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Founded in 1974, BrightSpring Health Services provides home and community-based health services for patients in need of specialized or chronic care. Formerly known as Phoenix Parent Holdings, the company services over 400,000 people daily with home health care, hospice care, pharmacy therapy management, and more. BrightSpring Health Services also offers infused, injectable, and oral medication services and rehabilitation services, including physical, speech, and occupational therapy.

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BrightSpring Health Services (BTSG): Company Profile, Stock Price, News, Rankings

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BrightSpring Health Services

brightspring health services

Thank you for standing by, and welcome to BrightSpring 2026 earnings. Participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. I would now like to hand the call over to David Deuchler, investor relations. Please go ahead.

Good morning. Thank you for participating in today's conference call. My name is David Deuchler with Investor Relations at BrightSpring. I'm joined on today's call by Jon Rousseau, Chief Executive Officer, and Jen Phipps, Chief Financial Officer. Earlier today, BrightSpring released financial results for the quarter ended June 30th, 2026. A copy of the press release and presentation is available on the company's investor relations website. Please note that today's discussion will include certain forward-looking statements that reflect our current assumptions and expectations, including those related to our future financial performance and industry market conditions. Such forward-looking statements are not guarantees of future performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations.

We encourage you to review the information in today's press release and presentation, as well as in our quarterly report on Form 10-Q that will be filed with the SEC, including specific risk factors and uncertainties discussed in our Form 10-K and Form 10-Q. Such factors may be updated from time to time in our periodic filings with the SEC, and we do not undertake any duty to update any forward-looking statements except as required by law. During the call, we will use Non-GAAP financial measures when talking about the company's financial performance and financial condition. You can find additional information on these Non-GAAP measures and reconciliations of our Non-GAAP financial measures to their most directly comparable GAAP financial measures to the extent available without unreasonable effort in today's press release and presentation, which again, are available on our investor relations website.

This webcast is being recorded and will be available for replay on our investor relations website. With that, I will now turn the call over to Jon Rousseau, Chief Executive Officer.

Good morning, everyone, and thank you for joining BrightSpring's second quarter 2026 earnings call. I'd like to start by thanking everyone at BrightSpring who drives our mission forward and makes a lasting impact every day. We are grateful for the hard work and commitment of all of our teammates, enabling us to deliver high quality and timely care to patients in so many communities across the U.S. As we grow the BrightSpring platform, we remain focused on our important role and value proposition of delivering quality services and compassionate care to patients at lower cost and most often, patient preferred settings. Our strategy is aligned with many secular trends in U.S. healthcare. We are focused on strong execution, thoughtful innovation, and continuous improvement to drive greater impact and sustained growth.

Our business continues to be underpinned by quality and operational performance. These fundamental and critical enablers go hand in hand with patient volume increases, expansion into adjacent and new markets, and disciplined capital allocation. We see many opportunities for the company in the years ahead. Turning to the second quarter, we were pleased with the performance across the organization, which reinforces our conviction and the value that we provide to patients and stakeholders across the country. Financial results for the quarter came in ahead of baseline expectations, with total company revenue of $3.9 billion, that represented 23% year-over-year growth and adjusted EBITDA of $206 million, that grew 44% year-over-year.

In the segments, Pharmacy Solutions revenue of $3.4 billion represented 22% growth year-over-year and adjusted EBITDA of $180 million represented an increase of 44% versus last year. In Provider Services, revenue of $466 million represented 30% growth and adjusted EBITDA of $75 million increased 33% versus last year. In Pharmacy Solutions, we saw continued business momentum in the second quarter. Our specialty and infusion business delivered revenue growth of 30% and script growth of 31%, reflecting strong performance from the clinical, operational, and commercial teams and relationships developed with manufacturers, physicians, and patients over the years.

Our specialty business continues to be driven by the branded oncology LDD portfolio. We continue to leverage proven and core capabilities and expand into other targeted therapeutic areas, including certain rare, orphan, and other complex therapies with noteworthy partnership wins in these areas. During the quarter, we added two ultranarrow network LDDs to our portfolio, bringing the total number of LDDs to 155. For the year, we have launched 12 LDDs through Q2, four as exclusive partners and eight ultranarrow. We of course continue to be extremely committed to our manufacturing and biotech partners and patients to deliver the best possible service support and experience for these life-changing and life-saving therapies. Additionally, we continue to see solid contribution from generic scripts driven in part by newly available generic alternatives last year and this year.

