10-Q – 2025-10-28 – btsg-20250930.htm

discontinued operations presentation. The Community Living business was historically presented as a part of the Provider Services reportable segment.
See Note 2 “Discontinued Operations” within the unaudited condensed consolidated financial statements and related notes, included elsewhere in this Form 10-Q.
Components of Results of Operations
Revenues . The Company recognizes the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. For transactions involving the transfer of goods, revenues are primarily recognized when the customer obtains control of the products sold, which is generally upon shipment or delivery, depending on the delivery terms specified in the sales agreement. For transactions exclusively involving provision of services, revenues are recognized over time based on an appropriate measure of progress.
Cost of Goods and Cost of Services . We classify expenses directly related to providing goods and services, including depreciation and amortization, as cost of goods and cost of services. Direct costs and expenses principally include cost of drugs, net of rebates, salaries and benefits for direct care and service professionals, contracted labor costs, insurance costs, transportation costs for clients requiring services, certain client expenses such as food, supplies and medicine, residential occupancy expenses, which primarily comprise rent and utilities, and other miscellaneous direct goods or service-related expenses.
Selling, General, and Administrative Expenses . Selling, general, and administrative expenses consist of expenses incurred in support of our operations and administrative functions and include labor costs, such as salaries, bonuses, commissions, benefits, and travel-related expenses, distribution expenses, facilities rental costs, third-party revenue cycle management costs, and corporate support costs including finance, information technology, legal costs and settlements, human resources, procurement, and other administrative costs.
Loss on Extinguishment of Debt. Loss on extinguishment of debt reflects the write-off of unamortized debt issuance costs upon the early repayment of our Second Lien Facility in 2024.
Interest Expense, net . Interest expense, net includes the debt service costs associated with our various debt instruments, including our First Lien Facilities, and the amortization of related deferred financing fees, which are amortized over the term of the respective credit agreement. Interest expense, net also includes the portion of the gain or loss on our interest rate swap agreements that is reclassified into earnings.
Income Tax Expense (Benefit) . Our provision for income taxes is based on permanent book/tax differences and statutory tax rates in the various jurisdictions in which we operate. Significant estimates and judgments are required in determining the provision for income taxes.

33

 

Results of Operations
Consolidated Results of Operations
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
The following table sets forth, for the periods indicated, our consolidated results of operations.
 

($ in thousands)

 

For the Three Months Ended September 30,

 

 

 

 

 

 

 

 

Change

 

 

2025

 

 

2024

 

 

Amount

 

 

%

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

2,966,966

 

 

$

2,265,697

 

 

$

701,269

 

 

 

31.0

%

Services

 

 

367,140

 

 

 

335,532

 

 

 

31,608

 

 

 

9.4

%

Total revenues

 

 

3,334,106

 

 

 

2,601,229

 

 

 

732,877

 

 

 

28.2

%

Cost of goods

 

 

2,721,314

 

 

 

2,077,121

 

 

 

644,193

 

 

 

31.0

%

Cost of services

 

 

220,784

 

 

 

201,016

 

 

 

19,768

 

 

 

9.8

%

Gross profit

 

 

392,008

 

 

 

323,092

 

 

 

68,916

 

 

 

21.3

%

Selling, general, and administrative expenses

 

 

304,165

 

 

 

293,995

 

 

 

10,170

 

 

 

3.5

%

Operating income

 

 

87,843

 

 

 

29,097

 

 

 

58,746

 

 

 

201.9

%

Interest expense, net

 

 

38,235

 

 

 

46,614

 

 

 

(8,379

)

 

 

(18.0

)%

Income (loss) before income taxes

 

 

49,608

 

 

 

(17,517

)

 

 

67,125

 

 

n.m.

 

Income tax expense

 

 

12,120

 

 

 

8,155

 

 

 

3,965

 

 

n.m.

 

Net income (loss)

 

$

37,488

 

 

$

(25,672

)

 

$

63,160

 

 

n.m.

 

Adjusted EBITDA (1)

 

$

160,443

 

 

$

116,940

 

 

$

43,503

 

 

 

37.2

%

 
* n.m.: not meaningful
(1) Reconciliation of GAAP to non-GAAP results is provided below under the section entitled “Non-GAAP Financial Measures.”
The following discussion of our results of operations should be read in conjunction with the foregoing table summarizing our consolidated results of operations.
Revenues
Revenues were $3,334.1 million for the three months ended September 30, 2025, as compared with $2,601.2 million for the three months ended September 30, 2024, an increase of $732.9 million or 28.2%. The increase resulted from growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below.
Cost of Goods
Cost of goods was $2,721.3 million for the three months ended September 30, 2025, as compared with $2,077.1 million for the three months ended September 30, 2024, an increase of $644.2 million or 31.0%. The increase resulted from an increase in Pharmacy Solutions cost of goods. See additional discussion in “—Segment Results of Operations” below.
Cost of Services
Cost of services was $220.8 million for the three months ended September 30, 2025, as compared with $201.0 million for the three months ended September 30, 2024, an increase of $19.8 million or 9.8%. The increase resulted from an increase in Provider Services cost of services. See additional discussion in “—Segment Results of Operations” below.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were $304.2 million for the three months ended September 30, 2025, as compared with $294.0 million for the three months ended September 30, 2024, an increase of $10.2 million or 3.5%. The increase primarily resulted from the following segment activity and factors:
• an increase of $18.3 million, or 6.2%, growth on consolidated third quarter of 2024 selling, general, and administrative expenses, as a result of growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below;

34

 

• 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 $6.3 million, or 2.1%, decline in consolidated third quarter of 2024 selling, general, and administrative expenses, as a result of a decrease in acquisition, integration and transaction-related expenses; and,

• a decrease of $3.3 million, or 1.1%, decline in consolidated third quarter of 2024 selling, general, and administrative expenses, as a result of a decrease in other operational expenses year-over-year.

