管理層發言
Good afternoon. Thank you for participating in today's conference call. My name is David Deuchler with Investor Relations for BrightSpring. I'm joined on today's call by Jon Rousseau, Chief Executive Officer; and Jen Phipps, Chief Financial Officer. Earlier today, BrightSpring released financial results for the quarter ended September 30, 2025. A copy of the press release and presentation is available on the company's Investor Relations 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 our quarterly report on Form 10-Q that will be filed with the SEC, including the specific risk factors and uncertainties discussed in our Form 10-K and Form 10-Q. 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 financial 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.
Good afternoon, everyone, and thank you for joining BrightSpring's Third Quarter 2025 Earnings Call. First off, I would like to thank all of our BrightSpring employees in the field and in administrative support roles who make a real impact for patients and people every day. I'm grateful for their continued dedication and commitment to providing the high-quality and compassionate care and services to the individuals we serve. BrightSpring is a leading health services provider in home and community settings in large and growing pharmacy and provider markets, and we believe a scaled platform in home and community health care differentiates and positions us well for the future. Today, we reported third quarter financial results that are in line with the preliminary financial results we announced on October 20. The third quarter exceeded our expectations and our ongoing commitment to high-value and high-quality services, operational execution and continuous improvement, all hallmarks of our company culture have driven the financial results so far this year. Before discussing BrightSpring's third quarter performance, I would like to remind you that the company's financial results and 2025 guidance pertain to the continuing operations and do not include results from the Community Living business. At this time, we now expect the Community Living divestiture transaction to close in the first quarter of 2026, which remains subject to final federal regulatory approvals and typical closing conditions. For the third quarter, BrightSpring revenue grew approximately 28% and adjusted EBITDA grew approximately 37% versus last year's comparable quarter. Total company revenue was $3.3 billion, with Pharmacy Solutions revenue of $3.0 billion, increasing 31% year-over-year and provider services revenue of $367 million, increasing 9% year-over-year. Total company adjusted EBITDA of $160 million in the quarter grew 37% compared to the same period last year, driven by strength across the businesses. EBITDA margin for the company was 4.8%, which grew approximately 30 basis points compared to the third quarter of last year and up 30 basis points versus second quarter. Margin expansion was primarily driven by disciplined operating expense management and modest revenue mix shift within pharmacy with greater contribution from generics. On cash flow, the company realized over $100 million of cash flow from operations in the third quarter and leverage declined to 3.3x at the end of the quarter sooner than previously communicated expectations with an updated goal of 3x by year-end as is and below 3x pro forma for both the Amedisys and LHC Home Health branch acquisitions and the Community Living sale. The company continues to deliver growth, reflective of each business line executing on our internal goals. Given the third quarter update today and current expectations for the fourth quarter of 2025, we are increasing total revenue and adjusted EBITDA guidance for 2025. A week ago, in the October 20 release, we increased our adjusted EBITDA guidance to a range of $605 million to $615 million, which compares to $590 million to $605 million communicated in August following our second quarter results. As a reminder, this 2025 guidance excludes Community Living and any M&A activity not yet closed. We continue to expect the Amedisys and LHC branches to close later this quarter and expect this to be immaterial to our 2025 results. We look forward to having the Amedisys and LHC colleagues join BrightSpring and Jen will discuss BrightSpring's third quarter financial results and 2025 outlook in more detail shortly. At BrightSpring, we're focused on quality and continuous improvement in our people and services to deliver comparatively low-cost, timely and attentive patient-centric care to complex populations. Quality and patient satisfaction scores across our service lines in the third quarter remained at very high levels. In home health, 94% of our branches are at four stars or greater with timely initiation of care at an industry-leading level of 99%. In hospice, we continue to be a top 5% ranked hospice program in the U.S. with a CAHPS overall hospice rating of 89%, up from 85% in the second quarter. Overall, hospice quality index scores and the number of visits we provide patients per month on average remain well above the national average. In rehab, our patient satisfaction scores remain exceptionally high. And in personal care, we have strong internal client records and quality indicator audit scores, along with a satisfaction score of 4.54 out of 5. In infusion, our patient satisfaction score was approximately 95%, and our discharge rate due to completion of therapy was stable at 96%. Home & Community Pharmacy demonstrated 99.5% order completeness and on-time delivery of 97.2%. In Specialty Pharmacy, our medication possession ratio remains much higher than the national average at approximately 95%, and we have a time to first fill of 3.7 days. Our company continues to demonstrate high levels of execution and customer satisfaction across service lines. Turning to the company's financial results by segment. Total Pharmacy Solutions revenue grew 31% in the third quarter and adjusted EBITDA grew 42% versus the prior year, with total pharmacy census growth facilitating total pharmacy script volume of 10.8 million in the quarter. Though script volumes