BTSG

BrightSpring Health Services is scaling rapidly across home health care and pharmacy services. FY2025 revenue grew 28.2% to $12.9B and the company swung to a real profit — net income of $191M (from -$18.1M) and operating income up 173.5% to $295M — after years of losses (-$53.9M in FY2022, -$155M in FY2023). The cash story is even more striking: operating cash flow of $490M, up from a trivial base, finally validates the model's cash conversion after the IPO-era build-out.

The problem is that profitability is razor-thin and the valuation already prices in a smooth continuation of the inflection. Gross margin is only 11.8%, operating margin 2.3% and net margin 1.5%, leaving almost no buffer against the reimbursement and labor pressures the 10-K enumerates at length. At $66.25 the stock trades at 76.1x earnings — an exceptionally rich multiple for a low-margin healthcare-services business — though the 1.0x P/S better reflects the high-revenue, low-margin nature of the model.