ROC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
|
☐ |
|
Accelerated filer |
|
☐ |
|
☒ |
|
Smaller reporting company |
|
||
Emerging growth company |
|
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of Registrant’s Common Stock outstanding as of July 30, 2024 was
Table of Contents
|
|
Page |
|
|
|
PART I. |
2 |
|
|
|
|
Item 1. |
2 |
|
|
2 |
|
|
3 |
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) |
4 |
|
5 |
|
|
7 |
|
|
9 |
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
Item 3. |
44 |
|
Item 4. |
44 |
|
|
|
|
PART II. |
46 |
|
|
|
|
Item 1. |
46 |
|
Item 1A. |
46 |
|
Item 2. |
46 |
|
Item 3. |
46 |
|
Item 4. |
46 |
|
Item 5. |
46 |
|
Item 6. |
47 |
|
48 |
||
i
Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q (this “Form 10-Q”) to “BrightSpring,” the “Company,” “we,” “us,” and “our” refer to BrightSpring Health Services, Inc. and its consolidated subsidiaries.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements that reflect our current views with respect to, among other things, our operations, and financial performance. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative version of these words, or similar terms and phrases to identify forward-looking statements.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our industries, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. If any of these risks materialize, or if any of our assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, those set forth in Item 1A, “Risk Factors,” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2023 (our “Form 10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”). Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. We caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this Form 10-Q. Any forward-looking statement made by us in this Form 10-Q speaks only as of the date hereof. We undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
1
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(unaudited) |
|
|
|
|
||
Assets |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable, net of allowance for credit losses |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property and equipment, net of accumulated depreciation of $ |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Intangible assets, net of accumulated amortization |
|
|
|
|
|
|
||
Operating lease right-of-use assets, net |
|
|
|
|
|
|
||
Deferred income taxes, net |
|
|
|
|
|
— |
|
|
Other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
Liabilities, Redeemable Noncontrolling Interests, and Equity |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Trade accounts payable |
|
$ |
|
|
$ |
|
||
Accrued expenses |
|
|
|
|
|
|
||
Current portion of obligations under operating leases |
|
|
|
|
|
|
||
Current portion of obligations under financing leases |
|
|
|
|
|
|
||
Current portion of long-term debt |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Obligations under operating leases, net of current portion |
|
|
|
|
|
|
||
Obligations under financing leases, net of current portion |
|
|
|
|
|
|
||
Long-term debt, net of current portion |
|
|
|
|
|
|
||
Deferred income taxes, net |
|
|
— |
|
|
|
|
|
Long-term liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
Redeemable noncontrolling interests |
|
|
|
|
|
|
||
Shareholders' equity: |
|
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
|
||
Preferred stock, $ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive income |
|
|
|
|
|
|
||
Total shareholders' equity |
|
|
|
|
|
|
||
Noncontrolling interest |
|
|
|
|
|
|
||
Total equity |
|
|
|
|
|
|
||
Total liabilities, redeemable noncontrolling interests, and equity |
|
$ |
|
|
$ |
|
||
See accompanying notes to the condensed consolidated financial statements.
2
BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Products |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of goods |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general, and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) before income taxes |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Income tax benefit |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income (loss) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Net loss attributable to noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income (loss) attributable to BrightSpring Health Services, |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per common share (Note 12): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income (loss) per share - basic |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
Income (loss) per share - diluted |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
See accompanying notes to the condensed consolidated financial statements.
3
BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net income (loss) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
Other comprehensive (loss) income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net change in fair value, net of tax (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amounts reclassified to earnings, net of tax (2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total other comprehensive (loss) income, net of tax |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Total comprehensive income (loss) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Comprehensive loss attributable to redeemable noncontrolling |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Comprehensive loss attributable to noncontrolling interest |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Comprehensive income (loss) attributable to BrightSpring Health |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
See accompanying notes to the condensed consolidated financial statements.
