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Thank you for standing by, and welcome to BrightSpring Health Services Second Quarter 2026 Earnings Conference Call. The operator provided instructions to participants. I would now like to hand the call over to David Deuchler, Investor Relations. Please go ahead.
Good morning. Thank you for participating in today's conference call. My name is David Deuchler with Investor Relations at 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 June 30, 2026. 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 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, including 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 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. With that, I will now turn the call over to Jon Rousseau, Chief Executive Officer.
Good morning, everyone, and thank you for joining BrightSpring's Second Quarter 2026 Earnings Call. I'd like to start by thanking everyone at BrightSpring who drives our mission forward and makes a lasting impact every day. We're grateful for the hard work and commitment of all of our teammates, enabling us to deliver high-quality and timely care to patients in so many communities across the U.S. As we grow the BrightSpring platform, we remain focused on our important role and value proposition of delivering quality services and compassionate care to patients in lower cost and most often patient-preferred settings. Our strategy is aligned with many secular trends in U.S. health care, and we are focused on strong execution, thoughtful innovation and continuous improvement to drive greater impact and sustained growth. Our business continues to be underpinned by quality and operational performance, and these fundamental and critical enablers go hand-in-hand with patient volume increases, expansion into adjacent and new markets and disciplined capital allocation. We see many opportunities for the company in the years ahead. Turning to the second quarter. We were pleased with the performance across the organization, which reinforces our conviction in the value that we provide to patients and stakeholders across the country. Financial results for the quarter came in ahead of baseline expectations with total company revenue of $3.9 billion that represented 23% year-over-year growth and adjusted EBITDA of $206 million that grew 44% year-over-year. In the segments, Pharmacy Solutions revenue of $3.4 billion represented 22% growth year-over-year and adjusted EBITDA of $180 million represented an increase of 44% versus last year. In Provider Services, revenue of $466 million represented 30% growth and adjusted EBITDA of $75 million increased 33% versus last year. In Pharmacy Solutions, we saw continued business momentum in the second quarter. Our Specialty and Infusion business delivered revenue growth of 30% and script growth of 31%, reflecting strong performance from the clinical, operational and commercial teams and relationships developed with manufacturers, physicians and patients over the years. Our Specialty business continues to be driven by the branded oncology LDD portfolio, while we continue to leverage proven and core capabilities and expand into other targeted therapeutic areas, including certain rare, orphan and other complex therapies with noteworthy partnership wins in these areas. During the quarter, we added 2 ultra-narrow network LDDs to our portfolio, bringing the total number of LDDs to 155. For the year, we have launched 12 LDDs through Q2, 4 as exclusive partners and 8 ultra-narrow. And we, of course, continue to be extremely committed to our manufacturing and biotech partners and patients to deliver the best possible service support and experience for these life-changing and life-saving therapies. Additionally, we continue to see solid contribution from generic scripts, driven in part by newly available generic alternatives last year and this year. The Infusion business delivered solid volume growth across both acute and chronic therapies in line with expectations, driven by operational initiatives and service levels as well as growth investments and execution this year. We plan to expand both the acute and chronic footprint into new markets in the future and are optimistic about the opportunity to scale this business. In Home and Community Pharmacy, we continue to operate at a high level with service levels and controllable customer retention at all-time highs as we serve a variety of growing end markets, including assisted living, behavioral, hospice, PACE, skilled nursing and others. Second quarter volume and revenue performance in the Home and Community Pharmacy business was impacted by the exit of certain skilled nursing customers last year and earlier this year, which in some cases has helped improve profitable growth year-to-date. We continue to invest in automation and technology to improve efficiency and service across our scaled national footprint and the positive impact of these initiatives was reflected in the profitability of the business in the quarter, which was up year-over-year. On the Provider side, the Home Health Care business performed well, driven by strong need and demand for these valuable services and continued volume growth above industry levels as well as de novo investments, preferred MA and ACO contract execution and contribution from acquisitions, all underpinned by leading quality results across the provider service lines. We are pleased with the integration of the Amedisys and LHC branches, with the Home Health team doing a great job of integrating, particularly in the areas of HR and IT, all while we continue to have nearly 95% of our branches at 4 star or better. We now expect an EBITDA contribution of approximately $35 million in 2026 from these acquired branches. Our hospice services continue to demonstrate industry-leading quality metrics and strong census growth. The Rehab Care business continues its long-standing performance with continued payer contract advancements for these highly