Operator: Hello, and thank you for standing by. Welcome to BrightSpring Health Services, Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to David Deuchler. Please go ahead.

David Deuchler: Good morning. Thank you for participating in today’s conference call. My name is David Deuchler with Investor Relations at BrightSpring. I’m joined on today’s call by Jon Rousseau, Chief Executive Officer; and Jen Phipps, Chief Financial Officer. Earlier today, BrightSpring released financial results for the quarter ended March 31, 2026. 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 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 our quarterly report on Form 10-Q that will be filed with the SEC, including specific risk factors and uncertainties discussed in our Form 10-K and Form 10-Q. 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 financial 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. With that, I will now turn the call over to Jon Rousseau, Chief Executive Officer.

Jon Rousseau: Good morning, everyone, and thank you for joining BrightSpring’s First Quarter 2026 Earnings Call. I’d like to start by thanking everyone at BrightSpring who drives our mission forward and makes a lasting impact every day. We’re grateful for their hard work and commitment, enabling us to deliver high-quality and timely care to patients. Before we speak to first quarter performance, a few key messages and takeaways from our Investor Day in March and why we are optimistic about the company’s prospects in the years ahead. BrightSpring is a national leader in home and community health services, serving complex patients in the health care system. We deliver high-quality services at significant scale with a disciplined operating model that focuses on patient and provider outcomes.

Throughout our service lines, that focus on quality care underpins commercial efforts supporting sustainable growth. Our organizational culture of continuous improvement and best practice sharing will continue to enable operations that expand the impact we’re making in providing comparatively lower cost services for complex patients across the country. In Pharmacy Solutions, the growth outlook is healthy with the specialty and infusion businesses continuing to deliver impressive script growth and patient satisfaction scores. We continue to see strong volume performance from both brand LDDs and generics, and we added 4 exclusive ultra-narrow LDDs to our portfolio in the first quarter, bringing our total number of LDDs to 153. Infusion represents one of our larger geographic expansion opportunities looking forward, covering today about 1/3 of the country on the acute side and half the country in chronic specialty.

Home and Community Pharmacy is looking to drive organic profitable growth in assisted living, behavioral, hospice, PACE, skilled nursing and other markets, supported by investments in automation across our national pharmacy footprint. On the provider side, in our home health care businesses, we continue to expect organic growth to be underpinned by market share gains from high-quality services and scaled market development and clinical support teams that we continue to invest in. In 2026, we are integrating the acquired Amedisys and LHC branches and expect approximately $30 million of EBITDA contribution in year 1. We are continuously looking to innovate services and associated operational processes to drive outcomes and growth with numerous payer agreements and partnerships that reflect this.

In palliative and hospice, the strength of our quality results and our patient-centric approach positions us well in a market that remains significantly underutilized with only half of eligible patients receiving such valuable care today. Rehab continues to deliver consistent growth in home and community settings with excellent clinical outcomes as we continue to expand in the senior setting through rehab in motion and assisted living facilities. Home-based primary care and value-based care initiatives, while still in earlier stages, produce meaningful reductions in hospitalization, help coordinate other needed services and represent significant potential for future growth as we scale. BrightSpring is firmly positioned on the right side of the most important trends in health care to address system and patient needs.

With a differentiated enterprise and a unique set of assets that deliver real solutions to patients, providers and payers alike. With that context, let me turn to the first quarter. As a reminder, the company’s financial results and 2026 guidance pertain to continuing operations and do not include results from the divested Community Living business nor the impact of any future closed acquisitions. We completed the sale of Community Living to Sevita on March 30, 2026, which resulted in net cash proceeds before tax of approximately $811 million. The proceeds from this transaction will be used to further strengthen the balance sheet, including both debt paydown and cash availability. Overall, we are pleased with our first quarter financial results with total company revenue of $3.6 billion that grew 26% year-over-year.

Pharmacy Solutions revenue of $3.2 billion and Provider Services revenue of $442 million represented 25% and 28% growth, respectively. First quarter 2026 adjusted EBITDA of $190 million grew 45% year-over-year with an adjusted EBITDA margin of 5.3%, a 70 basis point improvement year-over-year. Margin expansion was primarily driven by mix and operational efficiencies across the organization. On cash flow, the company realized $123 million of cash flow from operations in the quarter, excluding fees from the Community Living divestiture. Leverage was 2.27x as of March 31, 2026, which declined from 2.99x as of December 31, 2025. Pro forma leverage on March 31 was 2.40x when factoring in cash taxes associated with the Community Living proceeds that will be paid in Q2.

Performance in the quarter was driven by a high quality of care and patient satisfaction. In Home Health, over 91% of our branches are 4 stars or greater. We have an industry-leading timely initiation of care of greater than 99%. And in Q1, 65 Home Health locations were named a Best Home Health provider by U.S. News & World Report. In hospice, quality measures remain well above national average with significantly more visits provided, a top 5% ranked hospice program in the U.S. and a CAPS overall hospice rating of 87%. In rehab, patient satisfaction scores are at 98% with outpatient and 97% with Home and Community Rehab. In personal care, we have a client satisfaction score of 4.6 out of 5, consistent with the fourth quarter. On the pharmacy side, in Home and Community, dispensing accuracy was 99.99%.

