BrightSpring Health Services, Inc.

Good day and thank you for standing by. Welcome to the Bright Spring Health Services second quarter 2024 earnings call. At this time, all 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jennifer Fitts, Chief Accounting Officer at Bright Spring. Please go ahead.

Good morning. Thank you for participating in today's conference call. My name is Jennifer Fitts, Chief Accounting Officer at Bright Spring. I'm joined on today's call by John Rousseau, Chief Executive Officer, and Jim Mattingly, Chief Financial Officer. Earlier today, Bright Spring released financial results for the quarter ended June 30, 2024. A copy of the press release and presentation is available on the company's 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 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 quarterly report on Form 10-Q that will be filed with the SEC. Specific risk factors and uncertainties can also be found in our 10-K previously filed with the SEC. 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. 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.

Thank you, Jen. Good morning, and thank you for joining Bright Spring's second quarter 2024 earnings call. I'd also like to thank all of our employees and teammates, our clinicians, pharmacists, caregivers, and administrative and support employees who work hard every day to provide needed solutions to the customers and patients we serve, as well as to our other key stakeholders in healthcare. We are pleased to report strong second quarter performance with total revenue in the quarter of $2.7 billion, representing 26% growth year over year. and adjusted EBITDA of $139.1 million, which represented 17% growth year-over-year and exceeded our internal plan. Adjusted EBITDA growth metrics throughout my remarks exclude a certain non-recurring quality incentive payment, or QIP, of $30 million in the second quarter of 2023. Within the $2.7 billion of total revenue, pharmacy solutions revenue was $2.1 billion. growing 32% compared to the second quarter of last year, and provider services revenue was $616 million, growing 8% compared to the second quarter of last year. We reported pharmacy solutions adjusted EBITDA of $94 million, which grew 19% year-over-year, and provider services EBITDA of $86 million grew 16% year-over-year. Following strong performance in the first half of the year and continued business momentum, we are raising our adjusted EBITDA guidance for 2024 to be in the range of $570 million to $580 million, representing 12 to 14% growth, excluding the QIP payment in 2023. Our outperformance in the first half and increasing confidence in the second half of 2024 has led us to increase the midpoint of our adjusted EBITDA guidance by nearly $35 million since the start of the year. Jim will discuss the financial performance and outlook in more detail in a few minutes. Underpinning Bright Spring success in the second quarter and throughout the first half of 2024 is our dedication to delivering timely, preventative, and coordinated care to our seniors and specialty patients in the home and in low-cost settings. Our platform's performance and our core strategy continue to be underpinned by three key hallmarks and strategies. First, We serve large and growing markets of complex patient populations in lower cost home and community settings, which has significant and tangible quality and cost benefits. We bring a compassionate local and personal touch and an efficient care model to these complex patients, which preserves and improves quality of living and health while lowering the risk of complications and institutional patient days. We do this through standardized best practices, the use of leading technologies, and our proactive approach to addressing patient needs. Second, BrightSpring is focused on driving outside volume growth and market share gains through our high-quality operations and sales and marketing capabilities, supplemented with integrated care as well as de novos and accretive acquisitions to deepen and expand geographically and grow our volume further. As a result of our high-quality and dependable care model and our commercial capabilities, We drive volume growth across our business, in addition to serving a patient base with a comparatively high degree of recurring revenue. Third, we benefit from our scale and complementary services, which allows for greater efficiencies, the deployment of best practices throughout the organization, and enhanced growth. We leverage our scale and are ever evolving the way we go to market, procure goods, and contract for services to drive these efficiencies with a continuous improvement mindset and culture. We drive acquisition synergies through procurement and operational synergies and best practices enabled by our platform. A good example of this is the recent announcement of the planned acquisition of Haven Hospice, a Florida-based company holding a certificate of need for comprehensive hospice care services in 18 counties in the state. Haven operates in a highly desirable geography where we believe our capabilities can be implemented to improve operational metrics, financial performance, and growth. And last, our scale and complementary service lines also result in a unique comparative level of payer diversification. In the pharmacy world, there is retail, and then there are all of the many places where customers and higher acuity people need their medications with customized services every day, often 24-7, and that's us. In the provider world, There's hospitals and doctor's offices, and then there are homes and other community settings where people need their care every day, and that's us. We serve patients in home and community settings with a highly beneficial and valuable model. We focus on driving volume and market share growth, and we leverage our scale and complementary services in important and meaningful ways. Turning back to the second quarter performance, Pharmacy solutions revenue of $2.1 billion represented 32% growth compared with the second quarter of last year. Revenue momentum continued quarter over quarter, driven by ongoing execution supporting specialty product ramp-ups and launches from 2023 and 2024, infusion patient and volume growth, and strength in home and community pharmacy volume. The infusion and specialty business was particularly strong, growing 40% year over year. with specialty continuing to perform exceptionally well with outsized revenue growth. Home and community pharmacy revenue grew 13% year-over-year in the second quarter, driven by very solid script volume growth. We saw robust volume growth across our pharmacy segment with 10.1 million total scripts dispensed in the second quarter, representing an increase of approximately 10% in total compared to the prior year. In home and community pharmacy, Scripps Dispense grew in the high single digits year over year, highlighting the reliability, accuracy, high quality, and customized services that we continue to deliver to patients across settings. Our strong revenue performance in the quarter resulted in pharmacy solutions adjusted EBITDA of $94 million, representing 19% growth year over year. Pharmacy solutions adjusted EBITDA margin at 4.5% was in line with our expectations and influenced by outsized growth in specialty. Specialty pharmacy performed particularly well in the quarter with continued momentum in Scripps