BrightSpring Health Services Inc
For the period ended Sep 30, 2024. Filed Nov 1, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 1, 2024
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0000950170-24-089623
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0000950170-24-119820
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 222 previous paragraphs and 218 current paragraphs.
118 unchanged; 76 reworded; 22 added; 27 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Financial Performance Highlights: Third Quarter of 2024 Compared to Third Quarter of 2023
Current report
Revenue grew by $650.3 million, or 28.8% to $2.9 billion
Current report
Net loss decreased by $121.1 million from $130.1 million to $9.0 million
Current report
Adjusted EBITDA(1) increased by $20.5 million, or 15.7%, to $151.0 million
Current report
Pharmacy Solutions segment EBITDA increased by $13.1 million, or 15.2%, to $99.2 million
Current report
Loss per share decreased by $0.14 from $0.18 to $0.04
Current report
Adjusted EPS(1) increased by $0.19 from $(0.08) to $0.11
Current report
Selling, general, and administrative expenses were $351.3 million for the three months ended September 30, 2024, as compared with $410.5 million for the three months ended September 30, 2023, a decrease of $59.3 million or 14.4%. The decrease primarily resulted from the following segment activity and factors:
Current report
an increase of $22.4 million, or 5.5% growth on consolidated 2023 selling, general, and administrative expenses, as a result of growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below;
Current report
Income Tax Expense (Benefit)
Current report
Net loss was $9.0 million for the three months ended September 30, 2024, as compared with $130.1 million for the three months ended September 30, 2023, a decrease of $121.1 million. The decrease in the net loss is primarily attributable to the aforementioned decrease in interest expense, net and legal settlement and defense costs.
Current report
Adjusted EBITDA was $151.0 million for the three months ended September 30, 2024, as compared with $130.5 million for the three months ended September 30, 2023, an increase of $20.5 million or 15.7%. The increase primarily resulted from the following segment activity and factors:
Current report
Selling, general, and administrative expenses were $1,039.2 million for the nine months ended September 30, 2024, as compared with $986.2 million for the nine months ended September 30, 2023, an increase of $53.1 million or 5.4%. The increase primarily resulted from the following segment activity and factors:
Current report
an increase of $46.8 million, or 4.7% growth on consolidated 2023 selling, general, and administrative expenses, as a result of growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below;
Current report
a decrease of $99.8 million, or 10.1%, decline on consolidated 2023 selling, general, and administrative expenses, due to the settlement and changes in estimate of legal settlements and defense costs related to certain historical PharMerica litigation matters, which includes the Silver matter. See Note 10 “Commitments and Contingencies” within the unaudited condensed consolidated financial statements and related notes.
Current report
Net Loss
Current report
Selling, general, and administrative expenses were $117.3 million for the three months ended September 30, 2024, as compared with $106.6 million for the three months ended September 30, 2023, an increase of $10.7 million or 10.1%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than the volume growth rate and demonstrating economies of scale.
Current report
Segment EBITDA was $99.2 million for the three months ended September 30, 2024, as compared with $86.1 million for the three months ended September 30, 2023, an increase of $13.1 million or 15.2%. The increase primarily resulted from the aforementioned revenue and gross profit growth in the period. See Note 14 “Segment Information” to our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for further discussion.
Current report
Selling, general, and administrative expenses were $341.8 million for the nine months ended September 30, 2024, as compared with $319.4 million for the nine months ended September 30, 2023, an increase of $22.4 million or 7.0%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than the volume growth rate and demonstrating economies of scale.
Current report
Selling, general, and administrative expenses were $141.2 million for the three months ended September 30, 2024, as compared with $131.0 million for the three months ended September 30, 2023, an increase of $10.2 million or 7.8%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than the volume growth rate and demonstrating economies of scale.
Current report
Represents costs associated with certain transformational projects and for the periods presented primarily included general ledger system implementation and pharmacy billing system implementation, which both completed in the second fiscal quarter of 2024; and ransomware attack response costs. Ransomware attack response costs were $1.0 million for the three and nine months ended September 30, 2024, compared to $0.6 million and $3.1 million for the three and nine months ended September 30, 2023, respectively.
