There's this one. All right, good afternoon. Thank you for joining us for the next session here at TD Cowen's 46th Annual Health Care Conference.
We're really pleased to have with us BrightSpring Health Services. To speak with us today is Jennifer Phipps, Executive Vice President and Chief Financial Officer. Jennifer, thanks for being here.
Thanks for having me.
Well, a lot of good things happening at BrightSpring. You everyone reported a very strong end of the year, gave very positive guidance for this year. M aybe if you could just kind of sort of recap a little bit sort of the outlook for this year and sort of some of the big pieces to think about in terms of. I guess particularly when we think about the EBITDA guidance that you gave.
No, thank you. I would say, we expect another year of broad-based growth across both our pharmacy and our provider services business. Y ou will, end up seeing strong volumes that are underpinned by our high-quality services that we have across all of our different businesses, as well as margin expansion that's going to come from a couple of different things, our operational efficiencies and processes that we are very focused on every year.
We think there's additional opportunities for that again in 2026, we're very focused on achieving those.
Certainly, W e think that there's a favorable mix, that we would expect as well in terms of both growth in provider and where that growth is coming from, as well as that will be accretive to margins, and then on the pharmacy side, the mix of drugs as well.
When we look at the EBITDA guidance of, sort of $760 to 790 million, if we back out the contribution from the assets from Amedisys LLC, we're looking at core growth, 18% to 23%, obviously very strong here. Maybe help us a little understand anything within that. You said kinda broad-based, but maybe focusing first on pharmacy, between specialty pharmacy versus home and community, any kind of differentiation you'd like to point out?
From an EBITDA standpoint, we do expect continuation of strong volume growth, again, underpinned by our high-quality services. I would expect 2026 to look to at least be consistent with 2025 in terms of specialty and infusion, having larger script growth opportunities, as well as, we're focused on home and community pharmacy script growth. We will have some headwinds in scripts on home and community that we're lapping year-over-year associated with a couple of focused efforts in terms of customer profitability and divestitures that took place in that business starting in Q3 of 2025. Ultimately underpinned growth outside of those items.
I know a lot of folks are very much focused on generics and generic introductions. You highlighted on the earnings call, a few that are coming that you're pretty interested about. As we think about the contribution from generics in 2026 versus 2025, would you say that's the same?
Are you expecting more contribution from generics this year versus last?
We continue to grow our generics. Because there will be a couple of new generics, Pomalyst will be going generic in early Q2 of 2026, and then lenalidomide is finishing going generic in Q1. I think those will just continue to grow as we'll have additional generic portfolio products that we'll be offering.
I have to ask a question, you know, if we think about terms of EBITDA growth, how much would you say comes from, Like, how much is generics as a, as a mix?
Is that a bigger part of your portfolio that's contributing to growth?
what are the bigger drivers of growth?
We haven't quantified the impact specifically associated with any particular products or product sets. A gain, there is going to be broad-based growth. Generics will be a contributor for EBITDA growth as we grow the scripts in our, in our generic drugs. We also will have LDDs, new LDDs that we will be launching. W e expect approximately 16-18 new generic launches, or I'm sorry, not generic launches, LDD launches in 2026. We are going to continue to see growth associated with our 25 and 24 and 23 class of launches that we will have that will be growing into 2026. As we leverage our scale, we also will see leverage associated with those scripts and revenue growth.
We will definitely see leverage in our EBITDA margins as well.
One of the things that you also guys highlighted was sort of some headwinds from IRA this year. Y ou quantified it as sort of $35 to 40 million of sort of an unmitigated kind of headwind. Obviously, you are looking to mitigate some of that. Can you talk a little bit more about, how are you mitigating those that headwind?
That is, while there's revenue impact in both our specialty and infusion as well as our home and community pharmacy, our EBITDA impact is in home and community pharmacy. Consistent with Q3, we have mitigated to approximately $15 million of impact in 2026, where we stand today. How we've done that is, we have been negotiating with our with the PBMs on an e-enhanced dispensing fee, we continue to work through that productively with a couple of additional PBMs. Hopefully we'll have some additional mitigation that ultimately we will have throughout 2026. To the extent that there's no further mitigation, that's what we would expect. You know, despite that headwind, we still expect growth in our home and community pharmacy business in terms of EBITDA growth.
