Okay. Well, we're ready to get started with our next panel. I'm Scott Fidel. I'm the Healthcare Services Analyst with Goldman Sachs. Really delighted to have BrightSpring Health Services with us today. Here from the company, we've got Jennifer Phipps. Jennifer is the Chief Financial Officer. And then David Doikler, as well, is in the audience with Investor Relations. So, Jen, first of all, welcome to the conference. It's great to have you in BrightSpring here. And also, personally, it's just great timing for us because we actually just initiated research coverage on the company on Sunday night. And it's really exciting to be covering the company. I've been monitoring the company's progress since the IPO and have definitely been quite impressed with the performance the company has delivered against some end markets where it's not necessarily a given that everything's going to be linear. So, looking forward to covering the company on the forward. So, I think, Jen, maybe let's just sort of start with the growth profile and start with sort of a little bit of a look back, you know, over the last couple of years, like I just mentioned. And the companies, like we had in our note, one of the headlines was the growth profile that's hard to ignore in terms of what you've delivered. And over the last few years, that's been 20% top-line growth, 25% to 30% EBITDA growth, which is well ahead of the mid-teens framework that you have historically referenced. So why don't we sort of take a look back and sort of give us some insight into where those outperformance levers have been driven from, You know, when we think about LDD cadence, share gains, operational initiatives, just in terms of giving us sort of, you know, insight into what the underlying sort of drivers of performance of MIM.

Yeah, Scott, thanks for having us, obviously. We're glad to be here today. Bright Spring has operated traditionally in really attractive markets that are growing at attractive rates, providing higher ROI services to the network. And so, you know, as we think about that, we've been leaders in the market. Across both pharmacy and provider, we've had broad-based growth across all of our businesses. We have had, you know, we've been able to leverage our scale, leverage our investments and our M&A platform, which has helped deliver on the growth that we've had over the last few years. As we look across all of our businesses, we've seen, you know, really good growth across all of our businesses. Our specialty pharmacy business has grown higher than our company average. And as we think about that growth rate, that has been underpinned by our high-quality services and volume that we've been able to drive, largely because we've won new LDDs. We've won 16 to 20 LDDs each of the last several years. As we think about that going forward, there's really strong continued markets in both the oncology and rare and orphan, which is where we traditionally have focused our specialty pharmacy growth. So as we look at that profile, and a lot of times those LDDs typically take two to three years to grow in the market. So, you know, our 2026 growth from a revenue standpoint, you know, is partly underpinned by LDD wins that, you know, that we had back in 2024. You know, we have seen, you know, again, that broad-based growth across pharmacy and provider, which I think has, you know, really been beneficial. We've been able to leverage our scale, which has allowed us additional operational efficiencies and improvements. That's really at the core of who we are. We've been talking about that since the IPO. But really, if you go back 10 years, you'd see a list of projects that we were going after, you know, every single year. In the last 12 months, we've really operationalized and formalized our Lean Six Sigma training and processes, and vetting that throughout the operations as well as focused teams at our corporate that are helping deliver on some of those growth.

All right, great. So why don't we sort of take that and we'll just sort of transfer it forward and timing, you know, is good to talk about the forward. You had your investor conference not too long ago at which you laid out a framework for 15 to 20% growth algorithm from that 26 to 28 timeframe. And maybe sort of similarly, you know, maybe talk about sort of as you laid out that model, some of the key variables, the key inputs that you think, you know, could push that towards the top end versus the bottom of the range. And particularly a few of the things that I'd love to hear from you about would be those sort of that continuation of the LDD wins, which has been, you know, I think such a unique competitive differentiator for the company recently. then the infusion ramp, and then provider growth as well?