Current report
Nine Months Ended September 30, 2024 and 2023
Removed paragraphs (27)
Previous report
7.7 million restricted stock units granted to certain full-time employees, as disclosed in connection with our IPO Offerings
Previous report
Financial Performance Highlights: Second Quarter of 2024 Compared to Second Quarter of 2023
Previous report
Revenue grew by $563.5 million, or 26.0% to $2.7 billion
Previous report
Net income increased by $15.9 million to $19.9 million; when excluding the approximately $30 million quality incentive payment(“QIP”)received in the second fiscal quarter of 2023, net income increased by $46.8 million
Previous report
Adjusted EBITDA(1) decreased by $10.3 million, or 6.9%, to $139.1 million; when excluding the approximately $30 million QIP received in the second fiscal quarter of 2023, Adjusted EBITDA increased by $19.9 million, or 16.7%
Previous report
Pharmacy Solutions segment EBITDA decreased by $15.3 million, or 13.9%, to $94.5 million; when excluding the approximately $30 million QIP received in the second fiscal quarter of 2023, Pharmacy Solutions segment EBITDA increased by $14.9 million, or 18.7%
Previous report
Income per share increased by $0.07 from $0.03 to $0.10
Previous report
Adjusted EPS(1) was $0.10
Previous report
Selling, general, and administrative expenses were $326.6 million for the three months ended June 30, 2024, as compared with $292.5 million for the three months ended June 30, 2023, an increase of $34.2 million or 11.7%. The increase primarily resulted from the following segment activity and factors:
Previous report
an increase of $15.8 million, or 5.4% growth on consolidated 2023 selling, general, and administrative expenses, as a result of growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below;
Previous report
Net Income
Previous report
Net income was $19.4 million for the three months ended June 30, 2024, as compared with $2.8 million for the three months ended June 30, 2023, an increase of $16.7 million. Net income for the second fiscal quarter of 2024 is primarily attributable to the aforementioned decrease in interest expense, net, increase in revenues, and increase in income tax benefit. When excluding the approximately $30 million QIP received in the second fiscal quarter of 2023, net income increased by $46.8 million compared to a net loss of $27.4 million in the second fiscal quarter of 2023.
Previous report
Adjusted EBITDA was $139.1 million for the three months ended June 30, 2024, as compared with $149.4 million for the three months ended June 30, 2023, a decrease of $10.3 million or 6.9%. When excluding the approximately $30 million QIP received in the second fiscal quarter of 2023, Adjusted EBITDA increased $19.9 million or 16.7%. The decrease of $10.3 million primarily resulted from the following segment activity and factors:
Previous report
a decrease of $15.3 million, or 10.2% decline on consolidated 2023 Adjusted EBITDA, as a result of a decline in our Pharmacy Solutions segment primarily attributable to not receiving a QIP in 2024. See additional discussion in “—Segment Results of Operations” below; and
Previous report
Selling, general, and administrative expenses were $687.9 million for the six months ended June 30, 2024, as compared with $575.6 million for the six months ended June 30, 2023, an increase of $112.3 million or 19.5%. The increase primarily resulted from the following segment activity and factors:
Previous report
Income Tax Benefit
Previous report
o
Previous report
Gross profit was $182.7 million for the three months ended June 30, 2024, as compared with $187.6 million for the three months ended June 30, 2023, a decrease of $4.9 million or 2.6%. The decrease primarily resulted from outsized volume growth as well as mix in certain specialty branded drugs, which have lower margins, and the QIP received in the second fiscal quarter of 2023 for which there was no comparable in 2024. When excluding the approximately $30 million QIP received in the second fiscal quarter of 2023, gross profit increased 16.1% compared to gross profit of $157.4 million in the second fiscal quarter of 2023.
Previous report
Selling, general, and administrative expenses were $115.5 million for the three months ended June 30, 2024, as compared with $106.5 million for the three months ended June 30, 2023, an increase of $8.9 million or 8.4%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than the volume growth rate and demonstrating economies of scale.
Previous report
Segment EBITDA was $94.5 million for the three months ended June 30, 2024, as compared with $109.8 million for the three months ended June 30, 2023, a decrease of $15.3 million or 13.9%. The decrease primarily resulted from the QIP received in the second fiscal quarter of 2023 that was not received in the comparable period. When excluding the approximately $30 million QIP received in the second fiscal quarter of 2023, segment EBITDA increased 18.7% compared to segment EBITDA of $79.6 million in the second fiscal quarter of 2023. See Note 14 “Segment Information” to our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q for further discussion.
Previous report
Selling, general, and administrative expenses were $224.5 million for the six months ended June 30, 2024, as compared with $212.8 million for the six months ended June 30, 2023, an increase of $11.7 million or 5.5%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than the volume growth rate and demonstrating economies of scale.
Previous report
Selling, general, and administrative expenses were $136.6 million for the three months ended June 30, 2024, as compared with $129.7 million for the three months ended June 30, 2023, an increase of $6.9 million or 5.3%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than the volume growth rate and demonstrating economies of scale.
Previous report
Selling, general, and administrative expenses were $269.5 million for the six months ended June 30, 2024, as compared with $256.9 million for the six months ended June 30, 2023, an increase of $12.7 million or 4.9%. The increase primarily resulted from the aforementioned revenue growth in the period with selling, general, and administrative expenses growing less than the volume growth rate and demonstrating economies of scale.