demonstrated strong growth in both specialty and infusion with over 30% script growth in the subsegment, total pharmacy volumes declined 1% versus the prior year due to the majority of scripts being in Home & Community Pharmacy and a decline in the Home & Community Pharmacy total scripts dispensed due to divestitures associated with the customer that previously declared bankruptcy as well as flu season beginning later in 2025 as compared to 2024, operational decisions made to exit specific uneconomic customers and a difficult comparison to last year when we added the same aforementioned customer in the third quarter. In the specialty and infusion business, revenue grew 42% year-over-year, which exceeded expectations. The performance in specialty and infusion was driven by limited distribution drug launches, generic drug utilization from conversions over the past year, strong commercial execution from the team and excellent patient service. Specialty scripts grew approximately 40% in the third quarter, driven by strength in both brand LDDs and generics. We ended Q3 with 144 LDDs, including five LDD launches in the quarter. Through the end of October, our LDD portfolio has now expanded to 145 therapies, and we continue to expect 16 to 18 additional LDD launches over the next 12 to 18 months. We are honored and proud to have been chosen as a preferred specialty pharmacy partner for these new therapies that are being utilized to treat a range of cancers and rare orphan diseases. We work diligently to deliver high-quality care to patients and gain the trust of manufacturers, prescribing physicians and patients to support long-term therapy innovation and growth. Within Infusion, performance in the quarter was in line with expectations, driven by solid double-digit volume growth and continued benefit from operational improvements and procurement initiatives to streamline the business and improve profitability with strong year-over-year EBITDA growth well into the double digits. Our strategy is a broad-based one in terms of both acute and chronic therapies. We remain excited about the acute market where we believe there exists a multibillion-dollar market where our leadership team can leverage best practices and scale the business in new geographic markets efficiently. We also remain constructive on our ability to expand chronic infused therapy offerings as we look to innovate delivery to patients living with chronic disease. In Home & Community Pharmacy, revenue performance in the quarter was in line with our expectations, and we continue to optimize the go-to-market strategy and customer mix to ensure profitable growth in attractive and targeted end markets. Under a new and expanded leadership team, we continue to implement operational initiatives to augment efficiency with year-over-year EBITDA up outside of several unusual items in the quarter. Over time, we expect to continue to expand our presence in target markets with industry-leading operational processes, quality, and efficiency. Turning to the Provider segment. We are pleased by the performance across each of our service lines in the third quarter. Provider revenue grew 9% year-over-year and segment adjusted EBITDA grew 16% with a segment adjusted EBITDA margin in the quarter of 16.5%, up approximately 90 basis points year-over-year. Home health care, which represents about 50% of the revenue in provider segment and is comprised of home health, hospice and primary care grew 12% year-over-year. The home health care business continues to perform very well, driven by strong quality metrics and patient satisfaction scores, ongoing operational investments and advancements, de novo expansions and preferred provider Medicare Advantage contracts are continuing to advance. Average daily census in home health care was 29,592 in the third quarter, representing a 3% increase year-over-year with hospice increased approximately 15% year-over-year in the quarter. In the third quarter, home health settings in five states were awarded accreditation by the Accreditation Commission for Health Care, or ACHC, reflecting compliance with ACHC standards and CMS' conditions of participation, highlighting our commitment to providing safe and high-quality care to patients. Home-based primary care also delivered solid growth in the quarter. We believe primary care at home remains a large opportunity as we continue to build out the business, particularly as it relates to the benefits of our integrated services and ACO and SNP payment models, which we continue to make steady progress on. Moving to rehab care, which represented approximately 20% of provider revenue in the third quarter, growth was 9% year-over-year, underpinned by 11% growth in person served and approximately 17% growth in hours billed in the core neuro rehab services. We have continued to see a long history of performance and positive momentum in the rehab business and the expansion of our rehab into ALS and home settings with Part B rehab for seniors is now ongoing as we went live in the quarter with a key milestone and integrated home health and rehab offering in ALS. In personal care, which represented approximately 30% of provider revenue in the third quarter, revenue grew 6%. Personal care growth, operations and performance remained very steady, including solid growth in person served. Overall, we continue to realize and see many benefits from our high-value services in targeted markets with one integrated and coordinated enterprise. Finally, we are excited to announce that we will be hosting an Investor Day on March 17 in Louisville. We look forward to the opportunity to review our company strategy with the investment community, discuss each of our service lines and outline the prospects for each in the years to come. To close, we are pleased with BrightSpring's operating performance and financial results in the third quarter and the progress we have made so far in 2025, and we look forward to entering 2026 from a position of strength with continuing investments for long-term differentiation and sustainable growth across the organization. With that, I'll turn the call over to Jen.
