Ladies and gentlemen, thank you for standing by. Welcome to BrightSpring Health Services' Divestiture of Community Living 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to 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'm joined on today's call by Jon Rousseau, Chief Executive Officer, and Jim Mattingly, Chief Financial Officer. 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 Form 8-K that was filed today 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 expected performance and financial condition. You can find additional information on these non-GAAP measures 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 will turn the call over to Jon Rousseau, Chief Executive Officer. Thank you, Jen. Good morning, everyone. Thank you for joining today's conference call. Since Friday, BrightSpring entered into a definitive agreement to divest the community living business to Sevita, a leading provider of home and community-based specialty healthcare. The total consideration in the transaction is approximately $835 million, with an expected closing this year in 2025, subject to regulatory approvals and other customary closing conditions. Before I touch on the transaction rationale and impact for BrightSpring, I'd like to take a moment to express my gratitude and appreciation to the thousands of employees who are part of the community living business. They work hard every day to deliver attentive, compassionate, and quality care to clients and patients in need, individuals who otherwise would be left either without these critical daily services or receive them in institutional settings. With a five-decade heritage, we are extremely proud of the continued evolution in this business, particularly over the last eight years. Individuals served in this business can have high health and behavioral acuity. The services can be challenging, but also deeply rewarding, and we have continuously invested in our people, technology, homes, quality and compliance processes and resources, and best-in-class and customized pharmacy services to support all of our clients. As evidenced by years of client and employee testimonials, third-party employee awards and statewide accreditations, and many other measures, our dedicated teammates in community living have made an enormous impact, and they represent people with an others-first approach to life. Going forward, at this stage of our life cycle at BrightSpring, we are transitioning the community living business to Sevita, a company and team with extensive experience in the IDD and behavioral industries, who is well-suited to continue to provide compassionate care to the community living client population, leveraging best practices across both organizations. I believe that both organizations will benefit significantly upon the closing of this transaction, with increased capabilities and focus in our respective core markets. With this announcement, BrightSpring has streamlined its business to become more focused on a concentrated set of core patients and service capabilities, which is beneficial to the company, customers, patients, and shareholders for multiple reasons. First, this will result in enhanced operational efficiency across the organization, with more time, energy, and capital available to support patients in home health and hospice, personal care, rehabilitation, primary care, and the pharmacy businesses. Second, our integrated care synergies and strategic opportunities become more evident with the remaining pharmacy and provider businesses, which all serve the same seniors and specialty populations with similar business and delivery models. And finally, our provider-payer mix will become more balanced, as you can see in the transaction supplemental presentation on our Investor Relations website. The remaining BrightSpring Provider Services will be comprised of three operating groups, for which we will be disclosing revenue following the close of the transaction. They are the home healthcare segment, which will include our home health, hospice, and primary care services, personal care, and rehabilitation services. Each of these businesses has an attractive growth profile, operating in attractive growth markets of significant need, with demonstrated and compelling outcomes for all stakeholders. These businesses also have opportunities for both de novo expansion and acquisitions to augment growth and profitability. Following the close of the transaction, our operating structure will allow for a more focused allocation of corporate resources and capital to grow our service capabilities in these areas, as well as in our specialty and home community pharmacy business. Ultimately, the divestiture of community living will unlock a more consolidated and attractive provider services business profile, with improved revenue and adjusted EBITDA growth. Said another way, the divestiture of community living will be accretive to both the companies and the provider services segment's revenue growth and adjusted EBITDA growth in the future. As mentioned earlier, the total consideration for the divestiture is approximately $835 million. The transaction is deleveraging, and we intend to utilize the after-tax proceeds to reduce outstanding indebtedness and accelerate our path towards three times debt to EBITDA, achieving this level several quarters ahead of our previous plan. The transaction is expected to have a modest impact on our 2024 total company free cash flow generation. Following the close of the transaction, we believe that an increase in company growth rate, reduced leverage profile, improved cash flow conversion for shareholders. Turning to our expected 2024 results and guidance for 2025, we are pleased to provide an update to our expected results for 2024, which are anticipated to come in higher than our