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BrightSpring Health Services, Inc. (BTSG)·Q4 2024 Earnings Summary

Executive Summary

  • BrightSpring delivered strong Q4 2024 growth: net revenue $3.053B (+28.6% YoY) and Adjusted EBITDA $167M (+17.4% YoY), with diluted EPS $0.08 and Adjusted EPS $0.22; full-year 2024 revenue reached $11.266B (+27.6% YoY) and Adjusted EBITDA $588M .
  • Management increased FY 2025 guidance (ex-Community Living): revenue $11.6–$12.1B and Adjusted EBITDA $545–$560M, citing broad-based operational momentum and efficiency programs; divestiture of Community Living to Sevita for $835M expected to close in H2 2025 .
  • Pharmacy Solutions grew 34% YoY to $2.397B, led by Specialty and Infusion (+42% YoY) and Home & Community Pharmacy (+17% YoY); Provider Services revenue rose 11% to $656M, with segment margin expansion to 15.2% (+70 bps YoY) .
  • Q4 cash flow from operations was $90M including IPO fees ($116M excluding); net debt ~$2.7B with leverage ratio 4.16x; company targets 2025 run-rate operating cash flows >$300M and deleveraging toward 3.0x–3.5x (LT: 2.0x–2.5x) .
  • Wall Street consensus estimates via S&P Global were unavailable due to request limits; results vs estimates cannot be assessed (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

  • Specialty and Infusion outperformed: “Infusion and Specialty revenue was $1.8B, representing growth of 42%” in Q4, with specialty script growth +35% and turnaround times 10–11 days (“best-in-class”) .
  • Customer satisfaction and quality: Net Promoter Scores of 98 (Onco360) and 100 (CareMed); Home & Community pharmacy on-time delivery ~97%; 85% of Home Health branches predicted 4–5 stars; Hospice care index 9.3/10 .
  • Provider margin expansion: Provider Services Adjusted EBITDA margin reached 15.2% in Q4 (+70 bps YoY), driven by quality-based volume growth and efficiency execution .

What Went Wrong

  • Mix pressure in Pharmacy margins: company noted lower margins tied to outsized Specialty growth; Pharmacy segment Adjusted EBITDA margin was 4.7% in Q4, “in line with expectations,” with focus on reducing OpEx per script in Home & Community and Infusion .
  • Ongoing exposure to regulatory dynamics: IRA remains a swing factor; management cited the need for CMS true-up mechanics (MFP to WACC) on eight drugs to avoid margin harm in long-term care pharmacy; potential downside of “a couple percent of EBITDA” if unresolved, which they expect to grow through .
  • Leverage remains elevated: net debt ~$2.7B and leverage ratio 4.16x at YE; near-term deleveraging depends on execution, operating cash flows, and Community Living sale proceeds .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$2,730 $2,907 $3,053
Gross Profit ($USD Millions)$389 $408 $422
Operating Income ($USD Millions)$62.4 $56.8 $79.1
Adjusted EBITDA ($USD Millions)$139 $151 $167
Diluted EPS ($USD)$0.10 $(0.04) $0.08
Adjusted EPS ($USD)$0.10 $0.11 $0.22
  • Revenue growth YoY: Q2 +26.0% , Q3 +28.8% , Q4 +28.6% .
  • Gross profit YoY: Q2 +4.6% (13.8% ex-2023 QIP) , Q3 +13.9% , Q4 +14.4% .
  • Company noted Adjusted EBITDA YoY of +17.4% in Q4 ; full-year Adjusted EBITDA $588M (+9.3% YoY; +15.9% ex-2023 $30M QIP) .

Segment breakdown:

SegmentQ2 2024 Revenue ($MM)Q3 2024 Revenue ($MM)Q4 2024 Revenue ($MM)
Pharmacy Solutions$2,114 $2,266 $2,397
Provider Services$616 $641 $656
Total$2,730 $2,907 $3,053
SegmentQ2 2024 Segment EBITDA ($MM)Q3 2024 Segment EBITDA ($MM)Q4 2024 Segment EBITDA ($MM)
Pharmacy Solutions$94 $99 $113
Provider Services$86 $93 $99
Total Segment EBITDA$180 $192 $212
Corporate Costs$(41) $(41) $(45)
Total Company Adjusted EBITDA$139 $151 $167

KPIs:

KPIQ4 2024
Total scripts (Pharmacy)11 million (+14% YoY)
Specialty script growth+35% YoY
Specialty & Infusion revenue$1.8B (+42% YoY)
Home & Community Pharmacy revenue$601M (+17% YoY)
Provider Services Home Health revenue$280M (+17% YoY)
Community & Rehab Care revenue$376M (+8% YoY)
Provider Services Adjusted EBITDA margin15.2% (+70 bps YoY)
Pharmacy Solutions Adjusted EBITDA margin4.7%
Average daily census (Home Health)46,000 (+9% YoY)
NPS (Onco360/CareMed)98 / 100
Specialty turnaround time10–11 days
Cash flow from operations$90M including IPO fees; $116M excluding
Net debt and leverage ratio~$2.7B; 4.16x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025 (ex-Community Living)Not disclosed (January) $11.6B – $12.1B Raised
Adjusted EBITDAFY 2025 (ex-Community Living)$540M – $555M (derived from +$5M each end) $545M – $560M Raised
Pharmacy Segment RevenueFY 2025Not disclosed (January)$10.15B – $10.6B Raised
Provider Segment RevenueFY 2025Not disclosed (January)$1.45B – $1.5B Raised

