Good day, and thank you for standing by. Welcome to the BrightSpring Health Services Second Quarter 2024 Earnings Call. At this time all participants are in a listen-only mode. After the speaker’s presentation there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jennifer Phipps, Chief Accounting Officer at BrightSpring. Please go ahead.

Good morning. Thank you for participating in today's conference call. My name is Jennifer Phipps, Chief Accounting Officer of BrightSpring. I am joined on today's call by Jon Rousseau, Chief Executive Officer, and Jim Mattingly, Chief Financial Officer. Earlier today, BrightSpring released financial results for the quarter ended June 30, 2024. A copy of the press release and presentation is available on the company's website. Please note that today's discussion will include certain forward-looking statements that reflect our current assumptions and expectations, including those related to our future financial performance and industry and market conditions. Such forward-looking statements are not guarantees of future performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. We encourage you to review the information in today's press release and presentation as well as in our quarterly report on Form 10 Q that will be filed with the SEC. Specific risk factors and uncertainties can also be found in our 10-K previously filed with the SEC. Such factors may be updated from time to time in our periodic filings with the SEC, and we do not undertake any duty to update any forward-looking statements except as required by law. During the call, we will use non-GAAP financial measures when talking about the company's performance and financial condition. You can find additional information on these non-GAAP measures and reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures to the extent available without unreasonable effort in today's earnings press release and presentation, which again are available on our Investor Relations website. This webcast is being recorded and will be available for replay on our Investor Relations website. And with that, I will turn the call over to Jon Rousseau, Chief Executive Officer.

Thank you, Jen. Good morning, and thank you for joining BrightSpring Second Quarter 2024 Earnings Call. I'd also like to thank all of our employees and teammates, our clinicians, pharmacists, caregivers and administrative and support employees, who work hard every day to provide needed solutions to the customers and patients we serve as well as to our other key stakeholders in healthcare. We are pleased to report strong second quarter performance with total revenue in the quarter of $2.7 billion, representing 26% growth year-over-year and adjusted EBITDA of $139.1 million, which represented 17% growth year-over-year and exceeded our internal plan. Adjusted EBITDA growth metrics throughout my remarks exclude a certain nonrecurring Quality Incentive Payment or QIP of $30 million in the second quarter of 2023. Within the $2.7 billion of total revenue, Pharmacy Solutions revenue was $2.1 billion, growing 32% compared to the second quarter of last year. And Provider Services revenue was $616 million, growing 8% compared to the second quarter of last year. We reported Pharmacy Solutions adjusted EBITDA of $94 million, which grew 19% year-over-year, and Provider Services EBITDA of $86 million grew 16% year-over-year. Following strong performance in the first half of the year and continued business momentum, we are raising our adjusted EBITDA guidance for 2024 to be in the range of $570 million to $580 million, representing 12% to 14% growth, excluding the QIP payment in 2023. Our outperformance in the first half and increasing confidence in the second half of 2024 has led us to increase the midpoint of our adjusted EBITDA guidance by nearly $35 million since the start of the year. Jim will discuss the financial performance and outlook in more detail in a few minutes. Underpinning BrightSpring's success in the second quarter and throughout the first half of 2024 is…

Thanks, Jon. Before I provide financial results for the quarter, please note that all growth metrics for gross profit and adjusted EBITDA compared to 2023 exclude a certain $30 million Quality Incentive Payment or QIP that BrightSpring received in the second quarter of 2023. Total revenue in the second quarter of 2024 was $2.7 billion representing 26% growth from prior year period. Pharmacy Solutions segment revenue was $2.1 billion achieving growth of 32% year-over-year. Within the Pharmacy segment Infusion and Specialty revenue was $1.6 billion representing growth of 40% from last year and home and community pharmacy revenue was $528 million representing growth of 13% year-over-year. In the Provider Services segment, we reported revenue of $616 million representing growth of 8% compared to the prior year period. Within the Provider Services segment, home healthcare reported $254 million in revenue for the second quarter growth of 13% versus last year. And community and rehab care revenue was $362 million representing growth of 5% year-over-year. Moving down the P&L. The total company gross profit in the second quarter was $389 million representing growth of 14% compared with the second quarter of last year. Adjusted EBITDA for the total company was $139 million for the second quarter growing 17% compared to last year. And adjusted EPS for the total company was $0.10 for the second quarter. Turning back to segment performance. Pharmacy Solutions gross profit was $183 million growing 16% compared with the second quarter of last year. Adjusted EBITDA for Pharmacy Solutions was $94 million for the second quarter growing 19% compared to last year. Provider Services gross profit was $206 million growing 12% versus the second quarter of last year. And adjusted EBITDA for Provider Services was $86 million for the second quarter growing 16% versus last year. On a total…

Thank you for your time today to go through BrightSpring's second quarter results and guidance update. We will now open up the line for questions. Operator?

