Good day, and thank you for standing by. Welcome to the BrightSpring Health Services First Quarter 2024 Earnings Call. At this time all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Jennifer Phipps, Chief Accounting Officer. Please go ahead.

Good morning. Thank you for participating in today's conference call. My name is Jennifer Phipps, Chief Accounting Officer of BrightSpring. I am joined on today's call by John Rousseau, Chief Executive Officer, and Jim Mattingly, Chief Financial Officer. Earlier today, BrightSpring released financial results for the quarter ended March 31, 2024. A copy of the press release and presentation is available on the company's 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 10-Q that will be filed with the SEC. Specific risk factors and uncertainties can also be found in our 10-K previously filed with the SEC. 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 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 Jon Rousseau, Chief Executive Officer.

Thank you, Jen. Good morning, everyone, and thank you for joining BrightSpring's first quarter 2024 earnings call. I would like to begin by extending a heartfelt thank you to all of the people at BrightSpring. At BrightSpring, we are working vigorously to deliver high-quality home and community-based pharmacy and provider health solutions to complex patient populations. This could not be accomplished without our dedicated employees and the support of our investors. Consistent with both our long-term and recent track records, we are pleased to start the year with strong first quarter performance across the portfolio of home and community health service lines at BrightSpring. Our comprehensive care platform continues to deliver timely, preventative, and coordinated care solutions centered around patients. Some highlights here up front include the following: extremely strong volume growth in Q1, revenue and adjusted EBITDA in the first quarter that exceeded plan, and significantly raised guidance for the full year while continuing to invest in our infrastructure and future growth. These results are driven by our provision of services in large and growing markets, the delivery of valuable services that reduce costs and improve outcomes, our demonstration of strong quality and service levels, strong operational capabilities within a scaled platform, and our ongoing pursuit of attractive near-term and long-term growth opportunities through a sales and marketing focus and commitment to strategic growth. For the first quarter, the company's revenue was $2.6 billion, which represented 27% growth year-over-year and exceeded expectations. Pharmacy Solutions generated $2 billion in revenue, representing 35% growth compared with the first quarter last year. And the Provider Services segment generated $600 million in revenue, representing 7% growth compared to the same period last year. We are very pleased with the robust growth and performance in Pharmacy Solutions, which was well ahead of plan as well as with the Provider Services segment, which delivered impressive growth in line with our expectations and is comprised of several underlying higher-growth service lines. Very strong and broad-based revenue performance across the company led to better-than-expected adjusted EBITDA growth for BrightSpring with adjusted EBITDA of $130.5 million for the first quarter, representing 13.2% growth versus the prior year's first quarter. In Pharmacy Solutions, our 35% revenue growth was driven by strength in both the infusion and specialty business, and the Home and Community Pharmacy business, with the specialty business performing exceptionally well. The infusion and specialty business grew 44% year-over-year, well ahead of our expectations, with specialty delivery growth above the sub segment's growth rate. Home and Community Pharmacy revenue grew 15% year-over-year in the quarter. Across Pharmacy Solutions, total scripts dispensed and delivered were approximately $9.9 million in the quarter, which increased 9% versus the prior year, with excellent volume growth of over 35% in specialty pharmacy. Already this year, we have been selected as a preferred pharmacy partner for three new highly specialized limited distribution oncology drugs, a key driver of specialty growth bringing our total limited distribution drugs portfolio to 117. Scripts dispensed in Home and Community Pharmacy grew in the high single digits year-over-year, and we are currently on track this year to realize the largest increase in the number of new customers and patients ever in this business. We believe our performance in pharmacy is reflective of our operational efficiency, clinical and dispensing accuracy, high-quality services, and customer and patient support programs and satisfaction levels. And we expect the revenue momentum in this business to continue. Adjusted EBITDA in Pharmacy Solutions grew 7% year-over-year, driven by strong volume growth across the segment. Adjusted EBITDA margin was influenced by the outsized revenue growth in specialty, above expectations and corresponding mix shift, in addition to some impact from the changed health care disruption. We believe the pharmacy segment margins will expand over the balance of the year while continuing to make growth investments in the business. In Provider Services, 7% revenue growth was driven by strong home health care performance as well as continued strength in our rehab business. Our community living business delivered above-market growth in the quarter as well. Daily patients served remain healthy across our care platform. With home health care average daily census of approximately 43,000 growing 11% year-over-year, with double-digit census growth in our home health and hospice business. Community living and rehab person served was 16,600 in the first quarter, relatively flat compared to last year and in line with expectations. In rehab, we are internally focused on core billable hours for monitoring the growth of this business, which we believe is a better indicator of performance. And in the first quarter, core billable hours and rehab grew at a high-teens rate year-over-year, consistent with our plan. Adjusted EBITDA in Provider Services grew 25% year-over-year with margin expansion driven by cost efficiencies, economies of scale, operational quality, and volume and revenue growth. We saw adjusted EBITDA strength across the provider portfolio with margin expansion in both home health care and community and rehab care. Overall, as a company, EBITDA margin grew year-over-year when excluding the extremely high growth and higher share of business mix that the specialty pharmacy business delivered and represented in the first quarter. We were pleased with the total company growth and revenue and adjusted EBITDA in the quarter, which puts us ahead of our plan for 2024. As a result, we have raised both revenue and adjusted EBITDA guidance for the year, which we will discuss in more detail in just a few minutes. All in all, the company's first quarter financial results reflect impressive growth and profitability driven by consistency of performance in our complementary and comprehensive services platform. In addition to the growth metrics and financials, I would like to take a moment to discuss how and why BrightSpring is among the leading health care services companies in the country today. At BrightSpring, we deliver pharmacy and provider health services to complex patients in home and community settings. We operate in large and growing markets where we provide essential services with clear and strong ROI. Across our organization, our team works hard to deliver high-quality care to patients and we believe our operational prowess and culture of continuous improvement are competitive differentiators. We work to ensure that patients receive appropriate and accurate care in the most