• Total Revenue: $2.9 billion, 29% growth year-over-year.
• Adjusted EBITDA: $151 million, 16% growth year-over-year.
• Pharmacy Solutions Revenue: $2.3 billion, 35% growth year-over-year.
• Infusion and Specialty Revenue: $1.7 billion, 42% growth year-over-year.
• Home and Community Pharmacy Revenue: $588 million, 19% growth year-over-year.
• Provider Services Revenue: $641 million, 10% growth year-over-year.
• Home Healthcare Revenue: $265 million, 13% growth year-over-year.
• Community and Rehab Care Revenue: $376 million, 8% growth year-over-year.
• Gross Profit: $408 million, 14% growth year-over-year.
• Adjusted EPS: $0.11 for the third quarter.
• Cash Flow from Operations: $27 million, excluding legal payment $51 million.
• Net Debt Outstanding: Approximately $2.7 billion.
• Leverage Ratio: 4.39x.
• 2024 Revenue Guidance: $11.0 billion to $11.3 billion.
• 2024 Adjusted EBITDA Guidance: $580 million to $585 million.

• Warning! GuruFocus has detected 9 Warning Signs with MTZ.

Release Date: November 01, 2024

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 financial performance with a 29% year-over-year revenue growth, reaching $2.9 billion in the third quarter.
• The Pharmacy Solutions segment achieved a 35% revenue growth, driven by strong script volume and strategic focus.
• The company raised its 2024 revenue and adjusted EBITDA guidance, reflecting confidence in continued growth.
• BrightSpring successfully integrated a previously announced acquisition, contributing to growth in the Provider Services segment.
• The company continues to expand in large and growing markets, focusing on high-quality services and operational efficiency.

Negative Points

• Gross profit growth was lower than revenue growth, at 14%, partly due to nonrecurring items such as start-up costs and a settlement with a payer.
• The company faces risks and uncertainties related to forward-looking statements, which could impact future performance.
• There are ongoing costs associated with onboarding new customers, which may affect short-term profitability.
• The company has a high leverage ratio of 4.39x, with net debt outstanding at approximately $2.7 billion.
• Potential impacts from the Inflation Reduction Act and biosimilar market dynamics could pose challenges in the future.

Q & A Highlights

Q: Congrats on a solid quarter. Can you elaborate on the expected margin improvements in the fourth quarter? A: Jon Rousseau, CEO: Q4 is typically our highest margin quarter due to various factors, including days and other items. We expect this trend to continue, aided by the launch of a generic drug in specialty, new hospice rates, and onboarding of new customers. These, along with volume growth and leveraging fixed costs, will contribute to margin expansion.

Q: How is the Inflation Reduction Act impacting your business, particularly in the specialty pharmacy segment? A: Jon Rousseau, CEO: The IRA's impact is expected primarily in 2026. In specialty pharmacy, we have one drug on the list, but we are having constructive conversations with the manufacturer and see no risk. The CMS has clarified that there will be a true-up mechanism for LTC pharmacies, reducing potential impacts.

Q: Can you provide an update on your home-based primary care efforts and how you measure success in this area? A: Jon Rousseau, CEO: We continue to grow this business organically, focusing on patient growth and ACO contracts. We aim to manage over 100,000 patients in 5-7 years. Patient count and profitability are key metrics, with expectations to reach significant EBITDA figures by 2026.

Q: What are the capital deployment priorities for the next year, and are there any non-core areas you might divest? A: Jon Rousseau, CEO: Our acquisition strategy remains consistent, focusing on accretive transactions in long-term care pharmacy, infusion, rehab, home health, hospice, and home-based primary care. We aim for smaller, high-ROI investments while maintaining leverage targets.

Q: How do you view the sequential growth implied within the guidance for the fourth quarter? A: Jon Rousseau, CEO: We expect 15-16% year-over-year growth in Q4, with a $10-15 million sequential step-up. This reflects operational execution and growth across the business, with both Pharmacy and Provider segments contributing to the strong performance.

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