We're very focused on volume, growth, which we do expect, EBITDA contribution for, as well as operational efficiencies, that would have otherwise been, additional growth in the year. We've been able to, work to offset some of that.
If I remember correctly, right, was it Congress that had kind of said, "Hey, look, you know, understanding the impact of IRA, you know, PBMs should do something to help, you know, providers offset this impact."? Is it just a timing effect of having these discussions, or is there any pushback that you're getting from PBMs related to this?
In, I believe it was Q3, CMS did direct the PBMs to give an enhanced dispensing fee to help cover or to mitigate the impact of IRA for pharmacies. I mean, it's a, it's a real problem for our industry, and definitely something that, you know, we have industry experts advocating for. Our government relations team is very actively working with regulators to make sure they understand the impacts of this. While we are a scaled pharmacy provider and provider services, that's allowed us to navigate this impact. As I'm sure you can imagine from a home and community pharmacy standpoint, it really is pretty significant to the industry and definitely something that hopefully will ultimately be mitigated further.
Do you think that creates opportunities as it is obviously pressure across the industry, for you to gain incremental share, in this kind of environment?
Certainly, we are hopeful that there will be full mitigation for the pharmacy industry as we think that is very important, and that there were unintended consequences associated with the IRA that are directly impacting the pharmacies to the extent that that provides opportunity for share gain because of our ability to navigate that. You know, certainly we would be, you know, looking for that. Certainly I Congress acting or the PBMs is definitely important for the industry.
Understood. I think one of the interesting things coming out of the call last week was sort of the three LDDs that you're having in infusion. Infusion has been an area where it sounds like there hasn't been as much focus historically. Maybe talk a little bit about, what's changed there, maybe why the focus has kind of come back over the last several quarters or last year, and maybe some of the changes that you've put in place to take advantage of this market.
We are very excited about the new operational team. We've talked a little bit about that over the last couple of quarters that we have in place in our home infusion business. We are focused on both the acute and the chronic market and working on strategies across both of those markets. One example would be having dedicated business development and sales force teams that are focused individually on each of those markets, which are different re-referral sources. We recently hired someone who, you know, had previously worked in this area and has previously done, you know, LDD in home infusion.
We're really excited to bring his expertise along with, working with our trade team on the Onco360 CareMed side and their expertise to develop further relationships and see how that can be beneficial from home infusion standpoint.
I think Jon said on the call that in addition to the 3 LDDs that you announced, and maybe up to 5, it sounds like, you have access to 30 other LDDs. Maybe just clarify that a little bit. Does that mean you are in these limited networks already but don't have really any share for those drugs or, you know, what is your share for those LDDs? Because if you're already in a limited network, maybe help us understand that a little bit better.
Just a brief reminder that LDDs in the home infusion space are a little bit broader than how we think about LDDs on the specialty oral and injectable standpoint, where when we talk about LDDs, we're really talking about drugs that go through a market of one or two pharmacies because the specialty pharmacy channel largely can cover the whole country. In home infusion, those LDD networks are a little bit broader. We had access to those within our portfolio of specialty drugs, but our focus on those drugs was not where we want it to be and where we are focused on it being for the future.
How broad does those networks tend to be? It's sort of like these companies will pick, like, a set of provider networks to get coverage of the country. Is that the way to think of it?
That's right. Home infusion is really a local business.
Yeah.
It is really. it's important that these manufacturers have a little bit broader of a network in order to get the coverage that they need for their drug.
You mentioned that you're focused both on acute and chronic. Which is the more interesting part of the market for you? I'd imagine it's chronic really where you want to spend more time as we go forward, or how do you guys think of both sides of that?
We really think both are equally interesting. From an acute standpoint, we've largely been focused on acute over the history of our business.
We have a long history of really high-quality services and being able to meet patient demands there. We think it's also interesting to have both acute and chronic specialty focus in order to get the best rates with payers, you know, to be more relevant in terms of the drugs that we're dispensing. I think we're really focused on both, but what we're doing is we're trying to make sure we have people that are focused on both focused solely on an individual channel, as opposed to having to use their time to focus across multiple channels. We think we'll be much more effective by having really focused efforts in each of those channels.