guidance provided on November 1st, following our third-quarter results at the time. Our preliminary expected 2024 results, including Community Living, are as follows. Total revenue is expected to be in the range of $11.2 billion-$11.3 billion, with Pharmacy Solutions revenue expected to be between $8.7 billion-$8.75 billion, and Provider Services revenue expected to be between $2.5 billion-$2.55 billion. Included within this range are community living revenues, which are expected to be approximately $1.194 billion during 2024. Total adjusted EBITDA is expected to be approximately $588 million for the full year 2024. This result would represent approximately 15.8% growth versus full year 2023, when excluding the quality incentive payment received in 2023. Adjusted EBITDA attributable to community living business in 2024 is expected to be approximately $128 million. For the full year 2025, we are providing initial guidance, which excludes the community living business. Total revenue is expected to be in the range of $11.5 billion-$12.0 billion, including pharmacy solutions revenue of $10.05 billion-$10.5 billion, and provider services revenue of $1.45 billion-$1.5 billion. This would reflect 14.4%-19.3% growth over full year 2024 at the midpoint, excluding community living in both years. Total Adjusted EBITDA is expected to be in the range of $540 million-$555 million for the full year 2025, with operating cash flow of over $300 million. This would reflect 17.4%-20.7% growth over full year 2024, excluding Community Living in both years. To summarize, 2024 was a successful year for BrightSpring on many levels, with consistent execution across our businesses, supporting our mission to deliver compassionate and comprehensive health solutions to a large population of complex patients with significant needs, while providing significant and clear value to all stakeholders. We are pleased with the broad-based strength across pharmacy and provider that continues to underpin BrightSpring's success. As we enter 2025 and following this announcement, the company is extremely well-positioned for continued performance and progress. Before I turn the call over to Q&A, I would like to reiterate my appreciation to the community living employees for their dedication to the clients we serve and to each other. We will now open up the call for questions. Operator. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. And the first question comes from Whit Mayo with Leerink Partners. Your line is open. Hey, thanks. Good morning. Appreciate you doing this call on such short notice. Jon, just looking at the 2025 numbers, you're not giving specific numbers around the prior contribution of community living that's in street numbers. But if I assume that that business is probably not growing too much, it's not a stretch to see maybe $670 is a doable number this year. Am I in the ballpark here, or do you think I'm off on my math? Good morning. I think your assumption there would be solidly in the range for what we otherwise would have guided. Okay. Great. And maybe just one other one. I can't remember if you provided the details in the slide deck or not, just on the overall Medicaid mix of the business after the transaction. How does that look, or how does that change after selling this business? So community living was a Medicaid-funded business. We've received incredible advocacy in the space and from Medicaid payers at the state level over the last years, in particular over the last five years and through and after COVID. The value of our services has just never been more evident. And it's been very pleasing to see the level of support that we get, given the front-of-the-line population and the dramatic ROI on these services for states and the federal government. That all said, our Medicaid as a percent of our total payer base will go down from probably about 20% or 23% substantially. Go ahead, Jen. Or Jim, did you have more? Yeah, it will go down. We presented on slide seven. You can see the Q3 mix year-to-date updated, going from 20% Medicaid to 12% Medicaid. Great. Thank you. And our next question will come from A.J. Rice with UBS. Your line is open. Thanks. Hi, everybody. Congratulations on the deal. First, I know this isn't the formal Q4 release, but looking at the numbers you're providing today, it looks like your outperformance was primarily on the pharmacy side as we ended the year. Anything to call out there at a high level ahead of more formal release down the road? Yeah. Q4 was a very solid quarter. Good morning, A.J. We were pleased with it. It was really a record quarter on many levels for the organization. Very good momentum as we head into 2025. Q4 was about 17.5% EBITDA growth year-over-year. On the pharmacy side, it was about 22% EBITDA growth year-over-year. And on the provider side, it was still about 16% growth year-over-year. So very strong quarter from really all businesses in both segments. Okay. And I hear that one of the $1.5 billion or so provider revenue going forward, it sounds like you're going to start breaking that out between home health and hospice, personal care, and rehab. Those have sort of been buried within subsegments before. Can you give us a sense of what those look like, the order of magnitude of revenues of each of those buckets? Sure. I'll turn it over to Jen for that. But we thought that that made a lot of sense. That was the best segmentation on the provider side. And Jen, can you help A.J. with just a sense of relative scale there? Yeah. So we will be providing home health and hospice together as we are moving forward, and we are looking from a total perspective, we are looking at about 12.6%. I'm sorry, so we are looking at, let's see, about 50%, a little less than 50% will be the home health, hospice, and primary care segment, and