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SEC EDGAR · 10-Q

10-Q – 2025-10-28 – btsg-20250930.htm

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Omsättning
  • Unregistered Sales of Equity Securities and Use of Proceeds
  • Note 3 - Revenue
  • Services revenue
  • 3. Revenue | The Company is substantially dependent on revenues received under contracts with federal, state, and local government agencies. Operating funding sources are generally earned from Medicaid, Medicare, commercial insurance reimbursement, and from private and other payors. There is no single customer whose revenue was 10% or more of our consolidated revenue during the periods presented. The following tables set forth revenue by payor type (in millions):
  • Revenue
  • % of Revenue
  • Refer to Note 15 for the disaggregation of revenue by reportable segment.
  • The intangible assets consist of $ 14.8 million in indefinite-lived licenses and $ 5.1 million of trade name. The fair value of acquired licenses and trade name were based upon a third-party valuation. The trade name has an estimated useful life of 10.0 years. We expect all of the goodwill will be deductible for tax purposes. The Company believes the resulting amount of goodwill reflects its expectation of synergistic benefits of the acquisition. | Haven Hospice contributed $ 17.7 million and $ 50.1 million in revenue during the three and nine months ended September 30, 2025 , respectively, compared to $ 4.8 million in revenue during the three and nine months ended September 30, 2024 . Haven Hospice contributed $ 1.9 million and $ 5.1 million of operating income during the three and nine months ended September 30, 2025 , respectively, compared to $ 0.6 million of operating income during the three and nine months ended September 30, 2024. P | Others
EBITDA
  • 14. Related Party Transactions | The Company was party to a Monitoring Agreement with KKR and WBA, which required payment of an aggregate advisory fee equivalent to 1 % of consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”), payable in quarterly installments in arrears at the end of each quarter. The Monitoring Agreement terminated upon the completion of the IPO Offerings in January 2024. | Prior to the termination of the Monitoring Agreement, the Company recognized $ 0.7 million in monitoring and advisory fees during the first fiscal quarter of 2024 as a component of selling, general, and administrative expenses in our accompanying unaudited condensed consolidated statements of operations.
  • 15. Segment Information | The Company's Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer , who evaluates the performance of our segments and allocates resources based on segment EBITDA. Segment EBITDA is used as the key profitability measure when we set our annual operating plan for each segment, is the metric with which our CODM assesses segment results, and is a key component of our annual variable compensation plans. Segment EBITDA is commonly used as an analytical indicator within the health car | For all segments, the CODM uses segment EBITDA in the annual budgeting and monthly forecasting process. The CODM considers actual-to budget and actual-to current forecast variances for segment EBITDA on a monthly basis for evaluating performance of each segment and making decisions about allocating capital and other resources to each segment.
  • The Company's Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer , who evaluates the performance of our segments and allocates resources based on segment EBITDA. Segment EBITDA is used as the key profitability measure when we set our annual operating plan for each segment, is the metric with which our CODM assesses segment results, and is a key component of our annual variable compensation plans. Segment EBITDA is commonly used as an analytical indicator within the health car | For all segments, the CODM uses segment EBITDA in the annual budgeting and monthly forecasting process. The CODM considers actual-to budget and actual-to current forecast variances for segment EBITDA on a monthly basis for evaluating performance of each segment and making decisions about allocating capital and other resources to each segment.
  • Segment EBITDA
  • Total Segment EBITDA
  • We are a leading home and community-based healthcare services platform, focused on delivering complementary pharmacy and provider services to complex patients. We have a differentiated approach to care delivery, with an integrated and scaled model that addresses critical services that the highest-need and highest-cost patients require. With a focus on Senior and Specialty patients, which includes Behavioral populations, our platform provides pharmacy and provider services (both clinical and supp | On January 17, 2025, the Company entered into a purchase agreement with National Mentor Holding, Inc. to divest our community living services, home and community based waiver programs, and intermediate care facilities (the “Community Living business”), for $835 million, subject to typical adjustments for working capital and other customary items. We expect the divestiture to close in the first fiscal quarter of 2026, subject to customary closing conditions. This transaction provides for continui | The Company has determined the divestiture of the Community Living business represents a strategic shift that will have a major effect on its business and therefore met the criteria for classification as discontinued operations in the first fiscal quarter of 2025. As a result, in accordance with ASC 205-20, the financial results of the Community Living business, which were previously reported as part of our Provider Services segment, have been classified as discontinued operations in the unaudit
  • • Adjusted EBITDA (1) increased by $43.5 million, or 37.2%, to $160.4 million
  • Financial Performance Highlights: Third Quarter of 2025 Compared to Third Quarter of 2024 (continued) | • Pharmacy Solutions segment EBITDA increased by $41.8 million, or 42.2%, to $141.0 million
Rörelseresultat
  • Operating income
  • Operating income of discontinued operations
  • The intangible assets consist of $ 14.8 million in indefinite-lived licenses and $ 5.1 million of trade name. The fair value of acquired licenses and trade name were based upon a third-party valuation. The trade name has an estimated useful life of 10.0 years. We expect all of the goodwill will be deductible for tax purposes. The Company believes the resulting amount of goodwill reflects its expectation of synergistic benefits of the acquisition. | Haven Hospice contributed $ 17.7 million and $ 50.1 million in revenue during the three and nine months ended September 30, 2025 , respectively, compared to $ 4.8 million in revenue during the three and nine months ended September 30, 2024 . Haven Hospice contributed $ 1.9 million and $ 5.1 million of operating income during the three and nine months ended September 30, 2025 , respectively, compared to $ 0.6 million of operating income during the three and nine months ended September 30, 2024. P | Others
  • We have estimated the fair value of acquired customer relationships, licenses, trade names, and covenants not to compete based upon third-party valuations and/or the values assigned in prior acquisitions that were deemed comparable in nature. The intangible assets consist primarily of $ 22.3 million in customer relationships, $ 5.7 million in definite-lived licenses, $ 2.1 million in indefinite-lived licenses, $ 0.6 million in covenants not to compete, and $ 0.5 million in trade names. Definite- | The above acquisitions contributed approximately $ 20.5 million and $ 62.3 million in revenue during the three and nine months ended September 30, 2025 , respectively, compared to $ 21.8 million and $ 37.7 million in revenue during the three and nine months ended September 30, 2024 . The above acquisitions contributed approximately $ 0.3 million and $ 3.1 million in operating income during the three and nine months ended September 30, 2025 , respectively, compared to $ 2.0 million and $ 3.0 mill | Measurement period adjustments for all aforementioned acquisitions completed in 2024 recorded in the three and nine months ended September 30, 2025 were not material to the unaudited condensed consolidated financial statements. The Company expects to finalize the purchase price allocation for the 2024 acquisitions prior to the one-year anniversary date of each acquisition.
  • Segment operating income
  • EBITDA, Adjusted EBITDA, and Adjusted EPS are not measures of financial performance under U.S. GAAP and should be considered in addition to, and not as a substitute for, net income (loss), diluted EPS or other financial measures calculated in accordance with U.S. GAAP. Our method of determining non-GAAP financial measures may differ from other companies’ financial measures and therefore may not be comparable to methods used by other companies. | Given our determination of adjustments in arriving at our computations of EBITDA, Adjusted EBITDA and Adjusted EPS, these non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to net income or loss, operating income or loss, earnings or loss per diluted share, cash flows from operating activities, total indebtedness, or any other financial measures calculated in accordance with U.S. GAAP. | The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA:
  • Net cash provided by operating activities was $258.6 million for the nine months ended September 30, 2025 compared to net cash used in operating activities of $66.8 million for the nine months ended September 30, 2024. The change was primarily due to the following: | • a $157.7 million increase in operating income in 2025 as compared to 2024;
Periodens resultat
  • Net income (loss)
  • Net income (loss) attributable to BrightSpring Health Services, Inc. | and subsidiaries
  • Net income (loss) per common share (Note 10):
  • Net income (1)
  • (1) Net income (loss) to the Company for the three months ended September 30, 2025 and 2024 excludes $( 455 ) and $( 573 ) , respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.
  • (1) Net income (loss) to the Company for the nine months ended September 30, 2025 and 2024 excludes $( 1,370 ) and $( 1,395 ) , respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements. | (2) Issuance of common stock on initial public offering is presented net of underwriting discounts and commissions, and offering-related expenses of $ 36.8 million.
  • Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
  • 10. Earnings Per Share (“EPS”) | Basic net income (loss) per share excludes dilution and is reported separately for continuing operations and discontinued operations. Basic net income (loss) per share of common stock for continuing operations and discontinued operations is calculated by dividing net income (loss) from continuing operations and discontinued operations attributable to common shareholders by the weighted average number of shares outstanding for the reporting period. Diluted net income (loss) per share of common st
Resultat per aktie
  • Note 10 - Earnings Per Share
  • 10. Earnings Per Share (“EPS”) | Basic net income (loss) per share excludes dilution and is reported separately for continuing operations and discontinued operations. Basic net income (loss) per share of common stock for continuing operations and discontinued operations is calculated by dividing net income (loss) from continuing operations and discontinued operations attributable to common shareholders by the weighted average number of shares outstanding for the reporting period. Diluted net income (loss) per share of common st
  • The number of additional shares of common stock related to restricted stock units (“RSUs”) and stock option awards is calculated using the treasury stock method, if dilutive. | For the three and nine months ended September 30, 2025 and 2024, the TEUs were assumed to be outstanding at the minimum settlement amount for weighted-average shares for basic EPS. For the three and nine months ended September 30, 2025 , the Company's average applicable market value was greater than $ 15.28 , resulting in no dilutive impact to EPS for TEUs. For the three and nine months ended September 30, 2024 , the Company's average applicable market value was equal to or less than $ 15.28 but | The following table sets forth the computation of basic and diluted net income (loss) per share attributable to common shareholders (in thousands, except per share amounts):
  • • Adjusted EPS (1) increased by $0.27 from $0.03 to $0.30
  • Non-GAAP Financial Measures | In addition to our results of operations prepared in accordance with U.S. GAAP, which we have discussed above, we also evaluate our financial performance using EBITDA, Adjusted EBITDA, and Adjusted EPS. These non-GAAP financial measures are not intended to replace financial performance measures determined in accordance with U.S. GAAP, such as net income (loss) and diluted EPS. Rather, we present EBITDA, Adjusted EBITDA, and Adjusted EPS as supplemental measures of our performance. | EBITDA, Adjusted EBITDA, and Adjusted EPS
  • In addition to our results of operations prepared in accordance with U.S. GAAP, which we have discussed above, we also evaluate our financial performance using EBITDA, Adjusted EBITDA, and Adjusted EPS. These non-GAAP financial measures are not intended to replace financial performance measures determined in accordance with U.S. GAAP, such as net income (loss) and diluted EPS. Rather, we present EBITDA, Adjusted EBITDA, and Adjusted EPS as supplemental measures of our performance. | EBITDA, Adjusted EBITDA, and Adjusted EPS | The following are key financial metrics and, when used in conjunction with U.S. GAAP measures, we believe they provide useful information for evaluating our core business performance, enable comparison of financial results across periods, and allow for greater transparency with respect to key metrics used by management for financial and operational decision-making. We define EBITDA as net income (loss) before income tax expense (benefit), interest expense, net, and depreciation and amortization.
  • EBITDA, Adjusted EBITDA, and Adjusted EPS | The following are key financial metrics and, when used in conjunction with U.S. GAAP measures, we believe they provide useful information for evaluating our core business performance, enable comparison of financial results across periods, and allow for greater transparency with respect to key metrics used by management for financial and operational decision-making. We define EBITDA as net income (loss) before income tax expense (benefit), interest expense, net, and depreciation and amortization. | We have historically incurred substantial acquisition, integration, and transaction-related costs. The underlying acquisition activities take place over a defined timeframe, have distinct project timelines, and are incremental to activities and costs that arise in the ordinary course of our business. Therefore, we have excluded these costs from our Adjusted EBITDA and Adjusted EPS because it provides management a normalized view of our core, ongoing operations after integrating our acquired comp
  • The following are key financial metrics and, when used in conjunction with U.S. GAAP measures, we believe they provide useful information for evaluating our core business performance, enable comparison of financial results across periods, and allow for greater transparency with respect to key metrics used by management for financial and operational decision-making. We define EBITDA as net income (loss) before income tax expense (benefit), interest expense, net, and depreciation and amortization. | We have historically incurred substantial acquisition, integration, and transaction-related costs. The underlying acquisition activities take place over a defined timeframe, have distinct project timelines, and are incremental to activities and costs that arise in the ordinary course of our business. Therefore, we have excluded these costs from our Adjusted EBITDA and Adjusted EPS because it provides management a normalized view of our core, ongoing operations after integrating our acquired comp | The legal costs and settlements adjustment represents defense costs associated with certain PharMerica litigation matters, all of which have been finalized as of September 30, 2025, that commenced prior to KKR Stockholder’s and Walgreen Stockholder’s acquisition of PharMerica in December 2017, as well as settlement costs associated with these historical PharMerica cases including the Silver matter, which settled in November 2023. We have excluded defense costs associated with these PharMerica li
Kassaflöde
  • Cash flow hedges:
  • Supplemental disclosures of cash flow information:
  • Derivative Financial Instruments | To manage fluctuations in cash flows resulting from changes in the variable interest rates, the Company entered into receive-variable, pay-fixed interest rate swap agreements. The following table summarizes our interest rate swaps designated as cash flow hedges:
  • The net fair value of the net cash flow hedges as of September 30, 2025 and December 31, 2024 was $ 0.3 million and $ 10.6 million , respectively, and is reflected in prepaid expenses and other current assets, other assets, and long-term liabilities in the unaudited condensed consolidated balance sheets.
  • Amounts reported in accumulated other comprehensive income (“AOCI”) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Interest received, including payments made or received under the cash flow hedges, was $ 4.6 million and $ 13.4 million for the three and nine months ended September 30, 2025, respectively, as compared to $ 9.8 million and $ 28.9 million for the three and nine months ended September 30, 2024 , respec
  • Interest Expense, net | Interest expense, net was $38.2 million for the three months ended September 30, 2025, as compared with $46.6 million for the three months ended September 30, 2024, a decrease of $8.4 million or 18.0%. The decrease primarily resulted from a decrease in both the variable-rate and applicable margin for the three months ended September 30, 2025 as compared to the prior period, offset by a $5.2 million decrease in interest income received related to cash flow hedges of interest rate risk. | Income Tax Expense
  • Interest Expense, net | Interest expense, net was $118.8 million for the nine months ended September 30, 2025, as compared with $144.4 million for the nine months ended September 30, 2024, a decrease of $25.6 million or 17.7%. The decrease primarily resulted from a decrease in both the variable-rate and applicable margin for the nine months ended September 30, 2025 as compared to the prior periods and lower outstanding term debt as compared to the prior period, offset by a $15.5 million decrease in interest income rece | Income Tax Expense (Benefit)
  • Cash Flow Activity | The activity discussed in this section relates to our consolidated company results and includes the impacts of discontinued operations.
Likvida medel
  • Cash and cash equivalents
  • Net increase in cash and cash equivalents
  • Cash and cash equivalents at beginning of period
  • Cash and cash equivalents at end of period
  • Cash and cash equivalents included in assets held for sale at end of period
  • Cash and cash equivalents included in continuing operations at end of period
  • Liquidity and Capital Resources | Our principal sources of cash have historically been from operating activities. Our principal source of liquidity in excess of cash from operating activities has historically been from proceeds from our debt facilities and issuances of common stock. Our principal uses of cash and liquidity have historically been for acquisitions, debt service requirements, and financing of working capital. We believe that our operating cash flows, available cash on hand, and availability under our Revolving Cred | We evaluate our liquidity based upon the availability we have under our First Lien Facilities in addition to the net cash provided by (used in) operating, investing, and financing activities. Specifically, we review the activity under the Revolving Credit Facility and the LC Facility and consider period end balances outstanding under the Revolving Credit Facility and the LC Facility. Based upon the outstanding borrowings and letters of credit under the Revolving Credit Facility and the LC Facili
Nettoskuld
  • Net cash provided by (used in) operating activities
  • Net cash used in investing activities
  • Net cash (used in) provided by financing activities
  • The net fair value of the net cash flow hedges as of September 30, 2025 and December 31, 2024 was $ 0.3 million and $ 10.6 million , respectively, and is reflected in prepaid expenses and other current assets, other assets, and long-term liabilities in the unaudited condensed consolidated balance sheets.
  • Our principal sources of cash have historically been from operating activities. Our principal source of liquidity in excess of cash from operating activities has historically been from proceeds from our debt facilities and issuances of common stock. Our principal uses of cash and liquidity have historically been for acquisitions, debt service requirements, and financing of working capital. We believe that our operating cash flows, available cash on hand, and availability under our Revolving Cred | We evaluate our liquidity based upon the availability we have under our First Lien Facilities in addition to the net cash provided by (used in) operating, investing, and financing activities. Specifically, we review the activity under the Revolving Credit Facility and the LC Facility and consider period end balances outstanding under the Revolving Credit Facility and the LC Facility. Based upon the outstanding borrowings and letters of credit under the Revolving Credit Facility and the LC Facili
  • Operating Activities | Net cash provided by operating activities was $258.6 million for the nine months ended September 30, 2025 compared to net cash used in operating activities of $66.8 million for the nine months ended September 30, 2024. The change was primarily due to the following: | • a $157.7 million increase in operating income in 2025 as compared to 2024;
  • Investing Activities | Net cash used in investing activities decreased by $53.3 million, from $124.5 million in the nine months ended September 30, 2024 to $71.2 million in the nine months ended September 30, 2025. The decrease was primarily due to a $51.4 million decrease in cash paid for acquisitions in 2025 compared to 2024.
  • Financing Activities | Net cash used in financing activities was $107.4 million for the nine months ended September 30, 2025, primarily attributable to repayments on our long-term debt of $37.9 million, net repayments on our Revolving Credit Facility of $63.3 million, and payment of finance lease obligations of $10.1 million, offset by other financing activities. | Net cash provided by financing activities was $214.2 million for the nine months ended September 30, 2024, primarily attributable to net proceeds received from the IPO Offerings of $1,045.5 million, offset by extinguishment of and net repayments on our long-term debt of $818.6 million, net borrowings on our Revolving Credit Facility of $46.4 million, payment of debt issuance costs of $43.2 million, and other financing activities.
Eget kapital
  • Condensed Consolidated Statements of Shareholders' Equity
  • Shareholders' equity:
  • Total shareholders' equity
  • BrightSpring Health Services, Inc. and Subsidiaries | Condensed Consolidated Statements of Shareholders’ Equity | (In thousands, except share data)
  • BrightSpring Health Services, Inc. and Subsidiaries | Condensed Consolidated Statements of Shareholders’ Equity (continued) | (In thousands, except share data)
Antal aktier
  • Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ | The number of shares of Registrant’s Common Stock outstanding as o f October 24, 2025 was 180,352,297 .
  • Weighted average shares outstanding:
  • Consideration for the Haven Hospice acquisition included a $ 15.0 million cash payment, $ 15.0 million seller note payable in 2028, and $ 30.0 million of the Company's common stock equal to 2,471,251 shares at the time of the acquisition. The number of shares was calculated by dividing $ 30.0 million by a price per share equal to the average of the volume weighted average trading price of the Company's common stock on each of the fifteen consecutive trading days ending on and including the tradi | The intangible assets consist of $ 14.8 million in indefinite-lived licenses and $ 5.1 million of trade name. The fair value of acquired licenses and trade name were based upon a third-party valuation. The trade name has an estimated useful life of 10.0 years. We expect all of the goodwill will be deductible for tax purposes. The Company believes the resulting amount of goodwill reflects its expectation of synergistic benefits of the acquisition.
  • At any time prior to the second scheduled trading day immediately preceding February 1, 2027, a holder may elect to settle its Purchase Contract early, in whole or in part, at an early settlement rate equal to the minimum settlement rate. The Company has the right to settle the Purchase Contracts on or after November 1, 2024, in whole but not in part, on a date fixed by it at an early mandatory settlement rate equal to the maximum settlement rate, subject to certain exceptions. During the three | Unless settled earlier at the holder’s option or at the Company's election, each Purchase Contract will, subject to postponement in certain limited circumstances, automatically settle on February 1, 2027 for a number of shares of our common stock, subject to certain anti-dilution adjustments, based upon the 20-day volume-weighted average price ( “VWAP”) of our common stock as follows:
  • The Purchase Contracts are mandatorily convertible into a minimum of 26.2 million shares or a maximum of 30.8 million shares of our common stock on the mandatory settlement date (unless redeemed by us or settled earlier at the unit holder's option). The 26.2 million minimum shares are included in the calculation of basic weighted average shares outstanding. The difference between the minimum and maximum shares represents potentially dilutive securities, which are included in the calculation of d
  • 10. Earnings Per Share (“EPS”) | Basic net income (loss) per share excludes dilution and is reported separately for continuing operations and discontinued operations. Basic net income (loss) per share of common stock for continuing operations and discontinued operations is calculated by dividing net income (loss) from continuing operations and discontinued operations attributable to common shareholders by the weighted average number of shares outstanding for the reporting period. Diluted net income (loss) per share of common st
  • Weighted-average shares outstanding - basic
  • Weighted-average shares outstanding - diluted
Antal anställda
  • • an increase of $1.5 million, or 0.5%, growth on consolidated third quarter of 2024 selling, general, and administrative expenses, due to non-cash share-based compensation related to the equity awards granted to management and certain full-time employees; offset by,
  • • a decrease of $3.6 million, or 0.4%, decline in consolidated 2024 selling, general, and administrative expenses, due to non-cash share-based compensation related to the equity awards granted to management and certain full-time employees; and
  • (1) Represents non-cash share-based compensation to certain members of our management and full-time employees. The nine months ended September 30, 2024 includes $15.0 million of previously unrecognized share-based compensation expense related to performance-vesting options under the 2017 Stock Plan, a portion of which vested upon completion of the IPO.
Organisk tillväxt
  • We have a proven ability to augment growth of existing operations by expanding our presence and opening new locations – in both of our reportable segments, Pharmacy Solutions and Provider Services – across geographies with consistent ramp-up in performance after site opening. We believe our platform can continue to build further scale nationally, adding density to additional and targeted key markets as a lever to facilitate maximum pharmacy and provider services overlap, integrated and value-bas | We typically identify and open new locations within proximity of an existing location as we leverage existing market knowledge and presence to expand in target markets, regions, and states. Our internal support resources in real estate, purchasing, IT, credentialing, payor contracting, HR, and sales and marketing, along with our Project Management Office, help to support and manage de novo locations from start to opening. We expect to continue to selectively and strategically expand our footprin