Okay. Before I move on to provider, maybe one more question, or maybe a couple more. We, we talked about the unmitigated or the, you know, the unmitigated impact of IRA this year. Obviously, as we look out to 2027 and 2028, there are some more drugs. I think for 2028, there's maybe a handful of oncology drugs in Part D that would suggest that would be more perhaps on the specialty pharmacy side.
Maybe talk through how you're thinking about those as they come up, and how do you set up yourselves to, you know, sort of ahead of these kind of events?
I think IRA largely 2026 was the largest class of drugs, and they selected, you know. Really, as you think about the impact to us over the course of time based on the drugs that we're aware of now, really it, the impact diminishes over time. The impact to 2027 is about 50% of the impact to 2026, assuming no changes to how mitigation works from an EBITDA standpoint. It really was set up to address them, I think, in the most meaningful way, and so that really is how it plays out, at least based on the drugs that we're aware of through 2028.
Is it fair to say, like, how much smaller would you say the impact in 2028 versus 2027 is? Is that maybe another 50% or?
We haven't necessarily quantified that publicly, I would say just as a reminder, we in those specialty drugs, the drugs that are on that list, there's a couple of things. One, couple of those drugs are set to go generic very shortly thereafter of the IRA timeline. Separately, assuming that those would go on the same timeline. I think the other piece is in the specialty pharmacy network, we are able to have we're negotiating directly with manufacturers. It's a little bit easier to negotiate mitigation on those drugs, historically when they're going through a very small channel.
Got it. Then maybe talk about mitigation efforts. It sounds like you've come to agreement with one payer or one PBM, if I heard that correctly. When you think about. How are the discussions with the other PBMs going? Would you say that's kinda progressing, or would you say it's a collab? I mean, is that sort of an understanding kinda event where everyone kinda understands the need for something like this and it's just kind of agreeing to the right terms or?
We've negotiated mitigation with many more than one.
Okay.
I would say the majority of our PBMs, we have some mitigation that we've already negotiated. We just aren't at the level where it's a full mitigation.
I see. Okay.
In terms of what they are covering from a dispense fee.
Okay, that's helpful. Maybe shifting over to the provider segment. Obviously, a lot of people have been focused on it. I know it's not that a big part of the overall mix when we think of provider, but obviously, we had, you know, sort of a, not a great home health reimbursement rates. I think the expectation is this year is probably also not gonna be spectacular by any stretch. You know, how did the final rates kinda come out relative to your expectations, and sort of how are you thinking about this year?
We were very pleased to see significant mitigation from the preliminary to the final rule in 2025. CMS has consistently recognized, you know, in how they've gone from preliminary to final rule that they cannot significantly cut this essential program. Home health outcome data is really evident in terms of what it drives in terms of the cost versus hospitalization from a care standpoint, and we believe that CMS recognizes that and did recognize that in this final rule. We'll continue to work with industry and helping lead government relation efforts to make sure that Congress and CMS understand the importance of home health, which we do believe provides critical reduction in costs and improved outcomes versus other scenarios or versus not receiving that care at all.
Maybe asking another question here. Following sort of as we you know, complete the sale of Community Living, business, do you think, you know, as you look at the portfolio that you have, any other potential divestitures you know, is possible, or do you feel like what you have is a pretty good base and would actually like to add instead?
We really like the assets that we have. We also really love the Community Living business. We just felt like it made sense for a couple different reasons, including streamlining our operational processes largely focused to seniors and specialty drug populations across our services. You know, we really feel good about the assets that we have, that they provide a lot of the services that seniors need in terms of their care. We think that that is really important.
Okay. Obviously, you just completed the acquisition of assets coming out of Amedisys. You know, a fair bit about it, you know, last week. You know, one of the things that kinda struck me is that, you know, the margin profile which you bought and for revenues, $30 million contribution is about. Your provider segment is 16%. Does seem like communities are, you know, incremental, is coming out of this as you integrate into the platform. Maybe talk a little bit about the opportunities there and sort of what timeframe would you expect that to occur?
