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What changed in BrightSpring Health Services, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BrightSpring Health Services, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+458 added−773 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-06)

Top changes in BrightSpring Health Services, Inc.'s 2024 10-K

458 paragraphs added · 773 removed · 362 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

84 edited+10 added−183 removed282 unchanged
Biggest changeCombined, our daily pharmacy and provider services are delivered from and to approximately 10,300 office, clinic, and customer locations across the country, with over 400,000 patients serviced at any one time, including over 250,000 patients served in their homes at any one time. 2 Table of Contents We believe the historical results of the Company are due to both our scale and diversified yet complementary services, which have underpinned historical financial stability while also enabling us to grow and pursue opportunities in attractive markets principally in home and community settings.
Biggest changeCombined, our daily pharmacy and provider services are delivered from and to approximately 11,300 office, clinic, and customer locations across the country, with over 450,000 patients serviced at any one time, including approximately 300,000 patients served in their homes at any one time.
If any of our operations are found to violate applicable laws or regulations, we could suffer severe consequences that would have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation, and stock price, including: • suspension, termination or exclusion of our participation in government payor programs; • loss of our licenses required to operate provider and pharmacy solutions in the states in which we operate; • criminal or civil liability, fines, damages or monetary penalties relating to healthcare fraud and abuse, including the Stark Law, the Anti-Kickback Statute, the Civil Monetary Penalties Statute, the False Claims Act and/or state analogs to these federal enforcement authorities, or violations of other regulatory requirements, including state corporate practice of medicine and fee splitting laws; • mandated changes to our practices or procedures that significantly increase selling, general, and administrative expenses or decrease our revenue; • imposition of and compliance with corporate integrity agreements or other agreements that could subject us to ongoing audits, corrective actions, and reporting requirements as well as increased scrutiny of our business practices which could lead to potential fines, among other things; • termination or restructuring of various relationships and/or contracts related to our business, including joint venture arrangements, contracts with government payors, and real estate leases; • changes in and reinterpretation of rules and laws by a regulatory agency, legislature or court, such as state corporate practice of medicine laws, that could affect the structure and management of our business; • negative adjustments to government payment models including, but not limited to, Medicare Parts B, C, and D and Medicaid; • admissions bans, admissions holds, application denial periods, or reductions in census; and 28 Table of Contents • harm to our reputation, which could negatively impact our business relationships, the terms of government payor contracts, our ability to attract and retain patients, customers and referral sources, our ability to obtain financing, and our access to new business opportunities, among other things.
If any of our operations are found to violate applicable laws or regulations, we could suffer severe consequences that would have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation, and stock price, including: • suspension, termination or exclusion of our participation in government payor programs; • loss of our licenses required to operate provider and pharmacy solutions in the states in which we operate; • criminal or civil liability, fines, damages or monetary penalties relating to healthcare fraud and abuse, including the Stark Law, the Anti-Kickback Statute, the Civil Monetary Penalties Statute, the False Claims Act and/or state analogs to these federal enforcement authorities, or violations of other regulatory requirements, including state corporate practice of medicine and fee splitting laws; • mandated changes to our practices or procedures that significantly increase selling, general, and administrative expenses or decrease our revenue; • imposition of and compliance with corporate integrity agreements or other agreements that could subject us to ongoing audits, corrective actions, and reporting requirements as well as increased scrutiny of our business practices which could lead to potential fines, among other things; 13 Table of Contents • termination or restructuring of various relationships and/or contracts related to our business, including joint venture arrangements, contracts with government payors, and real estate leases; • changes in and reinterpretation of rules and laws by a regulatory agency, legislature or court, such as state corporate practice of medicine laws, that could affect the structure and management of our business; • negative adjustments to government payment models including, but not limited to, Medicare Parts A, B, C, and D and Medicaid; • admissions bans, admissions holds, application denial periods, or reductions in census; and • harm to our reputation, which could negatively impact our business relationships, the terms of government payor contracts, our ability to attract and retain patients, customers and referral sources, our ability to obtain financing, and our access to new business opportunities, among other things.
Civil Monetary Penalties Statute The Civil Monetary Penalties Statute, 42 U.S.C. § 1320a-7a, authorizes the imposition of civil monetary penalties, assessments, and exclusion against an individual or entity based on a variety of prohibited conduct, including, but not limited to: • presenting, or causing to be presented, claims, reports or records relating to payment by Medicare, Medicaid or other government payors that the individual or entity knows or should know are for an item or service that was not provided as claimed, is false or fraudulent or was presented for a physician’s service by a person who knows or should know that the individual providing the service is not a licensed physician, obtained licensure through misrepresentation or represented certification in a medical specialty without in fact possessing such certification; • offering remuneration to a federal healthcare program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive healthcare items or services from a particular provider; • arranging contracts with or making payments to an entity or individual excluded from participation in the federal healthcare programs or included on CMS’s preclusion list; • violating the Anti-Kickback Statute; • making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim for payment for items and services furnished under a federal healthcare program; • making, using, or causing to be made any false statement, omission, or misrepresentation of a material fact in any application, bid, or contract to participate or enroll as a provider of services or a supplier under a federal healthcare program; and • failing to report and return an overpayment owed to the federal government.
Civil Monetary Penalties Statute The Civil Monetary Penalties Statute, 42 U.S.C. § 1320a-7a, authorizes the imposition of civil monetary penalties, assessments, and exclusion against an individual or entity based on a variety of prohibited conduct, including, but not limited to: • presenting, or causing to be presented, claims, reports or records relating to payment by Medicare, Medicaid or other government payors that the individual or entity knows or should know are for an item or service that was not provided as claimed, is false or fraudulent or was presented for a physician’s service by a person who knows or should know that the individual providing the service is not a licensed physician, obtained licensure through misrepresentation or represented certification in a medical specialty without in fact possessing such certification; • offering remuneration to a federal healthcare program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive healthcare items or services from a particular provider; • arranging contracts with or making payments to an entity or individual excluded from participation in the federal healthcare programs or included on CMS’s preclusion list; • violating the Anti-Kickback Statute; • making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim for payment for items and services furnished under a federal healthcare program; 16 Table of Contents • making, using, or causing to be made any false statement, omission, or misrepresentation of a material fact in any application, bid, or contract to participate or enroll as a provider of services or a supplier under a federal healthcare program; and • failing to report and return an overpayment owed to the federal government.
In turn, these enablers are required to execute three key integrated and value-based care strategies, including (i) the coordination of clinically integrated care for patients receiving multiple Company services across settings and over time, (ii) providing multiple integrated (or bundled) services to senior living communities, behavioral providers, skilled nursing and rehabilitation facility providers, hospitals, and payors who all require our comprehensive offerings, and (iii) the execution of value-based 20 Table of Contents care contracts, whether internal through the Company’s own ACO shared savings arrangements and managed care plans or whether external through third-party government or managed care entities.
In turn, these enablers are required to execute three key integrated and value-based care strategies, including (i) the coordination of clinically integrated care for patients receiving multiple Company services across settings and over time, (ii) providing multiple integrated (or bundled) services to senior living communities, behavioral providers, skilled nursing and rehabilitation facility providers, hospitals, 2 Table of Contents and payors who all require our comprehensive offerings, and (iii) the execution of value-based care contracts, whether internal through the Company’s own ACO shared savings arrangements and managed care plans or whether external through third-party government or managed care entities.
Non-adherence causes approximately 40% of chronic disease treatment failures and 125,000 deaths per year in the United States. Further, non-adherence costs $100 billion annually, according to the JAMDA study. We deliver on our goals with 99.99% order accuracy and 98.20% order completeness. There are numerous success factors that we believe are important for long-term sustainability in the pharmacy industry.
Non-adherence causes approximately 40% of chronic disease treatment failures and 125,000 deaths per year in the United States. Further, non-adherence costs $100 billion annually, according to the JAMDA study. We deliver on our goals with 99.99% order accuracy and 98.63% order completeness. There are numerous success factors that we believe are important for long-term sustainability in the pharmacy industry.
Our services reduce cost by providing care for many of these individuals in non-institutional home and community settings and reducing hospitalizations. For example, across our pharmacies, we achieve 99.99% order accuracy and 98.20% order completeness, “excellent” and “world class” NPS, and a reduction in hospitalizations with CCRx, while also driving savings through medication adherence and therapeutic interchanges.
Our services reduce cost by providing care for many of these individuals in non-institutional home and community settings and reducing hospitalizations. For example, across our pharmacies, we achieve 99.99% order accuracy and 98.63% order completeness, “excellent” and “world class” NPS, and a reduction in hospitalizations with CCRx, while also driving savings through medication adherence and therapeutic interchanges.
In addition to large finance and human resources organizations, dedicated PMO, IMO, and Procurement teams have been in place for the last seven years and serve as control functions, as they evaluate opportunities, drive continuous improvement projects, and support the execution of critical initiatives across all business and enterprise functions in the Company.
In addition to large finance and human resources organizations, dedicated PMO, IMO, and Procurement teams have been in place for the last eight years and serve as control functions, as they evaluate opportunities, drive continuous improvement projects, and support the execution of critical initiatives across all business and enterprise functions in the Company.
Continued enhancements in revenue cycle systems and processes have included a new accounts receivable collections system to prioritize accounts and team activity and drive DSOs, implementation of our “One Touch” billing and collections program in pharmacy (to comparatively outperform for customers in a complicated industry billing environment using dedicated billing specialists assigned to facilities to proactively lower costs and optimize customer experiences), lockbox capability, and online bill pay.
Continued enhancements in revenue cycle systems and processes have included a 7 Table of Contents new accounts receivable collections system to prioritize accounts and team activity and drive DSOs, implementation of our “One Touch” billing and collections program in pharmacy (to comparatively outperform for customers in a complicated industry billing environment using dedicated billing specialists assigned to facilities to proactively lower costs and optimize customer experiences), lockbox capability, and online bill pay.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act will be available free of charge on our website, under the “Investors - Financial Information - SEC Filings” caption, as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act are available free of charge on our website, under the “Investors - Financial Information - SEC Filings” caption, as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.
Our cloud-based data lake (storage) and business intelligence (analytics) capabilities are now a single digital platform and set up to feed real-time quality, operational, and financial metrics tracking across the Company. 15 Table of Contents In 2020, we also completed the implementation of a financial systems transformation, including the implementation of Oracle Fusion and a new budgeting and forecasting system.
Our cloud-based data lake (storage) and business intelligence (analytics) capabilities are now a single digital platform and set up to feed real-time quality, operational, and financial metrics tracking across the Company. In 2020, we also completed the implementation of a financial systems transformation, including the implementation of Oracle Fusion and a new budgeting and forecasting system.
The CCPA imposes severe statutory damages and provides 35 Table of Contents consumers with a private right of action for certain data breaches. Further, the CPRA, which went into effect on January 1, 2023, expands the CCPA with additional data privacy compliance requirements that may impact our business, and establishes a regulatory agency dedicated to enforcing those requirements.
The CCPA imposes severe statutory damages and provides consumers with a private right of action for certain data breaches. Further, the CPRA, which went into effect on January 1, 2023, expands the CCPA with additional data privacy compliance requirements that may impact our business, and establishes a regulatory agency dedicated to enforcing those requirements.
We receive 22 Table of Contents substantially all of our Provider Services clients and patients through third-party referrals, including from healthcare providers, such as physicians, hospitals, skilled nursing and rehabilitation facilities, assisted living facilities, state, county and city departments on aging, rehabilitation, mental health, behavioral health, and social services, MCOs, and other healthcare and social services providers, discharge planners, and case managers.
We receive substantially all of our Provider Services clients and patients through third-party referrals, including from healthcare providers, such as physicians, hospitals, skilled nursing and rehabilitation facilities, assisted living facilities, state, county and city departments on aging, rehabilitation, mental health, behavioral health, and social services, MCOs, and other healthcare and social services providers, discharge planners, and case managers.
Recognizing the importance of our employee base, we have consistently increased investments in compensation and benefits in support of our multi-faceted efforts to attract and retain people, as demonstrated by our compensation up 50% in the last three years, and we offer innovative technology solutions to our employees that allow them the option to access their pay daily.
Recognizing the importance of our employee base, we have consistently increased investments in compensation and benefits in support of our multi-faceted efforts to attract and retain people, as demonstrated by our compensation up over 50% in the last four years, and we offer innovative technology solutions to our employees that allow them the option to access their pay daily.
We have over 1,000 pharmacies, branches/agencies, and service locations accredited by the leading, national, and third-party accreditation bodies, including ACHC, CHAP, Joint Commission, CARF, NABP, URAC, and DMEPOS.
We have over 1,000 pharmacies, branches/agencies, and service locations are operated by agencies accredited by the leading, national, and third-party accreditation bodies, including ACHC, CHAP, Joint Commission, CARF, NABP, URAC, and DMEPOS.
The SEC also maintains a website (www.sec.gov) where you can search for annual, quarterly and current reports, proxy and information statements and other information regarding us and other public companies. 38 Table of Contents
The SEC also maintains a website (www.sec.gov) where you can search for annual, quarterly and current reports, proxy and information statements and other information regarding us and other public companies. 21 Table of Contents
Our services are organized and managed through two reportable segments: Pharmacy Solutions and Provider Services. 9 Table of Contents The Company’s scale, complementary service offerings, and geographic footprint also enable integrated and value-based care opportunities. Many of our patients today receive both pharmacy and provider services from the Company, thus simplifying their experience and supporting positive outcomes.
Our services are organized and managed through two reportable segments: Pharmacy Solutions and Provider Services. The Company’s scale, complementary service offerings, and geographic footprint also enable integrated and value-based care opportunities. Many of our patients today receive both pharmacy and provider services from the Company, thus simplifying their experience and supporting positive outcomes.
We continue to invest in quality and compliance resources with 193 enterprise oversight quality and compliance team members, who conduct approximately 200 additional, deep, and next-level audits annually, in addition to ongoing audits at the field operations level. This team also completes monthly record reviews of 10% of patient charts, leveraging electronic health records.
We continue to invest in quality and compliance resources with 207 enterprise oversight quality and compliance team members, who conduct approximately 200 additional, deep, and next-level audits annually, in addition to ongoing audits at the field operations level. This team also completes monthly record reviews of patient charts, leveraging electronic health records.
Corporate Practice of Medicine and Fee-Splitting Laws Some of the states in which we currently operate have laws that prohibit business entities, such as us, from practicing medicine, employing physicians to practice medicine, exercising control over medical decisions by physicians or engaging in certain arrangements, such as fee-splitting, with physicians (such activities generally 32 Table of Contents referred to as the corporate practice of medicine).
Corporate Practice of Medicine and Fee-Splitting Laws Some of the states in which we currently operate have laws that prohibit business entities, such as us, from practicing medicine, employing physicians to practice medicine, exercising control over medical decisions by physicians or engaging in certain arrangements, such as fee-splitting, with physicians (such activities generally referred to as the corporate practice of medicine).
We also make available through the Investors section of our website other reports filed with or furnished to the 37 Table of Contents SEC under the Exchange Act, including our proxy statements and reports filed by officers and directors under Section 16(a) of the Exchange Act, as well as our Code of Ethics and Business Conduct, Corporate Governance Guidelines and Board committee charters.
We also make available through the Investors section of our website other reports filed with or furnished to the SEC under the Exchange Act, including our proxy statements and reports filed by officers and directors under Section 16(a) of the Exchange Act, as well as our Code of Ethics and Business Conduct, Corporate Governance Guidelines and Board committee charters.
Complementary scale in the pharmacy business is additive to provider services quality and growth, as our pharmacy business’ presence and footprint across geographies provide for a base of integrated care patient opportunities. 12 Table of Contents Home Health Care We provide patient-centric, highly skilled, and compassionate clinical care to Seniors and others in their homes.
Complementary scale in the pharmacy business is additive to provider services quality and growth, as our pharmacy business’ presence and footprint across geographies provide for a base of integrated care patient opportunities. Home Health Care We provide patient-centric, highly skilled, and compassionate clinical care to Seniors and others in their homes.
Through our comprehensive care capabilities, we are able to develop longitudinal relationships and views of our patients, which 1 Table of Contents enables us to more closely manage daily medication requirements and adherence, provide primary care and other skilled nursing and therapy clinical services, and address social determinants of health and daily care needs.
Through our comprehensive care capabilities, we are able to develop longitudinal relationships and views of our patients, which enables us to more closely manage daily medication requirements and adherence, provide primary care and other skilled nursing and therapy clinical services, and address social determinants of health and daily care needs.
As more of our patients utilize the multiple needed services that they require and we provide, we pro-actively monitor patients and deploy triage 13 Table of Contents tools through our Clinical (Nursing) Hub to address risks and optimize quality outcomes in real-time, particularly for higher risk patients.
As more of our patients utilize the multiple needed services that they require and we provide, we pro-actively monitor patients and deploy triage tools through our Clinical (Nursing) Hub to address risks and optimize quality outcomes in real-time, particularly for higher risk patients.
Our services make a dramatic impact on the trajectory of a patient’s independence, skills, and life and significantly lower longer-term costs. Rehab patients see profound improvements in their conditions, with the Company’s outpatient rehab services receiving a 98% patient satisfaction score and approximately 99% of patients who would recommend our services.
Our services make a dramatic impact on the trajectory of a patient’s independence, skills, and life and significantly lower longer-term costs. Rehab patients see profound improvements in their conditions, with the Company’s outpatient rehab services receiving a 97% patient satisfaction score and approximately 97% of patients who would recommend our services.
Fourth, many of our customers and patients have different and more significant clinical, educational, and reimbursement needs as compared to the general population’s retail medication profile, 10 Table of Contents which must be addressed through particular expertise and high-touch customer and patient support vehicles and resources.
Fourth, many of our customers and patients have different and more significant clinical, educational, and reimbursement needs as compared to the general population’s retail medication profile, which must be addressed through particular expertise and high-touch customer and patient support vehicles and resources.
Depending on the state, these funds may be used to supplement existing Medicaid programs or for distinct programs that serve non-Medicaid eligible 25 Table of Contents consumers. Any termination or material changes to these contracts or changes to the allocation of state funds or programs could affect our business, financial position, and results of operations.
Depending on the state, these funds may be used to supplement existing Medicaid programs or for distinct programs that serve non-Medicaid eligible consumers. Any termination or material changes to these contracts or changes to the allocation of state funds or programs could affect our business, financial position, and results of operations.
A determination that activities resulted in the submission of false claims could result in monetary liability, prison sentences, and/or exclusion from participation in any healthcare program funded in whole or in part 31 Table of Contents by the U.S. government, including Medicare, Medicaid, TRICARE, and state healthcare programs.