The infusion business delivered solid volume growth across both acute and chronic therapies in line with expectations, driven by operational initiatives and service levels as well as growth investments and execution this year. We plan to expand both the acute and chronic footprint into new markets in the future and are optimistic about the opportunity to scale this business. In home and community pharmacy, we continue to operate at a high level with service levels and controllable customer retention at all-time highs, as we serve a variety of growing end markets, including assisted living, behavioral, hospice, pace, skilled nursing, and others. Second quarter volume and revenue performance in the home and community pharmacy business was impacted by the exit of certain skilled nursing customers last year and earlier this year, which in some cases has helped improve profitable growth year to date.

We continue to invest in automation and technology to improve efficiency and service across our scaled national footprint, and the positive impact of these initiatives was reflected in the profitability of the business in the quarter, which was up year-over-year. On the provider side, the home health care business performed well, driven by strong need and demand for these valuable services and continued volume growth above industry levels, as well as de novo investments, preferred MA and ACO contract execution, and contribution from acquisitions, all underpinned by leading quality results across the provider service lines. We are pleased with the integration of the Amedisys and LHC branches, with the home health team doing a great job of integrating, particularly in the areas of Human Resource and IT, all while we continue to have nearly 95% of our branches at four star or better.

We now expect an EBITDA contribution of approximately $35 million in 2026 from these acquired branches. Our hospice services continue to demonstrate industry-leading quality metrics and strong census growth. The rehab care business continues its longstanding performance with continued payer contract advancements for these highly clinical neurotherapy programs, entry into new markets, and programs like Rehab in Motion resonating with patients and customers. All retention metrics for our clinicians continue to improve every year with retention at best practice levels. Personal care continues to provide consistent, high quality supportive care to patients who need assistance with activities of daily living in the home, with a growth rate and hours served well above the industry growth rate. In our home-based primary care business, our quality measures are extremely good, demonstrating significant reductions in hospitalizations and overall healthcare costs realized by patients in our network.

We continue to expand and invest in business development in this service line while further integrating with home health and hospice, also laying the groundwork for future growth in quality-based payment models. At the corporate level and across the organization, we continue to invest in and progress on key clinical, HR, and operational systems and new applications, including leveraging new automation and AI tools and agents in areas such as hiring, onboarding, intake, documentation, medication reviews, and patient care plans. We've now had almost 300 employees receive Lean Six Sigma certification of various belts while completing lean projects for each across the organization as we further institutionalize lean business processes every year.

On acquisitions, we have a full pipeline per usual, while we remain very disciplined in executing deals that clearly meet our strategy and objectives, we are optimistic about possible transactions in the second half, having signed several small tuck-ins and geographical expansions in the past quarter. Let me provide a few more financial highlights from the second quarter, which Jen will discuss in greater detail in a few minutes. As a reminder, the company's financial results referenced pertain to continuing operations and do not include results from the community living business, which was divested on March 30, 2026. Second quarter financial results came in ahead of baseline expectations, with total company revenue of $3.9 billion, representing 23% year-over-year growth. Pharmacy solutions revenue of $3.4 billion and provider services revenue of $466 million represented 22% and 30% growth, respectively.

Second quarter adjusted EBITDA of $206 million grew 44% year-over-year, representing an adjusted EBITDA margin of 5.3%, an 80 basis point improvement versus last year. Profitability in the quarter again benefited from the scale and complementary diversification of our platform across our target home and community end markets, which enables tangible advantages, including breadth and optionality of opportunities for revenue generation, disciplined operational execution leveraging top-down driven best practices, procurement and contracting processes across the organization, the cumulative impact of our lean and process improvement programs, ongoing technology and AI investments, and our acquisition integration capabilities and synergies. Many initiatives contributed to the profitability and margin performance in the quarter, these remain an important source of ongoing efficiency generation going forward.

From a cash flow perspective, the company generated $144 million of cash flow from operations in the quarter, excluding a one-time cash tax payment of approximately $100 million related to the community living transaction. Leverage was reduced to 2.15x as of June 30, 2026. We now expect approximately $600 million of operating cash flow this year, with EBITDA to operating cash conversion of around 70%, and leverage for the year to end below 2x before any potential acquisitions. Also in the quarter, we received ratings upgrades from both S&P and Moody's, and we refinanced our debt at a 50 basis points lower spread. As mentioned, performance in the quarter was underpinned by consistent focus on quality of care and patient satisfaction.