clinical neurotherapy programs, entry into new markets and programs like Rehab in Motion resonating with patients and customers. All retention metrics for our clinicians continue to improve every year with retention at best practice levels. Personal Care continues to provide consistent high-quality supportive care to patients who need assistance with activities of daily living in the home with a growth rate in hours served well above the industry growth rate. And in our home-based primary care business, our quality measures are extremely good, demonstrating significant reductions in hospitalizations and overall health care costs realized by patients in our network. We continue to expand and invest in business development in this service line while further integrating with home health and hospice, also laying the groundwork for future growth in quality-based payment models. At the corporate level and across the organization, we continue to invest in and progress on key clinical, HR and operational systems and new applications, including leveraging new automation and AI tools and agents in areas such as hiring, onboarding, intake, documentation, medication reviews and patient care plans. We've now had almost 300 employees receive Lean Sigma certification of various belts while completing Lean projects for each across the organization as we further institutionalize Lean business processes every year. On acquisitions, we have a full pipeline per usual. And while we remain very disciplined in executing deals that clearly meet our strategy and objectives, we are optimistic about possible transactions in the second half, having signed several small tuck-ins and geographical expansions in the past quarter. Now let me provide a few more financial highlights from the second quarter, which Jen will discuss in greater detail in a few minutes. As a reminder, the company's financial results referenced pertain to continuing operations and do not include results from the Community Living business, which was divested on March 30, 2026. Second quarter financial results came in ahead of baseline expectations with total company revenue of $3.9 billion, representing 23% year-over-year growth. Pharmacy Solutions revenue of $3.4 billion and Provider Services revenue of $466 million represented 22% and 30% growth, respectively. Second quarter adjusted EBITDA of $206 million grew 44% year-over-year, representing an adjusted EBITDA margin of 5.3%, an 80 basis point improvement versus last year. Profitability in the quarter again benefited from the scale and complementary diversification of our platform across our target Home and Community end markets, which enables tangible advantages, including breadth and optionality of opportunities for revenue generation, disciplined operational execution leveraging top-down driven best practices, procurement and contracting processes across the organization, the cumulative impact of our lean and process improvement programs, ongoing technology and AI investments and our acquisition integration capabilities and synergies. Many initiatives contributed to the profitability and margin performance in the quarter, and these remain an important source of ongoing efficiency generation going forward. From a cash flow perspective, the company generated $144 million of cash flow from operations in the quarter, excluding a onetime cash tax payment of approximately $100 million related to the Community Living transaction. Leverage was reduced to 2.15x as of June 30, 2026. We now expect approximately $600 million of operating cash flow this year with EBITDA to operating cash conversion of around 70%, and leverage for the year to end below 2x before any potential acquisitions. Also in the quarter, we received ratings upgrades from both S&P and Moody's, and we refinanced our debt at a 50 basis points lower spread. As mentioned, performance in the quarter was underpinned by consistent focus on quality of care and patient satisfaction. Additional quality measures of note included an industry-leading timely initiation of care of 99% in Home Health, hospice quality measures that continue to be well above the national average with a CAHPS overall hospice rating of 89%, rehab patient satisfaction scores above 97% and client satisfaction scores of 4.6 out of 5 in Personal Care. On the Pharmacy side, in Home and Community Pharmacy, dispensing accuracy was 99.98%, order completeness was 99% and on-time delivery was 94.3%. While in Infusion, our patient satisfaction score was 94% with 94% of discharges due to completion of therapy. Specialty Pharmacy demonstrated quality metrics well above the national average in the second quarter, delivering a high medication possession ratio of 93% and time to first fill of 3.7 days with industry-leading Net Promoter Scores. We are very pleased to consistently demonstrate exceptional service and quality across our businesses. Earlier this month, CMS released the calendar year 2027 preliminary rate for home health services. The preliminary rates include a positive annual payment update, the first such upward adjustment in several years and a positive starting point. We continue to work with CMS and Congress to highlight third-party data showing the positive health outcomes and lower Medicare cost profile of high-quality, clinically appropriate and medically necessary home health services. To close, the second quarter reflected consistent execution that we strive for every day with broad performance and steady progress towards our operating and growth priorities. We are building upon a strong foundation of growth anchored on quality to drive scale while we deploy best practices and processes across the organization to continually improve operations for the future. As we move into the second half of the year, the business is well positioned, momentum is broad-based, and we are confident in our ability to deliver the updated full year guidance Jen will discuss in a moment. With that, I'll turn the call over to her.