Order completeness was 99% and on-time delivery was 96%. And in infusion, our patient satisfaction score was 94%, 97% of discharges were due to completion of therapy. And importantly, we saw recent improvements in both acute and specialty turnaround times near internal goals aimed at best-in-class. And Specialty Pharmacy demonstrated a consistently high medication possession ratio of 92.1% in the quarter, along with time to first fill of 4.6 days, both much better than national average. I’d like to close by emphasizing that BrightSpring’s continued focus on serving large and growing markets, providing high-quality care for patients, building and leveraging scale and institutionalizing a disciplined operating model are what collectively differentiate the company.

We serve expanding populations of high-acuity individuals with solutions delivered in the home or community settings that consistently improve clinical outcomes while reducing total cost of care. We are deliberate in our corporate strategy, and we use our platform scale to generate operational efficiencies while deploying best practices across our pharmacy and provider service lines, equipping them with the resources and capabilities they need to execute and grow. We believe this approach and model is what creates durable value and the most positive impact for all of our stakeholders. BrightSpring’s first quarter saw broad-based momentum across both the pharmacy and provider segments that reflected execution on our operating and growth priorities, which we laid out at our Investor Day in March.

We feel good about the performance of the business through the first 3 months and are on track to deliver the updated full year guidance provided today. With that, I’ll turn the call over to Jen.

Jennifer Phipps: Thank you, Jon. Before I discuss our financial results for the first quarter of 2026, I’d like to remind you that in the first quarter of 2025, we began to record the Community Living business in discontinued operations, as indicated in the press release and 10-Q to adhere to accounting standards required on an interim basis. As such, all BrightSpring financial results and forecasts that I will discuss are related to continuing operations and exclude Community Living and any acquisitions that have not yet closed. Management believes the presentation of the non-GAAP financials from continuing operations is a useful reflection of our current business performance. In the first quarter of 2026, the total company revenue was $3.6 billion, representing 26% growth from the prior year period.

Pharmacy Solutions segment revenue in the quarter was $3.2 billion, achieving 25% year-over-year growth. Within the Pharmacy Segment, Specialty and Infusion revenue was $2.6 billion, representing growth of 36% from prior year, which was driven by strength in specialty and market adoption of existing LDDs, new LDD wins, brand to generic conversions and generic utilization. Growth in fee-for-service programs, including hubs and service agreements and strong commercial execution. Infusion showed solid volume growth and operational metrics driven by process improvements. Home and Community Pharmacy revenue was $527 million, representing a decline of 9% year-over-year due to an approximately $50 million impact from the IRA, which was expected, along with our decision to exit any uneconomic customers, both of which we have previously discussed and came in line with our expectations.

We expect to see a revenue impact from the IRA of approximately $45 million for each of the remaining quarters of 2026, totaling a Home and Community Pharmacy revenue impact of approximately $175 million for the full year of 2026. In the Provider Services segment, we reported revenue of $442 million in the first quarter, which represented 28% growth compared to the prior year. Within the Provider Services segment, Home Healthcare reported $266 million in revenue, growing 49% versus last year with strong census growth, de novo expansion, preferred MA contracts and ongoing successful integration of our acquired branches. The acquired assets contributed $79 million of revenue and approximately $9 million in adjusted EBITDA in the first quarter.

We are encouraged with how well the integration process is going and are optimistic about the performance for the year. Rehab revenue was $75 million, growing 7% versus last year, with momentum in person served and hours billed in Core Neuro Rehab, de novo additions and continued expansion in our Rehab in Motion program. Personal Care revenue was $102 million, representing growth of 4% year-over-year, driven by modest growth in persons served and stable operations. Moving down the P&L. First quarter company gross profit was $482 million, representing growth of 43% compared with the first quarter of last year. Adjusted EBITDA for the total company was $190 million in the first quarter, an increase of 45% compared to the first quarter of 2025.

Adjusted EPS for the total company was $0.39 in the first quarter. The company’s profitability growth and margins in the first quarter benefited from the performance dynamics Jon discussed and the impact of investment initiatives to drive operational improvement across the organization. Throughout 2026, we expect targeted commercial strategies and our operational and procurement initiatives to support both investment and growth from best practices deployment in operations, streamlining and ongoing efficiencies realized. Turning to Segment Performance in the first quarter. Pharmacy Solutions gross profit was $301 million, growing 48% compared with the first quarter of last year. Adjusted EBITDA for Pharmacy Solutions was $169 million for the first quarter, an increase of 46% compared to last year, representing an adjusted EBITDA margin of 5.3%, which was up approximately 70 basis points versus last year.

