BrightSpring Health Services, Inc.

Good day and thank you for standing by. Welcome to Bright Spring Health Services, Inc. Third Quarter 2024 Earnings Conference 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 1-1 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 Phipps, Chief Accounting Officer. Please go ahead.

Good morning. Thank you for participating in today's conference call. My name is Jennifer Phipps, Chief Accounting Officer at BrightSpring. I am 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 September 30th, 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.

Good morning, everyone. Thank you for joining Bright Spring's third quarter 2024 earnings call. I would like to take a moment and express my gratitude and appreciation to and for our employees and teammates who work very hard to deliver attentive, compassionate, and quality care to the individuals and patients we serve across home and community settings every day. We're pleased to have delivered another strong quarter of financial results. Third quarter total revenue was $2.9 billion, representing 29% growth year over year. and adjusted EBITDA was 151 million, representing 16% growth year over year. Based on this performance in the quarter, we are raising the midpoint of our total revenue and adjusted EBITDA guidance for 2024 from 570 to 580 million to 580 to 585 million. Jim will discuss our financial outlook in more detail shortly. Consistent with prior quarters, we continue to operate and expand in large and growing markets of significant need where we can best serve patients with essential high-quality services. Within our pharmacy segment, we drove exceptional volume growth with our operational focus and rigor, as well as leading sales and marketing strategies, connecting patients with the services and therapies they need. Total scripts dispensed year-to-date continue to trend favorably as the operators continue to execute. Our specialty business outpace forecast with higher script volumes driven by 2023 and 2024 LDD launches and generic scripts. In provider, we saw good growth in census and hours, and we successfully integrated previously announced acquisitions. We continue to deliver quality care to patients while improving margins sequentially, driven by leveraging scale and best practices across the organization. M&A and de novo expansion remain a focus at BrightSpring, we continue to have a strong acquisition engine with a healthy pipeline that, if converted, would augment the organic growth profile of the company. All in all, at BrightSpring, we are proud of the high-quality care we deliver to complex patients where they reside and in the community, which support the financial results delivered. Looking closer at third-quarter performance, pharmacy solutions revenue of $2.3 billion represented 35% growth compared with the third quarter of last year. driven primarily by strong script volume. The infusion and specialty business had another very strong revenue quarter, growing 42% year over year, while home and community pharmacy revenue grew 19% year over year. Across the pharmacy segment, we saw 10.9 million total scripts dispensed in the third quarter, representing growth of 15% compared with last year, driven by 36% growth in specialty scripts dispensed. Strong growth in specialty and infusion continue to be driven by strategic focus and operational discipline, leading quality and net promoter scores, partner and customer satisfaction, LDD launches, Salesforce support and integration with providers, and generic drug utilization. The LDD portfolio expanded to 123 therapies during the quarter, and we continue to expect 18 new LDDs to launch over the next 16 to 20 months. We are honored that Onco360 was selected as a limited drug distribution specialty pharmacy partner for each of those therapies and are committed to improving the lives of patients who are battling cancer, rare, orphan, and a number of other diseases. Spry cell, used for treatment of adults with newly diagnosed pH-positive CML in the chronic phase, also converted and launched as generic late in the third quarter. And we look forward to helping patients navigate the generic opportunity now in the market. Within Infusion, the business continued to drive volume growth in acute and chronic therapies in the third quarter. Throughout 2024, we have continued to overinvest in our Infusion business. We started with operational leadership changes earlier in the year, and we have been investing in people, capabilities, and process to drive operational efficiencies, best practices, and improving profitability in the future, expecting to see results from these investments in 2025. In home and community pharmacy this quarter, mid-teen script growth was driven by new customer wins and strong execution of our service programs across a variety of home and community settings, including assisted living, skilled nursing, medical and rehab facilities, behavioral settings, and hospice, as well as other locations where patients need at-home pharmacy support. Turning to provider services, segment revenue grew 10% year over year, and segment adjusted EBITDA margin expanded by 50 basis points year over year, primarily driven by broad-based execution, volume growth, and leveraging infrastructure across all service lines. Community and rehab care revenue grew 8%, which is a testament to the quality and customer service the team continues to deliver to patients. In the rehab business, we saw billable hours growth in the mid-teens compared with last year. A new and future avenue of growth we are excited about is our Rehab in Motion program. This program supports Part B Medicare outpatient rehab patients as we add de novos through partnerships with ALS to provide rehab care to seniors in additional home and community settings. Complementary to the commercial and workers' comp neuro rehab that we are known for today, and also complementary to our home health, primary care, and hospice services we provide to the Medicare population in ALS and in homes today. We anticipate rehab in motion to continue to evolve next year and grow to meaningful size over the next five years. Another way we are laying the foundation for long-term growth and better and more integrated prescriber and patient solutions. Community living performance has remained consistent, driven by quality services delivered to clients by a conscientious and coordinated care team within a robust infrastructure. As most recent evidence of this, we received another three-year CARF accreditation in the state of Indiana, which is very difficult for providers to achieve, and another third-party stamp of quality. In the third quarter in home health care, revenue grew 13% year over year, and average daily census grew 16% to over 46,000, supported by exceptional clinical quality scores, including 30-day readmission rates that are 60% lower than the national average in our emerging primary care services. Towards the end of the third quarter, we announced the closing of the Haven Hospice acquisition, and we look forward to expanding our quality care to high-need patients in Florida. Our hospice business continues to display a solid growth profile with great patient satisfaction. We currently hold an 84% overall rating of care according to the consumer assessment of healthcare provider and system. Overall in 2024, Bright Spring and our teams continue to execute consistently towards our mission of driving compassionate and comprehensive health solutions to complex populations. We believe we are well positioned to deliver on our updated 2024 outlook. Broad-based strength across pharmacy and provider continues to underpin Bright Spring's success. In 2025 and beyond, The company plans to drive operational best practices and volume growth in attractive markets while further providing patients reliable, coordinated, high-quality, and lower-cost care. Before I turn the call over to Jim to discuss our third quarter financial results and 2024 guidance in more detail, I would like to highlight that we recently added a third independent director to our board, Dr. Steve Miller, who brings to Bright Spring decades of impressive clinical leadership experience. I look forward to working with Steve to grow our company and deliver leading quality of care to patients.