Thank you, Jon. As a reminder, we closed the Community Living transaction on March 30, 2026, and all financial results reflect only continuing operations with Community Living results reflected in discontinued operations. For the second quarter of 2026, the company revenue was $3.9 billion, representing 23% growth from the prior year period. Pharmacy Solutions segment revenue in the quarter was $3.4 billion, achieving 22% year-over-year growth. Within the Pharmacy segment, Specialty and Infusion revenue was $2.9 billion, representing growth of 30% from prior year, which was driven by branded LDDs and new LDD launches, script growth as well as wraparound fee-for-service program growth, generics, acute infusion growth and strong commercial execution in both the Specialty and Infusion businesses. Home and Community Pharmacy revenue was $540 million, representing a decline of 8% year-over-year due to an approximate $50 million impact from the IRA, along with our decision to exit some uneconomic customers, both of which we have previously discussed and performed as expected. On the IRA impact for the balance of the year, we continue to see a revenue impact in Home and Community Pharmacy of approximately $45 million in each of the remaining quarters in 2026, bringing the total year IRA impact to Home and Community pharmacy revenue of approximately $200 million. In the Provider Services segment, we reported revenue of $466 million, which represents 30% growth compared to the prior year. Home Health Care reported $278 million in revenue, growing 51% versus last year. Revenue performance was driven by average daily census growth, de novo expansions and the impact of the acquired Amedisys and LHC branches, which contributed approximately $78 million of revenue and approximately $8 million of adjusted EBITDA in the second quarter. Rehab Care revenue was $82 million, growing 12% versus last year, with healthy growth in persons served and hours billed in core neuro rehab, along with the continued momentum in our Rehab in Motion program. Personal Care revenue was $107 million, representing 7% growth year-over-year, driven by modest growth in persons served, strong growth in hours billed and stable operations. Moving down the P&L. Second quarter company gross profit was $493 million, representing growth of 32% compared with the second quarter of last year. Adjusted EBITDA for the total company was $206 million in the second quarter, an increase of 44% compared to the second quarter of 2025. Adjusted EPS for the total company was $0.45. Company profitability benefited from strong top line performance across the businesses as well as consistent operational execution in addition to and from investments related to technology and AI. We continue to make targeted investments supporting a variety of operational processes and programs that will improve procurement efficiencies, streamline operations and further standardize best practices throughout the organization. Turning to segment profitability performance in the second quarter. Pharmacy Solutions gross profit was $298 million, growing 28% compared with the second quarter of last year. Adjusted EBITDA for Pharmacy Solutions was $180 million for the second quarter, an increase of 44% compared to last year, representing an adjusted EBITDA margin of 5.3%, which increased approximately 80 basis points versus last year and was similar to the first quarter of 2026. Second quarter Pharmacy profitability benefited from strong branded LDD portfolio performance, product mix across all Pharmacy businesses, pharma services and hub revenue and gross profit as well as continued investments to improve operational performance. Of note, notwithstanding external IRA and any payer impacts, Home and Community Pharmacy EBITDA performed well year-over-year in the quarter due to our internal continued operational process improvements underpinned by the deployment of new technologies. Provider Services gross profit was $195 million, growing 38% versus the second quarter of last year, with adjusted EBITDA of $75 million, growing 33% versus last year. This represents an adjusted EBITDA margin of 16.1%, up approximately 30 basis points compared to last year. We have continued to see the benefits of operational initiatives that we have put in place over the past year, driving broad-based growth, greater efficiency and economies of scale and increased margins across our Provider Services lines. On a total company basis, cash flow from operations was $44 million in the second quarter. Excluding the onetime cash payment for taxes of approximately $100 million related to the Community Living transaction, cash flow from operations was $144 million. Recall that the discontinued operations cash flows are included in the consolidated company cash flows. As we look forward to the balance of the year, excluding