still ahead of us in the next 3 years. Now we have to go execute against that but those are the types of things that we are working on, you know every single day here.
Got it, I appreciate it. I'll leave it there.
Thank you.
And our next question will be coming from Larry Solo of CJS Securities. Your line is open, Larry.
Great. Uh, thanks and good morning, uh, everybody. I guess just first question, anything. Any update on? Just bundling the services, and your value based contract efforts, with acos, you can provide
Continues to progress along, you know, we are going to see nice performance year-over-year in that business. This year, you know, that is a solidly profitable business between our ACO shared savings that we will realize and, um, our little but but growing ice snip plan in the future. So, um, you know, progressing, um, directionally positive positive year-over-year, we are making more and more investments in that business, um, to try to scale that even faster. We've got some new people in that business here in the last 3 to 6 months. Um, I think that's 1 that really getting into next year and and 2027, you know, I, I think we can start to really talk more about it and spec and, and potentially start to break out some numbers on in terms of it being a more material, even doc contributor. But you know that that's an area that continues to get a lot of internal um, attention. You know, it's a slower build but it's 1 that we continue to focus on
And and you had thrown out like a hundred million dollar potential Target in 5 years for you. The is that till something that you're comfortable with that is still our internal goal. Yes.
Great. And then just secondly, just on a quick follow-up. Just on your your, your build out your hospits. Your hospice efforts build out just
Quick question, just on Haven Hospice. I think it's about a year now since you bought that 1. You know, how's that uh, house that progressing?
Haven would be a really good example of our m&a prowess in what we're able to do. I mean, that was a business that was essentially losing money a year ago and now um, it is performing, um, extremely well. Well ahead of expectations, you know, we we will probably work ourselves into a 4 times multiple there. Um, I would say, run rate, probably within the next 6 months, um, team has just done an absolutely terrific job.
Great, appreciate the thought, thanks.
And I would now like to turn the call back to John for closing remarks.
Thank you for joining us today, everybody. We really appreciate it. Thank you for all the questions, and we hope you have a great day. We look forward to talking with you again after Q3, and we really appreciate your time and attention. Have a good one. Bye.
Hey, this concludes today's conference call, thank you for participating. You may now disconnect