Brightspring Health Services Inc (BTSGU) 2025 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to the BrightSpring Health Services Inc. fourth-quarter 2025 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, David Deuchler, Investor Relations. Please go ahead, sir.

Good morning. Thank you for participating in today's conference call. My name is David Deuchler with Investor Relations for 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 and full year ended December 31, 2025.

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 market conditions. Such forward-looking statements are not a guarantee 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 annual report and Form 10-K that we filed with the SEC, including the specific risk factors and uncertainties discussed in our Form 10-K. 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 the 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 Jon Rousseau, Chief Executive Officer.

Good morning, everyone, and thank you for joining BrightSprings Fourth-quarter and full-year 2025 earnings call. I'd like to begin by expressing my and the company's appreciation to all of our BrightSpring teammates who work hard to deliver attentive and quality patient care and services to people and communities across the country. They drive the realization of our mission forward every day.

2025 was another productive and impactful year at BrightSpring in many ways. Overall, we saw continued success, delivering revenue and EBITDA growth while achieving many milestones, all underpinned by the delivery of high-quality and compassionate services and care to patients. In the beginning of 2025, we announced our plan to divest the Community Living business, which will streamline the company's operations and create more focus on core patient populations in prioritized markets.

Earlier this year, the Community Living divestiture transaction was approved by the FTC, and at this time, we expect the transaction to close at the end of the first quarter. The transaction is expected to result in net after-tax cash proceeds of approximately $715 million, which we intend to primarily utilize for debt paydown to further improve our leverage and further strengthen the balance sheet.

Additionally, the acquisition of Amedisys and LHC home health assets closed in the fourth quarter of 2025 in a two-part transaction on December 1 and December 31. BrightSpring acquired 107 branches at a purchase price of $239 million, which was fully funded from cash on hand. The assets generated full year pro forma revenue of $345 million in 2025, which includes the months throughout the year prior to the transaction close.

These assets are very complementary to our existing home health business from a geographic perspective while also being in the same markets as our hospice locations in many cases. And we are thrilled to have the Amedisys and LHC assets and colleagues integrated into BrightSpring as we are already taking steps to bring new and improved company capabilities to these acquired operations. This is another example of thoughtful, logical, strategic and accretive M&A that has defined our acquisition's history.

Home health, of course, has a tremendous value proposition given its impact on clinical outcomes and cost as it is shown to reduce ER visits and hospitalizations by 15% and 25%, respectively, and reduce mortality rates by 30% relatively. With an estimated 35% of patients referred to home health but who do not end up receiving the service, home health should continue to be an important solution in the future of healthcare.

Some other accomplishments of note in the Pharmacy and Provider business last year include: continued LDD wins, strength in quality metrics, technology and people investments that resulted in ongoing efficiency gains across the organization, de novo expansions and small tuck-in acquisitions.

BrightSpring's operational and financial performance exceeded the high end of our guidance range for the year, and we believe that the company's performance is a reflection of the value of our patient-centric, lower-cost, timely and proximal care, enabled by our people and culture who maintain an ongoing commitment to provide excellent and leading services.

Moreover, our goal is to continue to build out a unique and scaled Home & Community healthcare platform that demonstrates leading quality outcomes and operational best practices, a platform that is best positioned to be a critical partner and solution in US healthcare.

Before discussing BrightSpring's fourth-quarter and full-year performance, I would like to remind you that the company's financial results and 2026 guidance pertain to continuing operations and do not include results from the Community Living business and the effects of any future closed acquisitions.

For the fourth quarter, BrightSpring's revenue grew approximately 29% and adjusted EBITDA grew approximately 41% versus last year's comparable quarter, resulting in full-year 2025 total revenue and adjusted EBITDA that were above expectations. For the year, total company revenue was $12.9 billion, representing 28% year-over-year growth, which included Pharmacy Solutions revenue of $11.4 billion and Provider Services revenue of $1.5 billion, representing 31% and 11% year-over-year growth, respectively.

Full-year 2025 adjusted EBITDA was $618 million, which grew 34% year-over-year. And adjusted EBITDA margin for the company was 4.8%, a 20 basis point increase versus 2024, primarily driven by cost efficiencies from procurement and operational initiatives, along with generic revenue mix shift pharmacy.

On cash flow, the company realized $490 million of cash flow from operations in 2025, and leverage was 2.99x as of December 31, 2025, which declined from 4.16x as of December 31, 2024. Overall, BrightSpring performed well in both the fourth-quarter and full-year 2025 across all business lines, and we are very pleased with the position of the balance sheet and expanded cash flow profile of the company this year.