Recent FY 2024 guidance progression:

  • Q2 2024: Revenue $10.45B–$10.90B; Adj EBITDA $570M–$580M .
  • Q3 2024: Revenue $11.00B–$11.30B; Adj EBITDA $580M–$585M .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
AI/Technology & AutomationTransformation programs (GL/BI and pharmacy billing implementations completed; ransomware response) >100 procurement/workflow/automation programs; RPA, AI use-cases embedded in EMRs; BPO team driving efficiencies Expanding adoption and impact
Limited Distribution Drugs (LDD)Specialty strength highlighted 12 LDDs in 2024; 125 total LDD portfolio; 16–18 potential launches next 12–18 months; early 2025 launches begun Robust pipeline momentum
Infusion OperationsMix and margin noted; investments ongoing Standardization completed; new leadership; best-in-class 10–11 day turnaround; targeted >20% growth in 2025 Improving execution and growth
Provider Quality & GrowthProvider revenue growth and margin expansion Provider margin up 70 bps to 15.2%; Home Health revenue +17% with 85% branches 4–5 stars; Hospice index 9.3/10 Strengthening quality and margins
Regulatory (IRA)Legal costs concluding; QIP impact removal IRA MFP→WACC true-up needed on eight drugs; downside swing “couple percent of EBITDA” if unresolved; expect resolution Policy risk monitored; likely mitigated
Litigation (PharMerica)Settlement costs ongoing, expected completion in 2024 Matters finalized in 2024 per 10-K reference; discrete tax benefit included Resolved; tail risk reduced
Capital Allocation & LeverageIPO/refinancings; rising equity base Net debt ~$2.7B; 4.16x leverage; target >$300M CFO in 2025; M&A spend ~$100M; LT leverage 2.0x–2.5x Deleveraging plan intact

Management Commentary

  • “We are increasing total revenue and adjusted EBITDA guidance for 2025… excluding the Community Living business.” (Jon Rousseau) .
  • “Infusion and Specialty revenue was $1.8 billion, representing growth of 42%… specialty script growth of 35%.” (Jennifer Phipps) .
  • “Our Home and Community pharmacy on-time delivery metrics approached 97%… Approximately 85% of our Home Health branches now have a predicted CMS star rating of 4 or 5.” (Jon Rousseau) .
  • “Provider Services… adjusted EBITDA margin of 15.2%, up 70 basis points versus last year.” (Jennifer Phipps) .
  • “We expect… the divestiture of Community Living… to close this year… [creating] a more streamlined organization with greater capital flexibility and increased growth rates.” (Jon Rousseau) .

Q&A Highlights

  • LDD competitiveness: Networks narrowing amid micro-therapies; BrightSpring continues to win exclusive/ultra-narrow contracts due to high service levels (NPS 98/100) .
  • Infusion trajectory: Operational reset completed; best-in-class 10–11 day turnaround; aiming for >20% growth in 2025; focus shifting back to referral growth and specialty mix .
  • Efficiency programs: >100 projects drove eight-figure EBITDA benefit in 2024, with continued contribution expected in 2025; many savings reinvested in IT, compliance, sales .
  • Home Health/Hospice development: Quality improvements (4–5 star branches up to ~85%); pursuing MA enhanced rates tied to quality; doubling revenue in five years is a goal .
  • IRA impact: Two-sided dynamic—lower patient OOP is tailwind; eight-drug list needs MFP→WACC true-up; downside “couple percent of EBITDA” if unresolved, expected to be absorbed .
  • Guidance pacing: Seasonality similar to prior years (Q1 payroll tax reset; Q4 typically stronger); 2025 guidance raised based on broad momentum .
  • Capital allocation: Base case ~$100M M&A in 2025; deleveraging with or without sale proceeds; long-term leverage target 2–2.5x .

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable due to S&P Global daily request limits; therefore, a beat/miss assessment vs consensus could not be performed for Q4 2024 (S&P Global data unavailable).

Key Takeaways for Investors

  • Q4 2024 was another strong execution quarter: revenue $3.053B and Adjusted EBITDA $167M, with segment breadth (Specialty/Infusion, Home & Community, Provider Services) driving growth and margin expansion .
  • FY 2025 guide raised with Community Living excluded: revenue $11.6–$12.1B and Adjusted EBITDA $545–$560M; expect streamlined portfolio and higher growth post-divestiture .
  • Specialty & Infusion is the growth engine: robust LDD pipeline (16–18 potential launches), improving operations, and best-in-class turnaround times position the segment for >20% growth in 2025 .
  • Provider Services quality and margins are trending up: 15.2% Q4 margin, Home Health star ratings elevated, Hospice metrics above national averages—supporting sustainable growth and payer discussions .
  • Efficiency and automation are durable tailwinds: >100 projects delivered eight-figure EBITDA benefits in 2024 with further contributions expected, reinforcing multi-year margin leverage .
  • Regulatory watch: IRA true-up on eight drugs is the key near-term policy variable; management expects resolution and has capacity to absorb a modest EBITDA headwind if needed .
  • Deleveraging path intact: >$300M 2025 run-rate operating cash flow target, ~$100M M&A, and sale proceeds support progress toward 3.0x–3.5x leverage (LT 2.0x–2.5x), reducing equity risk over time .