Brightspring Health Services Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Whit Mayo - Leerink Partners - Analyst : Hey, thanks. Good morning. I guess my first question is just on the gross profit per script. It was very strong in the quarter and I think you hit on maybe some of the factors, but not sure I called everything exactly. Can you talk about everything that sort of drove that dynamic in the quarter?

Question: Whit Mayo - Leerink Partners - Analyst : Okay. And then my follow up question just thinking about the IRA and the new changes that we're seeing this year, how are you thinking about second half growth around the pharmacy trends now and maybe any color that you have around, changes in manufacturer behavior that you care to share maybe as it relates to patient assistant funds or anything else. Thanks.

Question: Whit Mayo - Leerink Partners - Analyst : Thanks.

Question: Ann Hynes - Mizuho Securities - Analyst : Yeah, good morning. I'm just staying on the IRA. I do think there is opinions of the market that the IRA will lead to behavior change on the patient and physician side that could lead to an acceleration of utilization. How much of that kind of patient behavior change and physician change do you have in your guidance from our IRA, or should we think that as maybe upside potential going forward?

Question: Ann Hynes - Mizuho Securities - Analyst : Thank you.

Question: Joanna Gajuk - Bank of America - Analyst : Yes, hi. Good morning. Thank you so much for taking the question here. So, I think maybe I missed the first question. Was it about the gross profit for script? Because that was the one number that stood out. So, it sounds like you said it was something about mix and the purchasing efforts, but as we think about the generic launches going forward, should we expect this number to even accelerate it when it comes to the gross profit per script growth because it was up like 9% and this, $18.75 or so per script, should we expect this to continue to go higher.

Question: Joanna Gajuk - Bank of America - Analyst : Also helps. Okay. I see and if I may ask different topic. So just a headlines yesterday, that I guess the company was named one of the buyers from some assets that will be divested in the medicines acquisition by United. I don't know if you can give us a sense, like is it home health hospice, or anything else you can give us on that one. Thank you.

Question: Joanna Gajuk - Bank of America - Analyst : Great, thank you.

Question: David Larsen - BTIG - Analyst : Hey, congratulations on another very good beat and raise quarter. Jon, can you talk a little bit about the potential sort of scenarios around tariffs? Like if tariffs are implemented, I would imagine this would increase wholesale acquisition cost. Would that simply increase average wholesale price and those costs be passed through to your customers and how long would that process take and roughly how many days inventory do you have on hand? Thanks very much.

Question: David Larsen - BTIG - Analyst : Okay, and just what I heard you say was you're reimbursed on cost on the brand side and that happens right away so if prices increase, let's say August 1 on the brand side then on August 1 you would be covered for those higher costs right away.

Question: David Larsen - BTIG - Analyst : Okay. Great, thanks very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:30PM, BTSG.OQ - Q1 2025 Brightspring Health Services Inc Earnings Call

Question: Brian Tanquilut - Jefferies - Analyst : Hey, good morning guys, and congrats on the quarter. Hey Jon, so just on the Medicaid deal acquisition announcement, so curious more strategically speaking, I know you've been focused on growing the provider side of the business. So is this a sign that we should expect more deal flow in that space and then maybe the follow up to that would just be as we think about your leverage targets, how should we be thinking about that as you may potentially ramp up acquisitions in that space? Thanks.

Question: Brian Tanquilut - Jefferies - Analyst : Awesome, thank you.

Question: Matthew Gillmor - Keybanc - Analyst : Hey, thanks for the question. I wanted to ask you about the guidance update. I think the revenue is up $400 million and the EBITDA is up $25 million which is nicely above the beat. Jennifer provided some of the drivers, but I was hoping maybe you could sort of help us think through which of those drivers are sort of more important if you're able to size them relative to the EBITDA upside on the guide. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:30PM, BTSG.OQ - Q1 2025 Brightspring Health Services Inc Earnings Call Jennifer Phipps - Brightspring Health Services Inc - Executive Vice President and Chief Financial Officer, Corporate Secretary Yeah, so I just reiterate the comments that I made. We have continued to see strong pharmacy volume growth ahead of our expectations. We've adjusted the guidance to reflect that, as we've also discussed over the last several quarters, we have many different initiatives that we put in place focused on margin expansion. We will see and expect to see some of that in the provider space, especially as well as in pharmacy, and that is also reflected in our guidance.

