BrightSpring Health Services, Inc. (BTSG) May 12, 2026 Conference Transcript

Good morning, everyone. Thanks so much for joining Bank of America Health Care Conference. And it's my pleasure now to have this session with BrightSpring Health and Jen Pips, the CFO, is here with me on the stage, but also David is somewhere there in the audience. So if you guys are looking for another member of the team, he's right there. So again, thanks so much for being here. My name is Joanna Dajun. By the way, I cover health care provider companies here at Bank of America. And, yeah, we'll go right in the Q&A. So, maybe first we should start with the year. I guess a lot of things are happening and there's a lot of material to cover. But maybe first about, you know, Q1 clearly came in better and seems like, you know, every quarter seems to be outperforming and the guidance went up again, which is great. But maybe kind of help us understand where the app site came from, right? There was a $35 million, I guess, of the guidance left for the EBITDA line, right? And maybe kind of help us understand the kind of the drivers, you know, and build to that $35 million outperformance that you expect for this year versus your original.

So maybe I'll first start by saying the calendarization of the consensus was a little different than we would have calendarized it. but Q1 still, you know, did come in strong. And we we did have a guidance raise, as you noted. From a performance standpoint, we had really strong volumes underpinned by our high quality services. We had we saw broad based growth across both pharmacy and provider. We did see strong EBITDA and margin improvement That was led by operational improvements, mix of services and products that we saw, as well as, again, you know, volume in certain of our areas as well.

And I guess maybe you can talk about the recent LDD wins in terms of these contracts, right, in terms of the maybe break it into exclusive versus limited distribution, and also maybe some therapy areas that you're seeing, uh, kind of, you know, uh, coming through in the pipeline?

Yeah. So on the specialty pharmacy area, we did see, um, LDD wins. Um, as we, as we expected, we saw specialty pharmacy, we saw ultra narrow and exclusive wins in, uh, both, um, oncology and some rare and orphan disease states. Um, one particular drug disease the state in the specialty pharmacy that was launched in January was a cardiology drug as well. So expansion outside of as we're focusing on additional rare and orphan opportunities, expansion beyond just oncology, which we have been obviously working on building out. We did also talk about infusion LDD wins. and and those are typically a little bit broader access and certainly the ones that we that we want access to our broader access LDDs oftentimes infusion pharmacies need to be a little bit more local in terms of their services so we see broader access networks in LDDs so they're they're still limited but we see them across a little bit larger of a pharmacy than the exclusive and ultranera that we see in the oral and injectable space.

And with this guidance now, the EBITDA, you know, is expected to grow 30% year over year, pretty robust growth. So can you kind of walk us through how much, I guess there's some acquisitions that we know of, right. They are included in there. Um, so how much I guess is coming from acquisitions and maybe some other smaller things that you've done, you know, late last year and then, you know, what's organic growth in there too.

Yeah, so the total growth in the guide is 29% to 34% year over year. Organic represents about 23.5% to 28% growth, so really strong organic growth expected.

And with that guidance change, when we look at the revenue change in EBITDA, the incremental margin was pretty high. So kind of help us understand, like, what was the, this incremental, I guess, you know, EBITDA flow through that, that, that kind of comes at this very high margin.

Yeah. So, you know, the first is from a provider standpoint, there was a revenue raise volumes are expected to be stronger. And there are also some operational projects that we expect to come online. So, so associated with that, that tends to have a higher margin profile than the pharmacy side pharmacy. we also do expect volume growth and we also had both so there's benefit from an EBITDA standpoint in pharmacy both on volume and mix of the drugs but also additional operational projects that that benefit margin that we expect to come online as well.

Right and you mentioned in the pharmacy right, this EBITDA flow through on these volumes and some mix, right, but clearly when we look at the gross profit per script, you know, grew, what, 30 percent year over year, very robust growth, so kind of, can you help us understand, I know you don't want to specifically put numbers on different items, but a couple of different categories, right, that drove that increase in the gross profit per script, so kind of help us understand the magnitude, Like, which is the biggest driver versus the smallest driver of that growth?