Today, we are initiating total revenue and adjusted EBITDA guidance for 2026. We expect total revenue to grow approximately 14% year-over-year at the midpoint of the provided range and total adjusted EBITDA to grow approximately 25% year-over-year at the midpoint of the provided range. Included in total adjusted EBITDA guidance is an expected contribution of approximately $30 million from the Amedisys and LHC acquisitions. We are excited for the year ahead, and Jen will discuss our 2026 outlook in more detail shortly.

Before I discuss our business performance, I'd like to highlight BrightSpring's commitment to our employees and the communities, individuals, populations and therapeutic areas that we support, whether our people, seniors, youth or other specialty patient populations.

At the company, we continue to lean into helping individuals and organizations with access to resources and opportunities, for example, in supporting employees through difficult unforeseen circumstances through our share program, in college scholarships, in nursing school partnerships and in partnering with many, many organizations, such as the Special Olympics for one.

We currently operate a foundation through our hospice service line and we have now started an enterprise foundation that will more formally carry on all of our community and patient support activities. We are hopeful that this BrightSpring Health Foundation can positively impact lives for decades to come.

I'd also like to briefly highlight our strong patient satisfaction and high quality scores in the fourth quarter, which are driven by our delivery of attentive and skilled care to complex populations in a timely and relatively lower cost manner. In Home Health, we continue to see over 91% of our branches at 4 stars or greater with timely initiation of care at an industry-leading level of 99.4%. In hospice, our metrics remain well above the national average with a top 5% ranked hospice program in the US and a CAHPS overall hospice rating of 87%.

In Rehab, our patient satisfaction scores remain very strong with 100% outpatient satisfaction and 98.4% home and community rehab satisfaction. In Personal Care, we have a client satisfaction score of 4.6 out of 5 compared to 4.5% in the third quarter along with strong internal client records and quality indicators audit scores. In Home & Community Pharmacy, dispensing accuracy was 99.99%, order completeness was 99% and on-time delivery was 96.8%.

In Infusion, our patient satisfaction score was 94%, and we were 1 of only 2 providers in the country to receive the ACHC IG distinction award based on our clinical and operational commitment to the IG patient population. Specialty Pharmacy demonstrated a consistently strong medication possession ratio of 92.4% in the quarter, along with time to first fill of 4.1 days, both much stronger than the national average.

In the second half of 2025, Onco360 ranked first and ranked second in the MMIT physician and office staff satisfaction survey. BrightSpring continues to demonstrate very strong service and quality metrics across all businesses.

Turning to BrightSpring's financial results by segment. Total Pharmacy Solutions revenue grew 32% in the fourth quarter, and adjusted EBITDA grew 44% versus the prior year. Total pharmacy script volume was 10.8 million in the quarter driven by total pharmacy census growth. Total pharmacy volumes declined 1% due to a slight decline in Home & Community Pharmacy volumes from the previously mentioned unwinding of a large customer going through bankruptcy and our decision to exit specific uneconomic customers.

Specialty and Infusion script growth was 30% year-over-year in Q4. In the Specialty and Infusion business, performance throughout the year exceeded expectations with fourth-quarter revenue growth of 43% year-over-year driven by market adoption of existing LDDs, new LDD wins, fee-for-service growth and strong commercial execution in the field.

BrightSpring saw strength in the quarter from both brand LDDs and generic volumes, our total LDD portfolio now standing at 149 LDDs including 5 launches in the quarter and 24 total launches in 2025. Moving forward, we expect 16 to 20 plus limited distribution drug launches over the next 12 to 18 months. We believe that our growth will continue to be driven by new LDD launches, generic utilization, commercial execution with referral sources and expanding fee-for-service.

We are excited to have been chosen as the preferred specialty partner for additional new innovative therapies this quarter, which include infusible LDD therapies to treat a range of oncology, rare and complex diseases.

In Infusion, the business performed in line with expectations in the fourth quarter with solid script volume growth. Adjusted EBITDA in the quarter grew in double digits driven by the benefits of operational initiatives and process improvements. We expect to continue to see improved profitability in Infusion from our operational and growth initiatives moving forward.

In Home & Community Pharmacy, we are pleased with the progress throughout the year. We've executed consistently across several end markets, including in behavioral, assisted living, hospice and skilled nursing. As we've entered 2026, we continue to enhance our go-to-market strategy, invest in growth resources and look forward to driving expansion in each of our end markets while we execute against the 2026 set of process, technology and automation work to drive ongoing efficiency improvements.