efficient and desired setting. As part of our attentive and compassionate care, we work to identify potential medical and medication problems and reduce adverse events due to our highly proximate position to patients where they reside. We provide important health services for approximately 400,000 patients each day on average, enabled by the timely and high-quality care provided by well-trained personnel and BrightSpring's overarching focus on delivering patient-centric care. Our integrated platform of service capabilities also helps specific patients to receive the right care at the right time and in the right setting. We will continue to improve the coordination of integrated and patient-centric care for all people who require multiple health services at the same time or over time. This results in many benefits for patients, including efficiency of care and additional growth of the BrightSpring platform. In Pharmacy Solutions, we have 99.9% generic efficiency and order accuracy rates in our home and community pharmacy settings. We start cancer patients on therapy twice as fast compared to the industry average. We have Net Promoter scores greater than 90 in infusion and specialty, with patient satisfaction scores of 95% in our infusion business. Our medication adherence programs have delivered over $2,000 in average annual savings. And our medication management program for individuals in their own homes called Continue CareRx, has demonstrated a 73% reduction in hospitalizations when utilized together with our home health, as highlighted in the article of November 2023. This high level of performance, to cite only a few examples, is measured by patients and third parties and is well above the industry average. Our proactive best practices and operational capabilities were also recently evidenced when BrightSpring was able to mitigate any significant impact to revenue or EBITDA related to the changed health care, cybersecurity incident in the first quarter. In our Provider Services segment, our patients often have complex health conditions, which require dynamic care plans incorporating expertise across multiple disciplines. We are proactive in coordinating care delivered through customized programs and plans. As care takes place in the home or community clinics, we have demonstrated an ability to deliver high-quality outcomes with lower costs. Our home-based primary care team has demonstrated an 84% reduction in readmission for IDD patients and our seniors and dual patients experienced approximately 50% less hospitalization compared to the national average for similar patients. In our community living business, we have delivered 99.9% of incident-free service hours to an often acute population. We've received very high customer satisfaction scores of 99% in our rehab business, 4.4 out of 5 in our Personal Care business, and an 84% overall rating of care in our hospice business. Our hospice business is rated in the top 5% of all hospice providers in the country and delivers significantly more clinician time and care to patients compared to the national average. We deliver the highest level of skill and compassionate care to patients at some of the most important times in their lives. Importantly, these quality and operational results not only reflect the commitment to high levels of service and care in our organization but also contribute to our above-industry average growth profile. Our focus on service levels and quality creates a positive cycle of patient success, efficiency, and increased partnerships and referrals, which all contribute to the growth of the company. Secular growth drivers underpinning performance across the company include continued robust market growth driven by demographics, the continued shift of services delivered closer to the patient in home and community settings, and specific customer setting growth factors. Within pharmacy, there is also secular innovation in the delivery of complex drugs and limited distribution drugs in infusion and oncology and the continuing evolution of generic alternative availability in this specialty business. Against this positive industry backdrop, BrightSpring's scale, comprehensive offerings, and focused quality and service have been drivers of market share gains and above-industry average historical growth. With this foundation in place, we remain strategic with our spend and are further investing in targeted resources and operational enhancements to improve customer and patient access and workflows, while continuing to drive best practices across the enterprise. Ongoing operational focus, efficiency, and quality of services lead to superior sales and marketing results, improved revenue cycle management, and optimized recruiting and training systems for our employees. We leverage our operational capabilities to underpin our volume and revenue growth rates. And our ongoing strategic planning is aimed at meeting the needs of more patients as we continue to dive deeper into our existing and adjacent markets and focus on growing at above-market rates. We do this through the expansion of current operations, de novo projects, and acquisitions. And looking ahead, we will increasingly integrate additional offerings to patients through care management resources and the transitions of care to our lower-cost and patient-preferred settings. By further incorporating leading payment models from both government and private payers, we are beginning to drive true value-based care through clinical and operational integration that we are uniquely capable of delivering. As we have demonstrated in the past, we are well-positioned to capitalize on external opportunities to augment our organic growth plan, and we will look to acquire operations in the right geographies where we see increased value under the BrightSpring platform. We have been a successful acquirer of businesses, and we can improve service levels and profitability through the deployment of technology, good operational processes, enterprise best practices, synergies, and strong leadership. As you may have seen, there have been a number of updates from CMS on proposed reimbursement rules in health care as well as final rulings on dynamics that could impact our industry. Numerous updates have been favorable, and net, we believe there is no material change to our near-term or long-term forecast or outlook. We operate in healthy markets with high demand, characterized by lower-cost services that have proven value, and markets where we have significant opportunity to outperform due to our operational prowess, strategic discipline, and scale advantages. As a reminder, over the course of a given year, we have in excess of 4,900 payer contracts, and this breadth and balance of business and operations provide benefits, comparatively muting rate changes and enabling service lines to leverage the enterprise’s infrastructure and scale in contracting and best practices. Our comprehensive portfolio has helped support both consistent stability and growth in the past and lays the foundation for continued opportunity in the future. To summarize, we are pleased by our strong performance this quarter and are optimistic about the year ahead, as evidenced by our increased revenue and adjusted EBITDA guidance. We have recently added two independent directors to our Board, Olivia Kirtley and Tim Wicks. Both Olivia and Tim bring incredible operational and Board experience to BrightSpring, and I look forward to working with them as we grow the company. The timely, high-quality, compassionate, and coordinated care that we provide across our platform is unparalleled amongst our peer group. And we continue to cultivate and build upon a patient-centric culture characterized by continuous improvement and execution. I will now turn the call over to Jim to walk through the first quarter's financial results in more detail.