Community Living related cash flow impact, we expect to deliver approximately $600 million of annual operating cash flow. As of June 30, net debt outstanding was approximately $1.7 billion, and we finished the quarter with a leverage ratio of 2.15x, which includes the impact of approximately $100 million of taxes associated with the Community Living divestiture in the quarter. As mentioned during the Q1 2026 earnings call, our leverage at Q1 when adjusting for the Community Living taxes that were due subsequent to quarter end was a leverage of 2.4x. We were able to reduce our leverage from Q1 2026 to Q2 2026 on an adjusted basis by 0.25x. Our leverage ratio also includes $120 million of share repurchases year-to-date. During the second quarter, we repaid approximately $300 million of the term loan with proceeds from the Community Living sale and repriced the loan at SOFR plus 200. This compares with SOFR plus 325 at the time of our IPO and reflects strong operating performance of the business, improved cash flow generation and our lower leverage position of the company since the IPO. During Q2, Moody's and S&P both upgraded BrightSpring's credit rating, better reflecting our leverage position and debt management philosophies. Moody's upgraded its rating to Ba3 from B1, and our senior secured first lien revolving credit facility and senior secured first lien Term Loan B ratings to Ba3 from B1. S&P upgraded our issuer credit rating to BB- from B+ and also upgraded the ratings on our revolving credit facility and first-lien term loans to BB- from B+. The company has evolved since going public in January 2024 with business mix, scale, operating performance and leverage all further improved. As we move into the second half of the year and 2027, we will continue to evaluate options for the most appropriate capital structure needed to support growth over the next 5 years. Turning to guidance for 2026, which excludes the Community Living business as well as any acquisitions that have not yet closed. Total revenues is expected to be in the range of $15.1 billion to $15.425 billion, including Pharmacy Solutions revenue of $13.2 billion to $13.5 billion and Provider Services revenue of $1.9 billion to $1.925 billion. This range reflects 17.0% to 19.5% growth over full year 2025, excluding Community Living in both years. Total adjusted EBITDA is now expected to be in the range of $820 million to $845 million for full year 2026. This would reflect 32.8% to 36.8% growth over full year 2025, excluding Community Living in both years. Included in total adjusted EBITDA is expected contribution from the Amedisys and LHC assets acquisitions of approximately $35 million. I will now turn it back to Jon.
Thanks, Jen, and thank you for your time today to go through BrightSpring's second quarter 2026 results. We will now open up the call for questions. Operator?
分析師問答
The operator provided instructions. Our first question comes from the line of Charles Rhyee of TD Cowen.
Congrats on the quarter. I just wanted to ask what you're seeing in terms of generics. There's been a lot of discussion recently about Revlimid. I think you guys had said previously that that was coming on in stages. Curious about the contribution you saw in the quarter from that and how we should think about layering in the benefit the rest of '26. And then Jen, any comments on the step-up in corporate expense in the quarter?
Charles, I'm not aware of any recent news on Revlimid. It started going generic about four years ago and has been fully generic for quite a while now. So there's really been no change to our expectations this year.
Yes. From a corporate standpoint, Charles, we did see an increase as we continue to add investments across key hires, including some in different business roles and corporate leaders who will help drive value. We also continued to invest in AI and automation technology projects throughout the quarter, and we'll be looking for the benefit of those to come on either later in the year or very early next year.
Our next question comes from the line of Ann Hynes of Mizuho.
I want to focus on gross margin in the Pharmacy segment. It was up year-over-year about 40 basis points, but down sequentially about 70 basis points. Historically, gross margin is usually flat or up Q1 to Q2. Can you tell us what's going on?
Yes, Ann, the margins in Q2 were very healthy and completely in line with our expectations. We had seasonality in Q1 of this year, which is typical for gross margin to be a little higher in Q1 versus Q2 for a variety of reasons. When you normalize on gross profit per script, our GP per script was actually up in Q2. So I'd reiterate that the business is performing well year-over-year, with GP growth outpacing revenue growth and Specialty script growth particularly strong at 32% year-over-year and up 15% sequentially.