Turning to Provider Services. We are very pleased with the overall performance in the quarter and the year. In the fourth quarter, segment revenue grew 13% year-over-year and segment adjusted EBITDA grew 16% year-over-year with an adjusted EBITDA margin of 16.4% in the fourth quarter, a 50 basis point expansion year-over-year, primarily driven by economies of scale and efficiency.

Home healthcare, which represents approximately 55% of revenue in the Provider segment, grew 19% year-over-year. Average daily census grew 15% to almost 35,000 in the quarter driven by strong quality metrics, de novos, execution on partnerships and preferred MA contracts and strategic tuck-in acquisitions in target markets.

In home-based primary care, we are excited by the large opportunity that exists, especially with ACO payment strategies. We continue to invest in resources in this strategic area and we believe we can further expand our home-based primary care business to benefit payers and their members and better connect patients to other integrated services that they need.

In Rehab Care, which represented approximately 20% of Provider revenue in the fourth quarter, revenue growth was 8% year-over-year. We are pleased by strong person served growth of 13% and hours billed growth in the core neuro rehab services of 17%. Growth in the fourth quarter was driven by neuro rehab de novo additions and very high patient satisfaction scores, along with continued expansion of our rehab and motion program into ALF and home settings. We are excited by momentum in rehab Part B for seniors and look forward to driving additional de novo locations this year.

Turning to Personal Care, which represented approximately 25% of Provider revenue in the fourth quarter, revenue remained steady to up and grew 4% year-over-year. Personal Care person served grew 2% to 16,175 in the fourth quarter. In the quarter and throughout 2025, we saw steady operational performance as we continue to provide high-quality supportive care to seniors and assist with activities of daily living in the home.

Overall, I'm pleased with our operational execution throughout 2025, leading to excellent business performance across BrightSpring's Enterprise. We now have a seven-year CAGR of 22% on revenue and 18% on adjusted EBITDA. 2026 is off to a consistent and good start as we remain focused on leveraging our leading complementary and differentiated service capabilities and leveraging our scale, operational efficiencies and best practices to deliver high-quality coordinated care to complex patients.

We will be hosting an Investor Day on March 17 and look forward to discussing the BrightSpring platform and strategy that enables high-quality, lower cost, timely care delivery to an approximately 1.5 million senior and complex patient individuals every day. We'll provide information on the operations, end markets and growth drivers of each of our business units, and we'll discuss our long-term company vision and strategy and the reasons why we've never been more excited about Bright Spring's future.

With that, I'll turn the call over to Jen.

Thank you, Jon. Before I discuss our financial results for the fourth-quarter and full-year of 2025, 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-K to adhere to accounting standards required for annual reporting. As such, all BrightSpring's 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 for continuing operations is a useful reflection of our current business performance.

In the fourth quarter of 2025, total company revenue was $3.6 billion, representing 29% growth from the prior year period. Pharmacy Solutions segment revenue in the quarter was $3.2 billion, achieving 32% year-over-year growth. Within the Pharmacy segment, Infusion and Specialty revenue was $2.6 billion, representing growth of 43% from prior year, and Home & Community Pharmacy revenue was $593 million, representing a decline of 1% year-over-year.

Home & Community Pharmacy revenue declined year-over-year due to the divestitures associated with the customer that declared bankruptcy and our decisions to exit specific uneconomic customers. This particular customer's bankruptcy process is still ongoing and our forward year guidance contemplates a variety of scenarios. However, we do not anticipate any changes to the year under any scenario.

In the Provider Services segment, we reported revenue of $394 million in the fourth quarter, which represented 13% growth compared to the prior year. Within the Provider Services segment, Home Healthcare reported $217 million in revenue, growing 19% versus last year; Rehab revenue was $75 million, growing 8% versus last year; and Personal Care revenue was $102 million, representing growth of 4% year-over-year.

For the full-year 2025, total company revenue was $12.9 billion, representing 28% growth from 2024. Pharmacy Solutions segment revenue was $11.4 billion, representing 31% growth from the prior year. And Provider Services segment revenue was $1.5 billion, representing 11% growth from the prior year.

Moving down the P&L. Fourth quarter company gross profit was $413 million, representing growth of 22% compared with the fourth quarter of last year. For full-year 2025, company gross profit was $1.5 billion, representing growth of 20% compared to 2024.

Adjusted EBITDA for the total company was $184 million in the fourth quarter, an increase of 41% compared to the fourth quarter of 2024. For full-year 2025, adjusted EBITDA for the company was $618 million, representing 34% growth compared to 2024. Adjusted EPS for the total company was $0.33 for the fourth quarter and $1 for the full year.