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
Income tax expense was $12.1 million for the three months ended September 30, 2025, as compared with $8.2 million for the three months ended September 30, 2024, an increase in the expense of $4.0 million. The increase in the income tax expense is primarily driven by the increase in pre-tax book income for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, and an increase in the effective tax rate for the three months ended September 30, 2025 of 24.4% compared to (46.6)% for the three months ended September 30, 2024. The increase in the effective tax rate is primarily as a result of the cumulative impact of the year-to-date estimated tax rate on 2024 pre-tax book losses as well as the 2023 return-to-provision adjustment.
Net Income (Loss)
Net income was $37.5 million for the three months ended September 30, 2025, as compared with a net loss of $25.7 million for the three months ended September 30, 2024, an increase of $63.2 million. The increase in net income is primarily attributable to the increase in gross profit and the aforementioned decrease in interest expense, net, offset by an increase in selling, general, and administrative expenses and income tax expense.
Adjusted EBITDA (1)
Adjusted EBITDA was $160.4 million for the three months ended September 30, 2025, as compared with $116.9 million for the three months ended September 30, 2024, an increase of $43.5 million or 37.2%. The increase primarily resulted from the following segment activity and factors:
• an increase of $50.2 million, or 42.9% growth on consolidated third quarter of 2024 Adjusted EBITDA, as a result of growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below; offset by

• a decrease of $6.7 million, or 5.7% decline in consolidated third quarter of 2024 Adjusted EBITDA, as a result of increases in certain public company costs incurred, investments in information technology, and positions to support growth within the business.

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

35

 

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
The following table sets forth, for the periods indicated, our consolidated results of operations.
 

($ in thousands)

 

For the Nine Months Ended September 30,

 

 

 

 

 

 

 

 

Change

 

 

2025

 

 

2024

 

 

Amount

 

 

%

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

8,289,238

 

 

$

6,357,223

 

 

$

1,932,015

 

 

 

30.4

%

Services

 

 

1,070,695

 

 

 

968,026

 

 

 

102,669

 

 

 

10.6

%

Total revenues

 

 

9,359,933

 

 

 

7,325,249

 

 

 

2,034,684

 

 

 

27.8

%

Cost of goods

 

 

7,605,931

 

 

 

5,815,981

 

 

 

1,789,950

 

 

 

30.8

%

Cost of services

 

 

648,773

 

 

 

581,509

 

 

 

67,264

 

 

 

11.6

%

Gross profit

 

 

1,105,229

 

 

 

927,759

 

 

 

177,470

 

 

 

19.1

%

Selling, general, and administrative expenses

 

 

918,090

 

 

 

875,344

 

 

 

42,746

 

 

 

4.9

%

Operating income

 

 

187,139

 

 

 

52,415

 

 

 

134,724

 

 

 

257.0

%

Loss on extinguishment of debt

 

 

—

 

 

 

12,726

 

 

 

(12,726

)

 

n.m.

 

Interest expense, net

 

 

118,776

 

 

 

144,366

 

 

 

(25,590

)

 

 

(17.7

)%

Income (loss) before income taxes

 

 

68,363

 

 

 

(104,677

)

 

 

173,040

 

 

n.m.

 

Income tax expense (benefit)

 

 

13,118

 

 

 

(31,464

)

 

 

44,582

 

 

n.m.

 

Net income (loss)

 

$

55,245

 

 

$

(73,213

)

 

$

128,458

 

 

n.m.

 

Adjusted EBITDA (1)

 

$

434,022

 

 

$

329,792

 

 

$

104,230

 

 

 

31.6

%

 
* n.m.: not meaningful
(1) Reconciliation of GAAP to non-GAAP results is provided below under the section entitled “Non-GAAP Financial Measures.”
The following discussion of our results of operations should be read in conjunction with the foregoing table summarizing our consolidated results of operations.
Revenues
Revenues were $9,359.9 million for the nine months ended September 30, 2025, as compared with $7,325.2 million for the nine months ended September 30, 2024, an increase of $2,034.7 million or 27.8%. The increase resulted from growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below.
Cost of Goods
Cost of goods was $7,605.9 million for the nine months ended September 30, 2025, as compared with $5,816.0 million for the nine months ended September 30, 2024, an increase of $1,790.0 million or 30.8%. The increase resulted from an increase in Pharmacy Solutions cost of goods. See additional discussion in “—Segment Results of Operations” below.
Cost of Services
Cost of services was $648.8 million for the nine months ended September 30, 2025, as compared with $581.5 million for the nine months ended September 30, 2024, an increase of $67.3 million or 11.6%. The increase resulted from an increase in Provider Services cost of services. See additional discussion in “—Segment Results of Operations” below.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were $918.1 million for the nine months ended September 30, 2025, as compared with $875.3 million for the nine months ended September 30, 2024, an increase of $42.7 million or 4.9%. The increase primarily resulted from the following segment activity and factors:
• an increase of $61.3 million, or 7.0% growth on consolidated 2024 selling, general, and administrative expenses, as a result of growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below;

• an increase of $9.5 million, or 1.1%, growth in consolidated third quarter of 2024 selling, general, and administrative expenses, as a result of an increase in acquisition, integration and transaction-related expenses; offset by,

36

 

• a decrease of $22.7 million, or 2.6%, decline in consolidated 2024 selling, general, and administrative expenses, as a result of the termination fees incurred at the time of the IPO Offerings in connection with the termination of our Monitoring Agreement for which there is no comparable expense in 2025;

• 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

• a decrease of $1.8 million, or 0.2%, decline in consolidated 2024 selling, general, and administrative expenses, as a result of a decrease in other operational expenses year-over-year.

Loss on Extinguishment of Debt
During the nine months ended September 30, 2024, we used proceeds from the IPO Offerings to repay the Second Lien on January 30, 2024 and as a result incurred a loss on extinguishment of debt of $12.7 million related to the write-off of unamortized debt issuance costs. There was no loss on extinguishment of debt recognized for the nine months ended September 30, 2025.
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 received related to cash flow hedges of interest rate risk.
Income Tax Expense (Benefit)
Income tax expense was $13.1 million for the nine months ended September 30, 2025, as compared with an income tax benefit of $31.5 million for the nine months ended September 30, 2024, an increase in the income tax expense of $44.6 million. The increase in the income tax expense is primarily driven by the increase in pre-tax book income for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, and a decrease in the effective tax rate for the nine months ended September 30, 2025 of 19.2% compared to 30.1% for the nine months ended September 30, 2024. The decrease in the effective tax rate is primarily as a result of $4.7 million in tax benefits resulting from the recognition of excess tax benefits from stock-based compensation partially offset by limitations on the deductibility of certain executive compensation as a percentage of estimated pre-tax book income for the nine months ended September 30, 2025. In addition, the discrete tax benefit related to the Silver matter increased the effective tax rate on pre-tax book loss for the nine months ended September 30, 2024.
Net Income (Loss)
Net income was $55.2 million for the nine months ended September 30, 2025, as compared with a net loss of $73.2 million for the nine months ended September 30, 2024, an increase of $128.5 million. The increase in net income is primarily attributable to the increase in gross profit and the aforementioned decrease in interest expense, net, and loss on extinguishment of debt, partially offset by an increase in selling, general, and administrative expenses and income tax expense (benefit).
Adjusted EBITDA (1)
Adjusted EBITDA was $434.0 million for the nine months ended September 30, 2025, as compared with $329.8 million for the nine months ended September 30, 2024, an increase of $104.2 million or 31.6%. The increase primarily resulted from the following segment activity and factors:
• an increase of $118.1 million, or 35.8% growth on consolidated 2024 Adjusted EBITDA, as a result of growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below; offset by

• a decrease of $13.9 million, or 4.2% decline in consolidated 2024 Adjusted EBITDA, as a result of increases in certain public company costs incurred, investments in information technology, and positions to support growth within the business.