[Operator Instructions] And our first question comes from Brian Tanquilut of Jefferies. Your line is open.

Hey, good morning, guys. Congrats on a really strong quarter. I guess my question first, Jon, you've seen really good strong traction in specialty, and I think the guidance implies sequential growth in Pharmacy Solutions revenues into the back half of the year. As we look at historical trend in terms of back half, first half, it seems like it's up sequentially but maybe not by quite as much as historical trend. Is this conservatism? Or is there anything we need to be thinking about as it relates to the ramp in Pharmacy Solutions revenue in the back half? Thanks.

Hey, Brian. Good morning. Thanks for the question. No, our growth rate that we're seeing in pharmacy remains really strong. And we've got more momentum on the volume side in that business really than we ever have even at this point in time, seven years in. So we would expect similar growth rates into the second half. And again, we feel more positive about those growth rates than we have. Typically, we get about 53% of our EBITDA in the second half. Due to days and due to taxes and other items, we expect margins to always increase in the second half as well. We're leveraging fixed costs in corporate, which is flat in the second half as we continue to drive volume, but very consistent volume expectations in terms of growth rates for the second half and no reason to believe those will slow down or slow down heading into 2025.

Awesome. And then, maybe just the mentioned margins and I think, Jim mentioned that there are expectations for continued margin improvement. If you can just walk us through what the dynamics are? Or what are the moving pieces that would drive the sequential margin improvement in the back half of the year.

Yeah. We see about a 5.3%, 5.4% EBITDA margin for the full year. So obviously that's going to be higher than the 5.1%, in the second half. Really it's just a couple of things which are very clear and very tangible. We benefit from favorability in the way the days fall in the calendar months in the second half versus the first half of the year. Taxes are lower. You get payroll taxes resetting in the first half of the year. That's a meaningful number. As I said, we're going to continue to drive I think, really strong volume growth rates here. I mean, you can see on the Pharmacy side we are pushing 30%. And even on the Provider side close to 10%. We expect that to continue. Our assumption for corporate in the back half is flat, after we've made -- we've continued to make a lot of IT and people investments, throughout the first half of the year. And then we did have some ramp-up costs as we've been onboarding a few very large customers on the home and community pharmacy side. We incurred those costs in the first half ahead of the volume ramping up, in those contracts as well. And then, as an organization, we continue to focus on operational excellence. And so, there's just many operational initiatives which are continuing to kick in here in the second half of the year for a meaningful impact, as we continue to drive lean and automation across the organization and really last. The hospice final rule came in a little bit better than was estimated, but that's going to go live in Q4 too. So it's really a combination of multiple factors that we feel we have very direct line of sight on that will drive that margin improvement into the second half.

Yeah. That's awesome. Congrats again. Thanks, Jon.

Thank you. Our next question comes from A.J. Rice of UBS. Your line is open.

Hi everyone. Thanks for the question. Just the strong Specialty performance can you just comment on areas of growth? Is it new drug just coming online? Are you gaining share? What's driving that? And then, comment on the margin trajectory as that business grows, maybe looking out a little further. On the one hand in Pharmacy Solutions, I guess, the mix shift could pressure margin. But I think as new business improves overtime you'd see margin improvement. So maybe delve into that a little more, if possible.

Yeah. Thanks A.J., appreciate the comment about the Specialty growth. I would also note that the growth in the organization that we're seeing is really broad-based. If you look at it really almost every single one of our service lines they are growing in the organization. So we're really seeing very, very strong performance across the entirety of the portfolio. Specialty did see the highest growth rate. It was really driven by everything you mentioned brand growth through continued ramps in LDD drugs both from the last couple of years and even the five LDD drugs we've launched so far this year. Our continued focus on high-value generics and then a very large sales force that's executing out there in the field every day and prescriber offices with clinicians', patients, and family is driving I think strong market share improvement. We continue to win some hub business. And our fee-for-service and data business continues to increase at double-digit rates over here. So it's really broad-based growth in the organization -- and also within Specialty. Specialty's margins picked up a little bit into Q2. We expect that to continue into the back half as well. And we expect the same for the trend dynamic for overall Pharmacy.