Yes. We do expect additional opportunities in the margin as well as growth to have those branches as part of our family of brands now, as part of in-home health business. We think that those and branches are all really exciting part of our team. We're, you know, personally been to some of our operations, really excited. We think in terms of positions, this was just hand in glove in terms of CONs, large CON states and geography. We did not exist in terms of presence, giving us more opportunities for multiple services across different states. A lot of states where we had hospice branches, but we didn't have home health as an example.
We're really excited about what that is gonna do in terms of opportunities across our businesses, being able to provide more service to the customer serving. It relates to the margin profile. We do expect that to move up. We are being very full in terms of the integration process, making sure we have the right resources and investments in this to be an extreme successful and move through 2026 and into. I would expect us to be really run rating at the while the health business is run rating up.
When we look at the guide, though, right, it's only including $30 million contribution for. Is it, is there anything that you're not in benefit with some of those kind of benefits this year, or so could that be potential upside as we think about numbers?
We're gonna be really thoughtful again about the integration of that business and what do we think is the appropriate level of support that they need during 2026, especially where we're gonna be integrating that business. Could there be upside possibly late in the year? Maybe. You know, again, we're really focused on getting that business, you know, fully integrated, assessing, having the right level of travel and meetings, IT support estimates to get them onto our platform, which, you know, we've burdened for the long-term success of this acquisition.
That makes sense. As we think the pipeline, you know, I think Jon to Friday, right, has, you know, never been more excited by not there and a lot of opportunities. Maybe talk a little bit how you're thinking of opportunities right now. Is this something where you're gonna take some time to digest for kinda maybe give a thought on that?
Maybe now is, like, the perfect time to actually talk a little bit of our balance sheet. One of the things that Jon and I are extremely proud of is what we've done from a leverage standpoint. We were at 4.5 times, really at the high point post-IPO. We were at 2.99 times, you know, ending this year, 2.6 times if you pro forma for the Community Living transaction at 12/31/2025. That's important because our long-term leverage targets are about two and a half times or below. Outside of M&A, we would really be under 2 times levered at the end of 2026. We're really being thoughtful about the M&A opportunities. We have a near perfect track record of taking acquisitions that we've acquired and improving those.
We're really excited about, you know, we've always been very excited about the opportunities ahead of us. We've always had a very robust pipeline, although over the last couple of years, we've been focused on deleveraging. I do think that there's going to be additional opportunities. I believe that we'll continue to do the small tuck in under $1 million deals that we've always done, and those have been very positive and highly accretive to us. I do think that maybe towards the end of this year, we're going to, I think, be very busy with the integration of the Amedisys LHC acquisition, as well as the divestiture of Community Living in the first half of 2026.
Not to say that we won't be focused opportunistically on M&A, but I do think, you know, really sort of getting past that, let's call it like, you know, end of Q2, I think you'll really see us start to pick up, or at least our internal activity will pick up as it relates to the deals that we're be doing. Our pipeline has never been larger in terms of opportunities. Most of our deals have been proprietary deals. We continue to have a very robust pipeline. As we think about how we allocate our resources there, we're definitely much more interested in home infusion deals than we were than we were a couple of years ago.
We feel like we've got the right operational processes in place, and I think as we think about that, it'll be geographically in, you know, what is geographically interesting to us as we, you know, think about expanding our markets. I think that's how we'll be thinking about infusion deals. I think from a provider standpoint, we'll continue to be interested hospital. We have home health, I don't get into deal unless it's, you know, something like that in a geography we find really interesting. I think those will be the types of deals we'll be focused on. Later in 2026 and into 2027.
Obviously with the sort of the cash flow that you're starting to generate, right? Obviously, this past year and as we think about going forward, now that let's assume I think you've said, you know, the majority of Community Living proceeds will go to. I Was that the exact words?
Yeah.
Forget exactly what you said. Was it a large amount or did you say a majority?
Yeah.
Large portion. Like, how much of the proceeds from Community Living will go to pay down debt?
We're still evaluating that.
Yeah.
given where we expect to be from a cash standpoint. We absolutely do expect to pay down some of our debt, and then we're thinking about what opportunities we have ahead of us.
Yeah.
Whether or not we want to, you know, what would be more near term versus not. Absolutely, from a leverage standpoint, I think we're in really good shape in terms of where we expect to be at the end of the year for what might be some additional spend.
