BrightSpring (BTSG) Earnings Call Transcript

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DATE

Friday, Feb. 27, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Jon Rousseau
• Chief Financial Officer — Jennifer A. Phipps
• Investor Relations — David Deuchler

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TAKEAWAYS

• Total Revenue -- $12.9 billion, achieving 28% year-over-year growth, driven by both Pharmacy Solutions and Provider Services.
• Pharmacy Solutions Revenue -- $11.4 billion, up 31% year over year; Provider Services revenue was $1.5 billion, up 11% year over year.
• Fourth-Quarter Revenue -- $3.6 billion, reflecting 29% year-over-year growth, with Pharmacy Solutions contributing $3.2 billion (32% growth) and Provider Services $394 million (13% growth).
• Specialty and Infusion Revenue -- $2.6 billion for the quarter, marking 43% growth year over year; home and community pharmacy revenue declined 1% to $593 million, attributed to a customer bankruptcy and exiting uneconomic accounts.
• Fourth-Quarter Gross Profit -- $413 million, rising 22% from the prior year; Pharmacy Solutions gross profit increased 25% to $255 million and Provider Services gross profit rose 17% to $158 million.
• Adjusted EBITDA -- $618 million for the year, a growth of 34%, with a full-year margin of 4.8%, up 20 basis points primarily from procurement efficiencies and revenue mix; fourth-quarter adjusted EBITDA reached $184 million (41% year-over-year growth).
• Cash Flow from Operations -- $490 million for the year and $232 million in the fourth quarter, exceeding company expectations.
• Leverage Ratio -- 2.99x as of year-end, improved from 4.16x prior year; pro forma for the Community Living sale, leverage is expected at 2.6x.
• Community Living Divestiture -- Transaction expected to close end of Q1 with net after-tax proceeds of approximately $715 million, "primarily utilize for debt pay down."
• Amedisys and LHC Acquisition -- Two-part transaction closing with 107 branches acquired for $239 million cash, generating $345 million in full-year pro forma 2025 revenue; anticipated EBITDA contribution of $30 million in 2026.
• 2026 Guidance -- Total revenue expected in the $14.45 billion-$15.0 billion range (11.9%-16.2% growth); adjusted EBITDA guidance of $760 million-$790 million (23.1%-27.9% growth), excluding Community Living and unclosed deals.
• Quality and Service Metrics -- Over 91% of home health branches at four stars or greater, with 99.4% timely care initiation; hospice CAHPS rating 87%; rehab satisfaction scores of 100% outpatient and 98.4% home/community; pharmacy dispensing accuracy 99.99% with on-time delivery of 96.8%.
• Specialty Pharmacy Limited Distribution Drugs (LDDs) -- Total portfolio at 149 LDDs, with 24 launches in 2025; expectation for 16-20+ launches over next 12-18 months.
• Provider Segment Details -- Q4 home health revenue $217 million (19% growth); average daily census up 15% to nearly 35,000; rehab revenue $75 million (8% growth) with 17% growth in hours billed for core neuro rehab; personal care revenue $102 million (4% growth) with persons served up 2%.
• Operational Investments -- Ongoing investments in AI, technology, process automation, and sales resources stated as part of 2026 plan for productivity and margin expansion.
• Segment Margins -- Provider Services fourth-quarter adjusted EBITDA margin was 16.4% (up 50 basis points); Pharmacy Solutions margin was 5.1% (up 40 basis points).
• IR Act (IRA) and Brand-to-Generic Conversions -- Expected 2026 revenue headwinds of approximately $200 million in specialty/infusion, $400 million from brand-generic conversions, and $175 million in home and community, totaling nearly $775 million, partially offset by growth.

SUMMARY

BrightSpring Health Services (NASDAQ:BTSG) reported sizeable top-line expansion, driven by strong performance in specialty, infusion, and provider services, with segment-level margin improvement attributable to procurement strategies and operational efficiencies. The closure of the Community Living business is slated to further improve the company’s leverage profile, while integration of Amedisys and LHC is expected to augment 2026 EBITDA. Management explicitly highlighted material revenue headwinds from the Inflation Reduction Act and generic conversions but detailed ongoing payer negotiations for dispensing fees and productivity initiatives intended to address these challenges. Forecasted revenue and EBITDA for 2026 exclude potential contributions from pending transactions, maintaining transparency and operational clarity for investors.

• CEO Rousseau stated, “and financial performance exceeded the high end of our guidance range for the year.”
• Fourth-quarter specialty and infusion script growth reached 30% year over year, propelled by “market adoption of existing LDDs, new LDD wins, fee-for-service growth, and strong commercial execution.”
• Management’s 2026 guidance assumes “broad-based margin expansion” from late 2025 and 2026 initiatives, aided by “favorable mix both in terms of product and services.”
• Pharmacy Solutions script volume was 10.8 million in the quarter, with CEO Rousseau describing total pharmacy volumes as declining 1% due to the impact of “customer going through bankruptcy and our decision to exit specific uneconomic customers.”
• Integration work for Amedisys and LHC branches is expected to lift margins “towards our overall profile” over time, as stated by CFO Phipps.
• Sequential quarterly growth for both revenue and margin is anticipated throughout 2026, with Q1 forecasted as the lowest quarter due to fewer days and product launch timing.
• Operational cash flow and deleveraging have enabled the company to complete recent acquisitions with cash on hand, providing what management described as increased “capital allocation flexibility in 2026 and beyond.”
• Payer negotiations secured “enhanced dispensing fee” agreements in LTC pharmacy, providing partial mitigation for IRA-related headwinds.