Okay. And it sounds like in your prepared comments you're calling out a new service agreement with a large long-term care provider. So I assume that's the institutional Pharmacy business. I haven't heard people calling out big new business wins in that segment in a while. Is there an increase in RFP activity? Is this just a client that you've been working on for a while that came over the finish line? Or how would you characterize that competitive landscape and the opportunities there?

Yeah. The breadth of home and community pharmacy is covers a lot of attractive end market segments. That business grew its volume right around 10% revenue of about 13%. We continue to see that. We believe, we'll continue to see that into the future. We've got a great quality operation and a set of primary service programs for customers that serve us very well. We have a high-performing sales team too, and the business is very technology enabled. So those elements are really driving very productive customer relationships. I think at this point we've won some 35,000 or 40,000 new patients in beds from competitors this year. And we just really focus on the service model of the operations and that's continuing to drive preference with customers including in this case a very large customer that we onboarded in the back half of Q2 which will be beneficial into the second half of next year and in 2025.

Okay. Thanks a lot.

Thank you. Our next question comes from Whit Mayo of Leerink. Your line is open.

Hey, thanks. Good morning. Just back on the LDD launches I just want to make sure. I heard you that you've got 18 more that are coming. I don't know how many you're launching in the second half versus 2025. And just remind us are those accretive at launch? Or do they require some investments and the earnings slope is a little bit more on a lag?

Yeah. Good morning, Whit. We're up to 118 limited distribution drugs now. We do expect our most recent view after Q2 is probably another 18 or so wins in the next 15 or so months. So that cadence of about one a month, we would expect to continue. Again, that's based on the quality of our service to patients and our focus on manufacturing relationships and other service offerings to them. So momentum there very much continued. Those are accretive day one. There are a few investments that go into place to get ready for launch. But at launch those are accretive from day one at the respective GP margins and EBITDA per script margins right out of the gate.

Okay. So kind of one a month all right. Second question just on home infusion. Just sort of curious where you are in the growth of that business how many locations you have where you think you can go and sort of how you're prioritizing the geographies that you plan on entering. Thanks.

Yeah, I think our view on Infusion hasn't really changed. We're in about 35 states today. So we've got a really good national presence, which is critically important. The volume growth there has continued to be good. We are focused on some operational initiatives in that business and we've been making some investments in those throughout this year. We really believe Infusion is going to be a more meaningful driver for us into 2025, and beyond, as we continue to focus on operational excellence in that business and trying to really win on service levels. That has been a very consistent plan and story for the past six to nine months right now and we're excited for that business as we get into 2025 in particular.

Thanks.

Thank you. Our next question comes from David Larsen of BTIG. Your line is open.

Congratulations on the good quarter. Can you talk a little bit about cross-selling efforts within the Provider division? So for example PT to OT and home health, hospice, group homes, and so forth. Do your sales people have a CRM that has all of the available solutions? And can they sort of see account by account what the in-sell potential is and just what the sort of growth potential is with cross-selling efforts?

Yeah. Hey, David, good morning. Thank you for the question. Historically, a lot of our integrated care synergies have been driven through our pharmacy services also provided to our provider patients which is a real benefit to them receiving those one-stop services from one organization and really high-quality pharmacy services. We do continue to have a lot more of those integrated care opportunities. In the organization, as we look ahead all of our data is integrated into one data lake. It's been five years of significantly investing into our IT infrastructure and building out a data lake. That data is all in one place and available for all of our analytical slicing and dicing to track. What we've been doing really towards the second half of last year and more intensively this year is we do continue to invest in resources to drive these integrated care opportunities. We're building out our clinical nursing hub. These are nurses who are care coordinators for patients. And we're actually now creating and building out an integrated care team within the organization of professionals that -- looking at patients at each step in their journey and in a very clinically appropriate way working with them to provide the best services through their transition. And so that is occurring in the organization. We are making investments in that, because we believe that there is much greater opportunity. So as we've been saying since the IPO, I believe in the next year and 2026, we're really going to start to see the fruits of more and more integrated care in the organization. We obviously have very clinically appropriate home health to hospice transitions, some personal care and home health being delivered to the same patient's therapy as well. Those are occurring today but we see an opportunity to really increase that in the future. It takes focus. And so we're investing in an integrated care team to do that. I would say that we are continuing to make very significant strides in home-based primary care. We are at this point on the precipice of signing a very meaningful contract with a large payer. We are not talking about that now but we would plan to be talking about that in Q3 and Q4. And hopefully that's the first of many to come in the future. But we're not talking a whole lot about that third pillar of primary care and integrated care but we are continuing to be heads down and investing in it. And hopefully, as we get into as early as 2025, we start to see eight figures of EBITDA from those efforts.