So the point being is that if you think about that, your leverage is actually probably below 2. Have you thought about deployment beyond just M&A? Have you thought more about more share repo? You've done a little bit here and there, but, you know, how do you think about that versus, you know, now that you've paid down as, you know, probably enough debt to be kind of okay at the moment?
We're obviously evaluating all of the options available to us. We do think that we do a good job of deploying capital in the M&A that we have done, and we continue to believe that that's going to be an opportunity for us to drive shareholder value in the future. I definitely would expect us to continue to do M&A. Certainly participate secondary offering that in October and wait when that makes sense at individual time. At this time, I would not expect a broad share repo, and that's not something our board has approved. I think as it relates to potentially facilitate an transition our shareholders have, I think we continue to evaluate the value of that to the market, if that's helpful.
That is. Today is coming up in a couple weeks here. Let's just help sort of what to expect, you know, what you're planning to focus on, discuss. I know you have a little bit of a pharmacy tour as well, and maybe
We're really excited for our investors and our analysts to get a chance to meet our management team. Largely, I think you've only really met Jon and I. We're gonna have our different leaders from various different businesses.
They're gonna be talking to investors. We plan to give, you know, a framework and give better understanding of the opportunity sets within each of those different businesses. Hear directly from those operators about what are they focused on, what are they excited about, how do they see the markets that they're operating in. We will provide some information around capital. You know, we'll be talking a little bit more about M&A opportunities with our lead of corporate development and how we think about cash flow deployment over the course of the next couple of years.
As we think about a framework for how to think about the growth opportunity set in each of our different businesses, that is what we're planning to talk about.
If I can parse that a little bit, is that to say you're gonna give us a framework for how to think about like sort of a long-term targets, or is it maybe a little bit looser than that?
We're gonna give a framework of how to think about the long-term targets and what we think the growth opportunity set looks like in each of our underlying businesses.
Okay. I guess I can try to push a little more, but maybe I'll shift gears. How about this? You know, I know that what you've said is that you've consistently looked at sort of a mid-teens growth as sort of, you know, what you feel very good about and able to do sort of year in, year out. Obviously, this past year grew much faster than that. the guidance this year is for growth faster than that. When we look at particularly generic introductions expected this year, we look at, you know, biosimilars coming, you know, understanding there's some headwinds, let's say, from IRA, it's hard not to see that growth continues to probably be north of that sort of mid-teens. I understand that, you know, from setting targets, you know, maybe that's not where you wanna be.
Is there anything wrong in the way I'm kind of framing it that sort of the tailwinds that we're seeing are such that, you know, to be able to at least grow that mid-teens, but if not, you know, possibly better, at least the groundwork is there for that, would you say?
W e are focusing every year at, maximizing the opportunity set in front of us associated with each year, balancing that with investments that we wanna make. I think we've talked a lot about over the course of the last year, investments that we made, for example, in 2025 that we thought were gonna lead to growth in 2026 or 2027. We're thinking about 2026 the same way. What are the opportunities that we have for investment in 2026 that's gonna lead to growth in 2027 and 2028? We are balancing maximizing those opportunity sets in front of us along with, investments that will benefit future growth and give us more confidence and visibility into those growth opportunities.
you know, I think we also are very focused on maximizing, you know, opportunities that are ahead of us in each year.
Yes. Is that the... All right. In the last sort of 30 seconds, you know, anything that we should be focused on that maybe I haven't asked you about, but when you're looking sort of the business, anything that you pay more attention to than maybe others that, you know, we should also be focused on?
We are, you know, really excited about our volume growth opportunities that we have ahead of us in each of our different business lines that is underpinned by our really high-quality services that we have, that we continue to invest in and grow. We're focused on making sure we have core growth activities and, and action plans associated with each of our different businesses. The other thing that we're thinking about is how can we, and Jon's talked about this, about the strategic growth channel. How can we think about across our different business lines, continue to create opportunities for whether it's referral channels, how do we better go to market to customers in a more comprehensive way?
Those are things that we're very, very focused on inside our organization, which we think are gonna provide even, you know, more tailwinds into the future.
All right. I think we'll leave it there. Jen, thanks so much for being here. Thank you, everyone, for joining us today.
Thank you.