Thanks, Jon. Total revenue in the first quarter of 2024 was $2.6 billion, representing 27% growth from the prior year period. Pharmacy Solutions segment revenue was $2.0 billion, achieving growth of 35% year-over-year. Within the Pharmacy segment, infusion and specialty revenue was $1.5 billion, representing growth of 44% from last year, and Home and Community pharmacy revenue was $511 million, representing growth of 15% year-over-year. In the Provider Services segment, we reported revenue of $600 million, representing growth of 7% compared to the prior year period. Within the Provider Services segment, Home Healthcare reported $242 million in revenue in the first quarter, growing 9% versus last year, and community and Rehab Care revenue was $358 million, representing growth of 6% year-over-year. Moving down to P&L, total company gross profit in the third quarter was $369 million, representing growth of 10% compared with the third quarter of last year. SG&A expenses for the total company were $361 million compared to $283 million in the prior year period. Adjusted EBITDA for the total company was $131 million for the first quarter, growing 13% compared to last year. Adjusted EPS for the total company was $0.12 for the first quarter compared to negative $0.10 in the prior year period. Turning back to segment performance, Pharmacy Solutions gross profit was $170 million, growing 6% compared with the first quarter of last year. SG&A expenses for Pharmacy Solutions were $109 million compared to $106 million in the prior year period. Adjusted EBITDA for Pharmacy Solutions was $88 million for the first quarter, growing 7% compared to last year. Provider Services gross profit was $199 million, growing 14% versus the first quarter of last year. SG&A expenses for provider services were $134 million compared to $127 million in the prior year period. Adjusted EBITDA for Provider Services was $82 million for the first quarter, growing 25% versus last year. On a total company basis, cash flow from operations was negative $79 million in the first quarter of 2024. The first quarter is typically a lower operating cash flow quarter when compared to the rest of the year. Operating cash flow was in line with our expectations for the first quarter, excluding some modest impact from the changed health care disruption. We remain on track to deliver approximately $275 million of annual run rate operating cash flow. This excludes legacy litigation expenses and IPO-related expenses in the first half of 2024. We continue to focus on improving the company's leverage ratio towards our goal of three times within three years. As of March 31st, our net debt outstanding is approximately $2.6 billion with our leverage ratio at 4.3 times. The company has received three variable pay fixed interest swap agreements in place with a combined notional value of $2.0 billion and a maturity date of September 30, 2025. As a result, net interest expense includes interest income related to cash flow hedges. Quarterly interest expense is expected to be approximately $50 million per quarter moving forward, including approximately $1.6 million in interest expense related to the TEU instrument. Turning to our guidance for 2024 following the first quarter results, we are increasing our initial expectations for revenue and adjusted EBITDA. Total revenue is expected to be in the range of $10.3 billion to $10.8 billion, including Pharmacy Solutions revenue of $7.85 billion to $8.3 billion, and Provider Services revenue of $2.45 billion to $2.5 billion. As you will recall, we provided initial full-year adjusted EBITDA guidance of $550 million to $564 million. This range previously included a $16 million contribution from a certain quality incentive payment or QIP. Based on our year-to-date performance and momentum as we evaluate the remainder of the year, total company adjusted EBITDA is now expected to be in the range of $555 million to $570 million and now excludes any contribution from a certain quality incentive payment. To be very clear, this updated range represents a like-for-like increase in company adjusted EBITDA of approximately $20 million at the midpoint. It also represents 9.3% to 12.3% growth in 2024 versus 2023, excluding the impact from quality incentive payments in both years. Our visibility and confidence level regarding the quality incentive payment has not changed. However, we feel this revised EBITDA guidance, excluding the QIP, provides incremental clarity for investors. Should we receive a QIP next quarter, we would expect a $30 million increase to the low end and high end of our updated $555 million to $570 million adjusted EBITDA range. At the midpoint of the $555 million to $570 million range, the adjusted EBITDA margin is approximately 5.3%, excluding QIP, and we expect to see margin expansion throughout the rest of the year with company margin, excluding specialty, higher in 2024 compared to 2023. You can refer to the first-quarter report investor presentation for additional details on the increase in our adjusted EBITDA guidance. With that, I will turn it back over to Jon.