A determination that activities resulted in the submission of false claims could result in monetary liability, prison sentences, and/or exclusion from participation in any healthcare program funded in whole or in part by the U.S. government, including Medicare, Medicaid, TRICARE, and state healthcare programs.
We have developed an active affinity program for Veterans and families of Veterans, which 27 Table of Contents connects with targeted individuals and provides employment opportunities and support during and after their service time. We are an active sponsor of Soldier’s Angels and their Women of Valor program supporting active-duty females.
We have developed an active affinity program for Veterans and families of Veterans, which connects with targeted individuals and provides employment opportunities and support during and after their service time. We are an active sponsor of Soldier’s Angels and their Women of Valor program supporting active-duty females.
All impermissible uses or disclosures of unsecured PHI are presumed to be breaches unless an exception to the definition of breach applies or the covered entity or business associate establishes that there is a low probability the PHI has been compromised.
All impermissible uses or 18 Table of Contents disclosures of unsecured PHI are presumed to be breaches unless an exception to the definition of breach applies or the covered entity or business associate establishes that there is a low probability the PHI has been compromised.
Medicare Medicare is a federal program that provides medical services to persons aged 65 or older and other qualified persons with disabilities or end-stage renal disease. Medicare Parts A (hospital insurance) and B (medical insurance) provide prescription drug coverage in certain circumstances, while the Part D prescription drug benefit covers many 23 Table of Contents outpatient prescription drugs.
Medicare Medicare is a federal program that provides medical services to persons aged 65 or older and other qualified persons with disabilities or end-stage renal disease. Medicare Parts A (hospital insurance) and B (medical insurance) provide prescription drug coverage in certain circumstances, while the Part D prescription drug benefit covers many outpatient prescription drugs.
If an organization intends to use personal information for another purpose, it must again obtain that individual’s consent. Failure to comply with PIPEDA could result in significant fines and penalties. Data privacy and security laws and regulations are often contradictory and subject to change or differing and evolving interpretations.
If an organization intends to use personal information for another purpose, it must again obtain that individual’s consent. Failure to comply with PIPEDA could result in significant fines and penalties. 19 Table of Contents Data privacy and security laws and regulations are often contradictory and subject to change or differing and evolving interpretations.
This transition is due to an overall desire to better manage the costs of the Medicaid long-term care programs. In addition, hospice and home health services are also reimbursed by MCOs in some states.
This transition is due to an overall desire to better manage the costs of the Medicaid long-term care programs. In addition, hospice and home health services are 10 Table of Contents also reimbursed by MCOs in some states.
Our culture is at the heart of all we do, enabling execution of our strategies. Our commitment and passion for making a difference and helping people guides the way our care and services are delivered, one patient at a time.
Our culture is at the heart of all we do, enabling execution of 6 Table of Contents our strategies. Our commitment and passion for making a difference and helping people guides the way our care and services are delivered, one patient at a time.
The implementation of our PMO-led continuous improvement program over the past seven years at the enterprise level has resulted in approximately $47.5 million of annual savings in 2023 (in addition to annual efficiencies and savings work throughout field operations) from improved processes and working smarter, and these efficiencies have been used to reinvest in employees (both existing employees through wages and benefits and new employees to support key strategies, innovation and infrastructure needs to further scale), quality, technology, and growth initiatives.
The implementation of our PMO-led continuous improvement program over the past eight years at the enterprise level has resulted in approximately $67.5 million of annual savings in 2024 (in addition to annual efficiencies and savings work throughout field operations) from improved processes and working smarter, and these efficiencies have been used to reinvest in employees (both existing employees through wages and benefits and new employees to support key strategies, innovation and infrastructure needs to further scale), quality, technology, and growth initiatives.
These changes in federal regulations are anticipated to have a significant impact on healthcare providers and other stakeholders. In addition, we anticipate that additional changes will continue to be proposed in the future. Other Regulations Our operations are subject to various state hazardous waste and non-hazardous medical waste disposal laws.
These changes in federal regulations are anticipated to have a significant impact on healthcare providers and other stakeholders. In addition, we anticipate that additional changes will continue to be proposed in the future. 20 Table of Contents Other Regulations Our operations are subject to various state hazardous waste and non-hazardous medical waste disposal laws.
Our service capabilities extend across all 50 states in the United States, with co-location of our pharmacy and provider services in 40 states. We deliver a higher proportion of services in select regions with favorable demographics and regulatory environments, with approximately 49% of our revenue in 10 states for the year ended December 31, 2023.
Our service capabilities extend across all 50 states in the United States, with co-location of our pharmacy and provider services in 40 states. We deliver a higher proportion of services in select regions with favorable demographics and regulatory environments, with approximately 47% of our revenue in 10 states for the year ended December 31, 2024.
See “Risk Factors—Risks Related to Our Business.” Sales and Marketing In our Pharmacy Solutions segment, potential referral sources and customers include physicians and specialists (prescribers), hospitals, senior living providers, behavioral (I/DD and other) providers, hospice providers, skilled nursing and rehabilitation providers, pharmaceutical manufacturers, and other health providers.
See “Risk Factors—Risks Related to Our Business.” 8 Table of Contents Sales and Marketing In our Pharmacy Solutions segment, potential referral sources and customers include physicians and specialists (prescribers), hospitals, senior living providers, behavioral (I/DD and other) providers, hospice providers, skilled nursing and rehabilitation providers, pharmaceutical manufacturers, and other health providers.
In addition, the government may assert that a claim including items or services resulting from a violation of the Anti-Kickback the Statute or Stark Law constitutes a false or fraudulent claim for purposes of the False Claims Act.
In addition, the 15 Table of Contents government may assert that a claim including items or services resulting from a violation of the Anti-Kickback the Statute or Stark Law constitutes a false or fraudulent claim for purposes of the False Claims Act.
Many of our provider patients also receive their pharmacy services through the Company, which helps to optimize their pharmacy and medication care and needs, simplify their experience, and improve their satisfaction. Our patient personal care satisfaction score for provider services patients was 4.44 out of 5.0, per an internal survey.
Many of our provider patients also receive their pharmacy services through the Company, which helps to optimize their pharmacy and medication care and needs, simplify their experience, and improve their satisfaction. Our patient personal care satisfaction score for provider services patients was 4 Table of Contents 4.54 out of 5.0, per an internal survey.
Stark Law The Stark Law generally prohibits a physician who has (or whose immediate family member has) a financial relationship with a provider from making referrals to that entity for “designated health services” if payment for the 29 Table of Contents services may be made under Medicare or Medicaid.
Stark Law The Stark Law generally prohibits a physician who has (or whose immediate family member has) a financial relationship with a provider from making referrals to that entity for “designated health services” if payment for the services may be made under Medicare or Medicaid.
We have specifically focused on and built a fast, local, and “white-glove” delivery model that is supported by expert clinical teams in the field, which fulfilled over 37 million prescriptions in 2023 across customer and patient settings and types.
We have specifically focused on and built a fast, local, and “white-glove” delivery model that is supported by expert clinical teams in the field, which fulfilled over 41 million prescriptions in 2024 across customer and patient settings and types.
We have continued to invest greater amounts into technology resources and systems that we 26 Table of Contents believe are required, drive continuous improvement, and reflect leading infrastructure and applications standards in our industries, including investments in automation, digitization, standardization, and modernization initiatives.
We have continued to invest greater amounts into technology resources and systems that we believe are required, drive continuous improvement, and reflect leading infrastructure and applications standards in our industries, including investments in automation, digitization, standardization, and modernization initiatives.
“Designated health services” include clinical laboratory services, inpatient and outpatient hospital services, physical and occupational therapy services, outpatient speech-language pathology services, certain radiology services, radiation therapy services and supplies, durable medical equipment and supplies, parenteral and enteral nutrients equipment and supplies, prosthetics, orthotics and prosthetic devices and supplies, home health services, and outpatient prescription drugs.
“Designated health services” include clinical laboratory services, inpatient and outpatient hospital services, physical and occupational therapy services, outpatient speech-language pathology services, certain radiology services, radiation therapy services and supplies, 14 Table of Contents durable medical equipment and supplies, parenteral and enteral nutrients equipment and supplies, prosthetics, orthotics and prosthetic devices and supplies, home health services, and outpatient prescription drugs.
The majority of these clients and patients receive daily pharmacy support, delivered through our pharmacy business (with a 79% penetration rate), along with ongoing behavioral therapy consults and primary care medical care, which is increasingly being delivered through our home-based primary care practice.
The majority of these clients and patients receive daily pharmacy support, delivered through our pharmacy business, along with ongoing behavioral therapy consults and primary care medical care, which is increasingly being delivered through our home-based primary care practice.
Hospice services are paid by Medicare as a daily rate for each day a patient is enrolled in the hospice benefit. Hospice payment rates increased by 3.1% for federal fiscal year 2024, which reflects a 3.3% market basket update with a 0.2% productivity reduction. CMS requires various providers, including hospice providers, to submit quality reporting data each year.
Hospice services are paid by Medicare as a daily rate for each day a patient is enrolled in the hospice benefit. Hospice payment rates increased by 2.9% for federal fiscal year 2025, which reflects a 3.4% market basket update with a 0.5% productivity reduction. CMS requires various providers, including hospice providers, to submit quality reporting data each year.
Our presence spans all 50 states, we serve over 400,000 patients daily through our approximately 10,000 clinical providers and pharmacists, and our services make a profound impact in the lives and communities of the people we serve.
Our presence spans all 50 states, we serve over 450,000 patients daily through our approximately 11,000 clinical providers and pharmacists, and our services make a profound impact in the lives and communities of the people we serve.
Patients who receive our provider services average six chronic conditions per patient, and we delivered approximately 20 million hours of quality and compassionate care in 2023 to home health, hospice, rehab, and home care patients and clients.
Patients who receive our provider services average six chronic conditions per patient, and we delivered approximately 19 million hours of quality and compassionate care in 2024 to home health, hospice, rehab, and home care patients and clients.
Further, there are meaningful new opportunities, such as $90 billion expected by 2032 in pharmaceutical industry revenue from oncology drugs not yet launched, drugs that will become generic over the next five years, and approximately 400 drug therapies in Phase III in the Infusion and Specialty Pharmacy pipeline.
The incentive program has reached its conclusion. Further, there are meaningful new opportunities, such as $90 billion expected by 2032 in pharmaceutical industry revenue from oncology drugs not yet launched, drugs that will become generic over the next five years, and approximately 400 drug therapies in Phase III in the Infusion and Specialty Pharmacy pipeline.
For calendar year 2023, HH PPS rates increased by 0.7%, which reflects a 4.1% market basket update, reduced by a multifactor productivity adjustment of 0.1% as well as permanent adjustments through authority CMS retains to achieve budget neutrality of the new PDGM system through calendar year 2026. CMS will release final rates for calendar year 2024 this fall.
For calendar year 2024, HH PPS rates increased by 0.7%, which reflects a 4.1% market basket update, reduced by a multifactor productivity adjustment of 0.1% as well as permanent adjustments through authority CMS retains to achieve budget neutrality of the new PDGM system through calendar year 2026.
The SHARE program exemplifies what our culture is all about. As of December 31, 2023, we had over 35,000 full-time equivalent employees at the Company. Approximately 6,500 full-time equivalent employees are represented by labor unions. We maintain strong working relationships with these organizations, and we have numerous collective bargaining agreements in place, which are renegotiated from time to time.
The SHARE program exemplifies what our culture is all about. As of December 31, 2024, we had over 37,000 full-time equivalent employees at the Company. Approximately 7,200 full-time equivalent employees are represented by labor unions. We maintain strong working relationships with these organizations, and we have numerous collective bargaining agreements in place, which are renegotiated from time to time.
We currently have 116 limited distribution oncology drugs in the market with an additional 16 in the pipeline still to launch, including 5 exclusive and 11 ultra-narrow drugs with limited pharmacy access. In 2020, 2021, and 2022, as a testament to our leading quality and service, we achieved “world-class” NPS scores of over 90, which also triggered quality incentive payments.
We currently have 125 limited distribution oncology drugs in the market with an additional 18 in the pipeline still to launch, including 4 exclusive and 14 ultra-narrow drugs with limited pharmacy access. In 2020, 2021, and 2022, as a testament to our leading quality and service, we achieved “world-class” NPS scores of over 90, which also triggered quality incentive payments.
Infusion and Specialty Pharmacy prescriptions and Home and Community Pharmacy prescriptions have grown at more than 20% and 8%, respectively, from December 2022 to December 2023. We have a unique opportunity to increasingly provide more pharmacy services in the future to provider patients and patients transitioning across settings of care.
Infusion and Specialty Pharmacy prescriptions and Home and Community Pharmacy prescriptions have grown at more than 22% and 11%, respectively, from December 2023 to December 2024. We have a unique opportunity to increasingly provide more pharmacy services in the future to provider patients and patients transitioning across settings of care.
We have an 9.2 HCI score, calculated using data from CMS provider reports for each of our providers, and we believe that our nurse-to-patient visit frequency and staffing ratio is well above industry averages, as demonstrated by the fact that across our hospice services, our average total visits per patient is 22.0 visits per month as compared to the national average of 14.0 visits per month.
We have an 9.3 HCI score, calculated using data from CMS provider reports for each of our providers, and we believe that our nurse-to-patient visit frequency and staffing ratio is well above industry averages, as demonstrated by the fact that across our hospice services, our average total visits per patient is 17.1 visits per month as compared to the national average of 15.6 visits per month.
In federal fiscal years 2023 and 2024, the aggregate caps are $32,486.92 and $33,494.01, respectively. Our pharmacy services for eligible Medicare patients are reimbursed through the Medicare Part D program, which makes prescription drug coverage available to eligible Medicare beneficiaries.
In federal fiscal years 2024 and 2025, the aggregate caps are $33,494.01 and $34,465.34 , respectively. Our pharmacy services for eligible Medicare patients are reimbursed through the Medicare Part D program, which makes prescription drug coverage available to eligible Medicare beneficiaries.
For example, we have had approximately 56% retention of clinical positions in home health care, hospice care, and community and rehab care from December 31, 2022 to December 31, 2023.
For example, we have had approximately 68% retention of clinical positions in home health care, hospice care, and rehab care from December 31, 2023 to December 31, 2024.
Further, Medicare and Medicaid regulations, as well as commercial payor contracts, also provide for withholding or suspending payments in certain circumstances, which could adversely affect our cash flow. 33 Table of Contents Any failure by us or our service providers to comply with federal, state, and local licensing and certification laws, regulations, and standards could result in a variety of consequences, including cessation of our services, loss of our contracts, prior payments by government payors being subject to recoupment, requirements to make significant changes to our operations, civil or criminal penalties, admissions bans, admissions holds, application denial periods, reductions in census, loss or revocation of licenses, loss of accreditation, administrative or other orders, adverse regulatory actions, settlements or other requirements to take corrective actions, harm to our reputation, or requirements to transfer our service users, to provide reports or other documentation, to demonstrate compliance with licensure or other requirements or to undergo revisit surveys or inspections.
Any failure by us or our service providers to comply with federal, state, and local licensing and certification laws, regulations, and standards could result in a variety of consequences, including cessation of our services, loss of our contracts, prior payments by government payors being subject to recoupment, requirements to make significant changes to our operations, civil or criminal penalties, admissions bans, admissions holds, application denial periods, reductions in census, loss or revocation of licenses, loss of accreditation, administrative or other orders, adverse regulatory actions, settlements or other requirements to take corrective actions, harm to our reputation, or requirements to transfer our service users, to provide reports or other documentation, to demonstrate compliance with licensure or other requirements or to undergo revisit surveys or inspections.
These services consist of clinical and supportive care to over 34,000 Senior and Specialty populations today, with both census for Home Health Care services specifically, and rehab hours served, having grown approximately 10% from December 2022 to December 2023.
These services consist of clinical and supportive care to approximately 40,000 Senior and Specialty populations today, with both census for Home Health Care services specifically, and rehab hours served, having grown approximately 9% and 13% from December 2023 to December 2024, respectively.
Additionally, on average, nursing visits per patient per month was 10.5 as compared to the national average of 6.4 visits per patient per month, which monthly average was based on a MedPac report in 2022.
Additionally, on average, nursing visits per patient per month was 8.2 as compared to the national average of 6.8 visits per patient per month, which monthly average was based on a MedPac report in 2024.
Our customer service and quality metrics are in-line with, or better than, our peers, such as time-to-first-fill (3.7 day average turnaround time, which is significantly lower than the industry average of 9.7 day average turnaround time), overall MPR (97.3%, which is significantly higher than the generally accepted 80% threshold for compliance, which is also the threshold set forth in the Company’s Blue Cross Blue Shield guarantee), and infusion patient satisfaction scores (94.5%, which is in-line with the 95.6% national average).
Our certified oncology pharmacists are available 24/7 to provide support for patients and caregivers while working in close coordination with their physicians. 3 Table of Contents Our customer service and quality metrics are in-line with, or better than, our peers, such as time-to-first-fill (3.6 day average turnaround time, which is significantly lower than the industry average of 9.7 day average turnaround time), overall MPR (93.3%, which is significantly higher than the generally accepted 80% threshold for compliance, which is also the threshold set forth in the Company’s Blue Cross Blue Shield guarantee), and infusion patient satisfaction scores (94.5%, which is in-line with the 95.6% national average).
Like patients receiving home health care, our interdisciplinary hospice teams tailor individualized plans for patients and their families based on a comprehensive understanding of their needs. Our hospice patients require important daily pharmacy support, which we deliver through our pharmacy services.
Our services have also been shown to help manage end-of-life healthcare spending. Like patients receiving home health care, our interdisciplinary hospice teams tailor individualized plans for patients and their families based on a comprehensive understanding of their needs. Our hospice patients require important daily pharmacy support, which we deliver through our pharmacy services.
We achieve 98% patient satisfaction in our outpatient rehab services, an 84% overall rating of care in hospice, and, as reported by the Agency for Healthcare Research and Quality, hospitalizations 30% lower than the national average in our home-based primary care.
We achieve 97% patient satisfaction in our outpatient rehab services, an 85% overall rating of care in hospice, and, as reported by the Agency for Healthcare 1 Table of Contents Research and Quality, hospitalizations that are 35% lower than the national average in our home-based primary care.
For our patients and clients that receive certain home health benefits, effective January 1, 2020, CMS transitioned to 30-day periods of care within each 60-day certification of patient eligibility period and implemented the Patient-Driven Groupings Model, or PDGM, as the payment model for services provided to Medicare patients with dates of service on or after January 1, 2020.