Yeah, no. I think underpinning really that entire growth rate is, you know, our expectations for continuing really strong volume growth, which is underpinned by our high-quality services. So as we think about each of our different business lines, those markets are highly attractive markets that are growing, and then we've been able to grow in those markets via expansion expansion into new geographies, as well as deepening in those markets and market share that we've been able to take. We expect that to continue, you know, across our different businesses. You know, as we think about, you asked specifically about LDDs, we do see, you know, we've provided an outlook. We typically are working with manufacturers what can be 12 to 18 months in advance of launch. So we have oftentimes pretty good visibility, pretty far out. And as I mentioned, you know, 27's growth will be underpinned by 24 launches, the 2024 class of launches, or the 2025 class of launches, which we've already launched. So continuing on that LDD growth and what we went in 26 will deliver, you know, meaningful opportunities in 27. So, so, you know, we have pretty good visibility, you know, again, 12 plus months out from a launch, as well as what we've launched, which helps us give confidence in that framework. We think these are really strong markets. So as you think about, you know, the pipeline of products coming out, you know, that are in the phase three trials, both in oncology and the rare and orphan space, which is where we target those opportunities, you know, we see very strong pipelines. And we continue to see those pipelines execute on these very, you know, these more narrow networks than they traditionally had what might have been five or ten years ago. So we've seen that continuing narrowing. We continue to see that, you know, over the next several years, you know, as we're working with manufacturers on the potential launch of their product and understand what that market looks like. Again, it's really important to continue to win those that we deliver on those high-quality services. So we're one of the highest-quality providers in this space with time-to-first fill, medication-possession ratio, which is like an adherence measure that is allowing us and a strong sales force that is pulling through script volume and ultimately, you know, developing really strong relationships with pharma to have white glove processes and information and services around the launch of their new drugs, which we think, you know, is very beneficial. From operational efficiencies, we continue to see opportunities across especially technology as we leverage into more manual processes like front-end central intake or revenue cycle. We see you know, across a few different areas. Home infusion, you know, as you mentioned, is an area we've been investing in over the last couple of years. That is a smaller piece of our pharmacy business, but really, you know, we really see the value of infusion, and we do think that that is a big opportunity for growth. So, we'll be focused on, you know, we really have about 35 pharmacies across the United States, and, you know, there's additional areas that we need a presence in from an acute standpoint. So there's geographical expansion, but also deepening in the markets where we are. And then finally, you asked about the provider side. So, you know, we operate in what we call home health care, which is home health hospice and primary care. We see that as being just a really important, you know, opportunity to leverage, you know, across our pharmacy network and continue to deepen relationships as well as growing, you know, in those markets. And then on the rehab side, that is a strong growth market. Personal care is really more of a steady state, small grower for us, but really important, you know, value that it's delivering from an activity of daily living that's supportive care that is very beneficial to patients. So certainly as we think about the next step of, and John's really talked about, obviously, our growth being, you know, core and strategic and then highly accretive M&A. And as you think about the core growth, each of our businesses having focused growth strategies and plans and operational teams that are focused on growing in each of their individual end markets. From a strategic growth standpoint, how can we better unlock referral opportunities and integrated care opportunities across our platform? And that is, you know, definitely something that we think is, you know, of value and will be able to be valuable to us, you know, in the next two to five years. And then, obviously, highly accretive M&A.

Great. Wow, there was a lot in there. So thank you for that. One quick question just on the acute care infusion expansion that you mentioned. And you said you were at 35 sites currently?

Pharmacies, yes.

Yes, so 35 pharmacies. Do you have any visualizing of, like, where you think that number can grow to over the next two to three years?

It's a good question. obviously, you know, this is an area that, you know, we do have some interest potentially in, you know, M&A. We're certainly thinking about the buy versus build. You know, as we think, you know, there's definitely five to ten markets that we laid out. I don't think we actually laid out the markets, but we talked about five to ten markets that we would be interested in expanding into over, you know, the next handful of years at the investor day in our infusion area. So, as we think about some key areas where infusion, where there's infusion opportunities where we don't deliver into as, you know, as much, we see that probably in about 10 to 15 markets.