Thank you, Jon. Before I discuss our financial results for the third quarter of 2025, I'd like to remind you that in the first quarter of this year, we began to record the Community Living business in discontinued operations as indicated in the press release and 10-Q to adhere to accounting standards required on an interim basis. As such, all BrightSpring financial results and forecasts that I will discuss are related to continuing operations and exclude Community Living. Management believes the presentation of the non-GAAP financials from continuing operations is a useful reflection of our current business performance. In the third quarter of 2025, total company revenue was $3.3 billion, representing 28% growth from the prior year period. Pharmacy Solutions segment revenue in the quarter was $3.0 billion, achieving 31% year-over-year growth. Within the Pharmacy segment, Infusion and Specialty revenue was $2.4 billion, representing growth of 42% from prior year and Home & Community Pharmacy revenue was $590 million, which was approximately flat year-over-year. In the Provider Services segment, we reported revenue of $367 million in the third quarter, which represented 9% growth compared to the prior year. Within the Provider Services segment, Home Healthcare reported $188 million in revenue, growing 12% versus last year. Rehab revenue was $76 million, growing 9% versus last year, and Personal Care revenue was $102 million, representing growth of 6% year-over-year. Moving down the P&L, third quarter company gross profit was $392 million, representing growth of 21% compared with the third quarter of last year. Adjusted EBITDA for the total company was $160 million in the third quarter, an increase of 37% compared to the third quarter of 2024. Adjusted EPS for the total company was $0.30 for the third quarter. In the third quarter, continuous lean automation and efficiency programs at the company contributed to growth and margin improvement, and we anticipate additional improvements in the fourth quarter from ongoing operational initiatives. Further, we have seen a positive impact in the third quarter and into Q4 from our targeted growth investments, including in recent home health volume, hospice volume, rehab volume and an accelerating infusion volume and growth in LDD and generics in the specialty oncology and rare and orphan therapy business. Turning back to segment performance in the third quarter. Pharmacy Solutions gross profit was $246 million, growing 30% compared with the third quarter of last year. Adjusted EBITDA for Pharmacy Solutions was $141 million for the third quarter, an increase of 42% compared to last year, representing an adjusted EBITDA margin of 4.8%, which was up approximately 40 basis points versus last year. Provider Services gross profit was $146 million, growing 9% versus the third quarter of last year. Adjusted EBITDA for Provider Services was $61 million for the third quarter, growing 16% versus last year, representing an adjusted EBITDA margin of 16.5%, up approximately 90 basis points versus last year. Not included in the company's reported adjusted EBITDA of $160 million, as previously stated. Community Living's adjusted EBITDA was an additional $40 million in the quarter, an increase of 18% from the prior year in this business. On a total company basis, cash flow from operations was $108 million in the third quarter, we continue to expect to deliver over $300 million of annual run rate operating cash flow in 2025, and we remain focused on improving our leverage ratio towards our year-end goal of below 3.0x pro forma for both the pending home health acquisition and the Community Living divestiture. Our adjusted EBITDA growth, combined with our cash flow generation during the quarter has led to a leverage ratio at September 30 of 3.3x. Longer term, with continued growth, execution and cash flow generation, we remain on track towards a leverage target of 2.5x, which at current trends could be realized by mid or later next year, excluding acquisitions or other uses of cash. As of September 30, net debt outstanding was approximately $2.5 billion. As mentioned previously, in January, we expect to receive approximately $715 million of net cash proceeds from the $835 million of gross cash consideration in the pending Community Living sale. As a reminder, net interest expense includes interest income related to cash flow hedges due to our three received variable pay fixed interest rate swap agreements that we have in place, which matured on September 30, 2025. As part of our process to monitor and address risks, during the quarter, we entered into two three-year interest rate hedges, which are additional to the one-year extension that was entered into during the first quarter, providing stability to our interest rate risk