All of our operations must comply with the extensive conditions of participation in the Medicare program in order to continue receiving Medicare reimbursement. 9 Table of Contents For our patients and clients that receive certain home health benefits, effective January 1, 2020, CMS transitioned to 30-day periods of care within each 60-day certification of patient eligibility period and implemented the Patient-Driven Groupings Model, or PDGM, as the payment model for services provided to Medicare patients with dates of service on or after January 1, 2020.
Business associates are also directly subject to liability under HIPAA. In instances where we act as a business associate to a covered entity, there is the potential for additional liability beyond our status as a covered entity.
Business associates are also directly subject to liability under HIPAA. In instances where we act as a business associate to a covered entity, there is the potential for additional liability beyond our status as a covered entity. HIPAA violations may result in triggered settlement payments or civil monetary penalties.
A key strategy of the Company is effectively recruiting, attracting, onboarding, and retaining well-qualified and motivated employees. We use a comprehensive mix of initiatives and tactics to accomplish this, including traditional recruiting resources, traditional media, community events, open houses, job fairs, mailings, digital media candidate lead generation, targeted outreach, and partnerships with job boards, colleges, and non-profits.
We use a comprehensive mix of initiatives and tactics to accomplish this, including traditional recruiting resources, traditional media, community events, open houses, job fairs, mailings, digital media candidate lead generation, targeted outreach, and partnerships with job boards, colleges, and non-profits.
The Company filled over 37 million prescriptions in 2023 from over 180 pharmacies across all 50 states, with services delivered to approximately 6,000 customer locations, more than 44,000 individual or group homes, and over 350,000 patients, all through over 4,900 unique customer and payor contracts.
The Company filled over 41 million prescriptions in 2024 from over 180 pharmacies across all 50 states, with services delivered to approximately 7,100 customer locations, more than 60,000 individual or group homes, and over 400,000 patients, all through over 4,700 unique customer and payor contracts.
Information Technology Our information technology systems are essential to our day-to-day operations as well as to our long-term growth strategies. Technology is integrated across all business functions throughout the organization, including in coding, eMARs/EHRs, clinical operations, pharmacy operations, billing and collections, compliance, human resources, payroll, accounts payable, purchasing, sales and marketing, management business reviews, and financial reporting and accounting functions.
Technology is integrated across all business functions throughout the organization, including in coding, eMARs/EHRs, clinical operations, pharmacy operations, billing and collections, compliance, human resources, payroll, accounts payable, purchasing, sales and marketing, management business reviews, and financial reporting and accounting functions.
We have approximately 600 human resources professionals in the Company supporting our businesses and enterprise functions, in groups and teams spanning recruiting, learning, training, and organizational development, compensation and benefits, leadership development, M&A integration, employee relations, HR compliance, HR information technology, and generalist HR activities and business partners.
We have approximately 600 human resources professionals in the Company supporting our businesses and enterprise functions, in groups and teams spanning recruiting, learning, training, and organizational development, compensation and benefits, leadership development, M&A integration, employee relations, HR compliance, HR information technology, and generalist HR activities and business partners. 12 Table of Contents A key strategy of the Company is effectively recruiting, attracting, onboarding, and retaining well-qualified and motivated employees.
Several of our facilities have undergone claims audits related to their receipt of payments during the last several years. Liability from audits could potentially exceed established reserves, and any excess could potentially be substantial.
If these audits identify overpayments, we could be required to make substantial repayments, subject to various appeal rights. Several of our facilities have undergone claims audits related to their receipt of payments during the last several years. Liability from audits could potentially exceed established reserves, and any excess could potentially be substantial.
The Company receives incentive payments in connection with a payor contract, which includes incentive targets based on the Company’s NPS scores achieved from surveys performed directly by the payor. During the years ended December 31, 2022 and 2023, the incentive payments were approximately $20 million and $30 million, respectively.
The Company receives incentive payments in connection with a payor contract, which includes incentive targets based on the Company’s NPS scores achieved from surveys performed directly by the payor. During the year ended December 31, 2023, the incentive payment was approximately $30 million. The Company did not receive an incentive payment during the year ended December 31, 2024.
Our home-based primary care has delivered leading quality outcomes, including a hospital readmission rate 30% less than the national average and with acute, chronic, and complex patients served still able to spend 355 days per year at home, which is 6% more days than the Medicare average, based on the Health Days study.
Our home-based primary care has delivered leading quality outcomes, including a hospital readmission rate 35% less than the national average and with acute, chronic, and complex patients served still able to spend 359 days per year at home, more than 7% than the Healthy Days at Home study of 6.6 million Medicare beneficiaries found, which reported that beneficiaries with three or more chronic conditions spent, on average 333.7 days at home.
HIPAA violations may result in triggered settlement payments or civil monetary penalties. 34 Table of Contents Covered entities must notify affected individuals of breaches of unsecured PHI without unreasonable delay but no later than 60 days after discovery of the breach by a covered entity or its agents.
Covered entities must notify affected individuals of breaches of unsecured PHI without unreasonable delay but no later than 60 days after discovery of the breach by a covered entity or its agents.
Reimbursement rates and methods vary by state and service type but are typically based on an hourly or unit-of-service basis. Rates are subject to adjustment based on statutory and regulatory changes, administrative rulings, government funding limitations and interpretations of policy by individual state agencies.
Rates are subject to adjustment based on statutory and regulatory changes, administrative rulings, government funding limitations and interpretations of policy by individual state agencies.
In addition to many of our provider patients also receiving their pharmacy services from the Company, our patients often receive multiple in-home provider services from the Company to improve outcomes, including home-based primary care and home health or hospice and transitions from home health to hospice.
For I/DD patients, we have seen reductions in hospitalizations and readmissions of 44% and 84%, respectively, since beginning home-based primary care services. 5 Table of Contents In addition to many of our provider patients also receiving their pharmacy services from the Company, our patients often receive multiple in-home provider services from the Company to improve outcomes, including home-based primary care and home health or hospice and transitions from home health to hospice.
Our pharmacy services are all customized to specific settings and patients among the Senior and Specialty populations served, for example whether a patient receiving our medications is in a senior living community, a behavioral group home, or a hospice patient in their own home. 11 Table of Contents In addition to our very strong service delivery metrics, our pharmacy services and proprietary programs reduce drug costs to customers and patients, for example with a 99.9% generic efficiency rate (the percent of drugs dispensed as generic, when both brand and generic versions of a drug are available) and saving customers an average of $58 per therapeutic interchange.
In addition to our very strong service delivery metrics, our pharmacy services and proprietary programs reduce drug costs to customers and patients, for example with a 99.93% generic efficiency rate (the percent of drugs dispensed as generic, when both brand and generic versions of a drug are available) and saving customers an average of $58 per therapeutic interchange.
In March 2020, ONC and CMS issued complementary new rules that are intended to clarify provisions of the Cures Act regarding interoperability and information blocking and create significant new requirements for 36 Table of Contents healthcare industry participants.
As a result of the CARES Act and subsequent legislation, the 2% aggregated reductions to Medicare payments will remain in effect through 2032. In March 2020, ONC and CMS issued complementary new rules that are intended to clarify provisions of the Cures Act regarding interoperability and information blocking and create significant new requirements for healthcare industry participants.
Similarly, states have beneficiary inducement prohibitions and consumer protection laws that may be triggered by the offering of inducements, incentives, and other forms of remuneration to patients and prospective patients.
Similarly, states have beneficiary inducement prohibitions and consumer protection laws that may be triggered by the offering of inducements, incentives, and other forms of remuneration to patients and prospective patients. Violations range from civil to criminal and could have a material adverse effect on our business, results of operations, and financial condition.
Federal, state, and local agencies survey our facilities on a regular basis to determine whether the facilities are in compliance with regulatory operating and health standards and conditions for participating in government healthcare programs. In addition, physicians and other clinicians also must be licensed or certified, as applicable, in the states in which they are providing services.
Federal, state, and local agencies survey our facilities on a regular basis to determine whether the facilities are in compliance with regulatory 17 Table of Contents operating and health standards and conditions for participating in government healthcare programs.
Focusing on the interests and development of our employees is a top priority, and our ability to attract and retain compassionate and skilled caregivers and pharmacy professionals, as well as talented functional and managerial staff, is fundamental to our future. 14 Table of Contents Our LEGACY focus guides every member of our team to act as professionally and responsibly as possible with an attention to the following core behaviors: • L eadership: Everyone is a leader.
Focusing on the interests and development of our employees is a top priority, and our ability to attract and retain compassionate and skilled caregivers and pharmacy professionals, as well as talented functional and managerial staff, is fundamental to our future.
Accordingly, it is possible that regulatory oversight and legislative and regulatory developments, including changes to Medicare Part D program requirements and reductions in funding, could materially affect our Medicare Part D business, results of operations, or profitability. 24 Table of Contents Medicaid Programs Medicaid is a state-administered program that provides certain medical, pharmacy and social services to qualified low-income individuals and is jointly funded by the federal government and individual states.
Accordingly, it is possible that regulatory oversight and legislative and regulatory developments, including changes to Medicare Part D program requirements and reductions in funding, could materially affect our Medicare Part D business, results of operations, or profitability.
Establish purpose and coach to make others better. • E nvironment: Work together among a trusting team, and reward good performance. • G et Going: Think. Plan. Act.
Our LEGACY focus guides every member of our team to act as professionally and responsibly as possible with an attention to the following core behaviors: • L eadership: Everyone is a leader. Establish purpose and coach to make others better. • E nvironment: Work together among a trusting team, and reward good performance. • G et Going: Think. Plan. Act.
In certain situations, we also purchase branded pharmaceuticals directly from drug manufacturers. We have a sizable and experienced centralized procurement team that oversees inventory management and coordinates all purchasing across suppliers and vendors across the organization to leverage our scale and ensure optimal and cost-effective products.
We have a sizable and experienced centralized procurement team that oversees inventory management and coordinates all purchasing across suppliers and vendors across the organization to leverage our scale and ensure optimal and cost-effective products. 11 Table of Contents Intellectual Property We rely on a combination of intellectual property laws, internal procedures, and contractual provisions to protect our intellectual property and proprietary rights.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, our facilities and locations have been subject to other regulatory inquiries and matters, such as recoupments as a result of alleged insufficient documentation, overpayments, audits, removals of clients as a result of staffing and incidents identified during a monitoring visit, contract terminations, suspensions or revocations of licenses, home closures, vendor holds, which may occur as a result of our failure to submit an acceptable report under state law, and administrative penalties issued as a result of staffing issues and incidents found during monitoring visits. 52 Table of Contents If one or more of our facilities experiences an adverse patient incident or is found to have failed to provide appropriate patient care (including as a result of a staffing shortages or the actions or inactions of our employees or workforce members), governmental or regulatory authorities may take action against us or our employees or workforce members, including an admissions ban, admissions hold, reduction in census, loss of accreditation, license revocation, application denial period, administrative or other order, other adverse regulatory action, a settlement or other agreement requiring corrective actions or requiring us or a specific facility to demonstrate substantial compliance with licensure or other requirements, and the imposition of certain requirements, including requirements to transfer our service users, to provide reports or other documentation or to undergo revisit surveys or inspections.
Biggest changeIf one or more of our facilities experiences an adverse patient incident or is found to have failed to provide appropriate patient care (including as a result of a staffing shortages or the actions or inactions of our employees or workforce members), governmental or regulatory authorities may take action against us or our employees or workforce members, including an admissions ban, admissions hold, reduction in census, loss of accreditation, license revocation, application denial period, administrative or other order, other adverse regulatory action, a settlement or other agreement requiring corrective actions or requiring us or a specific facility to demonstrate substantial compliance with licensure or other requirements, and the imposition of certain requirements, including requirements to transfer our service users, to provide reports or other documentation or to undergo revisit surveys or inspections.
If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full.
If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full.
If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full.
If our existing indebtedness were to be accelerated, there can be no assurance that we would have, or be able to obtain, sufficient funds to repay such indebtedness in full.
Changes that may occur at the federal or state level include: 40 Table of Contents • administrative or legislative changes to the base rates under the applicable prospective payment systems; • the reduction or elimination of annual rate increases; • redefining eligibility or enrollment standards or coverage criteria for government healthcare programs or the receipt of services under those programs or changes in documentation requirements; • the imposition of prior authorization and concurrent utilization review programs that may further limit the services for which government healthcare programs will pay and shift patients to lower levels of care and reimbursement; • the imposition or increase of mechanisms shifting more responsibility for a portion of payment to beneficiaries, such as co-payments; • adjustments to the relative components of the wage index used in determining reimbursement rates; • decreasing benefits, such as limiting the number of hours of personal care services that will be covered; • changing reimbursement methodology; • slowing payments to providers; • increasing utilization of self-directed care alternatives or “all inclusive” programs; • changes to cap limits and per diem rates; • changes to case mix or therapy thresholds; • the reclassification of home health resource groups; and • the reclassification of long-term care diagnosis-related groups.
Changes that may occur at the federal or state level include: • administrative or legislative changes to the base rates under the applicable prospective payment systems; • the reduction or elimination of annual rate increases; • redefining eligibility or enrollment standards or coverage criteria for government healthcare programs or the receipt of services under those programs or changes in documentation requirements; • the imposition of prior authorization and concurrent utilization review programs that may further limit the services for which government healthcare programs will pay and shift patients to lower levels of care and reimbursement; • the imposition or increase of mechanisms shifting more responsibility for a portion of payment to beneficiaries, such as co-payments; • adjustments to the relative components of the wage index used in determining reimbursement rates; • decreasing benefits, such as limiting the number of hours of personal care services that will be covered; • changing reimbursement methodology; • slowing payments to providers; • increasing utilization of self-directed care alternatives or “all inclusive” programs; • changes to cap limits and per diem rates; • changes to case mix or therapy thresholds; 23 Table of Contents • the reclassification of home health resource groups; and • the reclassification of long-term care diagnosis-related groups.
On February 21, 2024, we used a portion of the net proceeds received from the IPO and the concurrent public offering by the Company of the 6.75% Tangible Equity Units ("Units") to repay $343.3 million of the borrowings under the First Lien Term Loan Facility, and established a new Tranche B-4 Term Loan to refinance the remaining $2,566.0 million of First Lien Term Loan Facility borrowings.
On February 21, 2024, we used a portion of the net proceeds received from the IPO and the concurrent public offering by the Company of the 6.75% Tangible Equity Units (“TEUs”) to repay $343.3 million of the borrowings under the First Lien Term Loan Facility, and established a new Tranche B-4 Term Loan to refinance the remaining $2,566.0 million of First Lien Term Loan Facility borrowings.
In addition, upon the occurrence and continuance of an event of a default, the lenders under the Revolving Credit Facility could terminate their further commitments to loan money and our secured lenders under the First Lien Facilities and the Second Lien Facility could foreclose against the assets securing their borrowings, and we could be forced into bankruptcy or liquidation.
In addition, upon the occurrence and continuance of an event of a default, the lenders under the Revolving Credit Facility could terminate their further commitments to loan money and our secured lenders under the First Lien Facilities could foreclose against the assets securing their borrowings, and we could be forced into bankruptcy or liquidation.
Many of these statutes and regulations have not been interpreted to the extent of their federal analogues, and therefore are not clear in their scope and application; • state corporate practice of medicine and fee-splitting laws that prohibit general business corporations, such as us, from practicing medicine, controlling physicians’ medical decisions or engaging in some practices such as splitting fees with physicians; • laws that regulate debt collection practices; 64 Table of Contents • a provision of the Social Security Act that imposes criminal penalties on healthcare providers who fail to disclose, or refund known overpayments; • federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented, and billed using codes that accurately reflect the type and level of services rendered; • federal and state laws that require licenses to dispense pharmaceuticals, including state laws that restrict operations by non-resident pharmacies, which may affect our ability to operate in some states; and • federal and state laws and policies that require healthcare providers to maintain licensure, certification or accreditation to enroll and participate in the Medicare and Medicaid programs, and to report certain changes in their operations to the agencies that administer these programs.
Many of these statutes and regulations have not been interpreted to the extent of their federal analogues, and therefore are not clear in their scope and application; • state corporate practice of medicine and fee-splitting laws that prohibit general business corporations, such as us, from practicing medicine, controlling physicians’ medical decisions or engaging in some practices such as splitting fees with physicians; • laws that regulate debt collection practices; • a provision of the Social Security Act that imposes criminal penalties on healthcare providers who fail to disclose, or refund known overpayments; • federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented, and billed using codes that accurately reflect the type and level of services rendered; • federal and state laws that require licenses to dispense pharmaceuticals, including state laws that restrict operations by non-resident pharmacies, which may affect our ability to operate in some states; and • federal and state laws and policies that require healthcare providers to maintain licensure, certification or accreditation to enroll and participate in the Medicare and Medicaid programs, and to report certain changes in their operations to the agencies that administer these programs.
The credit agreements governing the First Lien Facilities and the Second Lien Facility contain restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our best interest, including restrictions on our ability to: • incur additional indebtedness and guarantee indebtedness; • pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; • prepay, redeem, or repurchase certain debt; • make loans, investments, and other restricted payments; • sell or otherwise dispose of assets; • incur liens; • enter into transactions with affiliates; • alter the businesses we conduct; • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • consolidate, merge, or sell all or substantially all of our assets.
The credit agreements governing the First Lien Facilities contain restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our best interest, including restrictions on our ability to: • incur additional indebtedness and guarantee indebtedness; • pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; • prepay, redeem, or repurchase certain debt; • make loans, investments, and other restricted payments; • sell or otherwise dispose of assets; • incur liens; • enter into transactions with affiliates; • alter the businesses we conduct; • enter into agreements restricting our subsidiaries’ ability to pay dividends; and • consolidate, merge, or sell all or substantially all of our assets.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the federal physician self-referral law, commonly referred to as the Stark Law, which, subject to limited exceptions, prohibits physicians from referring Medicare or Medicaid patients to an entity for the provision of certain “designated health services” if the physician or a member of such physician’s immediate family has a direct or indirect financial relationship (including an ownership interest or a compensation arrangement) with the entity, and prohibit the entity from billing Medicare or Medicaid for such designated health services; • the False Claims Act, which imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • the federal physician self-referral law, commonly referred to as the Stark Law, which, subject to limited exceptions, prohibits physicians from referring Medicare or Medicaid patients to an entity for the provision of certain “designated health services” if the physician or a member of such physician’s immediate family has a direct or indirect financial relationship (including an ownership interest or a compensation arrangement) with the entity, and prohibit the entity from billing Medicare or Medicaid for such designated health services; 42 Table of Contents • the False Claims Act, which imposes civil and criminal liability on individuals or entities that knowingly submit false or fraudulent claims for payment to the government or knowingly making, or causing to be made, a false statement in order to have a false claim paid, including qui tam or whistleblower suits.