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10-Q

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ROC
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 10-Q
 
(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025
OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission File Number: 001-41938
 
BrightSpring Health Services, Inc.
(Exact Name of Registrant as Specified in its Charter)
 
 

Delaware

82-2956404

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

805 N. Whittington Parkway
Louisville , Kentucky

40222

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: ( 502 ) 394-2100
 
Securities registered pursuant to Section 12(b) of the Act:
 

Title of each class

 

Trading
Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share
6.75% Tangible Equity Units

 

BTSG
BTSGU

 

The Nasdaq Stock Market LLC
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

 

☐

 

 

 

 

 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of Registrant’s Common Stock outstanding as o f October 24, 2025 was 180,352,297 .
 
 

 

 

Table of Contents
 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

3

 

 

 

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Operations

4

 

Condensed Consolidated Statements of Comprehensive Income (Loss)

5

 

Condensed Consolidated Statements of Shareholders' Equity

6

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Condensed Consolidated Financial Statements

10

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

48

Item 4.

Controls and Procedures

49

 

 

 

PART II.

OTHER INFORMATION

50

 

 

 

Item 1.

Legal Proceedings

50

Item 1A.

Risk Factors

50

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

50

Item 3.

Defaults Upon Senior Securities

50

Item 4.

Mine Safety Disclosures

50

Item 5.

Other Information

50

Item 6.

Exhibits

51

Signatures

52

 

i

 

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q (this “Form 10-Q”) to “BrightSpring,” the “Company,” “we,” “us,” and “our” refer to BrightSpring Health Services, Inc. and its consolidated subsidiaries.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements that reflect our current views with respect to, among other things, our operations, and financial performance. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative version of these words, or similar terms and phrases to identify forward-looking statements.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our industries, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We believe that these factors include but are not limited to the following:
• our operation in a highly competitive industry;

• our inability to maintain relationships with existing patient referral sources or establish new referral sources;

• changes to Medicare and Medicaid rates or methods governing Medicare and Medicaid payments for our services;

• cost containment initiatives of third-party payors, including post-payment audits;

• the implementation of alternative payment models and the transition of Medicaid and Medicare beneficiaries to managed care organizations may limit our market share and could adversely affect our revenues;

• changes in the case mix of patients, as well as payor mix and payment methodologies, and decisions and operations of third-party organizations;

• our reliance on federal and state spending, budget decisions, and continuous governmental operations which may fluctuate under different political conditions;

• changes in drug utilization and/or pricing, PBM contracts, and Medicare Part D/Medicaid reimbursement, which may negatively impact our profitability;

• changes in our relationships with pharmaceutical suppliers, including changes in drug availability or pricing;

• reliance on the continual recruitment and retention of nurses, pharmacists, therapists, caregivers, direct support professionals, and other qualified personnel, including senior management;

• compliance with or changes to federal, state, and local laws and regulations that govern our employment practices, including minimum wage, living wage, and paid time-off requirements;

• fluctuation of our results of operations on a quarterly basis;

• harm caused by labor relation matters;

• limitations in our ability to control reimbursement rates received for our services if we are unable to maintain or reduce our costs to provide such services;

• delays in collection or non-collection of our accounts receivable, particularly during the business integration process;

• failure to manage our growth effectively, which may inhibit our ability to execute our business plan, maintain high levels of service and satisfaction or adequately address competitive challenges;

• our ability to identify, successfully complete and manage acquisitions, joint ventures, and other strategic initiatives, including the pending sale of our Community Living business;

• our ability to continue to provide consistently high quality of care;

• maintenance of our corporate reputation or the emergence of adverse publicity, including negative information on social media or changes in public perception of our services;

• contract continuance, expansion and renewal with our existing customers, including renewals at lower fee levels, customers declining to purchase additional services from us, or reduction in the services received from us pursuant to those contracts;

1

 

• effective investment in, implementation of improvements to and proper maintenance of the uninterrupted operation and data integrity of our information technology and other business systems;

• security breaches, loss of data, and other disruptions, which could compromise sensitive business or patient information; cause a loss of confidential patient data, employee data or personal information; or prevent access to critical information and thereby expose us to liability, litigation, and federal and state governmental inquiries and damage our reputation and brand;

• risks related to credit card payments and other payment methods;

• potential substantial malpractice or other similar claims;

• various risks related to governmental inquiries, regulatory actions, and whistleblower and other lawsuits, which may not be entirely covered by insurance;

• our current insurance program, which may expose us to unexpected costs, particularly if we incur losses not covered by our insurance or if claims or losses differ from our estimates;

• factors outside of our control, including those listed, which have required and could in the future require us to record an asset impairment of goodwill;

• a pandemic, epidemic, or outbreak of an infectious disease;

• inclement weather, natural disasters, acts of terrorism, riots, civil insurrection or social unrest, looting, protests, strikes, or street demonstrations;

• our inability to adequately protect our intellectual property rights;

• risks related to our compliance with our regulatory framework;

• the interests of KKR Stockholder (as defined below) may conflict with our stockholders’ interests in the future;

• our substantial indebtedness;

• significant changes in tax or trade policies, tariffs, or trade relations between the United States and other countries, such as the imposition of unilateral tariffs on imported products, including impacts on imported drug products, which could result in supply chain disruptions and significant increases in costs; and

• repurchases of our common stock

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. If any of these risks materialize, or if any of our assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, those set forth in Item 1A, “Risk Factors,” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024 (our “Form 10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”). Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. We caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this Form 10-Q. Any forward-looking statement made by us in this Form 10-Q speaks only as of the date hereof. We undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

2

 

PART I—FIN ANCIAL INFORMATION
Ite m 1. Financial Statements.
BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolida ted Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
 

 

 

September 30, 2025

 

 

December 31, 2024

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

140,344

 

 

$

60,954

 

Accounts receivable, net of allowance for credit losses

 

 

1,012,913

 

 

 

902,782

 

Inventories

 

 

639,195

 

 

 

636,561

 

Prepaid expenses and other current assets

 

 

123,978

 

 

 

161,310

 

Current assets held for sale

 

 

863,846

 

 

 

131,447

 

Total current assets

 

 

2,780,276

 

 

 

1,893,054

 

Property and equipment, net of accumulated depreciation of $ 387,921  and $ 339,892  at
    September 30, 2025 and December 31, 2024, respectively

 

 

175,494

 

 

 

180,570

 

Goodwill

 

 

2,370,566

 

 

 

2,363,884

 

Intangible assets, net of accumulated amortization

 

 

521,610

 

 

 

595,224

 

Operating lease right-of-use assets, net

 

 

159,589

 

 

 

161,032

 

Deferred income taxes, net

 

 

—

 

 

 

5,288

 

Other assets

 

 

41,962

 

 

 

39,128

 

Non-current assets held for sale

 

 

—

 

 

 

687,960

 

Total assets

 

$

6,049,497

 

 

$

5,926,140

 

Liabilities, Redeemable Noncontrolling Interest, and Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Trade accounts payable

 

$

954,497

 

 

$

923,926

 

Accrued expenses

 

 

304,046

 

 

 

295,746

 

Current portion of obligations under operating leases

 

 

38,217

 

 

 

38,910

 

Current portion of obligations under financing leases

 

 

4,727

 

 

 

3,463

 

Current portion of long-term debt

 

 

51,870

 

 

 

48,725

 

Current liabilities held for sale

 

 

196,613

 

 

 

117,563

 

Total current liabilities

 

 

1,549,970

 

 

 

1,428,333

 

Obligations under operating leases, net of current portion

 

 

128,751

 

 

 

129,467

 

Obligations under financing leases, net of current portion

 

 

10,423

 

 

 

6,530

 

Long-term debt, net of current portion

 

 

2,465,334

 

 

 

2,561,858

 

Deferred income taxes, net

 

 

10,441

 

 

 

—

 

Long-term liabilities

 

 

63,560

 

 

 

71,190

 

Non-current liabilities held for sale

 

 

—

 

 

 

77,177

 

Total liabilities

 

 

4,228,479

 

 

 

4,274,555

 

Redeemable noncontrolling interest

 

 

2,361

 

 

 

3,730

 

Shareholders' equity:

 

 

 

 

 

 

Common stock, $ 0.01  par value, 1,500,000,000  shares authorized, 180,685,884  and
    174,245,990  shares issued and outstanding at September 30, 2025 and
   December 31, 2024, respectively

 

$

1,807

 

 

$

1,742

 

Preferred stock, $ 0.01  par value, 250,000,000  authorized, no  shares issued and
   outstanding at September 30, 2025 and December 31, 2024

 

 

—

 

 

 

—

 

Additional paid-in capital

 

 

1,931,616

 

 

 

1,866,850

 

Accumulated deficit

 

 

( 108,569

)

 

 

( 222,155

)

Accumulated other comprehensive (loss) income

 

 

( 6,291

)

 

 

1,418

 

Total shareholders' equity

 

 

1,818,563

 

 

 

1,647,855

 

Noncontrolling interest

 

 

94

 

 

 

—

 

Total equity

 

 

1,818,657

 

 

 

1,647,855

 

Total liabilities, redeemable noncontrolling interest, and equity

 

$

6,049,497

 

 

$

5,926,140

 

See accompanying notes to the condensed consolidated financial statements.

3

 

BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated S tatements of Operations
(In thousands, except per share amounts)
(Unaudited)
 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

2,966,966

 

 

$

2,265,697

 

 

$

8,289,238

 

 

$

6,357,223

 

Services

 

 

367,140

 

 

 

335,532

 

 

 

1,070,695

 

 

 

968,026

 

Total revenues

 

 

3,334,106

 

 

 

2,601,229

 

 

 

9,359,933

 

 

 

7,325,249

 

Cost of goods

 

 

2,721,314

 

 

 

2,077,121

 

 

 

7,605,931

 

 

 

5,815,981

 

Cost of services

 

 

220,784

 

 

 

201,016

 

 

 

648,773

 

 

 

581,509

 

Gross profit

 

 

392,008

 

 

 

323,092

 

 

 

1,105,229

 

 

 

927,759

 

Selling, general, and administrative expenses

 

 

304,165

 

 

 

293,995

 

 

 

918,090

 

 

 

875,344

 

Operating income

 

 

87,843

 

 

 

29,097

 

 

 

187,139

 

 

 

52,415

 

Loss on extinguishment of debt

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12,726

 

Interest expense, net

 

 

38,235

 

 

 

46,614

 

 

 

118,776

 

 

 

144,366

 

Income (loss) from continuing operations before income taxes

 

 

49,608

 

 

 

( 17,517

)

 

 

68,363

 

 

 

( 104,677

)

Income tax expense (benefit)

 

 

12,120

 

 

 

8,155

 

 

 

13,118

 

 

 

( 31,464

)

Income (loss) from continuing operations, net of income taxes

 

 

37,488

 

 

 

( 25,672

)

 

 

55,245

 

 

 

( 73,213

)

Income from discontinued operations, net of income taxes

 

 

17,753

 

 

 

16,691

 

 

 

56,548

 

 

 

37,288

 

Net income (loss)

 

 

55,241

 

 

 

( 8,981

)

 

 

111,793

 

 

 

( 35,925

)

Net loss attributable to noncontrolling interests included in
   continuing operations

 

 

( 595

)

 

 

( 751

)

 

 

( 1,793

)

 

 

( 1,864

)

Net income (loss) attributable to BrightSpring Health Services, Inc.
   and subsidiaries

 

$

55,836

 

 

$

( 8,230

)

 

$

113,586

 

 

$

( 34,061

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share (Note 10):

 

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.19

 

 

$

( 0.13

)

 

$

0.28

 

 

$

( 0.37

)

Discontinued operations

 

$

0.08

 

 

$

0.09

 

 

$

0.28

 

 

$

0.19

 

Net income (loss)

 

$

0.27

 

 

$

( 0.04

)

 

$

0.56

 

 

$

( 0.18

)

Diluted income (loss) per share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.17

 

 

$

( 0.13

)

 

$

0.26

 

 

$

( 0.37

)

Discontinued operations

 

$

0.09

 

 

$

0.09

 

 

$

0.26

 

 

$

0.19

 

Net income (loss)

 

$

0.26

 

 

$

( 0.04

)

 

$

0.52

 

 

$

( 0.18

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

203,487

 

 

 

198,491

 

 

 

202,067

 

 

 

190,541

 

Diluted

 

 

217,982

 

 

 

198,491

 

 

 

218,519

 

 

 

190,541

 

See accompanying notes to the condensed consolidated financial statements.