Previous report
Represents costs associated with certain transformational projects and for the periods presented. General ledger system migration and related business intelligence system implementation costs, which were capitalized as development costs and are subsequently amortized in accordance with ASC 350-40, Internal Use Software, were $0.2 million and $0.7 million for the three and six months ended June 30, 2024, respectively, compared to $0.5 million and $1.0 million for the three and six month ended June 30, 2023, respectively. The general ledger system migration and related business intelligence system project costs were completed during the second fiscal quarter of 2024. Pharmacy billing system implementation costs were $0.1 million and $0.7 million for the three and six months ended June 30, 2024, respectively, compared to $0.7 million and $1.1 million for the three and six months ended June 30, 2023, respectively. The pharmacy billing system project costs were completed in the second fiscal quarter of 2024. Ransomware attack response costs associated with the ransomware attack in the first half of 2023 were $0.5 million and $2.5 million for the three and six months ended June 30, 2023.
Previous report
Six Months Ended June 30, 2024 and 2023
Previous report
a decrease of $7.1 million of cash inflows in accounts receivable due to volume growth in the first half of 2024 compared to the first half of 2023;
Previous report
a decrease of $38.0 million in cash outflows due to timing of payments for inventory purchases driven by volume growth;
Reworded paragraphs (76)
Previous wording
Second Quarter of 2024 Key Highlights
Current wording
Third Quarter of 2024 Key Highlights
Previous wording
Completed three acquisitions within our Pharmacy Solutions and Provider Services segments
Current wording
Completed three acquisitions within our Provider Services segment
Previous wording
Pharmacy Solutions segment revenue grew by $517.7 million, or 32.4%, to $2.1 billion
Current wording
Pharmacy Solutions segment revenue grew by $592.5 million, or 35.4%, to $2.3 billion
Previous wording
Provider Services segment revenue grew by $45.8 million, or 8.0%, to $615.7 million
Current wording
Provider Services segment revenue grew by $57.7 million, or 9.9%, to $641.1 million
Previous wording
Provider Services segment EBITDA grew by $11.7 million, or 15.7%, to $86.0 million
Current wording
Provider Services segment EBITDA grew by $11.8 million, or 14.4%, to $93.2 million
Previous wording
We are characterized by payor diversification across our platform. Our payors are principally federal, state, and local governmental agencies, commercial insurance, private, and other payors. Additionally, our Medicaid payors can be further broken down across each individual state with our top 10 Medicaid states representing 12% of total Company revenue for the three and six months ended June 30, 2024, compared to 15% and 14% for the three and six months ended June 30, 2023, respectively.
Current wording
We are characterized by payor diversification across our platform. Our payors are principally federal, state, and local governmental agencies, commercial insurance, private, and other payors. Additionally, our Medicaid payors can be further broken down across each individual state with our top 10 Medicaid states representing 12% of total Company revenue for the three and nine months ended September 30, 2024, respectively, compared to 14% for the three and nine months ended September 30, 2023.
Previous wording
We provide our services across all 50 states, Puerto Rico and Canada, with our top 10 states of operations comprising 52% and 45% of total Company revenues for the three and six months ended June 30, 2024, respectively, compared to 53% and 46% for the three and six months ended June 30, 2023, respectively. The federal, state, and local programs under which we operate are subject to legislative and budgetary changes that can influence reimbursement rates.
Current wording
We provide our services across all 50 states, Puerto Rico and Canada, with our top 10 states of operations comprising 52% and 46% of total Company revenues for the three and nine months ended September 30, 2024, respectively, compared to 53% and 47% for the three and nine months ended September 30, 2023, respectively. The federal, state, and local programs under which we operate are subject to legislative and budgetary changes that can influence reimbursement rates.
Previous wording
See Note 2 of the unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q for more information regarding revenue by payor type for each reportable segment for the three and six months ended June 30, 2024 and 2023.
Current wording
See Note 2 of the unaudited condensed consolidated financial statements and related notes in this Form 10-Q for more information regarding revenue by payor type for each reportable segment for the three and nine months ended September 30, 2024 and 2023.
Previous wording
We focus on providing health-dependent medications in a timely and well-supported manner to our patients receiving pharmacy solutions in their home and community-based settings. Our pharmacy services are primarily delivered directly to patients in their place of residence, home, or stay, and sometimes in a clinic setting. According to industry reports, pharmacy solutions delivered to and tailored for the home environment, such as home infusion services, oncology services, and daily medication management services in the home, will continue to grow faster than the overall and general pharmacy market. We have continued to expand our pharmacy capabilities to serve this need. Overall, our pharmacy has grown patient census and prescriptions by 10% and 9%, respectively, in the second fiscal quarter of 2024 compared to the second fiscal quarter of 2023. We are a leading independent pharmacy provider in our respective pharmacy patient markets, and we expect to continue to increase our share, including home infusion patients, specialty oncology patients, behavioral patients, in-home Seniors, and hospice patients.
Current wording
We focus on providing health-dependent medications in a timely and well-supported manner to our patients receiving pharmacy solutions in their home and community-based settings. Our pharmacy services are primarily delivered directly to patients in their place of residence, home, or stay, and sometimes in a clinic setting. According to industry reports, pharmacy solutions delivered to and tailored for the home environment, such as home infusion services, oncology services, and daily medication management services in the home, will continue to grow faster than the overall and general pharmacy market. We have continued to expand our pharmacy capabilities to serve this need. Overall, our pharmacy has grown patient census and prescriptions by approximately 12% and 15%, respectively, in the third fiscal quarter of 2024 compared to the third fiscal quarter of 2023. We are a leading independent pharmacy provider in our respective pharmacy patient markets, and we expect to continue to increase our share, including home infusion patients, specialty oncology patients, behavioral patients, in-home Seniors, and hospice patients.