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

37

 

Segment Results of Operations
Pharmacy Solutions Segment
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
The following table sets forth, for the periods indicated, our segment results of operations for Pharmacy Solutions.
 

 

Pharmacy Solutions

 

($ in thousands, except Business Metrics)

 

For the Three Months Ended

 

 

 

 

 

 

 

 

 

September 30,

 

 

Change

 

 

2025

 

 

2024

 

 

Amount

 

 

%

 

Revenues

 

$

2,966,966

 

 

$

2,265,697

 

 

$

701,269

 

 

 

31.0

%

Cost of goods

 

 

2,721,314

 

 

 

2,077,121

 

 

 

644,193

 

 

 

31.0

%

Gross profit

 

 

245,652

 

 

 

188,576

 

 

 

57,076

 

 

 

30.3

%

Selling, general, and administrative expenses

 

 

131,116

 

 

 

117,336

 

 

 

13,780

 

 

 

11.7

%

Segment operating income

 

$

114,536

 

 

$

71,240

 

 

$

43,296

 

 

 

60.8

%

Segment EBITDA

 

$

140,987

 

 

$

99,153

 

 

$

41,834

 

 

 

42.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Business Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Prescriptions dispensed

 

 

10,793,219

 

 

 

10,874,429

 

 

 

(81,210

)

 

 

(0.7

)%

Revenue per script

 

$

274.89

 

 

$

208.35

 

 

$

66.54

 

 

 

31.9

%

Gross profit per script

 

$

22.76

 

 

$

17.34

 

 

$

5.42

 

 

 

31.3

%

The following discussion of our Pharmacy Solutions segment results of operations should be read in conjunction with the foregoing table summarizing our segment results of operations.
Revenues
Revenues were $2,967.0 million for the three months ended September 30, 2025, as compared with $2,265.7 million for the three months ended September 30, 2024, an increase of $701.3 million or 31.0%. The increase primarily resulted from volume growth in prescriptions dispensed within Infusion and Specialty Pharmacy partially offset by a decline in prescriptions dispensed within Home and Community Pharmacy. Revenues attributable to Infusion and Specialty Pharmacy were $2,377.0 million for the three months ended September 30, 2025, as compared with $1,678.1 million for the three months ended September 30, 2024, an increase of $698.9 million or 41.6% attributable to an increase in prescriptions dispensed on certain specialty branded drugs. Revenues attributable to Home and Community Pharmacy were $590.0 million for the three months ended September 30, 2025, as compared with $587.6 million for the three months ended September 30, 2024, an increase of $2.4 million or 0.4% attributable to mix changes in prescriptions dispensed.
The increase in revenue per prescription dispensed is due to mix changes year-over-year and a greater relative increase in volume growth in certain specialty brand drugs, which carry a higher revenue per prescription dispensed.
Cost of Goods
Cost of goods was $2,721.3 million for the three months ended September 30, 2025, as compared with $2,077.1 million for the three months ended September 30, 2024, an increase of $644.2 million or 31.0%. The increase primarily resulted from the aforementioned revenue growth in the period as well as an increase in cost per prescription dispensed as a result of mix shift.
Gross profit was $245.7 million for the three months ended September 30, 2025, as compared with $188.6 million for the three months ended September 30, 2024, an increase of $57.1 million or 30.3%. The increase primarily resulted from the aforementioned revenue growth in the period, primarily the result of outsized volume growth as well as mix in certain specialty branded drugs, which have lower margins.
Gross profit margin for the three months ended September 30, 2025 and September 30, 2024 remained consistent at 8.3%.

38

 

Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were $131.1 million for the three months ended September 30, 2025, as compared with $117.3 million for the three months ended September 30, 2024, an increase of $13.8 million or 11.7%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than revenue due to demonstrating economies of scale.
Segment EBITDA
Segment EBITDA was $141.0 million for the three months ended September 30, 2025, as compared with $99.2 million for the three months ended September 30, 2024, an increase of $41.8 million or 42.2%. The increase primarily resulted from the aforementioned revenue and gross profit growth in the period. See Note 15 “Segment Information” to our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for further discussion.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
The following table sets forth, for the periods indicated, our segment results of operations for Pharmacy Solutions.
 

 

Pharmacy Solutions

 

($ in thousands, except Business Metrics)

 

For the Nine Months Ended

 

 

 

 

 

 

 

 

 

September 30,

 

 

Change

 

 

2025

 

 

2024

 

 

Amount

 

 

%

 

Revenues

 

$

8,289,238

 

 

$

6,357,223

 

 

$

1,932,015

 

 

 

30.4

%

Cost of goods

 

 

7,605,931

 

 

 

5,815,981

 

 

 

1,789,950

 

 

 

30.8

%

Gross profit

 

 

683,307

 

 

 

541,242

 

 

 

142,065

 

 

 

26.2

%

Selling, general, and administrative expenses

 

 

382,894

 

 

 

341,803

 

 

 

41,091

 

 

 

12.0

%

Segment operating income

 

$

300,413

 

 

$

199,439

 

 

$

100,974

 

 

 

50.6

%

Segment EBITDA

 

$

381,405

 

 

$

281,823

 

 

$

99,582

 

 

 

35.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Business Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Prescriptions dispensed

 

 

32,522,286

 

 

 

30,849,121

 

 

 

1,673,165

 

 

 

5.4

%

Revenue per script

 

$

254.88

 

 

$

206.07

 

 

$

48.81

 

 

 

23.7

%

Gross profit per script

 

$

21.01

 

 

$

17.54

 

 

$

3.47

 

 

 