4

 

BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Net income (loss)

 

$

55,241

 

 

$

( 8,981

)

 

$

111,793

 

 

$

( 35,925

)

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

( 97

)

 

 

72

 

 

 

111

 

 

 

( 123

)

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Net change in fair value, net of tax (1)

 

 

1,570

 

 

 

( 12,429

)

 

 

2,292

 

 

 

8,675

 

Amounts reclassified to earnings, net of tax (2)

 

 

( 3,434

)

 

 

( 7,373

)

 

 

( 10,112

)

 

 

( 21,801

)

Total other comprehensive loss, net of tax

 

 

( 1,961

)

 

 

( 19,730

)

 

 

( 7,709

)

 

 

( 13,249

)

Total comprehensive income (loss)

 

 

53,280

 

 

 

( 28,711

)

 

 

104,084

 

 

 

( 49,174

)

Comprehensive loss attributable to redeemable noncontrolling
   interests

 

 

( 455

)

 

 

( 573

)

 

 

( 1,370

)

 

 

( 1,395

)

Comprehensive loss attributable to noncontrolling interest

 

 

( 140

)

 

 

( 178

)

 

 

( 423

)

 

 

( 469

)

Comprehensive income (loss) attributable to BrightSpring
   Health Services, Inc. and subsidiaries

 

$

53,875

 

 

$

( 27,960

)

 

$

105,877

 

 

$

( 47,310

)

 
(1) The income tax effects of the net change in fair value were $( 510 ) and $( 744 ) for the three and nine months ended September 30, 2025, respectively, and $ 4,024 and $( 2,809 ) for the three and nine months ended September 30, 2024, respectively.

(2) The income tax effects of amounts reclassified to earnings were $ 1,114 and $ 3,281 for the three and nine months ended September 30, 2025, respectively, and $ 2,387 and $ 7,059 for the three and nine months ended September 30, 2024, respectively.

See accompanying notes to the condensed consolidated financial statements.

5

 

BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity
(In thousands, except share data)
(Unaudited)
 

 

 

For the Three Months Ended September 30, 2025

 

 

Common Stock

 

 

Additional
Paid-In Capital

 

 

Accumulated Deficit

 

 

Accumulated Other
Comprehensive Loss

 

 

Noncontrolling
Interest

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at June 30, 2025

 

 

177,055,327

 

 

$

1,771

 

 

$

1,909,854

 

 

$

( 164,405

)

 

$

( 4,330

)

 

$

( 283

)

 

$

1,742,607

 

Net income (1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

55,836

 

 

 

—

 

 

 

377

 

 

 

56,213

 

Other comprehensive loss, net of tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 1,961

)

 

 

—

 

 

 

( 1,961

)

Share-based compensation

 

 

—

 

 

 

—

 

 

 

17,250

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17,250

 

Exercise of stock options

 

 

735,483

 

 

 

7

 

 

 

5,612

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,619

 

Issuance of common stock for settlement
    of RSUs

 

 

115,810

 

 

 

1

 

 

 

( 1

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Tax effect of net share settlement of equity
    awards

 

 

( 52,203

)

 

 

—

 

 

 

( 1,071

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 1,071

)

Conversion of tangible equity units into
   common stock

 

 

2,831,467

 

 

 

28

 

 

 

( 28

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Balances at September 30, 2025

 

 

180,685,884

 

 

$

1,807

 

 

$

1,931,616

 

 

$

( 108,569

)

 

$

( 6,291

)

 

$

94

 

 

$

1,818,657

 

 

 

 

For the Three Months Ended September 30, 2024

 

 

Common Stock

 

 

Additional
Paid-In Capital

 

 

Accumulated Deficit

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Noncontrolling
Interest

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at June 30, 2024

 

 

171,397,030

 

 

$

1,714

 

 

$

1,804,965

 

 

$

( 226,150

)

 

$

19,025

 

 

$

379

 

 

$

1,599,933

 

Net loss (1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 8,230

)

 

 

—

 

 

 

( 178

)

 

 

( 8,408

)

Other comprehensive loss, net of tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 19,730

)

 

 

—

 

 

 

( 19,730

)

Share-based compensation

 

 

—

 

 

 

—

 

 

 

15,210

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

15,210

 

Shares issued under share-based compensation
    plan, including tax effects

 

 

210,696

 

 

 

2

 

 

 

507

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

509

 

Shares issued for payment of acquisition

 

 

2,471,251

 

 

 

25

 

 

 

29,975

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

30,000

 

Derecognition of redeemable noncontrolling
    interest

 

 

—

 

 

 

—

 

 

 

( 2,542

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 2,542

)

Balances at September 30, 2024

 

 

174,078,977

 

 

$

1,741

 

 

$

1,848,115

 

 

$

( 234,380

)

 

$

( 705

)

 

$

201

 

 

$

1,614,972

 

(1) Net income (loss) to the Company for the three months ended September 30, 2025 and 2024 excludes $( 455 ) and $( 573 ) , respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.
 
 

6

 

BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity (continued)
(In thousands, except share data)
(Unaudited)
 

 

 

For the Nine Months Ended September 30, 2025

 

 

Common Stock

 

 

Additional
Paid-In Capital

 

 

Accumulated Deficit

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Noncontrolling
Interest

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2024

 

 

174,245,990

 

 

$

1,742

 

 

$

1,866,850

 

 

$

( 222,155

)

 

$

1,418

 

 

$

—

 

 

$

1,647,855

 

Net income (1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

113,586

 

 

 

—

 

 

 

94

 

 

 

113,680

 

Other comprehensive loss, net of tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 7,709

)

 

 

—

 

 

 

( 7,709

)

Share-based compensation

 

 

—

 

 

 

—

 

 

 

55,733

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

55,733

 

Exercise of stock options

 

 

2,055,618

 

 

 

21

 

 

 

14,660

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14,681

 

Issuance of common stock for settlement
    of RSUs

 

 

1,817,356

 

 

 

18

 

 

 

( 18

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Tax effect of net share settlement of equity
    awards

 

 

( 264,547

)

 

 

( 2

)

 

 

( 5,581

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 5,583

)

Conversion of tangible equity units into
   common stock

 

 

2,831,467

 

 

 

28

 

 

 

( 28

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Balances at September 30, 2025

 

 

180,685,884

 

 

$

1,807

 

 

$

1,931,616

 

 

$

( 108,569

)

 

$

( 6,291

)

 

$

94

 

 

$

1,818,657

 

 

 

 

For the Nine Months Ended September 30, 2024

 

 

Common Stock

 

 

Additional
Paid-In Capital

 

 

Accumulated Deficit

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Noncontrolling
Interest

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2023

 

 

117,857,055

 

 

$

1,179

 

 

$

771,336

 

 

$

( 200,319

)

 

$

12,544

 

 

$

670

 

 

$

585,410

 

Net loss (1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 34,061

)

 

 

—

 

 

 

( 469

)

 

 

( 34,530

)

Other comprehensive loss, net of tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 13,249

)

 

 

—

 

 

 

( 13,249

)

Share-based compensation

 

 

—

 

 

 

—

 

 

 

55,194

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

55,194

 

Shares issued under share-based compensation
    plan, including tax effects

 

 

318,085

 

 

 

3

 

 

 

528

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

531

 

Shares issued for payment of acquisition

 

 

2,570,503

 

 

 

26

 

 

 

31,055

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

31,081

 

Derecognition of redeemable noncontrolling
    interest

 

 

—

 

 

 

—

 

 

 

12,439

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12,439

 

Issuance of common stock on initial public
    offering, net (2)

 

 

53,333,334

 

 

 

533

 

 

 

655,952

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

656,485

 

Proceeds from stock purchase contract
    issued under tangible equity units, net (3)

 

 

—

 

 

 

—

 

 

 

321,611

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

321,611

 

Balances at September 30, 2024

 

 

174,078,977

 

 

$

1,741

 

 

$

1,848,115

 

 

$

( 234,380

)

 

$

( 705

)

 

$

201

 

 

$

1,614,972

 

(1) Net income (loss) to the Company for the nine months ended September 30, 2025 and 2024 excludes $( 1,370 ) and $( 1,395 ) , respectively, allocable to the redeemable noncontrolling interests for our joint venture arrangements.
(2) Issuance of common stock on initial public offering is presented net of underwriting discounts and commissions, and offering-related expenses of $ 36.8 million.
(3) Proceeds from stock purchase contract issued under tangible equity units is presented net of underwriting discounts and commissions of $ 9.1 million.

7

 

BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated St atements of Cash Flows
(In thousands)
(Unaudited)

 

For the Nine Months Ended

 

 

 

September 30,

 

 

2025

 

 

2024

 

Operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

111,793

 

 

$

( 35,925

)

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

124,753

 

 

 

149,601

 

Impairment of long-lived assets

 

 

6,526

 

 

 

4,781

 

Change in fair value of contingent consideration, net

 

 

( 1,266

)

 

 

—

 

Payment of contingent consideration in excess of acquisition date fair value

 

 

( 6,170

)

 

 

—

 

Provision for credit losses

 

 

48,723

 

 

 

21,896

 

Amortization of deferred debt issuance costs

 

 

8,384

 

 

 

9,477

 

Share-based compensation

 

 

55,733

 

 

 

55,194

 

Deferred income taxes, net

 

 

18,266

 

 

 

( 27,781

)

Loss on extinguishment of debt

 

 

—

 

 

 

12,726

 

Loss (gain) on disposition of fixed assets

 

 

1,503

 

 

 

( 55

)

Other

 

 

( 1,838

)

 

 

( 959

)

Change in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

        Accounts receivable

 

 

( 162,689

)

 

 

( 163,996

)

        Prepaid expenses and other current assets

 

 

24,857

 

 

 

( 2,470

)

        Inventories

 

 

( 2,279

)

 

 

( 74,265

)

        Trade accounts payable

 

 

42,836

 

 

 

155,563

 

        Accrued expenses

 

 

17,212

 

 

 

( 150,032

)

        Other assets and liabilities

 

 

( 27,734

)

 

 

( 20,593

)

Net cash provided by (used in) operating activities

 

$

258,610

 

 

$

( 66,838

)

Investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

$

( 57,819

)

 

$

( 65,602

)

Acquisitions of businesses

 

 

( 8,308

)

 

 

( 59,755

)

Other

 

 

( 5,068

)

 

 

900

 

Net cash used in investing activities

 

$

( 71,195

)

 

$

( 124,457

)

Financing activities:

 

 

 

 

 

 

Long-term debt borrowings

 

$

—

 

 

$

2,566,000

 

Long-term debt repayments

 

 

( 37,933

)

 

 

( 3,384,633

)

Proceeds from issuance of common stock on initial public offering, net

 

 

—

 

 

 

656,485

 

Proceeds from issuance of tangible equity units, net

 

 

—

 

 

 

389,000

 

(Repayments) borrowings of the Revolving Credit Facility, net

 

 

( 63,300

)

 

 

46,400

 

Payments of debt issuance costs

 

 

—

 

 

 

( 43,188

)

Repurchase of shares of common stock

 

 

—

 

 

 

( 650

)

Proceeds from shares issued under share-based compensation plan

 

 

14,681

 

 

 

531

 

Taxes paid related to net share settlement of equity awards

 

 

( 5,583

)

 

 

—

 

Payment of acquisition earn-outs

 

 

—

 

 

 

( 4,156

)

Purchase of redeemable noncontrolling interest

 

 

( 5,100

)

 

 

( 2,316

)

Payments of financing lease obligations

 

 

( 10,133

)

 

 

( 9,276

)

Net cash (used in) provided by financing activities

 

$

( 107,368

)

 

$

214,197

 

Net increase in cash and cash equivalents

 

 

80,047

 

 

 

22,902

 

Cash and cash equivalents at beginning of period

 

 

61,253

 

 

 

13,071

 

Cash and cash equivalents at end of period

 

$

141,300

 

 

$

35,973

 

Cash and cash equivalents included in assets held for sale at end of period

 

 

956

 

 

 

427

 

Cash and cash equivalents included in continuing operations at end of period

 

$

140,344

 

 

$

35,546

 

 

8

 

BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (continued)
(In thousands)
(Unaudited)
 

For the Nine Months Ended

 

 

September 30,

 

2025

 

 

2024

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Cash paid for:

 

 

 

 

 

Interest, net

$

137,872

 

 

$

164,927

 

Income taxes, net of refunds

$

14,851

 

 

$

24,312

 

Supplemental schedule of non-cash investing and financing activities:

 

 

 

 

 

Notes issued in connection with acquisitions

$

—

 

 

$

23,408

 

Financing lease obligations assumed

$

10,452

 

 

$

9,625

 

Purchases of property and equipment in accounts payable

$

2,856

 

 

$

3,593

 

Consideration for purchase of redeemable noncontrolling interest in accounts payable

$

—

 

 

$

5,100

 

Common stock issued in connection with acquisitions

$

—

 

 

$

31,081

 

See accompanying notes to the condensed consolidated financial statements.

9

 

 
Index to Notes to Condensed Consolidated Financial Statements
 

 

Page

 

 

Note 1 - Significant Accounting Policies

11

Note 2 - Discontinued Operations

13

Note 3 - Revenue

14

Note 4 - Acquisitions

15

Note 5 - Goodwill and Intangible Assets

17

Note 6 - Debt and Derivatives

18

Note 7 - TEUs

20

Note 8 - Income Taxes

21

Note 9 - Detail of Certain Balance Sheet Accounts

21

Note 10 - Earnings Per Share

22

Note 11 - Common Stock, Preferred Stock, and Share-Based Compensation

24

Note 12 - Fair Value

24

Note 13 - Commitments and Contingencies

25

Note 14 - Related Party Transactions

25

Note 15 - Segment Information

26

 

10

 

BrightSpring Health Services, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Significant Accounting Policies
Description of Business
BrightSpring Health Services, Inc. and its subsidiaries (“BrightSpring”, the “Company”, “we,” “us,” or “our”) is a leading home and community-based healthcare services platform, focused on delivering complementary pharmacy and provider services to complex patients. Our platform delivers clinical services and pharmacy solutions across Medicare, Medicaid, and commercially-insured populations.
On December 7, 2017, affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR” or “KKR Stockholder”) and Walgreens Boots Alliance, Inc. (“WBA”) purchased PharMerica Corporation (“PharMerica”) and on March 5, 2019, expanded with the acquisition of BrightSpring Health Holdings Corp. The surviving entity was renamed BrightSpring Health Services, Inc.
BrightSpring Health Services, Inc. completed its initial public offering (“IPO”) of 53,333,334 shares of its common stock at a price of $ 13.00 per share and its concurrent offering of 8,000,000 6.75 % tangible equity units (“TEUs”) with a stated amount of $ 50.00 per unit in January 2024 (collectively, “the IPO Offerings”). The net proceeds from the IPO Offerings amounted to $ 656.5 million and $ 389.0 million for the common stock and TEUs, respectively, after deducting underwriting discounts and commissions, and offering-related expenses.
On January 17, 2025, the Company entered into a purchase agreement to divest its community living services, home and community based waiver programs, and intermediate care facilities (the “Community Living business”). The transaction is subject to customary closing conditions and certain other antitrust laws, and is expected to close in the first fiscal quarter of 2026.
During the second quarter of 2025, WBA sold their remaining ownership interests in the Company through open market transactions and is no longer considered a related party of the Company. In June 2025, KKR Stockholder and certain management selling stockholders completed a registered secondary public offering of the Company’s common stock. The Company did not purchase or sell any shares of common stock that were offered in the secondary public offering. The Company did not receive any proceeds from the secondary public offering, other than proceeds received in connection with the cash exercise of stock options by the management selling stockholders in connection with the secondary public offering. As a result of the aforementioned transactions, the Company no longer qualifies as a “controlled company” under the Nasdaq Stock Market LLC listing standards and is therefore required to comply with all applicable corporate governance requirements of Nasdaq, subject to phase-in rules.
On October 22, 2025, KKR Stockholder and certain management selling stockholders completed a registered secondary public offering of 15,000,000 shares of the Company’s common stock (the “October 2025 Offering”). The Company did not sell any shares of common stock that were offered in the October 2025 Offering. The Company did not receive any proceeds from the October 2025 Offering, other than proceeds received in connection with the cash exercise of stock options by the management selling stockholders in connection with the October 2025 Offering.
In connection with the October 2025 Offering, the Company concurrently purchased from the underwriter, out of the aggregate of 15,000,000 shares of common stock that were the subject of the October 2025 Offering, 1,500,000 shares of common stock. The price per share paid by the Company was equal to the price at which the underwriter purchased the shares from the selling stockholders in the October 2025 Offering.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of BrightSpring Health Services, Inc. and its subsidiaries. The Company consolidates its majority-owned and controlled entities, including variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated.
We record a noncontrolling interest for the allocable portion of income or loss and comprehensive income or loss to which the noncontrolling interest holders are entitled based upon their ownership share of the affiliate. The Company determined noncontrolling interests for certain of these VIEs to be redeemable noncontrolling interests, which are presented in the unaudited condensed consolidated balance sheets as redeemable noncontrolling interests.