Thank you for your time today to go through BrightSpring's platform, first-quarter results and guidance update. We will now open up the line for questions. Operator?

Our first question comes from Jamie Perse with Goldman Sachs.

Hey, thank you. Good morning. I was wondering if you could maybe just help walk us through where some of the upside in the pharmacy business came from specifically. Obviously, that was in the infusion and specialty segment, but where were results different than expectations when you provided initial full year guidance, you talked about some of the oncology partnerships you've entered into, how much did that contribute, just any more color you can give on where the upside to your guidance came from in that segment?

Yeah, good morning Jamie. Thank you for the question. Look, I would say overall that the growth we had in the company in Q1 was very broad-based. We exceeded expectations, really almost across the board. Really thanks to a lot of our planning and investments we've made last year and going into this year, Specialty Pharmacy, in particular, had borderline really explosive growth, very much outsized growth as well. I would call out though the Home and Community pharmacy also grew at 14% year-over-year as well. So the growth really was very broad-based. It was really driven by volume across the Board. We had almost 10% script growth on the pharmacy side on average. A lot of that is weighted to home and community because of the scale difference there on scripts. On Specialty, we just continue to perform on our limited distribution drugs. We won three more limited distribution drugs contracts in the first quarter. We've now got a pipeline of 18 launching in the next 16 months is our belief. And we have continued to execute really well on the generic side, and we have the largest sales force in the business that we've invested in. So it's continuing wins from a limited distribution drugs perspective and execution really across the board on targeted therapies, really driven by our quality and our leading sales force in the industry. I would note out that we said in the script, we had good new customer wins on home and community. This will be our biggest year ever in terms of new customers and patients on home and community as well. So we've just continued to lay the groundwork over the last few years, and it was a really strong quarter of execution on the volume side.

