BrightSpring Health Services, Inc.

Good day and thank you for standing by. Welcome to Bright Springs Health Services Incorporated fourth quarter and full year 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask the question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 11 again. Please be advised that today's conference is being recorded. We will be turning the call over to Bright Springs Health Services Chief Accounting Officer, Jennifer Phipps. Please go ahead.

Good morning and welcome to the Bright Spring Health Services earnings call for the quarter and year ended December 31st, 2023. My name is Jen Phipps and I am the Chief Accounting Officer at Bright Spring. I am joined on today's call by John Rousseau, Chief Executive Officer, and Jim Mattingly, Chief Financial Officer. After discussing Bright Spring's fourth quarter and full year 2023 results, as well as our 2024 outlook and long-term financial targets, we will open the call for questions. In the investor relations section of our website, you will find our earnings press release and slide presentation to accompany today's discussion. 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 and 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 annual report on Form 10-K that will be filed with the SEC regarding specific risks and uncertainties. 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 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 earnings press release and presentation, which again are available on our investor relations website. Additionally, to more appropriately describe business performance, the results and growth rates mentioned during these prepared remarks and in the investor slides posted to our website exclude the results of our other segment, which is the Equus Workforce Services business that was divested in Q4 2022. This webcast is being recorded and will be available for replay on our investor relations website. And with that, I will turn the call over to John Rousseau, Chief Executive Officer.

Thanks, Jen. And good morning, everyone. Thank you for joining us today. And I'd like to begin by thanking all of our dedicated and professional employees across the country who drive our mission of making a difference in people's lives and communities every day. I would also like to welcome and thank our new public company investors. We look forward to continuing our partnership with you. As a reminder, Bright Spring delivers pharmacy and provider health solutions to complex patients in home and community settings. We believe that our complimentary and coordinated portfolio of services delivers enhanced clinical outcomes in patient preferred settings and at a reduced total cost of care. And we do this at scale, serving approximately 400,000 people a day across our company. Chronic, higher cost, and higher need patients, referred to as complex, constitute 5% of the population, but 50% of the spending in U.S. healthcare. These individuals require multiple services over time, better coordinated care, and more person-centered care. Our solution for these patients is to not only provide services in lower cost preferred home and community settings, but also to do so with a differentiated care model that consists of three key pillars, including our pharmacy services, provider services, and home-based primary care. In our pharmacy segment, we provide leading infusion and specialty pharmacy and home and community pharmacy. These are our three pharmacy markets. We believe infusion to be a very attractive market given the localized and demanding nature of infusion services required to be successful in this market, continued growth potential from new therapeutics in the future, and market share opportunity. Infusion is also better positioned with customers and has sales synergies when complemented with broader specialty pharmacy capabilities, such as ours. Our oral and injectable specialty pharmacy is one of the two largest independent oncology pharmacies in the U.S. Oncology is defined by limited distribution drug pharmacy networks that are based on quality, such as our 93 net promoter score, biopharma trust and relationships, in partnership with thousands of prescribers across the country. Oncology is the largest category within the specialty pharmacy industry and growing at approximately 15% annually. In home and community pharmacy, which is referred to as closed-door pharmacy, we serve more acute customer and patient pharmacy needs in the home and across a myriad of attractive community settings by going directly to people anywhere they reside 24-7. Our network of over 185 pharmacies allows us to be at any door across the U.S. within a few hours with customized local pharmacy services and clinical programs. We believe the dynamics of these three specific pharmacy assets and markets are attractive, where service levels and quality, local and same-day delivery capability, scale, and volume growth are critical success factors. Our pharmacy segment has more than doubled over the past five years, and in 2023 generated $6.5 billion of revenue and $371 million of adjusted EBITDA. However, our pharmacy services also do not exist in isolation. They leverage enterprise best practices and infrastructure and benefit from our company's scale and contracting, and they are synergistic with our provider services and home-based primary care. Every one of our provider patients has a significant medication regimen and medication management need, and we provide the majority of the pharmacy services for our provider patients today. Our Continued Care Rx program, which combines in-home medication management alongside home healthcare, has driven a 73% reduction in hospitalization. The power of this clinical synergy between pharmacy and provider services for patients in the home was documented in a peer-reviewed study published by JAMDA last November. In our provider segment, similar to pharmacy, we are serving large and growing markets consisting of critical services delivered to homes, senior living, and skilled nursing settings to improve healthcare outcomes and costs. With home-based primary care, we are working to optimize care by going to the patient and better coordinating their services. Quality home-based primary care alone reduces hospitalizations by about 50%. And given these outcomes and this growing capability, we have sought new payment models, both internal shared savings and payer capabilities and external partnerships with payers to help more optimally manage their members. Our strategy is straightforward. One, drive organic growth in our core service lines. which enjoy strong secular tailwinds and where we have demonstrated above-market growth rates. Two, further coordinate our services and care management capabilities to drive integrated care and value-based care. And three, continue to execute accretive acquisitions to fill in geographies and drive market density and share. Most importantly, we will continue to invest in our people, our systems and processes, and our quality as key underpinnings to our strategies and our focus on growth and efficiency. As most recent evidence of this and our continued investment in people, we announced a $100 million equity grant at the time of the IPO to all full-time company employees who have been with us for at least a year, which is over 20,000 of our teammates. We are extremely excited about the opportunities in front of us over the next year and the longer term. We have strategically positioned Bright Spring to be a major player in the areas of greatest need in healthcare and in some of the most exciting growth markets within healthcare services. And I am confident that in each of these markets, Bright Spring will be among the long-term winners. For the year 2023, we are proud of our results in growing revenue by 18%, and adjusted EBITDA by 7% to $538 million, which largely reflected organic growth and was the highest point of the range previously communicated in the S-1. Q4 was another strong quarter, as we grew revenue by 22% and adjusted EBITDA by 4%. Notably, adjusted for a one-time Q4 2022 payer rate catch-up Q4 2023 increased an additional 12% as compared to the reported growth rate of 4%. Q4 2023 growth was consistent with strong Q3 2023 results, including 19% revenue growth and 13% adjusted EBITDA growth year over year. We have continued to demonstrate double digit adjusted EBITDA growth in the recent quarters and at this time expect double-digit year-over-year growth continuing into Q1 2024. For the full year 2024, we expect adjusted EBITDA to be in the range of $550 million to $564 million, excluding acquisitions. This includes the impact of approximately $6 million of new public company costs, primarily D&O insurance, and excludes certain quality incentive payments received in prior years and if received again, would result in potential upside. With the debt paydown from IPO proceeds, recent credit rating upgrades, and the successful recent completion of the company's debt refinancing at a seven-year term, our annual cash flow has increased by approximately $100 million from reduced interest expense. resulting in a strong normalized cash flow profile as we focus on driving to and below our three times or less leveraged target over time. In summary, BrightSpring is uniquely positioned to serve the large markets and growing needs in healthcare through leading and lower cost services with differentiated scale, capabilities, and historical performance. We provide critical services to people with more significant long-term needs where they are. With that, I'll turn the call over to Jim to further discuss our impressive 2023 results and momentum that is driving us into 2024.