through September 2028. Prior to any proceeds from the pending Community Living divestiture, quarterly interest expense is still expected to be approximately $43 million, including approximately $1.2 million of interest expense related to the TEU instrument. Turning to guidance for 2025, which excludes the Community Living business as well as any acquisitions that have not yet closed. Total revenue is expected to be in the range of $12.5 billion to $12.8 billion, including Pharmacy Solutions revenue of $11.05 billion to $11.3 billion and provider services revenue of $1.45 billion to $1.5 billion. This revenue range reflects 24.1% to 27.1% growth over full year 2024, excluding Community Living in both years. Total adjusted EBITDA is expected to be in the range of $605 million to $615 million for the full year 2025. This would reflect 31.5% to 33.7% growth over full year 2024, excluding Community Living in both years. I will now turn it back to Jon.
Thanks, Jen. Thank you for your time today to go through BrightSpring's Third quarter 2025 results. We will now open up the call for questions. Operator?
分析師問答
And our first question comes from A.J. Rice of UBS.
I have a question and a follow-up. Regarding the pacing of new drug launches, you've mentioned previously that you expected 16 to 18 launches over an 18-month period. Earlier this year, you suggested that this pace had shifted to a yearly basis. Today, you indicated that you still anticipate 16 to 18 launches over the next 12 to 18 months. I'm trying to clarify whether the pace of new drug launches relevant to you is accelerating, if it remains consistent, and if the pipeline continues to be robust.
A.J., how are you? Thanks for the question. I think the pipeline remains unchanged, just given the magnitude of it, both in the next year and over the next five to seven years on the brand side. We have had probably one of our strongest years in terms of brand wins going back several years, it's been robust, but this year has been a very good year. So we've seen some therapies come to market sooner, and we've been in a good position to be a partner on most all of those therapies. So it has been a good year, a little bit ahead of expectations, but we still expect a similar number of the 15 to 18 over the next year, 1.5 years. Nothing's really been pulled forward that would affect the future. Some things happen a little bit sooner, but the pipeline remains robust as we go bottoms up drug by drug, we still feel confident in that pace going forward.
Okay. And then for my follow-up question regarding your prepared comments on the pending transaction, I noticed you mentioned the acquisitions of Amedisys and LHC. It seems like what you're purchasing may have shifted somewhat. Could you provide any specifics on whether it is significantly larger than what you initially considered? Or in what other ways has what you are ultimately acquiring changed?
Yes. There's always been some of the divested branches were LHC, but it's been the minority. So I think we've just more or less said Amedisys in the past. It is the significant majority of those branches as United was working through all of its final agreements with the FTC, the universe did increase a little bit, not dramatically at all, but a little bit. So there's been a handful more branches that have been included in the group in the past couple of months, and we do expect that transaction to close in the quarter.
Do you have any early read on whether it will be accretive to '26? I know you said it would be neutral this year. Is it meaning any significant accretion next year? Or is it neutral? Or how should we think about it?
I think accretion is a fair comment, yes.
Congratulations on a great quarter. Can you talk about the sources of accretion for like the Amedisys transaction or quite frankly, any transaction, where do you drive the incremental margin and profit from, please?
We're limited on what we can disclose about this transaction due to our agreements with the other party. I think it's fair to say that we intend to integrate the operations as smoothly as possible. We've had a strong partnership that has allowed us to communicate effectively with the other side to ensure we handle this in the best way we can. We're very excited about it and optimistic about implementing our practices, payer contracts, IT, technology, and people practices within the organization. It is well run and has always been so, which is something we are very enthusiastic about, and we aim to maintain that consistency. If there are any beneficial synergies, particularly in terms of growth and efficiency, since we will retain all employees, we will certainly plan and explore those, especially in the technology and similar areas where we've seen success in other acquisitions.