Thank you. I have a question about margins. There was significant leverage in the provider segment regarding EBITDA margin, although pharmacy faced some mix pressures. You mentioned a trend of increasing margins throughout the year, which is reflected in your guidance. Could you elaborate on the factors affecting EBITDA margin for the rest of the year, particularly considering that the lowest-margin segment is experiencing what you called explosive growth? Thank you.

Yes, sure. I mean, I think you're exactly right. The provider margins were very strong in the quarter. We have continued to focus on operational execution and efficiency on that side of the business, and we definitely drove some leverage in our costs with our revenue increase. I think it's a really good example of our complementary diversification and stability as a company as you see that kind of balance in our organization. The margin on the specialty and pharmacy side of the company was almost entirely driven by really outsized growth above our expectations and that explosive specialty growth, especially while the EBITDA percent growth and the dollars are great, it does come with a lower margin as characteristic of that industry. But it really was outsized growth versus expectations on specialty. The rest of the company outside of Specialty grew its margin. And we expect from this point going forward, as we look at the quarterly forecast, that our margin as a company is going to continue to remain stable to tick up throughout the year. We were at about a 5.1% margin as a company in Q1. We expect that to get into the 5.3% range later in the year, and then maybe up into the 5.4%, 5.5% range as well. Again, Specialty is expected to stabilize to slightly tick up throughout the year. And then the rest of the company is expected to tick up a little bit throughout the rest of the year as well, really driven by operational efficiencies, OPEX savings in a lot of different areas, continued business unit performance, and leveraging our scale. And we do have some rate positive impacts coming later in the year like hospice in Q4. We also have the benefit, Jamie, of taxes and days as we go out for the year, and we have an impact in Q1 from payroll tax resets in the way the days fall. And so that's going to be favorable for the rest of the year as well.

Our next question comes from the line of Brian Tanquilut with Jefferies.

Hey, good morning guys. And congrats on a solid quarter. Maybe, Jon, to follow up on the first question from Jamie earlier. As we think about the strength of your growth, how are you thinking about the sustainability of these robust or elevated levels of growth? I know we're not looking at 30% specialty growth, obviously, longer term, but just curious how you're thinking about your ability to sustain these sort of elevated levels?

Yeah, thanks, Brian. Good morning. Thanks for the question. Look, we've never felt better about the company, whether it's from a growth perspective or what we're doing from a strategic and operational cost and efficiency perspective; we've never felt better about the growth of the company. We expect the specialty growth rate in particular to stay elevated, well above 30% looking out for the foreseeable time period. We expect infusion to be well into the double digits, and we expect Home and Community to be in double digits as well for the foreseeable future. For us, on Provider, there's different contributors, Home Health Care, Home Health, and Hospice, and then Rehab, we're all double-digit growers in the quarter as well. So we've really got broad-based growth in the organization. It's a really nice mix. We continue to see the current levels of growth continuing into the foreseeable future. It's going to ebb and flow a little bit across the business units with who contributes a little bit more, a little bit less per quarter. It's not always a straight line, but ultimately, the line keeps moving up from a growth perspective in a very healthy way. So we remain just very confident with our volume growth and our revenue growth as we look into the future. For us, we really focus a lot not only on operational execution and efficiency, but on volume and outpacing the market growth rates on volume to continue to take share. That volume and revenue growth has really been underpinned by our quality and our operational excellence and then our sales and marketing focus and the investments we've made. So again, going back a couple of years, we've always tried to put the foundation in place to be able to grow at rates higher than the market. That's been underpinned by quality, operational excellence in our sales and marketing team, and investments, and we see that continuing to play out.

No, it's awesome. And then maybe, Jon, as I think about acquisitions, you announced a few deals this past quarter. Just curious what you're seeing there in terms of your pipeline and interest from sellers to sit down with you guys for deals now that you're public and what you're seeing in that area?