19.8

%

The following discussion of our Pharmacy Solutions segment results of operations should be read in conjunction with the foregoing table summarizing our segment results of operations.
Revenues
Revenues were $8,289.2 million for the nine months ended September 30, 2025, as compared with $6,357.2 million for the nine months ended September 30, 2024, an increase of $1,932.0 million or 30.4%. The increase primarily resulted from volume growth in prescriptions dispensed across and within the Pharmacy Solutions segment. Revenues attributable to Infusion and Specialty Pharmacy were $6,531.9 million for the nine months ended September 30, 2025, as compared with $4,729.8 million for the nine months ended September 30, 2024, an increase of $1,802.1 million or 38.1% attributable to an increase in prescriptions dispensed on certain specialty branded drugs. Revenues attributable to Home and Community Pharmacy were $1,757.3 million for the nine months ended September 30, 2025, as compared with $1,627.4 million for the nine months ended September 30, 2024, an increase of $129.9 million or 8.0% attributable to volume growth.
The increase in revenue per prescription dispensed is due to mix changes year-over-year and a greater relative increase in volume growth in certain specialty brand drugs, which carry a higher revenue per prescription dispensed.
Cost of Goods
Cost of goods was $7,605.9 million for the nine months ended September 30, 2025, as compared with $5,816.0 million for the nine months ended September 30, 2024, an increase of $1,790.0 million or 30.8%. The increase primarily resulted from the aforementioned revenue growth in the period as well as an increase in cost per prescription dispensed as a result of mix shift.
Gross profit was $683.3 million for the nine months ended September 30, 2025, as compared with $541.2 million for the nine months ended September 30, 2024, an increase of $142.1 million or 26.2%. The increase primarily resulted from the aforementioned revenue growth in the period, primarily the result of outsized volume growth as well as mix in certain specialty branded drugs, which have lower margins.

39

 

Gross profit margin for the nine months ended September 30, 2025 was 8.2% compared to 8.5% for the nine months ended September 30, 2024. The decrease in gross profit margin is due to mix shift in the Pharmacy Solutions segment with greater relative volume growth in Infusion and Specialty Pharmacy, along with product-level mix shifts, rate changes, and an increase in the fulfillment cost per script in Home and Community Pharmacy.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were $382.9 million for the nine months ended September 30, 2025, as compared with $341.8 million for the nine months ended September 30, 2024, an increase of $41.1 million or 12.0%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than the volume growth rate and demonstrating economies of scale.
Segment EBITDA
Segment EBITDA was $381.4 million for the nine months ended September 30, 2025, as compared with $281.8 million for the nine months ended September 30, 2024, an increase of $99.6 million or 35.3%. The increase primarily resulted from the aforementioned revenue and gross profit growth in the period. See Note 15 “Segment Information” to our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for further discussion.
Provider Services Segment
Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
 

 

Provider Services

 

($ in thousands, except Business Metrics)

 

For the Three Months Ended

 

 

 

 

 

 

 

 

 

September 30,

 

 

Change

 

 

2025

 

 

2024

 

 

Amount

 

 

%

 

Revenues

 

$

367,140

 

 

$

335,532

 

 

$

31,608

 

 

 

9.4

%

Cost of services

 

 

220,784

 

 

 

201,016

 

 

 

19,768

 

 

 

9.8

%

Gross profit

 

 

146,356

 

 

 

134,516

 

 

 

11,840

 

 

 

8.8

%

Selling, general, and administrative expenses

 

 

93,027

 

 

 

88,507

 

 

 

4,520

 

 

 

5.1

%

Segment operating income

 

$

53,329

 

 

$

46,009

 

 

$

7,320

 

 

 

15.9

%

Segment EBITDA

 

$

60,669

 

 

$

52,279

 

 

$

8,390

 

 

 

16.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Business Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Home Health Care average daily census

 

 

29,592

 

 

 

28,650

 

 

 

942

 

 

 

3.3

%

Rehab Care persons served

 

 

7,321

 

 

 

6,571

 

 

 

750

 

 

 

11.4

%

Personal Care persons served

 

 

16,134

 

 

 

15,910

 

 

 

224

 

 

 

1.4

%

The following discussion of our Provider Services segment results of operations should be read in conjunction with the foregoing table summarizing our segment results of operations.
Revenues
Revenues were $367.1 million for the three months ended September 30, 2025, as compared with $335.5 million for the three months ended September 30, 2024, an increase of $31.6 million or 9.4%. The increase primarily resulted from volume growth as well as rate increases received during the period. Revenues attributable to Home Health Care were $188.3 million for the three months ended September 30, 2025, as compared with $168.2 million for the three months ended September 30, 2024, an increase of $20.1 million or 12.0%. Revenues attributable to Rehab Care were $76.4 million for the three months ended September 30, 2025, as compared with $70.2 million for the three months ended September 30, 2024, an increase of $6.2 million or 8.8%. Revenues attributable to Personal Care were $102.4 million for the three months ended September 30, 2025, as compared with $97.1 million for the three months ended September 30, 2024, an increase of $5.3 million or 5.5%.
Cost of Services
Cost of services was $220.8 million for the three months ended September 30, 2025, as compared with $201.0 million for the three months ended September 30, 2024, an increase of $19.8 million or 9.8%. The increase primarily resulted from the aforementioned revenue growth.

40

 

Gross profit was $146.4 million for the three months ended September 30, 2025, as compared with $134.5 million for the three months ended September 30, 2024, an increase of $11.8 million or 8.8%. The increase primarily resulted from the aforementioned revenue growth and costs of services improvements in the period.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were $93.0 million for the three months ended September 30, 2025, as compared with $88.5 million for the three months ended September 30, 2024, an increase of $4.5 million or 5.1%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than the volume growth rate and demonstrating economies of scale.
Segment EBITDA
Segment EBITDA was $60.7 million for the three months ended September 30, 2025, as compared with $52.3 million for the three months ended September 30, 2024, an increase of $8.4 million or 16.0%. The increase primarily resulted from the aforementioned revenue growth. See Note 15 “Segment Information" to our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for further discussion.
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
The following table sets forth, for the years indicated, our segment results of operations for Provider Services.
 