Yeah, so we did see throughout 2025 gross profit per script increasing throughout each, you know, each period, and that was related to drivers. So some of that is just natural increases that we would expect to see in Q1 as well increasing. But I would say the drivers of that are mix related to the growth rates in our different business lines. So our specialty pharmacy had the highest volume script growth. That tends to be the highest per script dollar that we have. We did see mix within, mix shift of different drugs within specialty pharmacy and home infusion pharmacy that benefited the margin. And we did see operational initiatives. So we had gross profit per script and gross profit margin increases across all of our pharmacy businesses. So home and community pharmacy, despite the IRA headwinds, also saw a gross margin increases, percentage increases. That was associated largely with the operational initiatives and focus that that team has put in place there. So really a wide variety. We also sort of lastly did have incremental hub, uh, volumes. Um, we, we added a couple of new hub programs and services as we launched new LDDs and, um, that tends to be pretty high margin, um, with no scripts associated with it.

And actually on this last point, uh, I want to touch base on that because you've, you've been calling out this, um, fee for service hub services, uh, as driver of, of revenue growth and now also the, um, the margin growth too. So is there something, um, to kind of call out in terms of what's driving this part of the business? Because yeah, it does come at high margins. Is there something that is changing in terms of like the compliance for the manufacturers, where they kind of looking, you know, actively for it for this, or is it just something that you kind of doing on the core business that also comes with the add-on, uh, revenue stream?

Yeah, we, we are, um, seeking to be a good partner to all of our trade partners as it relates to specialty drugs that we're serving. And we work with them closely to understand what needs they have in service of their drugs. And to the extent that there are opportunities for us to provide a touchpoint and provide these services or data, other information services around their drugs. You know, we're just working with them to see how can we be very helpful. I think it's, you know, a future opportunity for us to continue to build out. It is, um, you know, providing stickiness, but I would say it really relates to, you know, just trying to be very helpful to manufacturers as they're launching new drugs. And, um, and we've been able to do that and do that, um, well.

Cause you also mentioned that, uh, in some cases you do this, you provide a service, even if you do not distribute a drug, right?

So there's something that those makers see that you can provide and maybe others cannot. so maybe can you explain a little bit why they come to you for these services yeah so you know certain uh manufacturers um you know maybe smaller uh pharma companies that that don't have sort of all of the departments that maybe a big pharma would have or in some cases you know other other areas they see the hub services that we've been able to provide and the information and data and and how we've been able to service patients well and so if there's a natural fit and it makes sense then we've been open to those opportunities I would say the majority of our hub services though are related and those activities are related to drugs that we do serve and you mentioned

oncology business that's really where a lot of growth is coming from with this new you know product launches and you guys essentially you know winning a lot of that business so is there anything that kind of keeps you up at night as I say any risk to that growth because obviously it's been growing so fast that always kind of like, you know, you would question like, how long can you grow at that pace?

Yeah, we're, we're really proud of, um, being able to drive growth across all of our different businesses and pharmacy and provider seeking out opportunities, um, you know, for, for, you know, acceleration of growth or activities, whether it's operational improvements, different adjacencies or services that we can provide to be, um, very relevant. And so, you know, I think having that diversified and complementary platform has allowed us, you know, has given us a lot of benefit from a risk standpoint from a growth, you know, as we ultimately can direct investments and focus our growth areas in a number of different areas that we would see. We're in really attractive markets that includes specialty pharmacy, but many of our other areas, uh, we consider extremely attractive. And so, uh, that's really, you know, how we balance that risk. We're not just one type of company. We have a lot of growth opportunities.

And as we think about, um, this dynamic around, um, you know, bright spring winning these contracts essentially. So can you walk us through why, you know, Onco360 is sort of the go-to place for some of these drugs in terms of, you know, what are the other choices? Who are your competitors? Who are you winning that business from, essentially?

Yeah, we've been focused from an, you know, a specialty pharmacy standpoint on providing great service and access to life-saving, life-changing, and life-extending therapies. And so, you know, and doing that in a really high-quality way. And, you know, as we have done that, I think that has propelled wins in new LDD spaces for us as we are, you know, really focused on white glove service to customers. So pharma has gotten comfortable that a handful of pharmacies, a small handful of pharmacies can service the needs of all the patients for their drug and to do that in a very high quality way. And so that's what we're really focused on, um, ultimately, you know, providing consistent and reliable service, um, to serve the patients as best as possible. And that has been a winning formula for us.

So who are, who are your main competitors? Maybe talk about that. And also what's your market share in sort of your defined market, right? Because the specialty pharmacy is a broader term, but then inside that you kind of target the oncology more than anything. And now you kind of expanding into these other rare and orphan diseases. So is there a way to think about what's your current market share in these categories and kind of how you're thinking about that growing?