Basis of Presentation
The accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly our financial position, our results of operations, and our cash flows in accordance

11

 

with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting. Our results of operations for the interim periods presented are not necessarily indicative of the results of our operations for the entire year.
As a result of the Company's plan to divest the Community Living business discussed in Note 2, the Community Living business met the criteria to be reported as discontinued operations and held for sale during the first fiscal quarter of 2025. Therefore, the Company has reported the historical results of the Community Living business, including the results of operations, cash flows, and related assets and liabilities, as discontinued operations and held for sale for all periods presented herein. Unless otherwise noted, all activities and amounts reported in the accompanying notes to the unaudited condensed consolidated financial statements relate to the continuing operations of the Company and exclude activities and amounts related to the Community Living business.
This report should be read in conjunction with our consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, as well as the revised and recasted consolidated financial statements and related notes thereto for the year ended December 31, 2024 that reflect the Community Living business as discontinued operations included in our Current Report on Form 8-K as filed on June 10, 2025, which includes information and disclosures not included herein. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from the interim financial information presented, as allowed by the rules and regulations of the Securities and Exchange Commission.

Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts and related disclosures. We rely on historical experience and on various other assumptions that we believe to be reasonable under the circumstances to make judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Significant estimates are involved in the valuation of accounts receivable, inventory, long-lived assets, intangible assets, derivatives, contingent consideration, taxes, insurance reserves, share-based compensation, and goodwill. Actual amounts may differ from these estimates.

Recently Adopted Accounting Standards
 
There were no new accounting standards adopted during the nine months ended September 30, 2025 .
Recently Issued Accounting Standards
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU requires the following disclosures on an annual basis:
• A tabular rate reconciliation using both percentages and amounts, broken out into specific categories with certain reconciling items at or above 5% of the statutory tax further broken out by nature and/or jurisdiction;

• Qualitative disclosure of the nature and effect of significant reconciling items by specific categories and individual jurisdictions; and

• Income taxes paid (net of refunds received), broken out between federal, state/local and foreign, and amounts paid to an individual jurisdiction when 5% or more of the total income taxes paid.

The amendments in this ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis. This ASU will have no impact on the Company’s consolidated financial condition or results of operations. The Company is currently evaluating the impact to the income tax disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which was further clarified in January 2025 through the issuance of ASU 2025-01. These ASUs require new financial statement disclosures to provide disaggregated information for certain types of expenses, including purchases of inventory, employee compensation, depreciation, and amortization in commonly presented expense captions such as cost of goods and services and selling, general, and administrative expenses. The amendments in these ASUs are effective for annual periods beginning after December 15, 2026, with early adoption permitted. The adoption of this guidance will have no impact on the Company's consolidated financial condition or results of operations. The Company is currently evaluating the impact to the related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software , which modernizes the accounting for internal-use software costs by removing all references to prescriptive and sequential software development stages. The new standard requires entities to consider whether significant development uncertainty has been resolved before starting to capitalize software costs and aligns disclosure requirements with ASC 360, Property, Plant, and Equipment. The ASU is effective for annual and interim reporting periods beginning

12

 

after December 15, 2027, and can be applied prospectively, retrospectively, or using a modified transition method, with early adoption permitted. The Company is currently evaluating the impacts of this guidance on the consolidated financial statements and related disclosures.

2. Discontinued Operations
On January 17, 2025, BrightSpring entered into a definitive agreement to sell its Community Living business to National Mentor Holdings, Inc. (the “Purchaser”), for $ 835.0 million in cash upon closing, subject to certain post-closing adjustments. We entered into the transaction in order to streamline our service offerings and further focus on the senior and specialty populations. The transaction is expected to close in the first fiscal quarter of 2026, subject to receipt of customary regulatory approvals and satisfaction of other closing conditions.
The Company has determined the divestiture of the Community Living business represents a strategic shift that will have a major effect on its business and has concluded the criteria for classification as discontinued operations were met during the first fiscal quarter of 2025. Accordingly, the Community Living business is reported as discontinued operations in accordance with Accounting Standards Codification (“ASC”) 205-20, Discontinued Operations . The related assets and liabilities of the Community Living business are classified as assets and liabilities held for sale in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2025, and the results of operations from the Community Living business are classified as discontinued operations in the unaudited condensed consolidated statements of operations. Applicable amounts in prior years have been recast to conform to this discontinued operations presentation. The Community Living business was historically presented as a part of the Provider Services reportable segment.
In accordance with ASC 205-20, Allocation of Interest to Discontinued Operations , the Company elected to allocate interest expense to discontinued operations for the Company’s debt that is not directly attributed to the Community Living business. Interest expense was allocated based on a ratio of net assets held for sale to the sum of consolidated net assets and consolidated debt. In addition, upon closing of the divestiture, we will enter into a transition services agreement with the Purchaser to support the Purchaser's post-closing operations of the Community Living business by providing the Purchaser with certain transition services in exchange for service fees in the form of both fixed-price and pass through costs. Transition services will primarily include finance and accounting, human resources, IT, facilities management, and compliance services.
The financial results of the Community Living business are presented as income from discontinued operations on our unaudited condensed consolidated statements of operations through September 30, 2025 . The following table presents the financial results of the Community Living business (in thousands):
 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Services revenue

 

$

314,605

 

 

$

305,594

 

 

$

921,394

 

 

$

888,422

 

Cost of services

 

 

212,251

 

 

 

220,574

 

 

 

628,048

 

 

 

649,645

 

Gross profit

 

 

102,354

 

 

 

85,020

 

 

 

293,346

 

 

 

238,777

 

Selling, general, and administrative expenses

 

 

70,940

 

 

 

57,277

 

 

 

195,423

 

 

 

163,871

 

Operating income of discontinued operations

 

 

31,414

 

 

 

27,743

 

 

 

97,923

 

 

 

74,906

 

Interest expense, net

 

 

7,404

 

 

 

9,447

 

 

 

22,901

 

 

 

29,154

 

Income of discontinued operations before incomes taxes

 

 

24,010

 

 

 

18,296

 

 

 

75,022

 

 

 

45,752

 

Income tax expense of discontinued operations

 

 

6,257

 

 

 

1,605

 

 

 

18,474

 

 

 

8,464

 

Income from discontinued operations, net of income taxes

 

$

17,753

 

 

$

16,691

 

 

$

56,548

 

 

$

37,288

 

 

13

 

The following table presents the aggregate carrying amounts of assets and liabilities held for sale for the Community Living business in the unaudited condensed consolidated balance sheets (in thousands):
 

 

 

September 30, 2025

 

 

December 31, 2024

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

956

 

 

$

299

 

Accounts receivable, net of allowance for credit losses

 

 

129,707

 

 

 

125,872

 

Inventories

 

 

3,652

 

 

 

4,007

 

Prepaid expenses and other current assets

 

 

3,112

 

 

 

1,269

 

Total current assets held for sale

 

 

137,427

 

 

 

131,447

 

Property and equipment, net of accumulated depreciation of $ 104,774  and $ 110,417  at
    September 30, 2025 and December 31, 2024, respectively

 

 

78,145

 

 

 

69,715

 

Goodwill

 

 

307,640

 

 

 

307,640

 

Intangible assets, net of accumulated amortization

 

 

216,192

 

 

 

216,258

 

Operating lease right-of-use assets, net

 

 

121,676

 

 

 

88,717

 

Deferred income taxes, net

 

 

287

 

 

 

287

 

Other assets

 

 

2,479

 

 

 

5,343

 

Total assets held for sale

 

$

863,846

 

 

$

819,407

 

Liabilities

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Trade accounts payable

 

$

20,860

 

 

$

17,366

 

Accrued expenses

 

 

61,296

 

 

 

60,791

 

Current portion of obligations under operating leases

 

 

33,095

 

 

 

30,755

 

Current portion of obligations under financing leases

 

 

7,716

 

 

 

8,651

 

Total current liabilities held for sale

 

 

122,967

 

 

 

117,563

 

Obligations under operating leases, net of current portion

 

 

60,056

 

 

 

58,147

 

Obligations under financing leases, net of current portion

 

 

13,068

 

 

 

18,461

 

Long-term liabilities

 

 

522

 

 

 

569

 

Total liabilities held for sale

 

$

196,613

 

 

$

194,740

 

In accordance with ASC 205-20, all assets and liabilities held for sale are reported as current at September 30, 2025 as the Community Living transaction is expected to close within one-year of the balance sheet date. The presentation of assets and liabilities held for sale at December 31, 2024 are reported as current and noncurrent, consistent with the conclusion in the period, as the transaction did not meet the requirements of held for sale at that point in time.
The following table presents the significant non-cash items and purchases of property and equipment for the discontinued operations that are included in the accompanying unaudited condensed consolidated statements of cash flows (in thousands):
 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

2025

 

 

2024

 

Cash flows from discontinued operations operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

$

1,329

 

 

$

30,132

 

Share-based compensation

 

 

9,578

 

 

 

5,402

 

Impairment of long-lived assets

 

 

—

 

 

 

3,020

 

 

 

 

 

 

 

 

Cash flows from discontinued operations investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

8,755

 

 

 

7,708

 

 
3. Revenue
The Company is substantially dependent on revenues received under contracts with federal, state, and local government agencies. Operating funding sources are generally earned from Medicaid, Medicare, commercial insurance reimbursement, and from private and other payors. There is no single customer whose revenue was 10% or more of our consolidated revenue during the periods presented. The following tables set forth revenue by payor type (in millions):
 

14

 

 

Pharmacy Solutions

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

Commercial insurance

 

$

818.3

 

 

 

24.5

%

 

$

619.1

 

 

 

23.8

%

 

$

2,234.8

 

 

 

23.9

%

 

$

1,693.7

 

 

 

23.1

%

Medicaid

 

 

287.4

 

 

 

8.6

%

 

 

213.9

 

 

 

8.2

%

 

 

791.8

 

 

 

8.5

%

 

 

600.9

 

 

 

8.2

%

Medicare A

 

 

143.0

 

 

 

4.3

%

 

 

141.9

 

 

 

5.5

%

 

 

422.3

 

 

 

4.5

%

 

 

399.0

 

 

 

5.4

%

Medicare B

 

 

18.7

 

 

 

0.6

%

 

 

16.8

 

 

 

0.6

%

 

 

56.9

 

 

 

0.6

%

 

 

50.4

 

 

 

0.7

%

Medicare C

 

 

593.0

 

 

 

17.8

%

 

 

406.1

 

 

 

15.6

%

 

 

1,636.3

 

 

 

17.5

%

 

 

1,120.9

 

 

 

15.3

%

Medicare D

 

 

1,058.4

 

 

 

31.7

%

 

 

826.2

 

 

 

31.8

%

 

 

2,977.7

 

 

 

31.8

%

 

 

2,352.5

 

 

 

32.1

%

Private & other

 

 

48.2

 

 

 

1.5

%

 

 

41.7

 

 

 

1.6

%

 

 

169.4

 

 

 

1.8

%

 

 

139.8

 

 

 

2.0

%

 

$

2,967.0

 

 

 

89.0

%

 

$

2,265.7

 

 

 

87.1

%

 

$

8,289.2

 

 

 

88.6

%

 

$

6,357.2

 

 

 

86.8

%

 

 

Provider Services

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

Commercial insurance

 

$

51.3

 

 

 

1.5

%

 

$

41.9

 

 

 

1.6

%

 

$

136.8

 

 

 

1.5

%

 

$

125.0

 

 

 

1.7

%

Medicaid

 

 

128.3

 

 

 

3.8

%

 

 

84.9

 

 

 

3.3

%

 

 

301.9

 

 

 

3.2

%

 

 

251.4

 

 

 

3.4

%

Medicare A

 

 

127.0

 

 

 

3.8

%

 

 

114.3

 

 

 

4.4

%

 

 

375.2

 

 

 

4.0

%

 

 

327.2

 

 

 

4.5

%

Medicare B

 

 

1.7

 

 

 

0.1

%

 

 

3.7

 

 

 

0.1

%

 

 

4.6

 

 

 

0.0

%

 

 

18.7

 

 

 

0.3

%

Medicare C

 

 

28.8

 

 

 

0.9

%

 

 

36.0

 

 

 

1.4

%

 

 

96.0

 

 

 

1.0

%

 

 

84.3

 

 

 

1.2

%

Private & other

 

 

30.0

 

 

 

0.9

%

 

 

54.7

 

 

 

2.1

%

 

 

156.2

 

 

 

1.7

%

 

 

161.4

 

 

 

2.1

%

 

$

367.1

 

 

 

11.0

%

 

$

335.5

 

 

 

12.9

%

 

$

1,070.7

 

 

 

11.4

%

 

$

968.0

 

 

 

13.2

%

 

 

Consolidated

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

Commercial insurance

 

$

869.6

 

 

 

26.0

%

 

$

661.0

 

 

 

25.4

%

 

$

2,371.6

 

 

 

25.4

%

 

$

1,818.7

 

 

 

24.8

%

Medicaid

 

 

415.7

 

 

 

12.4

%

 

 

298.8

 

 

 

11.5

%

 

 

1,093.7

 

 

 

11.7

%

 

 

852.3

 

 

 

11.6

%

Medicare A

 

 

270.0

 

 

 

8.1

%

 

 

256.2

 

 

 

9.9

%

 

 

797.5

 

 

 

8.5

%

 

 

726.2

 

 

 

9.9

%

Medicare B

 

 

20.4

 

 

 

0.7

%

 

 

20.5

 

 

 

0.7

%

 

 

61.5

 

 

 

0.6

%

 

 

69.1

 

 

 

1.0

%

Medicare C

 

 

621.8

 

 

 

18.7

%

 

 

442.1

 

 

 

17.0

%

 

 

1,732.3

 

 

 

18.5

%

 

 

1,205.2

 

 

 

16.5

%

Medicare D

 

 

1,058.4

 

 

 

31.7

%

 

 

826.2

 

 

 

31.8

%

 

 

2,977.7

 

 

 

31.8

%

 

 

2,352.5

 

 

 

32.1

%

Private & other

 

 

78.2

 

 

 

2.4

%

 

 

96.4

 

 

 

3.7

%

 

 

325.6

 

 

 

3.5

%

 

 

301.2

 

 

 

4.1

%

 

$

3,334.1

 

 

 

100.0

%

 

$

2,601.2

 

 

 

100.0

%

 

$

9,359.9

 

 

 

100.0

%

 

$

7,325.2

 

 

 

100.0

%

Refer to Note 15 for the disaggregation of revenue by reportable segment.

 
4. Acquisitions
2025 Acquisitions
During the nine months ended September 30, 2025 , we completed two acquisitions within the Provider Services segment for aggregate consideration of $ 8.5 million. We entered these transactions in order to expand our services and geographic offerings. No cash was acquired as a part of these transactions. The operating results of the acquisitions are included in our unaudited condensed consolidated financial statements from the date of the acquisition and are not material to our results of operations.
2024 Acquisitions
During the year ended December 31, 2024, we completed eight acquisitions within the Pharmacy Solutions and Provider Services segments. We entered into these transactions in order to expand our services and geographic offerings. Aggregate consideration net of cash acquired for these acquisitions was approximately $ 110.6 million. The operating results of these acquisitions are included in our unaudited condensed consolidated financial statements from the respective dates of the acquisition.

15

 

Haven Hospice
The following table summarizes the consideration paid (in thousands) for the September 1, 2024 acquisition of North Central Florida Hospice, Inc. ( “ Haven Hospice ” ) and the fair value of the assets acquired and the liabilities assumed at the acquisition date, which were adjusted for immaterial measurement-period adjustments through September 1, 2025. Haven Hospice provides hospice and palliative care services in the state of Florida. Its results are consolidated within the Provider Services segment.
 