INDUSTRY GLOSSARY

• LDD (Limited Distribution Drug): Pharmaceuticals available only via a small number of specialty pharmacies, typically due to complexity, high cost, or need for special handling.
• CAHPS (Consumer Assessment of Healthcare Providers and Systems): A standardized survey instrument used to measure patients' perceptions of care quality and satisfaction.
• ADC (Average Daily Census): The average number of patients served per day within a given period, often used in provider or facility-based healthcare settings.
• IRA (Inflation Reduction Act): 2022 U.S. legislation impacting prescription drug pricing and reimbursement mechanisms, producing meaningful revenue headwinds for healthcare service providers.
• Payer: An entity (insurer, government, or managed care organization) responsible for paying for healthcare services received by patients.
• MMIT Survey: Rankings based on the Managed Markets Insight & Technology physician and staff satisfaction survey, commonly referenced in specialty pharmacy.
• ACHC IG Distinction: Accreditation Commission for Health Care award for excellence in Immunoglobulin (IG) therapy, signifying high standards of clinical and operational care.
• De novo: Refers to business expansion via newly established locations, as opposed to acquisitions.
• Fee-for-service: A payment model where healthcare providers are paid for each service performed.
• Hub: An integrated service point for pharmaceutical manufacturers supporting specialty therapy access, patient support, and data exchange.

Full Conference Call Transcript

David Deuchler: Thank you for participating in today's conference call. My name is David Deuchler with Investor Relations for BrightSpring Health Services, Inc. Common Stock. I am joined on today's call by Jon Rousseau, Chief Executive Officer, and Jennifer A. Phipps, Chief Financial Officer. Earlier today, BrightSpring Health Services, Inc. Common Stock released financial results for the quarter and full year ended 12/31/2025. A 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. Forward-looking statements are not a guarantee 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 Annual Report and Form 10-Ks that we file with the SEC, including the specific risk factors and uncertainties discussed in our Form 10-Ks. 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. 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 the Investor Relations website. This webcast is being recorded and will be available for replay on our Investor Relations website. With that, I will turn the call over to Jon Rousseau, Chief Executive Officer.

Jon Rousseau: Good morning, everyone, and thank you for joining BrightSpring Health Services, Inc. Common Stock's fourth quarter and full year 2025 earnings call. I would like to begin by expressing my and the company's appreciation to all of our BrightSpring teammates who work hard to deliver attentive and quality patient care and services to people in communities across the country. They drive the realization of our mission forward every day. 2025 was another productive and impactful year at BrightSpring Health Services, Inc. Common Stock in many ways. Overall, we saw continued success delivering revenue and EBITDA growth while achieving many milestones, all underpinned by the delivery of high-quality and compassionate services and care to patients.

In the beginning of 2025, we announced our plan to divest the Community Living business, which will streamline the company's operations and create more focus on core patient populations in prioritized markets. Earlier this year, the Community Living divestiture transaction was approved by the and at this time, we expect the transaction to close at the end of the first quarter. The transaction is expected to result in net after-tax cash proceeds of approximately $715 million, which we intend to primarily utilize for debt pay down to further improve our leverage and further strengthen the balance sheet. Additionally, the acquisition of Amedisys in 2025 in a two-part transaction on December 1 and December 31. BrightSpring Health Services, Inc.

Common Stock acquired 107 branches at a purchase price of $239 million, which was fully funded from cash on hand. The assets generated full-year pro forma revenue of $345 million in 2025, which includes the months throughout the year prior to the transaction close. These assets are very complementary to our existing home health business from a geographic perspective, while also being in the same markets as our hospice locations in many cases, and we are thrilled to have the Amedisys and LHC assets and colleagues integrated into BrightSpring Health Services, Inc. Common Stock, as we are already taking steps to bring new and improved company capabilities to these acquired operations.

This is another example of thoughtful, logical, strategic, and accretive M&A that has defined our acquisitions history. Home health, of course, has a tremendous value proposition given its impact on clinical outcomes and cost, as it is shown to reduce ER visits and hospitalizations by 15% and 25%, respectively, and reduce mortality rates by 30% relatively. With an estimated 35% of patients referred to home health but who do not end up receiving the service, home health should continue to be an important solution in the future of health care.

Some other accomplishments of note in the pharmacy and provider last year include continued LDD wins, strength in quality metrics, technology and people investments that resulted in ongoing efficiency gains across the organization, de novo expansions, and small tuck-in acquisitions. BrightSpring Health Services, Inc. Common Stock's operational and financial performance exceeded the high end of our guidance range for the year, and we believe that the company's performance is a reflection of the value of our patient-centric lower cost, timely, and proximal care, enabled by our people and culture who maintain an ongoing commitment to providing excellent and leading services.

Moreover, our goal is to continue to build out a unique and scaled home and community health care platform that demonstrates leading quality outcomes and operational best practices, a platform that is best positioned to be a critical partner in solution in U.S. health care. Before discussing BrightSpring Health Services, Inc. Common Stock's fourth quarter and full year performance, I would like to remind you that the company's financial results and 2026 guidance pertain to continuing operations, and do not include results from the Community Living business and the effects of any future closed acquisitions. For the fourth quarter, BrightSpring Health Services, Inc.

Common Stock's revenue grew approximately 29% and adjusted EBITDA grew approximately 41% versus last year's comparable quarter, resulting in full year 2025 total revenue and adjusted EBITDA that were above expectations. For the year, total company revenue was $12.9 billion, representing 28% year-over-year growth, which included Pharmacy Solutions revenue of $11.4 billion and Provider Services revenue of $1.5 billion, representing 31% and 11% year-over-year growth, respectively. Full year 2025 adjusted EBITDA was $618 million, which grew 34% year over year, and adjusted EBITDA margin for the company was 4.8%, a 20 basis point increase versus 2024, primarily driven by cost efficiencies from procurement and operational initiatives along with generic revenue mix shift in pharmacy.