Previous wording
In the second fiscal quarter of 2024, we opened four de novo offices (branches/agencies) and clinics in new locations across our pharmacy and provider services. We typically identify and open new locations within proximity of an existing location as we leverage existing market knowledge and presence to expand in target markets, regions, and states. Our internal support resources in real estate, purchasing, IT, credentialing, payor contracting, HR, and sales and marketing, along with our Project Management Office, help to support and manage de novo locations from start to opening. We expect to continue to selectively and strategically expand our footprint within the United States and extend our service offerings to our patients and for customers, referral sources, and payors, and we believe de novo investments facilitate more integrated care capability and are a meaningful organic growth driver for the Company.
Current wording
We typically identify and open new locations within proximity of an existing location as we leverage existing market knowledge and presence to expand in target markets, regions, and states. Our internal support resources in real estate, purchasing, IT, credentialing, payor contracting, HR, and sales and marketing, along with our Project Management Office, help to support and manage de novo locations from start to opening. We expect to continue to selectively and strategically expand our footprint within the United States and extend our service offerings to our patients and for customers, referral sources, and payors. We believe de novo investments facilitate more integrated care capability and are a meaningful organic growth driver for the Company.
Previous wording
We used the proceeds received from the IPO Offerings (i) to repay all indebtedness outstanding under the Second Lien Facility, (ii) to repay all indebtedness outstanding under the Revolving Credit Facility, (iii) to repay $343.3 million outstanding aggregate amount under the First Lien Facility, and (iv) to pay certain expenses in the offering. We intend to use the remaining proceeds for general corporate purposes. Additionally, we will pay $22.7 million of termination fees in connection with the termination of our monitoring agreement with our controlling stockholders, Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and Walgreens Boots Alliance, Inc. (together with KKR, the “Managers”) (the “Monitoring Agreement”).
Current wording
We used the proceeds received from the IPO Offerings (i) to repay all indebtedness outstanding under the Second Lien Facility, (ii) to repay all indebtedness outstanding under the Revolving Credit Facility, (iii) to repay $343.3 million outstanding aggregate amount under the First Lien Facility, and (iv) to pay certain expenses in the offering. We have used and intend to use the remaining proceeds for general corporate purposes. Additionally, we will pay $22.7 million of termination fees in connection with the termination of our monitoring agreement with our controlling stockholders, Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and Walgreens Boots Alliance, Inc. (together with KKR, the “Managers”) (the “Monitoring Agreement”). The Company will pay these fees during the fourth fiscal quarter of 2024.
Previous wording
As discussed under Part I, Item 1. “Business” in our Annual Report on Form 10-K for the year ended December 31, 2023, the Company was eligible to receive incentive payments in connection with a payor contract based on the Company's Net Promoter Score (“NPS”) achieved from surveys performed directly by the payor. During the second fiscal quarter of 2023, our Infusion and Specialty Pharmacy services earned a QIP of approximately $30 million. The Company did not receive a QIP during the three and six months ended June 30, 2024. The QIP program has reached its conclusion.
Current wording
As discussed under Part I, Item 1. “Business” in our Annual Report on Form 10-K for the year ended December 31, 2023, the Company was eligible to receive incentive payments in connection with a payor contract based on the Company's Net Promoter Score (“NPS”) achieved from surveys performed directly by the payor. During the second fiscal quarter of 2023, our Infusion and Specialty Pharmacy services earned a quality incentive payment (“QIP”) of approximately $30 million. The Company did not receive a QIP during the nine months ended September 30, 2024. The QIP program has reached its conclusion.
Previous wording
In November 2023, the Company agreed to settle the Silver matter without admitting liability, as discussed under Part I, Item 3. “Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2023. On May 29, 2024, the parties entered into a final settlement agreement, which was approved by both the United States Department of Justice and the District Court. The total financial impact of the settlement is $120.0 million. The District Court entered an order dismissing the Silver action in its entirety, with prejudice, on July 3, 2024. See Note 10 “Commitments and Contingencies” within the unaudited condensed consolidated financial statements and related notes, included elsewhere in this Quarterly Report on Form 10-Q.
Current wording
In November 2023, the Company agreed to settle the Silver matter without admitting liability, as discussed under Part I, Item 3. “Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2023. On May 29, 2024, the parties entered into a final settlement agreement, which was approved by both the United States Department of Justice and the District Court. The total financial impact of the settlement is $120.0 million. The District Court entered an order dismissing the Silver action in its entirety, with prejudice, on July 3, 2024. See Note 10 “Commitments and Contingencies” within the unaudited condensed consolidated financial statements and related notes, included elsewhere in this Form 10-Q.