Our next question comes from the line of Scott Fidel of Goldman Sachs.
Interested if you can parse out in the Infusion business how growth in the chronic versus the acute segments looked year-over-year or sequentially. And then talk about the continued investment and build-out in chronic infusion in terms of momentum, manufacturing engagement or demand or any other milestones to call out.
We continue to be very positive on the Infusion market. It's a roughly $20 billion market and remains fairly fragmented. Acute is less competitive given the demands of service delivery. Our acute volume year-over-year was up over 20%, which is significantly above market growth rates. We see another 12 to 15 states we want to enter over the next five years, so Infusion is a long-term play. On the chronic side, we're making progress but are not yet where we want to be; chronic volume growth was close to 20% year-over-year. We've rolled out white-glove concierge programs for therapies like immunoglobulin, which increased conversion rates noticeably in the quarter. We're expanding those programs to other therapies. We've made hires, upgraded the CFO for the business, added commercial investments and new leadership from a data analytics standpoint. We're integrating payer and purchasing efforts more closely with our Pharmacy for America business to leverage scale, and we have an AI project on intake. We've also won five LDDs in Infusion in the past six months. It was a productive quarter and we remain enthusiastic for the long term.
Our next question comes from the line of Pito Chickering of Deutsche Bank.
Can you talk about the ramp of the LDDs in the back half of the year and how to think about the contribution to revenue and EBITDA? Any color on involvement in daraxonrasib when it launches in the fall? And how should we think about overall EBITDA seasonality in 3Q and 4Q?
Pito, we remain enthusiastic about the LDD business. We've already won 12 LDDs this year. We're focused on being the best oncology partner, and we leverage those capabilities to expand outside oncology as well, where we've had exciting wins. We can't comment on specific drugs, but we're aware of the situation you referenced. We continue to lean into wraparound services for manufacturers—patient contact centers, nursing services, 3PL, and data analytics—which strengthen partnerships. The year is playing out as planned, if not a little better, and we're optimistic about the future.
Pito, in terms of growth through each quarter of 2026 and our guidance, we delivered a very strong first half with $206 million adjusted EBITDA in the quarter. We expect quarter-over-quarter growth for the rest of 2026. We expect the growth rate from Q2 to Q3 and from Q3 to Q4 to be similar to each other.
Last year's second half was very large for several reasons and we'll be lapping that, but we still expect robust year-over-year growth. Looking at our guidance and the first half performance, the implication is continued good growth throughout the year.
Our next question comes from the line of Stephen Baxter of Wells Fargo.
I was hoping to get an update on pharmacy sourcing initiatives as you continue to build scale. Relatedly, we saw headlines about potential tariffs on generics starting a couple of years from now. How are you thinking about that potential impact and building contingencies into contracting?
From a purchasing perspective, leveraging scale has been a focus for us for a decade. Our value proposition is serving home and community health care markets and leveraging our scale, operating and commercial capabilities. We aim to be one face to many external partners to maximize leverage and will continue to focus there.
On tariffs, there's a lot of noise but nothing that has impacted us to date. We're pleased the administration pushed any potential tariffs on generics to 2028. We remain flexible in purchasing contracts, with opportunities to buy drugs from different locations. We will monitor closely and exercise good judgment approaching any potential tariff impacts.
Generics are lower cost, and when we look across product by product and business by business, this is not something that concerns us for our long-term growth algorithm. We continue to focus on product-level performance and all growth pieces across the enterprise.
Our next question comes from the line of A.J. Rice of UBS.
You mentioned evaluating options for the optimal capital structure with proceeds from the Community Living divestiture. Are you thinking you might lean into acquisitions more? Can you give a flavor of the pipeline and what you're considering regarding capital structure?
A.J., we're proud of our balance sheet work with leverage at 2.15x at quarter end. That position gives us flexibility. With the ratings upgrades and our improved position, we believe we can continue to pursue M&A and we have a very robust pipeline. We're excited about the back half of 2026 and into 2027 given the balance sheet flexibility.
