BrightSpring (BTSG): Adj EBITDA +44%, Stock FELL 15% | Q2 2026

BrightSpring Health Services, Inc. (BTSG) Q2 2026 — Revenue $3,873M, +23.0% (beat ~$3.66B by 5.9%). Adj EBITDA $205.5M, +44.2%. Adj EPS $0.45 vs $0.22 (13% beat). FY26 guidance RAISED. Leverage 2.15x. And the stock fell ~15% to ~$61.60 from a $72.88 close. BrightSpring beat on every line and raised guidance on both - and the stock fell about 15%. All figures are continuing operations (Community Living divested 3/30/26). Revenue $3,873M (+23.0%) beat the ~$3.66B consensus by 5.9%; adjusted EBITDA $205.5M (+44.2%) at a 5.3% margin; adjusted EPS $0.45 vs $0.22. But prescriptions dispensed were FLAT (-0.1%) - all the growth is revenue per script (+22% to $314.20). Home & community pharmacy revenue FELL 8% to $540M on a ~$50M IRA hit, guided at ~$45M/qtr for the rest of 2026. Q2 operating cash flow was $43.9M ($144M ex a ~$100M one-time tax) on $205.5M of adj EBITDA. And the guide implies H2 revenue of ~$3,888M a quarter against the $3,873M just printed - flat. At ~$61.60 the EV is $15.2B, 18.3x FY26 adj EBITDA, against a peer set nearer 14x. Our DCF gives ~$45.50; even our BULL case ($54) is below the price. SELL, 4/5. THE CALL: SELL (4/5, A GREAT QUARTER AT THE WRONG PRICE) — base-case value ~$45.5 vs ~$61.6 today. KEY METRICS: - Q2 2026 = 3 months ended June 30, 2026; reported pre-open 2026-07-31 - CONTINUING OPS ONLY - Community Living divested 3/30/26 - Revenue $3,873.1M, +23.0% vs $3,147.7M - beat the ~$3.66B consensus by 5.9% - Gross profit $492.7M, +31.5%; gross margin 12.7% vs 11.9% - a DISTRIBUTION margin - Adjusted EBITDA $205.5M, +44.2%; margin 5.3% vs 4.5% (beat ~$195.7M) - Adjusted EPS $0.45 vs $0.22 (13% beat); GAAP continuing-ops EPS $0.39 vs $0.04 - Operating income $130.4M vs $48.6M; net income (cont. ops) $86.6M vs $8.5M - Pharmacy Solutions $3,407M (+22%), segment EBITDA $180M (+44%), 5.3% margin - Specialty & infusion ~$2.87B, +30%; scripts +31%; 155 limited-distribution drugs - Scripts 10,844,038 vs 10,851,773 = -0.1% FLAT; rev/script $314.20 (+22%) - Home & community pharmacy $540M, -8% - ~$50M IRA hit, ~$45M/qtr ahead, ~$200M FY26 - Provider Services $466M (+30%), EBITDA $75M (+33%), 16.1% margin - 3x pharmacy - Home health $278M (+51%); census 46,448 (+54%); Amedisys/LHC ~$78M rev, $8M EBITDA - Q2 CFFO $43.9M ($144M ex ~$100M one-time tax); capex $29.0M; reported FCF $14.9M - H1 CFFO $166.9M included a $240.0M inventory release ($815.2M to $575.0M) - Cash $550.4M vs ~$2.21B debt+leases = net debt ~$1.66B; leverage 2.15x (2.27x at 3/31) - $300M term loan repaid, repriced to SOFR+200; Moody's Ba3, S&P BB- (both upgrades) - KKR secondary in June + $60.0M / 1,026,465-share buyback; tangible book ~-$1.0B - FY26 guide RAISED: revenue $15,100-15,425M; adj EBITDA $820-845M; CFFO ~$600M - Implied H2: ~$3,888M revenue/qtr vs $3,873M printed - FLAT; EBITDA midpoint only +$22.5M - Our model: owner FCF $440M; DCF $45.50 base, $26 bear, $54 bull (9.25%); PW ~$43 - At ~$61.60: EV $15.2B = 18.3x FY26 adj EBITDA vs a ~14x peer set; reverse DCF needs 17.9%/yr - Street: $72.71 avg, $79 median, $49-$90, 12 Buy/0 Hold/0 Sell - all PRE-print What to watch: Bull: prescription VOLUME growth above 3% (scripts were flat) would make this a unit-economics story rather than mix, moving the base case toward $56; plus Q3 cash flow that puts the ~$600M FY guide in reach without another working-capital release. Bear: FCF conversion below 40% of adj EBITDA, 2027 commentary annualising the IRA drag beyond ~$200M, or a further KKR secondary into strength. Any two and fair value is nearer $35. We'd start looking at $40. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.