10-Q – 2026-07-31 – btsg-20260630.htm

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 six months ended June 30, 2026 was 9.1% compared to 8.2% for the six months ended June 30, 2025. The increase in gross profit margin is due to mix shift in the Pharmacy Solutions segment with greater relative volume growth in Specialty and Infusion Pharmacy, along with product-level mix shifts and rate changes, partially offset by an increase in the fulfillment cost per script in Home and Community Pharmacy.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were $300.6 million for the six months ended June 30, 2026, as compared with $251.8 million for the six months ended June 30, 2025, an increase of $48.9 million or 19.4%. The increase primarily resulted from the aforementioned revenue and gross profit growth in the period.
Segment EBITDA
Segment EBITDA was $349.1 million for the six months ended June 30, 2026, as compared with $240.4 million for the six months ended June 30, 2025, an increase of $108.7 million or 45.2%. The increase primarily resulted from the aforementioned revenue and gross profit growth in the period. See Note 11 “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 June 30, 2026 Compared to Three Months Ended June 30, 2025
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 Three Months Ended

 

 

 

 

 

 

 

 

 

June 30,

 

 

Change

 

 

2026

 

 

2025

 

 

Amount

 

 

%

 

Revenues

 

$

465,967

 

 

$

357,597

 

 

$

108,370

 

 

 

30.3

%

Cost of services

 

 

271,402

 

 

 

216,444

 

 

 

54,958

 

 

 

25.4

%

Gross profit

 

 

194,565

 

 

 

141,153

 

 

 

53,412

 

 

 

37.8

%

Selling, general, and administrative expenses

 

 

128,515

 

 

 

91,871

 

 

 

36,644

 

 

 

39.9

%

Segment operating income

 

$

66,050

 

 

$

49,282

 

 

$

16,768

 

 

 

34.0

%

Segment EBITDA

 

$

74,861

 

 

$

56,456

 

 

$

18,405

 

 

 

32.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Business Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Home Health Care average daily census

 

 

46,448

 

 

 

30,085

 

 

 

16,363

 

 

 

54.4

%

Rehab Care persons served

 

 

7,755

 

 

 

7,119

 

 

 

636

 

 

 

8.9

%

Personal Care persons served

 

 

16,357

 

 

 

16,138

 

 

 

219

 

 

 

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 $466.0 million for the three months ended June 30, 2026, as compared with $357.6 million for the three months ended June 30, 2025, an increase of $108.4 million or 30.3%. The increase primarily resulted from the following segment activity and factors:
• a $77.9 million, or 21.8%, increase from the Amedisys and LHC Branches acquisition; and

• a $30.5 million, or 8.5%, increase primarily from volume growth as well as rate increases received during the period.

Revenues attributable to Home Health Care were $277.6 million for the three months ended June 30, 2026, as compared with $184.5 million for the three months ended June 30, 2025, an increase of $93.1 million or 50.5%. Revenues attributable to Rehab Care were $81.9 million for the three months ended June 30, 2026, as compared with $73.2 million for the three months ended June 30, 2025, an increase of $8.7 million or 11.9%. Revenues attributable to Personal Care were $106.5 million for the three months ended June 30, 2026, as compared with $99.9 million for the three months ended June 30, 2025, an increase of $6.6 million or 6.6%.

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Cost of Services
Cost of services was $271.4 million for the three months ended June 30, 2026, as compared with $216.4 million for the three months ended June 30, 2025, an increase of $55.0 million or 25.4%. The increase primarily resulted from the aforementioned revenue growth.
Gross profit was $194.6 million for the three months ended June 30, 2026, as compared with $141.2 million for the three months ended June 30, 2025, an increase of $53.4 million or 37.8%. 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 $128.5 million for the three months ended June 30, 2026, as compared with $91.9 million for the three months ended June 30, 2025, an increase of $36.6 million or 39.9%. The increase primarily resulted from the aforementioned revenue and gross profit growth in the period.
Segment EBITDA
Segment EBITDA was $74.9 million for the three months ended June 30, 2026, as compared with $56.5 million for the three months ended June 30, 2025, an increase of $18.4 million or 32.6%. The increase primarily resulted from the aforementioned revenue growth. See Note 11 “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.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
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 Six Months Ended

 

 

 

 