Yes, the consistency has been strong, and the momentum continues. Being public now has positively impacted our ability to execute transactions. Historically, about 55 out of 57 acquisitions we've made improved EBITDA compared to their acquisition points, thanks to our operational synergies. This presents a significant value and opportunity for the company, especially now that we are public. Earlier in the quarter, we mentioned a couple of transactions, one of which closed right at midnight on December 31. This small transaction had a minimal impact in Q1. The other transactions we noted are still pending, so they had no effect on Q1. I consider these as typical small tuck-in deals at very low multiples—almost like a CAPEX strategy, focusing on low-cost acquisitions in targeted geographies. Since these have not closed yet, they are not included in our full-year guidance. However, I believe our M&A strategy will remain a strength, bolstered by our recent IPO. We kept a strong focus on operations in Q1 while actively working on our M&A pipeline. We expect a few smaller deals to close in Q2, and we will provide more details once they are finalized.

Our next question comes from the line of Joanna Gajuk with Bank of America.

Hey, Joanna, if you can hear us, we cannot hear you. Maybe operator, we can come back to Joanna in a second.

Joanna, are you able to hear us? Okay. Our next question will come from the line of Linda Bolduc with Morgan Stanley.

Hi, good morning. Can you hear me?

Yes, hi Linda.

Hi, this is Linda Bolduc filling in for Erin Wright. Thank you for the questions. I have two inquiries. First, regarding regulatory dynamics and reform, you mentioned in your prepared remarks that these have been favorable thus far. What are the key assumptions that are reflected in the low and high ends of your guidance? Second, concerning the enterprise long-term adjusted EBITDA margin target of around 6%, when we examine the different business segments, the pharmacy segment generally has lower margins compared to the provider business. Additionally, since the pharmacy space has experienced significant growth, how do you see the margin mix between these two segments evolving over the next few years? Are there strategies to achieve margin expansion across the various businesses?

Thank you for the question. When it comes to rate impact and the guidance for 2024, the notable element is our hospice pharmacy rate. The value of hospice has consistently received strong support over the years, and the proposed rule for 2025 will also reflect that, coming into effect in Q4. This is one of several factors contributing to EBITDA growth that we expect in the latter half of the year. Regarding future EBITDA margins, our long-term goal remains a 6% margin, although our specialty growth and its mix will influence this. Our specialty growth in terms of volume, revenue, and EBITDA has been very impressive. Our primary focus is on driving EBITDA dollar growth, while we view EBITDA margin management separately. We expect margins in Infusion and Home and Community pharmacy to continue to improve this year and into next year due to our strong top-line growth and operational efficiencies, including ongoing procurement and OPEX savings initiatives. We are more active than ever in driving operational efficiency, which is a core competency of ours. Therefore, we are confident that Infusion and Home Community Pharmacy will see margin increases in the second half of the year and as we approach 2025. The only variable affecting pharmacy margin in the near future is the mix of our offerings. With the exceptional growth in Specialty, which has exceeded our internal expectations, the speed of that growth will be key. Our focus remains on EBITDA dollars and working capital cash flow going forward. We are committed to improving margins across the company and are confident that they will continue to rise over the next two years.

Our next question comes from the line of Whit Mayo with Leerink Partners.

Is that me? Jon, I got a bit confused there. Speaking of confusion, can we discuss the quality incentive payment for a moment? I understand it's not currently in the guidance since you removed it, but you believe there's a possibility of receiving it. I just want to clarify that you're suggesting we don't necessarily need it and that we can show the growth of the business. I want to make sure I fully grasp what you mean regarding the QIP.

Yes. So on the quality incentive payment, and this is a very specific singular quality incentive payment that we're talking about, that we've been discussing here that we had put into the IPO model. Obviously, originally, nothing has changed whatsoever regarding our expectations for that payment. We should know about that in late Q2. Nothing whatsoever has changed about that. And what we wanted to try to do for investors is to be as clear as we possibly could about what was in our guide. And so previously, in the $550 million to $564 million range that we had with $557 million at the midpoint, there was a $16 million assumption in there sort of middle of the road for that QIP. Without that, without any QIP assumption, our guide was $534 million to $548 million. What we are saying now is without any QIP assumption, that specific one, our guide is now $555 million to $570 million. That's about a $20 million increase in our guide. We are still saying we have the same expectations about the QIP, we will find out later this year. If we get the QIP, it should be in the range of a net $30 million, and you would add that net $30 million to the low and the high end of the range on the $555 million to the $570 million. Is that helpful?

Yes. No, that's super helpful. Just the other question I have is just thinking about the uniqueness of your specialty business and the organization and the sales force, what do you think is different in terms of your platform versus others in terms of just the sheer size of the sales force and what you're doing?