On cash flow, the company realized $490 million of cash flow from operations in 2025, and leverage was 2.99x as of 12/31/2025, which declined from 4.16x as of 12/31/2024. Overall, BrightSpring Health Services, Inc. Common Stock performed well in both the fourth quarter and full year 2025 across all business lines, and we are very pleased with the position of the balance sheet and expanded cash flow profile of the company this year. Today, we are initiating total revenue and adjusted EBITDA guidance for 2026.

We expect total revenue to grow approximately 14% year over year at the midpoint of the provided range, and total adjusted EBITDA to grow approximately 25% year over year at the midpoint of the provided range. Included in total adjusted EBITDA guidance is an expected contribution of approximately $30 million from the Amedisys and LHC acquisition. We are excited for the year ahead, and Jen will discuss 2026 outlook in more detail shortly. Before I discuss our business performance, I would like to highlight BrightSpring Health Services, Inc. Common Stock's commitment to our employees and the communities, individuals, populations, and therapeutic areas that we support.

Whether our people, seniors, youth, or other specialty patient populations, at the company, we continue to lean into helping individuals and organizations with access to resources and opportunities. For example, in supporting employees through difficult unforeseen circumstances through our SHARE program and college scholarships, in nursing school partnerships, and in partnering with many, many organizations, such as the Special Olympics for one. We currently operate a foundation through our hospice service line, and we have now started an enterprise foundation that will more formally carry on all of our community and patient support activities. We are hopeful that this BrightSpring Health Foundation can positively impact lives for decades to come.

I would also like to briefly highlight our strong patient satisfaction and high-quality scores in the fourth quarter, which are driven by our delivery of attentive and skilled care to complex populations in a timely and relatively lower cost manner. In home health, we continue to see over 91% of our branches at four stars or greater, with timely initiation of care at an industry leading level of 99.4%. In hospice, our metrics remain well above the national average, with a top 5% ranked hospice program in the U.S. and a CAHPS overall hospice rating of 87%. In rehab, our patient satisfaction scores remain very strong, with 100% outpatient satisfaction and 98.4% home and community rehab satisfaction.

In personal care, we have a client satisfaction score of 4.6 out of 5, compared to 4.5 in the third quarter, along with strong internal client records and quality indicators audit scores. In home and community pharmacy, dispensing accuracy was 99.99%, order completeness was 99.3%, and on-time delivery was 96.8%. In infusion, our patient satisfaction score was 94%, and we were one of only two providers in the country to receive the ACHC IG Distinction award based on our clinical and operational commitment to the IG patient population, 92.4% in the quarter, along with time to first fill of 4.1 days, both much stronger than the national average.

In 2025, Onco360 ranked first and CareMed ranked second in the MMIT physician and office staff satisfaction survey. BrightSpring Health Services, Inc. Common Stock continues to demonstrate very strong service and quality metrics across all businesses. Turning to BrightSpring Health Services, Inc. Common Stock's financial results by segment. Total Pharmacy Solutions revenue grew 32% in the fourth quarter and adjusted EBITDA grew 44% versus the prior year. Total pharmacy script volume was 10.8 million in the quarter, driven by total pharmacy census growth. Total pharmacy volumes declined 1% due to a slight decline in home and community pharmacy volumes from the previously mentioned unwinding of a large customer going through bankruptcy and our decision to exit specific uneconomic customers.

Specialty and infusion script growth was 30% year over year in Q4. In the specialty and infusion business, performance throughout the year exceeded expectations, with fourth quarter revenue growth of 43% year over year driven by market adoption of existing LDDs, new LDD wins, fee-for-service growth, and strong commercial execution in the field. BrightSpring Health Services, Inc. Common Stock saw strength in the quarter from both brand LDDs and generic volumes, our total LDD portfolio now standing at 149 LDDs, including five launches in the quarter and 24 total launches in 2025. Moving forward, we expect 16 to 20-plus limited distribution drug launches over the next 12 to 18 months.

We believe that our growth will continue to be driven by new LDD launches, generic utilization, commercial execution with referral sources, and expanding fee for service. We are excited to have been chosen as the preferred specialty partner for additional new innovative therapies this quarter, which include infusible LDD therapies to treat a range of oncology, rare, and complex diseases. In infusion, the business performed in line with expectations in the fourth quarter with solid script volume growth. Adjusted EBITDA in the quarter grew in double digits driven by the benefits of operational initiatives and process improvements. We expect to continue to see improved profitability in infusion from our operational and growth initiatives moving forward.

In home and community pharmacy, we are pleased with the progress throughout the year. We have executed consistently across several end markets, including in behavioral, assisted living, hospice, and skilled nursing. As we have entered 2026, we continue to enhance our go-to-market strategy, invest in growth resources, and look forward to driving expansion in each of our end markets while we execute against the 2026 set of process, technology, and automation work to drive ongoing efficiency improvements. Turning to Provider Services. We are very pleased with the overall performance in the quarter and the year.

In the fourth quarter, segment revenue grew 13% year over year, and segment adjusted EBITDA grew 16% year over year, with an adjusted EBITDA margin of 16.4% in the fourth quarter, a 50 basis point expansion year over year primarily driven by economies of scale and efficiency. Home health care, which represents approximately 55% of revenue in the provider segment, grew 19% year over year. Average daily census grew 15% to almost 35,000 in the quarter, driven by strong quality metrics, de novos, execution on partnerships and preferred MA contracts, and strategic tuck-in acquisitions in target markets. In home-based primary care, we are excited by the large opportunity that exists, especially with ACO payment strategies.

We continue to invest in resources in this strategic area, and we believe we can further expand our home-based primary care business to benefit payers and their members and better connect patients to other integrated services that they need. In rehab care, which represented approximately 20% of provider revenue in the fourth quarter, revenue growth was 8% year over year. We are pleased by strong person-served growth of 13% and hours billed growth in the core neuro rehab services of 17%. Growth in the fourth quarter was driven by neuro rehab de novo additions and very high patient satisfaction scores, along with continued expansion of our Rehab in Motion program into ALF and home settings.