 

 

 

 

 

June 30,

 

 

Change

 

 

2026

 

 

2025

 

 

Amount

 

 

%

 

Revenues

 

$

908,339

 

 

$

703,555

 

 

$

204,784

 

 

 

29.1

%

Cost of services

 

 

532,326

 

 

 

427,989

 

 

 

104,337

 

 

 

24.4

%

Gross profit

 

 

376,013

 

 

 

275,566

 

 

 

100,447

 

 

 

36.5

%

Selling, general, and administrative expenses

 

 

250,937

 

 

 

181,973

 

 

 

68,964

 

 

 

37.9

%

Segment operating income

 

$

125,076

 

 

$

93,593

 

 

$

31,483

 

 

 

33.6

%

Segment EBITDA

 

$

140,841

 

 

$

107,536

 

 

$

33,305

 

 

 

31.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Business Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Home Health Care average daily census

 

 

46,258

 

 

 

30,163

 

 

 

16,095

 

 

 

53.4

%

Rehab Care persons served

 

 

7,688

 

 

 

6,909

 

 

 

779

 

 

 

11.3

%

Personal Care persons served

 

 

16,219

 

 

 

16,001

 

 

 

218

 

 

 

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 $908.4 million for the six months ended June 30, 2026, as compared with $703.5 million for the six months ended June 30, 2025, an increase of $204.8 million or 29.1%. The increase primarily resulted from the following segment activity and factors:
• a $156.4 million, or 22.2%, increase from the Amedisys and LHC Branches acquisition; and

• a $48.4 million, or 6.9%, increase primarily from volume growth as well as rate increases received during the period.

Revenues attributable to Home Health Care were $543.3 million for the six months ended June 30, 2026, as compared with $362.9 million for the six months ended June 30, 2025, an increase of $180.4 million or 49.7%. Revenues attributable to Rehab Care were $156.7 million for the six months ended June 30, 2026, as compared with $143.0 million for the six months ended June 30, 2025, an increase of $13.7 million or 9.6%. Revenues attributable to Personal Care were $208.4 million for the six months ended June 30, 2026, as compared with $197.6 million for the six months ended June 30, 2025, an increase of $10.8 million or 5.5%.

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Cost of Services
Cost of services was $532.3 million for the six months ended June 30, 2026, as compared with $428.0 million for the six months ended June 30, 2025, an increase of $104.3 million or 24.4%. The increase primarily resulted from the aforementioned revenue growth.
Gross profit was $376.0 million for the six months ended June 30, 2026, as compared with $275.6 million for the six months ended June 30, 2025, an increase of $100.4 million or 36.5%. 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 $250.9 million for the six months ended June 30, 2026, as compared with $182.0 million for the three months ended June 30, 2025, an increase of $69.0 million or 37.9%. The increase primarily resulted from the aforementioned revenue and gross profit growth in the period.
Segment EBITDA
Segment EBITDA was $140.8 million for the six months ended June 30, 2026, as compared with $107.5 million for the six months ended June 30, 2025, an increase of $33.3 million or 31.0%. The increase primarily resulted from the aforementioned revenue growth. See Note 11 “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 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 before income tax expense, 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; and restructuring and divestiture-related and other costs. 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. 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.
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, 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 from continuing operations to EBITDA and Adjusted EBITDA:
 

39

 

($ in thousands)

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Net income from continuing operations

 

$

86,604

 

 

$

8,541

 

 

$

160,887

 

 

$

17,757

 

Income tax expense

 

 

6,908

 

 

 

1,238

 

 

 

15,459

 

 

 

998

 

Interest expense, net

 

 

36,879

 

 

 

38,778

 

 

 

75,494

 

 

 

80,541

 

Depreciation and amortization

 

 

41,423

 

 

 

41,839

 

 

 

80,517

 

 

 

82,671

 

EBITDA

 

$

171,814

 

 

$

90,396

 

 

$

332,357

 

 

$

181,967

 

Non-cash share-based compensation (1)

 

 

19,488

 

 

 

19,508

 

 

 

32,604

 

 

 

31,982

 

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

 

 

6,630

 

 

 

19,828

 

 

 

12,730

 

 

 

29,349

 

Restructuring and divestiture-related and other costs (3)

 

 

7,573

 

 

 

12,785

 

 

 

17,575

 

 

 

30,281

 

Total adjustments

 

$

33,691

 

 

$

52,121

 

 

$

62,909

 

 

$

91,612

 

Adjusted EBITDA

 

$

205,505

 

 

$

142,517

 

 

$

395,266

 

 

$

273,579

 

 
(1) Represents non-cash share-based compensation to certain members of our management and full-time employees.