Strong performance across the therapy portfolio, favorable mix and fee-for-service contributed to profitability performance. Provider Services gross profit was $181 million, growing 35% versus the first quarter of last year. Adjusted EBITDA for Provider Services was $66 million for the first quarter, growing 29% versus last year, representing an adjusted EBITDA margin of 14.9%, up approximately 10 basis points versus last year. On a total company basis, cash flow from operations was $123 million in the first quarter. Recall that the discontinued operations cash flow are included in total company reports. As we look forward to the balance of the year, excluding Community Living related cash flow impact, we expect to deliver approximately $500 million of annual operating cash flow.

Our adjusted EBITDA growth, combined with our cash flow generation during the quarter led to a leverage ratio of 2.27x as of March 31, 2026. This cash flow and leverage profile provides the company with some additional flexibility in capital allocation and capital structure as we move throughout the year. As of March 31, net debt outstanding was approximately $1.7 billion. As Jon mentioned, we received approximately $811 million of net cash proceeds before tax from the $835 million gross cash consideration for Community Living. Approximately $100 million in taxes is expected to be paid out in the second quarter of 2026. We will remain active in evaluating options for the existing term loan and the appropriate capital structure for the company over the coming months in light of continued strong operating performance.

We expect quarterly interest expense to be approximately $35 million. Turning to guidance for 2026, which excludes the Community Living business as well as any acquisitions that have not yet closed. Total revenue is expected to be in the range of $14.725 billion to $15.225 billion, including Pharmacy Solutions revenue of $12.85 billion to $13.3 billion and provider services revenue of $1.875 billion to $1.925 billion. This revenue range reflects 14.1% to 17.9% growth over full year 2025, excluding Community Living in both years. Total adjusted EBITDA is now expected to be in the range of $795 million to $825 million for full year 2026. This would reflect 28.7% to 33.6% growth over full year 2025, excluding Community Living in both years. Included in total adjusted EBITDA is expected contribution from the Amedisys and LHC assets acquisition of approximately $30 million.

I will now turn it back to Jon.

Jon Rousseau: Thanks, Jen, and thank you for your time today to go through BrightSpring’s first quarter 2026 results. We’ll now open up the call for questions. Operator?

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Operator: [Operator Instructions] Our first question comes from the line of Ann Hynes with Mizuho.

Ann Hynes: I just want to talk about some of the growth initiatives hitting the P&L this year, especially with Infusion. I know that’s been a big focus for the company, expanding the chronic portfolio. Can you just let us know how that’s going, what the growth rate is, maybe what drug classes you’re focused on?

Jon Rousseau: Yes. I think pretty characteristically, we saw broad-based growth across the organization on both the provider and the pharmacy side, Provider obviously had a bit of a tailwind there from closing of the Home Health branches. But notwithstanding that, we saw really good growth. One of the reasons we had a little outperformance on the Home Health branches that were acquired was the step-up in admissions we were able to drive with them being under our roof for 3 to 4 months. So it was a nice quarter across the company in terms of volume growth. On the pharmacy side, the ramp-up of existing LDDs, the launching of new LDDs and focused growth around driving generic utilization led to good growth within our Onco360 and CareMed business.

I’d point out within that business, quite a few of our LDDs under CareMed now are outside of oncology, and that’s been intentional. And so not only did we see script growth rates over 30%, but we saw a continued growth rate in the number of new account — new prescriber accounts that we’re into as we not only continue to invest in more reps, particularly on the West Coast, but then also get into some therapeutic states in addition beyond oncology as we’ve continued to focus not only on oncology, but any other therapeutic area of interest. Specifically within infusion then, we did see double-digit growth on both the acute side and the chronic specialty side. So I think as we’ve mentioned before, we’ve been underweight on chronic specialty. So we think that’s an opportunity.

We did go live in early Q2 with a concierge program around IVIG and our thoughts are to build out and we are building out concierge programs around targeted therapy. So it was a productive quarter with solid double-digit growth across both of those areas within Infusion.

Ann Hynes: Great. And just for a follow-up, obviously, your leverage is at a nice point after the repayment of debt. If you — I guess, one, would you be interested in larger M&A? And if you would be, what would be a leverage you would be comfortable going back up to for the right asset?

Jon Rousseau: Yes. It’s — I know, Jen in particular, very pleased with the balance sheet, but we all are. And I think we’ve sort of said under 3x, mid-2s is our longer-term target where we’d always like to be. I think you’ll continue to see us act the way we have historically with a disciplined approach. I think if you look at least at the last 7 years, there’s been 2 transactions that have really worked out well for us that have been a little bit more sizable, the original Home Health and hospice acquisition of Abode, which gave us critical mass there and then this most recent one here with the LHC and Amedisys assets. But I think we do have a little bit more flexibility, obviously, but we will continue to try to make sure we look at anything that makes the most sense in the long term across the organization.

I think our bread and butter will continue to be geographical expansion with tuck-ins in our current businesses that allow us maybe to get into some new markets more quickly and where it makes sense or where you need licensure or a CON, et cetera. I think deals in that sort of midrange of 5 to 10 are probably easier to do. But as we look at our pipeline right now, nothing too different than historically. And whatever we do, we’ll continue to be very measured. And yes, we would like to stay within that target leverage range with anything that could come up. But I would say, at least for now, certainly a historically very consistent view and strategy as we look out at least probably through the next couple of quarters.