Throughout 2025, we continue to implement procurement initiatives and have invested in and deployed new technologies to enhance operational efficiencies across the company. This has contributed to ongoing people and growth investments as well as net profitability growth and margin results for the fourth quarter and full year of 2025. In 2026, we anticipate our procurement and operational programs to result in additional gains through cost efficiencies, best practices and streamlining across all business lines.

Turning back to segment performance. In the fourth quarter, Pharmacy Solutions gross profit was $255 million, growing 25% compared with the fourth quarter of last year. Adjusted EBITDA for Pharmacy Solutions was $162 million for the fourth quarter, an increase of 44% compared to last year, representing an adjusted EBITDA margin of 5.1%, which was up approximately 40 basis points versus last year.

Provider Services gross profit was $158 million, growing 17% versus the fourth quarter of last year. Adjusted EBITDA for Provider Services was $64 million for the fourth quarter, growing 16% versus last year, representing an adjusted EBITDA margin of 16.4%, up approximately 50 basis points versus last year.

Community Living continued to show strong operational and financial performance throughout the year, and we are pleased with the year-over-year revenue and EBITDA growth we achieved in this business in 2025.

On a total company basis, cash flow from operations was $232 million in the fourth quarter and $490 million for 2025, exceeding our annual run rate operating cash flow expectations for the year. Our adjusted EBITDA growth, combined with our cash flow generation during the quarter, has led to a leverage ratio of 2.99x at December 31, 2025, which we successfully decreased from 4.16x as of December 31, 2024.

At the time we provided our fourth quarter 2024 results in March of last year, our leverage ratio target was 3.0 to 3.5x pro forma for the Community Living transaction. And as of year-end, we have now reached a leverage ratio of just under 3x and below that expected range. Our review of year-end 2025 leverage pro forma for the Community Living transaction is 2.6x. We are pleased to have exceeded our leverage target for the year driven by both growth and very strong operating cash flows exiting the year.

BrightSpring is well positioned with a strong balance sheet, enabling increased capital allocation flexibility in 2026 and beyond. Longer term, with continued execution, growth and cash flow generation, we remain on track towards a leverage target of 2.5x or below which, at current trends, could be realized by midyear, excluding acquisitions or other uses of cash.

As of December 31, net debt outstanding was approximately $2.5 billion. We continue to actively evaluate our capital structure to ensure that we are best positioned moving forward. As mentioned previously, in January of last year, we expect to receive approximately $715 million of net cash proceeds from the $835 million of gross cash consideration in the pending Community Living sale, which at this time, we expect to close by the end of the first quarter. Given various moving parts with regards to the use of Community Living proceeds, we are not providing interest expense guidance at this point in time.

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 $14.45 billion to $15.0 billion, including Pharmacy Solutions revenue of $12.6 billion to $13.1 billion and Provider Services revenue of $1.85 billion to $1.9 billion. This revenue range reflects 11.9% to 16.2% growth over full-year 2025, excluding Community Living in both years.

Total adjusted EBITDA is expected to be in the range of $760 million to $790 million for full year 2026. This would reflect 23.1% to 27.9% growth over full-year 2025 excluding Community Living in both years. Included in total adjusted EBITDA is expected contribution from the Amedisys and LHC acquisition of $30 million.

I will now turn it back to Jon.

Thanks, Jen, and thank you for your time today to go through BrightSpring's Fourth Quarter and full-year 2025 results. We'll now open up the call for questions. Operator?

(Operator Instructions) Our first question is going to come from the line of AJ Rice with UBS.

Obviously, a lot of things are going well for the company at this point. When you look at your '26 outlook, I wonder if you could just maybe at a high level talk through a little bit about where are the points of variability in your forecast when you think about the greatest swing factor that could create upside or create challenges for you. What would you highlight?

AJ, thank you for the question. As we sit here right now, we see a lot of consistency that's playing out as we look at 2025. So we don't see a whole lot of changes and are continuing just to try to execute against the strategies that we've been driving for a while. I mean as we look out for the year and try to ensure execution, continuing to drive volume growth in each of the businesses is going to be important. We're making sales investments really, as always, in all of the businesses, in particular in a couple of them like Home Health, hospice and Infusion and Home & Community in select markets like IBD and ALS.

So seeing those sales investments take hold, as always, we have a fulsome list of Lean Sigma, tech and now increasingly, AI projects that are slated to roll out through the company this year. We expect benefit from those as well. And then as we integrate the Amedisys and LHC acquisitions, those will be important to do well this year. So look, I think it's just continued execution from a quality standpoint and, with that quality, investing more and more in sales to drive to our volume targets. And then on the cost side, continuing to drive lean initiatives through technology and through our procurement team.

