Brightspring Health Services Inc Q4 2024 Earnings Call Transcript

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

Question: AJ Rice - UBS - Analyst : Hi, everybody. Congratulations, Jim. Best wishes in the new role. When you think about your limited distribution drug business and pipeline, it seems like you guys are seeing more exclusivity, more -- fewer and fewer people are getting the contracts you're getting with less and less competition. I know some of that is obviously the strength of your franchise and what you've done. But I also wonder, is there any changes in the competitive landscape? Obviously, the pipeline of new LDDs continues to look robust, but it seems like you might be capturing more of those or getting more narrow contracts. Can you just comment on that?

Question: AJ Rice - UBS - Analyst : Okay. Then a couple of times, you mentioned in the prepared remarks about the investments you've made over the last 18 to 24 months in the Infusion business, and you sort of feel like it's positioned to grow from here. I wonder if we could get you to talk a little bit more about the opportunity now what the growth trajectory might look like for that business as well as where you're at with respect to margin and what level of upside there might be on margin at this point?

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

Question: Whit Mayo - Leerink - Analyst : Hey, thanks, guys. I think in the past, you've talked about a lot of internal operating cost saving and efficiency opportunities, maybe 60 different projects or programs that you've had kind of in flight, I think you recently rebid your wholesaler. Just maybe any sense on the cumulative savings from a lot of these initiatives and the opportunity on the margin side for this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 1:30PM, BTSG.OQ - Q4 2024 Brightspring Health Services Inc Earnings Call

Question: Whit Mayo - Leerink - Analyst : No, that's helpful. And maybe just wondering how you're feeling about Home Health and Hospice, really on the development side, there's maybe some distraction with some of your peers tied up with acquisitions or whatnot? I'm just wondering how you're thinking about the potential development opportunity over the next year or so. Thanks.

Question: Brian Tanquilut - Jefferies - Analyst : Hey, good morning, guys. And congrats on the quarter of the year and congrats on the promotion. Maybe, Jon, as I think about the -- your prepared remarks, clearly, growth has been really good and seems to be tracking well. So as we think about maybe the sustainability of these growth rates or just the elevated gross levels and with community out of the picture now, how should we be thinking about your view on blended growth going forward?

Question: Brian Tanquilut - Jefferies - Analyst : That makes a lot of sense. And then maybe, Jon, just a follow-up on A.J.'s question earlier on Infusion. As we think about your Quorum exiting markets, and then maybe thinking about the mix of business that you have in terms of being heavy on the acute versus chronic. Just trying to think about the dynamics that we are seeing or we could be expecting in that Infusion business for the period? Thanks.

Question: David Larsen - BTIG - Analyst : Hey, congratulations on another very good quarter. John, can you maybe talk a little bit about your -- the ACO arrangements that you're involved in? I mean, one of the things I've always liked about your business is that you're in what people call the post-acute space, its lower cost in the acute care environment. But at the same time, a lot of investors are maybe a little bit wary of anything that says ACO or value-based care, given how REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 06, 2025 / 1:30PM, BTSG.OQ - Q4 2024 Brightspring Health Services Inc Earnings Call some of the stocks in the sector have performed over the past year. So can you maybe just talk about your approach to it, your volumes and your pricing looked great on the provider side? So, thanks very much.

Question: David Larsen - BTIG - Analyst : Okay. Great. And then just one more, quick one, in terms of Specialty pricing, it looks like your Specialty revenue growth is very good. Is there anything in your mind that could slow that down? And obviously, a tailwind for the overall organization, the pricing increase is right?

Question: David Larsen - BTIG - Analyst : Great, I'll hop back in the queue nice quarter.

Question: Joanna Gajuk - Bank of America Securities - Analyst : Hey, good morning and thanks so much. I guess, my question will be around the IRA. So just a follow-up on the answer you gave earlier to the question about long-term outlook for growth after 2025. So what do you mean by there's a downside risk there? What would need to happen for this to be a headwind in the IRA, because, I guess there's obviously the price reductions but then, there's some Part D with design under the IRA. And in the past, you spoke about as being a tailwind to the company as realization increases. So just trying to understand the different dynamics and what would need to happen that you're referring to in terms of being IRA begin the impact there?

Question: Erin Wright - Morgan Stanley - Analyst : Great. Thanks. So following the community divestiture, which made sense to us, but are there other areas that you'd be looking to refine in terms of the business mix? And how do you think about that in contrast with efforts to better integrate the offering from a provider and pharmacy standpoint? And then I'll just ask my second question upfront, too, which is just on the government business as well. You mentioned kind of part, but I wanted to ask about Medicaid. Just how you're thinking about the exposure there obviously comes down with the divestiture. But can you talk wages through some of the potential risk factors as well as how you're just thinking about the outlook for that group given the unknowns in terms of that backdrop right now? Thanks.

Question: Jamie Perse - Goldman Sachs - Analyst : Hi, thank you. Good morning and congrats to Jen. I guess I wanted to start, can you help us think through OpEx investments needed to sustain growth in both businesses in 2025? And then just how much does that level of investment scale up or down based on top line growth? Just trying to think through incremental margins below gross profit?

Question: Jamie Perse - Goldman Sachs - Analyst : Okay. And then just thinking about your new pro forma leverage targets for the year, which is obviously quicker deleveraging than we had contemplated before the divestiture. Can you just update us on how you plan to allocate that in terms of pure debt paydown versus M&A? And just any color you can provide on the M&A pipeline or environment?

Question: Jamie Perse - Goldman Sachs - Analyst : Great thank you.

Question: Pito Chickering - Deutsche Bank - Analyst : Hey, good morning, guys. Can you sort of get back to that rare and orphan opportunity that you're talking about with A.J. I think historically, a big part of the strength of specialty has been a deep ties with oncologists, which has made you the partner of choice with new drugs and then obviously, as they go generic. So transitioning where orphan seems, I guess, to me, maybe pivot away from oncology. So can you talk about why you can be successful in the new area after being so successful in oncology?