 

Provider Services

 

($ in thousands, except Business Metrics)

 

For the Nine Months Ended

 

 

 

 

 

 

 

 

 

September 30,

 

 

Change

 

 

2025

 

 

2024

 

 

Amount

 

 

%

 

Revenues

 

$

1,070,695

 

 

$

968,026

 

 

$

102,669

 

 

 

10.6

%

Cost of services

 

 

648,773

 

 

 

581,509

 

 

 

67,264

 

 

 

11.6

%

Gross profit

 

 

421,922

 

 

 

386,517

 

 

 

35,405

 

 

 

9.2

%

Selling, general, and administrative expenses

 

 

275,000

 

 

 

254,779

 

 

 

20,221

 

 

 

7.9

%

Segment operating income

 

$

146,922

 

 

$

131,738

 

 

$

15,184

 

 

 

11.5

%

Segment EBITDA

 

$

168,205

 

 

$

149,701

 

 

$

18,504

 

 

 

12.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Business Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Home Health Care average daily census

 

 

29,970

 

 

 

28,034

 

 

 

1,936

 

 

 

6.9

%

Rehab Care persons served

 

 

7,048

 

 

 

6,615

 

 

 

433

 

 

 

6.5

%

Personal Care persons served

 

 

16,046

 

 

 

15,880

 

 

 

166

 

 

 

1.0

%

The following discussion of our Provider Services segment results of operations should be read in conjunction with the foregoing table summarizing our segment results of operations.
Revenues
Revenues were $1,070.7 million for the nine months ended September 30, 2025, as compared with $968.0 million for the nine months ended September 30, 2024, an increase of $102.7 million or 10.6%. The increase primarily resulted from volume growth as well as rate increases received during the period. Revenues attributable to Home Health Care were $551.2 million for the nine months ended September 30, 2025, as compared with $473.3 million for the nine months ended September 30, 2024, an increase of $77.9 million or 16.5%. Revenues attributable to Rehab Care were $219.5 million for the nine months ended September 30, 2025, as compared with $206.9 million for the nine months ended September 30, 2024, an increase of $12.6 million or 6.1%. Revenues attributable to Personal Care were $300.0 million for the nine months ended September 30, 2025, as compared with $287.8 million for the nine months ended September 30, 2024, an increase of $12.2 million or 4.2%.
Cost of Services
Cost of services was $648.8 million for the nine months ended September 30, 2025, as compared with $581.5 million for the nine months ended September 30, 2024, an increase of $67.3 million or 11.6%. The increase primarily resulted from the aforementioned revenue growth.
Gross profit was $421.9 million for the nine months ended September 30, 2025, as compared with $386.5 million for the nine months ended September 30, 2024, an increase of $35.4 million or 9.2%. The increase primarily resulted from the aforementioned revenue growth and costs of services improvements in the period.

41

 

Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were $275.0 million for the nine months ended September 30, 2025, as compared with $254.8 million for the nine months ended September 30, 2024, an increase of $20.2 million or 7.9%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than the volume growth rate and demonstrating economies of scale.
Segment EBITDA
Segment EBITDA was $168.2 million for the nine months ended September 30, 2025, as compared with $149.7 million for the nine months ended September 30, 2024, an increase of $18.5 million or 12.4%. The increase primarily resulted from the aforementioned revenue growth. See Note 15 “Segment Information" to our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for further discussion.
 
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
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. Adjusted EBITDA and Adjusted EPS exclude certain other items that are either non-recurring, infrequent, non-cash, unusual, or items deemed by management to not be indicative of the performance of our core operations, including non-cash, share-based compensation; acquisition, integration, and transaction-related costs; restructuring and divestiture-related and other costs; legal costs associated with certain historical matters for PharMerica and settlement costs; significant projects; and management fees. In determining which adjustments are made to arrive at Adjusted EBITDA and Adjusted EPS, management considers both (1) certain non-recurring, infrequent, non-cash, or unusual items, which can vary significantly from year to year, as well as (2) certain other items that may be recurring, frequent, or settled in cash but which management does not believe are indicative of our core operating performance. The financial measure calculated under U.S. GAAP which is most directly comparable to Adjusted EBITDA is net income (loss). The financial measure calculated under U.S. GAAP which is most directly comparable to Adjusted EPS is diluted EPS.
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 companies.
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 litigation matters from our Adjusted EBITDA and Adjusted EPS due to the magnitude of these cases and the costs attributable to them, the timing of the commencement of the cases and the fact that no similar cases have been brought against the Company since the acquisition of PharMerica, and the fact that these cases are unlike our routine legal and regulatory proceedings that we see in the normal course of business. Further, we have excluded settlement costs associated with the Silver matter from our Adjusted EBITDA and Adjusted EPS due to the magnitude of the case and the costs attributable to it, as well as the fact that the Silver matter is unlike our routine legal and regulatory proceedings that we see in the normal course of business.
The significant projects adjustment represents costs associated with certain transformational projects, which are not considered to be a part of our normal and recurring business operations and are not expected to recur in our future business plans. Moreover, the costs associated with significant projects, which are incurred on an infrequent and limited basis, are not reflective of our operating performance. Due to the aforementioned reasons, we have excluded the costs related to significant projects from our Adjusted EBITDA and Adjusted EPS, as such adjustment provides a more meaningful understanding to investors and others of our ongoing results.
The management fees adjustment represents fees paid historically under the Monitoring Agreement related to either (i) activities that are expected to be performed by our existing personnel upon the termination of the Monitoring Agreement, and thus not expected

42

 

to result in incremental costs subsequent to the IPO Offerings, or (ii) acquisitions, divestitures, and external financing activities, which costs would otherwise be excluded from our Adjusted EBITDA and Adjusted EPS. Therefore, we have excluded management fees from our Adjusted EBITDA and Adjusted EPS, as such fees are no longer applicable and representative of our ordinary operating performance as a result of the completion of the IPO Offerings.
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:
 

($ in thousands)

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Net income (loss)

 

$

37,488

 

 

$

(25,672

)

 

$

55,245

 

 

$

(73,213

)

Income tax expense (benefit)

 

 

12,120

 

 

 

8,155

 

 

 

13,118

 

 

 

(31,464

)

Interest expense, net

 

 

38,235

 

 

 

46,614

 

 

 

118,776

 

 

 

144,366

 

Depreciation and amortization

 

 

40,753

 

 

 

40,533

 

 

 

123,424

 

 

 

119,469

 

EBITDA

 

$

128,596

 

 

$

69,630

 

 

$

310,563

 

 

$

159,158

 

Non-cash share-based compensation (1)

 

 

14,173

 

 

 

12,720

 

 

 

46,155

 

 

 

49,793

 

Acquisition, integration, and transaction-related costs (2)

 

 

5,462

 

 

 

11,766

 

 

 

34,811

 

 

 

25,328

 

Restructuring and divestiture-related and other costs (3)

 

 

12,212

 

 

 

12,904

 

 

 

42,493

 

 

 

47,642

 

Legal costs and settlements (4)

 

 

—

 

 

 

8,920

 

 

 

—

 

 

 

21,886

 

Significant projects (5)

 

 

—

 

 

 

1,000

 

 

 

—

 

 

 

2,604

 

Management fee (6)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23,381

 

Total adjustments

 

$

31,847

 

 

$

47,310

 

 

$

123,459

 

 

$

170,634

 

Adjusted EBITDA

 

$

160,443

 

 

$

116,940

 

 

$

434,022

 

 

$

329,792

 

 
(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.