Okay. That's very helpful. And then I think I'm calculating an EBITDA per script increase of 32% year-over-year. Is that correct? That sounds high, which is good, obviously. Just any color around sort of the sustainability of that growth rate and what some of the key drivers there would be?
Yes, I think that's mostly accurate. It's likely just slightly higher on a per script adjusted EBITDA basis from a pharmacy perspective. The changes are primarily due to a shift in mix. We experienced significant growth in specialty and specialty scripts, which are our most profitable in terms of gross profit and adjusted EBITDA. As Jon highlighted in his prepared remarks, we saw over 40% growth in specialty scripts during the quarter, leading to a mix impact.
Great. And one more quick one. Can you just remind me, as a drug launches biosimilar or goes generic, how much of an earnings lift is there typically in terms of margin per drug?
David, that's not really information that we really reference. But when a drug goes generic, I think it's common knowledge that there are more manufacturers and that reduces the procurement cost. And overall, the price of the drug comes down pretty dramatically. But net-net, that's a very positive thing for all stakeholders and everybody in the industry. But really as a function of a lot more manufacturers typically able to provide the drug, you see a dynamic there, which is favorable to all stakeholders.
Jon and Jen, just wanted to ask, obviously, in one of the big competitors in community and pharmacy would be Omnicare and they declared bankruptcy. Just curious to what do you think of that as an opportunity to pick up incremental share? What kind of overlap in the markets are you there? And is that an opportunity to enter into new markets? Or is skilled nursing really maybe not that attractive to keep expanding into first?
Charles, we don't anticipate this issue being significant. It's primarily linked to some past litigation rather than our operational performance. Our focus remains on our customers and end markets, including sectors that we find particularly promising, such as assisted living, behavioral health, and hospice. These areas account for the majority of our Home & Community Pharmacy EBITDA. I want to highlight the robust script growth we experienced this quarter in hospice, infusion, and specialty pharmacy, all showing strong double-digit growth. On the skilled nursing facility (SNF) side, there are a few factors that will likely impact us over the next couple of quarters, although they won't affect our EBITDA. We signed a large customer last Q3, which was a significant event at the time, but that customer has since filed for bankruptcy. We're currently working through the implications of that. Additionally, with our new leadership team, we have actively reviewed our customer base and made decisions to prevent potential payment issues or unprofitable relationships. This proactive approach has proven beneficial. This year's flu season began later, impacting our business, especially with one large customer going offline. However, our overall business is performing exceedingly well due to growth in other markets and our emphasis on operational efficiencies. This is a factor that will carry over into the next quarter or two as we manage the timing related to that specific customer. Importantly, we are experiencing strong growth in key areas that enhance our EBITDA, and we are optimistic about the long-term prospects of Home & Community Pharmacy. Their EBITDA increased this quarter, and I am very enthusiastic about the operational automation and AI efficiency initiatives we've implemented with the new team. Despite the transition we observed comparing last Q3 to this Q3, we continue to excel in our primary service lines. Given that Home & Community scripts represent 77% of our pharmacy scripts, this reflects our year-over-year performance. We aim for growth in targeted end markets while continuously improving operations and automation in Home & Community Pharmacy.
This is Kieran Ryan on for Pito. Apologies if I missed something on this, but I was wondering if you could kind of provide a little more color on the breakout of the pharmacy guidance between SEC and infusion and Home & Community, but with a focus on kind of what it implies for SEC and infusion. I just wanted to see if maybe a little bit of the potential slowdown there in 4Q, if that was kind of related to your comments on how it's been kind of a record year on the branded side and maybe that's normalizing a little bit.
We do not perceive a slowdown. We have updated our revenue guidance, and you will still see strong year-over-year growth, which we expect to continue in Q4. From a pharmacy revenue standpoint, our increased guidance primarily relates to the specialty and infusion business, where we continue to experience strong growth in prescriptions. Additionally, from a margin and EBITDA standpoint, we have raised our guidance to reflect added efficiencies from the projects we discussed earlier, including those in infusion and home and community pharmacy, and we anticipate these will accelerate in Q4 as well.
