BrightSpring Health Services, Inc. ($BTSG)

So the total growth was -- 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 and EBITDA, the incremental margin was pretty high. So, kind of, help us understand, like what was this incremental, I guess, EBITDA flow-through that kind of comes at this very high margin?

Yes. So 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 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 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, grew about 30% 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?

Yes. So we did see throughout 2025 gross profit per script increasing throughout 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 gross margin increases -- percentage increases that was associated largely with the operational initiatives and focus that team has put in place there. So really a wide variety. We also sort of lastly did have incremental hub volumes. We added a couple of new hub programs and services as we launch new LDDs and that tends to be pretty high margin with no scripts associated with it.

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

Yes. We are 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 touch point and provide these services or data, other information services around their drugs. We're just working with them to see how can we be very helpful. I think it's a future opportunity for us to continue to build out. It is providing stickiness. But I would say it really relates to just trying to be very helpful to manufacturers as they're launching new drugs, and we've been able to do that well.

Because you also mentioned that 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?

Yes. So certain manufacturers maybe smaller pharma companies that don't have sort of all of the departments that maybe a big pharma would have or in some cases, other areas, they see the hub services that we've been able to provide and the information and data 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 right, oncology business, that's really where a lot of growth is coming from with these new product launches and you guys essentially winning a lot of that business. So is there anything that kind of keeps you up at night, as they say, any risk to that growth? Because obviously, it's been growing so fast that always kind of like you would question like how long can you grow at that pace?

Yes. We're really proud of being able to drive growth across all of our different businesses in pharmacy and provider, seeking out opportunities for acceleration of growth or activities, whether it's operational improvements, different adjacencies or services that we can provide to be very relevant. And so I think having that diversified and complementary platform has allowed us -- has given us a lot of benefit from a risk standpoint from a growth 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, we consider extremely attractive. And so that's really 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 this dynamic around BrightSpring winning these contracts essentially. So can you walk us through why Onco360 is sort of the go-to place for some of these drugs in terms of what are the other choices, who are your competitors, who are you winning that business from essentially?

Yes. We've been focused from a specialty pharmacy standpoint on providing great service and access to life-saving, life-changing and life-extending therapies. And so -- and doing that in a really high-quality way. And as we have done that, I think that has propelled wins in new LDD spaces for us as we are 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, ultimately, providing consistent and reliable service to serve the patients as best as possible, and that has been a winning formula for us.

So 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're 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?

Yes. 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 are really focused, as you know, on LDDs and limited -- these limited network drugs. And so we focused a lot of our efforts in that area, both from a sales and targeting with pharma that we have historically very much focused in the oncology space. That is really at the core of the history of 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 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 2 pharmacies, we would seek to be higher than 50% market share on that drug. If we were 1 of 3, we would seek to be higher than 30% market share on that drug.

And you mentioned the rare and orphan as 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?

Yes. As you look at the pipeline of rare and orphan and oncology drugs that are looking to come to the market in Phase III trials or earlier, there's a really extensive pipeline in that area. So we oftentimes are in touch with and working with manufacturers or trade partners, oftentimes, what could be up to 24 months in advance of a launch. More frequently, I would say it's probably closer to 6 to 12 months. 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 the pipeline about somewhere between 6 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 drug makers decide to go the route of exclusive right contracts or distribution. So kind of what's the -- what's driving this decision from these drug makers? Like is there something that happened in the marketplace? Or is it because the drugs we're talking about are kind of narrow in the population they target, and that's why they kind of -- like they don't need the national coverage or maybe they just need make sure that reaches the limited number of patients that are out there. So kind of walk us through the thought process from the drugmaker side and why they kind of go in that route? Because clearly, you guys put out the strategy where the last 2 years, the number of exclusive contracts went up dramatically from prior years for you guys?

Yes. So I would say when a manufacturer 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 to service the entirety of the market for that drug. If they feel like they would want extra coverage, that's sometimes where we're seeing 2 pharmacies that might be in a narrow network or an area there. So I would say it probably relates more to the size of the drug, I would say. But again, having a very narrow network, whether it's 1 or whether it is 2, I think they've gotten increasingly comfortable that the pharmacies that they are working with are able to get national coverage for the service of their drug.

And as it relates to the PBM-owned specialty pharmacies, clearly, they're 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 target market more than maybe historically? Kind of walk us through your thought process about the maybe competitive landscape changing, if at all?