then the rest being split almost evenly between rehab and personal care. Yeah. A.J., you can think about it as a $300 million-$350 million rehab business, about the same for personal care. And the balance are about $750 million or so in home health and hospice. Okay. That's great. Thanks so much. Our next question comes from David Larsen with BTIG. Your line is open. Hi. Congratulations on the transaction. Can you please remind us what your leverage ratio will be by year-end 2025 and what your sort of normalized free cash flow will be on an annual basis at the end of 2025? Thank you very much. Yeah. Good morning, David. We're hopeful that we will be very close to three times leverage by the end of 2025, assuming the transaction closes. The transaction in and of itself reduces leverage by about 0.3 turns, a little bit more than that. And then when you combine the expected EBITDA growth next year along with our cash flow generation next year, we should be somewhere in the 3.0-3.5 range as we get to the end of the year. I think we should be solidly in the middle of that range. And then based on the outcome of next year, hopefully we can see how close to three times we get. That is on a public EBITDA standpoint too. And then, Jim, maybe you want to provide a little bit more color on that. Sure, David. It's Jim. As we've always talked about, operating cash flow, our guide historically has been run rate of around $275 million for the company. As we look to complete this transaction during 2025, pro forma for the transaction and with the planned growth in 2025, we would expect our operating cash flow to be at or higher than that $275 number, between $275 and $300, with obvious working capital and other ongoing initiatives for us to possibly push that number even higher, all in the support of getting to that three times net leverage as quickly as we can, hopefully by the end of next year. Great. Thank you. And then can you talk about the selling synergies between community living and the other businesses like home health, hospice, rehab, primary care? It's always been my perspective that community living is really selling to sort of a different group of members or patients. So it's kind of not like you go to a hospital and sell community living along with hospice, along with home health, along with these other services. If you could just talk about that a bit, please. Thank you. Yeah. I mean, as we noted and has been noted elsewhere at this point in time, I mean, I think the primary rationale in the transaction is a streamlined organization going forward with a focus on our core markets and service settings, really reduce complexity, reduce leverage, along with increased growth rate. Community Living is a business that we have invested in substantially, and it's been extremely rewarding to see the progress in this business clinically and from a quality infrastructure and process standpoint over the last several years and over the last decade at the organization. It's a very stable business with an incredible ROI for states and the government. That said, it is a little bit more unique within our organization. It's primarily Medicaid is the main payer, and referrals run through case managers at the local market and state level as well. There clearly is a consistency of patients and referral sources and delivery models with the remaining organization: home health, hospice, rehab, personal care, and then infusion, specialty pharmacy, and home and community pharmacy. Those are all very tight businesses from the perspective of who you're serving, the referral source setting, and the delivery model itself. And that obviously is something that we wanted to try to continue to create as much focus and channel our energy as productively as possible as we go forward at this point in time. All right. One more quick one. For the community living business, is it 100% provider, 0% pharmacy, or just what percentage of that business is pharmacy, please? Thank you. What we are divesting is 100% provider Community Living. Okay. Great. Thank you. Our next question will come from Joanna Gajuk with Bank of America. Your line is open. Hi. Good morning. Thanks so much for taking the question. So first, a very quick one. Just to confirm, so your 2025 outlook, right? You said you excluded the Community Living business. So just to confirm, this is what you assume for the entire year that starts January 1, even though you did not execute on this transaction, correct? Yes, that is correct, so we expect to produce guidance. It will be in our discontinued operations throughout 2025, and we'd like to report that as an adjustment to EBITDA, reducing our Adjusted EBITDA in 2025. Thank you. That makes sense, and I guess my actual question, around the 2025 guidance, so it seems like the pharmacy revenue is better than what we had anticipated. And I guess if we exclude the community living, the provider business outlook is sort of as expected, at least versus our estimate. So could you frame a little bit for us what's assumed for the 2025 pharmacy? Is there anything we should be on the lookout in terms of what's driving that robust growth, or is it just continuation of the same, or just any additional color that would be helpful? Thank you. Yeah. Thank you, Joanna. It would be a continuation of all the things that we've been talking about throughout 2024 and as we enter into January, just seeing continued momentum in the business, really from a volume perspective and continuing to execute against a lot of our operational initiatives too, but on the pharmacy side, our specialty pharmacy business continues to see very, very strong growth rate from referrals coming in. I think in the first couple of weeks this year so far, we've had 10 or so record referral days. That's just a testament to our quality