Yeah, for us, we really don't focus on an entire market. We focus on individual drugs and whether or not we think that those drugs make sense in our portfolio and our platform. So we're really focused, as you know, on LDDs and these limited network drugs. And so we focus a lot of our efforts in that area, both from a sales sales and a targeting with pharma that you know we we have historically very much focused in the oncology space that that is really at the core of the history of the our specialty pharmacy business but we have expanded into certain rare and orphan disease states over the years as that very high-touch white glove specialty pharmacy model that we've put in place works well in. So it really is a disease by disease, drug by drug standpoint. So I think you'd really have to just look at all of our drugs and our percentage. Obviously, we seek to be higher than what our market share would otherwise be. If it's two pharmacies, we would seek to be higher than 50% market share on that drug. If we were one of three, we would seek to be higher than 30% market share on that drug.

And you mentioned the rare orphan as the sort of the next sort of area of expansion and growth. Is there a way to help us quantify or think about the size, the relative size? Like how big is that kind of vertical inside the specialty pharmacy segment and kind of where do you think this could be?

Yeah, as you look at the pipeline of rare and orphan and oncology drugs that, you know, that are looking to come to the market in phase three trials or earlier, there's a really extensive pipeline in that area. So, you know, we oftentimes are in touch with and working with manufacturers or trade partners. Oftentimes, you know, what could be up to 24 months in advance of a launch more frequently, I would say it's probably closer to six to 12 months. But but we're oftentimes working with them on the launch of their drug and figuring out sort of everything necessary to do that. So we have a pretty good visibility and line of sight into, um, into the pipeline about, um, somewhere between six to 18 months out, I would say on LDDs that we expect to launch in the next year.

And I guess you alluded to this, that more and more of these, uh, drug makers decide to, to go the route of exclusive right contracts or distribution. So kind of what's the, uh, what's driving this decision from, from these drug makers like is there something that happened in the marketplace or is it because the the drugs we're talking about are kind of narrow in the population you know the target and that's why they kind of like they they don't need the national coverage or maybe they just need make sure that reaches the the limited number of patients that are out there so kind of walk us through that the thought process from the drug maker side and why they kind of going that route because clearly you guys put out the stat rate where the last two years you know the number of exclusive contracts went up dramatically from prior years for you guys yeah so um you know i i would say you know when a manufacturer you know is deciding to go exclusive i think it relates to

what is the size of the market of that drug and they're looking at a pharmacy and whether or not they have the capability you know to service the entirety of the market for that drug um you know if they feel like they would want extra coverage that's sometimes where we're seeing you know, two, um, you know, two pharmacies that might be in a narrow network, um, or an area there. So I would say it probably relates more to the size of the drug, I would say, but again, you know, having a very narrow network, whether it's one or whether it is two, um, you know, I think they've gotten increasingly comfortable that, um, the, the manufacturer, the pharmacies that they're working with are able to get national coverage for their drug, the service of their drug.

And as it relates to, um, the PBM owned specialty pharmacies, clearly they trying to push that business to grow faster than maybe their traditional PBM. So are you looking at these guys and saying, Hey, this is like a real competitor. Could they kind of try to encroach into your, um, target, you know, market, uh, more than maybe historic, you kind of walk us through your thought process about, uh, the maybe competitive landscape changing, if at all.

So, you know, again, we see the importance for pharma in selecting, you know, LDD. And again, I'm speaking to the types of drugs that we're targeting specifically. You know, we see what is really important to pharma is having a partner that is going to work very closely with them, high quality services to the patients. Um, you know, over, over the years, uh, pharma has been able to see, um, the service that our teams are able to provide to the patients. And so they've been able to get, uh, you know, comfortable that, um, that we are able to, to meet the needs of those patients. So we, do you expect any, um, change in this dynamic as in like, would the, would these makers kind of have something out there to say, Hey, like we're going to reverse and now we're going to, I mean, we continue to be very focused on providing whatever support that pharma needs in support of their drugs are our NPS scores for patient satisfaction are you know consistently over 90 percent and we've had a couple quarters where it's been a hundred percent NPS scores physician satisfaction scores with us as a pharmacy you know has been really high our time to first fill measures are consists are consistently you know 50 percent or less of you know the average specialty pharmacy that would be out there medication possession ratio which is an adherence measure we have really strong adherence and medication possession ratio because of you know proprietary processes and things like that that we've put in place to to really make sure that we're wrapping our arms around these patients as they're taking these drugs and supporting them through that. So those are the things that we're focused on controlling, and we think continuing to do those really well will continue to give us access to those drugs.