A delay in collecting our accounts receivable, or the non-collection of accounts receivable, including, without limitation, in connection with our transition and integration of acquired companies, could have a material negative impact on our results of operations and liquidity and could be required to record credit losses in our consolidated financial statements. 50 Table of Contents If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and satisfaction, or adequately address competitive challenges.
A delay in collecting our accounts receivable, or the non-collection of accounts receivable, including, without limitation, in connection with our transition and integration of acquired companies, could have a material negative impact on our results of operations and liquidity and could be required to record credit losses in our consolidated financial statements. 31 Table of Contents If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and satisfaction, or adequately address competitive challenges.
Our second amended and restated certificate of incorporation provides that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or if such court does not have jurisdiction, another state or the federal courts (as appropriate) located within the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our Company, (ii) action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, or other employee or stockholder of our Company to the Company or our stockholders, creditors, or other constituents, (iii) action asserting a claim against the Company or any current or former director or officer of the Company arising pursuant to any provision of the Delaware General Corporation Law, or the DGCL, or our second amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL 80 Table of Contents confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) action asserting a claim governed by the internal affairs doctrine.
Our second amended and restated certificate of incorporation provides that unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or if such court does not have jurisdiction, another state or the federal courts (as appropriate) located within the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our Company, (ii) action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, or other employee or stockholder of our Company to the Company or our stockholders, creditors, or other constituents, (iii) action asserting a claim against the Company or any current or former director or officer of the Company arising pursuant to any provision of the Delaware General Corporation Law, or the DGCL, or our second amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) action asserting a claim governed by the internal affairs doctrine.
See “—Risks Related to Our Regulatory Framework—If we are found to have violated HIPAA, or any other applicable privacy and security laws and regulations, as well as contractual obligations, we could be subject to sanctions, fines, damages, and other additional civil or criminal penalties, which could increase our liabilities, harm our reputation, and have a material adverse effect on our business, financial condition, and results of operation.” Furthermore, our third-party providers’ existing safety systems, data backup, access protection, user management, information technology emergency planning, and other security measures may not be sufficient to prevent data loss or long-term network outages.
See “—Risks Related to Our Regulatory Framework—If we are found to have violated HIPAA, or any other applicable privacy and security laws and regulations, as well as contractual obligations, we could be subject to sanctions, fines, damages, and other additional civil or criminal penalties, which could increase our liabilities, harm our reputation, and have a material 35 Table of Contents adverse effect on our business, financial condition, and results of operation.” Furthermore, our third-party providers’ existing safety systems, data backup, access protection, user management, information technology emergency planning, and other security measures may not be sufficient to prevent data loss or long-term network outages.
Our substantial indebtedness reduces the funds that would otherwise be available for operations, future business opportunities, and payments of our debt obligations and limits our ability to: • obtain additional financing, if necessary, for working capital and operations, or such financing may not be available on favorable terms; 71 Table of Contents • make needed capital expenditures; • make strategic acquisitions or investments or enter into joint ventures; • react to changes or withstand a future downturn in our business, our industries or the economy in general; • meet budget targets and forecasts of future results; • engage in business activities, including future opportunities that may be in our interest; and • react to competitive pressures or compete with competitors with less debt.
Our substantial indebtedness reduces the funds that would otherwise be available for operations, future business opportunities, and payments of our debt obligations and limits our ability to: • obtain additional financing, if necessary, for working capital and operations, or such financing may not be available on favorable terms; • make needed capital expenditures; • make strategic acquisitions or investments or enter into joint ventures; • react to changes or withstand a future downturn in our business, our industries or the economy in general; • meet budget targets and forecasts of future results; • engage in business activities, including future opportunities that may be in our interest; and • react to competitive pressures or compete with competitors with less debt.
In particular, any such interruption in access, compromise, use, improper access, acquisition, disclosure or other loss of information, including personal information or PHI, could result in legal claims or proceedings and/or liability or penalties under laws and regulations that protect the privacy, confidentiality, or security of personal information, including the Health Insurance Portability and Accountability Act of 1996, as amended by the 56 Table of Contents Health Information Technology for Economic and Clinical Health Act of 2009 and other laws, and implementing regulations, or collectively, HIPAA, the FTCA, the California Consumer Privacy Act, or CCPA, as amended by the California Privacy Rights Act of 2020, or CPRA, and its implementing regulations, and other state data privacy, security, consumer health data, or consumer protection laws, including state breach notification laws.
In particular, any such interruption in access, compromise, use, improper access, acquisition, disclosure or other loss of information, including personal information or PHI, could result in legal claims or proceedings and/or liability or penalties under laws and regulations that protect the privacy, confidentiality, or security of personal information, including the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and other laws, and implementing regulations, or collectively, HIPAA, the FTCA, the California Consumer Privacy Act, or CCPA, as amended by the California Privacy Rights Act of 2020, or CPRA, and its implementing regulations, and other state data privacy, security, consumer health data, or consumer protection laws, including state breach notification laws.
Litigation with those affected could increase our liabilities, harm our reputation, and have a material adverse effect on our business, financial condition, and results of operations. 67 Table of Contents Numerous other federal and state laws protect the confidentiality, privacy, availability, integrity, and security of PHI.
Litigation with those affected 45 Table of Contents could increase our liabilities, harm our reputation, and have a material adverse effect on our business, financial condition, and results of operations. Numerous other federal and state laws protect the confidentiality, privacy, availability, integrity, and security of PHI.
In addition, the credit agreements governing the First Lien Facilities and the Second Lien Facility restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due.
In addition, the credit agreements governing the First Lien Facilities restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due.
Costs and expenses related to these requirements are a significant operating expense and may increase as a result of, among other things, 48 Table of Contents changes in federal, state, or local laws or regulations, or the interpretation thereof, requiring employers to provide specified benefits or rights to employees, increases in the minimum wage and local living wage ordinances, increases in the level of existing benefits, or the lengthening of periods for which unemployment benefits are available.
Costs and expenses related to these requirements are a significant operating expense and may increase as a result of, among other things, changes in federal, state, or local laws or regulations, or the interpretation thereof, requiring employers to provide specified benefits or rights to employees, increases in the minimum wage and local living wage ordinances, increases in the level of existing benefits, or the lengthening of periods for which unemployment benefits are available.
The Patient Protection and Affordable Care Act and the Health Care Education and Reconciliation Act, or collectively, the ACA, added a new Medicare requirement for face-to-face encounters to support claims for home 41 Table of Contents health services, which continues to be one of the most complex issues and can be the source of claims denials if not fulfilled, and extended the same requirements for face-to-face encounters to the case of physicians making certifications for home health services under Medicaid.
The Patient Protection and Affordable Care Act and the Health Care Education and Reconciliation Act, or collectively, the ACA, added a new Medicare requirement for face-to-face encounters to support claims for home health services, which continues to be one of the most complex issues and can be the source of claims denials if not fulfilled, and extended the same requirements for face-to-face encounters to the case of physicians making certifications for home health services under Medicaid.
On June 30, 2023, we entered into amendments to our First Lien Facilities and the Second Lien Facility, and as part of those amendments we transitioned from the use of London Interbank Offered Rate, or LIBOR, to Secured Overnight Financing Rate, or SOFR.
On June 30, 2023, we entered into amendments to our First Lien Facilities, and as part of those amendments we transitioned from the use of London Interbank Offered Rate, or LIBOR, to Secured Overnight Financing Rate, or SOFR.
Although the credit agreements governing the First Lien Facilities and the Second Lien Facility contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial.
Although the credit agreements governing the First Lien Facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial.
If our current suppliers were to stop selling drugs to us or delay delivery, including as a result of supply shortages, production disruptions, quality issues, closing, or bankruptcies of our suppliers, or for other reasons, we may be unable to procure alternatives from other suppliers in a timely and efficient manner and on acceptable terms, or at all.
If our current suppliers were to stop selling drugs to us or delay delivery, including as a result of supply shortages, production disruptions, quality issues, closing, or bankruptcies of our suppliers, or for other reasons, we may be unable to procure alternatives from other suppliers in a timely and efficient manner 28 Table of Contents and on acceptable terms, or at all.
Increases in 49 Table of Contents operating costs, such as labor and supply costs, without a compensating increase in reimbursement rates, could have a material adverse effect on our business. In addition, cost pressures resulting from the use of more expensive forms of palliative care, including drugs and drug delivery systems, could negatively impact our profitability.
Increases in operating costs, such as labor and supply costs, without a compensating increase in reimbursement rates, could have a material adverse effect on our business. In addition, cost pressures resulting from the use of more expensive forms of palliative care, including drugs and drug delivery systems, could negatively impact our profitability.
In addition, if we experience a greater number of these losses than we anticipate, it could have a material adverse effect on our business, financial condition, and results of operations. Factors outside of our control, including those listed, have required, and could in the future require us to record an asset impairment of goodwill.
In addition, if we experience a greater number of these losses than we anticipate, it could have a material adverse effect on our business, financial condition, and results of operations. 39 Table of Contents Factors outside of our control, including those listed, have required, and could in the future require us to record an asset impairment of goodwill.
As a result, KKR Stockholder and Walgreen Stockholder are able to control the election and removal of our directors and thereby determine our corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset sales, amendment of our certificate of incorporation or bylaws and other significant corporate transactions for so long as KKR Stockholder and its affiliates and/or Walgreen Stockholder and its affiliates retain significant ownership of us.
As a result, KKR Stockholder is able to control the election and removal of our directors and thereby determine our corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset sales, amendment of our certificate of incorporation or bylaws and other significant corporate transactions for so long as KKR Stockholder and its affiliates retain significant ownership of us.
Our second amended and restated certificate of incorporation provides that any of KKR Stockholder, Walgreen Stockholder, any of their respective affiliates or any director who is not employed by us or his or her affiliates do not have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate.
Our second amended and restated certificate of incorporation provides that any of KKR Stockholder, any of its respective affiliates or any director who is not employed by us or his or her affiliates do not have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate.
More recently, in June 2022, the Federal Trade Commission, or FTC, announced an inquiry regarding the role of PBMs and stated its intent to closely scrutinize the impact of PBM rebates and fees on patients and payers. Several states have proposed separate PBM bills, and at least 18 states have adopted PBM oversight laws.
More recently, in June 2022, the Federal Trade 44 Table of Contents Commission, or FTC, announced an inquiry regarding the role of PBMs and stated its intent to closely scrutinize the impact of PBM rebates and fees on patients and payers. Several states have proposed separate PBM bills, and at least 18 states have adopted PBM oversight laws.
For example, the failure of the 2011 Joint Select Committee to meet its Deficit Reduction goal resulted in an automatic reduction in Medicare home health and hospice payments of 2% beginning April 1, 2013. Due to subsequent legislative amendments to the statute, the 2% aggregated reductions will remain in effect through 2030.
For example, the failure of the 26 Table of Contents 2011 Joint Select Committee to meet its Deficit Reduction goal resulted in an automatic reduction in Medicare home health and hospice payments of 2% beginning April 1, 2013. Due to subsequent legislative amendments to the statute, the 2% aggregated reductions will remain in effect through 2030.
Further, the software and services 57 Table of Contents provided by our third-party payment processors may contain errors or vulnerabilities, be compromised, experience outages, or not meet our expectations. If any of these events were to occur, our business, financial condition, and results of operations could be materially and adversely affected.
Further, the software and services provided by our third-party payment processors may contain errors or vulnerabilities, be compromised, experience outages, or not meet our expectations. If any of these events were to occur, our business, financial condition, and results of operations could be materially and adversely affected.
Such changes may also require us to modify our products and features, and may limit our ability to make use of the data that we collect, may require 68 Table of Contents additional investment of resources in compliance programs, impact strategies, and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
Such changes may also require us to modify our products and features, and may limit our ability to make use of the data that we collect, may require additional investment of resources in compliance programs, impact strategies, and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
Termination of one or more of our facilities from the Medicare program for failure to satisfy the program’s conditions of participation, or the imposition of alternative sanctions, could disrupt operations, require significant attention by management, or have a material adverse effect on our reputation, business, financial condition, and results of operations.
Termination of one or more of our facilities from the Medicare program for failure to satisfy the program’s conditions of participation, or the imposition of alternative 47 Table of Contents sanctions, could disrupt operations, require significant attention by management, or have a material adverse effect on our reputation, business, financial condition, and results of operations.
If they were to occur, these consequences could have a material adverse effect on our business, financial condition, and results of operations. 70 Table of Contents Quality reporting requirements may negatively impact Medicare reimbursement. We are subject to certain reporting requirements, and if we fail to comply with those requirements, our future Medicare reimbursement could be impacted.
If they were to occur, these consequences could have a material adverse effect on our business, financial condition, and results of operations. Quality reporting requirements may negatively impact Medicare reimbursement. We are subject to certain reporting requirements, and if we fail to comply with those requirements, our future Medicare reimbursement could be impacted.
In addition, an event of default under the credit agreements governing the First Lien Facilities and the Second Lien Facility would permit the lenders under our Revolving Credit Facility to terminate all commitments to extend further credit under that facility.
In addition, an event of default under the credit agreements governing the First Lien Facilities would permit the lenders under our Revolving Credit Facility to terminate all commitments to extend further credit under that facility.
Our efforts to comply with these rules and regulations increase our legal and 75 Table of Contents financial compliance costs and to make some activities more time-consuming and costly. Our management devotes a substantial amount of time to ensure that we comply with all of these requirements, diverting the attention of management away from revenue-producing activities.
Our efforts to comply with these rules and regulations increase our legal and financial compliance costs and to make some activities more time-consuming and costly. Our management devotes a substantial amount of time to ensure that we comply with all of these requirements, diverting the attention of management away from revenue-producing activities.
Our ability to raise capital in the future may be limited. Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds through the issuance of new equity securities, debt, or a combination of both. Additional financing may not be available on favorable terms or at all.
Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds through the issuance of new equity securities, debt, or a combination of both. Additional financing may not be available on favorable terms or at all.
Because of the sensitivity of such personal information and other sensitive data and information that we and our service providers Process, the security of our technology platform and other 55 Table of Contents aspects of our services, including those provided or facilitated by our third-party service providers, are critical to our operations and business strategy.
Because of the sensitivity of such personal information and other sensitive data and information that we and our service providers Process, the security of our technology platform and other aspects of our services, including those provided or facilitated by our third-party service providers, are critical to our operations and business strategy.
Many payors seek to limit the number of providers that supply pharmaceuticals to their enrollees in order to build volume that justifies their discounted pricing. From time to time, payors with whom we have relationships require that we bid against our competitors to keep their business.
Many payors seek to limit the number of 27 Table of Contents providers that supply pharmaceuticals to their enrollees in order to build volume that justifies their discounted pricing. From time to time, payors with whom we have relationships require that we bid against our competitors to keep their business.
Threats to our systems and associated third-party systems can originate from human error, fraud, or malice on the part of employees or third parties or simply from accidental technological failure. Computer viruses and other malware can be distributed and could infiltrate our systems or those of associated third parties.
Threats to our systems and associated third-party systems can originate from human error, fraud, or malice on the part of employees or third parties or simply from accidental technological failure. Computer viruses and other malware can be distributed and could infiltrate our systems or those 36 Table of Contents of associated third parties.
For example, while we believe that the services we provide are of high quality, if our “quality measures,” which are published annually online by CMS, are deemed to be not of the highest value, our reputation could be negatively affected.
For example, while we believe that the services we 34 Table of Contents provide are of high quality, if our “quality measures,” which are published annually online by CMS, are deemed to be not of the highest value, our reputation could be negatively affected.
The incurrences of losses and 59 Table of Contents liabilities that exceed our available coverage, therefore, could have a material adverse effect on our business, financial condition, and results of operations. We utilize historical data to estimate our reserves for our insurance programs.
The incurrences of losses and liabilities that exceed our available coverage, therefore, could have a material adverse effect on our business, financial condition, and results of operations. We utilize historical data to estimate our reserves for our insurance programs.
There can be no assurances that other states will not seek to eliminate or limit their existing CON or POA programs, which could lead to increased competition in these states. 39 Table of Contents In our Pharmacy Solutions segment, we must maintain good working relationships with pharmaceutical manufacturers, wholesalers, and distributors.
There can be no assurances that other states will not seek to eliminate or limit their existing CON or POA programs, which could lead to increased competition in these states. In our Pharmacy Solutions segment, we must maintain good working relationships with pharmaceutical manufacturers, wholesalers, and distributors.
Our business also supports the use of electronic visit verification, or EVV, to collect visit submission information such as service type, visit start time and end time, and care plan tasks for our 54 Table of Contents home and community-based care services.
Our business also supports the use of electronic visit verification, or EVV, to collect visit submission information such as service type, visit start time and end time, and care plan tasks for our home and community-based care services.
The implementation of the IRA is currently subject to ongoing litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation 46 Table of Contents program. The effects of the IRA on our business and the healthcare industry in general are not yet known.
The implementation of the IRA is currently subject to ongoing litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation program. The effects of the IRA on our business and the healthcare industry in general are not yet known.
We also used a portion of the IPO and concurrent offering proceeds to repay all borrowings under the Second Lien Facility. See Note 5 "Debt and Derivatives" within the audited consolidated financial statements and related notes, included elsewhere in this Annual Report on Form 10-K.
We also used a portion of the IPO and concurrent offering proceeds to repay all borrowings under the Second Lien Facility. See Note 5 “Debt and Derivatives” within the audited consolidated financial statements and related notes, included elsewhere in this Annual Report on Form 10-K.
Such a default, if not cured or waived, may allow the creditors to accelerate the related debt principal and/or related interest payments and may result in the acceleration of any other debt to 73 Table of Contents which a cross-acceleration or cross-default provision applies.
Such a default, if not cured or waived, may allow the creditors to accelerate the related debt principal and/or related interest payments and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
In addition, KKR Stockholder, Walgreen Stockholder, and their respective affiliates may have an interest in pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to you.
In addition, KKR Stockholder and its affiliates may have an interest in pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to you.
These delays could materially adversely affect our working capital and negatively affect our operations in these states. Other alternative payment models, such as bundled payment arrangements, may be presented by the government and commercial payors to control costs that subject our Company to financial risk.
