Another big home-based care player is going public.
BrightSpring Health Services filed the paperwork for a $100 million initial public offering on Monday, realizing the long-time speculation of industry insiders who believed an IPO was just a matter of time for the Louisville, Kentucky-based company.
“We are an essential part of our nation’s health delivery network as a front-line provider of high-quality and cost-effective care to a large and growing number of people, who increasingly require a combination of specialized solutions to enable holistic health care management,” BrightSpring wrote in an S-1 filed with the U.S. Securities and Exchange Commission (SEC).
BrightSpring is unable to comment on the news at this time, a company spokesperson told Home Health Care News in an email.
Formerly known as ResCare, BrightSpring is a highly diversified, independent provider of home- and community-based services, with a footprint in all 50 states. The company was acquired by global investment firm KKR and an affiliate of Walgreens Boots Alliance (Nasdaq: WBA) for $1.32 billion in 2019.
Led by CEO and President Jon Rousseau, BrightSpring has leveraged its strategic focus on complementary services to grow rapidly over the past few years.
Currently, the company’s clinical offerings include home health, hospice and home-based primary care, in addition to in-home rehab and behavioral health services. Meanwhile, its supportive care offerings feature multiple services to help vulnerable populations with activities of daily living (ADLs) and social determinants of health (SDoH).
Alongside its provider-services portfolio, BrightSpring operates a vast pharmacy-solutions business, partly thanks to a merger with PharMerica, which happened as part of the KKR-Walgreens transaction. BrightSpring’s pharmacy solutions serve patients in both facility-based settings and the broader community, including the home.
Earlier this year, BrightSpring launched a new “Continue Care” program designed to deliver longitudinal medication-therapy and risk-management services for its home health patients. The program includes in-home assessments, medication reconciliations, deliveries and more, all of which is supported by nurse and consultant pharmacist check-ins and interventions.
Rousseau told HHCN in June 2020 that it’s the combination of clinical and supportive provider services, with pharmacy capabilities mixed into the formula, that gives BrightSpring its main competitive advantage.
“With complex populations, if the medication therapy side is not under control or if there are day-to-day issues in the home environment — whether dietary issues, fall hazards, transportation barriers or grooming and bathing challenges — things can quickly spiral,” he said. “And certainly things that are more clinical in nature — complications from COPD or heart disease, for example — can cause somebody to have to leave their home or current setting and go into a hospital and institutional setting.”
A changing market
Following the IPO, BrightSpring plans to list on the Nasdaq. It has not selected a ticker symbol, however.
The company said in its S-1 that it has access to a “$1.5 trillion combined market opportunity” across its business lines, with “numerous positive industry trends and drivers.”
BofA Securities, Credit Suisse, Goldman Sachs, Guggenheim Securities, Jefferies, KKR, SVB Leerink, BMO Capital Markets, Deutsche Bank, HSBC, Mizuho Securities, Morgan Stanley, Wells Fargo Securities and William Blair are the joint bookrunners on the IPO. No pricing terms were disclosed.
Monday’s news is the latest update to the rapidly changing public market for home-based care companies in 2021.
In July, HCA Healthcare (NYSE: HCA) bought a majority stake in the home health and hospice business of Brookdale Senior Living Inc. (NYSE: BKD). Encompass Health Corporation (NYSE: EHC) has similarly been working on a separation of its home health and hospice segment throughout the year.
New players are actively looking to shape the market as well, such as DTRT Health (Nasdaq: DTRTU), a special purpose acquisition company (SPAC) led by home care veteran Mark Heaney.
“Home care is the solution,” Heaney told HHCN shortly after launching his SPAC. “It’s the long-term solution, and it will be forever. We’re never going back to an institution-first model. It’s never going to happen.”
ModivCare (NYSE: MODV), previously known as The Providence Service Corporation, is likewise shaking up the home-based care landscape. The Denver-based health care services company acquired CareFinders Total Care for $340 million in July, less than a year after it bought Simplura Health Group for $575 million.
Atlanta-based Aveanna Healthcare (Nasdaq: AVAH) also went public early this year.
And in June, Bloomberg News reported that Help at Home was considering going public.
Those who follow the home health and home care industries long believed BrightSpring would pursue an IPO, with another possibility being the Dallas-based AccentCare.
“I think when you’re trying to predict who might be the next company to go public, you have to start with size. The biggest privately owned in-home care companies right now, to my knowledge, are BrightSpring and AccentCare,” Mertz Taggart Managing Partner Cory Mertz told HHCN this summer. “They both have the size and scale where it might make sense to do a public offering.”
In 2020, BrightSpring grew its revenue by $1.1 billion, or 23.3%, to $5.6 billion. Its home and community health provider services segment revenue was nearly $1.7 billion last year, accounting for roughly 30% of total revenue.
The company’s clinical and supportive care services delivered over 16 million hours of care in 2020 to home health, hospice and senior home care patients, with a census of over 30,000. BrightSpring’s home health and hospice businesses have grown over 81% over the past year alone.
“Almost all of the clients and patients that we serve have chronic conditions,” it stated in the S-1. “The vast majority of them receive their services on a recurring basis over long periods of time, with our provider services patient base having an average of six chronic conditions per patient.”
In addition to its expansive service portfolio, BrightSpring sees its revenue diversification as a major advantage.
As of Dec. 31, 2020, 43% of its revenue came from Medicare, with 27% coming from Medicaid and 18% from commercial sources. About 5% of its revenue came from government programs, with 7% coming from private-pay and other sources.
“As reimbursement models continue to evolve, our complementary, value-add services and diversified [payer] mix enables us to potentially enter into quality and value-based contracts that would allow us to realize greater incentives and savings than today and take risk,” BrightSpring said in the S-1.
Since 2018, BrightSpring has completed 42 acquisitions across multiple business lines, including strategic and tuck-in deals.
As it has been active on the m&A front, it launched several new de novo locations as well. BrightSpring has expanded to 75 new locations in 31 states since 2018, having opened eight in 2018, 22 in 2019, 30 in 2020 and 15 in the first six months of 2021.
“We believe we can replicate our historical performance of opening 20 [to] 30 de novo locations per year,” the S-1 explained.