BrightSpring Health Services Inc. (NASDAQ: BTSG) is poised for growth in the home health and hospice landscape.
The company anticipates ramping up merger and acquisition (M&A) activity in coming years, with an emphasis on long-term return on investment, according to BrightSpring President and CEO Jon Rousseau. The company is focusing on significant expansion in the next two years, he indicated.
Tuck-in deals and de novos have been key to BrightSpring’s strategic growth. Acquisitions have increasingly become a larger part of its game plan — though with a cautious and diligent mindset, Rousseau said at Morgan Stanley’s annual Global Healthcare Conference on Friday.
“Our pipeline has been consistent and has never been more robust,” Rousseau said during the conference. “Our strategy the last two years is just focusing on geographical tuck-ins and very attractive multiples. We have very good opportunities within the acquisitions world, and we just have to really try to be very disciplined. We’re focused on getting to 3x leverage within the next two years. We think we can there and balance accretive M&A as well. We have tremendous deal volume.”
BrightSpring’s service lines include hospice, home health, primary care, rehabilitation, pharmaceuticals, behavioral and home health. The Louisville, Kentucky-based company is a home- and community-based health care services platform that serves more than 400,000 patients daily across all 50 states.
BrightSpring went public earlier this year following a Jan. 3 filing with the U.S. Securities and Exchange Commission, with a $1 billion initial public offering (IPO). The company has completed six acquisitions thus far in 2024, Rousseau indicated.
Its most recent transaction came on Wednesday when BrightSpring closed its acquisition of the Florida-based nonprofit Haven Hospice for a price tag of $60 million. Haven holds hospice certificates of need in 18 counties in its home state.
Much of BrightSpring’s recent operational and strategic focus has included integrating its recently acquired assets, Rousseau stated. Hospice and home health remain a focal point for the company, he added.
“We will continue to be opportunistic,” Rousseau said. “We force ourselves to be very intentional and very selective about the M&A we do. We focused more of our efforts from a strategy, investment and resource perspective on the more clinically-oriented services like home health, hospice and rehabilitation. There’s just tremendous market share opportunities in those industries over a long period of time.”
Much of the company’s de novo growth will be weighted toward establishing new hospice and home health locations across its existing geographic service areas, according to Rousseau. Of the roughly 15 to 20 de novos launched annually, roughly 80% of these are home health and hospice locations, he indicated.
“De novos are typically high return on capital investments,” said Rousseau. “They can take three or four years to get to a couple times’ return on your investment, but you’re always seeding growth several years out. It’s just a key part of our overall volume growth and market share strategy.”
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