Okay. It sounds like the breadth of services that you have is one of the reasons why you're winning all of this share from your hospital clients, which obviously I like. Can you maybe just talk about the broader sort of acute care environment? Obviously, there was a lull in volumes a few -- like a year, year and a half ago with COVID. It seems like all these volumes are coming back up. Just what are you seeing in terms of broad-based demand for acute care and then obviously post-acute services from the market? Thanks.

Yes. Obviously, our platform is really unique. And we have the ability to be an integrated care provider at scale, I think very different from most others outside of one or two of the payers. But first and foremost, we really focus on quality and growth within each individual service line. And so, we focus on each one of our core service lines to really drive best practices within each one of them. We believe additional integrated care opportunities are upside and on top of that across the platform. And that's something that we are leaning into further in the future as we've talked about but really on top of each one of the core service lines executing at a high level and continuing to expand and deepen geographically and gain market share. As it relates to the hospitals and the acute systems, again with our platform, we really do benefit from complementary diversification. David, we see referrals across such a myriad of different referral sources across our service lines. For example, in Specialty Pharmacy, in oncology and orphan, we're not seeing -- you're not seeing sort of any dependencies on hospital systems. That's really more of a function of the oncology market and prescribers. Our rehab business is really not tethered to acute pharmacies either. Where we work with the – sorry, to acute hospitals either. Where we work with the hospitals, the most on things like home health and hospice, we're seeing double-digit growth rates there. So we just continue to focus on quality and commercial capabilities in each one of our service lines to drive volume and market share. And then we are fortunate with this very unique platform to drive referral sources from a very diversified set of partners and relationships.

Thanks very much.

Thank you.

Our next question comes from Joanna Gajuk of Bank of America. Your line is open.

Hi. Good morning. Thanks for taking the questions. So on the Provider segment, where the margins was pretty good 14% so up nicely year-over-year, so I guess I assume I know what the drivers are but I would like to hear. Is there anything specific to call out there on the margins? And is that 14% margin sustainable going forward?

Hey, Joanna good morning. Thanks for the question. When I received the question, I think from Brian earlier around second half margins of the items I mentioned numerous of them driving that one that you could add to the list is just continued growth in Provider. Provider comparatively has higher margins. So as that business continues to perform well that will be a tailwind in the second half. Additionally, yes, we do see sustainability in those margins. We really just focus on quality and patient care and continuing to drive volume growth. And so stability on the Provider side from a margin standpoint is just really underpinned by operational performance and volume growth and seeing some leverage in our fixed costs on that side of the business.

Thank you. And to that end I guess this Haven Hospice acquisition, I guess it's only second half but I guess it's going to be also additive to the segment EBITDA, maybe 1% or so. Is that a way to think about it in the ballpark?

Yeah. It's -- I don't -- I'd have to double confirm your math on the 1%. But we're excited about Haven. I think that's a good example of our M&A prowess. That was a tricky deal in terms of some idiosyncratic characteristics of that particular target. But Florida CONs are a very, very rare commodity. You're talking about one or two of these become available over a 20-year period of time. Our ability to form relationships there and get to know the sellers and to work with them through what was a very complicated process, I think is a good example of how we're very opportunistic on M&A and the types of transactions we will do. We structured that very uniquely in a way that we think really works for the balance sheet. That's a business that we will lean into from a quality and an operational perspective to try to drive operational performance. And with that we would expect to see both volume census growth and operational improvements and margin growth occur over time really over the next year to 1.5 years in that business. That's a business that we ultimately see is a $15 million-plus EBITDA business. But it will take us a little bit of time to get there going through that not-for-profit conversion. But it really will be applying our operational best practices to that situation and trying to serve more Floridians with really high-quality Hospice in those CON counties like we see an opportunity to do. So that's going to be a little bit of a buildup. We lean into situations where we can really apply our operational capabilities to improve the businesses. This is a great example of doing that in a really attractive market.