Yes. Look, I think, first and foremost, we're playing and participating in providing services in the most attractive elements of the specialty industry. That's oncology, some other areas of neuro and rare and orphan diseases. But we're participating in an area of oncology that's about 40% of the specialty industry growing at about 15% a year where there's just continuous innovation. First and foremost, it's that. We really also then execute extremely well operationally. That's evidenced by our 93% Net Promoter Score. Most recently here, actually, it was 94% by a third-party firm that alters this every quarter. We get our drugs out the door in two patients after their approved through benefit verification. Typically, twice as fast as the industry, and we just have outstanding levels of patient satisfaction. With that quality, which is so important to manufacturers and biotech partners, we win a lot of these limited distribution drugs, really almost most of them as they really want to go with a very high-quality provider. And so that fuels our limited distribution drug pipeline, and these limited distribution drugs take years and years to ramp, and it provides the steady underlying continued growth in revenue and our business. There's also favorable dynamics in the industry from generic conversions from brands. That's been a positive benefit for us over the last couple of years. We're going to have two more drugs at the end of the year going generic. That will be helpful. And then as you look out over the next five to six years, there's another nine more after the two at the end of this year that are going generic as well. And then with that quality and winning those limited distribution relationships for manufacturers based on that quality, we've got the biggest sales force in the industry in oncology. We're in thousands of doctors' offices every day interacting with referral sources in patients to pull referrals through. And that's just really the engine, the machine that we've created in that business, ultimately centered around the best possible outcomes for people with cancer. And literally, our work helps them live longer, keep them alive longer, and we're incredibly proud of that. And that's an operational process and strategy that's been put in place over the last decade.

Our next question comes from the line of Joanna Gajuk with Bank of America.

Good morning. This is with Bank of America on behalf of Joanna Gajuk. I apologize for the earlier disconnection. I want to ask about deals. First, regarding the deals closed this year, how much do these assets contribute to revenues and EBITDA this year? Additionally, are you introducing new pharmacies, new infusion types, or what other types of assets are you planning to add this year?

Yes. Thanks for the question. So again, we've closed really one transaction through the year. We did buy a remaining 30% interest in the joint venture we had, which was pretty small. We bought that remaining 30% interest that we didn't own. I would say those two transactions in Q1 were de minimis in terms of their impact in the quarter. As we look out, we've got several more deals under definitive. Those will close later into Q2 and when they do close, we would provide updates on that. But the guidance that we have in place right now does not include any future M&A. As it relates to assets we're looking at, I think it's just very complementary, consistent with our historical strategy, Home Health Care, Home Health Hospice, Rehab on the Provider side, select home-based primary care assets to scale faster there in relevant geographies. And then tuck-in home and community and infusion pharmacies, really just balancing our acquisitions and looking at what are the most attractive deals in those sectors and geographies of focus is how we sit back and always think about things and optimize. That's really why we're able to drive the historical multiples on M&A that we have. We're able to see most everything. Most of our deals are proprietary, and we're able to sit back across these markets and really selectively think about which deals we want to do and why as we balance multiples and really seek to drive the most accretive M&A possible. But it will continue to be a mix across those clinical areas of provider and then tuck-ins on infusion and Home Community Pharmacy.

Alright, thank you.

Thank you. Our next question comes from the line of Anne Hynes with Mizuho.

Good morning. I just want to confirm that all the guidance raised is really driven by organic. It's not really driven by incremental M&A? And then secondly, can you just let us know what the quarter was versus your internal expectations and what really came in above? I mean it sounds clearly specialty was above your expectations; is there anything else that you would call out as a second?

Yes. In response to your first question, the answer is yes. The guidance does not account for additional contributions from mergers and acquisitions. Regarding our internal expectations, we significantly exceeded our revenue projections and increased EBITDA by several million. As previously mentioned, we experienced substantial growth in specialty, but our overall company growth was broad-based as well. Home and Community pharmacies grew by 14%. Both Home Health Care and Rehab services also showed solid double-digit growth on the Provider side. We were satisfied with the quarter's results, meeting expectations in some areas and surpassing them in others. We anticipate strong growth to continue throughout the year, which reflects the groundwork and model we've established over the years. Our considerable volume growth has stemmed from operational excellence, quality, and a focused sales and marketing approach, which we complement with M&A. This strategy has proven to be effective and is yielding positive results. We performed better than anticipated in terms of top-line growth this quarter, and we are very optimistic about the remainder of the year. As I mentioned, we have a heightened focus on various growth and operational initiatives, and we feel more confident than ever about the company's direction.