Additional quality measures of note include an industry-leading timely initiation of care of 99% in home health, hospice quality measures that continue to be well above the national average with a CAHPS overall hospice rating of 89%, rehab patient satisfaction scores above 97%, and client satisfaction scores of 4.6 out of five in personal care. On the pharmacy side, in home and community pharmacy, dispensing accuracy was 99.98%, order completeness was 99%, and on-time delivery was 94.3%. While in infusion, our patient satisfaction score was 94%, with 94% of discharges due to completion of therapy. Specialty pharmacy demonstrated quality metrics well above the national average in the second quarter, delivering a high medication possession ratio of 93% and time to first fill of 3.7 days, with industry-leading net promoter scores. We are very pleased to consistently demonstrate exceptional service and quality across our businesses.

Earlier this month, CMS released the calendar year 2027 preliminary rate for home health services. The preliminary rates include a positive annual payment update, the first such upward adjustment in several years, and a positive starting point. We continue to work with CMS and Congress to highlight third-party data showing the positive health outcomes and lower Medicare cost profile of high quality, clinically appropriate, and medically necessary home health services. To close, the second quarter reflected consistent execution that we strive for every day, with broad performance and steady progress towards our operating and growth priorities. We are building upon a strong foundation of growth anchored on quality to drive scale while we deploy best practices and processes across the organization to continually improve operations for the future.

As we move into the second half of the year, the business is well-positioned, momentum is broad-based, and we are confident in our ability to deliver the updated full-year guidance Jen will discuss in a moment. With that, I'll turn the call over to her.

Thank you, Jon. As a reminder, we closed the community living transaction on March 30th, 2026, and all financial results reflect only continuing operations, with community living results reflected in discontinued operations. For the second quarter of 2026, the company revenue was $3.9 billion, representing 23% growth from the prior year period. Pharmacy Solutions segment revenue in the quarter was $3.4 billion, achieving 22% year-over-year growth. Within the Pharmacy Solutions segment, specialty and infusion revenue was $2.9 billion, representing growth of 30% from prior year, which was driven by branded LDDs and new LDD launches script growth, as well as wraparound fee for service program growth, generics, acute infusion growth, and strong commercial execution in both the specialty and infusion businesses.

Home and community pharmacy revenue was $540 million, representing a decline of 8% year-over-year due to an approximate $50 million impact from the IRA, along with our decision to exit some uneconomic customers, both of which we have previously discussed and performed as expected. On the IRA impact for the balance of the year, we continue to see a revenue impact in home and community pharmacy of approximately $45 million in each of the remaining quarters in 2026, bringing the total year IRA impact to home and community pharmacy revenue of approximately $200 million. In the Provider Services segment, we reported revenue of $466 million, which represents 30% growth compared to the prior year. Home Healthcare reported $278 million in revenue, growing 51% versus last year.

Revenue performance was driven by average daily census growth, de novo expansions, and the impact of the acquired Amedisys and LHC branches, which contributed approximately $78 million of revenue and approximately $8 million of adjusted EBITDA in the second quarter. Rehab care revenue was $82 million, growing 12% versus last year, with healthy growth in persons served and hours billed in core neuro rehab, along with the continued momentum in our Rehab in Motion program. Personal care revenue was $107 million, representing 7% growth year-over-year, driven by modest growth in persons served, strong growth in hours billed, and stable operations. Moving down the P&L, second quarter company gross profit was $493 million, representing growth of 32% compared with the second quarter of last year. Adjusted EBITDA for the total company was $206 million in the second quarter, an increase of 44% compared to the second quarter of 2025.

Adjusted EPS for the total company was $0.45. Company profitability benefited from strong top-line performance across the businesses, as well as consistent operational execution in addition to and from investments related to technology and AI. We continue to make targeted investments supporting a variety of operational processes and programs that will improve procurement efficiencies, streamline operations, and further standardize best practices throughout the organization. Turning to segment profitability performance in the second quarter, Pharmacy Solutions gross profit was $298 million, growing 28% compared with the second quarter of last year. Adjusted EBITDA for Pharmacy Solutions was $180 million for the second quarter, an increase of 44% compared to last year, representing an adjusted EBITDA margin of 5.3%, which increased approximately 80 basis points versus last year and was similar to the first quarter of 2026.

Second quarter pharmacy profitability benefited from strong branded LDD portfolio performance, product mix across all pharmacy businesses, pharma services, and hub revenue and gross profit, as well as continued investments to improve operational performance. Of note, notwithstanding external IRA and any payer impacts, home and community pharmacy EBITDA performed well year-over-year in the quarter due to our internal continued operational process improvement, underpinned by the deployment of new technologies. Provider Services gross profit was $195 million, growing 38% versus the second quarter of last year, with adjusted EBITDA of $75 million, growing 33% versus last year. This represents an adjusted EBITDA margin of 16.1%, up approximately 30 basis points compared to last year.