Sounds like a good place for Team Fight Out to do a little research on and sort of maybe sort of get some insights there. Well, you ended with sort of talking about, you know, we sort of talked about all the different pieces, the pharmacy, the provider model, and let's maybe bring it back up. I know we, like, went straight to growth, and which I always want to do, and straight to the numbers. Let's sort of bring it back up to the business model itself, and in particular, you know, give us some real insight into, you know, when you talk about that adding value by having both the pharmacy and the provider business, you know, what that really sort of translates to what that really means in terms of whether it's synergies on the revenue side, synergies on the expense side, you know, because we always hear a lot about that. And, you know, and then there's like there's having the businesses and then there's having them truly integrated, right, and creating value and sort of let us know what to you is that sort of integrated value creation.

Yeah, so, you know, we've talked about sort of our one company model as delivering a number of different value areas. So the first is we're serving very similar patients across both our pharmacy and our provider needs. So if you look at the needs of the patients that we're serving, they often have multi-chronic. They're the most expensive individuals in health care. They have six or more, our patients typically have six or more chronic conditions. They all need pharmacy. Most of them at various points in time will need provider services, whether it's rehab, home health, or hospice services. And they all have a primary care physician need. And so, you know, as we think about how can we provide more of those services to the patient, which just, I guess, would be, you know, as you think about that core growth. How do we just leverage patients that are receiving one area of, you know, whether it's pharmacy or provider services? How do we better leverage that patient across multiple services, maybe core growth? But then, you know, as we think about the connected nature of their needs and how do you provide even better outcomes? So in late 2023, we had an article published in JAMDA that showed a 72% hospitalization reduction for our patients that received our home health along with our pharmacy in the home versus home health on average, so an average home health hospitalization patient. I mean, 72% reduction, that is very statistically, you know, meaningful. And we do think that there's improved outcomes when you receive more coordinated care. And so we are very interested in how can we have better payment models across, in addition to just additional core growth, how can we unlock better payment models potentially for the outcomes that we're producing, whether that's happening in an individual business line. So, for example, in home health, you know, we had a couple of new contracts in the last 12 months where on the MA side where we're getting enhanced rates for outcomes. So, you know, the core rate, they wanted us to serve more. And so, you know, we were producing the outcomes. And so, you know, with those outcomes, we're getting enhanced rates. That is a version of, you know, sort of a value-based care, I guess, you know, enhancement, you know, scale is critically important. So as, you know, whether it's scale on the payer side, you know, from a, you know, on the reimbursement side or scale on the cost side, how can we better leverage our scale, you know, to drive value and economics that allow us, whether it's, you know, increased EBITDA growth or continued investment into our businesses, into our high quality and compliance processes that allow us to just, or technologies that allow us to get better. You know, scale, you know, that scale has allowed us to invest in targeted areas that we think are really attractive and, you know, to be able to target growth for three years from now or five years from now. You know, and then, you know, best practices deployment is critically important. So as we think about, you know, we think our home infusion business should be better in how they do nursing because we have home health, you know, and we do nursing there every day. And so how can we better connect best practices, whether it's in, you know, how do we target nursing, you know, from a, you know, in getting better nursing or how do we make sure that they've got the right career pathing as an example. That's just one example. Or IT, finance, the list could go on. But how do we leverage those best practices across our organization? You know, and then, And, you know, really, finally, you know, it allows us to invest in, whether it's de novo or highly accretive M&A, you know, that has, you know, allowed us to do, to continue to grow as well.

Great. Two quick follow-up questions just sticking with this theme. So the first just on some of those enhanced rate contracts that you said you're getting from payers and, you know, big theme across the whole home health, you know, space in terms of needing, essentially, you know, to get that, especially with how challenging the CMS reimbursement backdrop has been. Hopefully, maybe we're going to lap finally away from PDGM sort of pain. We'll see in the future. Any type of, like, insight you can give us into terms of how much of the gap between sort of, you know, traditionally discounted MA rates, which were as, you know, low as 25%, you know, lower historically than fee-for-service, how much of that gap you've been, you know, getting to sort of fill, you know, through some of these enhanced rate structures?