Question: Matthew Gillmor - Keybanc - Analyst : Got it. Thank you.

Question: Larry Solow - CJS Securities - Analyst : Great, good morning, and I echo the congrats on the good start to the year. Just a couple follow up questions. Could you give us any update just on your efforts in bundled services, in value-based care, and where we stand with the ACOs currently? Any update there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:30PM, BTSG.OQ - Q1 2025 Brightspring Health Services Inc Earnings Call

Question: Larry Solow - CJS Securities - Analyst : Great, I appreciate that color. And then just a quick follow up for Jen just on the on the cash flow in the quarter, nice strong start to the year. I think the cash flow from operations is a little over $100 million and you paid down a little bit, looks like a good amount of use a little lot of that excess for debt paid down. Is there any seasonality in your business? I don't think so, but maybe just in terms of timing, is Q1 normally a little bit stronger, maybe just running a little bit ahead of the game to start the year and I guess continue to expect to use most of your free cash flow for debt pay down this year. Thanks. Jennifer Phipps - Brightspring Health Services Inc - Executive Vice President and Chief Financial Officer, Corporate Secretary Yeah. So Q1 does tend to be a stronger quarter. There is a little bit of seasonality, but it's mostly associated with inventory opportunities that we can have it from time to time in our business. Q2 we do have -- tends to be one of our lower cash flow quarters just related to stick payments and some other one-time items in the year that are paid during the second quarter, but other than that it's pretty steady.

Question: Larry Solow - CJS Securities - Analyst : Great, thank you. I appreciate it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:30PM, BTSG.OQ - Q1 2025 Brightspring Health Services Inc Earnings Call

Question: AJ Rice - UBS - Analyst : Hi everybody. Maybe first to ask just on the infusion side of the business I know, you'd spent the last 18 months or so really repositioning that business internally, resource wise and externally, and have some pretty optimistic views about how much that might grow multiple times of its current size. Can you comment on how you feel that is unfolding? I know it's still early, but just are you on pace to accomplish that kind of growth and how much is CVS is actually a quorum from the market providing a tailwind.

Question: AJ Rice - UBS - Analyst : Okay. And on the M&A comment, I think you typically talk about deploying about $100 million in capital and M&A, is that a Medicis deal basically additive to that or is that part of the overall goal for the year?

Question: AJ Rice - UBS - Analyst : Okay, all right. Thanks a lot.

Question: Linda Baldock - Morgan Stanley - Analyst : Thank you. This is Linda Baldock on for Erin Wright, and congrats again on another strong quarter. So today we want to inquire further on cadence for 2025, building on the prior cash flow comments, that you just answered. So are there additional unique quarterly dynamics that we should think through as we progress through the remainder of the year, perhaps margin expansion across both segments, utilization, or generic launches? Thank you. Jennifer Phipps - Brightspring Health Services Inc - Executive Vice President and Chief Financial Officer, Corporate Secretary Yeah, so I just reiterate what I said earlier in the prepared remarks, which is we do expect our operating cash flow to be ahead of $300 million for the year, which obviously from a balance of the year perspective as operating cash flow was $102 million would reflect a couple of quarters that are less than what we saw in Q1, so if that's helpful. We do -- again continue to expect strong management, we are focused on improving our DSO, our day's inventory on hand, but providing opportunities to allow flexibility to invest in inventory builds and other strategic items as necessary so we feel really good about our ability to deliver on that this year.