We have continued to see the benefits of operational initiatives that we have put in place over the past year, driving broad-based growth, greater efficiency and economies of scale, and increased margins across our provider services lines. On a total company basis, cash flow from operations was $44 million in the second quarter. Excluding the one-time cash payment for taxes of approximately $100 million related to the community living transaction, cash flow from operations was $144 million. Recall that the discontinued operations cash flows are included in the consolidated company cash flows. As we look forward to the balance of the year, excluding community living-related cash flow impact, we expect to deliver approximately $600 million of annual operating cash flow.

As of June 30th, net debt outstanding was approximately $1.7 billion, and we finished the quarter with a leverage ratio of 2.15x, which includes the impact of approximately $100 million of taxes associated with the community living divestiture in the quarter. As mentioned during the Q1 2026 earnings call, our leverage at Q1, when adjusting for the community living taxes that were due subsequent to quarter end, was a leverage of 2.4x. We were able to reduce our leverage from Q1 2026 to Q2 2026 on an adjusted basis by 0.25x. Our leverage ratio also includes $120 million of share repurchases year to date. During the second quarter, we repaid approximately $300 million of the term loan with proceeds from the community living sale and repriced the loan at SOFR +200 basis points.

This compares with SOFR +325 basis points at the time of our IPO and reflects strong operating performance of the business, improved cash flow generation, and our lower leverage position of the company since the IPO. During Q2, Moody's and S&P both upgraded BrightSpring's credit rating, better reflecting our leverage position and debt management philosophies. Moody's upgraded its rating to Ba3 from B1, and our senior secured first lien revolving credit facility and senior secured first lien term loan B ratings to Ba3 from B1. S&P upgraded our issuer credit rating to BB- from B+, and also upgraded the ratings on our revolving credit facility and first lien term loans to BB- from B+. The company has evolved since going public in January 2024, with business mix, scale, operating performance, and leverage all further improved.

As we move into the second half of the year and 2027, we will continue to evaluate options for the most appropriate capital structure needed to support growth over the next five years. Turning to guidance for 2026, which excludes the community living business as well as any acquisitions that have not yet closed. Total revenues is expected to be in the range of $15.1 billion-$15.425 billion, including pharmacy solutions revenue of $13.2 billion-$13.5 billion, and provider services revenue of $1.9 billion-$1.925 billion. This range reflects 17.0%-19.5% growth over full year 2025, excluding community living in both years. Total adjusted EBITDA is now expected to be in the range of $820 million-$845 million for full year 2026. This would reflect 32.8%-36.8% growth over full year 2025, excluding community living in both years.

Included in total adjusted EBITDA is expected contribution from the Amedisys and LHC assets acquisition of approximately $35 million. I will now turn it back to Jon.

Thanks, Jen, and thank you for your time today to go through BrightSpring's second quarter 2026 results. We will now open up the call for questions. Operator?

For a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. You will be limited to one question to allow everyone the opportunity to participate. Please stand by while we compile the question-and-answer roster. Our first question comes from the line of Charles Rhyee of TD Cowen. Your line is open, Charles.

Yeah, thanks for taking the question. Well, congrats on the quarter. Just wanted to ask maybe what you're seeing in terms of generics. There's a lot of discussion the other day about REVLIMID, and I think you guys had said previously that was kind of coming on in stages. Just curious, maybe sort of the contribution you saw in the quarter from that, and maybe just give us an update on what you're seeing, how we should be thinking about layering in the benefit as we look to the rest of 2026. Maybe Jen, just real quick, any comments on sort of the step-up in corporate expense in the quarter? Thanks.

Yeah. Hey, Charles. Good morning. I'm not entirely familiar with any news on REVLIMID lately, but that started going generic about four years ago. It's been fully generic for quite a while now. There's really been no change whatsoever to our expectations this year.

Yeah, from a corporate standpoint, Charles, we did see an increase as we continue to increase some investments across key hires, including some key hires we have in a couple different business roles as well as corporate leaders that we're really excited about that are going to help drive value. We also did continue to invest in AI and automation technology projects throughout the quarter, and we'll be looking for the benefit of those to come on either later in the year or very early next year.

Our next question comes from the line of Ann Hynes of Mizuho. Please go ahead, Ann.

Great. Thank you. I just want to focus on gross margin in the pharmacy segment. It was up year-over-year 40 basis points, but it was down sequentially 70 basis points. When I look historically, gross margin is usually flat or up Q1-Q2. Can you just tell us what's going on? Thank you.

