BrightSpring Health Services Inc. (Nasdaq: BTSG) recently sold off its community living business to Setiva for $835 million. The transaction is anticipated to close in 2025 pending regulatory approvals.
Dubbed as ResCare Community Living, the sale of the business line represents an important milestone in BrightSpring’s strategic trajectory. The Louisville, Kentucky-based home- and community-based health care services platform expects to realize operational efficiencies following the divestiture.
The company reported an aim to develop a more “synergistic portfolio” of services in a recent press release announcing the deal.
“At this stage of our lifestyle at BrightSpring, we are transitioning the community living business to Sativa,” President and CEO Jon Rousseau said in a recent webcast call. “With this announcement, BrightSpring has streamlined its business to become more focused on a concentrated set of core patients and service capabilities, which is beneficial to the company, customers, patients and shareholders for multiple reasons.”
BrightSpring provides hospice, home health, primary care, rehabilitation, pharmaceuticals, behavioral and home health. The home- and community-based health care services platform serves more than 400,000 patients daily across all 50 states.
Among the multifaceted reasons for the divestiture is a drive to dedicate more time, energy and capital to supporting patients in hospice, home health, primary and personal care services, Rousseau said. Additionally, the company expects more strategic opportunities to follow the deal’s closing, particularly in its pharmacy and provider businesses serving seniors populations. The transaction was also made with a goal to develop a more balanced provider payer mix.
The company’s divested community living business is expected to generate approximately $1.2 billion in revenue and about $128 million of adjusted EBITDA in 2024, with roughly $23 million of capital expenditures and capital leases. The community living business’ 13,500 employees provides care to about 14,000 individuals.
BrightSpring expects the transaction to yield roughly $715 million of after-tax cash proceeds, which will be primarily utilized to pay down the company’s debt and strengthen its balance sheet.
BrightSpring’s remaining business lines in home health, personal care and rehabilitation services each have an “attractive growth profile,” Rousseau said. The company sees strategic opportunities in both de novo expansion and new acquisitions, he indicated.
“Ultimately, the divesture of community living will unlock a more consolidated and attractive provider services business profile,” Rousseau said during the webcast call. “The transaction is deleveraging. Our operating structure will allow for a more focused allocation of corporate resources and capital to grow our service capabilities in these areas, as well as in our specialty and home community pharmacy business.”
Guggenheim Securities LLC and Leerink Partners serve as BrightSpring’s financial advisors in the deal. Polsinelli, Barnes & Thornburg and Simpson Thatcher & Bartlett provided legal counsel.
Barclays and Goldman Sachs serve as financial advisors to Sevita, with Kirkland & Ellis LLP as its legal counsel.
Launched more than 50 years ago, Setiva provides home- and community-based care to roughly 50,000 adult and pediatric patients in 40 states. The company offers family behavioral health, rehabilitation and adult day services, as well as in-home health care and community based services for patients with intellectual and developmental disabilities and complex care needs.
“Sevita and ResCare Community Living share a deep commitment to providing quality community-based health care and improving the lives of those who rely on us every day,” Setiva CEO Philip Kaufman said in a press release. “Together, we will be positioned to support more people in need of these impactful services, deploy learnings and best practices from both organizations, and make continued investments in our homes, service delivery and technology — all with the goal of enhancing the lives of the individuals that we are privileged to serve.”