Previous wording
On May 11, 2023, the Department of Health and Human Services declared the COVID-19 pandemic is no longer a public health emergency. New variants could affect our operations for an extended period; however, at this time we cannot confidently forecast the duration or the ultimate financial impact on our operations, should such an impact occur. In the three and six months ended June 30, 2024 and the three months ended June 30, 2023, the Company received no funds from the Provider Relief Fund (“PRF”) and recognized no income related to the program. The Company received and recognized into income $18.8 million from the PRF for the six months ended June 30, 2023. The income recognized was offset directly by the expenses incurred within selling, general, and administrative expenses in our unaudited condensed consolidated statement of operations, which resulted in no net financial impact to the Company.
Current wording
On May 11, 2023, the Department of Health and Human Services declared the COVID-19 pandemic is no longer a public health emergency. New variants could affect our operations for an extended period; however, at this time we cannot confidently forecast the duration or the ultimate financial impact on our operations, should such an impact occur. In the three and nine months ended September 30, 2024 and the three months ended September 30, 2023, the Company received no funds from the Provider Relief Fund (“PRF”) and recognized no income related to the program. The Company received and recognized into income $18.8 million from the PRF for the nine months ended September 30, 2023. The income recognized was offset directly by the expenses incurred within selling, general, and administrative expenses in our unaudited condensed consolidated statement of operations, which resulted in no net financial impact to the Company.
Previous wording
Income Tax Benefit. Our provision for income taxes is based on permanent book/tax differences and statutory tax rates in the various jurisdictions in which we operate. Significant estimates and judgments are required in determining the provision for income taxes.
Current wording
Income Tax Expense (Benefit). Our provision for income taxes is based on permanent book/tax differences and statutory tax rates in the various jurisdictions in which we operate. Significant estimates and judgments are required in determining the provision for income taxes.
Previous wording
Revenues were $2,730.2 million for the three months ended June 30, 2024, as compared with $2,166.7 million for the three months ended June 30, 2023, an increase of $563.5 million or 26.0%. The increase resulted from growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below.
Current wording
Revenues were $2,906.8 million for the three months ended September 30, 2024, as compared with $2,256.5 million for the three months ended September 30, 2023, an increase of $650.3 million or 28.8%. The increase resulted from growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below.
Previous wording
Cost of goods was $1,931.8 million for the three months ended June 30, 2024, as compared with $1,409.2 million for the three months ended June 30, 2023, an increase of $522.5 million or 37.1%. The increase resulted from an increase in Pharmacy Solutions cost of goods. See additional discussion in “—Segment Results of Operations” below.
Current wording
Cost of goods was $2,077.1 million for the three months ended September 30, 2024, as compared with $1,509.8 million for the three months ended September 30, 2023, an increase of $567.3 million or 37.6%. The increase resulted from an increase in Pharmacy Solutions cost of goods. See additional discussion in “—Segment Results of Operations” below.
Previous wording
Cost of services was $409.4 million for the three months ended June 30, 2024, as compared with $385.4 million for the three months ended June 30, 2023, an increase of $24.0 million or 6.2%. The increase resulted from an increase in Provider Services cost of services. See additional discussion in “—Segment Results of Operations” below.
Current wording
Cost of services was $421.6 million for the three months ended September 30, 2024, as compared with $388.4 million for the three months ended September 30, 2023, an increase of $33.2 million or 8.5%. The increase resulted from an increase in Provider Services cost of services. See additional discussion in “—Segment Results of Operations” below.
Previous wording
an increase of $21.4 million, or 3.7% growth on consolidated 2023 selling, general, and administrative expenses, due to non-cash share-based compensation related to the new equity awards granted to management and certain full-time employees in conjunction with the IPO;
Current wording
an increase of $14.4 million, or 3.5% growth on consolidated 2023 selling, general, and administrative expenses, due to non-cash share-based compensation related to the new equity awards granted to management and certain full-time employees in conjunction with the IPO;
Previous wording
an increase of $5.1 million, or 1.8% growth on consolidated 2023 selling, general, and administrative expenses, as a result of an increase in other operational expenses year-over-year.
Current wording
an increase of $12.0 million, or 2.9% growth on consolidated 2023 selling, general, and administrative expenses, as a result of an increase in other operational expenses year-over-year; offset by,
Previous wording
an increase of $12.0 million, or 2.1% growth on consolidated 2023 selling, general, and administrative expenses, due to a change in estimate of legal settlements and defense costs related to certain historical PharMerica litigation matters; and
Current wording
a decrease of $108.1 million, or 26.3%, decline on consolidated 2023 selling, general, and administrative expenses, due to the settlement and changes in estimate of legal settlements and defense costs related to certain historical PharMerica litigation matters, which includes the Silver matter. See Note 10 “Commitments and Contingencies” within the unaudited condensed consolidated financial statements and related notes.