Yeah, so the majority of what we do is episodic Medicare from a payer mix standpoint, but But where we do MA, we are obviously looking to make sure that we're getting, you know, a fair and appropriate rate for the services that we are providing. And so some of the ways we've done that, you know, as payers have come to us and asked us to take more of their patients, you know, has been to, you know, be able to commit to quality because of our high-quality services that allows us to get an enhanced rate. So that's just an example of some things that we've done there. We continue to have strong advocacy across many of our different areas. Home health certainly has become more important to us. It's always been important to us, but it's been even more important with the Emeticis acquisition and Emeticis LHC branches. And so our government relations team continues to advocate for fair and appropriate rates. We know that over 40% of people that get written for a home health script don't get it because of access. And so we also, you know, believe and believe that CMS and, you know, and Congress understand the value of home health services and how it improves outcomes for the industry.

And then the other thing I'd be curious about is how BrightSpring, how the company has been evaluating what you think is the optimal clinical structure. if you're going to look to try to integrate, you know, some of those different services into a particular patient in the home. So, you know, in terms of the home infusion services on one side, the home health services on the other, I'm just thinking back even to when we had, you know, Option Care had pursued the acquisition of Metasys, and a lot of that thesis had been about sort of, I guess, sort of really sort of integrating and elevating, you know, the home health nurse to sort of oversee a lot of those sort of integrated services. And just curious around how you sort of envision that sort of clinical model as it relates to the actual clinician themselves, like, you know, sort of how much, how they can optimize the services.

So, you know, I think we think, you know, about our set of assets as being, you know, know, a little bit different than obviously that acquisition or that potential acquisition and that thesis, you know, we're really focused on first and foremost core growth in each of our different business lines, which we think each, you know, each of our different service lines have really attractive opportunities and markets where they can drive value individually. And then separately, as we think about, you know, how do we better, you know, come together that can come in different ways. So, for example, how can our home health and our Part B rehab go to senior living communities and be a better partner, you know, and be a one-stop shop for those? And then how can we then potentially bring along our senior living pharmacy leaders, you know, in those relationships or vice versa? How do we leverage those relationships? You know, as you know, these are largely fee-for-service or episodic-type relationships on the individual service line, and we see that being sort of the most important driver for each of those business lines. But how can we leverage the relationships we have to grow better in those core? And then, you know, as it relates to more integration of care, I think we see nurse practitioners and our primary care being sort of the quarterback of what is needed in the home for a patient that potentially, you know, allows for additional opportunity.

Yeah, that makes sense. That makes sense to me. Okay, just a quick question on following the community living divestiture, maybe just talk about sort of the structural sort of change, you know, to that platform in terms of the growth profile and the margin trajectory.

Yeah, so starting at the beginning of 2025, right after we announced the transaction, we started reporting the community living as discontinued operations. So from a continuing operations standpoint, throughout 2025 and any comparison periods you would look at related to 2024 in your 2025 financials, you actually would not see community living in there at all. One of the items, though, that we did talk about early in 25 before it was removed is community living was a lower growth profile business for us, and it was also a slightly lower margin business. So if you were to look at 24, you know, if you would look at it, including discontinued operations, I guess I should say, because it's been reported, you know, outside of that, you would have seen a lower margin as well as a slightly lower growth profile business within provider. But what I'd say is that our financials, as people have read them, would have reflected that, frankly, since early 2025.

That's helpful, certainly. Okay, so maybe let's talk about M&A, and it sounds like there's going to be at least some healthy optionality, you know, as you sort of look at over the next couple of years, and, you know, sort of conversation has been around, you know, potentially up to $2 billion of sort of dry capital, you know, sort of available for investor sort of accretive opportunities, and that's exactly, I mean, as we published our model, you know, We certainly saw that visibility into it and certainly have that reflected in sort of the free cash flow production as well. So, you know, the company has generally continued to focus on smaller tuck-ins, but, you know, now it's leveraged in the mid-twos. I mean, in our model, that comes down quite substantially over the next couple of years. So maybe sort of talk about, you know, sort of how, you know, I guess the roadmap or sort of the grid as we think about, you know, the tuck-ins across, you know, sort of your target markets, and then, you know, how the criteria would maybe evolve towards thinking about something larger.