We are excited by momentum in rehab Part B for seniors and look forward to driving additional de novo locations this year. Turning to personal care, which represented 25% of provider revenue in the fourth quarter, revenue remained steady to up and grew 4% year over year. Personal care persons served grew 2% to 16,175 in the fourth quarter. In the quarter, and throughout 2025, we saw steady operational performance as we continue to provide high-quality supportive care to seniors and assist with activities of daily living in the home. Overall, I am pleased with our operational performance throughout 2025, leading to excellent business performance across BrightSpring Health Services, Inc. Common Stock's enterprise.

We now have a seven-year CAGR of 22% on revenue and 18% on adjusted EBITDA. 2026 is off to a consistent and good start, as we remain focused on leveraging our leading complementary and differentiated service capabilities and leveraging our scale, operational efficiencies, and best practices to deliver high-quality coordinated care to complex patients. We will be hosting an Investor Day on March 17 and look forward to discussing the BrightSpring Health Services, Inc. Common Stock platform and strategy that enables high-quality, lower cost, timely care delivery to approximately one-half million senior and complex patient individuals every day.

We will provide information on the operations, end markets, and growth drivers of each of our business units, and we will discuss our long-term company vision and strategy, and the reasons why we have never been more excited about BrightSpring Health Services, Inc. Common Stock's future. With that, I will turn the call over to Jen.

Jennifer A. Phipps: Before I discuss our financial results for the fourth quarter and full year of 2025, I would like to remind you that in 2025, we began to record the Community Living business in discontinued operations, as indicated in the press release and 10-K, to adhere to accounting standards required for annual reporting. As such, all BrightSpring Health Services, Inc. Common Stock financial results and forecasts that I will discuss are related to continuing operations and exclude Community Living and any acquisitions that have not yet closed. Management believes the presentation of the non-GAAP financials from continuing operations is a useful reflection of our current business performance.

In 2025, total company revenue was $3.6 billion, representing 29% growth from the prior year period. Pharmacy Solutions segment revenue in the quarter was $3.2 billion, achieving 32% year-over-year growth. Within the pharmacy segment, infusion and specialty revenue was $2.6 billion, representing growth of 43% from prior year, and home and community pharmacy revenue was $593 million, representing a decline of 1% year over year. Home and community pharmacy revenue declined year over year due to the associated with the customer that declared bankruptcy and our decisions to exit specific uneconomic customers. This particular customer's bankruptcy process is still ongoing, and our forward-year guidance contemplates a variety of scenarios.

However, we do not anticipate any changes to the year under any scenario. In the Provider Services segment, we reported revenue of $394 million in the fourth quarter, which represented 13% growth compared to the prior year. Within the Provider Services segment, home health care reported $217 million in revenue, growing 19% versus last year. Rehab revenue was $75 million, growing 8% versus last year, and personal care revenue was $102 million, representing growth of 4% year over year. For the full year 2025, total company revenue was $12.9 billion, representing 28% growth from 2024.

Pharmacy Solutions segment revenue was $11.4 billion, representing 31% growth from the prior year, and Provider Services segment revenue was $1.5 billion, representing 11% growth from the prior year. Moving down the P&L, fourth quarter company gross profit was $413 million, representing growth of 22% compared with the fourth quarter of last year. For full year 2025, company gross profit was $1.5 billion, representing growth of 20% compared to 2024. Adjusted EBITDA for the total company was $184 million in the fourth quarter, an increase of 41% compared to 2024. For full year 2025, adjusted EBITDA for the company was $618 million, representing 34% growth compared to 2024.

Adjusted EPS for the total company was $0.33 for the fourth quarter and $1.00 for the full year. Throughout 2025, we continued to implement procurement initiatives and have invested in and deployed new technologies to enhance operational efficiencies across the company. This has contributed to ongoing people and growth investments as well as net profitability growth and margin results for the fourth quarter and full year of 2025. In 2026, we anticipate our procurement and operational programs to result in additional gains through cost efficiencies, best practices, and streamlining across all business lines. Turning back to segment performance, in the fourth quarter, Pharmacy Solutions gross profit was $255 million, growing 25% compared with the fourth quarter of last year.

Adjusted EBITDA for Pharmacy Solutions was $102 million for the fourth quarter, an increase of 44% compared to last year, representing an adjusted EBITDA margin of 5.1%, which was up approximately 40 basis points versus last year. Provider Services gross profit was $158 million, growing 17% versus the fourth quarter of last year. Adjusted EBITDA for Provider Services was $64 million for the fourth quarter, growing 16% versus last year, representing an adjusted EBITDA margin of 16.4%, up approximately 50 basis points versus last year. Community Living continued to show strong operational and financial performance throughout the year. We are pleased with the year-over-year revenue and EBITDA growth we achieved in this business in 2025.

On a total company basis, cash flow from operations was $232 million in the fourth quarter and $490 million for 2025, exceeding our annual run-rate operating cash flow expectations for the year. Our adjusted EBITDA growth combined with our cash flow generation during the quarter has led to a leverage ratio of 2.99x at December 31, 2025, which we successfully decreased from 4.16x as of 12/31/2024. At the time we provided our fourth quarter 2024 results in March, our leverage ratio target was 3.0x to 3.5x pro forma for the Community Living transaction, and as of year end, we have now reached a leverage ratio of just under 3.0x and below that expected range.

Our view of year-end 2025 leverage pro forma for the Community Living transaction is 2.6x. We are pleased to have exceeded our leverage target for the year, driven by both growth and very strong operating cash flows exiting the year. BrightSpring Health Services, Inc. Common Stock is well positioned with a strong balance sheet, enabling increased capital allocation flexibility in 2026 and beyond. Longer term, with continued execution, growth, and cash flow generation, we remain on track towards a leverage target of 2.5x or below, which at current trends could be realized by midyear, excluding acquisitions or other uses of cash. As of December 31, net debt outstanding was $2.5 billion.