These delays could materially adversely affect our working capital and negatively affect our operations in these states. 25 Table of Contents Other alternative payment models, such as bundled payment arrangements, may be presented by the government and commercial payors to control costs that subject our Company to financial risk.
If pharmaceutical manufacturers require significant additional services and products to obtain access to their products without a corresponding increase in service fees, our profitability could be adversely impacted. If we are unable to maintain relationships with existing patient referral sources or establish new referral sources, our business, financial condition, and results of operations could be materially adversely affected.
If pharmaceutical manufarcturers require significant additional services and products to obtain access to their products without a corresponding increase in service fees, our profitability could be adversely impacted. 22 Table of Contents If we are unable to maintain relationships with existing patient referral sources or establish new referral sources, our business, financial condition, and results of operations could be materially adversely affected.
As our business evolves and expands, and if we offer new payment options to consumers, we may be subject to additional regulations, compliance requirements, fraud, and other risks, in addition to new assessments that involve costs above what we currently pay for compliance.
As our business evolves and expands, and if we offer new payment options to consumers, we may be subject to additional regulations, compliance requirements, fraud, and other risks, in addition to new assessments that involve 37 Table of Contents costs above what we currently pay for compliance.
Although we may have contractual protections with our service providers, any actual or perceived security breach could harm our reputation and brand, expose us to potential liability, or require us to expend significant resources on data security and in responding to any such actual or perceived breach.
Although we may 46 Table of Contents have contractual protections with our service providers, any actual or perceived security breach could harm our reputation and brand, expose us to potential liability, or require us to expend significant resources on data security and in responding to any such actual or perceived breach.
Other industry participants, such as private payors, may also introduce financial or 66 Table of Contents delivery system reforms. We are unable to predict the nature and success of such initiatives.
Other industry participants, such as private payors, may also introduce financial or delivery system reforms. We are unable to predict the nature and success of such initiatives.
We have 8,000,000 Units outstanding, and each purchase contract that is a component of a Unit will settle automatically on the mandatory settlement date into between 3.2733 and 3.8461 shares of our common stock, subject to certain anti-dilution adjustments, which may result in dilution to investors.
We have 7,968,779 Units outstanding, and each purchase contract that is a component of a Unit will settle automatically on the mandatory settlement date into between 3.2733 and 3.8461 shares of our common stock, subject to certain anti-dilution adjustments, which may result in dilution to investors.
KKR Stockholder, Walgreen Stockholder and their respective affiliates may also direct us to make significant changes to our business operations and strategy, including with respect to, among other things, new service offerings, employee headcount levels, and initiatives to reduce costs and expenses.
KKR Stockholder and its affiliates may also direct us to make significant changes to our business operations and strategy, including with respect to, among other things, new service offerings, employee headcount levels, and initiatives to reduce costs and expenses.
In addition, KKR Stockholder, Walgreen Stockholder, and their respective affiliates are able to determine the outcome of all matters requiring stockholder approval and are able to cause or prevent a change of control of the Company or a change in the composition of our board of directors and could preclude any acquisition of the Company.
In addition, KKR Stockholder and its affiliates are able to determine the outcome of all matters requiring stockholder approval and are able to cause or prevent a change of control of the Company or a change in the composition of our board of directors and could preclude any acquisition of the Company.
Further, any failure by the Congress to 44 Table of Contents complete the federal budget process and fund government operations may result in a shutdown, potentially causing us to incur substantial costs without reimbursement under the Medicare program.
Further, any failure by the Congress to complete the federal budget process and fund government operations may result in a shutdown, potentially causing us to incur substantial costs without reimbursement under the Medicare program.
Historically, we have funded acquisitions primarily through our credit facilities and/or cash on hand, and there is no guarantee that we will be able to obtain financing for any future acquisition on favorable terms, if at all.
Historically, we have funded acquisitions primarily through our credit facilities, the issuance of our common stock, and/or cash on hand, and there is no guarantee that we will be able to obtain financing for any future acquisition on favorable terms, if at all.
We regularly assess the likelihood of adverse outcomes resulting from such examinations to determine the adequacy of our provision for income taxes.
We regularly assess the likelihood of adverse outcomes resulting from such examinations to determine the adequacy of our 55 Table of Contents provision for income taxes.
Similarly, private third-party payors also engage in post-payment audits which can result in recoupments. Additionally, private third-party payors may be successful in negotiating reduced reimbursement schedules for our services.
Similarly, private third-party payors also engage in 24 Table of Contents post-payment audits which can result in recoupments. Additionally, private third-party payors may be successful in negotiating reduced reimbursement schedules for our services.
A failure or inability to fully offset any increased prices or costs or to modify our operations to mitigate the impact of such increases could have a material adverse effect on our operating results. Additionally, any future changes in drug prices could be significantly different than our projections.
A failure or inability to fully offset any increased prices or costs or to modify our operations to mitigate the impact of such increases could have a material adverse effect on our operating results. Additionally, any future changes in drug prices could be significantly different than our projections. We cannot predict the effect of these possible changes on our businesses.
For example, the market price of our common stock could become more volatile and could be depressed by: • investors’ anticipation of the potential resale in the market of a substantial number of additional shares of our common stock received upon settlement of the purchase contracts that are a component of the Units; • possible sales of our common stock by investors who view the Units as a more attractive means of equity participation in us than owning shares of our common stock; and • hedging or arbitrage trading activity that may develop involving the Units and our common stock.
For example, the market price of our common stock could become more volatile and could be depressed by: • investors’ anticipation of the potential resale in the market of a substantial number of additional shares of our common stock received upon settlement of the purchase contracts that are a component of the Units; • possible sales of our common stock by investors who view the Units as a more attractive means of equity participation in us than owning shares of our common stock; and • hedging or arbitrage trading activity that may develop involving the Units and our common stock. 53 Table of Contents Our ability to raise capital in the future may be limited.
We are subject to lawsuits, civil investigative demands, and subpoenas under the False Claims Act, the Controlled Substances Act, the Anti-Kickback Statute, and other federal and state statutes designed to combat fraud and abuse in our industries, as well as civil investigative demands, subpoenas and other inquiries related to our operations, including several ongoing qui tam actions and the Silver matter, as discussed under Item 3 “Legal Proceedings” and Note 13 "Commitments 58 Table of Contents and Contingencies" to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We are subject to lawsuits, civil investigative demands, and subpoenas under the False Claims Act, the Controlled Substances Act, the Anti-Kickback Statute, and other federal and state statutes designed to combat fraud and abuse in our industries, as well as civil investigative demands, subpoenas and other inquiries related to our operations, including several ongoing qui tam actions and the Silver matter, as discussed under Item 3 “Legal Proceedings” and Note 14 “Commitments and Contingencies” to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
KKR Stockholder, Walgreen Stockholder, and their respective affiliates also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.
KKR Stockholder and its affiliates also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.
Furthermore, if we were unable to repay the amounts due and payable under the First Lien Facilities and the Second Lien Facility, those lenders could proceed against the collateral granted to them to secure that indebtedness, and we could be forced into bankruptcy or liquidation.
Furthermore, if 50 Table of Contents we were unable to repay the amounts due and payable under the First Lien Facilities, those lenders could proceed against the collateral granted to them to secure that indebtedness, and we could be forced into bankruptcy or liquidation.
Any common stock that we issue, including under our 2017 Stock Plan, our 2024 Incentive Plan, including the issuance of the New Equity Awards, or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by our then-current investors.
We have reserved, or will reserve in the future, shares for issuance under our 2024 Incentive Plan. Any common stock that we issue, including under our 2024 Incentive Plan, including the issuance of the New Equity Awards, or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by our then-current investors.
The DEA, FDA, and state regulatory authorities have broad enforcement powers, including the ability to seize or recall products.
The DEA, FDA, and state regulatory authorities have broad enforcement 41 Table of Contents powers, including the ability to seize or recall products.
Federal Reserve Board has significantly increased the federal funds rate in 2022 and 2023 and may continue to make further rate increases in the short-term to combat inflation in the United States, which has increased the borrowing costs on our variable rate debt and may increase the cost of any new debt we incur.
Federal Reserve Board significantly increased the federal funds rate in 2022 and 2023 and although it slightly reduced the federal funds rate in 2024, may make further rate increases to combat inflation in the United States, which increased the borrowing costs on our variable rate debt and may increase the cost of any new debt we incur.
Compliance with these regulations is expensive, and these costs may increase in the future. 62 Table of Contents Federal and state governments continue to pursue intensive enforcement policies resulting in a significant number of investigations, inspections, audits, citations of regulatory deficiencies, and other regulatory sanctions, including demands for refund of alleged overpayments, terminations from the Medicare and Medicaid programs, bans on Medicare and Medicaid payments for new admissions, admission moratoriums, and civil monetary penalties or criminal penalties.
Federal and state governments continue to pursue intensive enforcement policies resulting in a significant number of investigations, inspections, audits, citations of regulatory deficiencies, and other regulatory sanctions, including demands for refund of alleged overpayments, terminations from the Medicare and Medicaid programs, bans on Medicare and Medicaid payments for new admissions, admission moratoriums, and civil monetary penalties or criminal penalties.
We are required to hold valid DEA and state-level licenses, meet various security and operating standards, and comply with the federal and various state controlled substance acts and related regulations governing the sale, dispensing, disposal, holding and distribution of controlled substances.
We are required to hold valid DEA and state-level licenses, meet various security and operating standards, and comply with the federal and various state controlled substance acts and related regulations governing the sale, dispensing, disposal, holding and distribution of controlled substances. Compliance with these regulations is expensive, and these costs may increase in the future.
We cannot be assured we will succeed in any of these areas. From time to time and particularly in recent years, the lack of availability of medical personnel, including qualified nurses, has been a significant operating issue for us and other healthcare providers in certain local and regional markets.
From time to time and particularly in recent years, the lack of availability of medical personnel, including qualified nurses, has been a significant operating issue for us and other healthcare providers in certain local and regional markets.
If we perform at a level below the outcomes demonstrated by our competitors, fail to satisfy quality data reporting requirements, are unable to meet or exceed quality performance standards under any applicable value-based purchasing program, or otherwise fail to effectively provide or coordinate the efficient delivery of quality healthcare services, our reputation in the industry may be negatively impacted, we may receive reduced reimbursement amounts and we may owe repayments to payors, which could materially adversely impact our business, financial condition, and results of operations. 43 Table of Contents Additionally, our reputation may be affected by negative press, including adverse media related to staffing shortages, the quality of care, the failure to provide care, inadequate training, incidents at our facilities, and inadequate conditions at our facilities, which could materially adversely impact our business.
If we perform at a level below the outcomes demonstrated by our competitors, fail to satisfy quality data reporting requirements, are unable to meet or exceed quality performance standards under any applicable value-based purchasing program, or otherwise fail to effectively provide or coordinate the efficient delivery of quality healthcare services, our reputation in the industry may be negatively impacted, we may receive reduced reimbursement amounts and we may owe repayments to payors, which could materially adversely impact our business, financial condition, and results of operations.
Changes in the regulatory framework, including those associated with healthcare reform, and sanctions from various enforcement actions could have a material adverse effect on our business, financial condition, and results of operations. 63 Table of Contents In the U.S., we conduct business in a heavily regulated industry and if we fail to comply with these laws and government regulations, we could incur fines and penalties or be required to make significant changes to our operations or experience adverse publicity, any or all of which could have a material adverse effect on our business, financial condition, and results of operations.
In the U.S., we conduct business in a heavily regulated industry and if we fail to comply with these laws and government regulations, we could incur fines and penalties or be required to make significant changes to our operations or experience adverse publicity, any or all of which could have a material adverse effect on our business, financial condition, and results of operations.
Failure to protect our intellectual property and proprietary rights could have an adverse effect on our business. KKR Stockholder and Walgreen Stockholder control us and their interests may conflict with yours in the future. KKR Stockholder and Walgreen Stockholder collectively beneficially own approximately 67.9% of the voting power of our common stock.
Failure to protect our intellectual property and proprietary rights could have an adverse effect on our business. KKR Stockholder controls us and its interests may conflict with yours in the future. KKR Stockholder beneficially owns approximately 54.2% of the voting power of our common stock.
Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future offerings.
Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of our future offerings. Thus, you bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.
Our overall level of indebtedness requires that we dedicate a substantial portion of our cash flows to debt service payments. The First Lien Term Loan Facility requires quarterly principal and periodic cash interest payments through February 21, 2031 and the Second Lien Facility requires periodic cash interest payments through March 5, 2027.
Our overall level of indebtedness requires that we dedicate a substantial portion of our cash flows to debt service payments. The First Lien Term Loan Facility requires quarterly principal and periodic cash interest payments through February 21, 2031. The Revolving Credit Facility requires periodic cash interest payments on outstanding amounts through June 30, 2028.
These sales or issuances, or the possibility that these sales or issuances may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
These sales or issuances, or the possibility that these sales or issuances may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. Anti-takeover provisions in our organizational documents could delay or prevent a change of control.
Furthermore, in certain circumstances, we could be required to pay or be involved in disputes relating to termination fees or liquidated damages if an acquisition is not consummated, the payment of which could have a material adverse effect on our business, financial condition, or results of operations. 51 Table of Contents Upon consummation of an acquisition, the integration process could divert the attention of management, and any difficulties or problems encountered in the transition process could have a material adverse effect on our business, financial condition, or results of operations.
Furthermore, in certain circumstances, we could be required to pay or be involved in disputes relating to termination fees or liquidated damages if an acquisition is not consummated, the payment of which could have a material adverse effect on our business, financial condition, or results of operations.
Medicare imposes a financial penalty upon hospitals that have excessive rates of patient readmissions within 30 days from hospital discharge.
Clinical quality is becoming increasingly important within our industries. Medicare imposes a financial penalty upon hospitals that have excessive rates of patient readmissions within 30 days from hospital discharge.
Certain provisions of our second amended and restated certificate of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt, or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders. 79 Table of Contents These provisions provide for, among other things: • a classified board of directors, as a result of which our board of directors is divided into three classes, with each class serving for staggered three-year terms; • the ability of our board of directors to issue one or more series of preferred stock; • advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • certain limitations on convening special stockholder meetings; • the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% of the shares of common stock entitled to vote generally in the election of directors if KKR Stockholder, Walgreen Stockholder and their respective affiliates cease to beneficially own, in the aggregate, at least 40% of shares of common stock entitled to vote generally in the election of directors; and • that certain provisions may be amended only by the affirmative vote of at least 662/3% of shares of common stock entitled to vote generally in the election of directors if KKR Stockholder, Walgreen Stockholder and their respective affiliates cease to beneficially own, in the aggregate, at least 40% of shares of common stock entitled to vote generally in the election of directors.
These provisions provide for, among other things: • a classified board of directors, as a result of which our board of directors is divided into three classes, with each class serving for staggered three-year terms; 54 Table of Contents • the ability of our board of directors to issue one or more series of preferred stock; • advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • certain limitations on convening special stockholder meetings; • the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% of the shares of common stock entitled to vote generally in the election of directors if KKR Stockholder, Walgreen Stockholder and their respective affiliates cease to beneficially own, in the aggregate, at least 40% of shares of common stock entitled to vote generally in the election of directors; and • that certain provisions may be amended only by the affirmative vote of at least 66 2/3% of shares of common stock entitled to vote generally in the election of directors if KKR Stockholder, Walgreen Stockholder and their respective affiliates cease to beneficially own, in the aggregate, at least 40% of shares of common stock entitled to vote generally in the election of directors.
Similarly, our reimbursement from skilled nursing and rehabilitation facilities for drugs is determined pursuant to our agreements with them. Certain of these agreements are terminable upon prior notice by the other party. We cannot provide assurance that we will be able to replace terminated or expired agreements on terms as favorable as our existing agreements or at all.
Certain of these agreements are terminable upon prior notice by the other party. We cannot provide assurance that we will be able to replace terminated or expired agreements on terms as favorable as our existing agreements or at all.
So long as KKR Stockholder and its affiliates and/or Walgreen Stockholder and its affiliates continue to own, directly or indirectly, a significant amount of our voting power, even if such amount is less than 50%, they are able to strongly influence or effectively control our decisions, and each of KKR Stockholder and Walgreen Stockholder has the right to nominate individuals to our board of directors under the existing stockholders agreement. 61 Table of Contents In the ordinary course of their business activities, KKR Stockholder, Walgreen Stockholder, and their respective affiliates may engage in activities where their interests conflict with our interests or those of our stockholders.
So long as KKR Stockholder and its affiliates continue to own, directly or indirectly, a significant 40 Table of Contents amount of our voting power, even if such amount is less than 50%, it is able to strongly influence or effectively control our decisions, and KKR Stockholder has the right to nominate individuals to our board of directors under the existing stockholders agreement.
Inclement weather, natural disasters, acts of terrorism, riots, civil insurrection, social unrest or other acts of violence, looting, protests, strikes, or street demonstrations may prevent our employees from providing authorized services. We are not paid for authorized services that are not delivered due to these events.
Inclement weather, natural disasters, acts of terrorism, riots, civil insurrection or social unrest, looting, protests, strikes, or street demonstrations may impact our ability to provide services. Inclement weather, natural disasters, acts of terrorism, riots, civil insurrection, social unrest or other acts of violence, looting, protests, strikes, or street demonstrations may prevent our employees from providing authorized services.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

12 edited+14 added−16 removed19 unchanged
Biggest changeThis includes processes for assessing the severity of a cybersecurity threat, identifying the source of a cybersecurity threat, implementing cybersecurity countermeasures and mitigation strategies, and informing and updating management and, as needed, the Audit Committee and our Board of Directors of cybersecurity incidents that may pose a significant risk for the business.
Biggest changeKey aspects of this risk management program include, but are not limited to: • Identifying the source of a cybersecurity threat; • Assessing the severity of a cybersecurity threat; • Implementing cybersecurity countermeasures and mitigation strategies; • Providing our employees with regular training on cybersecurity and the protection of our information systems; • Maintaining and testing a business continuity and disaster recovery program; • Maintaining insurance coverage intended to address cybersecurity and data breach risks; and • Informing and updating management and, as needed, the Audit Committee and our Board of Directors of cybersecurity incidents that may pose a significant risk for the business.