Yeah. Hey, Ann. The margins in Q2 were very healthy again and completely in line with our expectations. We had seasonality in Q1 of this year, which is very typical and typical for your gross margin to be a little bit higher in Q1 versus Q2 for a variety of reasons. On a GP per script basis, actually, when you normalize for that, our GP per script was actually up in Q2. So, I would just reiterate that in the business, year-over-year growth was still 28% in GP, higher than revenue growth. Specialty script growth in particular was 32% year-over-year and even 15% up sequentially.

Thank you. Our next question comes from the line of Scott Fidel of Goldman Sachs. Please go ahead, Scott.

Hi, thanks. Good morning. Would be interested if you can maybe parse out in the infusion business, maybe talk about how growth in the chronic versus the acute segments looked in terms of anything to call out year-over-year or sequentially. Then maybe just talk about in terms of the continued sort of investment and build-out in the chronic infusion side of the business in terms of momentum there, in terms of manufacturing engagement or demand or any other milestones you'd want to call out. Thanks.

Yeah. Hey, good morning, Scott. Yeah, look, we continue to be really positive on the infusion market, notwithstanding some things here and there. It's a $20 billion market, still pretty fragmented, and less competitive on the acute side for a variety of reasons, just given the demands of service delivery requirements there. But within that market, I can say that our acute volume year-over-year was up over 20%, which is what? Some 7x-8x what that market grows at. So, some of our investments really pay off, and I think as we sit here today, there's another 12 states-15 states that we want to be in over the next five years. So we really view infusion as a long-term play here where we can continue to grind away. On the chronic side, we're still making progress, nowhere near where we want to be.

Nevertheless, the volume growth on that side of the business year-over-year was close to 20%. We've done some things like roll out white glove concierge programs for things like IG. We've seen that increase our conversion rate noticeably in the quarter. We're going to do that on some other target therapies. We just continue to invest in that into the business in terms of capabilities and infrastructure. We've got a key AI project going on on the intake side. We've made some key hires, upgraded Chief Financial Officer in the business within the last quarter. Some commercial investments as well. Brought in new leadership from a data analytics standpoint. We're starting to put this business together from a payer and purchasing standpoint in a more integrated way with our PharMerica business and all of that scale over there.

We see a lot of benefits from that in the future as well. It's been a really productive quarter in that business, but remain, I would say, more enthusiastic from a long-term perspective.

Thank you. Our next question comes from the line of Pito Chickering of Deutsche Bank. Your line is open, Peter.

Good morning, guys, and thanks for taking my question. Can you talk about the ramp of the LDDs in the back half of the year and how to think about the contribution of revenue and EBITDA? Any color if you'll be involved in drug when it launches in the fall? How should we think about the overall EBITDA seasonality in 3Q and 4Q?

I'll let Jen handle some of this. Pito, good morning. We remain really enthusiastic about that business, just given we've already won 12 LDDs to date this year. As mentioned in the script, not only are we continuing to try to be the best oncology partner we can be within, I think one of the more dynamic and innovative spaces within the specialty market. We're really leveraging those capabilities as much as we can, not only from an operational, but from a commercial perspective and field perspective to extend our partnerships outside of oncology. We have a lot of those today, and some of our most, I would say, exciting wins here going forward have actually been outside of oncology now.

We're not at liberty to talk about any specific drugs. We're well aware of the situation you referenced, and again, I think we're always leveraging our unique operational capabilities and our customer satisfaction feedback and our value-add wraparound services for manufacturers, which include patient contact centers, nursing services, 3PL, data analytics agreements and capabilities. We just continue to lean into those as much as we can and leverage our track record to put ourselves in a great position, to continue to be a partner for a lot of these just incredible therapies that are in the pipeline. Optimistic about it as well. The year is playing out as planned, if not a little bit better than planned, and we couldn't be more enthusiastic about the future.

The only thing I would add, Pito, in terms of growth through each quarter of 2026 and our guidance, we have delivered a very strong first half, $206 million in the quarter. We expect quarter-over-quarter growth continuing for the rest in the balance of 2026. We do expect that growth, quarter-over-quarter, to be very similar. Q2 going to Q3 going to Q4, we expect continued growth and that to be very similar to Q3 and Q4's growth to be similar to each other.

Last year, second half, for a variety of reasons, and catalysts was a really huge second half, and we're going to be lapping that. We still expect robust year-over-year growth. If you look at the first half versus our guidance and the high end of the guidance, that obviously implies pretty good continued growth throughout the year.

Thank you. Our next question comes from the line of Stephen Baxter of Wells Fargo. Please go ahead, Steven.

Hi. Thanks. I'm going to get an update on pharmacy sourcing initiatives as you continue to build scale. Relatedly, we saw some headlines recently about the potential for generic tariffs starting in a couple of years. How are you thinking about the potential impacts of that, and how do you build contingencies for that into your contracting? Thank you.