We continue to actively evaluate our capital structure to ensure that we are best positioned moving forward. As mentioned previously, in January, we expect to receive approximately $715 million of net cash proceeds from the $835 million of gross cash consideration in the pending Community Living sale, which at this time we expect to close by the end of the first quarter. Given various moving parts with regards to the use of Community Living proceeds, we are not providing interest expense guidance at this point in time. Turning to guidance for 2026, which excludes the Community Living business, as well as any acquisitions that have not yet closed.

Total revenue is expected to be in the range of $14.45 billion to $15.0 billion, including Pharmacy Solutions revenue of $12.6 billion to $13.1 billion and Provider Services revenue of $1.85 billion to $1.9 billion. This revenue range reflects 11.9% to 16.2% growth over full year 2025, excluding Community Living in both years. Total adjusted EBITDA is expected to be in the range of $760 million to $790 million for full year 2026. This would reflect 23.1% to 27.9% growth over full year 2025, excluding Community Living in both years. Included in total adjusted EBITDA is expected contribution from the Amedisys and LHC acquisitions of $30 million. I will now turn it back to Jon. Thanks, Jen.

Jon Rousseau: And thank you for your time today to go through BrightSpring Health Services, Inc. Common Stock's fourth quarter and full year 2025 results. We will now open up the call for questions. Operator?

Operator: Thank you. Star 1-1 on your telephone and wait for your name to be announced. In fairness to all, we ask that you please limit yourself to one question and one follow-up. One moment for our first question. Our first question is going to come from the line of A.J. Rice with UBS. Your line is open. Please go ahead.

A.J. Rice: Thanks. Hi, everybody. Obviously, a lot of things are going well for the company at this point. When you look at your '26 outlook, I wonder if you could—

Jon Rousseau: —sit here right now. Yes. We see a lot of consistency that is playing out in Q1, as we look at 2025. So we do not see a whole lot of changes and are continuing to try to execute against the strategies that we have been driving for a while. I mean, as we look out for the year and try to ensure execution, continuing to drive volume growth in each of the businesses is going to be important. We are making sales investments, really as always, and in all of the businesses in particular, and a couple of them, like home health, hospice, and infusion and in home and community in select markets like IDD and ALS.

So seeing those sales investments take hold, as always, we have a wholesome list of Lean Sigma tech and now increasingly AI projects that are slated to roll out through the company this year. We expect benefit from those as well. And then as we integrate the Amedisys and LHC acquisitions, those will be important to do well this year. So, look, I think it is just continued execution from a quality standpoint, and with that quality, investing more and more in sales to drive to our volume targets, and then on the cost side, continuing to drive lean initiatives through technology and through our procurement team.

Obviously, there is some margin expansion in what we are expecting for this year, but all of those items are things we have been executing against for a long time, and I think we want to take the consistency we are seeing right now and just continue to execute from a volume and a margin perspective.

A.J. Rice: Okay. And then maybe for the follow-up, I know you said that over the next twelve to eighteen months, you are looking at 16 to 20 new LDD introductions. I wondered if you could give us some comments about the landscape from a generic conversion, biosimilar conversion, and what that looks like for you at this point.

Jon Rousseau: Yes. We 24 LDDs we won last year, and 16 to 20 is our guidepost. We have been beating that the last year or two. We feel like that is a really good number as we look out twelve to eighteen month payment, doing a great job. Again, from a quality and service level perspective, that is something we focus on immensely to try to be the best partner we can. I think importantly, we are winning rare and orphan and some LDDs outside of oncology as well.

We will have probably three or four infusion LDDs, for example, that we are going to be winning here in Q1 or early Q2, and that is an area we are really focusing on. And then even a very meaningful cardiac drug here recently that we picked up too. So our LDD and specialty strategy is continuing to, would say, expand, leveraging on the core capabilities that we have. And that is deciding. From a biosimilar perspective, with Solara mostly in the rearview mirror, a little bit of residual impact for us this year, but we really do not have any exposure there just given the nature of the therapies and the drugs that we supply.

A.J. Rice: Okay. Thanks a lot.

Operator: Thank you. And one moment for our next question. Our next question will come from the line of Whit Mayo with Leerink Partners. Your line is open. Please go ahead.

Whit Mayo: Hey, thanks. Good morning. Jon or Jen, can you talk about just EBITDA and margins for each of the segments expected for this year?

Jon Rousseau: Yes, sure. I will go ahead and turn that over to Jen in a second. I would just say, as you are seeing EBITDA in our guide thus far for 2026 outpace revenue, obviously there is some margin expansion there. From a revenue perspective, some things that were expected, you have got IRA, you have got some branded generic conversions, you have got a little bit of residual impact from a customer or two in home and community pharmacy that we either fired or they went bankrupt, and so that is at play in some of our revenue numbers, notwithstanding that really strong growth rate numbers for the year that we are really confident in.

I think some of the EBITDA drivers, as I said before, is going to be some product mix and then these operational efficiencies that we continue to drive. Provider has got a really good growth number for 2026. That is a 17% margin business as well. So, Jen, any other commentary at the segment level?

Jennifer A. Phipps: Yes. I would say from a segment standpoint, we do expect broad-based margin expansion from the initiatives that we deployed in late 2025 and continuing into 2026. So we will see, we do expect some of that. We have favorable mix both in terms of product and services that is benefiting that. Jon mentioned some of the revenue impacts that also is causing expansion from a margin perspective, from an EBITDA standpoint. But just with all of that, we continue to invest for future growth. So in our plan for 2026, we will continue our investments in AI and technologies and other operational processes and sales investments, as Jon has mentioned.

