Brightspring Health Services Inc Preliminary Q4 2024 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 appreciate you doing this call on such short notice. Jon, just looking at the 2025 numbers. You're not giving specific numbers around the prior contribution of community living. That's in street numbers. But if I assume that business is probably not growing too much, it's not a stretch to see. Maybe 670 is a doable number this year. Am I in the ballpark here or do you think I'm off on my math? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 21, 2025 / 1:00PM, BTSG.OQ - Q4 2024 Brightspring Health Services Inc Preliminary Earnings Call

Question: Whit Mayo - Leerink Partners - Analyst : Okay, great. And maybe just one other on, I can't remember if you provided the details in the slide deck or not just on the overall Medicaid mix of the business after the transaction. How does that look or how does that change after selling this business?

Question: Whit Mayo - Leerink Partners - Analyst : Great. Thank you.

Question: AJ Rice - UBS Equities - Analyst : Thanks. Hi, everybody. Congratulations on the deal. First, I know this isn't the formal Q4 release, but looking at the numbers you're providing today, it looks like your performance was primarily on the pharmacy side. As we ended the year, anything to call out there at a high level ahead of a more formal release down the road?

Question: AJ Rice - UBS Equities - Analyst : Okay. And I hear that on -- of the $1.5 billion or so provider revenue going forward, it sounds like you're going to start breaking that out between home, health and hospice, personal care, and rehab. Those have sort of been buried within sub segments before. Can you give us a sense of what those look like? Order of magnitude of revenues of each of those buckets?

Question: AJ Rice - UBS Equities - Analyst : Okay. That's great. Thanks so much.

Question: David Larsen - BTIG - Analyst : Hi, congratulations on the transaction. Can you please remind us of what your leverage ratio will be by the -- by year end 2025 and what your sort of normalized free cash flow will be on an annual basis at the end of '25?Thank you very much.

Question: David Larsen - BTIG - Analyst : Great. Thank you. And then can you talk about the selling synergies between community living and the other businesses like Home Health, Hospice, Rehab, Primary Care. It's always been my perspective that community living is really selling to sort of a different group of members or patients. So it's kind of-- it's not like you go to a hospital and sell community living along with Hospice along with Home Health along with these other services. If you could just talk about that a bit, please. Thank you.

Question: David Larsen - BTIG - Analyst : All right. One more quick one. For the community living business, is it 100% provider? 0% pharmacy or just what percentage of that business is pharmacy, please? Thank you.

Question: David Larsen - BTIG - Analyst : Okay, great. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 21, 2025 / 1:00PM, BTSG.OQ - Q4 2024 Brightspring Health Services Inc Preliminary Earnings Call

Question: Joanna Gajuk - BofA Global Research - Analyst : Hi, good morning. Thanks so much for taking the question. So first of a quick one, just to confirm, so your 2025 outlook, right? You said you excluded the community business. So just to confirm, this is the -- you assume for the entire rate starting January 1, even though you did not execute on this transaction yet, correct?

Question: Joanna Gajuk - BofA Global Research - Analyst : Thank you. That makes sense. And I guess my actual question around the 2025 guidance. So it seems like the pharmacy revenue is better than what we had anticipated. And I guess if we exclude the living, the provider business outlook, sort of as expected at least versus our estimate. So could you say a little bit for us what's assumed for the 2025 pharmacy? Is there anything we should be on the lookout in terms of what's driving that robust growth or is it just consumers of the same or just, any additional color that would be helpful? Thank you.

Question: Joanna Gajuk - BofA Global Research - Analyst : And just to clarify on the pharmacy comment and a follow up to the question that was asked before. So you're selling only the community living services, right? But your pharmacy, community pharmacy business is serving the same patient population. So you assume that will continue, right? Is there any risk that somehow they might change that the new owner of these assets might use different pharmacy venders? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 21, 2025 / 1:00PM, BTSG.OQ - Q4 2024 Brightspring Health Services Inc Preliminary Earnings Call

Question: Joanna Gajuk - BofA Global Research - Analyst : Great. Thank you so much. Thanks for taking the questions.

Question: Stephen Baxter - Wells Fargo Securities LLC - Analyst : Hi, thank you. I was hoping you could give us a sense of what the improvement in the long term revenue and do growth rate is that you're expected as a result of the transaction or I guess, potentially give us the growth of the community and asset for the past couple of years. So we could calculate the drag and I guess is your plan to give us, restated financials for the past couple of years, both for the provider segment and also the total company. Thank you.

Question: Stephen Baxter - Wells Fargo Securities LLC - Analyst : Okay. Yeah, thank you. And I just one quick follow up. Yeah, I'm personally not as familiar with Sevita. And like the amount of overlap you have with them today, I guess you just give us a little bit of insight into the -- kind of the divestiture process and the anti-trust risk and how confident you are around close and any initial conversation, you may have had with States about this transaction? Thank you.

Question: Matthew Gillmor - KeyBanc Capital Markets Inc. - Analyst : Hey, thanks for the question. Thanks for hosting the call. I wanted to ask about capital deployment priorities. You mentioned this gets you pretty well along the way to your target of three times by year end. Any thoughts to share in terms of capital deployment priorities, once we get towards that three times level?

Question: Matthew Gillmor - KeyBanc Capital Markets Inc. - Analyst : Got it. And then one follow up on the 2025 guide, can you just remind us sort of the state of play with the quality incentive payment? Is that something that potentially comes back into play? And are there any assumptions around that for 2025? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 21, 2025 / 1:00PM, BTSG.OQ - Q4 2024 Brightspring Health Services Inc Preliminary Earnings Call

Question: Matthew Gillmor - KeyBanc Capital Markets Inc. - Analyst : Got it. Thank you.

Question: Larry Solow - CJS Securities - Analyst : Good morning. Congratulations. Thanks for taking the question. Well, most of my questions have been answered. I guess just a question on the $128 million of EBITDA you called out, curious, is there -- it's somewhat of a little bit of the business is kind of a stand-alone, but a bit of a carve out from within a segment. Does that $128 million, exclude any overhead expenses or anything that you might have incurred or the cut, the buyer will have to incur next year as the business is sold?

Question: Larry Solow - CJS Securities - Analyst : Got it. And just a question the acquisition, just your appetite for [acquisitions], clearly, your capital deployment, you're focused on reducing the debt. And as you mentioned, this takes you down a little less than a half a turn. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 21, 2025 / 1:00PM, BTSG.OQ - Q4 2024 Brightspring Health Services Inc Preliminary Earnings Call Does your goal of three or about three times by year end? I guess that assumes incremental small M&A like you mentioned. But does your appetite potentially clearly gives you a little more room for acquisition? So does this potentially give you a little more opportunity and a little more discretion if something is bigger to come along on an opportunity basis? Thanks.

Question: Larry Solow - CJS Securities - Analyst : Got it. I appreciate the color. Thanks.