Inventories

 

$

45

 

Property and equipment

 

 

495

 

Goodwill

 

 

45,614

 

Intangible assets

 

 

19,860

 

Operating lease right-of-use assets

 

 

7,157

 

Trade accounts payable

 

 

1,264

 

Current portion of obligations under operating leases

 

 

2,235

 

Obligations under operating leases, net of current portion

 

 

4,922

 

Aggregate purchase price

 

$

64,750

 

Consideration for the Haven Hospice acquisition included a $ 15.0 million cash payment, $ 15.0 million seller note payable in 2028, and $ 30.0 million of the Company's common stock equal to 2,471,251 shares at the time of the acquisition. The number of shares was calculated by dividing $ 30.0 million by a price per share equal to the average of the volume weighted average trading price of the Company's common stock on each of the fifteen consecutive trading days ending on and including the trading day that is three trading days prior to the closing date, as required by the asset purchase agreement. The sellers were restricted from trading during a 180-day lock-up period from closing with agreed-upon sale volume limitations for four years thereafter. The asset purchase agreement also includes a post-closing adjustment feature to the extent any losses are incurred by the sellers in the sale of their common stock for four years following closing with a final equity adjustment feature. See Note 12.
The intangible assets consist of $ 14.8 million in indefinite-lived licenses and $ 5.1 million of trade name. The fair value of acquired licenses and trade name were based upon a third-party valuation. The trade name has an estimated useful life of 10.0 years. We expect all of the goodwill will be deductible for tax purposes. The Company believes the resulting amount of goodwill reflects its expectation of synergistic benefits of the acquisition.
Haven Hospice contributed $ 17.7 million and $ 50.1 million in revenue during the three and nine months ended September 30, 2025 , respectively, compared to $ 4.8 million in revenue during the three and nine months ended September 30, 2024 . Haven Hospice contributed $ 1.9 million and $ 5.1 million of operating income during the three and nine months ended September 30, 2025 , respectively, compared to $ 0.6 million of operating income during the three and nine months ended September 30, 2024. Pro forma financial data for the Haven Hospice acquisition has not been included as the results of the operations are not material to our unaudited condensed consolidated financial statements.
Others
The following table summarizes the consideration paid (in thousands) for 2024 acquisitions, excluding Haven Hospice, and the estimated fair value of the assets acquired and the liabilities assumed at the acquisition dates, which are adjusted for immaterial measurement-period adjustments through September 30, 2025 . Consideration for acquisitions by the Pharmacy Solutions and Provider Services segments was $ 27.0 million and $ 18.9 million, respectively.
 

16

 

Accounts receivable

 

$

3,749

 

Inventories

 

 

1,234

 

Prepaid expenses and other current assets

 

 

174

 

Property and equipment

 

 

398

 

Goodwill

 

 

17,721

 

Intangible assets

 

 

31,233

 

Operating lease right-of-use assets

 

 

364

 

Other assets

 

 

1,438

 

Trade accounts payable

 

 

650

 

Accrued expenses

 

 

7,657

 

Current portion of obligations under operating leases

 

 

56

 

Current portion of obligations under financing leases

 

 

53

 

Obligations under operating leases, net of current portion

 

 

308

 

Obligations under financing leases, net of current portion

 

 

8

 

Deferred income taxes, net

 

 

1,686

 

Aggregate purchase price, net of cash acquired

 

$

45,893

 

We have estimated the fair value of acquired customer relationships, licenses, trade names, and covenants not to compete based upon third-party valuations and/or the values assigned in prior acquisitions that were deemed comparable in nature. The intangible assets consist primarily of $ 22.3 million in customer relationships, $ 5.7 million in definite-lived licenses, $ 2.1 million in indefinite-lived licenses, $ 0.6 million in covenants not to compete, and $ 0.5 million in trade names. Definite-lived intangible assets have an estimated weighted average useful life of 14.9 years. We expect $ 12.0 million of the goodwill will be deductible for tax purposes. The Company believes the resulting amount of goodwill reflects its expectation of synergistic benefits of the acquisitions.
The above acquisitions contributed approximately $ 20.5 million and $ 62.3 million in revenue during the three and nine months ended September 30, 2025 , respectively, compared to $ 21.8 million and $ 37.7 million in revenue during the three and nine months ended September 30, 2024 . The above acquisitions contributed approximately $ 0.3 million and $ 3.1 million in operating income during the three and nine months ended September 30, 2025 , respectively, compared to $ 2.0 million and $ 3.0 million in operating income during the three and nine months ended September 30, 2024. Pro forma financial data for the 2024 acquisitions has not been included as the results of the operations are not material to our unaudited condensed consolidated financial statements.
Measurement period adjustments for all aforementioned acquisitions completed in 2024 recorded in the three and nine months ended September 30, 2025 were not material to the unaudited condensed consolidated financial statements. The Company expects to finalize the purchase price allocation for the 2024 acquisitions prior to the one-year anniversary date of each acquisition.
During the three and nine months ended September 30, 2024 , the Company incurred approximately $ 0.2 million and $ 2.1 million in transaction costs, respectively, related to all 2024 acquisitions, including those acquisitions completed in subsequent quarters of 2024. These costs are included in selling, general, and administrative expenses in our unaudited condensed consolidated statements of operations.
The Company also agreed to purchase the remaining 30 % noncontrolling interest in Gateway Pediatric Therapy, LLC during the first fiscal quarter of 2024 and the remaining 45 % noncontrolling interest in Harvest Grove LTC, LLC during the third fiscal quarter of 2024. These transactions did not meet the definition of a business combination in accordance with ASC 805 , Business Combinations .

5. Goodwill and Intangible Assets
A summary of changes to goodwill, by reportable segment, is as follows (in thousands):
 

 

Goodwill

 

 

Pharmacy Solutions

 

 

Provider Services

 

 

Total

 

Goodwill at January 1, 2025*

 

$

841,052

 

 

$

1,522,832

 

 

$

2,363,884

 

Goodwill added through acquisitions

 

 

—

 

 

 

6,430

 

 

 

6,430

 

Measurement period adjustments

 

 

—

 

 

 

128

 

 

 

128

 

Foreign currency adjustments

 

 

—

 

 

 

124

 

 

 

124

 

Goodwill at September 30, 2025*

 

$

841,052

 

 

$

1,529,514

 

 

$

2,370,566

 

* For the periods presented, the carrying amount of goodwill is presented net of accumulated impairment losses of $ 40.9 million.

17

 

Intangible assets are as follows (in thousands):
 

 

September 30, 2025

 

 

December 31, 2024

 

 

 

 

Gross

 

 

Accumulated
Amortization

 

 

Net Carrying
Value

 

 

Gross

 

 

Accumulated
Amortization

 

 

Net Carrying
Value

 

 

Life
(Years)

Customer relationships

 

$

517,753

 

 

$

354,982

 

 

$

162,771

 

 

$

542,137

 

 

$

335,647

 

 

$

206,490

 

 

5 - 20

Trade names

 

 

328,968

 

 

 

156,431

 

 

 

172,537

 

 

 

332,977

 

 

 

140,020

 

 

 

192,957

 

 

2 - 20

Licenses

 

 

60,515

 

 

 

17,970

 

 

 

42,545

 

 

 

68,425

 

 

 

17,528

 

 

 

50,897

 

 

10 - 20

Doctor/payor network

 

 

5,650

 

 

 

4,800

 

 

 

850

 

 

 

12,730

 

 

 

10,965

 

 

 

1,765

 

 

5 - 8

Covenants not to compete

 

 

6,874

 

 

 

4,605

 

 

 

2,269

 

 

 

8,790

 

 

 

5,886

 

 

 

2,904

 

 

2 - 7

Other intangible assets

 

 

10,940

 

 

 

7,535

 

 

 

3,405

 

 

 

10,940

 

 

 

6,362

 

 

 

4,578

 

 

5 - 7

Total definite-lived assets

 

$

930,700

 

 

$

546,323

 

 

$

384,377

 

 

$

975,999

 

 

$

516,408

 

 

$

459,591

 

 

 

Licenses

 

 

137,233

 

 

 

—

 

 

 

137,233

 

 

 

135,633

 

 

 

—

 

 

 

135,633

 

 

Indefinite

Total intangible assets

 

$

1,067,933

 

 

$

546,323

 

 

$

521,610

 

 

$

1,111,632

 

 

$

516,408

 

 

$

595,224

 

 

 

Amortization expense for the three and nine months ended September 30, 2025 was $ 22.7 million and $ 69.7 million , respectively, as compared to $ 24.1 million and $ 72.0 million for the three and nine months ended September 30, 2024 , respectively.

6. Debt and Derivatives
The table below summarizes the total outstanding debt of the Company (in thousands):
 

 

September 30, 2025

 

 

December 31, 2024

 

 

 

Rate

 

 

$

 

 

Rate

 

 

$

 

First Lien Incremental Term Loan Tranche B-5 - payable to lenders at SOFR
     plus applicable margin

 

 

6.66

%

 

$

2,527,638

 

 

 

6.86

%

 

$

2,546,787

 

Revolving Credit Loans - payable to lenders at SOFR plus applicable margin

 

 

6.91

%

 

 

—

 

 

 

7.61

%

 

 

—

 

Swingline/Base Rate - payable to lenders at ABR plus applicable margin

 

 

9.25

%

 

 

—

 

 

 

9.75

%

 

 

63,300

 

Amortizing Notes (1)

 

 

 

 

 

37,181

 

 

 

 

 

 

53,804

 

Notes payable and other

 

 

 

 

 

17,267

 

 

 

 

 

 

19,428

 

Total debt

 

 

 

 

 

2,582,086

 

 

 

 

 

 

2,683,319

 

Less: debt issuance costs, net

 

 

 

 

 

64,882

 

 

 

 

 

 

72,736

 

Total debt, net of debt issuance costs

 

 

 

 

 

2,517,204

 

 

 

 

 

 

2,610,583

 

Less: current portion of long-term debt

 

 

 

 

 

51,870

 

 

 

 

 

 

48,725

 

Total long-term debt, net of current portion

 

 

 

 

$

2,465,334

 

 

 

 

 

$

2,561,858

 

 
(1) See Note 7 for discussion of Amortizing Notes.

The following discussion summarizes the debt agreements and related modifications for the nine months ended September 30, 2025 and the year ended December 31, 2024. We were in compliance with all applicable financial debt covenants at September 30, 2025 and December 31, 2024.
First Lien Credit Agreement
On March 5, 2019 , the Company entered into a First Lien Credit Agreement (the “First Lien”), with Morgan Stanley Senior Funding, Inc., as the Administrative Agent and the Collateral Agent. The First Lien originally consisted of a principal amount of $ 1,650.0 million. In 2019, an additional delayed draw of $ 150.0 million was made on the First Lien, resulting in a gross borrowing of $ 1,800.0 million (“Tranche B-1”). The First Lien, as amended in 2020, provided for the establishment of a Tranche B-2 Term Loan (“Tranche B-2”) in an aggregate principal amount equal to $ 550.0 million. The First Lien, as amended in 2021, provided for the establishment of a Tranche B-3 Term Loan (“Tranche B-3”) in an aggregate principal amount equal to $ 675.0 million.
On February 21, 2024, we used a portion of the net proceeds received from the IPO Offerings to repay $ 343.3 million of the borrowings under the First Lien, and amended the First Lien to establish a new Tranche B-4 Term Loan (“Tranche B-4”) in an aggregate principal amount of $ 2,566.0 million. The proceeds from Tranche B-4 borrowings were used to refinance the equivalent amount of the remaining First Lien Tranches B-1, B-2, and B-3 borrowings and was accounted for as a debt modification.
On December 11, 2024, we amended the First Lien to refinance Tranche B-4 by establishing a Tranche B-5 Term Loan (“Tranche B-5”) in an aggregate principal amount of $ 2,553.2 million at a rate equal to Secured Overnight Financing Rate (“SOFR”) plus 2.50 % or Alternate Base Rate (“ABR”) plus 1.50 % with a maturity date of February 21, 2031 . The non-cash transaction was accounted for as a

18

 

debt modification. Principal payments are due on the last business day of each quarter, which commenced in the first fiscal quarter of 2025 and equate to 0.25 % of the principal at issuance, with a balloon payment due February 21, 2031.
Revolving Credit Facility
The First Lien also extends credit in the form of a Revolving Credit Facility with a borrowing capacity of $ 475.0 million (the “Revolver”), of which up to $ 50.0 million is available as swingline loans and up to $ 82.5 million is available as letters of credit (the “LC Sublimit”). The Revolver will mature on June 30, 2028 . In connection with the First Lien modification on February 21, 2024, borrowings under the Revolver bore interest at a rate equal to SOFR (with a floor of 0.00 %) plus 3.25 % for the Revolving Credit Loans or ABR plus 2.25 % for the Swingline Loans at December 31, 2024. During the first fiscal quarter of 2025, the variable rate on the Revolving Credit Loans and Swingline Loans decreased to SOFR plus 3.00 % and ABR plus 2.00 %, respectively, as a result of our improved leverage ratio in accordance with the terms of our credit agreement. As of September 30, 2025, the Company had $ 475.0 mi llion of borrowing capacity available under the Revolver as there were no borrowings under the Revolver or letters of credit outstanding. As of December 31, 2024, the Company had $ 63.3 million of borrowings outstanding under the Revolver and no letters of credit, reducing the available borrowing capacity to approximately $ 411.7 million .
The Company’s First Lien also provides for an additional $ 65.0 million of letter of credit commitments (the “LC Facility”), which are not subject to the LC Sublimit and do not reduce the Revolver borrowing capacity. As of September 30, 2025, there were $ 62.8 million of letters of credit outstanding under the LC Facility, resulting in an available borrowing capacity of $ 2.2 million . As of December 31, 2024, there were $ 61.8 million of letters of credit outstanding under the LC Facility, resulting in an available borrowing capacity of $ 3.2 million .
Second Lien Credit Agreement
The Company’s amended and restated Second Lien Credit Agreement (the “Second Lien Facility”), with certain Lenders and Wilmington Trust, National Association, as the Administrative Agent and the Collateral Agent consisted of a principal amount of $ 450.0 million. On January 30, 2024, we used a portion of the net proceeds received from the IPO Offerings to repay all outstanding borrowings under the Second Lien Facility. No remaining obligation exists related to the Second Lien Facility. This transaction was accounted for as a debt extinguishment and the Company incur red a loss on extinguishment of debt of $ 12.7 million related to the write-off of unamortized debt issuance costs during the first fiscal quarter of 2024.
Derivative Financial Instruments
To manage fluctuations in cash flows resulting from changes in the variable interest rates, the Company entered into receive-variable, pay-fixed interest rate swap agreements. The following table summarizes our interest rate swaps designated as cash flow hedges:
 

 

 

Notional Amount as of

 

 

 

 

 

Financial Institution

 

September 30, 2025

 

December 31, 2024

 

Effective Dates

 

Fixed Rates

 

Credit Suisse

 

$

—

 

 

 

$

500

 

million

 

3-year period ending September 30, 2025

 

 

3.41650

%

Morgan Stanley

 

 

—

 

 

 

 

1,050

 

million

 

3-year period ending September 30, 2025

 

 

3.42000

%

Credit Agricole Corporate and Investment Bank

 

 

—

 

 

 

 

450

 

million

 

3-year period ending September 30, 2025

 

 

3.52410

%

Matured contracts

 

$

—

 

 

 

$

2,000

 

million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Agricole Corporate and Investment Bank

 

$

500

 

million

 

$

—

 

 

 

1-year period ending September 30, 2026

 

 

3.72500

%

Mizuho Capital Markets

 

 

500

 

million

 

 

—

 

 

 

1-year period ending September 30, 2026

 

 

3.61121

%

Credit Agricole Corporate and Investment Bank

 

 

250

 

million

 

 

—

 

 

 

3-year period ending September 30, 2028

 

 

3.33150

%

Morgan Stanley

 

 

250

 

million

 

 

—

 

 

 

3-year period ending September 30, 2028

 

 

3.17700

%

Existing contracts

 

$

1,500

 

million

 

$

—

 

 

 

 

 

 

 

The net fair value of the net cash flow hedges as of September 30, 2025 and December 31, 2024 was $ 0.3 million and $ 10.6 million , respectively, and is reflected in prepaid expenses and other current assets, other assets, and long-term liabilities in the unaudited condensed consolidated balance sheets.

19

 

Amounts reported in accumulated other comprehensive income (“AOCI”) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Interest received, including payments made or received under the cash flow hedges, was $ 4.6 million and $ 13.4 million for the three and nine months ended September 30, 2025, respectively, as compared to $ 9.8 million and $ 28.9 million for the three and nine months ended September 30, 2024 , respectively. The Company expects approximately $ 0.9 million of pre-tax gains to be reclassified out of AOCI into earnings within the next twelve months.