(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.

(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.

The following table reconciles diluted EPS to Adjusted EPS:
 

(shares in thousands)

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Diluted EPS

 

$

0.39

 

 

$

0.04

 

 

$

0.73

 

 

$

0.09

 

Non-cash share-based compensation (1)

 

 

0.09

 

 

 

0.09

 

 

 

0.15

 

 

 

0.15

 

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

 

 

0.03

 

 

 

0.09

 

 

 

0.06

 

 

 

0.14

 

Restructuring and divestiture-related and other costs (1)

 

 

0.03

 

 

 

0.06

 

 

 

0.08

 

 

 

0.14

 

Income tax impact on adjustments (2)

 

 

(0.09

)

 

 

(0.06

)

 

 

(0.19

)

 

 

(0.10

)

Adjusted EPS

 

$

0.45

 

 

$

0.22

 

 

$

0.83

 

 

$

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

220,276

 

 

 

216,336

 

 

 

221,191

 

 

 

214,963

 

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

 

 

220,276

 

 

 

216,336

 

 

 

221,191

 

 

 

214,963

 

(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. For all periods presented, the income tax impact on adjustments is inclusive of a discrete tax benefit related to share-based compensation.

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. 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

40

 

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.”
The following table provides a calculation of our Total Liquidity:
 

($ in thousands)

 

For the Six Months Ended June 30,

 

 

For the Year Ended
December 31,

 

 

 

2026

 

 

2025

 

Revolving Credit Facility Rollforward

 

 

 

 

 

 

Beginning Revolving Credit Facility balance

 

$

—

 

 

$

63,300

 

Repayments of the Revolving Credit Facility, net

 

 

—

 

 

 

(63,300

)

Ending Revolving Credit Facility balance

 

$

—

 

 

$

—

 

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

 

 

—

 

 

 

—

 

Less: outstanding letters of credit subject to LC Sublimit

 

 

—

 

 

 

—

 

Less: outstanding letters of credit under the LC Facility

 

 

63,909

 

 

 

62,790

 

End of period Revolving Credit Facility and LC Facility availability

 

 

476,091

 

 

 

477,210

 

End of period cash balance

 

 

550,381

 

 

 

88,370

 

Total Liquidity, end of period

 

$

1,026,472

 

 

$

565,580

 

Cash Flow Activity
The activity discussed in this section relates to our consolidated company results and includes the impacts of discontinued operations.
Six Months Ended June 30, 2026 and 2025
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 Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

Variance

 

Net cash provided by operating activities

 

$

166,859

 

 

$

150,674

 

 

$

16,185

 

Net cash provided by (used in) investing activities

 

$

719,195

 

 

$

(47,434

)

 

$

766,629

 

Net cash used in financing activities

 

$

(424,150

)

 

$

(94,261

)

 

$

(329,889

)

Operating Activities
Net cash provided by operating activities was $166.9 million for the six months ended June 30, 2026, compared to $150.7 million for the six months ended June 30, 2025. The change was primarily due to the following:
• a $152.5 million increase in operating income from continuing operations in 2026 as compared to 2025;

• a $20.6 million decrease in cash outflows for interest, net primarily as a result of a reduction in the variable-rate and applicable margin on our outstanding term debt, and refinancing of our First Lien in the second fiscal quarter of 2026; offset by

• a $143.7 million increase in cash outflows for income taxes, which includes $97.0 million of taxes paid as a result of the Community Living divestiture; and

• a $17.0 million increase in transaction costs related to the closing of the Community Living divestiture in the first fiscal quarter of 2026.