We're thinking about adding to the M&A team. Our approach has been targeting tuck-ins in geographically adjacent areas where operational capabilities and synergies create value. We operate in large markets. Home Health, Hospice, Rehab, Infusion, Primary Care, and Home and Community Pharmacy all have acquisition opportunities. We focus on smaller tuck-ins where we can apply scale; medium or larger deals for us are still typically under $30 million to $40 million of EBITDA. The pipeline is substantial, but we remain disciplined on pricing and valuation. The balance sheet has evolved well; we'll do over $600 million of operating cash flow this year, and free cash flow will follow. We're pleased with the progress.
Our next question comes from the line of David Larsen of BTIG.
Can you talk about your selling efforts and how they've evolved? If you're talking to an acute care IDN, what's the value proposition to those hospital systems? How much time do you spend selling to health plans? Are they encouraging their networks to work with you? And how many commission-based reps do you have, if any, and how has that evolved?
Our value proposition is to be a leading partner delivering high-quality services to payers, hospital systems and ACOs, particularly in the first 30 to 60 days post-discharge to reduce unnecessary readmissions and ER visits. We've seen the ability to execute preferred arrangements with ACOs, hospital systems and payers, and that remains a key focus. Our quality performance enables these partnerships and drives growth above industry averages. On the Provider side, the business grew over 30% year-over-year from an EBITDA perspective and organically was just under 20%. We have many individual clinical liaisons across service lines in doctor offices and hospital systems daily; across the company it's near 1,000 clinical liaisons performing educational and support work. Formalizing post-discharge programs and expanding preferred agreements is an ongoing opportunity and contributes to volume growth.
Our next question comes from the line of Sean Dodge of BMO Capital Markets.
In Pharmacy, the IRA headwind this year: Jen, you said $200 million to Home and Community and I think previously you said $175 million to Specialty and Infusion. Is that still what you expect for Specialty? And is it too early to tell directional indicators for the impact next year?
For Home and Community, IRA revenue impact is about $200 million for the full year, which equates to roughly $50 million per remaining quarter. The EBITDA impact for Home and Community remains about $15 million for the year. For Specialty, the IRA impact is largely a revenue headwind and remains around $175 million for the year, but from an EBITDA standpoint, it's not a material impact.
We've tried to get ahead of this from an operational perspective. Many of the technology, automation and AI investments we've made last year and this year will play out into next year. The IRA approach has some unintended consequences and needs to be fixed. Operationally, the team has executed well and that will help next year. The business will see an up second half and had an up second quarter, with good drivers in markets like assisted living and behavioral health. We continue to work regulatory and payer contracting to mitigate the impact.
On 2027, the drugs selected for 2027 impacts are the largest drugs, and our current view is that about 50% of the impact we had in 2026 is our best estimate for 2027 from a Home and Community standpoint. We will continue working on regulatory issues and payer contracting to mitigate impacts, in addition to operational improvements.
Our next question comes from the line of Joanna Gajuk of Bank of America.
A follow-up on gross profit in Pharmacy. You said gross profit per script was up 28% year-over-year, but sequentially it declined slightly. Is about $27.50 gross profit per script a good number to think about going forward? Is there more growth to assume for that metric? Remind us of the main drivers and, if possible, quantify the impact of fee-for-service revenue on that metric.
Take a step back: we're pleased across the business including Pharmacy and Provider where growth was strong. Within Specialty and Infusion, there are multiple levers. Fee-for-service programs are one of them. When we come to market with new drugs, there are several wraparound services we provide to partners for visibility and optimal outcomes. That capability and the volume of those services have been increasing. It's multifaceted growth: fee-for-service, OpEx per script leverage, partnerships, generics conversion, acute and chronic infusion performance, and product mix. GP per script in the quarter was up sequentially when you adjust for typical seasonality and Q1 items, and we view the current level as stable and within expectations for the rest of the year.
Our next question comes from the line of Whit Mayo of Leerink Partners.
Jon, you've talked about acute infusion as an area of focus. Would any potential 340B changes impact your view on that?
No, that is not a meaningful part of our Infusion business.
Our next question comes from the line of Raj Kumar of Stephens.
Going back to generic conversion: as we think about 2027 and the pipeline, any way to frame what branded versions of those drugs make up in current script year-to-date to help frame the opportunity for 2027?
The launches of brands going generic that we see in 2027 will probably occur later in the year, which is our current expectation.