7. Tangible Equity Units
Concurrently with the IPO, we issued 8,000,000 TEUs, which have a stated amount of $ 50.00 per unit. Each TEU is comprised of a prepaid stock purchase contract ( “Purchase Contract”) and a senior amortizing note (“Amortizing Note” ) due February 1, 2027 , each issued by the Company. E ach TEU may be separated by a holder into its constituent Purchase Contract and Amortizing Note, each of which is considered a freestanding financial instrument. The proceeds from the issuance were allocated to equity and debt based on the relative fair value of the respective components of each TEU as follows (in thousands):
 

 

 

Equity Component

 

 

Debt Component

 

 

Total

 

Fair value per unit

 

$

41.3382

 

 

$

8.6618

 

 

$

50.00

 

 

 

 

 

 

 

 

 

 

Gross proceeds

 

$

330,706

 

 

$

69,294

 

 

$

400,000

 

Less: issuance costs

 

 

9,095

 

 

 

1,905

 

 

 

11,000

 

Net proceeds

 

$

321,611

 

 

$

67,389

 

 

$

389,000

 

The value allocated to the Purchase Contract is reflected net of issuance costs in additional paid-in capital. The value allocated to the Amortizing Notes is reflected in long-term debt in the unaudited condensed consolidated balance sheet, with payments expected in the next twelve months reflected in current portion of long-term debt. The long-term portion of the Amortizing Notes as of September 30, 2025 and December 31, 2024 wa s $ 13.0 million and $ 32.9 million, respectively. The short-term portion of the Amortizing Notes as of September 30, 2025 and December 31, 2024 wa s $ 24.2 million and $ 20.9 million, respectively. Issuance costs related to the Amortizing Notes are reflected as a reduction of the carrying amount and will be amortized through the maturity date using the effective interest rate method.
Amortizing Notes
The Company pays equal quarterly cash installments of $ 0.8438 per Amortizing Note on February 1, May 1, August 1 and November 1, commencing on May 1, 2024, except for the May 1, 2024 installment payment, which was $ 0.8531 per Amortizing Note, with a final installment payment date of February 1, 2027 . In the aggregate, the annual quarterly cash installments are the equivalent of 6.75 % per year. Each installment payment constitutes a payment of interest and a partial repayment of principal. The Company paid $ 6.7 million and $ 20.2 million in TEU installment payments during the three and nine months ended September 30, 2025 , respectively, as compared to $ 6.8 million and $ 13.6 million during the three and nine months ended September 30, 2024. The Amortizing Notes rank equally in right of payment with all other existing and future unsecured senior indebtedness and rank senior to all of our existing and future indebtedness, if any, that is subordinated to the Amortizing Notes.
Purchase Contracts
At any time prior to the second scheduled trading day immediately preceding February 1, 2027, a holder may elect to settle its Purchase Contract early, in whole or in part, at an early settlement rate equal to the minimum settlement rate. The Company has the right to settle the Purchase Contracts on or after November 1, 2024, in whole but not in part, on a date fixed by it at an early mandatory settlement rate equal to the maximum settlement rate, subject to certain exceptions. During the three and nine months ended September 30, 2025 , 865,017 Purchase Contracts were converted at the holder's option. During the three and nine months ended September 30, 2024 , no Purchase Contracts were converted at the holder's option.
Unless settled earlier at the holder’s option or at the Company's election, each Purchase Contract will, subject to postponement in certain limited circumstances, automatically settle on February 1, 2027 for a number of shares of our common stock, subject to certain anti-dilution adjustments, based upon the 20-day volume-weighted average price ( “VWAP”) of our common stock as follows:
 

VWAP of BTSG Common Stock

 

Common Stock Issued

Greater than $ 15.28

 

3.2733  shares (minimum settlement rate)

Equal to or less than $ 15.28  but greater than or equal to $ 13.00

 

 $ 50  divided by VWAP

Less than $ 13.00

 

3.8461  shares (maximum settlement rate)

 

20

 

The Purchase Contracts are mandatorily convertible into a minimum of 26.2 million shares or a maximum of 30.8 million shares of our common stock on the mandatory settlement date (unless redeemed by us or settled earlier at the unit holder's option). The 26.2 million minimum shares are included in the calculation of basic weighted average shares outstanding. The difference between the minimum and maximum shares represents potentially dilutive securities, which are included in the calculation of diluted weighted average shares outstanding to the extent that the average applicable market value is equal to or greater than $ 13.00 but is less than or equal to $ 15.28 during the period (see Note 10).

8. Income Taxes
The provision for income taxes is attributable to U.S federal, state, and foreign income taxes. The Company’s effective tax rate used for interim periods is based on an estimated annual effective tax rate and includes the tax effect of items required to be recorded discretely in the interim periods in which those items occur.
A reconciliation of the Company’s effective tax rate is as follows:
 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Estimated annual effective tax rate before discrete items

 

 

26.4

%

 

 

( 28.5

)%

 

 

26.4

%

 

 

20.6

%

Discrete items recognized

 

 

( 2.0

)%

 

 

( 18.1

)%

 

 

( 7.2

)%

 

 

9.5

%

Effective tax rate recognized in the statements of operations

 

 

24.4

%

 

 

( 46.6

)%

 

 

19.2

%

 

 

30.1

%

During the three months ended September 30, 2025 , the Company’s effective tax rate was lower than the U.S. federal income tax rate, primarily as a result of including $ 1.0 million in tax benefits resulting from the recognition of excess tax benefits from share-based compensation. During the three months ended September 30, 2024, the Company's effective tax rate was lower than the U.S. federal income tax rate, primarily as a result of the cumulative impact of the year-to-date estimated tax rate on pre-tax book losses as well as the 2023 return-to-provision adjustments driven by a refinement of pre-tax book income from continuing operations for tax reporting purposes.
During the nine months ended September 30, 2025 , the Company's effective tax rate was lower than the U.S. federal income tax rate, primarily as a result of including $ 4.7 million in tax benefits resulting from the recognition of excess tax benefits from share-based compensation. During the nine months ended September 30, 2024, the Company’s effective tax rate was higher than the U.S. federal income tax rate, primarily as a result of limitations on the deductibility of certain executive compensation that now apply to the Company after the IPO Offerings, which were completed in January 2024. In addition, the discrete tax benefit related to the Silver matter increased the effective tax rate on pre-tax book losses to date.
On July 4, 2025, H.R.1, new tax legislation commonly referred to as the One Big Beautiful Bill Act ("OBBBA"), which includes a broad range of tax provisions, was enacted in the U.S. The Company does not expect the OBBBA will have a material impact on its estimated annual effective tax rate in 2025, however will continue to monitor the cash tax benefits as a result of favorable tax treatment for certain business provisions.
See Note 13 for further discussion of the Silver matter.

9. Detail of Certain Balance Sheet Accounts
Prepaid expenses and other current assets consist of the following (in thousands):
 

 

September 30, 2025

 

 

December 31, 2024

 

Rebate receivable

 

$

38,188

 

 

$

49,538

 

Non-trade receivables

 

 

25,068

 

 

 

45,428

 

Prepaid insurance

 

 

15,383

 

 

 

13,892

 

Income tax receivable

 

 

14,366

 

 

 

13,468

 

Inventory returns receivable

 

 

9,855

 

 

 

11,245

 

Prepaid maintenance

 

 

3,663

 

 

 

3,644

 

Interest rate swaps

 

 

—

 

 

 

10,633

 

Other prepaid expenses and current assets

 

 

17,455

 

 

 

13,462

 

Total prepaid expenses and other current assets

 

$

123,978

 

 

$

161,310

 

 

21

 

Other assets consist of the following (in thousands):
 

 

September 30, 2025

 

 

December 31, 2024

 

Insurance recoveries

 

$

6,890

 

 

$

7,564

 

Notes receivable

 

 

6,712

 

 

 

8,577

 

Cloud computing

 

 

6,054

 

 

 

7,362

 

Equity method investments

 

 

5,821

 

 

 

670

 

Deposits

 

 

5,666

 

 

 

6,733

 

Deferred compensation

 

 

4,505

 

 

 

3,777

 

Deferred debt issuance costs

 

 

1,940

 

 

 

2,470

 

Interest rate swaps

 

 

1,037

 

 

 

—

 

Other assets

 

 

3,337

 

 

 

1,975

 

Total other assets

 

$

41,962

 

 

$

39,128

 

Accrued expenses consist of the following (in thousands):
 

 

September 30, 2025

 

 

December 31, 2024

 

Wages and payroll taxes

 

$

121,480

 

 

$

98,245

 

Checks in excess of cash balance

 

 

27,202

 

 

 

27,643

 

Compensated absences

 

 

26,930

 

 

 

24,360

 

Workers compensation insurance reserves

 

 

24,006

 

 

 

19,966

 

Health insurance reserves

 

 

19,146

 

 

 

14,934

 

Property insurance reserves

 

 

11,568

 

 

 

9,879

 

Deferred revenue

 

 

8,302

 

 

 

10,196

 

Legal settlements and professional fees

 

 

8,060

 

 

 

13,982

 

General and professional liability insurance reserves

 

 

6,639

 

 

 

8,328

 

Automobile insurance reserves

 

 

4,338

 

 

 

21,353

 

Taxes other than income taxes

 

 

2,700

 

 

 

1,985

 

Interest

 

 

1,398

 

 

 

8,779

 

Interest rate swaps

 

 

717

 

 

 

—

 

Contingent consideration

 

 

200

 

 

 

3,136

 

Other

 

 

41,360

 

 

 

32,960

 

Total accrued expenses

 

$

304,046

 

 

$

295,746

 

 

Long-term liabilities consist of the following (in thousands):
 

 

September 30, 2025

 

 

December 31, 2024

 

Workers compensation insurance reserves

 

$

23,442

 

 

$

25,360

 

General and professional liability insurance reserves

 

 

23,090

 

 

 

21,182

 

Automobile insurance reserves

 

 

9,514

 

 

 

9,034

 

Deferred compensation

 

 

4,505

 

 

 

3,777

 

Contingent consideration

 

 

750

 

 

 

5,250

 

Employee incentives

 

 

—

 

 

 

3,993

 

Other

 

 

2,259

 

 

 

2,594

 

Total long-term liabilities

 

$

63,560

 

 

$

71,190

 

 
10. Earnings Per Share (“EPS”)
Basic net income (loss) per share excludes dilution and is reported separately for continuing operations and discontinued operations. Basic net income (loss) per share of common stock for continuing operations and discontinued operations is calculated by dividing net income (loss) from continuing operations and discontinued operations attributable to common shareholders by the weighted average number of shares outstanding for the reporting period. Diluted net income (loss) per share of common stock is computed by giving effect to all potential weighted average dilutive common stock. In periods of net loss, no potentially dilutive common shares are included in the diluted shares outstanding as the effect is anti-dilutive.

22

 

The number of additional shares of common stock related to restricted stock units (“RSUs”) and stock option awards is calculated using the treasury stock method, if dilutive.
For the three and nine months ended September 30, 2025 and 2024, the TEUs were assumed to be outstanding at the minimum settlement amount for weighted-average shares for basic EPS. For the three and nine months ended September 30, 2025 , the Company's average applicable market value was greater than $ 15.28 , resulting in no dilutive impact to EPS for TEUs. For the three and nine months ended September 30, 2024 , the Company's average applicable market value was equal to or less than $ 15.28 but greater than or equal to $ 13.00 . Thus, the TEUs were assumed to be settled at a conversion factor based on the 20-day VWAP per share of the Company's common stock not to exceed 3.8461 shares per Purchase Contract, if dilutive. See Note 7 for further discussion of TEUs.
The following table sets forth the computation of basic and diluted net income (loss) per share attributable to common shareholders (in thousands, except per share amounts):
 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

37,488

 

 

$

( 25,672

)

 

$

55,245

 

 

$

( 73,213

)

Less: Net loss attributable to noncontrolling interests

 

 

( 595

)

 

 

( 751

)

 

 

( 1,793

)

 

 

( 1,864

)

Net income (loss) from continuing operations attributable to
    common shareholders

 

 

38,083

 

 

 

( 24,921

)

 

 

57,038

 

 

 

( 71,349

)

Net income from discontinued operations

 

 

17,753

 

 

 

16,691

 

 

 

56,548

 

 

 

37,288

 

Net income (loss) attributable to common shareholders

 

$

55,836

 

 

$

( 8,230

)

 

$

113,586

 

 

$

( 34,061

)

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding - basic

 

 

203,487

 

 

 

198,491

 

 

 

202,067

 

 

 

190,541

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

 

7,835

 

 

 

—

 

 

 

8,387

 

 

 

—

 

RSUs

 

 

6,660

 

 

 

—

 

 

 

8,065

 

 

 

—

 

TEUs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Weighted-average shares outstanding - diluted

 

 

217,982

 

 

 

198,491

 

 

 

218,519

 

 

 

190,541

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.19

 

 

$

( 0.13

)

 

$

0.28

 

 

$

( 0.37

)

Discontinued operations

 

$

0.08

 

 

$

0.09

 

 

$

0.28

 

 

$

0.19

 

Net income (loss)

 

$

0.27

 

 

$

( 0.04

)

 

$

0.56

 

 

$

( 0.18

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income (loss) per share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.17

 

 

$

( 0.13

)

 

$

0.26

 

 

$

( 0.37

)

Discontinued operations

 

$

0.09

 

 

$

0.09

 

 

$

0.26

 

 

$

0.19

 

Net income (loss)

 

$

0.26

 

 

$

( 0.04

)

 

$

0.52

 

 

$

( 0.18

)

The following potentially common share equivalents were excluded from the computation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented (in thousands):
 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Stock options

 

 

245

 

 

 

15,096

 

 

 

1,303

 

 

 

15,096

 

RSUs

 

 

—

 

 

 

11,078

 

 

 

—

 

 

 

11,078

 

TEUs

 

 

—

 

 

 

1,881

 

 

 

—

 

 

 

1,881

 

Other

 

 

—

 

 

 

9

 

 

 

—

 

 

 

9

 

Total

 

 

245

 

 

 

28,064

 

 

 

1,303

 

 

 

28,064

 

 

23

 

 
11. Common Stock, Preferred Stock, and Share-Based Compensation
Common Stock and Preferred Stock
The Company’s Board of Directors approved a 15.7027 -for-one stock split of the Company’s common stock on January 24, 2024. The stock split became effective on January 25, 2024. The par value per share of the Company’s common stock remained unchanged at $ 0.01 per share, and the authorized shares of the Company’s common stock increased from 8,750,000 to 137,398,625 . Upon completion of the IPO Offerings in January 2024, the Company's Board of Directors approved an amendment to our articles of incorporation to authorize 1,500,000,000 and 250,000,000 shares of common stock and preferred stock, respectively, each with a par value of $ 0.01 per share.
Share-Based Compensation
In January 2025, the Company's Board of Directors approved the modification of certain equity awards in connection with the divestiture of the Community Living business, which resulted in $ 1.7 million and $ 4.8 million of incremental share-based compensation expense recognized during the three and nine months ended September 30, 2025 , respectively.

12. Fair Value
Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques:
A. Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

B. Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost).

C. Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option-pricing and excess earnings models).

Assets and Liabilities Measured at Fair Value on a Recurring Basis
The financial assets or liabilities recorded at fair value on a recurring basis are set forth in the table below (in thousands):
 

 

 

September 30, 2025

 

 

December 31, 2024

 

 

Valuation Technique

Assets:

 

 

 

 

 

 

 

 

Interest rate swaps (Level 2)

 

$

275

 

 

$

10,633

 

 

A

Total assets

 

$

275

 

 

$

10,633

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Contingent consideration (Level 3)

 

$

950

 

 

$

8,386

 

 

C

Total liabilities

 

$

950

 

 

$

8,386

 

 

 

The fair values of our interest rate swaps are based upon Level 2 inputs, which include valuation models. The key inputs for the valuation models are quoted market prices, interest rates, forward yield curves, and credit risk adjustments that are necessary to reflect the probability of default by the counterparty or us. For disclosures about our derivative instruments, refer to Note 6.
The contingent consideration represents future earn-outs and a post-closing equity adjustment feature, both associated with acquisitions, which are recognized as a component of the purchase price at the estimated fair value on the acquisition date. These liabilities are classified as accrued expenses and long-term liabilities in our accompanying unaudited condensed consolidated balance sheets.
The fair values of the liabilities associated with future earn outs were derived using the income approach with unobservable inputs, including future earnings forecasts and present value assumptions, and there was little or no market data (Level 3). The Company will re-assess the fair values on each reporting period thereafter until settlement.
The fair value of the liability associated with the post-closing equity adjustment feature related to the Haven Hospice acquisition was derived with unobservable inputs using a Monte Carlo simulation, where the common stock price of the Company was evolved using a Geometric Brownian Motion of a period from the valuation date to the end of the fourth anniversary of closing. Estimated equity volatility was based on historical volatility, implied volatility, and peer group volatility over various periods. The Company will

24

 

re-assess the fair value at each reporting period with changes in value being recorded through the statement of operations. The ultimate settlement of the liability will be through either issuance of additional equity shares and/or additional cash paid in case of net realized losses on sales; or reduction of the outstanding balance of the seller note, in the case of net aggregate realized gain on sales up to the amounts previously paid.