dispensed, delivering 36% volume growth. The continued outperformance in specialty can be attributed to strong execution across our LBB and high-value generics portfolios. anchored by our quality and innovative national sales and marketing strategies. We continue to expand access to limited distribution drugs and coverage of prescribers, which drives referrals that are supported by our comprehensive patient service offerings, bringing higher quality of care to patients that is rated at world-class levels and helps to extend lives. The innovative, personalized, and high-tech service and clinical programs that we deliver continue to be preferred by patients as evidenced by consistently high net promoter scores from prescribers and patients that approach or exceed 90. We continue to grow our limited distribution drug network in oncology, rare and orphan drugs, and other select indications with 118 LDDs. Most recently, we were selected as a pharmacy partner by Day One Biopharmaceuticals for distribution of OGENDA, which is utilized to treat central nervous system tumors in children six months and older, specifically relapsed or refractory pediatric low-grade glioma, the most common central nervous system tumor in children. We're excited by this opportunity and all others like that to improve the lives of patients and families through this partnership and believe it speaks to the differentiated level of care and support that we deliver to patients every day. We expect to add an additional 18 LDDs to our portfolio over the next 12 to 18 months. We continue to grow volume robustly in high-value generics, and we see a meaningful opportunity to grow the specialty business further with 11 large brand drugs converting to generic over the next five to six years, the first of these now expected in Q4 this year. We are also pleased with the volume performance in our home and community pharmacy business. For example, Bright Spring recently began services with one of the largest skilled nursing providers in the country as a long-term care pharmacy provider to all patients across all healthcare facilities of this customer. This sizable new customer addition speaks to the quality of care and services that we provide to our valued partners and patients. In provider services, we saw very solid revenue growth of 8%, driven by strength in home healthcare, particularly home health and hospice, as well as in our rehab business. To highlight, home health care average daily census grew 13% year-over-year to 44,246 in the second quarter, and rehab billable hours grew in the high single digits. The number of patients that we serve across our platform continues to grow, enabled by our highly skilled health professionals and the company's continued commitment to coordinated care in our patients' preferred settings. The addition of Haven Hospice, which is expected to close this quarter, will expand our services into the attractive and hard to access Florida market with the opportunity to provide compassionate and high quality care that has been rated in the top 5% of all hospice providers nationally to more patients and their families. We remain enthusiastic about the trajectory of the provider business in the coming years. Our provider business also realized very solid adjusted EBITDA of $86 million, representing 16% year-over-year growth and a 14.0% margin compared to 13.1% in Q2 2023, driven by increased scale and additional operational efficiencies. We continue to work hard to deliver patient-centric plans in home and community settings, driving significant reductions in hospital readmissions for seniors, duals, and behavioral patients. Ultimately, our ability to deliver higher quality care in preferred settings and in a more efficient way enables improved outcomes, increased patient satisfaction, and reduced costs, which help drive referrals to meet ever-increasing demand and address significant societal needs. As we've discussed previously, Bright Spring was eligible to receive a last annual Equality Incentive Payment, or QIP, in specialty from one of our PBM partners in the second quarter. As we have discussed, the bar for this QIP was extremely high. And while we delivered an outstanding Net Promoter Score of 87 for these particular members, it was below the threshold of 90 in the contract and below the NTS that we track and see for all other payer and PBM members. While we're disappointed to not receive this payment, as has been known, this program is now concluded, and we benefited from receiving these QIP payments in the three years prior, based on our extremely high levels of quality and patient-focused care. Relative to peers and industry standards, we continue to deliver exceptional service levels, which are the foundation of the strong growth and financial performance we are experiencing in 2024 and expect to continue to experience in the future. Across our business, our employees work hard every day to deliver high-quality and compassionate care to the people that we serve. We continue to invest in our employees who contribute to the success of the company and truly believe that our healthcare workers, clinicians, skilled caregivers, operators, and sales and marketing teams enable us to deliver leading levels of patient-centric care and support in our industry. To reward our employees for their hard work and dedication and to further create and foster an ownership culture at the company, in the second quarter we completed the $100 million all-employee equity grant that was announced at the IPO. Bright Spring awarded approximately 20,000 full-time and tenured employees with employee-specific share grants to commemorate their dedication to the company and their impact on patients in the communities that we all live in. To summarize, the first half of 2024 has been very successful as we continue to execute on our goals and strategies as we have for the past seven years. We are optimistic about the performance across the entire portfolio, not only heading into the second half of the year, but also as we head into 2025. Within pharmacy, we are particularly excited by our strong manufacturing and customer partnerships, our valued referral relationships, our high quality scores, and our growing portfolio of limited distribution drugs and generics and specialty. We continue to drive improved operational performance with a real focus on efficiency initiatives across infusion and home and community pharmacies. the provider side we are outpacing the industry on volume growth and remain confident in our ability to grow daily census and hours while we continue to reduce hospitalizations and readmissions by delivering the right care management at the right time and in the right setting to patients our integrated platform service capabilities continue to advance and allow bright spring to improve the coordination of patient-centric care for people who require multiple health services. Moving forward in the back half of the year and into 2025 and beyond, BrightSpring continues to remain focused on targeting volume growth and attractive markets, delivering needed solutions, driving operational best practices, and providing more coordinated and high-quality care, leveraging the scale and complementary nature of our platform to deliver healthy financial results. I will now turn the call over to Jim to discuss our second quarter financial results and 2024 guidance in more detail.