Yes, that's right. Nothing imminent outside of that other than obviously the Amedisys, LHC transaction. So as we've been working through the Community Living divestiture and then the Amedisys, LHC branch acquisition, we have just been focused on really small deals and target attractive geographies that are highly accretive. And that will probably continue at least for another quarter or so. There's nothing imminent in terms of anything sizable, but our M&A strategy will remain primarily focused on accretive tuck-ins in target geographies and probably a little bit more activity in deals of a little bit higher size, call it, in the $3 million to $10 million of EBITDA range. Those might start to get more focus again as we get past these two transactions into next year. We remain open and flexible to something interesting, a little bit larger, but certainly nothing transformational that's on our radar screen whatsoever right now. We really like our current strategy and where our organic growth is and where the balance sheet is.
Congrats on the quarter. Jon, maybe as I think about generics really quickly since you touched on that in your prepared remarks, anything you can share with us in terms of the cadence of upcoming patent expirations in your portfolio and also the dynamics in terms of the margin ramp? Like what is the runway for margin ramping on a per script basis for a new generic launch?
Yes. I think some of the information, Brian, we've laid out publicly remains the same. We expect numerous more brand to generic conversions over the next couple of years, including a more significant one probably at the end of Q1 next year. And we expect similar overall dynamics in these conversions that we've seen and experienced in the past and over the past 10 years. So our ability to partner with manufacturers and win innovative new brand therapies, the very strong growth in our fee-for-service business in that business and then the steady stream of these brand to generics really all underpinned by our service levels and commercial team and efforts. I think really remains very consistent as we look out still over the next five years. So, I think the information that we've put out there publicly and in our slide deck remains our current view. Yes, no, nothing unusual. Unfortunately, these processes can just take time these days. The recent government shutdown wasn't overly helpful. But we remain very optimistic that this will close in Q1. There were a handful of markets that the buyer needed to work through with the FTC, which is ongoing and seems very straightforward and is well down the path. So we expect that to occur in Q1.
Great. Just anything on the Washington front that we should be on the lookout in the next coming months, especially with a potential health care bill going through Congress at the end of December?
There's nothing particularly noteworthy from our perspective at this time. Things have remained consistent over the past few months. We expect the home health rule to be released soon, although it might be delayed slightly because of the government shutdown. Historically, and with strong industry advocacy, we anticipate some reduction in the proposed cut in the final rule. While any cut is not significantly impactful for us now due to the percentage of revenue and EBITDA tied to that business, we will manage any rate changes easily. It's important that these crucial services are adequately funded in the future, so we will keep advocating for that, educating where possible, and looking forward to collaborating with CMS on aligned solutions. Regarding the IRA, we are pleased that CMS has communicated with payers this quarter about incorporating the IRA into their 2026 pricing. We are also glad for our advocacy efforts with lawmakers, as we have many supporters who recognize the unique effects of the IRA on LTC pharmacies. There are bills in both the House and the Senate, and a lot is happening in D.C. leading up to the end of the year. Regardless of the outcomes, we believe our internal mitigation plans, combined with the overall strength of the company, have positioned us well. There are no significant updates since we last discussed this.
I wanted to drill down on the EBITDA guidance raise. You raised the outlook a bit more than the beat on the quarter. From Jennifer's comments, it sounds like that reflects the combination of core performance and then pulling through some efficiency efforts. Was that about the components of the change?
That is correct, yes.
Okay. And then as a quick follow-up, I think in the past, you've talked about being conservative with the value-based care accruals, but you have some potential shared savings to go get. I just wanted to see if there's been any change in thinking there, if there's still some potential to pull through some shared savings at some point later in the year.
Yes. I think at this point, we've gained clarity that we will get some shared savings there. But that after receiving news about last year here just very recently, looks to be probably a little bit of opportunity there that will be realized.
So, I guess a couple of follow-ups. So, first, I appreciate the comments around the acquisition of the assets from Amedisys and LHC will be accretive next year. But anything else we should be thinking about heading into next year in terms of any high-level tailwinds and headwinds? I'll stop here.