Right. And I guess on the comment around Home Health and Hospice businesses growing double digits, how much of that I guess is organic? And I guess is that revenue? Or is that volume? I'm just interested in what are you seeing in terms of your volumes, organic volumes in Home Health and Hospice?

Yeah, that is largely organic. And I've been particularly pleased on the Home Health side of our business. In Hospice, we are a top five quality provider in the United States. So it's the continued focus on reaching patients and many more patients who really deserve and need Hospice care at the end of their life, which clearly reduces cost and hospitalization and provides an outstanding quality results for families and patients themselves. So Hospice very stable incredible quality platform, and just we actually made a change there on the leadership side with our sales team bringing in a best-in-class sales leader for Hospice. We're really excited about that. On the Home Health side, we've continued to add some just incredible talent into that business in the first half of the year. And we're really seeing the results, which is very pleasing to me. Home Health census was up and admits were up -- or in the mid-teens year-over-year in Q2. But we're also seeing operational performance across a variety of initiatives in the organization. So look we remain as I've said before, very optimistic about Home Health over the long-term. You have some of the bigger providers in the United States being acquired and we believe that just creates opportunity in the future. The date cost savings from CMS themselves have never been more clear in terms of the benefit on Home Health. And so we're optimistic on the future that rates will get back to very appropriate levels of increases here over the next year or two. And we're really trying to set ourselves up to capitalize on that over the next three to five years.

Joanna, it's Jim Mattingly. One quick follow-up on your previous question about Haven Hospice. Just for clarity, we have not included Haven Hospice on our guidance. We've announced the transaction but haven't closed it yet. So we will include any change to our guidance, which will be immaterial once that transaction closes with an update in the second half of the year just for clarity.

Great. Thank you. Thanks so much for that. Thank you.

Thank you. Our next question comes from Erin Wright of Morgan Stanley. Your line is open.

Great. Thanks for taking my question. It's a little early to ask and you're not going to give formal guidance, but you mentioned 2025 several times on the call. Just can you speak to some of those bigger picture, kind of, high-level headwinds and tailwinds that we should be thinking about as we're, kind of, modeling out 2025 both from a top line and profit perspective? Thanks.

Yes. Good morning, Erin. Yes, [Technical Difficulty] looking out several years out we're shipped [Technical Difficulty]. But we'll be getting into those details here more intensively into Q3. I think at this point in time we just see great momentum in the business. Obviously, raising our second half guide was a reflection of that at this point in time. We've raised our guidance since the time of the IPO about $35 million of EBITDA. We just continue to see very good momentum -- and think about not only in the second half, but continuing into 2025. As we sit here today we would envision very similar growth rates into 2025 with potentially some upside in that if we do a little bit more M&A.

Okay. And on that front on the M&A side you -- can you speak to the nature of the acquisition pipeline the health of that today relative to let's say, a year ago in terms of how you're thinking about the pipeline?

Yes, sure. We continue just to have an overflow of opportunities like we always have. The pipeline is very similar to always which is extremely full. And we just have to be very judicious about which deals we do. We really pick carefully. We've been focused on deals that are very accretive here in the last year in particular that are four times pro forma EBITDA or less typically. And that's really where our focus has been. But there is an opportunity to do significantly more EBITDA and we just have a focus on the balance sheet as well and getting to that three times leverage target here in the next 2, 2.5 years. Very pleased with the cash flow in Q2. We actually --the vast majority of the cash payment related to that 20-year-old lawsuit went out the door in Q2, adjusted for that we had about $75 million of OCF in the quarter. That obviously annualizes to about $300 million for the year. So we continue to see our OCF at an annualized run rate of about $280 million as we work towards that three times leverage target in the future. And we believe we can continue to augment our growth rate through very accretive M&A combined with organic growth to achieve our growth objectives while we work towards that leverage target.

Great. Thank you.

Sure.

Thank you. Our next question comes from Ann Hynes of Mizuho Securities. Your line is open.