Previous wording
Interest expense, net was $52.4 million for the three months ended June 30, 2024, as compared with $79.7 million for the three months ended June 30, 2023, a decrease of $27.2 million or 34.2%. The decrease primarily resulted from lower outstanding term debt as compared to the prior period and a $1.9 million increase in interest income related to cash flow hedges of interest rate risk from $7.6 million of interest income for the three months ended June 30, 2023 to $9.5 million for the three months ended June 30, 2024.
Current wording
Interest expense, net was $56.1 million for the three months ended September 30, 2024, as compared with $83.7 million for the three months ended September 30, 2023, a decrease of $27.6 million or 33.0%. The decrease primarily resulted from lower outstanding term debt as compared to the prior period and a $0.6 million increase in interest income related to cash flow hedges of interest rate risk, from $9.2 million of interest income for the three months ended September 30, 2023 to $9.8 million for the three months ended September 30, 2024.
Previous wording
Income tax benefit was $9.5 million for the three months ended June 30, 2024, as compared to $2.8 million for the three months ended June 30, 2023, an increase of $6.6 million. The increase in the income tax benefit is attributable to a decrease in the effective tax rate for the three months ended June 30, 2024 of (94.9%) compared to 4,167.6% for the three months ended June 30, 2023. The decrease in the effective tax rate is primarily due to a combination of the discrete tax benefit recognized in the quarter related to the Silver matter that was finalized during the second fiscal quarter of 2024 as well as the impact of the year-to-date cumulative adjustment of the second fiscal quarter of 2023 estimated effective tax rate on near break-even pre-tax book loss for the quarter. For additional information on the Silver matter, see Note 10 within the unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q.
Current wording
Income tax expense was $9.8 million for the three months ended September 30, 2024, as compared to an income tax benefit of $5.8 million for the three months ended September 30, 2023, an increase of $15.6 million. The increase in the income tax expense is attributable to an increase in the effective tax rate for the three months ended September 30, 2024 of 1,252.9% compared to 4.3% for the three months ended September 30, 2023. The increase in the effective tax rate is primarily due to the impact of the year-to-date cumulative adjustment of the third fiscal quarter of 2024 estimated effective tax rate on near break-even pre-tax book income for the quarter.
Previous wording
an increase of $11.7 million, or 7.8% growth on consolidated 2023 Adjusted EBITDA, as a result of growth in our Provider Services segment. See additional discussion in “—Segment Results of Operations” below; offset by
Current wording
an increase of $24.8 million, or 19.0% growth on consolidated 2023 Adjusted EBITDA, as a result of growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below; offset by
Previous wording
a decrease of $6.7 million, or 4.5% decline on consolidated 2023 Adjusted EBITDA, as a result of increases in certain public company costs incurred, investments in information technology, and positions to support growth within the business.
Current wording
a decrease of $4.3 million, or 3.3% decline on consolidated 2023 Adjusted EBITDA, as a result of increases in certain public company costs incurred, investments in information technology, and positions to support growth within the business.
Previous wording
Revenues were $5,306.8 million for the six months ended June 30, 2024, as compared with $4,195.1 million for the six months ended June 30, 2023, an increase of $1,111.7 million or 26.5%. The increase resulted from growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below.
Current wording
Revenues were $8,213.7 million for the nine months ended September 30, 2024, as compared with $6,451.6 million for the nine months ended September 30, 2023, an increase of $1,762.0 million or 27.3%. The increase resulted from growth in our Pharmacy Solutions and Provider Services segments. See additional discussion in “—Segment Results of Operations” below.
Previous wording
Cost of goods was $3,738.9 million for the six months ended June 30, 2024, as compared with $2,716.2 million for the six months ended June 30, 2023, an increase of $1,022.6 million or 37.6%. The increase resulted from an increase in Pharmacy Solutions cost of goods. See additional discussion in “—Segment Results of Operations” below.
Current wording
Cost of goods was $5,816.0 million for the nine months ended September 30, 2024, as compared with $4,226.1 million for the nine months ended September 30, 2023, an increase of $1,589.9 million or 37.6%. The increase resulted from an increase in Pharmacy Solutions cost of goods. See additional discussion in “—Segment Results of Operations” below.
Previous wording
Cost of services was $809.6 million for the six months ended June 30, 2024, as compared with $772.1 million for the six months ended June 30, 2023, an increase of $37.5 million or 4.9%. The increase resulted from an increase in Provider Services cost of services. See additional discussion in “—Segment Results of Operations” below.
Current wording
Cost of services was $1,231.2 million for the nine months ended September 30, 2024, as compared with $1,160.5 million for the nine months ended September 30, 2023, an increase of $70.7 million or 6.1%. The increase resulted from an increase in Provider Services cost of services. See additional discussion in “—Segment Results of Operations” below.