to new drugs launching and continuing to execute in the field with patients and their families providing just really outstanding services and a really high Net Promoter Score. Our home and community pharmacy business had a nice year last year from a volume perspective as well, in the double-digit growth on scripts. We see that continuing this year. They landed a large customer in particular in the back half of last year. And then on the infusion side, as we've talked about, we really see this year as a reversal and improved performance based on a lot of the operational investments that we've taken the last 12 months to make. So I would just say continued execution on both the volume and operational side across both pharmacy and provider. Really nothing new, but just continued focus on our core strategies. And just to clarify, actually, on the pharmacy comment and follow-up to the question that was asked before, so you're selling only the community living services, right? But your pharmacy, community pharmacy business is serving the same patient population. So you assume that that will continue, right? Is there any risk that somehow they might change, that the new owner of these assets might use different pharmacy vendors? There is, within our home and community pharmacy business, we have our IDD behavioral pharmacy as well. There is a minority of that IDD pharmacy that serves our Community Living clients today. That contract will roll over and be assumed by the buyer. It will go from ResCare to Community Living. That contract will now live with Sevita, and we will continue to serve that client population. Great. Thank you so much. Thanks for taking the question. And our next question comes from Stephen Baxter with Wells Fargo. Your line is open. Hi. Thank you. I was hoping you could give us a sense of what the improvement in the long-term revenue and EBITDA growth rate is that you're expecting as a result of the transaction, or I guess potentially give us the growth of the community living asset for the past couple of years so we could calculate the drag? And I guess is your plan to give us restated financials for the past couple of years, both for the provider segment and also the total company? Thank you. Hey, Stephen. Good morning. Community Living has been a very solid and stable business for us at the organization. As I've said, we have invested heavily in quality and technology in our people, really in the eight years that I've been here. We have an outstanding team with a ton of longevity and consistency in that business, doing just a lot of good in communities for clients and for states. Very stable business that has been a solid contributor to us. You see that Medicaid population, that's typically about a 1%-3% growth rate. There are some subsegments like host home that can be double-digit growth. That's a tremendous model. We would characterize that as just a very stable business that we have continued to invest in liberally to make sure where we want to be from a process and from an outcome standpoint. It's a business that we love. It's got an incredibly deep mission. But we would characterize that, as we always have, as more of a stable, steady contributor. I think a way that you can think about it is that the organization, excluding Community Living, would have about a, in our view, as we think about 2025, as we sit here today, about a 6%-8% increase in growth rate for the organization, excluding Community Living, on an EBITDA standpoint. And then to the second part of your question regarding whether we will provide additional details, we will. So we So we expect the significant disposal at close. We will obviously be providing the appropriate disclosures at that time. We also expect that in Q1 2025, it will meet discontinued operations from an accounting standpoint. So at that time, we will be providing a lot of additional detail so that you can see specifically the community living business at that time. Okay. Yeah. Thank you. And then just one quick follow-up. Yeah, I'm personally not as familiar with Sevita and the amount of overlap you have with them today. I guess could you just give us a little bit of insight into kind of the divestiture process and the antitrust risk and how confident you are around close and any initial conversation you may have had with states about this transaction? Thank you. Yeah. Sevita is a very dynamic organization, tremendous leadership team and CEO. They've been around for over 50 years in the behavioral and specialty care space as well. Very long-standing heritage, sophisticated company. On the second point, IDD is a massive market, and it is extremely fragmented. I think collectively, both our organizations have less than 5% market share. And so we do not anticipate any challenges as we work our way through the approval process here in the coming months. Our next question will come from Matthew Gilmore with KeyBanc. Your line is open. Hey, thanks for the question. Thanks for hosting the call. I wanted to ask about capital deployment priorities. You mentioned this gets you pretty well along the way to your target of three times by year-end. Any thoughts to share in terms of capital deployment priorities once we get towards that three times level? Yeah. Good morning, Matt. The preponderance and vast majority of the net proceeds here will go down to pay down debts. We will probably retain some amount of capital for flexibility as we see fit from an acquisition standpoint. One of the real strengths of the organization is our M&A pipeline and capability in very fragmented spaces where we can bring our operational sophistication to bear in transactions. Our pipeline remains as deep as it ever has. We will continue to be very deliberate and very selective in anything we do. I would just note that, for