Our next question comes from the line of Jack Wallace with Guggenheim Securities.

Yeah, thanks for taking my questions and congrats on a great start to the year. A couple of questions. One, it sounds like the tuck-in strategy has been working really well and maybe paying off some dividends this quarter. Can you talk about just any of these synergies, just prior tuck-in deals, particularly in the areas or geographies where you've got incremental density related to those deals? And how much were those synergies powering over performance in the quarter?

There really wasn't any impact from previous deals in the quarter. It was almost entirely organic. We were primarily focused on the IPO in the second half of the year, which is where the slowdown in M&A happened last year as we prepared for the IPO. Thus, this quarter was largely driven by organic growth. However, synergies certainly played a significant role. Our scale, operational capabilities, sales and marketing strength, along with our contracting and purchasing capabilities, all contribute to immediate synergies and transactions. These factors can quickly reduce our multiple by half when we engage in deals. We expect a steady flow of smaller tuck-ins this year, especially since we are concentrating on execution after the IPO and focusing on cash flow. For the early part of this year and into Q3, we will be focused on smaller tuck-ins that are very accretive and help with deleveraging in our acquisitions. There was really no contribution from previous M&A in the first quarter, but our pipeline has consistently remained strong. We are currently in definitive negotiations for several more deals that should be closing soon, and these will also be smaller tuck-ins at attractive multiples.

Got it. That's helpful. It seems there was some strong performance in the provider segment due to your success in managing potential reimbursement challenges. Is there additional growth expected in that area this year, or was there perhaps an unusual benefit in the first quarter that may not continue? Any insight on this would be appreciated. Thank you.

Thank you, Jack. I believe this reflects the strong balance within the organization. The provider segment performed exceptionally well this quarter compared to the previous year, particularly in terms of margins. As we look forward for the remainder of the year, I mentioned that margins for the company, excluding specialty and factoring in the impact of specialty's significant growth, improved year-over-year. We anticipate that margins for the company will continue to grow after the calendar year turns on January 1 and following the first quarter. This growth is expected across the entire company, including the provider segment, where we expect to see ongoing improvement in margins. Several factors will contribute to this, including increased volume growth and better management of our fixed costs and operating expenses. We also anticipate positive rate changes, especially in hospice, later in the year during the fourth quarter. Additionally, we have various operational initiatives that will bolster EBITDA throughout the year. Therefore, we expect a slight uptick and modest improvements in provider margins as the year progresses.

Our next question comes from the line of Pito Chickering with Deutsche Bank.

Hi there, this is Kieran Ryan on for Pito. Thanks for taking the questions. Just wanted to go back to the Specialty and Infusion margins one more time. Since the guidance raise is mostly driven by that segment, is this about the level of EBITDA flow-through that we should assume on revenue upside for this segment going forward or is there anything you'd call out that is maybe kind of dragging the incremental margins down this time? Just trying to kind of square the incremental margins on the guidance increase with the historical trends. Thank you.

Yes, our guidance for the provider side is expected to increase as well. We are optimistic about that segment and have raised our expectations for the year on the provider side. This improvement reflects enhancements in both pharmacy and provider areas. Regarding margins, most of the increase is attributed to significant growth in specialty and its mix. The remainder of the company also saw margin growth aside from the volume increase in specialty, though there was a minor mix impact. There were some changes in insulin pricing within the industry at the start of the year, and we observed a relatively modest effect from these changes this quarter, which is expected to dissipate in the second quarter. I believe we managed this situation exceptionally well, demonstrating our operational effectiveness. Looking ahead, we have also raised our guidance for the provider side. We anticipate an increase in margins overall for the company this year, primarily driven by robust growth in our specialty pharmacy business. This is encouraging from both revenue and EBITDA perspectives, and the overall company margins are very healthy. We are confident about their trajectory over the next 12 months.

That concludes today's question-and-answer session. I'd like to turn the call back to Jon Rousseau for closing remarks.

Thank you, operator, and thanks all of you for joining us today on the call. Over the course of the next couple of months, we're going to be participating in several investor conferences. We wanted to let you know as well, and we look forward to speaking with you there in the future and on the second-quarter call in a few months. Thanks for joining today, and have a great one. Bye.

This concludes today's conference. Thank you for participating. You may now disconnect.