Hi. Good morning. In your prepared remarks you referenced just the oncology pipeline over the next five years. I know the company has a lot of leverage to that. Can you remind us maybe what drug is going generic at the end of the year? I think you said it was Q4 2024. Is this earlier than expected? And maybe how we should think from a modeling perspective over the next three to five years will this kind of generic wave at 2% year growth, 3% year growth just from that leverage? That would be great.

Yes. Hey, Ann. No, oncology is obviously two of the biggest areas of the massive specialty pharmacy market. It's a market that grows. It's a -- into the double digits 12% 10% to 15% depending on the quarter. So we have an extremely strong position as one of the two biggest independents in specialty pharmacy oncology in the United States. And again our growth has just continued to be underpinned by great quality and very strong manufacturing relationships in addition to a sales force that really focuses on high-value generics. There's some $90 billion of new brand oncology drug launches expected in the next seven years $90 billion. The FDA pipeline has never been deeper. A lot of those drugs are going to be trending more towards niche drugs and more specific specialty indications more narrower indication. That's beneficial for numerous reasons as well. But the pipeline in oncology has never been more robust and we have an incredibly strong position in that market which has been built over the last 10 to 15 years. There's 11 big brand drugs going generic over the next six to seven years. We show what those are on our PowerPoint on our website. That's good for everybody. Generic conversions are good for everybody, one that we've gotten visibility here in Q2 because you really sort of don't know exact timing or dynamics around generic launches until you get very close to them. But SPRYCEL is going generic here in Q4. We were able to get as much confirmation as we could here in Q2. And that will certainly be a positive event like any brand to generic conversion is. And we expect SPRYCEL to be the first one of these 11 -- next 11 meaningful generics to go here in Q4.

Great. Thank you.

[Operator Instructions] And our next question comes from Pito Chickering of Deutsche Bank. Your line is open.

Good morning guys. Going back to the back half of the year margin ramp that Brian and Joanna have already asked, you raised the revenue guidance by $125 million and EBITDA by $13 million. So that's a lot more yield on EBITDA guidance raise than the revenue would suggest. So if you think about the EBITDA guidance raise of $8 million to $9 million more than the revenue raise, can you help sort of quantify exactly where this is coming from? How much came from hospice? Did you get any better provider Medicaid rates or any supplemental payments? I get that the margin change improves as -- because providers have a better margin, but I wondering what happened from last guidance to today's guidance.

Yes. Thanks, Pito. As I sort of mentioned before, there's about eight factors more, but principally about eight factors in summary that are driving second half margins. I can talk a little bit more specifically into the businesses. But first off, typically second half margins are higher for a variety of reasons. We've seen that every year historically. Second, just volume growth as we leverage fixed costs. As I mentioned before, we've been making a lot of corporate investments in our people and compliance quality and IT as we always do. Corporate is estimated to be flat in the back half of the year. Leveraging fixed costs not only in corporate, but in the businesses as we just continue to drive very high volume growth here approaching double digits on the provider side and 30% on pharmacy. Really third, I mentioned before we get a benefit from calendar days. There's more shipping in Monday through Fridays in the back half of the year. That's meaningful. Fourth is the reduction in payroll taxes. Fifth, we get some support here in the back half of the year particularly around hospice into Q4. Sixth, a lot of operational initiatives that we've been working on continuously, we have a continuous improvement lean focus in this organization. But there is very meaningful benefit that we are driving in the company through continued process focus and automation. We're seeing some of those projects really roll on in the back half of the year. I would say, you've got new customer growth, meaningful growth with in particular on the home and community pharmacy side with one of the biggest skilled nursing providers in the country that we spent money to ramp up in Q2, but that's starting to roll on in terms of revenue here in Q3 and then into Q4. Specialty growth will continue to be very positive. And then home health and hospice and rehab growth continues to be very strong in the back half of the year. Really then I'd just sort of end with and really as you said, the Provider business is going to continue to grow. That has a higher margin disproportionately. If you look at the margins in the back half, it's both on the Provider side and on the Pharmacy side. If you were to look into our markets business by business, we expect really every single one of them to pick up into the back half of the year.

Okay. I'll just ask this I guess a different way. You raised EBITDA guidance by $13 million in the three different buckets, Pharmacy, Provider, Corporate. Kind of where do that $13 million come from? Thanks.