(2) Represents transaction costs incurred in connection with planned, completed, or terminated acquisitions, which include investment banking fees, legal diligence and related documentation costs, finance and accounting diligence and documentation; costs associated with the integration of acquisitions, including any facility consolidation, integration travel, or severance; and costs associated with other planned, completed, or terminated non-routine transactions. The three and nine months ended September 30, 2025 includes other non-routine transaction costs of $1.1 million and $23.4 million, respectively, as compared to $0.7 million and $1.4 million in the three and nine months ended September 30, 2024.

(3) Represents costs associated with restructuring-related activities, including closure, and related license impairment, and severance expenses associated with certain enterprise-wide or significant business line cost-savings measures. These costs include $3.8 million and $18.5 million of costs that did not meet the criteria for discontinued operations related to the Community Living divestiture for the three and nine months ended September 30, 2025, respectively, as compared to $6.2 million and $19.6 million for the three and nine months ended September 30, 2024, respectively. These costs also include $12.7 million of unamortized debt issuance costs associated with the extinguishment of our Second Lien Facility in the nine months ended September 30, 2024.

(4) Represents settlement and defense costs associated with certain historical PharMerica litigation matters, including the Silver matter, all of which were finalized in 2024. See Note 13 within the unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q for additional information.

43

 

(5) Represents costs associated with certain transformational projects and for the periods presented primarily included general ledger system implementation, pharmacy billing system implementation, and ransomware attack response costs, all of which were finalized in 2024.

(6) Represents annual management fees payable to the Managers under the Monitoring Agreement through the date of the IPO, and $22.7 million of termination fees resulting from the termination of the Monitoring Agreement upon completion of the IPO Offerings. All management fees ceased following the completion of the IPO in 2024.

The following table reconciles diluted EPS to Adjusted EPS:
 

(shares in thousands)

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Diluted EPS

 

$

0.17

 

 

$

(0.13

)

 

$

0.26

 

 

$

(0.37

)

Non-cash share-based compensation (1)

 

 

0.07

 

 

 

0.06

 

 

 

0.21

 

 

 

0.25

 

Acquisition, integration, and transaction-related costs (1)

 

 

0.03

 

 

 

0.06

 

 

 

0.16

 

 

 

0.13

 

Restructuring and divestiture-related and other costs (1)

 

 

0.06

 

 

 

0.06

 

 

 

0.19

 

 

 

0.24

 

Legal costs and settlements (1)

 

 

—

 

 

 

0.04

 

 

 

—

 

 

 

0.11

 

Significant projects (1)

 

 

—

 

 

 

0.00

 

 

 

—

 

 

 

0.01

 

Management fee (1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

0.12

 

Income tax impact on adjustments (2)(3)

 

 

(0.03

)

 

 

(0.06

)

 

 

(0.13

)

 

 

(0.29

)

Adjusted EPS

 

$

0.30

 

 

$

0.03

 

 

$

0.69

 

 

$

0.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding used in calculating
     diluted U.S. GAAP net income (loss) per share

 

 

217,982

 

 

 

198,491

 

 

 

218,519

 

 

 

190,541

 

Weighted average common shares outstanding used in calculating
     diluted Non-GAAP income per share

 

 

217,982

 

 

 

208,694

 

 

 

218,519

 

 

 

199,930

 

(1) This adjustment reflects the per share impact of the adjustment reflected within the definition of Adjusted EBITDA.

(2) The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate for the respective non-GAAP adjustment.

(3) For the nine months ended September 30, 2024, the income tax impact on adjustments is inclusive of a discrete tax benefit related to the Silver matter that was finalized in connection with the signing of the settlement agreement during the second fiscal quarter of 2024.

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 Credit Facility and the LC Facility will be sufficient to meet our cash requirements for the next twelve months and beyond. Our cash flows are primarily provided by the continuing operations of the Company. Cash provided by operating activities of the discontinued operations is expected to be offset at the closing of the transaction through proceeds from the sale, which may be utilized for the paydown of debt. Our future capital requirements will depend on many factors that are difficult to predict, including the size, timing, and structure of any future acquisitions, future capital investments, and future results of operations. We cannot assure you that cash provided by operating activities or cash and cash equivalents will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows from operations in the future, we may have to obtain additional financing. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all.
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 Facility, we calculate the availability for incremental borrowings under the Revolving Credit Facility and the LC Facility. Such amount, in addition to cash on our balance sheet, is what we consider to be our “Total Liquidity.”

44

 

The following table provides a calculation of our Total Liquidity:
 

($ in thousands)

 

For the Nine Months Ended September 30,

 

 

For the Year Ended
December 31,

 

 

 

2025

 

 

2024

 

Revolving Credit Facility Rollforward

 

 

 

 

 

 

Beginning Revolving Credit Facility balance

 

$

63,300

 

 

$

50,700

 

(Repayments) borrowings of the Revolving Credit Facility, net

 

 

(63,300

)

 

 

12,600

 

Ending Revolving Credit Facility balance

 

$

—

 

 

$

63,300

 

Calculation of Revolving Credit Facility and LC Facility availability

 

 

 

 

 

 

Revolving Credit Facility and LC Facility limit

 

$

540,000

 

 

$

540,000

 

Less: outstanding Revolving Credit Facility balance

 

 

—

 

 

 

63,300

 

Less: outstanding letters of credit subject to LC Sublimit

 

 

—

 

 

 

—

 

Less: outstanding letters of credit under the LC Facility

 

 

62,790

 

 

 

61,821

 

End of period Revolving Credit Facility and LC Facility availability

 

 

477,210

 

 

 

414,879

 

End of period cash balance

 

 

140,344

 

 

 

60,954

 

Total Liquidity, end of period

 

$

617,554

 

 

$

475,833

 

Cash Flow Activity
The activity discussed in this section relates to our consolidated company results and includes the impacts of discontinued operations.
Nine Months Ended September 30, 2025 and 2024
The following table sets forth a summary of our cash flows provided by (used in) operating, investing, and financing activities for the periods presented:
 

($ in thousands)

 

For the Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

Variance

 

Net cash provided by (used in) operating activities

 

$

258,610

 

 

$

(66,838

)

 

$

325,448

 

Net cash used in investing activities

 

$

(71,195

)

 

$

(124,457

)

 

$

53,262

 

Net cash (used in) provided by financing activities

 

$

(107,368

)

 

$

214,197

 

 

$

(321,565

)

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;

• a $30.9 million decrease in one-time cash outflows for direct and indirect remuneration (“DIR”) fees paid in connection with the conclusion of the DIR program;

• a $100.0 million decrease in cash outflows attributable to the timing of Silver legal settlement payments;

• a $27.1 million decrease in cash outflows for interest, net primarily as a result of a reduction in the variable interest rates applicable to our outstanding term debt; and

• a $9.5 million decrease in cash outflows for income taxes.