Operator: Our next question comes from the line of David Larsen with BTIG.

David Larsen: Congratulations on another excellent beat-and-raise quarter. Can you maybe talk a little bit about the overall Medicare environment and how this is impacting your business? Like some of the health plans, obviously, are talking about high trend pressure on margins. And I think you had talked a bit about the potential for getting into some value-based care arrangements in Medicare that could be a benefit to you. Just sort of general thoughts on the overall Medicare landscape and how this is affecting you would be very helpful.

Jon Rousseau: Yes, sure. David, we’ve just seen consistency on the Medicare side this year. No major changes. On the pharmacy side, from a Part D perspective, we’ve continued to, I think, be a partner in driving cost down there in terms of generic utilization over time. On Infusion, we continue to press in D.C. with the industry and the associations around some of the fixes for the Cures Act to provide much greater access for Medicare patients beneficiaries being able to receive very valuable home infusion in their own home instead of the hospital that has a massive potential benefit for the program, and we continue to be optimistic that at some point, that change and that update can be addressed and can be implemented. On the provider side, on Home Health and Hospice, we’ve been pleased with where those rates have shaken out over the last 6 months.

So nothing too different that we’ve seen organizationally in the last even 6 months. I would say as it relates to value-based care, we continue to make some progress there. We’re going to be applying to this new lead ACO program. That’s in the works. Applications are due in May, and we’ll see how that goes. Hopefully, we make it. But that business, we continue to invest in with some really good people even here recently that we’ve added to the business. And I would say, operationally, being able to serve these patients across skilled nursing assisted living and in the home with a house calls model is not the easiest thing to do in the world. And we’ve been focused on doing that extremely well with really good quality outcomes. And I think we’ve really achieved that over the last couple of years, and our focus now is on really trying to scale it.

And so we’re looking to next-gen ACO programs in addition to the one we’re in. We had a successful year there last year. And we’ve never been as positive about the ability to reduce cost in very desirable care settings as we are today. So that will continue to be a passion for us internally in terms of how we can take care of more folks in their own home in a value-based care model with the most proximal and intimate services possible. We’re leaning in and building out that hub as much as we can to provide oversight in between time and trying to apply AI to all of our data and analytics to be as proactive as we can and as smart as we can with our care approaches. So nothing too different as we sit here today on the Medicare front at large in terms of traditional payment programs.

But I think there are real opportunities for the program in terms of what we can provide for it in terms of cost reduction in the future across quite a few of our businesses, and we will continue to be passionate about leaning into that.

David Larsen: Great. And then just one quick follow-up. Jen, I thought that we had been talking about $600 million of revenue headwind in 2026 coming from a combination of IRA community, IRA, specialty infusion and then also brand to generic conversions. Is that correct? And you obviously beat my revenue estimate by a lot in the quarter. So you’re certainly overcoming that really well. Just sort of an update there would be helpful on how that’s tracking relative to expectations.

Jennifer Phipps: Yes, that’s correct. Thank you so much for the question. We did obviously talk about the IRA impact in Home and Community because it was really obvious from a revenue standpoint. But that is consistent, and we’re tracking towards our expected numbers in all of those areas. So just as a reminder, that is about $175 million in — which we talked about a little bit earlier in the call in Home and Community related to IRA for the full year, full year IRA of about $181 million in Specialty and Infusion and branded generic conversions of about $250 million.

Operator: Our next question comes from the line of Charles Rhyee with TD Cowen.

Charles Rhyee: Congrats on the results. Maybe, Jen, just to quickly follow-up there. Besides the revenue headwind, are we still looking at $15 million of mitigated sort of headwind on the EBITDA line that hasn’t changed?

Jennifer Phipps: That is correct.

Charles Rhyee: Okay. Perfect. And then I don’t think you gave sort of what the specialty script growth in the quarter was. And I was just curious what that number was and what maybe Health Care — Home and Community rev growth ex Genesis was as well?

Jennifer Phipps: Yes. So our Specialty and Infusion scripts growth in the quarter year-over-year was approximately 30% year-over-year growth. Specialty was a little bit higher with Infusion in the mid-teens. So higher — Specialty was higher than that total Infusion in the mid-teens in terms of their script growth. So really strong growth across both of those business lines. Home and Community ex the uneconomic customers did see modest script growth in the mid-single digits.

Charles Rhyee: Got it. That’s helpful. And then maybe just one last question. We’re seeing a lot of commentary from PBMs and they’re really trying to push sort of their own label biosimilars and so there’s kind of discussion of how much more competitive they’re getting or at least trying to steer patients into their own sort of captive pharmacies. I would like to understand sort of how much exposure you have to some of those dynamics and if that’s something that you’re seeing? And if so, what can you — what do you do to help kind of get around that?

