Investing.com — Shares of BrightSpring Health Services (NASDAQ: BTSG) climbed 13% as the company announced plans to divest its community living business, ResCare Community Living, to Sevita for $835 million. The transaction is anticipated to close in 2025, subject to regulatory approvals. Post-divestiture, BrightSpring will focus on home health, hospice, personal care, rehabilitation services, and primary care.
The move is seen as a strategic effort to enhance the company’s margins by concentrating on higher-margin core services. Proceeds from the sale are expected to be used for debt reduction and to increase capital availability, which could lead to higher revenue and EBITDA growth rates, as well as improved cash conversion. Analysts have responded favorably to the news, with Mizuho (NYSE:MFG)’s Ann Hynes noting, “We view this announcement positively given the divestiture of its community living segment will allow for a strategic focus on its higher margin core services and a reduction of leverage.” Hynes also finds the 2025 guidance positive, reflecting continued strong execution and solid underlying performance. Whit Mayo of Leerink Partners commented, “The deal shaves off around a half-point of leverage and should allow BTSG to more aggressively deploy capital into the faster growing, higher margin, and more strategically complementary subsegments of its business,” while highlighting the strong business momentum and tailwinds implied by the 2025 pharmacy revenue guidance.
BrightSpring anticipates 2025 revenues to range from $11.50 billion to $12.00 billion, with estimates slightly higher at $12.34 billion according to Bloomberg Consensus. The company’s pharmacy segment is projected to grow 15.2% to 20.3% over the full year 2024, while the provider segment is expected to see an 8.9% to 12.7% increase. Adjusted EBITDA for 2025 is forecasted to be between $540 million and $555 million, below the consensus estimate of $634 million.
The company also reported preliminary net revenue for 2024 between $11.2 billion and $11.3 billion, surpassing the consensus of $11.17 billion. Preliminary adjusted EBITDA for 2024 is approximately $588 million.
BrightSpring’s CEO Jon Rousseau expressed pride in the company’s mission and heritage, emphasizing the quality, technology, and people investment over the years. Philip Kaufman, CEO of Sevita, shared his enthusiasm for the acquisition, underlining the shared commitment to quality community-based health care.
The divested community living business is expected to generate about $1.2 billion in revenue and roughly $128 million of adjusted EBITDA in 2024. BrightSpring plans to use the transaction proceeds primarily for debt paydown, which aligns with the company’s long-term leverage target of less than 3.0x. The transaction is projected to be accretive to both company and provider services revenue growth and adjusted EBITDA growth.
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