example, in the most recent Haven acquisition that we announced in the back half of last year, that was a business that needed a significant amount of operational items to be addressed, and that is occurring, and that business is well ahead of plan. That's just another really good example of our ability to drive additional performance in businesses that we choose to partner with. So we will continue to be opportunistic as we look at acquisitions. I don't think anything fundamentally changes versus what we've always said before. $10 million-$15 million of highly accretive EBITDA a year from acquisitions is pretty straightforward for us. That's been our track record pretty conservatively. And then from there, we can remain opportunistic for situations that we think are very unique and will ultimately provide significant shareholder value. So principally working towards our three times leverage ratio, I think we'll now get there several quarters before we otherwise would, potentially by the end of next year. That's our goal. And we will always blend in some very accretive M&A to supplement growth, as has been our history. Got it. And then one follow-up on the 2025 guide. Can you just remind us sort of the state of play with the quality incentive payment? Is that something that potentially comes back into play, and are there any assumptions around that for 2025? Yeah. That was a unique situation related to DIRs and specialty pharmacy in the pharmacy world, which ended in 2023. So that was a four-year program from 2019 to 2023 that ended now 13 months ago. Got it. Thank you. As a reminder to ask a question, please press star, 1-1 on your telephone, and wait for your name to be announced. The next question comes from Larry Solow with CJS Securities. Your line is open. Good morning and congratulations. Thanks for taking the question. Lots of my questions have been answered. I guess just a question on the $128 million of EBITDA you called out. I'm curious, it's somewhat of a little bit the business is kind of a standalone, but a bit of a carve-out from within a segment. Does that $128 million exclude any overhead expenses or anything that you might have incurred or that the buyer will have to incur next year as the business is sold? Good morning, Larry. Yeah. So within our businesses, just fundamentally, our approach is that we really leverage enterprise best practices in the organization. I think that's really one of our strengths, is being able to bring HR, GR, IT expertise, sales and marketing expertise down through each one of our businesses. That's something that we're incredibly focused on to try to outgrow market share within our organization. I mean, you look back at what we did at the service line level in 2024. I mean, every single one of our service lines, except for one, grew in the double digits. And that's been a key part of our performance capability set over time. At the same time, we really balance that with dedicated resources to the businesses. Every one of our businesses has always had dedicated management teams that run their businesses every day, and they really benefit from help and support from those specific functions at the corporate and enterprise level. Community Living is actually very readily able to be carved out, just given the dedicated employees to that business, which is very clear. In that EBITDA, that would be a net EBITDA number that includes all overhead support for the business. I think as you go forward in the organization after close, we will always continue to look at our resources, and there could be opportunities for additional synergies in a streamlined organization, but that would be separate. Got it. And just a question on the acquisition, just your appetite for acquisitions. Clearly, at your capital deployment, you're focused on reducing the debt. And as you mentioned, this takes you down a little less than a half a turn. Does your goal of three or about three times by year-end, I guess that assumes incremental small M&A, like you mentioned? But does your appetite potentially clearly gives you a little more room for acquisition? So does this potentially give you a little more opportunity and a little more discretion if something is bigger to come along on an opportunistic basis? Thanks. Sure. Yeah. The guide that we've provided for 2025, excluding community living, that 17%-21% plus growth, that largely excludes any acquisitions next year. So to the extent that we would do any acquisitions, that would be upside potentially to that number. As I said before, we will be very consistent in our acquisition philosophy and approach as we have historically. There is a baseline amount of EBITDA that we've consistently executed against, which is very accretive, where we bring our operational capabilities and synergies to bear from our enterprise. It's a unique capability that we do have. I think our baseline remains our baseline, similar to what it's been in the past. Certainly, we are always open to situations that we think are really unique, that we may come across with our relationships, and that we're in a unique position to follow up and execute on. So our baseline remains the same, but I think it is fair to say we maybe have a little bit more flexibility, second, though, to driving towards that target leverage level. Got it. I appreciate the call. Thanks. I show no further questions at this time. I would now like to hand the call back over to Jon Rousseau for closing remarks. Thank you, operator. Thank you, everybody, for joining the call at 8:00 A.M. after a holiday. We really appreciate that. Hopefully, this was informative and helpful, and we look forward to talking with you again soon. Thank you, and have a great day. This concludes today's conference call. Thank you for your participation. You may now disconnect.