Obviously, there's some margin expansion in what we're expecting for this year. But all those items are things we've been executing against for a long time. And I think we want to take the consistency we're seeing right now and just continue to execute from a volume and a margin perspective.

Okay. And maybe for the follow-up, I know you said that over the next 12 to 18 months, you're looking at 16 to 20 new LDD introductions. I wondered -- give us some comments about the landscape from a generic conversion, biosimilar conversion and what that looks like for you at this point?

Yes. We actually had 24 LDDs we won last year. And 16 to 20 is our guidepost. We've been beating that in the last year or 2. We feel like that's a really good number as we look out 12 to 18 months.

The team is just doing a great job. Again, from a quality and service level perspective, that's something we focus on immensely to try to be the best partner we can.

I think importantly, we are winning rare and orphan and some LDDs outside of oncology as well. We'll have probably 3 or 4 infusion LDDs, for example, that we're going to be winning here in Q1 or early Q2, and that's an area we're really focusing on, and then even a very meaningful cardiac drug here recently that we picked up, too. So our LDD and specialty strategy is continuing to, I would say, expand, leveraging on the core capabilities that we have. And that's exciting.

From a biosimilar perspective, with STELARA mostly in the rearview mirror, there's a little bit of residual impact for us this year. But we really don't have any exposure there just given the nature of the therapies and the drugs that we supply.

Our next question will come from the line of Whit Mayo with Leerink Partners.

John or Jen, can you talk about just EBITDA and margins for each of the segments expected for this year?

Yes, sure. I'll go ahead and turn that over to Jen in a second. Yes, I would just say, as you're seeing EBITDA in our guide thus far for 2026 outpace revenue, obviously, there's some margin expansion there. From a revenue perspective, some things that were expected, you've got IRA, you've got some branded generic conversions. You've got a little bit of residual impact from a customer too in Home & Community Pharmacy that we either fired or they went bankrupt.

And so that's at play in some of our revenue numbers, notwithstanding that really strong growth rate numbers for the year that we're really confident in. I think some of the EBITDA drivers said before is going to be some product mix and then these operational efficiencies that we continue to drive. Providers got a really good growth number for 2026. That's a 17% margin business as well. So Jen, any other commentary at the segment level?

Yes. I would say from a segment standpoint, we do expect broad-based margin expansion from the initiatives that we've deployed in late 2025 and continuing into 2026. So we do expect some of that. We have favorable mix both in terms of products and services that is benefiting that. Jon mentioned some of the revenue impact that also is causing expansion from a margin perspective, from an EBITDA standpoint.

But just with all that, we continue to invest for future growth. So in our plan for 2026, we will continue our investments in AI and technologies and other operational processes and sales investments, as Jon has mentioned. So we are going to be covering that in this revenue guide as well.

Yes. I think that's an important point. I mean, even sort of with the EBITDA guide for '26, which I think it's 27%, 28% at the high end. There's a lot of continual investment we're making in the company as we look out to one, three-and five-year growth, which we're really excited about.

Okay. And then I'm curious, just your views on the future of the temporary and permanent behavioral adjustment cuts for home health now that you've really doubled down on industry. There's some debate whether or not CMS will, in fact, move forward to implement any further cuts. So I mean you may have kind of, call it, bottomed here on the rate environment in some ways. So I'm just curious how you're looking at the rate environment.

Yes. We like home health a lot. I mean that deal was such an incredible set from a geographical perspective. Our baseline with home health rates, just to be conservative, is flat. I think there's been a lot of constructive conversations even here recently around the future and the value of home health.

So we do remain optimistic. And just given the landscape of what's happened with some of the providers I mean, we see an unbelievable runway in home health and hospice over the next 5 to 10 years. And our base case is flat. And I think if certain things occur in the future, there could be positivity there and back to normal and expected and justified rate increases.

Remember, home health for us is sort of still sitting around 10% or so of the company. And then hospice has obviously had a ton of support and has been a phenomenal performer for us. Both of those teams in our company have best-in-class management. We continue to add to sales. We continue to drive technology into those businesses, and super excited about their prospects.

(Operator Instructions) Our next question comes from the line of David Larsen with BTIG.

Congratulations on the great year. Can you talk a little bit about the earnings impact on specialty when drugs launched generic? It's my understanding that even though the price can decline, your margins would improve with generic launches. You're able to negotiate better margins across product classes when that happens. Just any numbers around that would be very helpful, if that's the case.

