On Monday, KeyBanc Capital Markets maintained its Sector Weight rating on shares of BrightSpring Health (NASDAQ: BTSG). The decision followed the company’s third-quarter results, which showed a solid performance, underpinned by increased prescription volumes in its Pharmacy Solutions business and improved margins in Provider Services.

BrightSpring Health’s EBITDA (earnings before interest, taxes, depreciation, and amortization) saw a year-over-year increase of 16%, and the analyst noted that the figure would have risen by more than 20% if not for certain one-time expenses, including startup costs and a payor settlement.

Looking ahead, the analyst’s outlook for BrightSpring Health is positive, particularly for the year 2025. The anticipated EBITDA growth is expected to benefit from several factors, including recent mergers and acquisitions, as well as investments into the company’s Infusion services during 2024. The analyst also mentioned that BrightSpring Health appears to be well-protected from the dynamics of the Inflation Reduction Act (IRA).

Despite the positive indicators and the potential for long-term growth, KeyBanc has chosen to maintain its current rating. The firm expressed interest in seeing further progress in certain areas before considering a rating change. Specifically, KeyBanc is looking for BrightSpring Health to make headway in capturing cross-sell opportunities, improving value-based care (VBC) economics, and reducing its debt leverage.

In other recent news, BrightSpring Health Services announced the retirement of its Chief Legal Officer, Steven S. Reed, who will transition to a senior legal counsel role until 2025. Concurrently, the company is in search of a successor. BrightSpring’s earnings and revenue have seen a positive impact from a series of acquisitions, including a $60 million acquisition of Haven Hospice assets in Florida.

Analyst firms KeyBanc and BTIG have provided coverage on BrightSpring, with KeyBanc assigning a Sector Weight rating and BTIG upgrading its outlook for the company, raising the price target from $15.00 to $20.00. Investment firm KKR & Co. Inc. has agreed to purchase 11,619,998 of BrightSpring’s common stock shares from Walgreens Boots Alliance (NASDAQ:).

InvestingPro Insights

BrightSpring Health’s recent performance aligns with several InvestingPro data points and tips. The company’s revenue growth of 25.72% over the last twelve months and 28.82% in Q3 2024 supports KeyBanc’s observation of solid performance, particularly in the Pharmacy Solutions business. This growth is reflected in the InvestingPro Tip highlighting BrightSpring as a “Prominent player in the Healthcare Providers & Services industry.”

The 16% year-over-year EBITDA increase mentioned by KeyBanc is corroborated by InvestingPro data showing an 18.14% EBITDA growth over the last twelve months. This positive trend is further emphasized by the InvestingPro Tip indicating that “Net income is expected to grow this year.”

Despite these positive indicators, BrightSpring’s profitability remains a concern, as noted in the InvestingPro Tip stating the company is “Not profitable over the last twelve months.” This aligns with KeyBanc’s interest in seeing improved value-based care economics before considering a rating change.

Investors should note that BrightSpring is currently trading near its 52-week high, with a strong return of 56.82% over the last year. This performance, combined with analysts’ predictions of profitability this year, suggests potential for the improvements KeyBanc is looking for.

For a more comprehensive analysis, InvestingPro offers 13 additional tips for BrightSpring Health, providing deeper insights into the company’s financial health and market position.

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