So we, I guess, talk a lot about the new drugs launches for the LDDs, but also the other dynamic here for the company is around the branded switching to generics. So maybe kind of, you know, walk us through that in terms of what it means for the company, where clearly there's some top line headwind, but there seems to be also, you know, talent to EBITDA margins from that. And also, you know, what is the timeline on a typical generic? I know this could vary dramatically based on the product, but kind of how should we think about that going forward? Yeah.

So I think it's very common in industries like pharmacy or, you know, just like any other industry or provider industry to have different reimbursement rates for different types of products. And, um, and, you know, we really think about managing our products over a very large portfolio, um, across, you know, our branded and generic, uh, pharmaceuticals that we offer, um, and try to attract, um, you know, the most attractive products, um, you know, and what I would say is that generics are really good for everybody. Um, they're good from, you know, they bring down the cost of health care our company does serve across our entire script volume base a lot of generics and we're trying to increase generic utilization which reduces the cost the cost of the health care environment from a what what has traditionally happened in the specialty generic space is the prices come down but the costs come down more and so from a dynamic standpoint um, that has been beneficial. So you're right. Um, it does provide, um, a headwind to revenue. Um, but ultimately has still been, um, has been, you know, uh, favorable from a margin standpoint.

And how quickly you see the margin left, uh, from the generic launch. Is it sort of immediate or it takes a little bit time to kind of play out?

So, you know, we, you know, historically we've seen, uh, you know, margins, um, you know, just really be consistent and, and, um, you know, move, move sort of down consistently over, you know, over a very long, um, a long period. And I think that's been a dynamic that's been at play for, for a number of years.

Maybe switching gears, uh, from pharmacy to provider segment. Um, there are a couple of of things I want to hit on, I guess, maybe first on this, a medicine's acquisition. So sounds like Q1 kind of came in, uh, you know, much better than maybe what the, the initial commentary implied, uh, for the contribution from that business. So kind of walk us through how, how we should think about the ramp up for that asset, I guess, through the year.

Yeah, we did have a strong Q1 volumes came in, um, ahead of what our plan was. We, uh, you know, we've spent a lot of time integrating that asset. and we're really excited to have those members of those branches as part of our team and we see the excitement i think that was evidence in the volume increases that we saw so we're seeing a lot of positive momentum there we do have investments planned and these were always planned in q2 and q3 things like getting them onto our version of our our operational systems some other operational processes like central intake and other areas. So those are some costs still to come, um, that will, um, you know, that we do expect to impact Q2 and Q3, but, um, but we are obviously looking forward and pushing, you know, pushing the teams on volume growth that, um, that they can get and, and, uh, believe that we'll be exiting, you know, 26 in a good place on that acquisition has performed really well for us.

Okay, great. That's what I was asking essentially.

Um, and then, uh, as we think about this home health business so now you double down with this acquisition because by the way this is mostly home health it is a little bit of hospice that came from that asset so should we expect more um you know a growth external growth like you know adding more assets or for now you kind of like the way this platform looks like so from a home health standpoint obviously in 2026 the team is pretty um pretty busy with um the integration of the emeticis and lhc branches i think you know if we were to do anything it would be very uh very uh geographically makes sense tuck in so um you know we bought a con license it was a really small dollar item we bought at the end of q1 in an area right around some branches that we received so we we felt like it made sense. It was able to be pulled in then to, um, you know, into the geography that we had just, uh, put leadership in place and it, it made a lot of sense. So there might be small things like that, really small tuck in geography items. But at this point, I don't expect anything that would be more significant than that in 26.

And hospice business seems like that's, um, uh, growing pretty nicely there.

Um, so any investments we should expect there sort of going heavier in hospice versus home health so we're really proud of the balance sheet position that we've gotten ourselves into um we were at four and a half times right after the ipo we've delivered to 2.27 times at the end of q1 that gives us a lot of flexibility for additional m a as we think about the target areas for you know potential m a you know what we've said is that areas for home infusion hospice and rehab pharmacies would be probably our highest priority areas but we obviously have a number of different businesses that we serve and we're constantly evaluating all the opportunities that are in front of us just a reminder that most of our deals are proprietary we have a really strong corporate development team that that has done a great job generating deals and deal flow and we also have an integration management team that has allowed us to be successful in integrating the assets and other acquisitions to be able to achieve what has been a historical four times pro forma multiple on our transactions.