David, yes, look, in the Specialty Pharmacy business, that growth is multifactorial and it's been working for a decade now. You've got brand LDDs. We continue to win about 20 of those a year. We're continuing to actually expand outside of oncology and a lot of rare and orphan conditions, which is exciting. The pipeline out there in pharma continues to never be more innovative and bigger.

Some of these therapeutics are amazing for what they can do for people.

But you've got brand LDDs. You've got a healthy stream of brands converting generic over time. That's a great thing for everybody. We drive generic utilization as much as we can. Obviously, the cost on the buy side and procurement comes down, and that's helpful.

And then we have a really growing fee-for-service business. We have a lot of data agreements and other service agreements with pharma. We're up to over 30 hubs now, where we're the hub for pharma.

And so just a terrific business in terms of the fee-for-service side. And that's obviously a higher gross profit margin as well. So we like the multifactorial nature of growth in that business and we continue to lean into all of them.

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

Maybe just a follow-up from Whit's question, just at least thinking through for the segments related to the overall EBITDA guidance. Obviously, with the Provider segment, we're going to add in sort of the $30 million contribution from the Amedisys transaction here. But beyond that, if we look at sort of either the '25 full year performance for the segments versus maybe fourth quarter, anything that would suggest that the trends that we're seeing in either that we should take account in our modeling as we think about how to proportion sort of the overall EBITDA between the segments?

We expect consistency with what we saw in 2025. So we will continue to see volume growth, and EBITDA growth is our expectation organically across both of our segments.

Our next question will come from the line of Jared Haase with William Blair.

Yes. Just wanted to drill in a little bit more. Just I wanted to understand the margin profile of the Amedisys assets that you acquired. From your comments, it sounds like that's a high single-digit margin if I use the pro forma revenues and then the $30 million EBITDA contribution, which, I guess, seems to be a little bit on the lower side compared to peers in the space and the rest of your like Provider segment.

So just wanted to kind of understand, make sure um thinking about margins for that asset correctly. And I'm wondering you're sort of absorbing any integration or transformation-related costs post that acquisition in the near term.

Jared, I'll let Jen speak in a second. No, look, I think you're largely doing that math correctly in terms of what we acquired. It is what it is. But as we look out for the year, that would be something that we would hope to integrate very soundly. And as we step through the year, we'll see how it's going.

We have a margin that's higher than that, and our goals will be to drive to our margin over time. And I think we will look to see how quickly we can do that.

I would agree. There's a lot of integration work and technology investments that we're making, ensuring everyone's on consistent platforms and systems, a number of travel initiatives and other things. So we're really excited about that asset and what that will bring. And again, as Jon mentioned, we are very excited about moving that towards our overall profile.

Yes. I think the only question hopefully will be the timeline of that. And if it moves up, it moves up. And that's a good thing.

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

Congrats on the quarter, guys. Maybe, Jen, as I think through the year, any callouts, especially with the Amed transaction coming in and kind of like a margin ramp expectation there, any call out on how we should think about the cadence of the quarters for 2026?

Yes. Really great question, Brian. Thank you. Just as a reminder, Q1 is the shortest quarter from a day's perspective. So that tends to be from an annualized perspective our lowest quarter.

We would expect sequential growth in each of our quarters throughout 2026 consistent with what we saw in 2025. And from a margin perspective, that will be driven really kind of throughout the year as well as we have different products coming online. We have a generic launch that will happen in Q2. So that will increase throughout the year from a margin perspective.

Our next question will come from the line of Pito Chickering with Deutsche Bank.

Great quarter here. Looking at the 2026 Pharmacy revenue guidance, can you give us the moving parts between sort of core growth of existing drugs plus new LDD wins and the offsets from generic conversions? And obviously, generics is obviously revenue and obviously not EBITDA. But if you can just give us how we think about core growing plus LDD wins minus generics to help get to the pharmacy revenue guidance.

Yes. So maybe I'll just start with a couple of unfavorable impacts. I think that will be helpful context. So as you think about IRA in Specialty and Infusion, we do have a revenue headwind of approximately $200 million. And then brand to generic conversions, as we've talked throughout 2025, we typically are trying to increase our sales in advance of a launch.

And as we know when there's a brand to generic conversion, revenue does come down, and then ultimately, that is good for everyone. It is beneficial from an EBITDA standpoint for us.

The total impact in Specialty and Infusion is a little over $400 million between those 2 items. And then Home & Community IRA impact from a revenue standpoint is approximately $175 million. So we do have headwinds of approximately $600 million in 2026. Despite that, we obviously have strong growth. We do expect growth across all of our different business lines.

We will absolutely have LDD growth, that in specialty. We have strong script growth in home infusion and specialty plans.

