The home- and community-based services provider BrightSpring Health Services once again is planning to go public.
Backed by the PE firm KKR, BrightSpring originally planned to raise $800 million in an IPO. In November of 2022, it ultimately decided against that course of action.
Now, an IPO – this time with a goal of raising $1 billion – is back in play. Bloomberg first reported the news, citing “people familiar with the matter.” The listing is expected to come to fruition in the fourth quarter.
BrightSpring has “re-engaged” Goldman Sachs and KKR’s capital markets division as lead bookrunners for the offering. Specifics and plans surrounding the IPO are not 100% ironed out yet, according to Bloomberg’s sources.
Based in Louisville, Kentucky, BrightSpring serves 350,000 senior and specialty patients daily in all 50 states. The company’s focus is on high-risk, high-need populations. Its patients have an average of 6 chronic conditions, according to the company. It provides 120 million hours of care per year, 75% of which is done so in the home.
In 2019, when KKR closed on its $1.32 billion purchase of BrightSpring, the latter merged with the pharmacy company PharMerica. At the time, the two companies had combined revenues of about $4.5 billion.
In 2021, BrightSpring acquired the home health and hospice company Abode Healthcare for $750 million.
In addition to KKR, Walgreens Boots Alliance (Nasdaq: WBA) – one of the retailers most involved with home-based care these days – is also a BrightSpring backer.
BrightSpring declined to comment on that matter.
Going public in home-based care
BrightSpring is a diversified home-based care services provider. After the onset of COVID-19, similar companies were performing very well on the public market. There were also rumors of several other privately held companies considering IPOs given the care-to-home trend taking place across the U.S.
Since then, the public market has mostly been hard on providers, particularly for those involved in home health and hospice.
LHC Group exited after UnitedHealth Group’s (NYSE: UNH) Optum acquired it in a deal that was finalized in early 2023. Now, Amedisys Inc. (Nasdaq: AMED) is also set to exit the public market to join Optum, so long as the deal clears regulatory hurdles.
Amedisys ultimately decided to sell due to multiple factors affecting its financial performance. Those factors include the Centers for Medicare & Medicaid Services (CMS) slashing home health payment, as well as the growing population of Medicare Advantage (MA) beneficiaries. MA plans generally pay far less for home health services than traditional Medicare does.
Enhabit Inc. (NYSE: EHAB) – another large home health and hospice provider – is currently conducting a strategic review that could result in a merger or sale. The company’s IPO only took place a little over a year ago, in June of 2022.
Reimbursement challenges aren’t just isolated to Medicare. In Medicaid, most states have begun paying more for home- and community-based services (HCBS). A recent proposed rule from CMS could also significantly affect public companies in that space, however.
HCBS providers could be forced to direct 80% of reimbursement to workers, which could be problematic, especially in markets where reimbursement is already lower than the national average.
Nevertheless, KKR and BrightSpring seem to be set on making that entrance onto the public market. Its diverse set of service lines could be enough to insulate it from regulatory and reimbursement challenges in one area or another, but that will remain unclear until the IPO is official.