For further discussion of the risks associated with cybersecurity incidents, as well as a description of an event that occurred in March 2023, see “Risk Factors—Risks Related to Our Business—Security breaches, loss of data, and other disruptions could compromise sensitive business or patient information, cause a loss of confidential patient data, employee data, personal information, or prevent access to critical information, and expose us to liability, litigation, and federal and state governmental inquiries and damage our reputation and brand.” Governance Our Board of Directors has overall oversight responsibility for our risk management, and delegates information security and related risk management oversight to the Audit Committee.
For further discussion of the risks associated with cybersecurity incidents, as well as a description of an event that occurred in March 2023, see “Risk Factors—Risks Related to Our Business—Security breaches, loss of data, and other disruptions could compromise sensitive business or patient information, cause a loss of confidential patient data, employee data, personal information, 56 Table of Contents or prevent access to critical information, and expose us to liability, litigation, and federal and state governmental inquiries and damage our reputation and brand.” Governance Our Board of Directors has overall oversight responsibility for our risk management, and delegates information security and related risk management oversight to the Audit Committee.
We incorporate cybersecurity practices into our Enterprise Risk Management (ERM) approach, which is subject to oversight by our 81 Table of Contents Board of Directors. Our cybersecurity policies and practices are aligned with relevant industry standards and are designed to detect, prevent, contain, and respond to cybersecurity threats and incidents in a prompt and effective manner.
We incorporate cybersecurity practices into our Enterprise Risk Management (ERM) approach, which is subject to oversight by our Board of Directors. Our cybersecurity policies and practices are aligned with relevant industry standards and are designed to detect, prevent, contain, and respond to cybersecurity threats and incidents in a prompt and effective manner.
Our CDTO is a member of our executive management team who is principally responsible for overseeing our cybersecurity risk management program, in partnership with other business leaders across the Company.
Our CIO is a member of our executive management team who is principally responsible for overseeing our cybersecurity risk management program , in partnership with other business leaders across the Company.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information BrightSpring’s common stock and 6.75% Tangible Equity Units began trading on the Nasdaq Global Select Market, (Nasdaq), under the ticker symbol "BTSG" and "BTSGU", respectively, on January 26, 2024.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information BrightSpring’s common stock and 6.75% Tangible Equity Units began trading on the Nasdaq Global Select Market, (Nasdaq), under the ticker symbol “BTSG” and “BTSGU”, respectively, on January 26, 2024.
The Audit Committee may also promptly receive information regarding any material cybersecurity incident that may occur, including any ongoing updates regarding the same. The Audit Committee periodically discusses our approach to cybersecurity risk management with our Chief Digital & Technology Officer (CDTO).
The Audit Committee may also promptly receive information regarding any material cybersecurity incident that may occur, including any ongoing updates regarding the same. The Audit Committee periodically discusses our approach to cybersecurity risk management with our Chief Information Officer (CIO).
It em 2. Properties. Our principal executive offices are located in Louisville, Kentucky, where we lease approximately 100,000 square feet. We also own 68 properties and lease 2,100 properties, with an additional 200 service sites, in the United States and lease one property in Canada. Of the leased properties, approximately 90% are provider service properties and 10% are pharmacy locations.
Our principal executive offices are located in Louisville, Kentucky, where we lease approximately 100,000 square feet. We also own 67 properties and lease 2,098 properties, with an additional 231 service sites, in the United States and lease one property in Canada. Of the leased properties, approximately 90% are provider service properties and 10% are pharmacy locations.
Prior to that date, there was no public market for our common stock or 6.75% Tangible Equity Units. Stockholders As of March 1, 2024, there were approximately 57 holders of our common stock.
Prior to that date, there was no public market for our common stock or 6.75% Tangible Equity Units. Stockholders As of March 3, 2025, there were approximately 56 holders of our common stock.
Prompt response to incidents is delivered by multi-disciplinary teams in accordance with our incident response plan. Through ongoing communications with these teams during incidents, the CDTO monitors the triage, mitigation and remediation of cybersecurity incidents, and reports such incidents to executive management, the Audit Committee and other colleagues in accordance with our cybersecurity policies and procedures, as is appropriate.
Through ongoing communications with these teams during incidents, the CIO monitors the triage, mitigation and remediation of cybersecurity incidents, and reports such incidents to executive management, the Audit Committee and other colleagues in accordance with our cybersecurity policies and procedures , as is appropriate. It em 2. Properties.
On November 6, 2023, the District Court denied our motion for summary judgment. On November 18, 2023, we agreed to settle the matter without admitting liability. The settlement agreement is subject to the approval of the United States Department of Justice and the District Court, which we anticipate will occur during fiscal 2024.
On November 6, 2023, the District Court denied our motion for summary judgment. On November 18, 2023, we agreed to settle the matter without admitting liability. On May 29, 2024, the parties entered into a final settlement agreement, which was approved by both the United States Department of Justice and the District Court.
Our CDTO has over twenty years of extensive experience in information technology and security, and works in coordination with other members of the management team, including, among others, the Chief Financial Officer, the Chief Compliance Officer and the Chief Legal Officer and their designees.
Our CIO has over twenty-five years of extensive experience in information technology and security, and works in coordination with other members of the management team, including, among others, the Chief Financial Officer and Chief Compliance Officer and their designees. We believe our business leaders have the appropriate expertise, background, and depth of experience to manage risks arising from cybersecurity threats.
We believe our business leaders have the appropriate expertise, background and depth of experience to manage risks arising from cybersecurity threats. Our CDTO, along with leaders from our privacy and corporate compliance functions, collaborate to implement a program designed to manage our exposure to cybersecurity risks and to promptly respond to 82 Table of Contents cybersecurity incidents.
Our CIO, along with leaders from our privacy and corporate compliance functions, collaborate to implement a program designed to manage our exposure to cybersecurity risks and to promptly respond to cybersecurity incidents. Prompt response to incidents is delivered by multi-disciplinary teams in accordance with our incident response plan.
Removed
The estimated financial impact of the settlement is $115.0 million, which we accrued in 2023.
Added
The total financial impact of the settlement is $120.0 million; $110.0 million of which was paid during the year ended 57 Table of Contents December 31, 2024, with the remaining $10.0 million in accrued expenses in the consolidated balance sheet as of December 31, 2024.
Removed
We expect the principal portion of the settlement to be paid during fiscal 2024 and the remainder in fiscal 2025, in each case using available borrowing capacity under our Revolving Credit Facility, which will have the effect of reducing amounts otherwise available to be drawn thereunder and increasing our net debt.
Added
As of December 31, 2023, the estimated financial impact of the settlement was $115.0 million, $105.0 million of which was included in accrued expenses and $10.0 million in long-term liabilities in the consolidated balance sheet. The District Court entered an order dismissing the Silver action in its entirety, with prejudice, on July 3, 2024.
Removed
Although we expect the settlement agreement to be approved, until such approval is received and the amount of the Relator’s attorney fees is determined, the financial impact of this litigation is an estimate only and not final. It em 4. Mi ne Safety Disclosures. Not applicable. 83 Table of Contents PART II It em 5.
Added
The Company is also party to various legal and/or administrative proceedings arising out of the operation of our programs and arising in the ordinary course of business. We record accruals for such contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
Removed
Recent Sales of Unregistered Securities The following sets forth information regarding securities granted or issued in the year ended December 31, 2023 which were not registered under the Securities Act.
Added
We do not believe the ultimate liability, if any, for outstanding proceedings or claims, individually or in the aggregate, in excess of amounts already provided, will have a material adverse effect on our consolidated financial condition, results of operations, or cash flows. It is reasonably possible that an adverse determination might have an impact on a particular period.
Removed
For the year ended December 31, 2023, we granted stock options to certain employees, in connection with services provided by such employees or the hiring/promotion of such employees, to purchase an aggregate of 1,114,883 shares of common stock of the Company.
Added
While we believe our provision for legal contingencies is adequate, the outcome of legal proceedings is difficult to predict, and we may settle legal claims or be subject to judgments for amounts that exceed our estimates. It em 4. Mi ne Safety Disclosures. Not applicable. 58 Table of Contents PART II It em 5.
Removed
For the year ended December 31, 2023, options to purchase 77,869 shares of common stock of the Company were exercised, and options to purchase 1,220,988 shares of common stock of the Company had expired or been forfeited and/or cancelled.
Added
Recent Sales of Unregistered Securities Except as set forth below, there were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company.
Removed
The issuances of stock options and the shares of common stock issuable upon the exercise of the options described in this Item 5 were issued pursuant to written compensatory plans or arrangements with our employees and directors, in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 701 promulgated under the Securities Act or the exemption set forth in Section 4(2) under the Securities Act and Regulation D promulgated thereunder relative to transactions by an issuer not involving any public offering, to the extent an exemption from such registration was required.
Added
On April 30, 2024, we issued 99,252 shares of common stock at $10.89 per share to Rodney A.
Removed
All of the foregoing securities are deemed restricted securities for purposes of the Securities Act. Issuer Purchases of Equity Securities None.
Added
Thomason Revocable Trust shareholders (the “Trust”) as partial consideration for our acquisition of certain assets and equity interests from the Trust, ICP Holdings, LLC and ICP Management, LLC (together with ICP Holdings, LLC, the “Sellers”) pursuant to an Asset Purchase Agreement by and among the Company, the Trust, and the Sellers (the “ICP Purchase Agreement”).
Removed
Stock Performance Graph Not applicable. 84 Table of Contents Use of Proceeds from Initial Public Offering and Concurrent Offering of Units On January 30, 2024, we completed our IPO, in which we issued and sold 53,333,334 shares of our common stock at a public offering price of $13.00 per share.
Added
We also issued 30,533 shares of common stock at $10.89 per share to the Trust to be held by the Company subject to a one year lock-up post-closing adjustment feature based on stock price performance. This post-closing adjustment resulted in the number of holdback shares being reduced to zero and cancelled.
Removed
In addition, the Company concurrently issued 8,000,000 Units for a purchase price of $50.00 per unit.
Added
We issued these shares of common stock pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act”), in that such issuance did not constitute a public offering. Issuer Purchases of Equity Securities None.
Removed
All of the shares issued and sold in our IPO and the concurrent offering of Units were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-276348), as amended, which was declared effective by the SEC on January 25, 2024, and registered 61,333,334 shares of common stock and 9,200,000 Units.
Added
Stock Performance Graph The following performance graph compares the cumulative total return to shareholders on our common stock relative to the cumulative total returns of the S&P 500 Index and S&P 500 Health Care Services Select Industry Index, the Dow Jones US Industrial 59 Table of Contents Average Index and the S&P 500 Index for the period beginning with our IPO and ended December 31, 2024.
Removed
The aggregate offering price of the common stock and Units registered and sold under the registration statement was approximately $693.3 million and $400.0 million, respectively.
Added
The comparisons assume the investment of $100 on January 26, 2024 in our common stock and in each index, and the reinvestment of dividends when paid. 1/26/2024 3/28/2024 6/28/2024 9/30/2024 12/31/2024 BrightSpring Health Services, Inc. $ 100.00 $ 98.82 $ 103.27 $ 133.45 $ 154.82 S&P 500 Index $ 100.00 $ 107.43 $ 111.64 $ 117.82 $ 120.25 S&P 500 Health Care Services Select Industry Index $ 100.00 $ 108.58 $ 103.05 $ 110.98 $ 103.33 The stock performance graph above shall not be deemed to be “soliciting material” or to be “filed” with the U.S.
Removed
The Company received net proceeds of $657.5 million and $388.9 million for the common stock and Units, respectively, after deducting underwriting discounts and other fees of $31.2 million and $11 million for the common stock and Units, respectively. Goldman Sachs & Co. LLC acted as representatives of the underwriters in the offering.
Added
Securities and Exchange Commission or subject to the liabilities of Section 18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Removed
The underwriters did not exercise their (i) 30-day option to purchase up to an additional 8,000,000 shares of common stock and (ii) 13-day option to purchase up to an additional 1,200,000 Units, in each case to cover over-allotments, if any.
Added
In addition, it shall not be deemed incorporated by reference by any statement that incorporates this Annual Report on Form 10-K by reference into any filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except to the extent that we specifically incorporate this information by reference.
Removed
We used the proceeds received from the IPO and concurrent offering of Units (i) to repay all indebtedness outstanding under the Second Lien Facility, (ii) to repay all indebtedness outstanding under the Revolving Credit Facility, (iii) to repay $343.3 million outstanding aggregate amount under the First Lien Facility, and (iv) to pay certain expenses in the offering.
Removed
We intend to use the remaining proceeds for general corporate purposes. Additionally, we will pay $22.7 million of termination fees in connection with the termination of our monitoring agreement with our controlling stockholders, Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and Walgreens Boots Alliance, Inc. (together with KKR, the “Managers”) (the "Monitoring Agreement").

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

154 edited+49 added−174 removed104 unchanged
Biggest changeFor years ended December 31, 2023 and 2022, interest expense, net includes interest income related to cash flow hedges of interest rate risk of $31.4 million and $0.7 million, respectively. 114 Table of Contents The table below summarizes the total outstanding debt of the Company as of December 31, 2023 and 2022: ($ in thousands) Long term obligation and note payable Interest expense, net December 31, December 31, Fiscal Year Fiscal Year 2023 2022 2023 2022 First Lien - payable to lenders at SOFR* plus applicable margin (8.72% and 7.63% as of December 31, 2023 and 2022, respectively) $ 1,719,360 $ 1,737,270 $ 146,167 $ 87,870 First Lien Tranche B-2 and B-3 - payable to lenders at SOFR* plus applicable margin (8.97% and 7.88% as of December 31, 2023 and 2022, respectively) 1,189,975 1,202,212 104,190 63,833 Second Lien - payable to lenders at SOFR* plus applicable margin (13.97% and 12.88% as of December 31, 2023 and 2022, respectively) 450,000 450,000 62,012 47,833 Revolving Credit Loans - payable to lenders at SOFR* plus applicable margin (9.59% as of December 31, 2023) 50,000 — 3,988 — Swingline/Base Rate - payable to lenders at ABR plus applicable margin (11.75% and 10.75% as of December 31, 2023 and 2022, respectively) 700 74,800 12,243 9,268 Notes payable and other 4,356 452 2 405 Amortization of deferred financing costs & other, net of interest income from cash flow hedges — — (4,009 ) 24,375 Total debt $ 3,414,391 $ 3,464,734 $ 324,593 $ 233,584 Less: debt issuance costs, net 50,177 70,025 Total debt, net of debt issuance costs 3,364,214 3,394,709 Less: Current portion of long-term debt 32,273 30,407 Total long-term debt $ 3,331,941 $ 3,364,302 * Beginning on June 30, 2023, the debt instruments bear interest at a rate equal to SOFR plus applicable margin.
Biggest changeThe table below summarizes the total outstanding debt of the Company: ($ in thousands) Rate Long-term obligation and note payable Interest Expense December 31, December 31, December 31, December 31, Fiscal Year Fiscal Year 2024 2023 2024 2023 2024 2023 First Lien - payable to lenders at SOFR plus applicable margin — 8.72 % $ — $ 1,719,360 $ 21,217 $ 146,167 First Lien Tranche B-2 and B-3 - payable to lenders at SOFR plus applicable margin — 8.97 % — 1,189,975 15,106 104,190 First Lien Incremental Term Loan Tranche B-4 - payable to lenders at SOFR plus applicable margin — — — — 176,223 — First Lien Incremental Term Loan Tranche B-5 - payable to lenders at SOFR plus applicable margin 6.86 % — 2,546,787 — 10,353 — Second Lien - payable to lenders at SOFR plus applicable margin — 13.97 % — 450,000 5,239 62,012 Revolving Credit Loans - payable to lenders at SOFR plus applicable margin 7.61 % 9.59 % — 50,000 387 3,988 Swingline Loans and Base Rate Loans - payable to lenders at ABR plus applicable margin 9.75 % 11.75 % 63,300 700 12,392 12,243 Amortizing Notes 53,804 — 5,726 — Notes payable and other 19,428 4,356 316 2 Amortization of deferred financing costs & other, net of interest income from cash flow hedges — — (18,573 ) (4,009 ) Total debt $ 2,683,319 $ 3,414,391 $ 228,386 $ 324,593 Less: debt issuance costs, net 72,736 50,177 Total debt, net of debt issuance costs 2,610,583 3,364,214 Less: Current portion of long-term debt 48,725 32,273 Total long-term debt, net of current portion $ 2,561,858 $ 3,331,941 Our Company leverage, as calculated under our First Lien Credit Facilities, was 4.16x at December 31, 2024.
Census Bureau projects that the U.S. population aged 65 and over will grow substantially from 15% of the population in 2016 to 21% of the population by 2030, and the population size of people over age 85 is expected to double by 2040, according to the Administration for Community Living.
The U.S. Census Bureau projects that the U.S. population aged 65 and over will grow substantially from 15% of the population in 2016 to 21% of the population by 2030, and the population size of people over age 85 is expected to double by 2040, according to the Administration for Community Living.
Interest expense, net also includes the portion of the gain or loss on our interest rate swap agreements that is reclassified into earnings. Income Tax (Benefit) Expense . Our provision for income taxes is based on permanent book/tax differences and statutory tax rates in the various jurisdictions in which we operate.
Interest expense, net also includes the portion of the gain or loss on our interest rate swap agreements that is reclassified into earnings. Income Tax Benefit . Our provision for income taxes is based on permanent book/tax differences and statutory tax rates in the various jurisdictions in which we operate.
For transactions involving the transfer of goods, revenues are primarily recognized when the customer obtains control of the products sold, which is generally upon shipment or delivery, depending on the delivery terms specified in the sales agreement. For transactions exclusively involving provision of services, revenues are recognized over time based on an appropriate measure of progress.
For transactions involving the transfer of goods, revenues are primarily recognized when the customer obtains control of the products sold, which is generally upon shipment or delivery, depending on the delivery terms specified in the sales agreement. For transactions exclusively involving provision of services, revenues are recognized over time based on an appropriate measure of progress.
Self-insurance The Company is self-insured for a substantial portion (subject to certain stop loss coverage at a high level of losses) of the Company’s general and professional liability, automobile liability, workers’ compensation risks, and health benefits.
Self-insurance The Company is self-insured for a substantial portion of the Company’s general and professional liability, automobile liability, workers’ compensation risks, and health benefits, subject to certain stop loss coverage at a high level of losses.
The First Lien Credit Agreement and the Second Lien Credit Agreement described above contain customary negative covenants, including, but not limited to, restrictions on the Company and its restricted subsidiaries’ ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances, or investments, pay dividends, sell or otherwise transfer assets, prepay or modify terms of certain junior indebtedness, enter into transactions with affiliates, or change their lines of business or fiscal year.
