BTSG Gains More Than 54% YTD: Should You Buy, Hold or Sell?

BrightSpring Health Services BTSG has gained 54.6% year to date, as investors increasingly recognize the earnings potential of its specialty pharmacy, infusion and home-based healthcare platforms. The Zacks Medical Services industry has grown 2%, the Medical sector has gained 1.2% and the S&P 500 Index has risen 11% over the same period. While Option Care Health OPCH declined 25.8%, Addus Homecare ADUS rose 10.4%.

The latest second-quarter results support the optimism around the company stock. Revenues rose 23% year over year to $3.9 billion, while adjusted EBITDA jumped 44% to $206 million, with the margin improving 80 basis points to 5.3%. Pharmacy Solutions revenues increased 22%, while Provider Services revenues grew 30%, demonstrating broad-based momentum across the business.

The earnings trajectory is particularly encouraging given that BTSG continues to absorb portfolio-related headwinds. For 2026, management expects revenues of $15.1-$15.425 billion, representing 17-19.5% growth, and adjusted EBITDA of $820-$845 million, implying 32.8-36.8% growth.

YTD Share Price Performance

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Specialty Pharmacy and Infusion Provide Key Growth Levers

Specialty and Infusion remain the strongest components of BTSG's growth strategy. Combined revenues increased 30% in the second quarter, while specialty script growth reached 32%. Specialty continues to benefit from branded limited-distribution drugs (LDDs), new LDD launches, generics and fee-for-service programs. The company added two ultra-narrow-network LDDs during the quarter, bringing its portfolio to 155 LDDs, and launched 12 LDDs during the first half of 2026.

Infusion provides another multiyear opportunity. Acute infusion volume increased more than 20% year over year, while chronic volume grew close to 20%. Management sees room to expand into another 12-15 states over five years, while new concierge programs and AI-enabled intake capabilities should improve conversion and operating efficiency.

The contrast with peers highlights BTSG's momentum. Option Care Health reported only 2% year-over-year revenue growth in the second quarter, although acute infusion continued to grow at a high-single-digit rate. Addus HomeCare reported 8% revenue growth, with hospice up 11.1% and personal care up 6.8%.

EBITDA Expansion Strengthens the Investment Case

Robust improvement in the second-quarter adjusted EBITDA was driven by strong performance across both segments. While Pharmacy Solutions EBITDA advanced 44% to $180 million, Provider Services EBITDA increased 33% to $75 million. Operational efficiency, scale, procurement, technology and AI investments are supporting margin expansion.

The company also strengthened its balance sheet, reducing leverage to 2.15X and receiving credit-rating upgrades from Moody's and S&P. The lower leverage provides greater flexibility for acquisitions and further investment in growth.

BTSG Holds Premium Valuation

At 22.06X forward P/E, BTSG trades at a premium to its five-year median of 14.10X and the industry multiple of 16.31. It also carries a premium to Option Care Health's 11.79X and Addus HomeCare's 16.11X. The premium valuation therefore requires sustained earnings execution, but the operating trends provide a strong foundation for the bull case.

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Challenges Could Limit the Upside

The largest near-term challenge is the policy and pricing reset affecting chronic inflammatory therapies. BTSG continues to expect roughly 600 basis points of revenue headwind from its CID portfolio in 2026, with an estimated $55 million gross-profit headwind. STELARA and related biosimilars are expected to account for less than 1% of 2026 company revenues and gross profit, limiting their direct impact, but the broader CID reset remains a drag.

Home and Community Pharmacy also remains a revenue constraint. Second-quarter revenues declined 8% to $540 million, reflecting the IRA's approximately $50 million impact and the exit of uneconomic customers. BTSG expects the IRA to reduce this business's revenues by approximately $200 million during 2026.

Conclusion

BTSG's strong share price gain so far this year reflects growth that significantly outpaces several of its home health and infusion peers. Strong specialty script growth, expanding LDD opportunities, accelerating infusion volumes and substantial EBITDA growth support the company's positive earnings trajectory. The balance-sheet improvement further strengthens its ability to pursue acquisitions and reinvest in the platform.

However, the premium valuation leaves less room for execution disappointments than peer valuations, while CID-related headwinds and Home and Community Pharmacy weakness remain relevant risks. Even so, given its Zacks Rank #1 (Strong Buy), robust growth outlook and expanding profitability, BTSG appears well positioned for further gains, with its premium valuation supported by its superior growth potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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