So again, we see the importance for pharma in selecting LDD. And again, I'm speaking to the types of drugs that we're targeting specifically. 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. Over the years, pharma has been able to see the service that our teams are able to provide to the patients. And so they've been able to get comfortable that we are able to meet the needs of those patients.

So do you expect any change in this dynamic as in like would these makers kind of have something and others say, "Hey, like we're going to reverse and now we're going to the network.

We continue to be very focused on providing whatever support that pharma needs in support of their drugs. Our NPS scores for patient satisfaction are consistently over 90%. And we've had a couple of quarters where it's been 100% NPS scores. Physician satisfaction scores with us as a pharmacy has been really high. Our time to first fill measures are consistently 50% or less of 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 proprietary processes and things like that we put in place 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 be -- 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 walk us through that in terms of what it means for the company, right clearly, there's some top line headwind, but there seems to be also a tailwind to EBITDA margins from that. And also what is the time line 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?

Yes. So I think it's very common in industries like pharmacy or just like any other industry or provider industry to have different reimbursement rates for different types of products. And we really think about managing our products over a very large portfolio across our branded and generic pharmaceuticals that we offer and try to attract the most attractive products. And what I would say is that generics are really good for everybody. They're good -- 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 of the health care environment. From a -- 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, that has been beneficial. So you're right, it does provide a headwind to revenue, but ultimately still has been favorable from a margin standpoint.

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

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

And maybe switching gears from pharmacy to provider segment. There are a couple of things I want to hit on. I guess maybe first on the Amedisys acquisition. So it sounds like Q1 kind of came in much better than maybe what the initial commentary implied for the contribution from that business. So kind of walk us through how we should think about the ramp-up for that asset, I guess, through the year?

Yes. We did have a strong Q1. Volumes came in ahead of what our plan was. 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, and I think that was evidenced 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 operational systems. Some other operational processes like central intake and other areas. So those are some costs still to come that will -- that we do expect to impact Q2 and Q3. But we are obviously looking forward and pushing the teams on volume growth that they can get and believe that we'll be exiting '26 in a good place on that acquisition. It's performed really well for us.

Okay. Great. That's what I was asking essentially. And then as we think about this home health business, so now you doubled down with this acquisition because by the way, this is mostly home health. There's a little bit of hospice that came from that asset. So should we expect more growth -- external growth, like 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 busy with the integration of the Amedisys and LHC branches. I think if we were to do anything, it would be very geographically makes sense tuck-in. So 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 felt like it made sense. It was able to be pulled in then into the geography that we had just put leadership in place, and 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 growing pretty nicely there. 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. We were at 4.5x right after the IPO. We've delevered to 2.27x at the end of Q1. That gives us a lot of flexibility for additional M&A. As we think about the target areas for potential M&A, 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 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 4x pro forma multiple on our transactions.

No, exactly. And then, I guess, since you mentioned the capital deployment, so you said home infusion hospice, rehab are priorities. Should we expect more of that coming later this year because you also mentioned the integration of the Amedisys acquisition? Or should we just think integration could happen as you also execute on some other transactions?

Certainly, we don't put any M&A in our guide, and we would just -- I think we'll have a corporate development team that is focused on identifying what could be good strategic assets for us. From a timing standpoint, we don't know how all of those would necessarily play out from a timing standpoint. But from a capital availability standpoint, we certainly are below our long-term target leverage. We will -- 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 we think makes sense for the company.

And coming back to the provider segment, so I asked about home health and hospice. I guess personal care is actually still pretty sizable, even though, relatively, provider small in pharmacy, but still inside that provider segment, personal care is sizable. So how are you thinking about that business? Because that doesn't seem like that's growing as robustly as maybe some of the other provider service lines. So kind of what's your view of that strategic importance or value of having that asset in the portfolio?

Yes. 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 generator of cash and has been just really steady, we think, provides the strategic importance around serving more holistically the senior patients that we have, especially as we lean into areas of providing multiple services to the same patient.

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

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

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

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

Yes. So we're focused in terms of both acute and chronic therapies. So acute, there have 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 the importance of having some expanded pharmacy footprint is important to us. We think scale in infusion is important because it gives you leverage from a payer standpoint. And so that is also beneficial to us. We do think that there are therapies in the chronic space that are attractive. And we'll obviously, as we do with any of the areas that we're targeting, I think, be very strategic about making sure that we're going after what we think are the most attractive opportunities at any time.

Right. I think this is all the time we have. So thank you so much, and Thanks, everyone.

Thank you.