So we are going to be covering that in this revenue guide as well. Yes, I think that is an important point. I mean even sort of with the EBITDA guide for '26, which I think it is 27%, 28% at the high end, there is a lot of continual investment we are making in the company as we look out to one-, three-, and five-year growth, which we are really excited about.

Whit Mayo: Okay. And then, I am curious just your views on the future of the temporary and permanent behavioral adjustment cuts for home health now that you have really doubled down on the industry. There is some debate whether or not CMS will in fact move forward to implement any further cuts. And then you may have kind of called bottom here on the rate environment in some ways. So I am just curious how you are looking at the rate environment.

Jon Rousseau: Yes. We like home health a lot. I mean, that deal was such an incredible fit from a geographical perspective. Our baseline view of home health rates, just to be conservative, is flat. I think there has been a lot of constructive conversations even here recently around the future and the value of home health. So we do remain optimistic, and just given the landscape of what has happened with some of the providers, I mean, we see an unbelievable runway in home health over the next five to ten years.

And our base case is flat, and I think if certain things occur in the future, there could be positivity there and back to normal and expected and justified rate increases. Remember, home health for us is sort of still sitting around 10% or so of the company. And then hospice has obviously had a ton of support and has been a phenomenal performer for us. Both of those teams in our company have best-in-class management. We continue to add sales. We continue to drive technology into those businesses, and I am super excited about their prospects.

Operator: Thank you. And due to time, we ask that you please limit yourselves to one question. One moment for our next question. Our next question comes from the line of David Michael Larsen with BTIG. Your line is open. Please go ahead.

David Michael Larsen: Hi. Congratulations on the great year. Can you talk a little bit about the earnings impact on specialty when drugs launch generic? It is my understanding that even though the price can decline, your margins would improve with generic launches. You are able to negotiate better margins across product classes when that happens. Numbers around that would be very helpful if that is the case. Thank you.

Jon Rousseau: Hey, David. Yes. Look. In the specialty pharmacy business, that growth is multifactorial, and it has been working for a decade now. You have got brand LDDs. We continue to win about 20 of those a year. We are continuing to actually expand outside of oncology in a lot of rare and orphan conditions, which is exciting. The pipeline out there in pharma continues to never be more innovative and bigger. These therapeutics are amazing for what they can do for people. But you have got brand LDDs. You have got a healthy stream of brands converting generic over time. That is a great thing for everybody. We drive generic utilization as much as we can.

Obviously, the cost on the buy side of procurement comes down, and that is helpful. And then we have a really growing fee-for-service business. We have a lot of data agreements and other service agreements with pharma. We are up to over 30 hubs now. We are the hub for pharma. And so just a terrific business in terms of the fee-for-service side, and that is obviously a higher gross profit margin as well. So we like the multifactor nature of growth in that business, and we continue to lean into all of them.

Operator: Thank you. And one moment for our next question. Our next question comes from the line of Charles Rhyee with TD Cowen. Your line is open. Please go ahead.

Charles Rhyee: Yes. Thanks for taking the questions, guys. Maybe just follow-up from Luke's question and just at least thinking through for the segments related to the overall EBITDA guidance, obviously, with the provider segment, we are going to add in sort of the $30 million contribution from the Amedisys transaction here. But beyond that, if we look at sort of either the 2025 full-year performance for the segments versus maybe fourth quarter, anything that would suggest that the trends that we are seeing that we should take account in our modeling as we think about the proportions of the overall EBITDA between the segments?

Jennifer A. Phipps: We expect consistency with what we saw in 2025, so we will continue to see volume growth and EBITDA growth is our expectation, organically across both of our segments.

Operator: And one moment for our next question. Our next question will come from the line of Jared Haas with William Blair. Your line is open. Please go ahead.

Jared Haas: Yes. Hey, guys. Thanks for taking the questions, and good morning. Just wanted to drill in a little bit more. Just wanted to understand the margin profile of the Amedisys assets that you acquired. From your comments, it sounds like that is a high single-digit margin if I use the pro forma revenues and then the $30 million EBITDA contribution, which I guess seems to be a little bit on the lower side compared to peers in the space and the rest of your legacy provider segment. So just wanted to kind of understand, make sure we are thinking about margins for that asset correctly.

And I am wondering if you are sort of absorbing any integration or transformation-related costs post that acquisition in the near term?

Jon Rousseau: Hey, Jared. I will let Jen speak in a second. Good morning. No, look, I think you are largely doing that math correctly in terms of what we acquired. It is what it is. But, as we look out for the year, that would be something that we would hope to integrate very soundly, and as we step through the year, we will see how it is going. We have a margin that is higher than that, and our goals will be to drive to our margin over time, and I think we will look to see how quickly we can do that.

Jennifer A. Phipps: I would agree. There is a lot of integration work, some technology investments that we are making, ensuring everyone is on consistent platforms and systems. A number of travel initiatives and other things. So we are really excited about that asset and what that will bring, and again, as Jon mentioned, we are very excited about moving that towards our overall profile.

Jon Rousseau: I think the only question hopefully will be the timeline of that. And if it moves up, it moves up, and that is a good thing.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Brian Gil Tanquilut with Jefferies. Your line is open. Please go ahead.

Brian Gil Tanquilut: Hey, good morning and congrats on the quarter, guys. Maybe, Jen, as I think through the year, any callouts especially with the AMED transaction coming in and kind of like a margin ramp expectation there? Any callout on how we should think about the cadence of the quarters for 2026?

Jennifer A. Phipps: Yes. A really great question, Brian. Thank you. Just as a reminder, Q1 is the shortest quarter from a days perspective, so that tends to be, from an annualized perspective, our lowest quarter. We would expect sequential growth in each of our quarters throughout 2026, consistent with what we saw in 2025. And from a margin perspective, that will be driven really kind of throughout the year as well as we have different products coming online. We have a generic launch that will happen in Q2, so that will increase throughout the year from a margin perspective.