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.

45

 

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.
Debt
We typically incur debt to finance mergers and acquisitions, and we borrow under our Revolving Credit Facility for working capital purposes, as well as to finance acquisitions, as needed. Below is a summary of our long-term indebtedness as of September 30, 2025 and December 31, 2024.
We were in compliance with all applicable financial covenants as of September 30, 2025 and December 31, 2024.
First Lien Credit Agreement
On March 5, 2019, the Company entered into the First Lien Credit Agreement, among Phoenix Intermediate Holdings Inc., as Holdings, Phoenix Guarantor Inc., as the Borrower, the several lenders from time to time parties thereto and Morgan Stanley Senior Funding, Inc., as the Administrative Agent and Collateral Agent (the “First Lien Credit Agreement”). The First Lien Credit Agreement 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 Credit Agreement (“Tranche B-1”). The First Lien Credit Agreement was further amended in 2020 (“Tranche B-2”) and 2021 (“Tranche B-3”) to establish additional borrowings of $550.0 million and $675.0 million, respectively, resulting in a total gross borrowings of $3,025.0 million.
On June 30, 2023, the Company amended the terms of the First Lien Credit Agreement to reflect a change in reference rate to the Secured Overnight Financing Rate (“SOFR”).
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 established Tranche B-4 to refinance the remaining $2,566.0 million of borrowings under the First Lien Credit Agreement at a rate equal to SOFR plus 3.25%. Tranche B-4 has a maturity date of February 21, 2031. On December 11, 2024 we amended the First Lien to refinance Tranche B-4 by establishing Tranche B-5 in an aggregate principal amount of $2,553.2 million at a rate equal to SOFR plus 2.50% or ABR plus 1.50% with a maturity date of February 21, 2031.
For additional information about our First Lien Credit Agreement, see Note 6 of the unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q.
The First Lien Credit Agreement described above contain customary negative covenants, including, but not limited to, restrictions on the Company and its restricted subsidiaries’ ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances, or investments, pay dividends, sell or otherwise transfer assets, prepay or modify terms of certain junior indebtedness, enter into transactions with affiliates, or change their lines of business or fiscal year. In addition, under the Revolving Credit Facility, the Company will not permit the consolidated first lien secured debt to consolidated EBITDA (as defined in the First Lien Credit Agreement) ratio to be greater than 6.90 to 1.00, which shall be tested as of the end of the most recent quarter at any time when the aggregate revolving credit loans exceed 35% of the total revolving credit commitments.
Revolving Credit Facility
The total borrowing capacity under the Revolving Credit Facility included in the First Lien Credit Agreement (the “Revolver”) was $475.0 million as of September 30, 2025 and December 31, 2024. As of September 30, 2025, the Company had $475.0 million 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 $411.7 million.
The First Lien Credit Agreement, as amended on September 17, 2024, provides for an additional $65.0 million of letter of credit commitments, or the LC Facility, which are not subject to the LC Sublimit. 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.

46

 

For additional information about our Revolving Credit Facility and LC Facility, see Note 6 of the unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q.
Second Lien Credit Agreement
On March 5, 2019, the Company entered into a $450.0 million Second Lien Facility. Borrowings under the Second Lien Facility were subordinated to the First Lien Credit Agreement. 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 further obligation exists related to the Second Lien Facility. This transaction was accounted for as a debt extinguishment and the Company incurred a loss on extinguishment of debt of $12.7 million related to the write-off of unamortized debt issuance costs.
Interest Rate Swap Agreements
To manage fluctuations in cash flows resulting from changes in the variable interest rates, the Company entered into pay-fixed interest rate swap agreements. For the nine months ended September 30, 2025 and the year ended December 31, 2024, interest expense, net includes interest income received related to cash flow hedges of interest rate risk of $13.4 million and $35.3 million, respectively. Refer to Note 6 within our unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q for further discussion.
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. The Company will pay 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 will be equivalent of 6.75% per year. Each installment payment constitutes a payment of interest and a partial repayment of principal. Each TEU may be separated by a holder into its constituent Purchase Contract and Amortizing Note. Refer to Note 7 within our unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q for further discussion.

47

 

The table below summarizes the total outstanding debt of the Company:
 

($ in thousands)

 

Rate

 

 

Long-term obligation and note payable

 

 

Interest Expense

 

 

 

September 30, 2025

 

 

December 31, 2024

 

 

September 30, 2025

 

 

December 31, 2024

 

 

Nine Months Ended September 30, 2025

 

 

Fiscal Year 2024

 

First Lien - payable to lenders at SOFR
    plus applicable margin

 

 

—

 

 

 

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

18,151

 

First Lien Incremental Term Loans
    Tranches B-2 and B-3 - payable to
    lenders at SOFR plus applicable
    margin

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12,923

 

First Lien Incremental Term Loan
    Tranche B-4 - payable to lenders at
    SOFR plus applicable margin

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

150,759

 

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

 

 

6.66

%

 

 

6.86

%

 

 

2,527,638

 

 

 

2,546,787

 

 

 

110,975

 

 

 

8,857

 

Second Lien - payable to lenders at
    SOFR plus applicable margin

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,482

 

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

 

 

6.91

%

 

 

7.61

%

 

 

—

 

 

 

—

 

 

 

—

 

 

 

331

 

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

 

 

9.25

%

 

 

9.75

%

 

 

—

 

 

 

63,300

 

 

 

6,321

 

 

 

10,602

 

Amortizing Notes

 

 

 

 

 

 

 

 

37,181

 

 

 

53,804

 

 

 

3,350

 

 

 

4,899

 

Notes payable and other

 

 

 

 

 

 

 

 

17,267

 

 

 

19,428

 

 

 

663

 

 

 

316

 

Amortization of deferred financing
    costs and other, net of interest
    income from cash flow hedges

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

(2,533

)

 

 

(20,774

)

Total debt

 

 

 

 

 

 

 

$

2,582,086

 

 

$

2,683,319

 

 

$

118,776

 

 

$

190,546

 

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

 

 

 

 

 

 

 

Our Company leverage, as calculated under our First Lien Credit Agreement, was 3.31x and 4.16x at September 30, 2025 and December 31, 2024, respectively. The results of the Community Living business are included in such calculation pursuant to the terms of our First Lien Credit Agreement and the Second Lien Credit Agreement.
Critical Accounting Policies and Use of Estimates
In preparing our unaudited condensed consolidated financial statements in conformity with U.S. GAAP, we must use estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures and the reported amounts of revenue and expenses. In general, our estimates are based on historical experience and various other assumptions we believe are reasonable under the circumstances. We evaluate our estimates on an ongoing basis and make changes to the estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from those estimates.
We consider our critical accounting policies and estimates to be those that involve significant judgments and uncertainties and may potentially result in materially different results under different assumptions and conditions. There have been no material changes to our critical accounting policies and estimates from those disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, which are hereby incorporated by reference.
Ite m 3. Quantitative and Qualitative Disclosures About Market Risk.
Impact of Inflation
Wages and other expenses increase during periods of inflation and when labor shortages occur in the marketplace. The impact of inflation on the Company is primarily in the area of labor costs. The healthcare industry is labor intensive. There can be no guarantee we will not experience increases in the cost of labor, particularly given the shortage of qualified caregivers in our markets, and the demand for homecare services is expected to grow.