Previous wording
an increase of $43.2 million, or 7.5% growth on consolidated 2023 selling, general, and administrative expenses, as a result of our IPO Offerings and are therefore not expected to reoccur. These expenses include $22.7 million of termination fees we will pay to the Managers in connection with the termination of our Monitoring Agreement; $15.0 million of previously unrecognized non-cash share-based compensation expense related to performance-vesting options, which vested upon the IPO; and $5.5 million of non-capitalizable offering costs;
Current wording
an increase of $43.7 million, or 4.5% growth on consolidated 2023 selling, general, and administrative expenses, as a result of our IPO Offerings and are therefore not expected to reoccur. These expenses include $22.7 million of termination fees we will pay to the Managers in connection with the termination of our Monitoring Agreement; $15.0 million of previously unrecognized non-cash share-based compensation expense related to performance-vesting options, a portion of which vested upon the IPO; and $6.0 million of non-capitalizable offering costs;
Previous wording
an increase of $13.3 million, or 4.5% growth on consolidated 2023 selling, general, and administrative expenses, due to non-cash share-based compensation related to the new equity awards granted to management and certain full-time employees in conjunction with the IPO; and
Current wording
an increase of $35.8 million, or 3.6% growth on consolidated 2023 selling, general, and administrative expenses, due to non-cash share-based compensation related to the new equity awards granted to management and certain full-time employees in conjunction with the IPO;
Previous wording
an increase of $11.4 million, or 2.0% growth on consolidated 2023 selling, general, and administrative expenses, as a result of an increase in other operational expenses year-over-year.
Current wording
an increase of $26.6 million, or 2.7% growth on consolidated 2023 selling, general, and administrative expenses, as a result of an increase in other operational expenses year-over-year; offset by,
Previous wording
During the six months ended June 30, 2024, we used proceeds from the IPO Offerings to repay the Second Lien on January 30, 2024 and, as a result, incurred a loss on extinguishment of debt of $12.7 million related to the write-off of unamortized debt issuance costs. There was no loss on extinguishment of debt recognized for the six months ended June 30, 2023.
Current wording
During the nine months ended September 30, 2024, we used proceeds from the IPO Offerings to repay the Second Lien on January 30, 2024 and, as a result, incurred a loss on extinguishment of debt of $12.7 million related to the write-off of unamortized debt issuance costs. There was no loss on extinguishment of debt recognized for the nine months ended September 30, 2023.
Previous wording
Interest expense, net was $117.5 million for the six months ended June 30, 2024, as compared with $157.9 million for the six months ended June 30, 2023, a decrease of $40.4 million or 25.6%. The decrease primarily resulted from lower outstanding term debt as compared to the prior period and a $6.4 million increase in interest income related to cash flow hedges of interest rate risk from $12.7 million of interest income for the six months ended June 30, 2023 to $19.1 million for the six months ended June 30, 2024. The Company's outstanding term debt decreased in the first fiscal quarter of 2024 due to the paydowns on our term debt using proceeds from the IPO Offerings.
Current wording
Interest expense, net was $173.5 million for the nine months ended September 30, 2024, as compared with $241.5 million for the nine months ended September 30, 2023, a decrease of $68.0 million or 28.2%. The decrease primarily resulted from lower outstanding term debt as compared to the prior period and a $7.0 million increase in interest income related to cash flow hedges of interest rate risk from $21.9 million of interest income for the nine months ended September 30, 2023 to $28.9 million for the nine months ended September 30, 2024. The Company's outstanding term debt decreased in the first fiscal quarter of 2024 due to the paydowns on our term debt using proceeds from the IPO Offerings.
Previous wording
Income tax benefit was $32.8 million for the six months ended June 30, 2024, as compared to $7.2 million for the six months ended June 30, 2023, an increase of $25.6 million. The increase in the income tax benefit is attributable to an increase in the pre-tax book loss for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, and an increase in the effective tax rate for the six months ended June 30, 2024 of 54.9% compared to 26.9% for the six months ended June 30, 2023. The increase in the effective tax rate is primarily due to limitations on the deductibility of certain executive compensation that now apply to the Company upon completion of its IPO in January 2024, as well as the discrete tax benefit recognized in the period related to the Silver matter that was finalized during the second fiscal quarter of 2024. See Note 10 within the unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q for additional information on the matter.
Current wording
Income tax benefit was $23.0 million for the nine months ended September 30, 2024, as compared to $13.0 million for the nine months ended September 30, 2023, an increase of $10.0 million. The increase in the income tax benefit is attributable to an increase in the effective tax rate for the nine months ended September 30, 2024 of 39.0% compared to 8.0% for the nine months ended September 30, 2023. The increase in the effective tax rate is primarily due to limitations on the deductibility of certain executive compensation that now apply to the Company upon completion of its IPO in January 2024, as well as the discrete tax benefit recognized in the period related to the Silver matter that was finalized during the second fiscal quarter of 2024. During 2023, the Company's effective tax rate was lower than the U.S. federal income tax rate, primarily as a result of the unfavorable impact of the Silver legal settlement, which was not expected to be deductible for tax purposes at that time. See Note 10 within the unaudited condensed consolidated financial statements and related notes in this Quarterly Report on Form 10-Q for additional information on the matter.