Jon Rousseau: Yes. I think, Charles, just given our history and product portfolio today, I don’t think we have a lot of exposure there. You tend to see more of that on injectables. And if you look at our Infusion business, still today, the majority is acute, but we look to be growing on the chronic side, and we are, but more from an infusable standpoint versus a subcu or an injectable standpoint. So we just — we don’t have a lot of concentration internally that would have biosimilar risk. And on the Onco360 and CareMed side, the predominant form factor is oral solid. So I think we feel good about that. Last little thing on LTC. We are proud of the performance in the quarter on Home Community Pharmacy. We’ve really put just a top-notch team in there over the past year.

They’re doing a great job, particularly from an operational perspective and then with our focus on some of these attractive end markets. And excluding IRA, that business was up in profitability in the quarter year-over-year. And our hope and goal is in Q2, even with IRA, we’re going to have a really strong up quarter versus last year. So some nice momentum there, too. I just wanted to add that.

Operator: Our next question comes from the line of Joanna Gajuk with Bank of America.

Joanna Gajuk: So maybe on the Infusion, if I may. So thanks for the color in terms of you guys growing double digits in both segments. And as it relates to that business, can you give us an update? And is it — the growth, I guess, is coming from these 20 or so LDDs. So last time we spoke you said you had these LDDs, but you were not really participating. So it sounds like you’re executing on this already or that’s still kind of in front of you?

Jon Rousseau: Yes. I think what we said last time is we had won 3 LDDs and we had access to 20-plus more historically. At this point, we’ve won 5 LDDs in the last 6 months. So we’ve won a couple more. None of those are of the exclusive or ultra-narrow 1 or 2 categories is in Onco360 and CareMed. So that’s our goal. But nonetheless, nice wins. And I would say, as we kind of put specialty programs in place, you have to win access to the drug and then obviously, you have to execute on a number of operational initiatives and programs to pull those drugs through in the market. We do such a good job of that on the Onco360 and the CareMed side with all of our wraparound programs, data services agreements, especially hubs that we provide for patients as well.

So we’re building that out on the Infusion side. We launched IG Connect in the quarter, which is a concierge program now for all IG referrals. And we’ll look to do that for each one of these LDDs in the future and really have a focus on it to be able to customize that experience for both the manufacturer and the patient. So we are seeing some growth there. But Joanna, I think we’re probably in the early stages of a several year growth focus in LDDs and infusion. Like we’ve had over at Onco and CareMed for the past decade. But nice continued progress with manufacturers on the Infusion side, and we will continue to focus on the pull-through in the programs in the future.

Joanna Gajuk: And if I might, a follow-up. My question was actually about the gross profit per script, which was impressive. It was up 50% in this quarter year-over-year and sequentially, obviously. So how much is from this new LDD launches, new product launches versus the generic conversions? And I’m asking just thinking going forward, how much more room, I guess, is there left on that metric?

Jon Rousseau: Yes. I don’t know that we would expect to see too much more continued gains in GP per script. I mean, I think just stability there would be very good. But overall, there were 4 principal drivers for the tick up there. Number one was the disproportionate growth on the specialty Infusion side in that business with its gross profit per script. Second was we did have really healthy growth in both brands and generics, but the brand to generic mix shift there. In the quarter relative from a volume perspective was additive to GP per script. Third is from a purchasing perspective, we’re — we leverage our scale as much as we can, and we’re committed to all of our partners in the supply chain and have, I think, very constructive and long-standing relationships there that are really healthy on the supply side.

and what we did from a purchasing standpoint has been helpful in the quarter again. And then really last, but maybe even not least, fee-for-service. That’s a high gross profit margin business that we have with our hubs and our service agreements. And every time you launch a brand, you typically get some good fee-for-service commercial business out of that, too. And so those were the 4 factors that were all contributing to the gross profit per script change.

Operator: Our next question comes from the line of Jared Haase with William Blair & Company.

Jared Haase: Maybe I’ll pack 2 here into one, just as it relates to the margin in the quarter. One thing I wanted to clarify was just a mix comment in regards to margin expansion that you showed in the first quarter. I think all else being equal, we typically assume sort of rapid growth in specialty, particularly on the branded side, could be a bit dilutive to the overall margin profile. So I just wanted to make sure I kind of understood what was going on there and if the mix dynamic had more to do with generics. And then I guess rolling that forward, how should we think about sort of the cadence of margins for the rest of the year? I think we typically would model margins building sequentially, but your guidance sort of implies full year margins that are consistent with what you showed in the first quarter. So just wanted to kind of make sure we’re understanding the expectation there as well.

Jon Rousseau: Jen, maybe you can take the outlook for the year, but I think we would expect some consistency for sure. On the GP side, you’ve got the percent margin versus the dollar margin. And I think it was the mix shift that we saw that helped probably proportionately on the dollar margin side versus the percent margin if you’re tracking with me there. Jen?