Operator: Thank you. And one moment for our next question. Our next question will come from the line of Pito Chickering with Deutsche Bank. Your line is open. Please go ahead.

Pito Chickering: Hey, good morning, guys. Great quarter here. Looking at the 2026 pharmacy revenue guidance, can you give us the moving parts between sort of core growth of existing drugs plus new LDD wins and then the offsets from generic conversions? And, obviously, generics is obviously revenue, obviously not EBITDA. But if you can just give how we think about core growing plus LDD wins, minus generics to help get to the pharmacy revenue guidance. Thank you.

Jennifer A. Phipps: Yes. So maybe I will just start with a couple of unfavorable impacts. I think that will be helpful context. So as you think about IRA in specialty and infusion, we do have a revenue headwind of approximately $200 million, and then brand-to-generic conversions, as we have talked throughout 2025, we typically are trying to increase our sales in advance of a launch. And as we know, when there is a brand-to-generic conversion, revenue does come down, and then ultimately, that is good for everyone. It is beneficial from an EBITDA standpoint for us. The total impact in specialty and infusion is a little over $400 million between those two items.

And then home and community IRA impact from a revenue standpoint is approximately $175 million. So we do have headwinds of approximately $100 million in 2026. Despite that, we obviously have strong growth. We do expect growth across all of our different business lines. We will absolutely have LDD growth. That is the, you know, that in specialty. We have strong script growth in home infusion and specialty plans. We mentioned in Q3 that home and community script growth will be challenged because of the year-over-year lapping of some of the customers that we offboarded or branches associated with that customer that went through bankruptcy and those locations.

So in home and community, we will have script challenges until about Q3, but outside of that we are having really strong volume growth across each of our pharmacy businesses.

Operator: Thank you. And one moment for our next question. Our next question comes from the line of Ann Hynes with Mizuho. Your line is open. Please go ahead.

Ann Hynes: Great. Thank you. Can you provide an update on the infusion business? I know it has been a big focus of investment and growth. Maybe how much that grew within specialty, what the margin profile is, and maybe what it contributes now as a percent of total specialty. Thanks.

Jon Rousseau: Yes. Hey, Ann. Good morning. We are pleased with where the infusion business is at. We have really high aspirations for it this year and going forward. The acute business, we are really a top-two provider there, and in a lot of markets, have a leading market share. That growth has been in the double digits, and we expect that will occur again this year. On the specialty side is, I think, where we have a big opportunity. We have been underweight on specialty. We are creating specialty hubs right now and really separating those two businesses out to create the focus that we want. We have invested in a lot of resources there.

We are going to be further investing in resources. We have plans to significantly expand our AIS presence. We have got about 30 right now. We are going to be retrofitting those and upgrading them and moving locations all this year and trying to make them extremely consumer friendly in all the right kind of strip malls and places. So, super excited about it. As you look at our balance sheet, that gives us a lot more flexibility in the future as well.

And then just kind of broadly, just touching back on Pito's question, when you think about the numbers Jen put out there, sort of those one-time impacts, that otherwise is calculating to a revenue outlook at this time for 2026 of at 20% or a little bit over 20% when you adjust for those items. So really robust, broadly outside of a couple of those external items. And then I just wanted to circle back on Brian's note on the cadence of the year. It is a great question. I mean, as Jen said, we do expect the quarters to increase throughout the year.

As I sort of mentioned to AJ, the continual sales investments we are making, all in the back of quality, de novos that we are investing in, and then our operational projects, these things are all ongoing throughout the year. And as such, those are some of the growth drivers we see throughout the year as we sit here today.

Operator: Thank you. And one moment for our next question. Our next question will come from the line of Matthew Dale Gillmor with KeyBanc. Your line is open. Please go ahead.

Matthew Dale Gillmor: Thanks for the question. I wanted to ask about the Onco360 sales force. Seems like a pretty unique asset within the specialty pharmacy platform. Can you remind us the role they play, especially with LDD launches or with generic conversions? And what are the priorities for that part of the business as you are thinking about 2026?

Jon Rousseau: Yes. No. That is an area that we have continued to invest in. A lot of longstanding relationships both with pharma and with prescribers, which we take extremely seriously and are very honored to have. But it is an area that we give a lot of attention. We have increased our investments in that field force every year. We will do it again this year. We are essentially, at this point, covering, I think, every geography in the United States from a referral standpoint.

And, again, it is the service levels that are really pulled through behind the commitments by the field force that are so important, and those were all reflected in the net promoter scores that we have, which typically range between 95 to 100. So everything starts with service, and from there, it is just trying to offer the best education and support for all of the stakeholders out there in the market that we can.

Operator: Thank you. And one moment for our next question. Our next question will come from the line of Joanna Sylvia Gajuk with Bank of America. Your line is open. Please go ahead.

Joanna Sylvia Gajuk: Good morning. If I may ask the same question a little bit differently about the segment for that. So I appreciate the $600 million revenue headwind in the pharmacy segment. So if I look at, you know, 2025 pharmacy segment margins, right, they improved actually a little bit year over year, to 4.7%, call it, in '25. Is that the, you know, to think about 2026 margins for that segment, you know, how, I guess, will revenue headwinds translate into the margin for that segment? Thank you.

Jennifer A. Phipps: Yes. Thank you, Joanna. Yes. It would be mix shift. It would be operational improvements and offset by the investments that we are going to be making, as mentioned, in each of the different segments and at corporate in those areas. So, again, we would absolutely expect an improvement in margin. You see that coming through in the in. You see that margin move up. We will expect a small improvement of that is continuing through 2026. And, again, for those particular reasons.

Jon Rousseau: Yes. In addition to the mix shift and the operational initiatives, you have got economies of scale just from really robust, just core growth.