Yeah. I would just say from a purchasing perspective, that's something that we've had a focus on for a decade now. If you look at our value proposition as a home and community healthcare company targeting what we believe to be the most attractive markets and those of highest need, then just leveraging our scale and our operating and commercial capabilities, that scale component has been a focus for us for a really long time. So, we continue to do what we can there. I think what we've done more and more over time that we're continuing to do is to really try to be one face to a lot of our external partners, to be able to leverage that scale as much as we can. We'll continue to do that.

From a tariff perspective, there continues to be a lot of noise, nothing that has impacted the company to date. We're pleased that the Trump administration has pushed any potential tariffs on generics to 2028. We continue to be flexible, as Jon mentioned, in our purchasing contracts. There's a lot of opportunities to buy drugs from different locations. We continue to monitor that closely, we'll obviously continue to exercise good judgment as best we can as we approach any tariff impact that there could be.

Yeah, look, the good news is generics are obviously a lot lower cost, right? For that reason, as we look across our business and take a view of it, when you look at the product by product, business by business, that's not something that has us concerned as we think about our long-term growth algorithm and adding up all the different growth pieces that are going to go into it over the years. We don't view that as something that's worrisome.

Thank you. Our next question comes from the line of A.J. Rice of UBS. Please go ahead, A.J.

Thanks. Hi, everybody. I'm just interested maybe in pursuing a little more Jen's comments in the prepared remark, that you were looking at options for evaluating what the optimal capital structure is for the company going forward. I know you've gotten rid of or gotten the proceeds in now from the community living divestiture. Are you thinking maybe you can lean into acquisitions a little more? Maybe give us a little flavor of what you're seeing in terms of the pipeline as well, or is there something else you're looking at in terms of commenting on optimal capital structure?

A.J., thank you so much. We appreciate the question. We're really proud of the work that we've done from a balance sheet perspective with our leverage at 2.15x at the end of this quarter. We really are excited about the position that puts us in. As Jon mentioned in the call, I mentioned in the call, we were able to reduce our interest expense. We continue to look at what makes sense from a capital structure perspective, especially with the ratings upgrades and what makes sense there. We do believe that we will continue to be able to lean in on M&A, and we have a very robust pipeline, as Jon has mentioned, that continues to be very robust, and we're excited about the back half of 2026 and into 2027, that the balance sheet position has really given us a lot of flexibility from a capital standpoint.

Hey, A.J., good morning. We're actually thinking about adding to that M&A team. We've got seven people on the team already. They do a great job. Really the hallmark of our M&A approach over the last 10 years now has been really targeting tuck-ins and geographically adjacent areas, where we can apply better operational capabilities and synergies to drive a lot of accretive deals. We operate in massive markets. Some of our markets don't really have acquisition opportunities, you look at home health, hospice, rehab, infusion, primary care, home and community pharmacy, those all do. The ability to be the scale provider across these markets and leverage all of our scale synergies and operational capabilities is just a really big value proposition.

I think that's something that, particularly from a smaller tuck-in perspective, we'll probably look to even increase the frequency on. In terms of medium to a little bit bigger sized deals, and for us, bigger is still always probably less than 30% or 40% of EBITDA. That pipeline continues to be huge and long, and we continue to get people who proactively approach us, who really want to be a part of our enterprise as a long-term home. Some people out there always do and are increasingly doing goofy things on prices and valuations in some of these markets that go well into the 20x EBITDA. We just stay incredibly disciplined. We pick our spots and we've got our hit list right now, and we'll see if they work out or not.

It's always got to meet our criteria and we always try to make everything work in the equation, and stay pretty disciplined. Great to see where the balance sheet has evolved and, I mean, we'll do over $600 of OCF this year. The free cash flow is not going to be far behind it. I think we're just really pleased with how that's played out over time.

Thank you. Our next question comes from the line of David Larsen of BTIG. Your line is open, David.

Hey, can you talk a bit about your selling efforts and how they've evolved? If you're talking to an acute care IDN, what is the value prop to those hospital systems? How much time do you spend selling to the actual health plans? Are they encouraging their networks to work with you? How many reps do you have, like commission-based reps, really, if any? Just how that has evolved over time. Thanks a lot.

I just think fundamentally our value proposition is to be a leading partner where we can deliver hopefully some of the highest quality services to payers and to hospital systems and to ACOs, to everybody. Really help in particular in those first 30 days-60 days post-discharge to reduce unnecessary bounce backs and any ER visits. That's what we've been really focused on for years, Our ability to be a preferred provider in a narrower network, with ACOs, with some hospital systems, with payers. We've seen the ability to execute on those agreements here over the last couple of years, and it will remain a really key focus for us. I think in part, that is one reason why we're seeing growth rates well above the industry averages here.