Jennifer Phipps: Yes. No. So for the rest of the year, I do think we have the potential for slight build. Those things are going to be — based on our guidance range, we have a range of 5.2% to 5.6% margins that we would expect for the year. And the things that we are working on is continued leverage of scale. We have a number of operational initiatives that we are building in place. And then from a mix standpoint, as we think about the mix within each portfolio, so as Jon mentioned, we’re working to drive, for example, chronic therapies within Infusion. And so as we execute on those, I think we have the potential for slight margin expansion, but largely consistent with what we saw in Q1.

Operator: Our next question comes from the line of A.J. Rice.

Albert Rice: Just maybe picking up on the comment that Jen just made. I know operational efficiencies have been an ongoing part of your strategy and you’re attributing part of the 70 basis points of margin improvement you saw year-to-year to operational efficiencies. Can you just maybe update us on some of the specific areas of focus and any AI-related applications you’re looking at there?

Jon Rousseau: Yes, look, I mean, I think as we’ve said before, we did a nice job offsetting some of this IRA impact in Q1 in Home and Community pharmacy. Some really nice efforts there from procurement over the past year, but then also in operations with some automation tools and order intake and revenue cycle, in particular, currently working on something in Infusion around order intake as well. Just to give everybody a tangible example because it can be a little ethereal sometimes. But you get a 5-inch thick patient packet and intake and Infusion, it takes somebody 2 hours to enter the relevant information in the system, working on an agent that can do that in 2 seconds. That would be an example of streamlining workflow of which we have 9 or 10 different projects going on internally in the organization.

As you look at the Home Health and Hospice side, we’ve invested a lot in portals. There can literally be 85 different portals that hospitals will send their — put their patients into upon discharge and you’ve got to connect to all of them. And so we’ve done a ton of work there over the last 2 years, connecting into all the portals. You still have to go earn the referral with your clinical liaison, but you’ve got to be in the game by accepting the referral in the portal. We’ve done a ton of work there. I think we have evidence of improvement and success in our admissions from doing that. And then I think a last example would be in order intake in Home Health. We’ve done a really nice job centralizing that. As some of these assets come over from Amedisys and Optum, they were not centralized, and we’re seeing some real benefit there already out of the gate.

And so continue to invest in that team. I mean, Jen, we’re up to over 20 people in our internal AI team now. And it seems like the more we get into it, the more opportunities you find. But that’s going to continue to be a real focus for us. There are — there’s another — I hesitate to say, but we’ve got a pretty strong bogey for cost to fill reduction in Home Community Pharmacy in Q2 and then more in Q3 and Q4 that we have to hit, and a lot of them are tied to these OpEx initiatives, which are underpinned by some technology systems and automation. So working hard at it, but we are seeing things proceed along the intended path as of now.

Albert Rice: Okay. That’s great. And maybe just conceptually also ask you about biosimilars. Obviously, you benefited from tremendous new pacing of new LDD launches and so forth. But I’m also curious about the pace of biosimilars, how the biosimilars coming to market has emerged. Do you see that as still the opportunity you thought it was a couple of years ago? Or are there aspects about it that either make you more optimistic or a little more cautious about what that pipeline looks like and what it might mean for you?

Jon Rousseau: Yes. I think as we sit here today, we do not see much biosimilar risk just based on our current portfolio and the revenue and GP that we have from it. So I think conceptually, over time, there’s an opportunity for us to participate in that more from a baseline of it’s all upside. And I think that’s how we’re thinking about it. So — but I think a lot of that is to be determined. If you think about our portfolio today, we have our oncology products. We have our other rare and orphan and LDDs that are oral injectable. We have our infusible products that we’re leaning into from an LDD standpoint. Those are kind of our 3 swim lanes of our primary products today from a specialty standpoint, we are looking just more broadly at the specialty world, any other LDDs or any other just attractive products and thinking if it makes sense to us to participate in any other areas.

So I think we will continue to try to refine our strategic assessment of your exact question this year. But I do think that there could be opportunities there, and we don’t have any near and present risk in that area today. So hopefully, as we lean into this more, it could be a fourth or fifth swim lane in time.

Operator: Our next question comes from the line of Sean Dodge with BMO Capital Markets.

Sean Dodge: Maybe just going back to the operational initiatives again. Jon, you gave some specific examples of what you’re working on there. But if we think about — I know those were a driver of some of the margin improvement we saw last year. You’re continuing to work on those this year. How should we think about the expected contribution from those in ’26, maybe relative to what you saw in ’25? The savings or benefits from those you expect to be greater this year than last? And then of all of the margin levers you talked about, where do these efficiency initiatives rank in terms of kind of the amount of EBITDA they’re driving? Is this kind of pretty close to the generics? Or is this kind of a distant second?

Jon Rousseau: Yes, Jen, maybe you can sort of tack on to this question. But what we have internally, I would say, is a program that’s been consistent over time. I think we mentioned at Investor Day, we’ve even more formalized, call it, continuous improvement, if you will, into a real Lean Sigma training program throughout the organization, White, Green, Black Belt, you can get, and we’ve really formalized that. So I think it is very much in our culture, just constantly looking for the next thing. I think our data says that we’ve got over 700 projects that we’ve completed in the process improvement arena in the last 5-plus years that has generated 9 figures of savings, of which a ton of it we’ve reinvested back into our people and into IT and technology systems.