Previous wording
Net loss was $26.9 million for the six months ended June 30, 2024, as compared with $19.5 million for the six months ended June 30, 2023, an increase of $7.4 million. Net loss for 2024 includes the aforementioned $42.7 million of expense related to non-recurring costs directly associated with the IPO Offerings. Additionally, the Company incurred a write-off of $12.7 million of unamortized debt issuance costs upon the extinguishment of the Second Lien and $21.4 million of non-cash share-based compensation expense related to new equity awards granted to management and certain full-time employees in connection with the IPO Offerings. The increase in expenses is offset by the aforementioned decrease in interest expense, net, increase in revenues, and increase in income tax benefit. When excluding the approximately $30 million QIP received in 2023, net loss decreased by $22.8 million compared to a net loss of $49.7 million in 2023.
Current wording
Net loss was $35.9 million for the nine months ended September 30, 2024, as compared with $149.6 million for the nine months ended September 30, 2023, a decrease of $113.7 million. Net loss for 2024 includes the aforementioned $43.7 million of expense related to non-recurring costs directly associated with the IPO Offerings. Additionally, the Company incurred a write-off of $12.7 million of unamortized debt issuance costs upon the extinguishment of the Second Lien and $43.5 million of non-cash share-based compensation expense related to new equity awards granted to management and certain full-time employees in connection with the IPO Offerings. The increase in expenses is offset by the aforementioned decrease in interest expense, net and legal settlement and defense costs, increase in revenues, and increase in income tax benefit. When excluding the approximately $30 million QIP received in 2023, net loss decreased by $143.9 million compared to a net loss of $179.8 million in 2023.
Previous wording
Adjusted EBITDA was $269.6 million for the six months ended June 30, 2024, as compared with $264.7 million for the six months ended June 30, 2023, an increase of $4.9 million or 1.9%. When excluding the approximately $30 million QIP received in 2023, Adjusted EBITDA increased $35.1 million or 15.0%. The increase of $4.9 million primarily resulted from the following segment activity and factors:
Current wording
Adjusted EBITDA was $420.7 million for the nine months ended September 30, 2024, as compared with $395.2 million for the nine months ended September 30, 2023, an increase of $25.4 million or 6.4%. When excluding the approximately $30 million QIP received in 2023, Adjusted EBITDA increased $55.7 million or 15.3%. The increase of $25.4 million primarily resulted from the following segment activity and factors:
Previous wording
an increase of $28.3 million, or 10.7% growth on consolidated 2023 Adjusted EBITDA, as a result of growth in our Provider Services segments. See additional discussion in “—Segment Results of Operations” below; offset by,
Current wording
an increase of $40.0 million, or 10.1% growth on consolidated 2023 Adjusted EBITDA, as a result of growth in our Provider Services segments. See additional discussion in “—Segment Results of Operations” below; offset by,
Previous wording
an decrease of $9.5 million, or 3.6% decline on consolidated 2023 Adjusted EBITDA, as a result of a decline in our Pharmacy Solutions segment primarily attributable to not receiving a QIP in 2024. See additional discussion in “—Segment Results of Operations” below; and,
Current wording
an increase of $3.6 million, or 0.9% growth on consolidated 2023 Adjusted EBITDA, as a result of a growth in our Pharmacy Solutions segment. See additional discussion in “—Segment Results of Operations” below; and,
Previous wording
When excluding the approximately $30 million QIP received in 2023, consolidated Adjusted EBITDA related to the Pharmacy Solutions segment increased 8.9% compared to consolidated Adjusted EBITDA of $234.5 million in 2023.
Current wording
When excluding the approximately $30 million QIP received in 2023, consolidated Adjusted EBITDA related to the Pharmacy Solutions segment increased 9.3% compared to consolidated Adjusted EBITDA of $365.0 million in 2023.
Previous wording
a decrease of $13.9 million, or 5.2% decline on consolidated 2023 Adjusted EBITDA, as a result of increases in certain public company costs incurred, investments in information technology, and positions to support growth within the business.
Current wording
a decrease of $18.2 million, or 4.6% decline on consolidated 2023 Adjusted EBITDA, as a result of increases in certain public company costs incurred, investments in information technology, and positions to support growth within the business.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Gross profit was $188.6 million for the three months ended September 30, 2024, as compared with $163.3 million for the three months ended September 30, 2023, an increase of $25.3 million or 15.5%. The increase primarily resulted from the aforementioned revenue growth in the period, primarily the result of outsized volume growth as well as mix in certain specialty branded drugs, which have lower margins.
Current report — wording carried from elsewhere
$46.4 million, partially offset by extinguishment of and repayments on our long-term debt of $818.6 million, payment of debt issuance costs of $43.2 million, and other financing activities.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
When excluding the approximately $30 million QIP received in the second fiscal quarter of 2023, Adjusted EBITDA related to the Pharmacy Solutions segment increased 12.5% compared to consolidated Adjusted EBITDA of $119.2 million in the second fiscal quarter of 2023.