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Investing Activities
Net cash provided by (used in) investing activities increased by $766.6 million, from a cash outflow of $47.4 million in the six months ended June 30, 2025 to a cash inflow of $719.2 million in the six months ended June 30, 2026. The increase was primarily due to proceeds from the sale of our Community Living business of $810.9 million, offset by a $35.4 million decrease in cash paid for acquisitions in 2026 compared to 2025.
Financing Activities
Net cash used in financing activities was $424.2 million for the six months ended June 30, 2026, primarily attributable to repayments on our long-term debt of $320.5 million, repurchase of shares of common stock of $120.0 million in connection with the March and June 2026 secondary offerings, and payment of finance lease obligations of $5.8 million, offset by the net proceeds from share-based compensation and settlement of equity awards of $25.8 million and other financing activities.
Net cash used in financing activities was $94.3 million for the six months ended June 30, 2025, primarily attributable to repayments on our long-term debt of $23.7 million, net repayments on our Revolving Credit Facility of $63.3 million, payment of financing lease obligations of $6.7 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 June 30, 2026 and December 31, 2025.
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”). On December 11, 2024 we amended the First Lien to refinance the outstanding principal 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.
On May 28, 2026, we used a portion of the net proceeds received from the Community Living divestiture to repay $300.0 million of the borrowing under Tranche B-5, and amended the First Lien to establish a new Tranche B-6 Term Loan (“Tranche B-6”) in an aggregate principal amount of $2,214.9 million. The proceeds from Tranche B-6 borrowings were used to refinance the equivalent amount of the remaining Tranche B-5, after the aforementioned debt paydown, at a rate equal to SOFR plus 2.00% or ABR plus 1.00% with a maturity date of February 21, 2031. The transaction was accounted for as a debt modification. Principal payments are due on the last business day of each quarter, which will commence in the third fiscal quarter of 2026 and equate to 0.25% of the principal at issuance, with a balloon payment due 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.
We were in compliance with all applicable financial covenants as of June 30, 2026 and December 31, 2025.
Revolving Credit Facility
In connection with the First Lien debt modification on May 28, 2026, borrowings of the Revolver bear interest at a rate equal to SOFR (with a floor of 0.00%) plus 2.00% for the Revolving Credit Loans or ABR (with a floor of 0.00%) plus 1.00% for the Swingline Loans. Prior to the debt modification, borrowings bore interest at a rate equal to SOFR (with a floor of 0.00%) plus 2.75% for the Revolving Credit Loans and ABR (with a floor of 0.00%) plus 1.75% for the Swingline Loans. The total borrowing capacity under the Revolving Credit Facility included in the First Lien Credit Agreement (the “Revolver”) was $475.0 million as of June 30, 2026 and December 31, 2025. As of June 30, 2026 and December 31, 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.

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The First Lien Credit Agreement 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 June 30, 2026, there were $63.9 million of letters of credit outstanding under the LC Facility, resulting in an available borrowing capacity of $1.1 million. As of December 31, 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.
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.
Interest Rate Swap Agreements
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. For the six months ended June 30, 2026 and the year ended December 31, 2025, interest expense, net includes interest income received related to cash flow hedges of interest rate risk of $1.0 million and $15.2 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 Tangible Equity Units (“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.
The table below summarizes the total outstanding debt of the Company:
 

($ in thousands)

 

Rate

 

 

Long-term obligation and note payable

 

 

Interest Expense

 

 

 

June 30, 2026

 

 

December 31, 2025

 

 

June 30, 2026

 

 

December 31, 2025

 

 

Six Months Ended June 30, 2026

 

 

Fiscal Year 2025

 

First Lien Incremental Term Loan
   Tranche B-6 - payable to lenders at
   SOFR plus applicable margin

 

 

5.62

%

 

 

—

 

 

$

2,214,872

 

 

$

—

 

 

$

11,758

 

 

$

—

 

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

 

 

—

 

 

 

6.22

%

 

 

—

 

 

 

2,521,255

 

 

 

63,091

 

 

 

146,482

 

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

 

 

5.62

%

 

 

6.47

%

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

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

 

 

7.75

%

 

 

8.50

%

 

 

—

 

 

 

—

 

 

 

2,476

 

 

 

6,996

 

Amortizing Notes

 

 

 

 

 

 

 

 

19,278

 

 

 

31,360

 

 

 

1,219

 

 

 

4,183

 

Notes payable and other

 

 

 

 

 

 

 

 

15,103

 

 

 

17,129

 

 

 

434

 

 

 

886

 

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

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

(3,484

)