The First Lien Credit Agreement described above contain customary negative covenants, including, but not limited to, restrictions on the Company and its restricted subsidiaries’ ability to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances, or investments, pay dividends, sell or otherwise transfer assets, prepay or modify terms of certain junior indebtedness, enter into transactions with affiliates, or change their lines of business or fiscal year.
Our pharmacy services are primarily delivered directly to patients in their place of residence, home, or stay, and sometimes in a clinic setting. Our high-need Senior and Specialty patients depend on closely and expertly managed daily medication regimens that are supported by pharmacist and nurse consultants and available in a timely and 24/7 manner.
Our pharmacy services are primarily delivered directly to patients in their place of residence, home, or stay, and sometimes in a clinic setting. Our high-need Senior and Specialty patients depend on closely and expertly managed daily medication regimens that are supported by pharmacist and nurse consultants whom are available in a timely and 24/7 manner.
Direct costs and expenses principally include cost of drugs, net of rebates, salaries and benefits for direct care and service professionals, contracted labor costs, insurance costs, transportation costs for clients requiring services, certain client expenses such as food, supplies and medicine, residential occupancy expenses, which primarily comprise rent and utilities, and other miscellaneous direct goods or service-related expenses.
Direct costs and expenses primarily include cost of drugs, net of rebates, salaries and benefits for direct care and service professionals, contracted labor costs, insurance costs, transportation costs for clients requiring services, certain client expenses such as food, supplies and medicine, residential occupancy expenses, which primarily comprise rent and utilities, and other miscellaneous direct goods or service-related expenses.
Notwithstanding our belief that the assumptions we used for WACC and long-term growth rates in our impairment testing were reasonable, we performed sensitivity analyses for the Home Health and Therapies and Institutional Pharmacy reporting units.
Notwithstanding our belief that the assumptions we used for WACC and long-term growth rates in our impairment testing were reasonable, we performed sensitivity analyses for the Home Infusion, Home Health and Therapies and Institutional Pharmacy reporting units.
In determining which adjustments are made to arrive at Adjusted EBITDA, management considers both (1) certain non-recurring, infrequent, non-cash, or unusual items, which can vary significantly from year to year, as well as (2) certain other items that may be recurring, frequent, or settled in cash but which management does not believe are indicative of our core operating performance.
In determining which adjustments are made to arrive at Adjusted EBITDA and Adjusted EPS, management considers both (1) certain non-recurring, infrequent, non-cash, or unusual items, which can vary significantly from year to year, as well as (2) certain other items that may be recurring, frequent, or settled in cash but which management does not believe are indicative of our core operating performance.
We elected to perform a qualitative assessment for our intangible assets for our annual impairment test in the fourth quarter of 2023, 2022 and 2021. As a result of our qualitative analyses, we determined that it was more-likely-than- not that the fair values of our indefinite-lived intangible assets were greater than their carrying values.
We elected to perform a qualitative assessment for our intangible assets for our annual impairment test in the fourth quarter of 2024, 2023 and 2022. As a result of our qualitative analyses, we determined that it was more-likely-than-not that the fair values of our indefinite-lived intangible assets were greater than their carrying values.
A change in the estimates we use could result in a decline in the estimated fair values derived in the 2023 impairment testing. We then conducted an analysis of market data inputs and risk considerations in the period since the 2023 impairment test date and do not believe that market or risk considerations changed materially.
A change in the estimates we use could result in a decline in the estimated fair values derived in the 2024 impairment testing. We then conducted an analysis of market data inputs and risk considerations in the period since the 2024 impairment test date and do not believe that market or risk considerations changed materially.
We believe that our estimates and assumptions used in the 2023 goodwill impairment tests are reasonable but are subject to change from period to period. Actual results of operations and other factors may differ from the estimates used and it is possible that differences could be significant.
We believe that our estimates and assumptions used in the 2024 goodwill impairment tests are reasonable but are subject to change from period to period. Actual results of operations and other factors may differ from the estimates used and it is possible that differences could be significant.
Interest expense, net includes the debt service costs associated with our various debt instruments, including our First Lien Facilities and Second Lien Facility, and the amortization of related deferred financing fees, which are amortized over the term of the respective credit agreement.
Interest expense, net includes interest paid on and debt service costs associated with our various debt instruments, including our First Lien Facilities and Second Lien Facility, and the amortization of related deferred financing fees, which are amortized over the term of the respective credit agreement.
See Note 1 “Significant Accounting Policies” to our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K for a summary of all of our significant accounting policies. Revenue Recognition The Company recognizes the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.
See Note 1 “Significant Accounting Policies” to our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K for a summary of all of our significant accounting policies. 79 Table of Contents Revenue Recognition The Company recognizes the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.
As of December 31, 2023 and 2022, we had three interest rate swaps with a combined notional value of $2.0 billion that were designated as cash flow hedges of interest rate risk. See Note 5 “Debt and Derivatives” within the audited consolidated financial statements and related notes, included elsewhere in the Annual Report on Form 10-K.
As of December 31, 2024, we had three interest rate swaps with a combined notional value of $2.0 billion that were designated as cash flow hedges of interest rate risk. See Note 5 “Debt and Derivatives” within the audited consolidated financial statements and related notes, included elsewhere in the Annual Report on Form 10-K.
In addition, under the Revolving Credit Facility, the Company will not permit the consolidated first lien secured debt to consolidated EBITDA (as defined in the First Lien Credit Agreement) ratio to be greater than 6.90 to 1.00, which shall be tested as of the end of the most recent quarter at any time when the aggregate revolving credit loans exceed 35% of the total revolving credit commitments.
In addition, under the Revolving Credit Facility, the Company will not permit the consolidated first lien secured debt to consolidated EBITDA (as defined in the First Lien Credit Agreement) ratio to be greater than 6.90 to 1.00, which shall be tested as of 78 Table of Contents the end of the most recent quarter at any time when the aggregate revolving credit loans exceed 35% of the total revolving credit commitments.
There can be no guarantee we will not experience increases in the cost of labor, particularly given the shortage of qualified caregivers in our markets, and the demand for homecare services is expected to grow. 119 Table of Contents In addition, increases in healthcare costs are typically higher than inflation and impact our costs under our employee benefit plans.
There can be no guarantee we will not experience increases in the cost of labor, particularly given the shortage of qualified caregivers in our markets, and the demand for homecare services is expected to grow. In addition, increases in healthcare costs are typically higher than inflation and impact our costs under our employee benefit plans.
Management’s evaluation takes into consideration factors such as historical 116 Table of Contents bad debt experience, business and economic conditions, trends in healthcare coverage, other collection indicators, and information about specific receivables. The Company’s evaluation also considers the age and composition of the outstanding amounts in determining their estimated net realizable value.
Management’s evaluation takes into consideration factors such as historical bad debt experience, business and economic conditions, trends in healthcare coverage, other collection indicators, and information about specific receivables. The Company’s evaluation also considers the age and composition of the outstanding amounts in determining their estimated net realizable value.
The estimates and assumptions we use to estimate fair values when performing quantitative assessments are highly subjective judgments based on our experience and knowledge of our operations. Significant changes in the 118 Table of Contents assumptions used in our analysis could result in an impairment charge related to goodwill or the indefinite-lived intangible assets.
The estimates and assumptions we use to estimate fair values when performing quantitative assessments are highly subjective judgments based on our experience and knowledge of our operations. Significant changes in the assumptions used in our analysis could result in an impairment charge related to goodwill or the indefinite-lived intangible assets.
Our future capital requirements will depend on many factors that are difficult to predict, including the size, timing, and structure of any future acquisitions, future capital investments, and future results of operations. We cannot assure you that cash provided by operating activities or cash and cash equivalents will be sufficient to meet our future needs.
Our future capital requirements will depend on many factors that are difficult to predict, including the size, timing, and structure of any future acquisitions, future 76 Table of Contents capital investments, and future results of operations. We cannot assure you that cash provided by operating activities or cash and cash equivalents will be sufficient to meet our future needs.
We serve patients from and across approximately 10,300 offices, customer locations and group homes, as well as serving approximately 250,000 patients in their own homes, every day with co-location of our pharmacy and provider services in 40 states. Payor Mix We are characterized by payor diversification across our platform.
We serve patients from and across approximately 11,300 offices, customer locations and group homes, as well as serving approximately 300,000 patients in their own homes, every day with co-location of our pharmacy and provider services in 40 states. Payor Mix We are characterized by payor diversification across our platform.
The Company first assesses certain qualitative factors to determine whether the existence of events or circumstances would indicate that it is more-likely-than-not that the fair value of a reporting unit was less than its carrying amount.
The Company first assesses certain qualitative factors to determine whether the existence of events or circumstances would indicate that it 80 Table of Contents is more-likely-than-not that the fair value of a reporting unit was less than its carrying amount.
The Company’s geographic and operations scale and platform of complementary segments and service lines provides us with access to more de novo opportunities to consider and prioritize. Since January 1, 2018, we have opened 143 de novo offices (branches/agencies) and clinics in new locations across our pharmacy and provider services.
The Company’s geographic and operations scale and platform of complementary segments and service lines provides us with access to more de novo opportunities to consider and prioritize. Since January 1, 2018, we have opened 164 de novo offices (branches/agencies) and clinics in new locations across our pharmacy and provider services. In 2024, we opened 21 de novo offices.
We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all. We evaluate our liquidity based upon the availability we have under our First Lien Facilities and the Second Lien Facility in addition to the net cash provided by (used in) operating, investing, and financing activities.
We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all. We evaluate our liquidity based upon the availability we have under our First Lien Facilities, as applicable, in addition to the net cash provided by (used in) operating, investing, and financing activities.
The management fees adjustment represents fees paid historically under the Monitoring Agreement related to either (i) activities that are expected to be performed by our existing personnel upon the termination of the Monitoring Agreement, and thus not expected to result in incremental costs subsequent to our IPO, or (ii) acquisitions, divestitures, and external financing activities, which costs would otherwise be excluded from our 108 Table of Contents Adjusted EBITDA.
The management fees adjustment represents fees paid historically under the Monitoring Agreement related to either (i) activities that are expected to be performed by our existing personnel upon the termination of the Monitoring Agreement, and thus not expected to result in incremental costs subsequent to the IPO Offerings, or (ii) acquisitions, divestitures, and external financing activities, which costs would otherwise be excluded from our Adjusted EBITDA and Adjusted EPS.
Amounts reported in AOCI related to derivatives will be reclassified to interest expense, net as interest payments are made on the Company’s variable-rate debt. The Company expects approximately $25.0 million of pre-tax gains to be reclassified out of AOCI into earnings within the next twelve months.
Amounts reported in AOCI related to derivatives will be reclassified to interest expense, net as interest payments are made on the Company’s variable-rate debt. The Company expects approximately $10.6 million of pre-tax gains to be reclassified out of AOCI into earnings within the next twelve months.
For example, across our pharmacies we achieve 99.99% order accuracy and 98.20% order completeness, “excellent” and “world class” NPS, a 95% satisfaction rating from infusion patients, and a reduction in hospitalizations with CCRx, while also driving savings through medication adherence and therapeutic interchanges.
For example, across our pharmacies we achieve 99.99% order accuracy and 98.63% order completeness, “excellent” and “world class” NPS, a 94% satisfaction rating from infusion patients, and a reduction in hospitalizations with CCRx, while also driving savings through medication adherence and therapeutic interchanges.
Further, we had no substantial changes in our long-term projections between those used in the 2023 impairment test.
Further, we had no substantial changes in our long-term projections between those used in the 2024 impairment test.
Financing Activities Net cash used in financing activities was $76.9 million for the year ended December 31, 2023, primarily attributable to repayments on our long-term debt of $30.4 million, net repayments on our Revolving Credit Facility of $24.1 million, payment of finance lease obligations of $11.6 million, repurchases of stock options of $10.0 million and other financing activities.
Net cash used in financing activities was $76.9 million for the year ended December 31, 2023, primarily attributable to repayments on our long-term debt of $30.4 million, net repayments on our Revolving Credit Facility of $24.1 million, payment of finance lease obligations of $11.6 million, and other financing activities.
We believe our platform can continue to build further scale nationally, adding density to additional and targeted key markets as a lever to facilitate maximum 94 Table of Contents pharmacy and provider services overlap, integrated and value-based care, and growth.
We believe our platform can continue to build further scale nationally, adding density to additional and targeted key markets as a lever to facilitate maximum pharmacy and provider services overlap, integrated and value-based care, and growth.
The majority of these clients and patients receive daily pharmacy support, delivered through our pharmacy business (with an 79% penetration rate), along with ongoing behavioral therapy consults and primary care medical care, which is increasingly being delivered through our home-based primary care practice.
The majority of these clients and patients receive daily pharmacy support, delivered through our pharmacy business, along with ongoing behavioral therapy consults and primary care medical care, which is increasingly being delivered through our home-based primary care practice.
Given our determination of adjustments in arriving at our computations of EBITDA and Adjusted EBITDA, these non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to net income or loss, operating income or loss, cash flows from operating activities, total indebtedness or any other financial measures calculated in accordance with GAAP.
Given our determination of adjustments in arriving at our computations of EBITDA, Adjusted EBITDA, and Adjusted EPS, these non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to net loss, operating income, loss per diluted share, cash flows from operating activities, total indebtedness, or any other financial measures calculated in accordance with U.S.
Continued Growth of our Provider Services Patient Populations We focus on delivering high-touch and coordinated services to medically complex Senior and Specialty patients in the home and community-based settings where they live. As the baby boomer population ages, Seniors, who comprise a significant majority of our patients, will represent a higher percentage of the overall population. The U.S.
Continued Growth of our Provider Services Patient Populations Our Provider Services segment focuses on delivering high-touch and coordinated services to medically complex Senior and Specialty patients in the home and community-based settings where they live. As the baby boomer population ages, Seniors, who comprise a significant majority of our patients, will represent a higher percentage of the overall population.
Therefore, we do not believe there were any material changes to the conclusions reached with no impairment of goodwill and indefinite-lived intangible assets. 2022 and 2021 Goodwill Impairment Analyses Our 2022 goodwill impairment analysis concluded that the fair value of the Home Health and Therapies, Behavioral Therapies, Institutional Pharmacy, Specialty Pharmacy and Home Infusion reporting units were each substantially in excess of carrying value.
Therefore, we do not believe there were any material changes to the conclusions reached with no impairment of goodwill and indefinite-lived intangible assets. 2023 and 2022 Goodwill Impairment Analyses Our 2023 goodwill impairment analysis concluded that the fair value of the Behavioral Health, Specialty Solutions, Hospice Pharmacy, and Home Infusion reporting units were each substantially in excess of carrying value.
Our presence spans all 50 states, we serve over 400,000 patients daily through our approximately 10,000 clinical providers and pharmacists, and our services make a profound impact in the lives and communities of the people we serve.
Our presence spans all 50 states, we serve over 450,000 patients daily through our approximately 11,000 clinical providers and pharmacists, and our services make a profound impact in the lives and communities of the people we serve.
We believe that we are positioned to identify potential medical problems and avoid adverse events due to our highly proximate position to patients and attentive care protocols, as evidenced by these quality metrics.
We believe that we 66 Table of Contents are positioned to identify potential medical problems and avoid adverse events due to our highly proximate position to patients and attentive care protocols, as evidenced by these quality metrics.
The results of these sensitivity analyses on our impairment tests revealed that if there was a hypothetical 1% increase in the WACC or a hypothetical 1% decrease in the long-term growth rate, the fair value of the Home Health and Therapies reporting unit would continue to be in excess of its carrying amount.
The results of these sensitivity analyses on our impairment tests revealed that if there was a hypothetical 1% increase in the WACC or a hypothetical 1% decrease in the long-term growth rate, the fair value of the Home Infusion, Home Health and Therapies, and Institutional Pharmacy reporting units each would continue to be in excess of its carrying amount.
The analysis entails measuring the multiple of sales and/or EBITDA at which the comparables are currently trading or were purchased. • Equal weighting was applied to the discounted cash flow analysis or income approach (50%) and the market approach (50%). 117 Table of Contents 2023 Goodwill Impairment Analysis As of October 1, 2023, our six reporting units had an aggregate carrying amount of $4.2 billion.
The analysis entails measuring the multiple of sales and/or EBITDA at which the comparables are currently trading or were purchased. • Equal weighting was applied to the discounted cash flow analysis or income approach (50%) and the market approach (50%). 2024 Goodwill Impairment Analysis As of October 1, 2024, our six reporting units had an aggregate carrying amount of $4.3 billion.
We recorded intangible impairment of $8.3 million related to definite-lived intangible licenses for the years ended December 31, 2023 and 2022. During the year ended December 31, 2021, we recorded no impairment related to intangible assets.
We recorded intangible impairment of $6.6 million and $8.3 million related to definite-lived intangible licenses for the years ended December 31, 2024 and 2023, respectively. During the year ended December 31, 2022, we recorded no impairment related to intangible assets.
Tests are performed more frequently if events occur or circumstances change, that would more-likely- than-not reduce the fair value of the reporting unit below its carrying amount. The Company performs an annual goodwill impairment test on the first day of the fourth quarter of each year for each reporting unit.
Tests are performed more frequently if events occur or circumstances change, that would more-likely- than-not reduce the fair value of the reporting unit below its carrying amount. The Company performs an annual goodwill impairment test on October 1st of each year for each reporting unit.
Our payors are principally federal, state, and local governmental agencies, commercial insurance, private, and other payors. No payor represents more than 40% of our revenue in the aggregate for the years ended December 31, 2023, 2022 and 2021.
Our payors are principally federal, state, and local governmental agencies, commercial insurance, private, and other payors. No payor represents more than 30% of our revenue in the aggregate for the years ended December 31, 2024 and 2023.
Further, we believe it is important to exclude settlement costs associated with the Silver matter from our Adjusted EBITDA due to the magnitude of the case and the costs attributable to it, as well as the fact that the Silver matter is unlike our routine legal and regulatory proceedings that we see in the normal course of business.
Further, we have excluded settlement costs associated with the Silver matter from our Adjusted EBITDA and Adjusted EPS due to the magnitude of the case and the costs attributable to it, as well as the fact that the Silver matter is unlike our routine legal and regulatory proceedings that we see in the normal course of business.
We used the proceeds received from the IPO and concurrent offering of Units (i) to repay all indebtedness outstanding under the Second Lien Facility, (ii) to repay all indebtedness outstanding under the Revolving Credit Facility, (iii) to repay $343.3 million outstanding aggregate amount under the First Lien Facility, and (iv) to pay certain expenses in the offering.
