BrightSpring Health Services, Inc.

Good day and thank you for standby. Welcome to the Bright Spring Health Services Inc. fourth quarter and full year 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, David Deichler, Investor Relations. Please go ahead.

Good morning. Thank you for participating in today's conference call. My name is David Deichler, and I'm responsible for Investor Relations at Bright Springs. I'm joined on today's call by John Rousseau, Chief Executive Officer, and Jen Phipps, Chief Financial Officer. Earlier today, Brightspring released financial results for the quarter and full year ended December 31st, 2024. 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 forward-looking statements that reflect our current assumptions and expectations, including those related to our future financial performance, 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 our annual report in Form 10-K filed with the FCC, including specific risk factors and uncertainties discussed in our 10-K. Such factors may be updated from time to time in our periodic filings with the FCC, 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 conditions. You can find additional information on these non-GAAP financial measures and reconciliations 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. And with that, I'll turn the call over to John Rousseau, Chief Executive Officer.

Good morning. Thank you for joining Bright Spring's fourth quarter and full year 2024 earnings call. I'd like to begin this call by expressing my appreciation and gratitude to and for the Bright Spring team across the country. Our employees and caregivers work very hard with diligence each day to deliver compassionate and attentive care to the people we provide critical services to. I would also like to welcome Jen Phipps as Chief Financial Officer and thank Jim Mattingly for his excellent service over the years as we transition the CFO position. During Jim's tenure, the company has achieved some exceptional results, including the sale and recapitalization to KKR and WBA, 175% revenue and 109% EBITDA growth since that time, implementation of best-in-class financial systems, completing the IPO, and executing multiple successful refinancings underpinned by the company's performance. We appreciate all of Jim's leadership and contributions as he moves to other priorities and next steps. And after appropriate and thorough consideration and evaluation, we are extremely pleased that Jen will assume the role of Chief Financial Officer. With Jen's overall background and eight-year tenure at Bright Spring, she is extremely well-suited for this role. Jen has served as the Chief Accounting Officer at the company since January 2017. and principal accounting officer since the IPO. Jen has also served as the CFO of the home health and hospice business, and she has run numerous other departments within the company, including procurement, real estate, and tax. She has been deeply involved in all financial systems and processes over the years, as well as all acquisitions and divestitures, and many automation and efficiency initiatives. Jen is well prepared, knows the entirety of the company, and is very deserving of this position. Turning to 2024, it was another year of milestones, continued quality improvements in leadership, further growth, and significant ongoing impact for the customers, patients, and communities that Bright Spring serves. And we are proud of how our businesses and people have performed. Throughout 2024, we have also deepened our focus on operational efficiencies across the organization to best support employee effectiveness and high-quality services. In addressing significant needs for individuals across the country, the company has increased its reach to more patients and delivered strong growth across both pharmacy and provider businesses through strategic prioritization, disciplined investments, company scale, and execution. Our results are ultimately a reflection of the reliable, relatively lower cost, and coordinated care that drive high customer and patient satisfaction rates. In the fourth quarter, We are pleased to have realized total revenue growth of 29% year-over-year, leading to total company and segment revenues for full year 2024 at the high end of our guidance range and in line with our preliminary results provided in January. Total revenue of $11.3 billion in 2024 represented 28% growth year-over-year, which included pharmacy solutions revenue of $8.8 billion and provider services revenue of $2.5 billion, representing 34% and 9% growth year-over-year, respectively. Full-year 2024 adjusted EBITDA was $588 million, representing 16% growth year-over-year when excluding a certain $30 million quality incentive payment from 2023. Adjusted EBITDA also came in at the high end of our guidance range and in line with preliminary 2024 results communicated in January. Today, we are increasing total revenue in adjusted EBITDA guidance for 2025, with our adjusted EBITDA guidance for this year increasing by $5 million at each of the low and high ends of the prior range provided in January, and which excludes the community living business. We announced in January that we entered into a definitive agreement to divest the community living business to Civita and expect the transaction to close this year, subject to regulatory approvals and typical closing conditions. Jen will discuss our fourth quarter and full year 2024 financial results, along with our 2025 outlook in more detail shortly. Before I discuss business performance, I would like to further reinforce our commitment to both quality and continuous improvement and efficiencies across the organization, which go hand in hand. For example, in quality, our most recent net promoter scores in specialty pharmacy for Onco360 and CareMed were 98 and 100, respectively, almost a perfect rating for Onco360 and a perfect 10 out of 10 rating for CareMed from all participants. also scores that are the best among specialty pharmacies. After the past year of investments in people and process in our infusion business, we are now seeing best-in-class referral to in-home turnaround times for specialty patients. Our home and community pharmacy on-time delivery metrics approach 97%. Approximately 85% of our home health branches now have a predicted CMS star rating of 4 or 5 out of 5. and we have 97% timely initiation of care, above industry average. In hospice, we have a 9.3 hospice care index score out of 10, significantly above the national average, and we provide 16% more nursing visits to patients and 27% more patient visits in the last week of life, with 90% of our locations above national average on visits provided to patients. In primary care, Our ACO is reporting 13% lower healthcare costs for patients in skilled nursing facilities and 31% lower costs for patients in assisted living through our more attentive, local, and proactive care and quality. And our special needs plan has already improved its star rating by 0.5 in less than a year under our ownership, with a 6% reduction in hospitalizations in the last year, a 99% capture rate for health risk assessments, and 99% of our patients receiving annual wellness visits within 90 days