Exactly and then I guess since you mentioned the capital deployment so you said home infusion hospice we have our priorities should we expect more of that coming later this year because we You also mentioned the integration of the acquisition, or should we just think, you know, integration could happen as you also, um, you know, do execute on some other transactions?

Um, you know, certainly we don't put any M and a in our guide and we would just, uh, I think we'll have a corporate development team that is focused on, um, identifying what could be good strategic assets for us from a timing standpoint. You know, we, we don't know how all of those would necessarily play out from a timing standpoint, but from a capital availability standpoint, you know, we certainly are below our long-term target leverage. We will, you know, we're not going to be in any rush to spend up to that leverage necessarily. We're going to want to be very thoughtful in any deals that we do or any use of capital deployment will be very strategic and, and we think makes sense for the company.

And coming back to the provider segment. Um, so I asked about home health and hospice, I guess personal care is actually still, you know, pretty sizable, even though relatively, you know, provider is smaller than pharmacy, but still inside that, um, that provider segment, you know, personal care is sizable. So how do you think about that business? Cause that doesn't seem like that's growing as robust as maybe some of the other provider service lines.

So kind of what's your view of that, um, you know, strategic importance or value of having that asset in the portfolio yeah you know we really like the set of assets that we have we think it provides differentiated opportunity for us to serve our patients in a more holistic way across various different settings that business has tended to be more steady in terms of growth that is not a significant growth driver it is a really great you know generator of cash and has been just really steady, we think provides those strategic importance around, you know, serving more holistically, the, the senior patients that we have, especially as we lean into, you know, areas of, um, of providing multiple services, um, to the same patient.

And the last piece, uh, very small is the home-based provider or the primary care providers. So kind of, you know, what's, what's the latest thought process there? There's a lot of disruption in value-based care overall the last couple of years. I guess you still seem to be, you know, investing and trying to grow that business. So any latest thoughts about that?

Yeah, we, we, um, you know, we certainly see an opportunity over time to, to be able to get differentiated payment models, um, across the services that we're providing. So, um, you know, we're in good markets and serving a lot of the same patients, um, you know, in, in various different settings. And so, you know, we, we do think that that's going to provide an opportunity for addition, you know, differentiated payment models, you know, over time. And so, um, you know, we continue to, to lean in, in that area, but it is a very small piece of our business today.

And home infusion, since you mentioned, uh, right, um, coming back, I guess to pharmacy segment, uh, you clearly want to grow more aggressively in that, uh, business, but, you know, your public competitor, you know, seeing a lot of disruption to their business, to the CID and the Stellaris specifically. So kind of what gives you confidence that this is still a good business to invest in? Because clearly you guys were, you know, hiring a bunch of, uh, people there, you know, investing and growing both acute and chronic. So kind of, how do you think about a long-term kind of growth outlook for that piece of the business?

Yeah. We believe that the infusion pharmacy and the home infusion or outside of the hospital setting is an important area of pharmacy. And, and we do believe that, um, that, that there are a lot of, uh, opportunities within that space. So a scaled provider, um, you know, that is definitely in, you know, something that, you know, we want to be more scaled and there's a few geographies that we don't, um, really service. And so wanting to make sure that we have, um, you know, pharmacies in, in all of the right key target areas to target, um, patients, um, in certain areas. So we think, you know, expansion of some of our pharmacy footprint is definitely, you know, an area that we're, you know, that we're leaning in on. Um, but we do think, um, that the infusion space is, is an area that, um, does have opportunities available and it's a good market.

And walk us through how you think about the growth outlook there in terms of the top line and the bottom line going forward, I guess, long-term.

Yeah. So we're focused, you know, in terms of both acute and chronic therapies. So acute, there've been a lot of players that have gotten out of that space. It is difficult to do if you're not local. And so that's where, you know, the importance of having some expanded pharmacy footprints is important to us. we think scale and infusion, um, is important because it gives you leverage, uh, from a payer standpoint. And so, um, you know, that is also beneficial to us. We do think that there are therapies, um, in the chronic space that, um, are attractive and, um, you know, we'll obviously, as we do with, um, you know, any of the areas that we're targeting, I think be very strategic about making sure, um, you know, that we're going after what we think are the most attractive opportunities um at any time all right i think this is all the time we had so thank you so much thank you if you've ever done something big you haven't done it alone there was always someone

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