Operator: Thank you. And one moment for our next question. Our next question will come from the line of Raj Kumar with Stephens. Your line is open. Please go ahead.

Raj Kumar: Maybe just kind of expanding upon the integration milestones with Amedisys, LHCG, and thinking about that beyond 2026 and maybe kind of flushing out the embedded value you see with the asset integration and then cross-integration of services and products between both segments, considering the deeper kind of geographical overlap post deal, kind of would be helpful to kind of see or frame the overall kind of story there.

Jon Rousseau: Yes. So I think there was an earlier question about the margin structure that we acquired. Our provider margins, you can look at what they are. That is what our hope is for the business, and I think we just have to see how quickly we can get there. I would say we are very optimistic about the top-line growth and the volume and ADC growth as well, and the potential that we have in the business. The assimilation so far has gone incredibly well. From a cultural standpoint, fantastic, and so we are really excited about it.

There is margin opportunity there, but we are as excited and even more excited about what we can do from a growth perspective in some of these really terrific markets. I would say that there is also overlap with our hospice branches, and so there is going to be a lot of integrated care opportunities there as well, and benefits for our hospice business too. I would note that we funded that deal entirely with cash on hand, and I think that is just a little bit of a callout to where our balance sheet and our cash profile is today. We ended up the year at almost $500 million of operating cash flow.

We also did a repurchase later in the year. And as we look at our balance sheet under three times now, and pro forma for the Community Living close 2.6x, so the ability to execute against that transaction entirely funded with cash on hand was a helpful benefit of where we have come as a company from a balance sheet perspective and where we sit today. And as mentioned, I think that is going to give us some flexibility as we go forward, particularly later in the year and certainly into '27 and '28.

Operator: Thank you. And one moment for our next question. Our next question comes from the line of Steven Beck with Wells Fargo. Your line is open. Please go ahead.

Steven Beck: Yeah. Hi. Yes. So I am looking at the growth rates here, and I think that actually includes, potentially stepping over a fairly large headwind in the LTC business that is coming off the changes that are being made around the IRA. I was wondering if you could update us maybe on the magnitude of the headwind there that you are stepping over? And then any update on your efforts to maybe offset that headwind through reimbursement changes or additional fees or things like that? Thank you.

Jennifer A. Phipps: Yes. So as we discussed last quarter, we continue to work and continued through Q4 to work productively with our payers regarding an enhanced dispensing fee that we have worked to achieve, which has helped us to mitigate some of the impact. We absolutely do have an impact. We continue to work through that from a payer perspective. But through all of the other growth initiatives, the volume growth, the efficiencies, we have growth planned, as we had discussed, healthy growth planned in the home and community business. So we continue to work again with our payers to ensure that we have an appropriate enhanced dispensing fee.

Our government relations team is also active, making sure that everyone understands the impacts to the pharmacy business. But again, our scale platform and our operational improvements that are hallmark really to how we are approaching every single year, I think, have helped us in this year, for 2026.

Jon Rousseau: Yes. I think hopefully we have been clear on the growth drivers for specialty across LDDs, brand generic, fee for service, infusion. You have got acute, you have got specialty. You have got a growing LDD business there, rollout of more AISs. In home and community pharmacy, outside of this IRA, which we will work through constructively, and you have got one or two customer situations, unfortunately, which will be in the rearview mirror probably by about Q3 or Q4. I mean, the name of the game in that business is driving as much volume as you can in these other attractive end markets and being the most efficient scale provider in the industry.

So you look at assisted living, you look at hospice, you look at behavioral, you look at the PACE market we are entering, and then the skilled nursing market with a segment of that market, all extremely attractive. I mean, we are adding some 30 reps this year to grow and penetrate across all those markets further. And then this is where we are leaning into AI and technology the most, for starters. You look at the whole pharmacy intake and revenue cycle process, and there are some seven or eight projects this year.

So super excited about continuing to build out the biggest scaled independent provider in that space in these attractive end markets, and providing a set of operations that produce the highest service levels possible and with a continued focus on cost per script there.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Sean Dodge with BMO Capital Markets. Your line is open. Please go ahead.

Sean Dodge: Yes. Thanks. Good morning. Maybe just going back to the—

Jon Rousseau: —margin comments on the pharmacy side. You mentioned some of the key drivers having been your efficiency efforts and then product mix. Could you just give us a sense of the margin expansion you drove over the last year? How much of that was from generics versus how much of that was from those cost initiatives? And then we think about the '26 guidance, the improving margins you are embedding there. Is that proportionality expected to change at all? How big of a role do you expect incremental efficiencies to play into that, again, versus lift from the generics? Thanks. Yes.

I mean, well, look, the good news on operational efficiencies is a lot of them occurred in the back half of last year, so they are just sort of flowing through at this point and will be year-over-year tailwinds. And then in addition to that, we are always looking at the next thing and launching new projects. I would say on the pharmacy side, home and community and infusion is where we have the most projects from an operational excellence perspective going on and will be going on this year. But from a margin perspective, I mean, yes, economies of scale from pretty aggressive growth targets that we like to put out there and go try to achieve.

But, look, across all the different businesses, you have got brands and generics in each. You have got a lot of different end markets, a lot of different payers. I mean, there is just a lot going on. But the net effect of it every year, if you focus on strong, strong double-digit growth, market share gains, targeting the most attractive therapeutic areas, and doing all of that with the best quality and the most operational efficiency, that has always been out to a really good place. The hallmarks of the company now for ten years has been volume and efficiency, and then accretive M&A.

And so that story has really never been more intact, and you see all that play through in 2026, we think, as we sit here today.

Operator: Thank you. I am showing no further questions. I would like to hand the conference back over to Jon Rousseau for closing remarks.

Jon Rousseau: Thank you, everybody, for joining. We really appreciate it. Appreciate your questions, as always. Have a great day, and we look forward to talking with you soon.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone have a great day.

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