13. Commitments and Contingencies
Legal Proceedings
On March 4, 2011, Relator Marc Silver, on behalf of the U.S. Government and various state governments, filed a complaint in the United States District Court for the District of New Jersey (“the District Court”) against PharMerica, seeking relief, with respect to alleged violations of the federal False Claims Act and state false claims acts. The U.S. Government and state governments declined to intervene in the case. The District Court issued an order dismissing the case in full in 2016. In 2018, however, the Third Circuit Court of Appeals issued an order reinstating the case. In June 2023, the District Court issued an order setting a trial date of December 4, 2023. In November 2023, the District Court denied our motion for summary judgment and the Company subsequently agreed to settle the matter without admitting liability. On May 29, 2024, the parties entered into a final settlement agreement, which was approved by both the United States Department of Justice and the District Court.
The total financial impact of the settlement was $ 120.0 million; $ 90.0 million was paid in June 2024, $ 20.0 million was paid in July 2024, and the remaining $ 10.0 million was paid in April 2025. The District Court entered an order dismissing the Silver action in its entirety, with prejudice, on July 3, 2024.
The Company is also party to various legal and/or administrative proceedings arising out of the operation of our programs and arising in the ordinary course of business. We record accruals for such contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We do not believe the ultimate liability, if any, for outstanding proceedings or claims, individually or in the aggregate, in excess of amounts already provided, will have a material adverse effect on our consolidated financial condition, results of operations, or cash flows. It is reasonably possible that an adverse determination might have an impact on a particular period. While we believe our provision for legal contingencies is adequate, the outcome of legal proceedings is difficult to predict, and we may settle legal claims or be subject to judgments for amounts that exceed our estimates.

14. Related Party Transactions
The Company was party to a Monitoring Agreement with KKR and WBA, which required payment of an aggregate advisory fee equivalent to 1 % of consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”), payable in quarterly installments in arrears at the end of each quarter. The Monitoring Agreement terminated upon the completion of the IPO Offerings in January 2024.
Prior to the termination of the Monitoring Agreement, the Company recognized $ 0.7 million in monitoring and advisory fees during the first fiscal quarter of 2024 as a component of selling, general, and administrative expenses in our accompanying unaudited condensed consolidated statements of operations.
As a result of the termination of the Monitoring Agreement and in accordance with the agreement, the Company paid $ 22.7 million in termination fees to KKR and WBA in the fourth fiscal quarter of 2024. The termination fees were recognized in the first fiscal quarter of 2024 as selling, general, and administrative expense in our unaudited condensed consolidated statement of operations.
KKR Capital Markets LLC (“KCM”), a wholly owned subsidiary of KKR, acted as an underwriter in the IPO Offerings during the first fiscal quarter of 2024 and received $ 7.4 million in underwriting discounts and commission. In connection with debt refinancing in the first fiscal quarter of 2024, the Company paid underwriter, arranger, and transaction fees to KCM of $ 1.9 million. These fees are included within selling, general, and administrative expenses in our unaudited condensed consolidated statement of operations for the nine months ended September 30, 2024 . There were no similar fees paid to KCM during the three or six months ended September 30, 2024, and the three or nine months ended September 30, 2025.
KKR has ownership interests in a broad range of portfolio companies, and we may enter into commercial transactions for goods or services in the ordinary course of business with these companies. We do not believe such transactions are material to our business.
The Company had an agreement with WBA and/or certain of its affiliates under which the Company purchased significant volume of inventory, including a Joinder Agreement to the Pharmaceutical Purchase and Distribution Agreement (the “WBAD Membership Agreement”) between WBA and AmerisourceBergen Drug Corporation (“ABDC”). The WBAD Membership Agreement was terminated in the first fiscal quarter of 2025, and we entered into a separate agreement with ABDC on February 1, 2025.

 

25

 

15. Segment Information
The Company's Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer , who evaluates the performance of our segments and allocates resources based on segment EBITDA. Segment EBITDA is used as the key profitability measure when we set our annual operating plan for each segment, is the metric with which our CODM assesses segment results, and is a key component of our annual variable compensation plans. Segment EBITDA is commonly used as an analytical indicator within the health care industry and is utilized in the evaluation of segment operating performance as it is a profit measure that is generally within the control of the operating segments.
For all segments, the CODM uses segment EBITDA in the annual budgeting and monthly forecasting process. The CODM considers actual-to budget and actual-to current forecast variances for segment EBITDA on a monthly basis for evaluating performance of each segment and making decisions about allocating capital and other resources to each segment.

Segment amounts exclude certain expenses not specifically identifiable to the segments for functions performed in a centralized manner, which include accounting, finance, human resources, legal, information technology, corporate office support, and overall corporate management. Segment assets and capital expenditures are not provided to the Company’s CODM and, therefore, are not disclosed.
The following tables set forth information about the Company’s reportable segments, along with the items necessary to reconcile the segment information to the totals reported in the Company’s unaudited condensed consolidated statements of operations as follows (in thousands):
 

 

For the Three Months Ended September 30, 2025

 

 

Pharmacy Solutions

 

 

Provider Services

 

 

Total Segments

 

Products revenue

$

2,966,966

 

 

$

—

 

 

$

2,966,966

 

Services revenue

 

—

 

 

 

367,140

 

 

 

367,140

 

Cost of drugs

 

2,541,723

 

 

 

—

 

 

 

2,541,723

 

Cost of services

 

—

 

 

 

220,784

 

 

 

220,784

 

Other direct costs  (1)

 

179,591

 

 

 

—

 

 

 

179,591

 

Segment selling, general, and administrative expenses (2)

 

131,116

 

 

 

93,027

 

 

 

224,143

 

Segment depreciation and amortization expense  (3)

 

26,451

 

 

 

7,340

 

 

 

33,791

 

Segment EBITDA

$

140,987

 

 

$

60,669

 

 

$

201,656

 

 

 

For the Three Months Ended September 30, 2024

 

 

Pharmacy Solutions

 

 

Provider Services

 

 

Total Segments

 

Products revenue

$

2,265,697

 

 

$

—

 

 

$

2,265,697

 

Services revenue

 

—

 

 

 

335,532

 

 

 

335,532

 

Cost of drugs

 

1,920,089

 

 

 

—

 

 

 

1,920,089

 

Cost of services

 

—

 

 

 

201,016

 

 

 

201,016

 

Other direct costs  (1)

 

157,032

 

 

 

—

 

 

 

157,032

 

Segment selling, general, and administrative expenses (2)

 

117,336

 

 

 

88,507

 

 

 

205,843

 

Segment depreciation and amortization expense  (3)

 

27,913

 

 

 

6,270

 

 

 

34,183

 

Segment EBITDA

$

99,153

 

 

$

52,279

 

 

$

151,432

 

 

 

For the Nine Months Ended September 30, 2025

 

 

Pharmacy Solutions

 

 

Provider Services

 

 

Total Segments

 

Products revenue

$

8,289,238

 

 

$

—

 

 

$

8,289,238

 

Services revenue

 

—

 

 

 

1,070,695

 

 

 

1,070,695

 

Cost of drugs

 

7,066,776

 

 

 

—

 

 

 

7,066,776

 

Cost of services

 

—

 

 

 

648,773

 

 

 

648,773

 

Other direct costs  (1)

 

539,155

 

 

 

—

 

 

 

539,155

 

Segment selling, general, and administrative expenses (2)

 

382,894

 

 

 

275,000

 

 

 

657,894

 

Segment depreciation and amortization expense  (3)

 

80,992

 

 

 

21,283

 

 

 

102,275

 

Segment EBITDA

$

381,405

 

 

$

168,205

 

 

$

549,610

 

 

26

 

 

For the Nine Months Ended September 30, 2024

 

 

Pharmacy Solutions

 

 

Provider Services

 

 

Total Segments

 

Products revenue

$

6,357,223

 

 

$

—

 

 

$

6,357,223

 

Services revenue

 

—

 

 

 

968,026

 

 

 

968,026

 

Cost of drugs

 

5,356,206

 

 

 

—

 

 

 

5,356,206

 

Cost of services

 

—

 

 

 

581,509

 

 

 

581,509

 

Other direct costs  (1)

 

459,775

 

 

 

—

 

 

 

459,775

 

Segment selling, general, and administrative expenses (2)

 

341,803

 

 

 

254,779

 

 

 

596,582

 

Segment depreciation and amortization expense  (3)

 

82,384

 

 

 

17,963

 

 

 

100,347

 

Segment EBITDA

$

281,823

 

 

$

149,701

 

 

$

431,524

 

 
(1) Other direct costs primarily includes direct labor costs, delivery costs, insurance, and depreciation and amortization expense that relates to revenue-generating assets.

(2) Segment selling, general, and administrative expense includes direct labor costs, depreciation and amortization, insurance, rent, lease, supplies, professional services, maintenance, repairs, utilities, and communications expense.

(3) Total segment depreciation and amortization expense is presented in other direct costs, costs of services, and segment general and administrative expenses, based on the associated asset.

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Reconciliation of income or loss:

 

 

 

 

 

 

 

 

 

 

 

 

Total Segment EBITDA

 

$

201,656

 

 

$

151,432

 

 

$

549,610

 

 

$

431,524

 

Segment depreciation and amortization

 

 

33,791

 

 

 

34,183

 

 

 

102,275

 

 

 

100,347

 

Expenses not allocated at segment level:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

 

73,060

 

 

 

81,802

 

 

 

239,047

 

 

 

259,640

 

Depreciation and amortization

 

 

6,962

 

 

 

6,350

 

 

 

21,149

 

 

 

19,122

 

Loss on extinguishment of debt

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12,726

 

Interest expense, net

 

 

38,235

 

 

 

46,614

 

 

 

118,776

 

 

 

144,366

 

Income tax expense (benefit)

 

 

12,120

 

 

 

8,155

 

 

 

13,118

 

 

 

( 31,464

)

Net income (loss) from continuing operations

 

$

37,488

 

 

$

( 25,672

)

 

$

55,245

 

 

$

( 73,213

)

 

27

 

Ite m 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion analyzes our financial condition and results of operations and should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (our “Form 10-Q”). This discussion contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that characterize our business. Known material factors that could affect our financial performance and actual results, and could cause actual results to differ materially from those expressed or implied in any forward-looking statements included in this discussion or otherwise made by our management, are described in Item 2 of Part I of this Form 10-Q, and in Item 1A, “Risk Factors” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024 (our “Form 10-K”). Factors that could cause or contribute to such difference are not limited to those identified in “Risk Factors.” When used in the following discussion, “Senior” patients and populations mean individuals who are aged 65 and older, “Specialty” patients and populations mean individuals who have unique, specialized and most often chronic/life-long health conditions and needs, and “Behavioral” patients and populations mean individuals with intellectual and developmental disabilities including mental illness.
Overview
We are a leading home and community-based healthcare services platform, focused on delivering complementary pharmacy and provider services to complex patients. We have a differentiated approach to care delivery, with an integrated and scaled model that addresses critical services that the highest-need and highest-cost patients require. With a focus on Senior and Specialty patients, which includes Behavioral populations, our platform provides pharmacy and provider services (both clinical and supportive care in nature) in lower-cost home and community settings largely to Medicare, Medicaid, and commercially-insured populations. We are an essential part of our nation’s health delivery network as a front-line provider of high-quality and cost-effective care to a large and growing number of people, who increasingly require a combination of specialized solutions to enable holistic health care management. Our presence spans all 50 states, we serve over 460,000 patients daily through our approximately 10,500 clinical providers and pharmacists, and our services make a profound impact in the lives and communities of the people we serve.
On January 17, 2025, the Company entered into a purchase agreement with National Mentor Holding, Inc. to divest our community living services, home and community based waiver programs, and intermediate care facilities (the “Community Living business”), for $835 million, subject to typical adjustments for working capital and other customary items. We expect the divestiture to close in the first fiscal quarter of 2026, subject to customary closing conditions. This transaction provides for continuity of important intellectual and developmental disability services while BrightSpring focuses on a concentrated group of customers, patients and stakeholders in the future. We believe the Company’s streamlined service offerings will result in increased strategic focus, operational efficiencies, a refined payer mix, and greater clinical integration and business synergy across the Provider Services segment. The divestiture will also augment our expected Revenue and Adjusted EBITDA growth rates and maximize exposure to target growth markets that require BrightSpring’s needed and valuable solutions, such as home health, rehab, primary care, and hospice.
The Company has determined the divestiture of the Community Living business represents a strategic shift that will have a major effect on its business and therefore met the criteria for classification as discontinued operations in the first fiscal quarter of 2025. As a result, in accordance with ASC 205-20, the financial results of the Community Living business, which were previously reported as part of our Provider Services segment, have been classified as discontinued operations in the unaudited condensed consolidated statements of operations, and the Community Living business's assets and liabilities have been classified as held for sale for all periods presented. Unless otherwise noted, amounts and disclosures throughout this Management’s Discussion and Analysis relate to our continuing operations. Refer to “PART I - Item 1. Note 2” of our Form 10-K for additional information regarding discontinued operations.
For additional overview of our business, see “PART I - Item 1. Business” of our Form 10-K.
Financial Performance Highlights: Third Quarter of 2025 Compared to Third Quarter of 2024
• Revenue grew by $732.9 million, or 28.2%, to $3,334.1 million

• Pharmacy Solutions segment revenue grew by $701.3 million, or 31.0%, to $2,967.0 million

• Provider Services segment revenue grew by $31.6 million, or 9.4%, to $367.1 million

• Net income increased by $63.2 million from net loss of $25.7 million to net income of $37.5 million

• Adjusted EBITDA (1) increased by $43.5 million, or 37.2%, to $160.4 million

(1) Reconciliation of GAAP to non-GAAP results is provided below under the section entitled “Non-GAAP Financial Measures.”

28

 

Financial Performance Highlights: Third Quarter of 2025 Compared to Third Quarter of 2024 (continued)
• Pharmacy Solutions segment EBITDA increased by $41.8 million, or 42.2%, to $141.0 million

• Provider Services segment EBITDA grew by $8.4 million, or 16.0%, to $60.7 million

• Diluted income per share increased by $0.30 from diluted loss per share of $(0.13) to diluted income per share of $0.17

• Adjusted EPS (1) increased by $0.27 from $0.03 to $0.30

(1) Reconciliation of GAAP to non-GAAP results is provided below under the section entitled “Non-GAAP Financial Measures.”
Recent Developments

As previously disclosed, on October 22, 2025, KKR Stockholder and certain management selling stockholders completed a registered secondary public offering of 15,000,000 shares of the Company’s common stock (the “October 2025 Offering”). The Company did not sell any shares of common stock that were offered in the October 2025 Offering. Also, the Company did not receive any proceeds from the October 2025 Offering, other than proceeds received in connection with the cash exercise of stock options by the management selling stockholders in connection with the October 2025 Offering.

In connection with the October 2025 Offering, the Company concurrently purchased from the underwriter, out of the aggregate of 15,000,000 shares of common stock that were the subject of the October 2025 Offering, 1,500,000 shares of common stock at a price of $29.00 per share, for a total purchase price of $43.5 million. The purchase price reflected a discount to the closing market price on the date of purchase. The repurchase was reviewed and approved by the audit committee of our Board of Directors.
Our Service Offerings
We are one of the largest independent providers of home and community-based health services in the United States, delivering both pharmacy and provider services. We believe our high-quality and complementary health services offerings address significant and important patient and stakeholder needs. We enhance patient outcomes through the delivery and coordination of high-quality services that high-need, high-cost patients require. Our services are principally delivered in patient-preferred and lower-cost settings and often over longer periods of time, given the chronic nature of the patient conditions that we address. We believe our breadth of service capabilities and proven outcomes position us as a provider of choice for patients, families, referral sources, customers, and payors. We deliver services through two reportable segments: Pharmacy Solutions and Provider Services. For additional details regarding our diversified service offerings within each reportable segment see “PART I - Item 1. Business” of our Form 10-K.
The following table summarizes the revenues generated by each of our reportable segments:
 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

($ in millions)

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

 

Revenue

 

 

% of Revenue

 

Pharmacy Solutions

 

$

2,967.0

 

 

 

89.0

%

 

$

2,265.7

 

 

 

87.1

%

 

$

8,289.2

 

 

 

88.6

%

 

$

6,357.2

 

 

 

86.8

%

Provider Services

 

 

367.1

 

 

 

11.0

%

 

 

335.5

 

 

 

12.9

%

 

 

1,070.7

 

 

 

11.4

%

 

 

968.0

 

 

 

13.2

%

Consolidated BrightSpring

 

$

3,334.1

 

 

 

100.0

%

 

$

2,601.2

 

 

 

100.0

%

 

$

9,359.9

 

 

 

100.0

%

 

$

7,325.2

 

 

 

100.0

%

Payor Mix
We are characterized by payor diversification across our platform. Our payors are principally federal, state, and local governmental agencies, commercial insurance, private, and other payors. Additionally, our Medicaid payors can be further broken down across each individual state with our top 10 Medicaid states representing 7% of total Company revenue for the three and nine months ended September 30, 2025 and 2024.
We provide our services across all 50 states, Puerto Rico and Canada, with our top 10 states of operations comprising 53% of total Company revenues for the three and nine months ended September 30, 2025, compared to 52% for the three and nine months ended September 30, 2024. The federal, state, and local programs under which we operate are subject to legislative and budgetary changes that can influence reimbursement rates.
 