Yeah, no, we really are proud of the work that we've done to do leverage and get ourselves to this position. We were at about four-and-a-half times leverage post-IPO. at 2.27 times at the end of Q1, 2.4 times if you proform it for the taxes we had to pay in Q2 on that transaction, under our long-term target, as you mentioned. And, you know, as we think about M&A, we agree. We think that there's opportunities for us to leverage, you know, really the M&A platform that we've built over the years to continue to, you know, to do acquisitions. I would say, you know, I would expect that we will be able to do the small tuck-in M&A that really, you know, we almost think of as, like, CapEx for us. They're highly accretive, really small tuck-in M&A, and I would expect that we'll continue to do that. I think where we, you know, have the opportunity to lean in more, you know, as we think about deals that we've not done many of the last couple years, as we've been focusing on deleverage are deals in, like, let's call it the $3 to $15 million worth of EBITDA range. You know, I think there's opportunities for us to do, you know, maybe a little bit more of that, which is a little bit chunkier of an M&A. You know, give us an opportunity as we think about, you know, expansion. The areas, you know, most interesting to us are, you know, infusion within pharmacy, hospice, and rehab within provider. and we will continue to have the same rigor and I would expect us to have the same process. Every deal we do has a strategic reason why we're doing it. You know, we continue to be focused on what our growth rate looks like and the trajectory of our long-term growth rate. And so, you know, the deals that we do, you know, are going to be obviously, you know, important to making sure that we maintain that profile. And so, you know, could there be a deal in a $30-ish million range, you know, one or two of those in the next five years? Potentially, I think, you know, our capital flexibility definitely gives us that opportunity. But again, I think, you know, we're going to be continuing to have the same rigor and strategic rationale and process, you know, led by our corporate development team, which is a very strong team, as well as our integration management office on any deals that we would do.

Great, great. Time's flying by here. So why don't I ask a couple questions just on specialty pharmacy, which has really been the core engine for the company, 75% plus of EBITDA. It's continuing to grow north of the end market itself. You know, we have it sort of growing sort of that low to mid-teens type rate, you know, in the report. your specialty business has been growing materially faster than that. So why don't we just sort of start with those, the build around the growth. You know, as we think about, you know, clearly we have the market growth, but then in terms of, you know, the market share and some of those particular strategies that we've already touched on, you know, maybe talk about sort of how that layers into the outperformance we've seen and then hopefully continues, you know, into the future?

Yeah, so I think our targeted strategy around LVDs, you know, has been very helpful, you know, in that. So you're right. It's been, you know, it's a market that's growing 10% to 15%. If you look at the, you know, but if you look at that, where we've been focused are on these limited distribution drugs that are going into narrow networks of one, two, or maybe three pharmacies, although we've typically seen one to two over the last few years. This means that we're getting, if it's a network of two, it means that we would be aspiring to get more than 50% of the market of that drug. If it's a network of three, it would be greater than 33%. So by layering on these new drugs where there are these limited networks, we're capturing a larger share of that growth just by nature of our LDD focus.

Great. And then sort of sticking with that, so you've guided to around 16 to 20 LDD launches over the next 12 to 18 months. How does that compare to the cadence that you've seen historically and then also on the relative size of those launches?

Yeah, so every drug is different in terms of the size of the launch and is an N of one. And so obviously it depends on each drug. We've seen very large drugs. We've seen smaller drugs, but obviously, you know, when it's in that LDD network, we certainly think, you know, those are attractive opportunities for us. You know, we have seen, you know, a narrowing of, you know, over the last few years, we've seen a narrowing of the networks, you know, where maybe three, four years ago, there were three pharmacies. We're seeing, you know, a lot of times two pharmacies in these new LDDs. but each drug is different in terms of the market opportunity we continue to see pharma going through these limited distribution channels we don't see anything changing about that there's a lot of reasons why we think that's very beneficial to pharma working with a narrow set of pharmacies and they've become increasingly comfortable we believe they become increasingly comfortable that you know a couple of pharmacies are able to service the entire market of that drug and so you know we seek to be a really good partner with pharma offering you know whatever white glove or pharma services that they would potentially need we're able to be very flexible in in those needs and so being a high quality patient and physician preferred pharmacy and then layering on top of that the relationships we have with pharma has been very beneficial to continuing to win that. As I mentioned, we typically have a pretty good outlook and are oftentimes working with manufacturers 12 months in advance of a launch. And so, again, we have pretty good visibility into what that looks like.