I mean, even on the provider side, David, while the business grew over 30%, all in from an EBITDA perspective year-over-year, I mean, organically, we were just a touch under 20% on the provider side organically. I think that's at play. It starts with our quality. Then you've got to be a great partner, Johnny on the spot service all day long, with thousands and thousands of referral sources and hundreds of thousands of patients on a daily basis. We have a lot of individual clinical liaisons across our service lines that are in doctor offices and hospital systems every day. I mean, if you look across the breadth of the company, it's probably near 1,000 clinical liaisons across our service lines, just doing great educational and support work every day.

I think our ability to more formalize post-discharge programs and enter into even more preferred agreements with individuals. There's only more and more opportunity and a lot of opportunity to do that. Building on some of the things we already have done in that area, which has been a part of our volume growth.

Thank you. Our next question comes from the line of Sean Dodge of BMO Capital Markets. Your line is open, Sean.

Yeah. Thanks, Todd. Good morning. In pharmacy, the IRA headwinds this year, Jen, you said, $200 million now to home and community. I think you said before $175 million to specialty and infusion. Is that still what you're expecting for specialty? Then is it too early to tell, are there kind of any directional indicators you can give us on the impact, either in aggregate or by sub-segment there, what the impact from the next round next year will be?

Yeah. Thank you. IRA for home and community is just a touch higher than where we were based on our sale of the drugs this year. It's about $200 million that we expect for the balance of the year. Or not the balance of the year, for the full year, about $50 million worth of impact in each quarter. The EBITDA impact remains about the same as we had previously expected and stated, which is $15 million for the year. That's for home and community, IRA impact, and specialty. Just as a reminder, from an EBITDA standpoint, it's really nothing. From a revenue headwind standpoint, does remain around that $175 million for the year.

We try to get well ahead of this from an operational perspective. A lot of the things we've done on technology and automation and AI last year and now this year are going to play out into next year as well. Now that IRA thing needs to get fixed.

It's still broken in its approach and how it was applied to the industry. We're doing everything we can from an internal perspective to control what we can control. The team's operational execution this year has just been phenomenal. We're seeing that play out in the business, and it'll continue to play out next year and makes us optimistic about the prospects for that business this year. It's going to have an up second half, had an up second quarter, and there's some good drivers there for next year from an operational perspective. In a lot of these growth markets that we're in, like ALF and behavioral. Unfortunate that we have to deal with some of these unintended consequences, and things that occur on some of these legislative items. We continue to work our way through it.

Yeah. Just to your question on 2027, the drugs, they selected the largest drugs first. As we think about 2027 impacts, really from a home and community standpoint, it's about 50% of the impact that we had in 2026 is our best view. Obviously, we continue to work, as Jon mentioned, from a regulatory standpoint, and then also on payer contracting to mitigate the impact for 2027, in addition to the work that we're doing operationally.

Thank you. Our next question comes from the line of Joanna Gajuk of Bank of America. Your line is open, Joanna.

Hi, good morning. If I may, still have a question on the discussion around the gross profits in the pharmacy segment. Like you said, the gross profit per script was up 28% or so year-over-year, but I guess sequentially it did decline slightly. Right? Is that the new sort of number, the $27.50, call it, gross profit per script, as a good number to think about going forward? Is there more, I guess, growth that we should assume for that metric going forward? Kind of remind us the main drivers and specifically if there's a way for you to help us quantify or understand the impact of the fee-for-service revenue adding to that metric as well. Thank you.

Hey, Joanna. Good morning. I would just take a step back and just sort of, as we think about the broad growth of the company, really pleased across the board with what we've done, not only on the pharmacy side, you look at the provider side, 44% and 30%. We always think about the company just from a total growth perspective and go from there with all the different pieces in the organization. Within specialty and infusion, a lot of different levers there and a lot of different moving pieces that all contributed to the quarter. As you said there at the end, fee-for-service is certainly one of them. We've really focused on having best-in-class wraparound services to support our manufacturing and biotech partners and all of their patients, and five or six different dimensions of what we offer them, from a partnership perspective.

That capability set and the volume of patients we're serving and the amount of manufacturers we're serving with those wraparound value drivers does continue to increase at a very healthy clip. It, but very was multifaceted growth, not only across the enterprise, but within specialty and infusion. You had the acute business and infusion doing really well. The chronic business is growing their operational efficiencies. We've actually won five LDDs in infusion in the past six months, too. We're turning our focus from an LDD perspective, leveraging our know-how on that side in the oncology world to infusion, too. You look within specialty and the 12 LDD launches this year, eight networks to four exclusives. You've got the fee-for-service, you've got OPEX per script leverage, and you've got continued partnership as we help drive generic conversions as they come out.