4
BrightSpring Health Services, Inc. and Subsidiaries
(In thousands, except share data)
(Unaudited)
|
|
For the Three Months Ended June 30, 2024 |
|
|||||||||||||||||||||||||
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated Deficit |
|
|
Accumulated Other Comprehensive Income |
|
|
Noncontrolling |
|
|
Total |
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balances at March 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income (loss) (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Other comprehensive loss, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Shares issued under share-based compensation |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Shares issued for payment of acquisition |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Balances at June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
For the Three Months Ended June 30, 2023 |
|
|||||||||||||||||||||||||
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated Deficit |
|
|
Accumulated Other Comprehensive Income |
|
|
Noncontrolling |
|
|
Total |
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balances at March 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Net income (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balances at June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
(1)
5
BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity (continued)
(In thousands, except share data or otherwise indicated)
(Unaudited)
|
|
For the Six Months Ended June 30, 2024 |
|
|||||||||||||||||||||||||
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated Deficit |
|
|
Accumulated Other Comprehensive Income |
|
|
Noncontrolling |
|
|
Total |
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balances at December 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net loss (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Shares issued under share-based compensation |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Shares issued for payment of acquisition |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Extinguishment of redeemable noncontrolling |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Issuance of common stock on initial public |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Proceeds from stock purchase contract issued |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balances at June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
For the Six Months Ended June 30, 2023 |
|
|||||||||||||||||||||||||
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated Deficit |
|
|
Accumulated Other Comprehensive Income |
|
|
Noncontrolling |
|
|
Total |
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balances at December 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Net loss (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Shares issued under share-based compensation |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Balances at June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
(1)
See accompanying notes to the condensed consolidated financial statements.
6
BrightSpring Health Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|
For the Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to cash (used in) provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Impairment of long-lived assets |
|
|
|
|
|
|
||
Provision for credit losses |
|
|
|
|
|
|
||
Amortization of deferred debt issuance costs |
|
|
|
|
|
|
||
Share-based compensation |
|
|
|
|
|
|
||
Deferred income taxes, net |
|
|
( |
) |
|
|
( |
) |
Loss on extinguishment of debt |
|
|
|
|
|
— |
|
|
Loss on disposition of fixed assets |
|
|
|
|
|
|
||
Other |
|
|
( |
) |
|
|
|
|
Change in operating assets and liabilities, net of acquisitions and dispositions: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Trade accounts payable |
|
|
|
|
|
( |
) |
|
Accrued expenses |
|
|
( |
) |
|
|
|
|
Other assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash (used in) provided by operating activities |
|
$ |
( |
) |
|
$ |
|
|
Investing activities: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
$ |
( |
) |
|
$ |
( |
) |
Acquisitions of businesses, net of cash acquired |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
|
||
Net cash used in investing activities |
|
$ |
( |
) |
|
$ |
( |
) |
Financing activities: |
|
|
|
|
|
|
||
Long-term debt borrowings |
|
$ |
|
|
$ |
— |
|
|
Long-term debt repayments |
|
|
( |
) |
|
|
( |
) |
Proceeds from issuance of common stock on initial public offering, net |
|
|
|
|
|
— |
|
|
Proceeds from issuance of tangible equity units, net |
|
|
|
|
|
— |
|
|
Borrowings of the Revolving Credit Facility, net |
|
|
|
|
|
|
||
Payment of debt issuance costs |
|
|
( |
) |
|
|
— |
|
Repurchase of shares of common stock |
|
|
( |
) |
|
|
— |
|
Shares issued under share-based compensation plan, including tax effects |
|
|
|
|
|
|
||
Shares issued for payment of acquisition |
|
|
|
|
|
— |
|
|
Payment of acquisition earn-outs |
|
|
( |
) |
|
|
— |
|
Purchase of redeemable noncontrolling interest |
|
|
( |
) |
|
|
— |
|
Payment of financing lease obligations |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
$ |
|
|
$ |
|
||
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents at beginning of year |
|
|
|
|
|
|
||
Cash and cash equivalents at end of year |
|
$ |
|
|||||