BrightSpring to Go Public, Trading on NASDAQ

BrightSpring Health Services is pursuing an initial public offering (IPO) and expects to begin trading on the NASDAQ. The company, which does not yet have a stock symbol, seeks to raise $100 million through the IPO.

BrightSpring is a home and community-based health care services platform. The company entered the hospice space in February with the $775 million acquisition of Abode Healthcare from the private equity firm Summit Partners. Brightspring completed a second hospice deal in September, acquiring North Carolina-based Dare County Home Health & Hospice for $2.9 million.

“By providing a complementary and purpose-built suite of services, our care model is designed to address more patient needs and better integrate health services delivery to improve outcomes and patient experiences, while reducing overall costs,” BrightSpring wrote in a filing with the U.S. Securities and Exchange Commission.

BrightSpring is making a concurrent offering of a so far undisclosed percentage of tangible equity units. These often come in the form of prepaid stock purchase contracts. 

Following this offering, BrightSpring’s current backers — KKR Phoenix Aggregator L.P., and Walgreens Co., an affiliate of Walgreens Boots Alliance, Inc. (NASDAQ: WBA) — will maintain a yet-to-be-determined percentage of shares. 

Goldman Sachs, Jeffries, BMO Capital Markets and Morgan Stanley are among the 14 financial institutions underwriting the IPO. Sources at several of these organizations indicated to Hospice News that they could not comment on a pending deal. BrightSpring also had no comment.

Established as ResCare in 1974, BrightSpring focuses on serving patient populations with complex and specialized care needs across the continuum of care and also offers pharmaceutical and diagnostic services through subsidiaries such as Adoration Health LLC, Pharmacy Alternatives LLC and more.

BrightSpring saw 23.3% revenue growth in 2020, a $1.1 billion increase to $5.6 billion across all of its business segments, which include Home and Community Health Provider Services, or Provider Services, and Pharmacy Solutions. Net income rose to $21.2 million last year, up 129.8%.

In the SEC filing, the company cited a combined market opportunity of $1.5 trillion across all of its business lines as a contributing factor to its decision to go public. BrightSpring sees growth opportunities through organic expansion, referral synergies across its service lines, emerging value-based payment models and strategic acquisitions, according to the filing. 

The company completed 12 deals each year between 2018 and 2020. As of Q2 2021, BrightSpring has completed six acquisitions, including the Abode and Dare County deals.

Acquisitions accounted for the bulk of its nearly $2.5 billion revenue growth from 2018 to 2020, BrightSpring indicated in the SEC documents.

“Our platform and financial profile also benefits from an extensive M&A track record and proven ability to source, execute and integrate strategic and accretive acquisitions across multiple fragmented industries,” BrightSpring indicated in its filing. “We are able to selectively target attractive and value-enhancing acquisitions that we expect to continue to contribute meaningfully to the long-term success of the company.”

BrightSpring also expects to benefit from the strong demographic tailwinds from the aging population that has propelled industry-wide growth. About 10,000 people in the United States become Medicare-eligible annually, a trend that began in 2011 and is expected to continue through 2030, according to the Kaiser Health Foundation. A substantial majority will have a serious or chronic health condition.

The company did cite some risks that could limit or adversely affect execution of their growth strategy. BrightSpring has a significant amount of debt, totaling nearly $3.5 billion, meaning the company must devote “a substantial portion” of its cash flows to paying down that sum.

Most of the risks BrightSpring identified reflect challenges that impact the health care sector as a whole, such as the highly competitive market, workforce shortages, potential changes to Medicare policy or reimbursement, as well as uncertainties related to the COVID-19 pandemic.

“We may be more vulnerable to the effects of a public health emergency than other businesses due to our complex patient populations and the physical proximity required by our operations,” the SEC filing indicated.