Yes, Joanna, there's been consistent performance throughout the year. We expect this trend to continue, as each service line has been performing well individually. Recently, our efforts in infusion over the past 18 months are starting to pay off, which is exciting and will be a significant advantage for us next year. Hospice is also performing well, with a rate increase starting in Q4, and there’s positive momentum around the LDDs and specialty conversions, as well as in home health following the acquisition of divested branches. We're seeing great developments in our business, including automation initiatives and the hiring of a new sales team. September marked our best month for admissions in home health, which coincided with our new sales leadership team. We're on track to achieve our largest customer wins in home and community pharmacy, which we are enthusiastic about. Additionally, we are heavily investing in efficiency and continuous improvement. We have a new CTO and are building an internal AI team as well as collaborating with outside vendors on AI projects. In terms of growth and efficiency, we are pushing forward and have many positive developments. Our balance sheet has improved significantly; we were at approximately 3.64x leverage a quarter ago and have now reduced that to 3.31x. We had previously discussed potential year-end leverage of 3.5x, but now we anticipate it to be closer to 3x or lower after the Community Living sale. We're optimistic about maintaining or exceeding this goal. We've been discussing $300 million of operating cash flow this year, but it looks like it may be closer to $375 million, with around $260 million to $270 million in free cash flow before debt amortization. There’s a strong organizational focus on our balance sheet and cash flow, which has been very encouraging.
And if I may a couple of follow-ups. So on this comment about infusion, right, you sound very excited about this, and I guess you've been growing it nicely. But as we think about the pharmacy segment, I guess, in totality or maybe the specialty infusion, but the Pharmacy segment, the revenue is going to grow more than 25% this year, right? So how should we think about your ability to kind of grow on top of this fast growing into next year?
From an infusion perspective, as they continue to grow at a faster pace, we don’t anticipate any significant changes in their growth rate within the specialty sector as it stands today. However, we do expect infusion to accelerate, which we believe will give us a bit of an advantage heading into next year.
A couple of questions. First one is kind of bigger picture. Just can you speak to kind of some of the future opportunities across kind of pharmacy solutions and specifically kind of specialty pharmacy. The focus has been on oncology, but can you speak to rare disease or other areas and also the opportunity around some of those value-added manufacturer biopharma services and the respective margins associated with some of those opportunities evolving over time?
Yes, thank you, Erin. Everything you mentioned is correct. We are currently involved in a significant number of rare and orphan therapies, many of which are in the oncology sector. This remains a key priority for us, both within and outside of oncology, and we plan to continue our efforts in this area. The fee-for-service business, which includes data agreements, clinical hubs, and various programs with pharmaceutical companies, has gained substantial momentum over the past couple of years. It has become a significant contributor to our EBITDA, and we anticipate further growth with many more program launches scheduled for next year. On the infusion front, we aim to expand both acute and chronic therapies. The acute market, which is worth billions in the U.S., presents a challenging operational environment that some companies have moved away from. However, we are committed to this area and have already seen positive results in the third quarter, which played a considerable role in our growth rate. We are also focused on customized programs for chronic therapies, including some lower-dose delivery systems in infusion. In Home & Community Pharmacy, we see substantial potential in markets such as assisted living, inflammatory bowel disease, behavioral hospice, and PACE that can greatly enhance our market share. Overall, across all our pharmacies, there is a strong emphasis on enhancing processes and efficiency within the organization. We are implementing automation and AI throughout our business operations to maximize efficiency and leverage our scale. This consistent focus on growth across all sectors, paired with our efforts on process and automation, fosters our excitement for next year and beyond. Yes. So the fee-for-service part of what we do is still the minority, the far minority. But as we've talked about before, we do our best to drive generic utilization for the industry, which is positive and good for all stakeholders. We also have a lot of our therapies, for example, in acute, which is immune from any of this discussion, too. So if you look across the breadth of our portfolio, branded GP is not the majority just given the diversification of what we do. And then as it relates to things like DTC, our pharmacy services are really to complex and high acuity patients. and often very local with significant clinical support needs. So they really don't lend themselves to DTC.
Obviously, the sequential progress you made on margins in the pharmacy business has been really notable. It sounds like you're expecting that to continue in the fourth quarter based on the guidance that you've given. And then broadly, you're describing kind of the conditions around further progress on LDDs and further the generic dynamics continuing in 2026. I guess how do we think about the trajectory of margins exiting this year and opportunity for further improvement in 2026?
