BrightSpring Health Services

Company overview

BrightSpring Health Services (NASDAQ: BTSG) is a large U.S. provider of home and community-based health services: specialty/infusion pharmacy, institutional pharmacy, home health, hospice, rehab and personal care. >485,000 patients served daily; ~7,700 locations; all 50 states. Two segments (LTM Jun-26): Pharmacy Solutions ~$12.7bn revenue / ~$652m segment EBITDA (thin ~5% margins, LDD oncology growth); Provider Services ~$1.7bn / ~$266m. Government programs (Medicare + Medicaid) are ~69% of revenue; most pharmacy revenue flows through PBMs.

KKR/Walgreens roll-up history. IPO (Jan-2024) repaid the prior second lien. Community Living sold Mar-2026 (~$811m cash). First lien (Tranche B-6) was repriced to SOFR+200 in May-2026. Perimeter warning: continuing ops P&L excludes Community Living; some FY2023 metrics are as-originally-reported including CL — do not mix bases without saying so.

Ask (illustrative): fund a hypothetical $1.0bn home-health/hospice acquisition (~$110m Adj. EBITDA) with $225m cash + $400m incremental 1L (BSL, not offered to you) + **$400m senior secured second-lien TL** (the private ask). LTM Jun-26: revenue $14.4bn, Adj. EBITDA $739m, ~3.1x gross / ~2.3x net. ~4.9x LTM historical interest coverage; ~4.6x pro forma at the illustrative structure. PF through 1L ~3.08x (2L attachment) / through 2L ~3.55x. 1L financial covenant is springing 6.90x only when RCF >35% drawn. The IC question: is ~300 bp over the 1L enough for a 2L that recovers only if EV holds?

Downside snapshot (from §7): "Repriced and re-levered" (2027–28) on PF Adj. EBITDA $849m. Downside: Pharmacy EBITDA −20%, Provider −15%, acquired −30% vs plan; Adj. EBITDA $646m; no RCF draw; 4.8x gross (~5% cushion to the 5.00x 2L covenant); PF stressed coverage 3.0x; 1L/2L recovery 100%/100%. Severe: −30%/−20%/−40%; $556m; $240m RCF drawn; 5.9x; PF 2.4x; 1L/2L 100%/79%. Tail: −50%/−35%/−60%; $364m; $475m RCF drawn; 9.7x; PF 1.5x; 1L/2L 56%/0%. Cash after capex and interest (EBITDA − capex − interest $327m / $222m / $14m).

Your memo should answer

1. 01Seventy percent of revenue is Medicare/Medicaid and most pharmacy runs through four PBMs. Which payer line hurts EBITDA most if it moves? Home & Community Pharmacy is already down ~8% from the IRA — what does one more negotiation round, or a $3 cut in GP/script, do to leverage and 2L recovery?
2. 02Revenue is up ~24% while scripts are flat. How much is real gross profit vs drug cost at ~9% margin? Pharmacy EBITDA grew ~45% on 'certain specialty branded drugs' — how concentrated is that, what don't filings tell you, and what diligence do you need before funding?
3. 03This is a KKR roll-up with add-backs of 18–44% of EBITDA and ~$100m/yr acquisition/integration costs. You're paying ~9.1x for a target vs ~7x Amedisys branches and ~6.5x Community Living sale. How much of the delever from ~5.9x to ~2.15x did the business earn vs IPO equity and asset sales, and where does management want leverage?
4. 04The company pays SOFR+200 on its first lien. Why sit behind ~$2.6bn of it plus a $475m revolver for ~300 bp more? Give attachment and detachment points. The 1L's only disclosed financial covenant is a springing 6.90x first-lien test when RCF >35% drawn — what does a 2L 5.00x covenant actually buy with a 180-day standstill, and what stops priming?
5. 05Walk 2L recovery in a services business: government/PBM receivables, wholesaler-funded inventory, licenses that don't transfer. What does the second lien own? At what EBITDA and multiple do you get zero — and why 6x, not the ~18x equity market multiple?
6. 06CFO was $24m in 2024 and $490m in 2025 — which is normal? Strip Silver, Community Living tax, and inventory swings; what is Adj. EBITDA − SBC − capex − cash taxes − interest on this structure? Label LTM historical vs pro forma coverage.

Financials ($M)

Term sheet

Facility (the ask)

$400m senior secured second-lien TL — ILLUSTRATIVE private ask

Concurrent (not offered)

$400m incremental first-lien TL pari with B-6 at assumed SOFR+200; existing $475m RCF stays

Sources & uses

Uses $1,000m purchase + fees/OID; Sources $400m 2L + $400m 1L + $225m cash

Tenor / amort

7 years (springs 91 days inside 1L if B-6 not refinanced); bullet (no amort)

Pricing (illustrative)

Term SOFR + 500 bp, 1.00% floor, 98.0 OID (~300 bp over 1L B-6)

Pro forma leverage

PF Adj. EBITDA $849m; 1L ~3.08x (2L attachment); through 2L ~3.55x; total ~3.61x gross / ~3.23x net

Coverage note

~4.9x = LTM historical (Adj. EBITDA / reported interest). ~4.6x = PF at illustrative structure. Do not mix.

2L financial covenant

Max total net leverage 5.00x → 4.75x after Q8; equity cure 2-in-4 / 4 life

1L covenant (disclosed)

Springing 6.90x first-lien leverage only when RCF >35% drawn (effectively cov-lite when RCF lightly drawn)

Other terms

Intercreditor 1L debt cap $3,400m; 180-day standstill; NC-12 then 102/101/par; add-backs capped 10%; J.Crew/Chewy/Serta/Pluralsight; annual top-10 drug concentration reporting