• Total Revenue: $2.9 billion, 26% growth year-over-year.
• Pharmacy Solutions Revenue: $2.5 billion, 28% growth year-over-year.
• Provider Services Revenue: $346 million, 12% growth year-over-year.
• Adjusted EBITDA: $131 million, 28% growth year-over-year.
• Pharmacy Segment Script Volume Growth: 10% to 10.9 million scripts.
• Specialty and Infusion Revenue Growth: 33% year-over-year.
• Home and Community Pharmacy Revenue Growth: 14% year-over-year.
• Home Healthcare Revenue: $178 million, 21% growth year-over-year.
• Rehab Revenue: $70 million, 5% growth year-over-year.
• Personal Care Revenue: $98 million, 3% growth year-over-year.
• Gross Profit: $338 million, 16% growth year-over-year.
• Cash Flow from Operations: $102 million in the first quarter.
• Net Debt Outstanding: Approximately $2.5 billion with a leverage ratio of 3.87 times.
• 2025 Revenue Guidance: $12 billion to $12.5 billion.
• 2025 Adjusted EBITDA Guidance: $570 million to $585 million.

• Warning! GuruFocus has detected 5 Warning Signs with BTSG.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• BrightSpring Health Services Inc (NASDAQ:BTSG) reported a strong start to 2025 with first-quarter results exceeding expectations.
• Total company revenue grew by 26% year-over-year, reaching $2.9 billion.
• Pharmacy solutions revenue increased by 28% year-over-year, driven by strong performance in Onco360 and CareMed specialty pharmacy businesses.
• Adjusted EBITDA for the company grew by 28% compared to the same period last year, indicating improved operational efficiency.
• The company increased its total revenue and adjusted EBITDA guidance for 2025, reflecting confidence in continued growth.

Negative Points

• The company is facing regulatory scrutiny with a second request for review from the SEC regarding the planned divestiture of the community living business.
• There are uncertainties related to potential future pharma tariffs, which could impact the company's operations.
• The leap year in 2024 resulted in fewer days in Q1 2025, negatively impacting EBITDA by $3.7 million.
• Gross margin was impacted by a mix of revenue, with larger growth in the specialty pharmacy business, which carries lower than corporate average gross margins.
• The company is subject to potential impacts from the Inflation Reduction Act (IRA) and Medicaid discussions, although it currently does not foresee significant changes.

Q & A Highlights

Q: Can you explain the factors driving the strong gross profit per script in the quarter? A: Jon Rousseau, CEO: The increase was primarily due to a favorable mix of drugs, including brands versus generics, and proactive efforts on the purchasing side. Our internal procurement strategies also contributed to this positive dynamic.

Q: How are you approaching the potential impact of the IRA on pharmacy trends and manufacturer behavior? A: Jon Rousseau, CEO: Our view on the IRA has not changed in the last six to nine months. We do not anticipate any significant impact on pharmacy growth rates for the rest of the year. Pharmacies are not the target of the IRA, and we remain confident in our long-term growth trajectory.

Q: What is your outlook on the potential impact of tariffs on your business? A: Jon Rousseau, CEO: Currently, there are no significant tariffs in place. If tariffs were implemented, we expect reimbursement increases to offset any cost increases, especially since we are reimbursed based on cost for brand drugs. We do not foresee a material impact this year due to our inventory levels.

Q: Can you provide more details on the guidance update and the drivers behind the increased revenue and EBITDA expectations? A: Jennifer Phipps, CFO: The guidance increase reflects stronger than expected pharmacy volume growth and ongoing margin expansion initiatives. We expect to see continued benefits from these initiatives in both the provider and pharmacy segments.

Q: How is the infusion business performing, and what impact has the exit of Quorum from the market had? A: Jon Rousseau, CEO: The infusion business continues to perform well, and we are on track to meet our internal budget for the year. The exit of Quorum from the market has largely been factored in, and we remain optimistic about the opportunities in the infusion market.

Q: What is the strategic significance of the recent acquisition related to the Medicines acquisition by United? A: Jon Rousseau, CEO: Due to confidentiality, we can't provide specific details, but this acquisition aligns with our philosophy of pursuing unique opportunities that fit our strategic goals. We do not expect it to impact our leverage targets.

Q: How are you progressing with bundled services and value-based care initiatives, particularly with ACOs? A: Jon Rousseau, CEO: We are making steady progress with our primary care business and alternative payment models. We are optimistic about achieving double-digit savings rates and expanding our managed care plans over the next few years.

Q: Can you elaborate on the cash flow dynamics for the year and any seasonal factors to consider? A: Jennifer Phipps, CFO: Q1 tends to be a stronger quarter for cash flow, partly due to inventory opportunities. We expect operating cash flow to exceed $300 million for the year, with some quarters being less than Q1. We remain focused on improving our DSO and inventory management.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.