29

 

The following tables summarize the percentage of revenue generated by each payor type for each of our service offerings and reportable segments:
 

 

For the Three Months Ended September 30, 2025

 

 

Commercial insurance

 

 

Medicaid

 

 

Medicare Part A

 

 

Medicare Part B

 

 

Medicare Part C

 

 

Medicare Part D

 

 

Private & other

 

 

Total

 

Infusion and Specialty Pharmacy

 

 

21.8

%

 

 

6.8

%

 

 

—

 

 

 

0.6

%

 

 

17.8

%

 

 

23.5

%

 

 

0.8

%

 

 

71.3

%

Home and Community Pharmacy

 

 

2.7

%

 

 

1.8

%

 

 

4.3

%

 

 

—

 

 

 

0.0

%

 

 

8.2

%

 

 

0.7

%

 

 

17.7

%

Pharmacy Solutions

 

 

24.5

%

 

 

8.6

%

 

 

4.3

%

 

 

0.6

%

 

 

17.8

%

 

 

31.7

%

 

 

1.5

%

 

 

89.0

%

Home Health Care

 

 

0.3

%

 

 

0.3

%

 

 

3.8

%

 

 

0.0

%

 

 

0.9

%

 

 

—

 

 

 

0.3

%

 

 

5.6

%

Rehab Care

 

 

1.1

%

 

 

1.0

%

 

 

—

 

 

 

0.1

%

 

 

0.0

%

 

 

—

 

 

 

0.1

%

 

 

2.3

%

Personal Care

 

 

0.1

%

 

 

2.5

%

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.5

%

 

 

3.1

%

Provider Services

 

 

1.5

%

 

 

3.8

%

 

 

3.8

%

 

 

0.1

%

 

 

0.9

%

 

 

—

 

 

 

0.9

%

 

 

11.0

%

Consolidated BrightSpring

 

 

26.0

%

 

 

12.4

%

 

 

8.1

%

 

 

0.7

%

 

 

18.7

%

 

 

31.7

%

 

 

2.4

%

 

 

100.0

%

 

 

For the Three Months Ended September 30, 2024

 

 

Commercial insurance

 

 

Medicaid

 

 

Medicare Part A

 

 

Medicare Part B

 

 

Medicare Part C

 

 

Medicare Part D

 

 

Private & other

 

 

Total

 

Infusion and Specialty Pharmacy

 

 

20.7

%

 

 

5.9

%

 

 

—

 

 

 

0.6

%

 

 

15.6

%

 

 

21.1

%

 

 

0.6

%

 

 

64.5

%

Home and Community Pharmacy

 

 

3.1

%

 

 

2.3

%

 

 

5.5

%

 

 

—

 

 

 

0.0

%

 

 

10.7

%

 

 

1.0

%

 

 

22.6

%

Pharmacy Solutions

 

 

23.8

%

 

 

8.2

%

 

 

5.5

%

 

 

0.6

%

 

 

15.6

%

 

 

31.8

%

 

 

1.6

%

 

 

87.1

%

Home Health Care

 

 

0.2

%

 

 

0.4

%

 

 

4.4

%

 

 

0.1

%

 

 

1.4

%

 

 

—

 

 

 

0.0

%

 

 

6.5

%

Rehab Care

 

 

1.3

%

 

 

0.6

%

 

 

—

 

 

 

0.0

%

 

 

0.0

%

 

 

—

 

 

 

0.7

%

 

 

2.6

%

Personal Care

 

 

0.1

%

 

 

2.3

%

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1.4

%

 

 

3.8

%

Provider Services

 

 

1.6

%

 

 

3.3

%

 

 

4.4

%

 

 

0.1

%

 

 

1.4

%

 

 

—

 

 

 

2.1

%

 

 

12.9

%

Consolidated BrightSpring

 

 

25.4

%

 

 

11.5

%

 

 

9.9

%

 

 

0.7

%

 

 

17.0

%

 

 

31.8

%

 

 

3.7

%

 

 

100.0

%

 

 

For the Nine Months Ended September 30, 2025

 

 

Commercial insurance

 

 

Medicaid

 

 

Medicare Part A

 

 

Medicare Part B

 

 

Medicare Part C

 

 

Medicare Part D

 

 

Private & other

 

 

Total

 

Infusion and Specialty Pharmacy

 

 

21.2

%

 

 

6.5

%

 

 

—

 

 

 

0.6

%

 

 

17.5

%

 

 

23.1

%

 

 

0.9

%

 

 

69.8

%

Home and Community Pharmacy

 

 

2.7

%

 

 

2.0

%

 

 

4.5

%

 

 

—

 

 

 

0.0

%

 

 

8.7

%

 

 

0.9

%

 

 

18.8

%

Pharmacy Solutions

 

 

23.9

%

 

 

8.5

%

 

 

4.5

%

 

 

0.6

%

 

 

17.5

%

 

 

31.8

%

 

 

1.8

%

 

 

88.6

%

Home Health Care

 

 

0.2

%

 

 

0.3

%

 

 

4.0

%

 

 

0.0

%

 

 

1.0

%

 

 

—

 

 

 

0.3

%

 

 

5.8

%

Rehab Care

 

 

1.2

%

 

 

0.7

%

 

 

—

 

 

 

0.0

%

 

 

0.0

%

 

 

—

 

 

 

0.5

%

 

 

2.4

%

Personal Care

 

 

0.1

%

 

 

2.2

%

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.9

%

 

 

3.2

%

Provider Services

 

 

1.5

%

 

 

3.2

%

 

 

4.0

%

 

 

0.0

%

 

 

1.0

%

 

 

—

 

 

 

1.7

%

 

 

11.4

%

Consolidated BrightSpring

 

 

25.4

%

 

 

11.7

%

 

 

8.5

%

 

 

0.6

%

 

 

18.5

%

 

 

31.8

%

 

 

3.5

%

 

 

100.0

%

 

 

For the Nine Months Ended September 30, 2024

 

 

Commercial insurance

 

 

Medicaid

 

 

Medicare Part A

 

 

Medicare Part B

 

 

Medicare Part C

 

 

Medicare Part D

 

 

Private & other

 

 

Total

 

Infusion and Specialty Pharmacy

 

 

20.3

%

 

 

5.8

%

 

 

—

 

 

 

0.7

%

 

 

15.3

%

 

 

21.7

%

 

 

0.9

%

 

 

64.7

%

Home and Community Pharmacy

 

 

2.8

%

 

 

2.4

%

 

 

5.4

%

 

 

0.0

%

 

 

0.0

%

 

 

10.4

%

 

 

1.1

%

 

 

22.1

%

Pharmacy Solutions

 

 

23.1

%

 

 

8.2

%

 

 

5.4

%

 

 

0.7

%

 

 

15.3

%

 

 

32.1

%

 

 

2.0

%

 

 

86.8

%

Home Health Care

 

 

0.2

%

 

 

0.4

%

 

 

4.5

%

 

 

0.3

%

 

 

1.2

%

 

 

—

 

 

 

0.1

%

 

 

6.7

%

Rehab Care

 

 

1.4

%

 

 

0.6

%

 

 

—

 

 

 

0.0

%

 

 

0.0

%

 

 

—

 

 

 

0.7

%

 

 

2.7

%

Personal Care

 

 

0.1

%

 

 

2.4

%

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1.3

%

 

 

3.8

%

Provider Services

 

 

1.7

%

 

 

3.4

%

 

 

4.5

%

 

 

0.3

%

 

 

1.2

%

 

 

—

 

 

 

2.1

%

 

 

13.2

%

Consolidated BrightSpring

 

 

24.8

%

 

 

11.6

%

 

 

9.9

%

 

 

1.0

%

 

 

16.5

%

 

 

32.1

%

 

 

4.1

%

 

 

100.0

%

 
See Note 3 of the unaudited condensed consolidated financial statements and related notes in this Form 10-Q for more information regarding revenue by payor type for each reportable segment for the three and nine months ended September 30, 2025 and 2024.
Trends and Other Factors Affecting Business
Continued Growth of our Pharmacy Solutions Patient Populations
We focus on providing health-dependent medications in a timely and well-supported manner to our patients receiving pharmacy solutions in their home and community-based settings. Our pharmacy services are primarily delivered directly to patients in their place of residence, home, or stay, and sometimes in a clinic setting. According to industry reports, pharmacy solutions delivered to and tailored for the home environment, such as home infusion services, oncology services, and daily medication management services in the home, will continue to grow faster than the overall and general pharmacy market. We have continued to expand our pharmacy

30

 

capabilities to serve this need. Overall, our pharmacy has grown patient census by approximately 2%, in the third fiscal quarter of 2025 compared to the third fiscal quarter of 2024. We are a leading independent pharmacy provider in our respective pharmacy patient markets, and we expect to continue to increase our share, including home infusion patients, specialty oncology patients, behavioral patients, in-home Seniors, and hospice patients.
Continued Growth of our Provider Services Patient Populations
We focus on delivering high-touch and coordinated services to medically complex Senior and Specialty patients in the home and community-based settings where they live. As the baby boomer population ages, Seniors, who comprise a significant majority of our patients, will represent a higher percentage of the overall population. Given the proven value proposition of home-based health services, we believe patients will increasingly seek treatment and referral sources and payors will increasingly support treatment in homes more often than in higher cost, less convenient, higher acuity institutional settings.
The vast majority of patients we serve in our provider businesses are served in the home, and we have purposefully continued to expand our service offering and footprint to serve patients in this lower cost setting. Since 2019, we built upon supportive care services to patients, as we have meaningfully expanded our footprint of highly clinical and expert services to home health, rehabilitation, and hospice patients to address a large national healthcare need and more completely and better serve Senior and Specialty patients in the home as evidenced by continued census growth within the Provider Services segment. Our complementary services that address the multiple needs of these patient populations will increasingly provide integrated care opportunities to provide more complete and better coordinated services to patients across health settings and stages.
Stable Reimbursement Environment Across our Portfolio of Businesses
Our revenue is dependent upon our contracts and relationships with payors for our “must-serve” patient populations. We partner with a large and diverse set of payor groups nationally and in each of our markets, to form provider networks and to lower the overall cost of care. We structure our payor contracts to help both providers and payors achieve their objectives in a mutually aligned manner. Maintaining, supporting, and both deepening and increasing the number of these contracts and relationships, particularly as we continue to grow market share and enter new markets, is important for our long-term success.
We have observed relatively stable reimbursement rates from government and commercial payors in our pharmacy and provider services over a number of years, particularly for services provided to high-need, medically complex populations. Due to the medical necessity of our services, which are lower cost than healthcare services provided in other settings and reduce ER, hospital and institutional facility utilization, we have a history of reimbursement stability.
Culture of Quality and Compliance and Consistent Operations Execution
Quality and compliance are central to our strategies and mission. We have demonstrated leading and excellent service and customer/patient/family satisfaction scores across the organization, as referenced in prior filings such as our Form 10-K. In addition to quality and compliance resources and programs in field operations, we invest in people, training, auditing, signature programs, accreditations, advocacy, and technologies to support quality, compliance, and safety as part of our “Quality First” framework. We have demonstrated consistently high and often leading marks for service levels, satisfaction scores, and quality metrics in our industries.
Operational excellence is also an ongoing focus at the Company, including how we collect and share key metrics, hold operational reviews, audit, conduct training, deploy expert support resources, execute on corrective and preventative actions, and implement continuous improvement initiatives across the organization. We have continued to make investments in automation, data, and technology systems to support enhanced workflows, further scale, and future growth across service lines.
Ability to Build De Novo Locations
We have a proven ability to augment growth of existing operations by expanding our presence and opening new locations – in both of our reportable segments, Pharmacy Solutions and Provider Services – across geographies with consistent ramp-up in performance after site opening. We believe our platform can continue to build further scale nationally, adding density to additional and targeted key markets as a lever to facilitate maximum pharmacy and provider services overlap, integrated and value-based care, and growth. The Company’s geographic and operations scale, and platform of complementary segments and service lines, provides us with access to more de novo opportunities to consider and prioritize.
We typically identify and open new locations within proximity of an existing location as we leverage existing market knowledge and presence to expand in target markets, regions, and states. Our internal support resources in real estate, purchasing, IT, credentialing, payor contracting, HR, and sales and marketing, along with our Project Management Office, help to support and manage de novo locations from start to opening. We expect to continue to selectively and strategically expand our footprint within the United States and extend our service offerings to our patients and for customers, referral sources, and payors. We believe de novo investments facilitate more integrated care capability and are a meaningful organic growth driver for the Company.

31

 

Ability to Facilitate Integrated Care
Our operating model consists of complementary pharmacy and provider services that high-need Senior and Specialty populations require, and it is designed to increasingly coordinate, manage, and serve patients across our various needs and settings over time, leading to improved patient, family, physician, and referral source satisfaction, improved payor experiences, and better outcomes. Our performance and potential to drive increased service volume for increased patient and health outcomes impact is driven partly by our appeal with our patients, families, customers, referral sources, and payors to provide multiple integrated care services – either in the same setting at the same time or across settings and stages of health – within our collection of pharmacy solutions and provider services and differentiated overall capabilities.
We provide multiple pharmacy and provider services to approximately 8,000 patients today, and we believe that there are substantially more opportunities to deliver more integrated care, given the hundreds of thousands of patients we serve and a similar number of patients discharging from customers annually. Value-add, beneficial, and multiple integrated care opportunities exist for our customer base and all Senior and Specialty patient populations not only across pharmacy and provider services, but also within each segment. Within pharmacy services, CCRx is aimed at providing medication risk and therapy management continuously and longitudinally post discharge from hospitals and skilled nursing customers. Within provider services, patients often transition from home health to hospice services and can receive therapy and supportive care services concurrent with each other and with home health and hospice.
Aligning to Value-Based Care Reimbursement Models with Innovative Solutions
The scale and depth of our complimentary platform of diverse yet related customer and patient services – that complex patients require – positions us at the forefront with governmental and commercial payors who are increasingly seeking ways to expand value-based reimbursement models. Our high-quality services that are delivered in home and community-based and patient and family-preferred settings at lower comparable costs are well-positioned for the long-term, and we continue to add wraparound care management capabilities and offerings to our core services. In addition to our large Medicare and Medicaid beneficiary populations, we have a large number of non-governmental payor contracts across the organization today, which both diversifies our payor mix, and provides for additional value-based opportunities and partnerships. The Company’s focused build out of its (i) Home-Based Primary Care, transitional care programs, and in-home medication therapy management, and (ii) Clinical (Nursing) Hub, are key enablers to coordinate base pharmacy and provider services and drive improved quality and lower costs for value-based care constructs. In addition to numerous payor contracts that feature reimbursement incentives, in the past year the Company has entered into several accountable care organization (“ACO”) arrangements to participate in shared savings from its attributed primary care patients and other ACO partnerships and contract as a preferred provider.
Factors Affecting Results of Operations and Comparability
Legal Costs and Settlements Accrual
In November 2023, the Company agreed to settle the Silver matter without admitting liability, as discussed under Part I, Item 3. “Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2024. On May 29, 2024, the parties entered into a final settlement agreement, which was approved by both the United States Department of Justice and the District Court. The total financial impact of the settlement was $120.0 million; all of which has been paid as of April 2025. We paid $110.0 million of the settlement in 2024, and the remainder in April 2025. The District Court entered an order dismissing the Silver action in its entirety, with prejudice, on July 3, 2024. See Note 13 “Commitments and Contingencies” within the unaudited condensed consolidated financial statements and related notes, included elsewhere in this Form 10-Q.
Discontinued Operations
On January 17, 2025, the Company entered into a definitive agreement to sell its Community Living business to National Mentor Holdings, Inc. (the “Purchaser”), for $835.0 million in cash upon closing, subject to certain post-closing adjustments. We entered into the transaction in order to streamline our service offerings and further focus on the senior and specialty populations. The transaction is currently expected to close in the first fiscal quarter of 2026, subject to receipt of customary regulatory approvals and satisfaction of other closing conditions.
The Company has determined the divestiture of the Community Living business represents a strategic shift that will have a major effect on its business and has concluded the criteria for classification as discontinued operations were met during the first fiscal quarter of 2025. Accordingly, the Community Living business is reported as discontinued operations in accordance with Accounting Standards Codification (“ASC”) 205-20, Discontinued Operations. The related assets and liabilities of the Community Living business are classified as assets and liabilities held for sale in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2025, and the results of operations from the Community Living business are classified as discontinued operations in the unaudited condensed consolidated statements of operations. Applicable amounts in prior years have been recast to conform to this

32