Great. And sort of sticking on sort of the financial model inside. So on the gross profit per script side, the company has reported some upside that's been driven by mix towards specialty, how do you see the gross profit for scripts? You know, how would you sort of provide some thoughts around sort of the modeling of that moving forward? Do you see that, you know, trending relatively stable, or do you see further room for mix-driven expansion on the floor?

Yeah, so, you know, as you think about script growth, so what we report externally is obviously just total gross profit per script because we just have the total pharmacy scripts. Certainly, depending on how growth rate changes in each of our individual businesses could impact the GP per script, but, you know, and that's the mixed shift. So if specialty is growing faster than, you know, other areas of pharmacy, you know, we've seen that shift up. But what we've seen in each underlying business is expansion and margin, which we think is very healthy. So we're focused on driving, you know, healthy growth in terms of dollars and mix, you know, across, you know, each of the different opportunity sets that we have.

All right, great. And, you know, it's for a new analyst for portfolio management that would come in. There's, you know, a few things that are a little bit different, right, about sort of the pricing dynamics and margin dynamics in this business because, you know, you've got a couple of things playing out here. You know, one around, you know, the generic conversions where that can be a revenue headwind, but it translates into an EBITDA tailwind. And then also we've had in the home and community pharmacy side some of the nuances around the Inflation Reduction Act and some of the regulatory changes that went into effect there. that also, you know, has sort of pressured revenues and pressured sort of pricing yields, right? But you still were able to deliver gross profit growth there. And so I know that those are sort of two different dynamics, but we have a minute and a half left, you know, but I think it's really helpful, I think, to sort of just maybe, you know, to understand, you know, those dynamics and really ultimately around those, what matters in the modeling moving forward.

Yeah. So, you know, to your question on generics, we think generics are good for everybody. The price comes down and is a revenue headwind, as you note, but typically the competition on the manufacturer side and the cost of the drug allows the cost to come down even more. And so, you know, that is the dynamic around generics. As it relates to IRA, you know, certainly, you know, that has been a headwind, you know, to revenue. We have been able to mitigate the EBITDA impact for the drug and specialty pharmacy. Where we have the impact is from a profitability standpoint is in home and community pharmacy. um there has not yet been a fix um legislatively to the impact to the pharmacies on ira and you know so it was left to the pharmacies to negotiate individually with the pbms on an enhanced dispensing fee so we were able to partially mitigate but not fully mitigate the impact associated with the ira impact um to bright spring and um we'll look to continue to try to improve on on, you know, that enhanced dispensing fee. Certainly, you know, our government relations team is actively working, you know, as are the industry, you know, experts and advocacy groups regarding the home and community pharmacy and the impact of IRA to the pharmacies.

Do you think, and we'll probably wrap up that, that there could be some momentum? I mean, clearly I think there's an acknowledgment at DC that the intention was not to penalize pharmacies in order to shift profitability to PBMs. That certainly not is part of what the narrative has been in Washington, but again, like you said, there hasn't been a fix yet, and, you know, there's a lot of just unproductive sort of, you know, areas of focus in Washington.

Yeah, it is certainly, you know, a focus area for us, you know, to make sure that we're advocating for the industry, you know, as the industry groups are doing to make sure that people understand what we believe is the unintended consequences associated with that.

All right. Well, we are out of time. Jen, thanks so much for joining us. And again, I hope you have a productive rest of the conference.