Our next question comes from the line of Matthew Gillmor of KeyBanc.
Can you frame the rare and orphan opportunity relative to oncology? And do you need to augment or invest in the sales force to pursue that, or can you leverage the existing Specialty sales force?
You can leverage the existing sales force. We have several hundred clinical liaisons working across thousands of prescriber offices today. Some niche companies focused on rare and orphan don't have a sales force; we do. We have 155 LDD programs and 15 years of experience. We've supported many therapies outside oncology and had noteworthy wins in the last six months based on our track record. We can service most therapies outside oncology and see this as a strategic growth area. It's sizable, though not as large as oncology, but meaningful for future contribution.
Our next question comes from the line of Jared Haase of William Blair.
You noted retention at all-time highs in Home and Community. Would you primarily attribute that to technology initiatives, or is there anything else driving retention? How much more opportunity is there to push retention higher as a growth lever?
Retention has been a focus for a long time and is driven by three main things. First, compensation and benefits: we've continued to invest to attract and retain top talent. Second, technology and process improvements: we aim to make jobs efficient and reduce administrative headaches so clinicians can focus on patients. Third, training and development: onboarding, seamless training, and programs that enable career advancement. We invest in talent management and culture, emphasize mission, reward people, and try to be a place people like to work. As we grow, we continue to invest more in these areas.
Our next question comes from the line of Erin Wright of Morgan Stanley.
Gross profit per script was up 28% in Q2, 50% in Q1, and 21% in 2025, but prior to that it was roughly flat. What led to the inflection and what are the durable drivers heading into 2027? Also, can you speak to hub services—how big they are, how much they drive growth, and how fee-for-service relationships work?
Changes in gross profit margin are driven by mix across our businesses. As we've layered on more fee-for-service business, those services are offered in our launches and have become a meaningful contributor to margin—one of the top drivers though not the majority of profitability. When we bring a new drug to market, we provide additional services for manufacturers to ensure optimal patient outcomes and visibility. That capability set is growing and contributes to margin and growth alongside product mix, operational efficiencies, and volume.
Our next question comes from the line of Brian Tanquilut of Jefferies.
As we think about bigger oncology or oral oncologics coming down the pipeline, how do the dynamics shift with LDDs? How should we think about exclusives versus ultra-narrow networks and how each ramps? Jen, how should we think about margin differences between exclusives and ultra-narrow arrangements over time?
We're enthusiastic about the oncology pipeline and have positioned ourselves as a partner in that market. Our experience and scale, combined with wraparound services, make us a strong candidate for both exclusive and ultra-narrow arrangements.
From a margin perspective, we typically negotiate with payers on a basket of LDDs that includes both exclusive and ultra-narrow arrangements. Having exclusives and ultra-narrows has been a differentiator in our ability to negotiate rates on those drugs.
Our next question comes from the line of Parker Snure of Raymond James.
On the Pharmacy G&A, it stepped down in Q2 about $13 million to $14 million from Q1. What were the drivers—timing of investments or other items—and how should that line track going forward?
We had some onetime investments in Q1 related to sales force and other key positions as we layered out management to support future growth. Some AI and automation project spending wrapped up in Q1. There continues to be ongoing projects and some corporate spend in Q2, but the step-down reflects the timing of those Q1 investments.
Our next question comes from the line of Jason Cassorla of Guggenheim.
You increased the expected EBITDA contribution from the Amedisys and LHC assets by about $5 million. Can you walk through the drivers beyond pricing benefits of being on your platform? Any additional integration details would help.
Integration in that business has continued to go really well. At the start of the year, we planned a slightly slower ramp on some growth initiatives to allow the team to complete integration work. Some investments needed in Q1 have wrapped, and as of today all branches are on our home care system. We're working through final integration steps and feel more confident increasing the guidance.
Integration has gone extremely well and volume is moving up under our ownership.
I would now like to turn the conference back to Jon Rousseau for closing remarks.
Thank you, everybody, for joining today. We really appreciate your time on the call, and it was a productive quarter. We continue to invest for the future while delivering on today, and we look forward to talking with you in another 90 days. Thank you, and have a great day.
This concludes today's conference call. Thank you for participating. You may now disconnect.