We used a portion of the net proceeds received from the IPO Offerings to (i) repay all indebtedness outstanding under the Second Lien Facility, (ii) repay all indebtedness outstanding under the Revolving Credit Facility, (iii) repay $343.3 million outstanding aggregate amount under the First Lien Facility, and (iv) pay certain expenses in the offering.
General ledger system migration and related business intelligence system implementation costs, which were capitalized as development costs and are subsequently amortized in accordance with ASC 350-40, Internal Use Software , were $2.0 million, $2.5 million, and $3.8 million for the years ended December 31, 2023, 2022, and 2021, respectively.
General ledger system migration and related business intelligence system implementation costs, which were capitalized as development costs and are subsequently amortized in accordance with ASC 350-40, Internal Use Software , were $0.7 million and $2.0 million for the years ended December 31, 2024, and 2023, respectively.
Over the past five years we built upon supportive care services to patients, as we have meaningfully expanded our footprint of highly clinical and expert services to home health, rehabilitation, and hospice patients to address a large national healthcare need and more completely and better serve Senior and Specialty patients in the home.
Over the past five years we built upon supportive care services to patients, as we have meaningfully expanded our footprint of highly clinical and expert services to home health, rehabilitation, and hospice patients to address a large national healthcare need and more completely and better serve Senior and Specialty patients in the home as evidenced by continued census growth within the Provider Services segment.
As of December 31, 2023, our debt outstanding was $3.4 billion, of which $2.0 billion is fixed through interest rate swap agreements. A hypothetical 1% increase in interest rates would increase our net loss and decrease our cash flows by $14.1 million on an annual basis based upon our borrowing level at December 31, 2023. 120 Table of Contents
As of December 31, 2024, our debt outstanding was $2.7 billion, of which $2.0 billion is fixed through interest rate swap agreements. A hypothetical 1% increase in interest rates would increase our net loss and decrease our cash flows by $6.1 million on an annual basis based upon our borrowing level at December 31, 2024. 83 Table of Contents
We define Adjusted EBITDA as EBITDA, further adjusted for the impact of certain other items that are either non-recurring, infrequent, non-cash, unusual, or items deemed by management to not be indicative of the performance of our core operations, including non-cash, share-based compensation; acquisition, integration, and transaction-related costs; restructuring and divestiture-related and other costs; goodwill impairment; legal costs associated with certain historical matters for PharMerica and settlement costs associated with the Silver matter; significant projects; management fees; and unreimbursed COVID-19 related costs.
Adjusted EBITDA and Adjusted EPS exclude certain other items that are either non-recurring, infrequent, non-cash, unusual, or items deemed by management to not be indicative of the performance of our core operations, including non-cash, share-based compensation; acquisition, integration, and transaction-related costs; restructuring and divestiture-related and other costs; legal and settlement costs associated with certain historical matters for PharMerica; significant projects; management fees; and unreimbursed COVID-19 related costs.
(1) Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations ” 103 Table of Contents Segment Results of Operations Pharmacy Solutions Segment Years Ended December 31, 2023, 2022 and 2021 The following table sets forth, for the years indicated, our segment results of operations.
(1) Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations ” Segment Results of Operations Pharmacy Solutions Segment The following table sets forth, for the years indicated, our segment results of operations.
See Note 16 “Segment Information" to our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K for further discussion. 107 Table of Contents Non-GAAP Financial Measures In addition to our results of operations prepared in accordance with GAAP, which we have discussed above, we also evaluate our financial performance using EBITDA and Adjusted EBITDA.
See Note 17 “Segment Information” to our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K for further discussion. Non-GAAP Financial Measures In addition to our results of operations prepared in accordance with U.S. GAAP, which we have discussed above, we also evaluate our financial performance using EBITDA, Adjusted EBITDA, and Adjusted EPS.
The increase primarily resulted from the following segment activity and factors: • an increase of $71.6 million, or 6.4% growth on consolidated 2022 selling, general, and administrative expenses, as a result of growth in our Pharmacy Solutions and Provider Services segments.
The increase primarily resulted from the following segment activity and factors: • an increase of $66.4 million, or 5.2% growth on consolidated 2023 selling, general, and administrative expenses, as a result of growth in our Pharmacy Solutions and Provider Services segments.
The net proceeds from the Offerings amounted to $657.5 million and $388.9 million for the common stock and Units, respectively, after deducting underwriting discounts, commissions, and offering-related expenses. The shares of common stock and Units began trading on the Nasdaq Global Select Market on January 26, 2024 under the ticker symbols “BTSG” and “BTSGU,” respectively.
The net proceeds from the IPO Offerings amounted to $656.5 million and $389.0 million for the common stock and TEUs, respectively, after deducting underwriting discounts, commissions, and offering-related expenses. The shares of common stock and TEUs began trading on the Nasdaq Global Select Market on January 26, 2024 under the ticker symbols “BTSG” and “BTSGU,” respectively.
We have built a significant presence and capability in delivering complementary and high-touch daily healthcare services and programs to complex patients in their homes and in communities in order to address their multiple health needs and requirements more completely.
We have built a significant presence and capability in delivering complementary and high-touch daily healthcare services and programs to complex patients in their homes and in communities in order to address their multiple health needs and requirements more completely, through two reportable segments: Pharmacy Solutions and Provider Services.
Although we hedge a portion of our interest rate risk through interest rate swaps, any borrowings under our First Lien or Second Lien Facility in excess of the notional amount of the swaps will be subject to variable interest rates.
Although we hedge a portion of our interest rate risk through interest rate swaps, any borrowings under our First Lien in excess of the notional amount of the swaps are subject to variable interest rates.
Through November 1, 2022 and for the year ended December 31, 2021, the Company had a seventh reporting unit, Workforce Solutions, which was sold effective November 1, 2022. In each of 2023, 2022, and 2021, we performed a quantitative assessment of all reporting units as of October 1.
Through November 1, 2022, the Company had a seventh reporting unit, Workforce Solutions, which was sold effective November 1, 2022. In each of 2024, 2023, and 2022, we performed a quantitative assessment of all reporting units as of October 1.
We believe it is important to exclude legal costs associated with these PharMerica litigation matters from our Adjusted EBITDA due to the magnitude of these cases and the costs attributable to them, the timing of the commencement of the cases and the fact that no similar cases have been brought against the Company since the acquisition of PharMerica, and the fact that these cases are unlike our routine legal and regulatory proceedings that we see in the normal course of business.
We have excluded defense costs associated with these PharMerica litigation matters from our Adjusted EBITDA and Adjusted EPS due to the magnitude of these cases and the costs attributable to them, the timing of the commencement of the cases and the fact that no similar cases have been brought against the Company since the acquisition of PharMerica, and the fact that these cases are 74 Table of Contents unlike our routine legal and regulatory proceedings that we see in the normal course of business.
Following our IPO in January 2024, we used a portion of the net proceeds received to repay all outstanding borrowings under the Second Lien Facility.
Following our IPO Offerings in January 2024, we used a portion of the net proceeds received to repay all outstanding borrowings under the Second Lien Facility and repay $343.3 million of borrowings under the First Lien Facility.
The decrease in gross profit margin is due to mix shift in the Pharmacy Solutions segment and greater relative volume growth in Infusion and Specialty Pharmacy, along with product-level mix shifts, rate changes, and an increase in the fulfillment cost per script in Home and Community Pharmacy.
The decrease in gross profit margin is due to mix shift in the Pharmacy Solutions segment with greater relative volume growth in Infusion and Specialty Pharmacy, along with product-level mix shifts, rate changes, an increase in the fulfillment cost per script in Home and Community Pharmacy, and the QIP received in 2023 for which there was no comparable in 2024.
The legal costs and settlements adjustment represents defense costs associated with certain PharMerica litigation matters associated with three cases, two of which remain outstanding as of December 31, 2023, that commenced prior to KKR Stockholder’s and Walgreen Stockholder’s acquisition of PharMerica in December 2017, as well as settlement costs associated with the Silver matter, which settled in November 2023.
The legal costs and settlements adjustment represents defense costs associated with certain PharMerica litigation matters, all of which have been finalized as of December 31, 2024, that commenced prior to KKR Stockholder’s and Walgreen Stockholder’s acquisition of PharMerica in December 2017, as well as settlement costs associated with the Silver matter, which settled in November 2023.
Overall, our pharmacy has grown patient census and prescriptions by 13% and 10%, respectively, over the past year. We are a leading independent pharmacy provider in our respective pharmacy patient markets, and we expect to continue to increase our share.
Overall, our pharmacy has grown patient census and prescriptions by 12% over the past year. We are a leading independent pharmacy provider in our respective pharmacy patient markets, 65 Table of Contents and we expect to continue to increase our share.
We intend to use the remaining proceeds for general corporate purposes. Additionally, we will pay $22.7 million of termination fees in connection with the termination of our monitoring agreement with our controlling stockholders, Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and Walgreens Boots Alliance, Inc. (together with KKR, the “Managers”) (the "Monitoring Agreement").
We retained the remaining proceeds for general corporate purposes. Additionally, we paid $22.7 million of termination fees in connection with the termination of our monitoring agreement with Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and Walgreens Boots Alliance, Inc. (together with KKR, the “Managers”) (the “Monitoring Agreement”).
Actual results could differ from those estimates. 115 Table of Contents We consider our critical accounting policies and estimates to be those that involve significant judgments and uncertainties and may potentially result in materially different results under different assumptions and conditions.
We consider our critical accounting policies and estimates to be those that involve significant judgments and uncertainties and may potentially result in materially different results under different assumptions and conditions.
Our Behavioral Therapies, Specialty Solutions, Hospice Pharmacy, and Home Infusion reporting units had fair values that substantially exceeded their respective carrying amounts and an aggregate goodwill balance of $791.7 million.
Our Behavioral Health, Specialty Solutions, and Hospice Pharmacy reporting units had fair values that substantially exceeded their respective carrying amounts and an aggregate goodwill balance of $559.2 million.
Adjusted EBITDA (1) $ 537,808 $ 522,543 $ 15,265 2.9 % (1) Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations ” The following discussion of our results of operations should be read in conjunction with the foregoing table summarizing our consolidated results of operations.
Adjusted EBITDA (1) $ 588,075 $ 537,808 $ 50,267 9.3 % * n.m.: not meaningful (1) Reconciliation of GAAP to non-GAAP results is provided in the section “Non-GAAP Financial Measures” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations ” The following discussion of our results of operations should be read in conjunction with the foregoing table summarizing our consolidated results of operations.
These services consist of clinical and supportive care to over 34,000 Senior and Specialty populations today, with both census for Home Health Care services specifically, and rehab hours served, having grown approximately 10% from December 2022 to December 2023.
These services consist of clinical and supportive care to approximately 40,000 Senior and Specialty populations, with both census for Home Health Care services specifically, and rehab hours served, having grown approximately 9% and 13% from December 2023 to December 2024, respectively.
The Company filled over 37 million prescriptions in 2023 from over 180 pharmacies across all 50 states, with services delivered to approximately 6,000 customer locations, more than 44,000 individual or group homes, and over 350,000 patients, all through over 4,900 unique customer and payor contracts.
The Company filled over 41 million prescriptions in 2024 from over 180 pharmacies across all 50 states, with services delivered to approximately 7,100 customer locations, more than 60,000 individual or group homes, and over 400,000 patients, all through over 4,700 unique customer and payor contracts.
Cost of Goods Cost of goods was $5,840.7 million for the year ended December 31, 2023, as compared with $4,635.4 million for the year ended December 31, 2022, an increase of $1,205.3 million or 26.0%. The increase resulted from an increase in Pharmacy Solutions cost of goods. See additional discussion in “—Segment Results of Operations” below.
Cost of Goods Cost of goods was $8,008.5 million for the year ended December 31, 2024, as compared with $5,840.7 million for the year ended December 31, 2023, an increase of $2,167.8 million or 37.1%. The increase resulted from an increase in Pharmacy Solutions cost of goods. See additional discussion in “—Segment Results of Operations” below.
Cost of Services Cost of services was $1,551.7 million for the year ended December 31, 2023, as compared with $1,492.0 million for the year ended December 31, 2022, an increase of $59.7 million or 4.0%. The increase primarily resulted from the aforementioned revenue growth and included operational improvements resulting in lower costs of services increases compared to revenue growth.
The increase primarily resulted from the aforementioned revenue growth and included operational improvements resulting in lower costs of services increases compared to revenue growth. Gross profit was $842.7 million for the year ended December 31, 2024, as compared with $752.1 million for the year ended December 31, 2023, an increase of $90.6 million or 12.0%.
The increase primarily resulted from the aforementioned revenue growth and costs of services improvements in the period. 106 Table of Contents Selling, General, and Administrative Expenses Selling, general, and administrative expenses were $518.3 million for the year ended December 31, 2023, as compared with $475.2 million for the year ended December 31, 2022, an increase of $43.1 million or 9.1%.
The increase primarily resulted from the aforementioned revenue growth and costs of services improvements in the period. Selling, General, and Administrative Expenses Selling, general, and administrative expenses were $549.0 million for the year ended December 31, 2024, as compared with $518.3 million for the year ended December 31, 2023, an increase of $30.7 million or 5.9%.
Our Home Health and Therapies and Institutional Pharmacy reporting units had fair values that exceeded their carrying amounts by less than 10%, carrying amounts of $1.6 billion and $1.2 billion, and goodwill balances of $1.4 billion, and $447.0 million, respectively.
Our Home Infusion, Home Health and Therapies, and Institutional Pharmacy reporting units had fair values that exceeded their carrying amounts by less than 25%, carrying amounts of $334.3 million, $1.8 billion, and $1.1 billion and goodwill balances of $192.5 million, $1.4 billion, and $454.0 million, respectively.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses were $1,286.6 million for the year ended December 31, 2023, as compared with $1,125.6 million for the year ended December 31, 2022, an increase of $161.1 million or 14.3%.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses were $1,382.1 million for the year ended December 31, 2024, as compared with $1,286.6 million for the year ended December 31, 2023, an increase of $95.4 million or 7.4%.
We achieve 98% patient satisfaction in our outpatient rehab services, and we achieve an 84% overall rating of care in hospice, hospitalizations 30% lower than the national average in our home-based primary care, and four stars (out of five) in the CAHPS home health patient survey ratings.
We achieve 97% patient satisfaction in our outpatient rehab services, and we achieve an 85% overall rating of care in hospice (compared to the national average of 81%), hospitalizations 35% lower than the national average in our home-based primary care, and four stars (out of five) in the CAHPS home health patient survey ratings. 84% of our home health branches have a STAR rating of 4 or higher.
New Equity Awards We granted approximately $63.3 million in non-cash share-based compensation with respect to equity awards to our management and certain other full-time employees in January 2024 at the time of our IPO, and expect to grant up to an additional $100.0 million in non-cash share-based compensation to management and certain other full-time employees starting in the second quarter of fiscal year 2024.
New Equity Awards We granted approximately $63.3 million in non-cash share-based compensation with equity awards to our management and certain other full-time employees in January 2024 at the time of the IPO Offerings.
Within provider services, we address the clinical and supportive care needs of Senior and Specialty populations, including neuro and Behavioral patients, primarily in their homes, as well as some clinic and community settings.
Within provider services, we address the clinical and supportive care needs of Senior and Specialty populations, including neuro patients, primarily in their homes, as well as some clinic and community settings. Our clinical services consist of home health and hospice and rehab therapy, and our supportive care services address activities of daily living and social determinants of health as well.
EBITDA and Adjusted EBITDA EBITDA and Adjusted EBITDA are non-GAAP financial measures and are not intended to replace financial performance measures determined in accordance with GAAP, such as net (loss) income. Rather, we present EBITDA and Adjusted EBITDA as supplemental measures of our performance.
These non-GAAP financial measures are not intended to replace financial performance measures determined in accordance with U.S. GAAP, such as net loss and diluted EPS. Rather, we present EBITDA, Adjusted EBITDA, and Adjusted EPS as supplemental measures of our performance. EBITDA, Adjusted EBITDA, and Adjusted EPS The following are key financial metrics and, when used in conjunction with U.S.
The increase primarily resulted from volume growth. Revenue attributable to Home Health Care was $921.4 million for the year ended December 31, 2023, as compared with $878.4 million for the year ended December 31, 2022, an increase of $43.0 million or 4.9%.
The increase primarily resulted from volume growth as well as rate increases received during the period. Revenue attributable to Home Health Care was $1,041.3 million for the year ended December 31, 2024, as compared with $921.4 million for the year ended December 31, 2023, an increase of $119.9 million or 13.0%.
Income Tax (Benefit) Expense Income tax benefit was $(20.6) million for the year ended December 31, 2023, as compared to an expense of $8.5 million for the year ended December 31, 2022, a change of $29.0 million which corresponds with a change in the effective tax rate from (18.5)% for the year ended December 31, 2022 to 11.6% for the year ended December 31, 2023.
Income Tax Benefit Income tax benefit was $14.2 million for the year ended December 31, 2024, as compared with $20.6 million for the year ended December 31, 2023, a change of $6.4 million which corresponds with a change in the effective tax rate from 11.6% for the year ended December 31, 2023 to 40.9% for the year ended December 31, 2024.
Gross profit was $681.7 million for the year ended December 31, 2023, as compared with $629.0 million for the year ended December 31, 2022, an increase of $52.7 million or 8.4%. The increase primarily resulted from the aforementioned revenue growth in the period.
The increase primarily resulted from the aforementioned revenue growth in the period as well as an increase in cost per prescription dispensed as a result of mix shift. Gross profit was $745.8 million for the year ended December 31, 2024, as compared with $681.7 million for the year ended December 31, 2023, an increase of $64.0 million or 9.4%.
We have little or no ability to pass on certain of these increased costs associated with providing services to Medicare and Medicaid patients due to federal and state laws that establish fixed reimbursement rates.
We have little or no ability to pass on certain of these increased costs associated with providing services to Medicare and Medicaid patients due to federal and state laws that establish fixed reimbursement rates. Interest Rate Risk Our Company is exposed to interest rate risk related to changes in interest rates for borrowings under our First Lien Facilities.
Revenue attributable to Home and Community Pharmacy was $1,921.6 million for the year ended December 31, 2023, as compared with $1,732.9 million for the year ended December 31, 2022, an increase of $188.7 million or 10.9%.
Revenue attributable to Home and Community Pharmacy was $2,228.3 million for the year ended December 31, 2024, as compared with $1,921.6 million for the year ended December 31, 2023, an increase of $306.7 million or 16.0% attributable to volume growth.

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