of enrollment. In personal care, we have a likelihood to recommend a 4.54 out of 5. In rehab, we have overall stakeholder satisfaction of over 97% among case managers, discharge planners, physicians, claims managers, et cetera. And we have a patient satisfaction score of over 95%. and community living. Our external audits outperform the national average, and we hold more third-party accreditations than anyone in the industry, while we have deployed innovative and leading technologies to drive client risk stratification and care plans. These are just some select mentions and highlights among many other strong and leading service and quality measures in the company. Across the organization, we continue to invest in and deploy new and or enhanced technologies, EMRs, ERPs, applications, and analytics and reporting, numerous of which now incorporate new automation and AI use cases to the benefit of our people and to drive outcomes for the individuals we serve. We also continue to invest heavily in compliance, with literally thousands of onsite internal compliance visits and audits conducted across our operations last year. On the efficiency front, since the start of last year, the company has over 100 procurement, workflow augmentation, and automation programs completed or ongoing, driving process improvements, cost efficiencies, best practices, and streamlining across all business lines. We are more dedicated than ever to lean into process and technology innovation and leadership in healthcare services and provide all of our stakeholders with the best possible experiences over the years. Now, taking a closer look at fourth quarter results, pharmacy solutions revenue of $2.4 billion represented 34% growth compared with the fourth quarter of last year. Growth for the business was primarily driven by total script volume of $11 million in the fourth quarter, which represented 14% growth compared to the prior year's quarter. The infusion in specialty business has continued to deliver above expectations, growing revenue 42% year-over-year in the quarter, driven by specialty script growth of 35%. Our results in specialty and infusion this quarter and throughout the year have been a function of cross-functional operational execution and continued LDD brand launches and generic drug utilization. Our total LDD portfolio now stands at 125, which includes 12 LDDs launched in 2024 in either an exclusive or ultra-narrow pharmacy network. We continue to see the potential for an additional 16 to 18 limited distribution drug launches over the next 12 to 18 months, while also facilitating the adoption of new generic products. We are honored that we are selected by our pharma manufacturing and biotech partners as a limited distribution drug specialty pharmacy for each of these therapies and are committed to helping and improving the lives of patients who are battling cancer, rare, orphan, neuro, and a number of other diseases through market-leading service levels and satisfaction scores. Within Infusion, in 2023 and through 2024, we initiated and completed operational initiatives and investments to deploy standardizations and process improvements, and we believe that results in the Infusion subsegment will begin to benefit from these investments in 2025. In home and community pharmacy, revenue grew 17% year-over-year in the fourth quarter, driven by script growth and new customer wins. We continue to be pleased with our execution across a variety of home and community pharmacy settings, including behavioral, hospice, assisted living, skilled nursing, hospital, and rehab settings, as well as other locations where patients need at-home pharmacy support. We believe we have an additional market share and growth potential opportunity in all of these markets, and we will also be entering the PACE pharmacy market this year. We remain focused on driving more operational and technology-driven efficiencies in the business, and the continued expansion of our pharmacy services is important to ensuring that as many people as possible receive the highest quality and most comprehensive medication management and care. Turning to provider services, segment revenue grew 11% year-over-year, and segment adjusted EBITDA margin expanded by 70 basis points year-over-year to 15.2% in the fourth quarter, which was primarily driven by strong service and quality-based volume growth and broad-based operational efficiency and execution. In home health care, revenue grew at a rate of 17% year-over-year in the fourth quarter, with average daily census growth of 9% to 46,000. We saw continued growth in the home health and hospice businesses both in the fourth quarter and for the full year 2024. Personal care has been a consistent performer this year as well with steady billable hours and very consistent operational execution. Our primary care business has seen expansion and growth where we leverage proximity and access to patients including through core pharmacy and provider services And we believe home-based primary care represents a significant opportunity in the coming years with ACO and payer strategies continuing to develop. Community and rehab care also performed well again in the quarter with strong revenue growth of 8% year-over-year and consistent growth in rehab persons and hours served. In the rehab business, billable hours grew in the mid-teens year-over-year for the fourth quarter and full year. We continue to add numerous de novos through new home and community neuro rehab programs and new rehab in motion programs and assisted living facilities. And we anticipate attractive growth from rehab in motion over the next five years as we continue to add locations. The community living business has shown solid growth through 2024 through operational continuity, a service focus, and continued investments in technology and employees. As I mentioned earlier, the divestiture of community living remains on track, anticipated to close in the second half of 2025, subject to customary regulatory approvals and closing conditions. We expect that the transaction will create a streamlined organization at Bright Spring and augment both provider services and company revenue and adjusted EBITDA growth rates. our strategic focus in provider will narrow to the remaining home health care, rehab, and personal care businesses, each of which continues to perform in line with our high expectations. Consistent with the announced investiture of community living, our capital allocation priorities remain on both debt pay down and continued tuck-in acquisitions at disciplined valuations, consistent with our prior strategy. To summarize, 2024 was an excellent year for BrightSpring, and I'm pleased with our execution so far in 2025 as we always continue to look for any ways to serve more people and improve their outcomes with mission-driven and meaningful services. We are focused on delivering on our 2025 financial outlook through quality, volume growth, process optimizations and cost efficiencies, accretive acquisitions, and effective portfolio and asset management and deployment. With that, I'll turn the call over to Jen to discuss our 2024 fourth quarter and full year financial results and 2025 guidance in more detail.