We mentioned in Q3 that Home & Community script growth will be challenged because of the year-over-year lapping of some of the customers that we off-boarded or the branches associated with that customer that went through bankruptcy and those locations. In Home & Community, we will have script challenges until about Q3, but outside of that we are having really strong volume growth across each of our Pharmacy businesses.

Our next question comes from the line of Ann Hynes with Mizuho.

Can you provide an update on the Infusion business? I know it's been a big focus of investment in growth. Maybe how much that grew within specialty, what the margin profile is and maybe what it contributes now as a percent of total specialty.

Yes. Ann, we're pleased with where the Infusion business is at. We have really high aspirations for it this year and going forward. The acute business, we're really a top 2 provider in the country there and in a lot of markets have a leading market share. That growth has been in the double digits and we're optimistic that will occur again this year.

On the specialty side is, I think, where we have a big opportunity. We've been underweight on specialty. We're creating specialty hubs right now and really separating those 2 businesses out to create the focus that we want. We've invested in a lot of resources there. We're going to be further investing in resources.

We have plans to significantly expand our AIS presence. We've got about 30 right now. We're going to be retrofitting those and upgrading them and moving locations all this year and trying to make them extremely consumer-friendly and all the right kind of strip malls and places. So super excited about it. As you look at our balance sheet, that gives us a lot more flexibility in the future as well.

And then just kind of broadly, just touching back on Pito's question. When you think about the numbers Jen put out there sort of those onetime impacts, that otherwise is calculating to a revenue outlook at this time for 2026 of at 20% or a little bit over 20% when you adjust for those items. So really robust broadly outside of a couple of those external items.

And then I just wanted to circle back on Brian's note on the cadence for the year. It's a great question. I mean, as Jen said, we do expect the quarters do increase throughout the year. As I sort of mentioned to AJ, the continual sales investments we're making all on the back of quality, de novos that we're investing in and then our operational projects, these things are all ongoing throughout the year. And as such, those are some of the growth drivers we see throughout the year as we sit here today.

Our next question will come from the line of Matthew Gillmor with KeyBanc.

I wanted to ask about the Onco360 sales force. It seems like a pretty unique asset within the specialty pharmacy platform. Can you remind us the role they play, especially with LDD launches or with generic conversions? And what are the priorities for that part of the business as you're thinking about 2026?

Yes. No, that's an area that we've continued to invest in, a lot of long-standing relationships, both with pharma and with prescribers, which we take extremely seriously and are very honored to have. But it's an area that we give a lot of attention. We've increased our investments in that field force every year. We'll do it again this year.

We're essentially at this point covering, I think, every geography in the United States from a rural standpoint. And again, it's the service levels that are really pulled through behind the commitments by the field force that are so important. And those are all reflected in the Net Promoter Scores that we have, which typically range between 95% to 100%.

So everything starts with service. And from there, it's just trying to offer the best education and support for all of the stakeholders out there in the market that we can.

Our next question will come from the line of Joanna Gajuk with Bank of America.

If I may ask the question a little bit differently about the segment. So I appreciate the $600 million revenue headwind in in the Pharmacy segment. So if I look at 2025 Pharmacy segment margins, like they improved actually a little bit year-over-year, the 4.7%, call it, in '25. Is that the way to think about '26 margins for this segment? How, I guess, these revenue headwinds translating into the margin for that segment?

Yes. Thank you, Joanna. Yes. It would be mix shift, it would be operational improvements, offset by the investments that we're going to be making as we had mentioned in each of the different segments and at corporate in those areas. So again, we would absolutely expect an improvement in margins.

You see that coming through and you start to see that in Q4. You see that margin move up. We'll expect a small improvement of that that's continuing through 2026 and, again, for those particular reasons,

Yes. In addition to the mix shift and the operational initiatives, you've got economies of scale just from really robust just core growth.

Our next question will come from the line of Raj Kumar with Stephens.

Maybe just kind of banding up on the kind of the integration milestones with Amedisys, LHC and thinking about that beyond 2026. And maybe kind of fleshing out the embedded value you see with the asset integration and then cross-integration of services and products between both segments considering the deeper kind of geographical overlap post deal kind of would be helpful to kind of see or frame the overall kind of story there.

Yes. So I think there was an earlier question about the margin structure that we acquired. Our Provider margins, you can look at what they are. That's what our hope is for the business. And I think we just have to see how quickly we can get there.

I would say we're very optimistic about the top line growth and the volume and ADC growth as well and the potential that we have in the business.

The assimilation so far has gone incredibly well. From a cultural standpoint, fantastic. And so we're really excited about it. There's margin opportunity there. But we're as excited and even more excited about what we can do from a growth perspective in some of these really terrific markets.