48

 

In addition, increases in healthcare costs are typically higher than inflation and impact our costs under our employee benefit plans. Managing these costs remains a significant challenge and priority for us. While we believe the effects of inflation, if any, and labor shortages on our results of operations and financial condition have not been significant, there can be no guarantee we will not experience the effect of inflation in the future.
In addition, suppliers pass along rising costs to us in the form of higher prices, which impacts us primarily in the area of pharmaceutical drug costs in our Pharmacy Solutions segment. Changes in costs of drugs can be accompanied by a change in rate that we pass along to our customers. Additionally, our supply chain efforts have enabled us to effectively manage and mitigate any inflationary impacts in our supply chain over recent years. However, we cannot predict our ability to cover future cost increases.
We have little or no ability to pass on certain of these increased costs associated with providing services to Medicare and Medicaid patients due to federal and state laws that establish fixed reimbursement rates.
Interest Rate Risk
The Company is exposed to interest rate risk related to changes in interest rates for borrowings under our First Lien Facilities. Although we hedge a portion of our interest rate risk through interest rate swaps, any borrowings under our First Lien Facility in excess of the notional amount of the swaps will be subject to variable interest rates. By using a derivative instrument to hedge exposures to changes in interest rates, we expose ourselves to credit risk due to the possible failure of the counterparty to perform under the terms of the derivative contract.
As of September 30, 2025, our debt outstanding was $2.6 billion and we had four existing interest rate swaps with a combined notional value of $1.5 billion that were designated as cash flow hedges of interest rate risk. A hypothetical 1% increase in interest rates would decrease our net income and our cash flows by $10.3 million on an annual basis based upon our borrowing level at September 30, 2025. The market risks associated with our debt obligations as of September 30, 2025 have not changed from those reported in “Part II. Item 7A. Quantitative and Qualitative Disclosure About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2024. See Note 6 within the unaudited condensed consolidated financial statements and related notes, included elsewhere in the Quarterly Report on Form 10-Q.
Ite m 4. Controls and Procedures.
Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

49

 

PART II—OTHE R INFORMATION
Ite m 1. Legal Proceedings.
From time to time, we are involved in various legal and/or administrative proceedings and subject to claims that arise in the ordinary course of business. 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 in our consolidated financial statements, will have a material adverse effect on our business, financial condition, or results of operations. It is reasonably possible that an adverse determination might have an impact on a particular period. Regardless of the outcome, litigation has the potential to have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
For a summary of our material legal proceedings, refer to Note 13 of the unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q.
Ite m 1A. Risk Factors.
There have been no material changes to the risk factors affecting our business, financial condition, or results of operations from those set forth under the heading “Summary Risk Factors” or in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, or results of operations.
Ite m 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Ite m 3. Defaults Upon Senior Securities.
None.
Ite m 4. Mine Safety Disclosures.
Not applicable.
Ite m 5. Other Information.
None .

50

 

Ite m 6. Exhibits.
 

 

 

 

 

Incorporated by Reference

Exhibit
Number

Description

 

Form

 

File No.

 

Exhibit

 

Filing Date

 

 

 

 

 

 

 

 

 

 

 

3.1

 

Second Amended and Restated Certificate of Incorporation of BrightSpring Health Services, Inc.

 

8-K

 

001-41938

 

3.1

 

1/30/2024

3.2

 

Amended and Restated Bylaws of BrightSpring Health Services, Inc.

 

8-K

 

001-41938

 

3.2

 

1/30/2024

4.1

 

Purchase Contract Agreement, dated as of January 30, 2024, between BrightSpring Health Services, Inc. and U.S. Bank Trust Company, National Association, as purchase contract agent, as attorney-in-fact for the Holders from time to time as provided therein and as trustee under the indenture referred to therein.

 

8-K

 

001-41938

 

4.1

 

1/30/2024

4.2

 

Form of Unit (included in Exhibit 4.1).

 

8-K

 

001-41938

 

4.2

 

1/30/2024

4.3

 

Form of Purchase Contract (included in Exhibit 4.1).

 

8-K

 

001-41938

 

4.3

 

1/30/2024

4.4

 

Indenture, dated as of January 30, 2024, between BrightSpring Health Services, Inc. and U.S. Bank Trust Company, National Association, as trustee.

 

8-K

 

001-41938

 

4.4

 

1/30/2024

4.5

 

First Supplemental Indenture, dated as of January 30, 2024, between BrightSpring Health Services, Inc. and U.S. Bank Trust Company, National Association, as trustee, paying agent and security registrar.

 

8-K

 

001-41938

 

4.5

 

1/30/2024

4.6

 

Form of Amortizing Note (included in Exhibit 4.5).

 

8-K

 

001-41938

 

4.6

 

1/30/2024

4.7

 

Registration Rights Agreement, dated December 7, 2017, by and among Phoenix Parent Holdings Inc., KKR Phoenix Aggregator L.P., and Walgreens Co.

 

S-1/A

 

333-276348

 

4.1

 

1/10/2024

31.1

 

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

 

31.2

 

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

 

32.1

 

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

 

32.2

 

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

 

101.INS

 

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

 

 

 

 

 

 

 

 

101.SCH

 

Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents

 

 

 

 

 

 

 

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

 

 

 

 

 
 

51

 

SIG NATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 

BrightSpring Health Services, Inc.

Date: October 28, 2025

By:

/s/ Jon Rousseau

Jon Rousseau

Chairman, President, and Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

Date: October 28, 2025

By:

/s/ Jennifer Phipps

 

 

 

Jennifer Phipps

 

 

 

Executive Vice President and Chief Financial Officer

 

 

 

(Principal Financial Officer)

 

52