Can BrightSpring's Q1 Strength Carry Through 2025 Headwinds?

Louisville, KY-based BrightSpring Health Services BTSG posted strong financial results and raised its full-year guidance, but faced several operational and macroeconomic headwinds in the first quarter of 2025. The company’s performance was partially hampered due to revenue mix, policy uncertainty, early-stage care models and interest-related constraints.

For instance, fewer business days in first-quarter 2025 (compared with first-quarter 2024, which was a leap year) resulted in a negative $3.7 million impact on EBITDA. 10% of the company’s revenues are derived from Medicaid post the Community Living divestiture. Hence, any federal or state-level cuts could still pose future reimbursement risk. Uncertainty around potential pharmaceutical tariffs or geopolitical trade changes adds procurement planning complexity. Gross margin in the first quarter was modestly impacted by a revenue mix shift toward the lower-margin specialty pharmacy segment.

BrightSpring remains confident in delivering solid financial results underpinned by strong execution, operational efficiency initiatives, and growing demand for home and community-based care across its pharmacy and provider services. Total revenues rose 26% year over year to $2.9 billion, while Pharmacy Solutions and Provider Services were up 28% and 12%, respectively. Adjusted EBITDA increased 28% to $131 million, supported by efficiency initiatives and volume leverage. 

In addition, the company raised its full-year guidance and expects total revenues to be between $12 billion and $12.5 billion, representing 19.1-24.1% year-over-year growth. Adjusted EBITDA guidance was also raised to $570-$585 million from prior projections, marking 23.9-27.2% year-over-year growth. 

How Are BTSG’s Peers Holding Up?

Despite inflation and policy headwinds, Option Care Health OPCH delivered strong first-quarter 2025 results, with revenue and margin growth driven by rising infusion therapy demand and payer diversification. Additionally, adjusted earnings per share were up 14.3% year over year. Due to the strong performance in the first quarter, the company raised its full-year financial outlook. 

Amedisys AMED delivered a solid first-quarter 2025 financial performance despite facing macroeconomic and operational headwinds. Hospice, high-acuity care and home health all saw consistent growth, contributing to a 4.1% annual rise in net service income. Additionally, adjusted earnings per share rose 21.4% year over year. However, operating margins were pressured by growing labor costs in a competitive employment market. The pending merger with UnitedHealth Group faced uncertainty due to the DOJ antitrust review and regulatory scrutiny.

BTSG’s Price Performance, Valuation and Estimates

Shares of BrightSpring have gained 114.8% in the past year against the industry’s 16.2% decline. The S&P 500 composite grew 9.3% in the same period.

From a valuation standpoint, BTSG trades at a 12-months forward price-to-earnings ratio of 20.36, up from the industry’s 14.25.

The Zacks Consensus Estimate for BTSG’s earnings has been on the rise over the past 60 days.

BTSG currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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