So over the past several years, we’ve just had, I would say, meaningful savings that have been either investment and/or EBITDA contributors each year into the organization. I mean, look, first and foremost, we are always going to try to drive growth through a focus on the top line. I mean the 3 things that have driven the company over the past 9 years now that we talk about a lot are volume growth, operational efficiency and accretive M&A. And we will continue to try to drive each one of those in the future. So volume growth, whether it’s on the pharmacy side with LDD wins, trying to maximize generic conversions or whether it’s on the provider side with patient volume growth will always be first and foremost. And I would say, the biggest contributor, but we certainly try to complement that.

Jen, anything else?

Jennifer Phipps: No, I would agree. I think the volume underpinned by our high-quality services has always been our very highest focus. And then as Jon mentioned, the strength of our portfolio of our company really is at the core of our DNA is leveraging our scale through smart procurement activities continuing to build. We think there’s a continuous opportunity for that in terms of focus on execution in those areas. As Jon mentioned, we have a lot of people. We’ve been training just out in the field, hundreds of people that have gone through our White Belt and Green Belt trainings, but also making sure that as we scale that we’re going back and leveraging that in our procurement initiatives. And I think that will continue to be an important contributor as well as the volume.

Sean Dodge: Okay. Great. And then you mentioned before one of the other kind of growth areas within pharmacy being the fee-for-service business. Just anything you can share around kind of the scale of that business now? How much is that contributing? And what do you kind of see the longer run opportunity being with fee-for-service specifically?

Jon Rousseau: Yes. I mean it’s — I think we’ve got 31 hub programs today, probably more service agreements than that. It’s growing in the 40% to 50% range year-over-year. It’s certainly not the majority of our GP contribution within our specialty business, but it’s no longer $5 million or $10 million either. So it’s — I hesitate to get into too many details. But it’s a meaningful part of the business that’s really important to us. And I think philosophically is an example of how we try to deepen our relationships as much as we can with manufacturers wherever we can be helpful.

Sean Dodge: Congratulations.

Operator: Our next question comes from the line of Whit Mayo with Leerink Partners.

Benjamin Mayo: Jon, I was just wondering if you have market share data with your specialty business. Just wondering if you know what your oncology share is today versus maybe 1 to 2, 3 years ago.

Jon Rousseau: Yes. It’s tricky, Whit. I mean it’s a great question. And we do have some of this, obviously, drug by drug. As we talk about a lot, a proxy would be generally half of the revenue of specialty drugs goes through the SP channel. And then what is your share from there. We do feel that our share continues to increase. Almost by definition, if you’re an exclusive with a manufacturer or in an ultra-narrow network, say, of 2 pharmacies, by definition, you’re going to get 100 or 50%, 60%, 70% market share of that specific drug. So as more drugs have gone exclusive in ultra-narrow, just given the service that we’ve been able to provide, that will pick up your market share. You do have to go drug by drug ultimately. But if the trend is towards more LDDs in particular, EDs and ultra-narrows, we would be seeing a greater share there over time.

And then on the generic side, we do try to get in front of it. We try to be in the offices well in front of a generic launch, communicating and educating and building out that brand volume. So I think we’d like to believe our performance on the conversion side is really strong. And — but we can do a little bit more work on those market shares. You don’t have perfect visibility on it, obviously, but we do feel like it is continuing to ebb up.

Benjamin Mayo: That’s helpful. And corporate cost was up maybe a little bit more than you thought. I mean I know you guys are making a lot of investments this year. You’ve been quite vocal about that. Jen, what do you have in your plan for the full year for corporate?

Jennifer Phipps: Yes. Great question, Whit. So if you look at versus Q4, our corporate costs are not up quite as much as they would appear to be year-over-year as we have been making additional investments in different activities throughout 2025 as well. I would say I do expect a small tick up through the remainder of the year as we think about some additional projects that we have in the pipeline from an IT perspective and other things. But I would say not a significant tick up at this time is our best view.

Operator: [Operator Instructions] Our next question comes from the line of Matthew Gillmor with KeyBanc.

Matthew Gillmor: Maybe picking up on some of the generic conversion comments. You had mentioned that utilization was strong. I wanted to see if you could provide a broader comment on the landscape for generic conversions and how you’re performing relative to that opportunity.

Jon Rousseau: Yes. I would just say just very consistent there in terms of the last really 5 years. We’ve got a broad portfolio across drugs and brands and generics across the organization. And so — so it’s really fluid in terms of what’s coming in and what’s coming out with new brand launches and conversions. The market is real dynamic. But from a generic standpoint, the playbook remains the same. We’ve continued to invest in the Salesforce, and we’ve continued to try to invest in our manufacturing partners as well, not only branded but generic to be able to have access to the supply where needed as well. So I would just say it’s a strategy that we continue to try to refine over time. It’s multifaceted in terms of being able to execute against it.