I would say that there's also overlap with our hospice branches. And so there's going to be a lot of integrated care opportunities there as well and benefits for our hospice business, too.

I would note that we funded that deal entirely with cash on hand, and I think that's just a little bit of a call out to where our balance sheet and our cash profile is today. We ended up the year at almost $500 million of operating cash flow. We also did a repurchase later in the year. And as we look at our balance sheet, under 3x now, and pro forma for the Community Living close, 2.6x. So it's, I think, the ability to execute against that transaction entirely funded with cash on hand was a helpful benefit of where we've come as a company from a balance sheet perspective.

And where we sit today and, as mentioned, I think that's going to give us some flexibility as we go forward, particularly later in the year and certainly into '27 and '28.

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

Some strong growth rates here. And I think that actually includes potentially stepping over a fairly large headwind in the LTC business. It's coming off the changes that are being made around the IRA. I was wondering if you could update us maybe on the magnitude of the headwind there that you're stepping over. And then any update on your efforts to maybe offset that headwind through reimbursement changes or additional fees or things like that.

Yes. So as we discussed last quarter, we continue to work and continue to work productively with our payers regarding an enhanced dispensing fee that we have worked to achieve, which has helped us to mitigate some of the impact. There, we absolutely do have an impact, and we continue to work through that from a payer perspective. But through all of the other growth initiatives, the volume growth, the operational efficiencies, we have growth planned as we had discussed, healthy growth plan in the Home & Community business.

So we continue to work again productively with our payers to ensure that we have an appropriate enhanced dispensing fee. Our government relations team is also active, making sure that everyone understands the impacts to the Pharmacy business. But again, our scale platform and our operational improvement that are hallmark really to how we're approaching every single year, I think, have helped us in this year for 2026.

Yes. I think, hopefully, we've been clear on the growth drivers for specialty across LDDs, brand, generic, fee-for-service, infusion. You've got acute. You've got specialty. You've got a growing LDD business there, roll out of more AISs in Home & Community Pharmacy, outside of this IRA, which we'll work through constructively, and you've got 1 or 2 customer situations, unfortunately, which will be in the rearview mirror probably by about Q3 or Q4.

I mean the name of the game in that business is driving as much volume as you can in these other attractive end markets and being the most efficient scale provider in the industry.

So you look at assisted living, you look at hospice, you look at behavioral, you look at the PACE market we're entering and then the skilled nursing market with a segment of that market, all extremely attractive. I mean, we're adding some 30 reps this year to grow and penetrate across all those markets further. And then this is where we are leaning into AI and technology the most for starters. You look at the whole pharmacy intake and revenue cycle project process, and there are some 7 or 8 projects this year.

So super excited about continuing to build out the biggest scaled independent provider in that space in these attractive end markets and providing a set of operations that produce the highest service level as possible and with a continued focus on cost per script there.

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

Maybe just going back to the margin comments on the Pharmacy side. You mentioned some of the key drivers having been your efficiency efforts and then product mix. Could you just give us a sense of the margin expansion you drove over the last year, how much of that was from generics versus how much of that was from those cost initiatives? And then we think about the '26 guidance, the improving margins you're embedding there. Is that proportionality expected to change at all?

How favorable do you expect incremental efficiencies to play into that again versus lift from the generics?

Yes. I mean, well, look, the good news on operational efficiencies as a lot of them occurred in the back half of last year. So they're just sort of flowing through at this point and will be year-over-year tailwinds. And then in addition to that, we're always looking at the next thing and launching new projects. I would say on the Pharmacy side, Home & Community and Infusion is where we have the most projects from an operational excellence perspective going on and will be going on this year.

But from a margin perspective, I mean, yes, economies of scale from pretty aggressive growth targets that we like to put out there and go try to achieve. But look, across all the different businesses, you've got brands and generics in each. You've got a lot of different end markets, a lot of different payers. I mean, there's just a lot going on. But the net effect of it every year, if you focus on strong, strong double-digit growth, market share gains, targeting the most attractive therapeutic areas and doing all of that with the best quality and the most operational efficiency, that's always net out to a really good place.

The hallmarks of the company now for 10 years has been volume and efficiency and then accretive M&A. And so that story has really never been more intact, and you see all of that play through in 2026, we think, as we sit here today.

Thank you. I'm showing no further questions, I would like to hand the conference back over to Jon Rousseau for closing remarks.

Thank you, everybody, for joining. We really appreciate it. Appreciate your questions, as always. And have a great day, and we look forward to talking with you soon.

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.