There's a lot there, and we're always focused on a lot of different growth levers. GP per script in the quarter was up sequentially when you adjust for some typical seasonality and some items that occur in Q1. As we look to the rest of the year, we think that is a pretty stable level. Everything is within our expectations right now fully. As we think about the rest of the year and next year, nothing has been outside of what we would have expected whatsoever.

Thank you. Our next question comes from the line of Whit Mayo of Leerink Partners. Please go ahead, Whit.

Hey, thanks. Good morning. Jon, you've talked about acute infusion as being an area of focus for the organization. I was just wondering if any of the potential 340B changes sort of impact your views on that.

Hey, Whit, good morning. No, that is not a meaningful part of our infusion business.

Thank you. Our next question comes from the line of Raj Kumar of Stephens. Please go ahead, Raj.

Hi, good morning. Maybe going back to the generic conversion component of the growth here, as we think about 2027 and that pipeline, maybe any way of framing what the branded versions of those drugs make up in the current script that you're seeing year to date, as we try to frame the opportunity for 2027? Thank you.

Yeah, the brands going generic that we see in 2027 will probably happen later in the year, which would be our expectation right now.

Thank you. Our next question comes from the line of Matthew Gillmor of KeyBanc Capital Markets. Please go ahead, Matthew.

Hey, thanks for the question. I wanted to see if you could frame up the rare and orphan opportunity relative to oncology, and then can you help us think through any sort of augmentation or investments into the sales force that needs to go along with that? Or does that leverage the existing sales force within specialty pharmacy?

Yeah, on the latter, you're exactly right, and I think that's something that's really interesting to us. We've got several hundred folks that are clinical liaisons working across thousands of prescriber offices today. I think some other niche companies that have only focused on rare and orphan in the past don't have a sales force. We've got 155 LDD programs and 15 years of experience in that area. It's not one or two therapies that we're supporting outside of oncology. It's quite a few. We've had some really noteworthy wins there here in the last six months, which has been terrific to see, and it's been based on the long track record that we can point to across our history of other LDDs.

We can 100% service almost any other therapy outside of oncology within the world that you reference, and that's why that's an obvious area of strategic growth for us. That market is sizable. I don't think it's nearly as sizable as oncology, but it is sizable, and we wouldn't be spending time on it if we didn't think it could be a meaningful contributor in the future. It's nowhere near as big as oncology, but it is an interesting market.

Thank you. Our next question comes from the line of Jared Haase of William Blair. Please go ahead, Jared.

Thanks for squeezing me in here. Maybe I'll drill back to your comments about seeing retention at all-time highs in the home and community business. I'm curious, would you primarily attribute that to some of the technology initiatives that you guys have put in place, or is there anything else that you would call out driving that retention? I guess how much more incremental opportunity do you see to push retention higher as another growth lever going forward?

Yeah, Jared. Hey, I really appreciate that question. That's been an area of focus for a really long time. It's really fundamentally three things. We continue to invest in our individuals from a compensation and benefits perspective, and that's been a continued focus for us, and we've been able to do that within our financial performance here for a really long time. We want to attract really good talent and the best talent, and so I think we've really tried to reward our people as best we can. I would say to your point exactly, number two on technology and process, how do you try to make the job as efficient as possible for people so they don't have headaches?

We've tried to be really innovative with our approaches there and lean in to give them every ability to focus on the patient as much as they can versus some of the headaches administratively and with paperwork that you might face. That's been a huge area of focus for us, and we continue to do that. I would say just really third, from a training perspective, it's a huge investment for us. We try to make sure the onboarding experience is as seamless as possible, and people get trained, and they're invested in from a talent perspective and a development perspective, too. We have all sorts of programs in the company where people can graduate through and move up and be advanced in their career at the organization.

People and talent management is kind of a passion for us here, and the bigger we get, we just try to invest more and more in that if we can. Then culturally, we just try to be a good place to work. We focus on the mission every day. We try to reward people, and try to create a very mission-focused culture where everybody's really respectful of what we're trying to do here and each other, and I think it's a place people like to work.

Thank you. Our next question comes from the line of Erin Wright of Morgan Stanley. Please go ahead, Erin.

BrightSpring Health Services Q2 2026 Earnings Call Transcript | Fortune

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BrightSpring Health Services (BTSG) Q2 2026 Earnings Call Transcript

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