And as we look out to the next 2 years in particular and then another 5 years, there’s still a healthy stream of drugs that will be coming up on their patent expiration date and converting generics. But we’re always looking to grow our product portfolio in the most broad and holistic way possible across all therapy types.

Operator: Our next question comes from the line of Brian Tanquilut with Jefferies.

Brian Tanquilut: Congrats Jon, maybe just a question on the business, right, as it relates to the defensiveness of it? Or how do you think it could be resilient, I guess, any PBM moves in light of the challenges that the PBM industry is facing and also some of the stuff we found out yesterday from your peer where the PBMs and the payers are trying to move drugs away from non-PBM or specialty pharmacy. So just curious how you’re thinking about the strategy around defending the moat of your business?

Jon Rousseau: Yes. I mean we do as best we can to try to partner with everybody. I mean we have really long-standing relationships. And I think healthy partnerships with everybody across the value chain. I mean I think it starts with our quality. We really invest in quality like crazy. I think, hopefully, our scale is extremely helpful, too. And look, on the Medicare side, there’s rules and any willing provider, for example, but we’re big believers that in patient choice and member choice, and they should be able to receive the provider that they want. So we try to be a high-quality provider, and we try to provide the best service possible to everybody’s members out there. And I think we try to be really thoughtful about where we participate in terms of what therapeutic area specifically.

Operator: Our next question comes from the line of Larry Solow with CJS Securities.

Lawrence Solow: Congrats also on the good quarter. Just quickly on the Pharmacy Solutions, I think grew about 25% in the quarter. The kind of midpoint of guidance sort of mid-teens. Is the difference going forward? Is that an increase in IRA and more branded conversions? Or is it a little sense of conservatism? Or what kind of drives a little bit of a slowdown there?

Jon Rousseau: Jen, do you want to hit that?

Jennifer Phipps: Yes. So I would say it really is related more to the year-over-year growth and the quarterly sequential growth we saw in 2025. So really, as we think about the remainder of the quarters, while we do expect sequential growth, both in terms of revenue and EBITDA, we see that as being much more balanced in terms of quarter-over-quarter growth.

Operator: Our next question comes from the line of Stephen Baxter with Wells Fargo.

Stephen Baxter: I just want to follow-up on some of the kind of the efficiency conversations we’ve been having today. I guess, specifically looking at the pharmacy business, you’ve held SG&A in a really tight range for the past couple of years. And I think you’ve gotten leverage on SG&A, I think, in all 20 quarters that we have in our model. But as we look at this quarter specifically, it looks like SG&A stepped up like $40 million sequentially or something like 40% quarter-over-quarter. So I would love to just understand a little bit better like what is driving that sequential increase? Is there anything that’s onetime or kind of unusual to flag? And then as we think about what this money is actually being spent on, how to think about like kind of the growth profile or the returns that you’d expect to get on this kind of what seems like pretty meaningful platform spend over time?

Jennifer Phipps: Yes. So maybe I’ll start and Jon, if there’s anything else you want to add. So from a Q1 perspective, there were a number of investments we’ve talked about in terms of IT and other areas. Those were certainly contributors from a cost perspective in the quarter. But we also continue to invest for growth in terms of Salesforce across our different businesses, a number of other areas. So we’ve talked about as we are investing, we’re always thinking about how can those investments drive growth next year and 2 years and 3 years from now. So we did have a number of investments there. There certainly were commissions and other things that related to the strong sales growth and other areas that did drive that. But I would say the largest impact were those investments, including into our Salesforce and other areas throughout in the quarter.

Operator: Our next question comes from the line of Erin Wright with Morgan Stanley.

Erin Wilson Wright: So I hate to belabor the topic, but just since we’re getting a lot of inbound questions on it, I just wanted to dig into the PBM dynamic just a little bit more on private label, it just seems more dedicated to subcu. But are you seeing any changes in reimbursement now on the Infusion side versus subcu? And when the subcu does launch? And how do you kind of think about the scope of the private label right now? Does it broaden at all over time, just given some of the traction that they’ve seen so far? And I guess, how do you think about the relationship with payers and PBMs and any potential conflicts of interest that could arise? And I don’t think you give a generic penetration rate, but like what percentage of that could be exposed to some of this competition over time? I’m just trying to reconcile with that.

Jon Rousseau: Yes. I think as it relates to any of the private label stuff, we just don’t have a lot of volume or exposure to those sort of relevant products or situations today. And anything we’re seeing or experiencing from a payer or PBM standpoint, I would just say it is very consistent. We’re not seeing any big changes or big moves as it relates to our agreements or our products.

Operator: Ladies and gentlemen, I’m showing no further questions in the queue. That concludes today’s conference call. Thank you for your participation. You may now disconnect.

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BRIGHTSPRING HEALTH SERVICES INC

Q1 2026

Earnings Transcript

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