 

 

(1,236

)

Total debt

 

 

 

 

 

 

 

$

2,249,253

 

 

$

2,569,744

 

 

$

75,494

 

 

$

157,311

 

Less: debt issuance costs, net

 

 

 

 

 

 

 

 

58,493

 

 

 

62,200

 

 

 

 

 

 

 

Total debt, net of debt issuance costs

 

 

 

 

 

 

 

 

2,190,760

 

 

 

2,507,544

 

 

 

 

 

 

 

Less: current portion of long-term debt

 

 

 

 

 

 

 

 

41,445

 

 

 

52,340

 

 

 

 

 

 

 

Total long-term debt, net of current
    portion

 

 

 

 

 

 

 

$

2,149,315

 

 

$

2,455,204

 

 

 

 

 

 

 

Our Company leverage, as calculated under our First Lien Credit Agreement, was 2.15x and 2.99x at June 30, 2026 and December 31, 2025, respectively. The results of the Community Living business are excluded from the calculation for June 30, 2026 since the Company divested the Community Living business prior to the end of the period. The results of the Community Living business are included in the calculation for December 31, 2025 pursuant to the terms of our First Lien Credit Agreement.

43

 

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, 2025, 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 since the demand for homecare services is expected to grow.
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 June 30, 2026, our debt outstanding was $2.2 billion and we had 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 $7.1 million on an annual basis based upon our borrowing level at June 30, 2026. The market risks associated with our debt obligations as of June 30, 2026 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, 2025. 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.

44

 

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 June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

45

 

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.
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, 2025. 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.
Security Trading Plans of Directors and Executive Officers
On June 16, 2026 , Scott Greenwell , Executive Vice President and President , PharMerica, entered into a stock trading plan designed to comply with Rule 10b5-1 under the Exchange Act (the “Rule 10b5-1 Plan”). The Rule 10b5-1 Plan provides for the sale, subject to certain price limits, of up to 11,973 shares of the Company’s common stock. The Rule 10b5-1 Plan has a trading effective date of September 14, 2026 , and no sales are permitted to occur before this date. The Rule 10b5-1 Plan will terminate on September 14, 2026 , unless terminated earlier pursuant to the terms of the Rule 10b5-1 Plan. If all shares are sold pursuant to the Rule 10b5-1 Plan, Mr. Greenwell will continue to satisfy the Company’s stock ownership guidelines.

46

 

Ite m 6. Exhibits.
 

 

 

 

 

Incorporated by Reference

Exhibit
Number

Description

 

Form

 

File No.

 

Exhibit

 

Filing Date

 

 

 

 

 

 

 

 

 

 

 

2.1*

 

Purchase Agreement, dated January 17, 2025, by and among Res-Care, Inc., certain other affiliated entities, National Mentor Holdings, Inc., and BrightSpring Health Services, Inc. (solely for purposes of Section 5.24).

 

8-K

 

001-41938

 

2.1

 

1/21/2025

2.2

 

First Amendment to Purchase Agreement, dated December 5, 2025, by and among Res-Care, Inc., certain other affiliated entities, National Mentor Holdings, Inc., and BrightSpring Health Services, Inc.

 

10-K

 

001-41938

 

2.2

 

2/27/2026

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

10.1

 

Amendment No. 10, dated as of May 28, 2026, by and among Phoenix Intermediate Holdings Inc., Phoenix Guarantor Inc., the several lenders from time to time parties thereto and Morgan Stanley Senior Funding Inc. as administrative agent and collateral agent to the First Lien Credit Agreement, dated as of March 5, 2019, by and among Phoenix Intermediate Holdings Inc., Phoenix Guarantor Inc., the lenders party thereto, and Morgan Stanley Senior Funding, Inc. (with amended First Lien Credit Agreement attached as Exhibit A).

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

47

 

 
* Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplementally copies of any of the omitted schedules or similar attachments upon request by the SEC or its staff.
 

48

 

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: July 31, 2026

By:

/s/ Jon Rousseau

Jon Rousseau

Chairman, President, and Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

Date: July 31, 2026

By:

/s/ Jennifer Phipps

 

 

 

Jennifer Phipps

 

 

 

Executive Vice President and Chief Financial Officer

 

 

 

(Principal Financial Officer)

 

49