Yes. I mean, it's going to be a pretty even mix. We've seen as I said before just really broad-based growth in the organization. I think that's a hallmark of what we're doing here at this company. We really try to drive excellence in every one of our service lines. And then secondarily, we try to augment that platform through integrated care and leveraging our scale and our size to drive operational efficiencies. And then we augment all of that third with accretive acquisitions. That's always been our strategy. And it's really at this point in time at least working, better than ever before and we think those are key strategies required to be successful, in the future of health care. And again, we're going to get some leverage on a lot of our OpEx, in the back half of the year. So we really focus on gross profit margin. And as your volume grows, what's your GP margin and how much of that can you keep because you're being very disciplined on the OpEx side, and we're continuing to drive a lot of these operational initiatives. But it's drive the core, through our service line, it's leverage that core through integrated care and our size and scale and efficiency. And then it's complement all of that with accretive acquisitions. Those three strategies, that have served us well for the last seven years are really powering the company so far this year. And we see that into the back half of 2025. Q – Pito Chickering: Thank you.

Thank you. Our next question comes from Stephen Baxter of Wells Fargo. Stephen. Your line is open. Q – Stephen Baxter: Hi. Thanks. Just wanted to follow up on some of the gross margin commentary. It looks like in the first and the second quarter, the revenue growth rate on the Pharmacy side of the business was very similar. But then in the second quarter, we saw the gross profit growth jump up to I think 16% excluding, the QIP payments. I think that was 6% growth in the first quarter. I just want to hear a little bit more about what drove the acceleration and whether the rest of the year should maybe look more like the second quarter than the first quarter gross profit growth. Thank you.

Yes. Thank you, Stephen. So as we've said before, margins do just naturally tick up through the course of the year for a variety of reasons. And then you've got some favorability on mix, on the -- both really the product side, primarily the product side a little bit payer primarily product side in Q2 and specialty. And that was favorable to their margin. Our generics continue to perform very well, and those on the margin ticked up a little bit comparatively in Q2 versus brand, if you were to look at Q2 versus Q1 and that has a favorable margin impact.

Thank you. Our next question comes from Jack Wallace of Guggenheim Securities. Your line is open. Q – Jack Wallace: Hi. Congrats on the quarter. Thanks for taking my questions. Quickly, just on the provider side it sounds like you got some nice volume gains there. Just thinking about the sourcing of those market share gains. And how much of that is kind of incremental density in existing markets versus expansions into newer markets? Thanks..

Yes. Hi, Jack. The majority of that is probably going to be just growth in current markets, figure 90-10 on that growth in current markets versus say newer growth coming from de novos or small tuck-in M&A. But 90% 95% of that is just from execution, in our core markets and growth there. Really each one of our markets that we're in on the provider side, we're growing. I'd say, on community living, kind of at the market growth rate. Really everywhere else, growing above market. Q – Jack Wallace: Got you. That's helpful. And then, just another one kind of double-clicking the 2Q margin. Were there any kind of material puts and takes there associated with supporting de novo, sort of your recent tuck-ins? And then also, any impact from value-based care payments? Thank you.

Yes. It's -- I would say, we did have some investments in the quarter to continue to see future growth. We're always very thoughtful about that. The quarter could have been materially higher, if we don't continue to invest for the future like we do. But you have, quite a few de novos still working towards profitability, which is consistent with their plans and they'll get there. Those will drive nice EBITDA into the future. We did onboard, a very large customer contract, which was several million dollars of start-up costs in the quarter. Those would principally be the two. And we continue to make investments in our people and in IT. We think, we've made a lot of those investments here in the last year. And corporate is going to even out in the back half of the year, as we just continue to invest in the platform and position ourselves for the future. Q – Jack Wallace: Thank you.

Thank you. This concludes the question-and-answer session. I would now like to turn it back to Jon Rousseau for closing remarks.

Thank you, Didi [ph]. Thanks everybody for joining our call today. We really appreciate the time. It was really another successful quarter for BrightSpring. We continue to focus on serving as many patients as we can, who need our high-quality and high ROI services in the US, in a very differentiated way, with a very differentiated platform. We're continuing to drive a very consistent set of winning strategies and we look forward to talking, with you again in another quarter. Have a great day. Thank you.

This concludes today's conference call. Thank you for participating and you may now disconnect.