Yes. From a guidance perspective, we expect margins in the fourth quarter to be higher than what we've experienced in the last few quarters. The fourth quarter typically serves as our highest margin quarter for various reasons. Additionally, we anticipate continued growth across our different businesses and product mix, contributing to a slightly higher margin for Q4, which will result in an overall annual margin that is slightly elevated as indicated in our guidance.
From an enterprise perspective, as we consider margins, many of our initiatives focused on lean operations and efficiency continue to be important throughout the organization. These will be particularly beneficial as our provider segment grows, which typically yields a higher margin. Many of our acquisitions bring in synergies that enhance margins as well. Therefore, we are concentrating on maintaining operational efficiency while also delivering high-quality services and leveraging that quality to collaborate with payers in advantageous ways that could lead to better rates. While margins fundamentally depend on product mix, we are making intentional efforts across the organization to ensure we operate as smoothly and efficiently as possible.
Thank you. Congratulations on another strong quarter. Overall, I appreciate the insights provided. Everything sounds promising. Looking at the future, Jon, I know you'll share more details in March. However, as we project three to five years ahead, the 30% or even 40% volume growth we've seen this quarter seems unlikely to be sustainable. I understand you've mentioned that double-digit growth in Pharmacy Solutions is achievable. Are we able to maintain these rapid growth rates of 25% or 30%, or are we expecting the market to adjust to low double digits in the coming years? Where do we realistically see ourselves? Is it more in line with the low double-digit growth, or can we expect to grow at a rate significantly above that? Any insights on this would be appreciated.
It's a great question, and we spend a lot of time considering it. Over the past decade, our historical compound annual growth rate has been around 15%, and it has been even higher in recent years. This growth is due to various factors, including our efforts to build a well-positioned platform for different environments in the future. Corporate performance was slightly up this quarter and has been this year because we are continually making future-focused investments, such as establishing an AI team and hiring talented individuals from the tech industry. We will keep investing in new marketers and significantly in our development teams. It’s difficult, if not impossible, to predict growth rates for the next four to five years with certainty. However, it's reasonable to expect that next year we will grow well above our historical CAGR based on what we currently know. We aim to achieve a growth rate of 20% or more in most of our businesses, excluding personal care. Our focus is to ensure quality, improve operational processes, and advocate for services that enhance patient outcomes while reducing costs. While some of our businesses may exceed our internal goals and others may not reach them, we consistently set high expectations. We believe in our markets and have carefully curated our offerings. We anticipate acceleration in the future through increased integration across our platform. We're currently introducing some combined ALS offerings, which have been well-received. We see primary care and value-based contracting as significant opportunities for growth. Our approach is to differentiate between core growth, which involves clear objectives for each business over the short and long term, and strategic growth, such as home-based primary care and integrated selling into ALS. Everything aligns well with our existing assets. As we move forward, we feel confident about our position for the coming year. We have learned valuable lessons along the way, and we remain optimistic. Our goal is to enhance our platform by leveraging different businesses with attractive opportunities while pursuing strategic growth and driving operational improvements and technological innovations across the organization. No, we don't expect it to be whatsoever. So that was announced in the last quarter. I think based on the strength of our platform and our diversification, it was a nonevent for us in Q2. We talked about that. I only mention it because that's part of the reason why the home and community scripts had a tough year-over-year comp just given we were coming on to that contract last Q3, and now we're kind of going off. And so that's that. But really attractive growth within all of our pharmacy businesses and the ones that matter the most across specialty infusion, hospice, behavioral, et cetera. So, and in Home & Community Pharmacy, we're seeing right now, our pipeline has us looking at our biggest customer signing in three to four or years. So things are moving in a really good direction. And one of the things surely we will talk about at the Investor Day is how much automation and process innovation is going into that pharmacy business today, which is going to be extremely constructive.
We have no further questions at this time. I'd like to turn it back to Jon Rousseau for closing remarks.
Yes. Thank you for the time today, everybody. We appreciate the interest in the company. Thank you for all the questions, and we look forward to talking with you again in another quarter. Have a great rest of the day.
This concludes today's conference call. Thank you for participating, and you may now disconnect.