Guardian Pharmacy Services Q1 2025 Earnings Report

Guardian Pharmacy Services EPS Results

• Actual EPS: $0.21
• Consensus EPS: $0.22
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A

Guardian Pharmacy Services Revenue Results

• Actual Revenue: $329.31 million
• Expected Revenue: $321.21 million
• Beat/Miss: Beat by +$8.09 million
• YoY Revenue Growth: N/A

Guardian Pharmacy Services Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: After Market Closes
• Conference Call Date: Monday, May 12, 2025
• Conference Call Time: 4:30PM ET

Guardian Pharmacy Services (NYSE:GRDN), a pharmacy service company, provides a suite of technology-enabled services designed to help residents of long-term health care facilities (LTCFs) in the United States. Its individualized clinical, drug dispensing, and administration capabilities are used to serve the needs of residents in lower acuity LTCFs, such as assisted living facilities and behavioral health facilities and group homes. The company's Guardian Compass includes dashboards created using data from its data warehouse to help its local pharmacies plan, track, and optimize their business operations; and GuardianShield Programs for LTCFs. The company was founded in 2003 and is based in Atlanta, Georgia.

Guardian Pharmacy Services Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1 the company reported $329.3 million in revenue (up 20% YoY), 189,000 residents (up 15% YoY), and $23.4 million in adjusted EBITDA (up 16%), and expects to land in the upper half of its revenue guidance.
• Guardian now operates 52 pharmacies after closing a Wichita, Kansas deal and is actively integrating 2024 acquisitions Freedom and Heartland using a proven 3–4 year playbook.
• The planned expansion includes new Greenfield startups in Columbus, Oklahoma City, Omaha and Naples to strengthen regional presence and leverage local operators.
• Management expects minimal impact from proposed U.S. tariffs due to its AWP-based reimbursement for branded drugs and competitive pricing dynamics in the generic market.
• Discussions with policymakers and PBM partners on the Inflation Reduction Act are ongoing, with no major developments but continued confidence in managing potential 2026 margin effects.

Presentation

[Operator]

Good day, everyone, and welcome to the Guardian Pharmacies First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. Later, you will have the opportunity to ask a question during the question and answer session. Today's speakers will be Fred Burke, President and CEO of Guardian Pharmacy and David Morris, EVP and CFO of Guardian Pharmacy. Before we begin, I'd like to remind everyone that the statements included in this conference call and in the press release issued today may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act.

[Operator]

These statements include, but are not limited to, comments regarding our plans, objectives, business outlook and our financial results for 2025 and beyond. Actual results could differ materially from those expressed or implied in forward looking statements because of a number of risk factors and uncertainties, which are discussed in the company's quarterly report on Form 10 Q and earnings release issued today. Guardian Pharmacy undertakes no obligation to update any forward looking statements. Additionally, on this afternoon's call, the company will reference certain non GAAP financial measures such as EBITDA and adjusted EBITDA. Included in our earnings release as well as on our website are reconciliations of these non GAAP financial measures to the GAAP measures reported in our financial statements.

[Operator]

This afternoon's call is being recorded and a replay of this call will be available later today. I'm now pleased to introduce the President and CEO of Guardian Pharmacy, Fred Burke.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

Welcome to Guardian Pharmacy's first quarter twenty twenty five earnings call. On today's call, I'll share financial highlights, discuss our recent pharmacy expansions and provide an update on some of the industry trends we're closely monitoring. However, before moving into our agenda, I would like to take the opportunity to introduce Ashley Stockton, our new Senior Director of Investor Relations, who joins us with close to thirty years' experience in the equity markets. Most recently, she was Head of Institutional Equity Sales in the Southeast for JPMorgan. Welcome, Ashley.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

Now moving on with our agenda, starting with the first quarter highlights, I'm pleased to report a strong start to the year, which includes revenue of $329,000,000 an increase of 20% year on year resident count at the end of the quarter of approximately 189,000 a 15% increase from the first quarter last year and adjusted EBITDA of $23,400,000 representing an increase of 16% compared to last year. Excluding pubco costs, this represents growth of 20%. As for guidance, given our strong first quarter, we think we will end up in the upper half of our revenue range and remain confident in our adjusted EBITDA range. I want to emphasize how pleased I am with our strong double digit growth in the first quarter and the meaningful progress we made on integrating multiple acquisitions and advancing our strategic initiatives. The underlying trends in our core business remain strong, and our acquisition pipeline is highly active with several near term opportunities on the horizon.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

We remain deeply committed to growing our business in a way that drives sustainable long term value for shareholders. David will share more detail about our financial results and our outlook for the remainder of the year. Today, we are pleased to announce that we closed an acquisition of a small pharmacy in Wichita, Kansas on April 1, bringing our total number of pharmacies to 52. This new pharmacy will work with our Kansas City location, allowing better service and further penetration of the Kansas market. Furthermore, we are continuing to integrate the two twenty twenty four acquisitions, Freedom and Heartland.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

David will elaborate on this, but as a reminder, we have developed a tried and tested integration playbook that takes acquired pharmacies from breakeven, which most of them are when we acquire them, to operating at our company margin profile over the course of three to four years. Additionally, we continue to bring a number of our Greenfield startups fully operational. Continuous expansion strengthen our regional presence in a given market and are typically driven by our existing local pharmacy operators. As an example, Columbus, Ohio launched by Cincinnati. The Cincinnati pharmacies experienced significant growth since acquisition in 2020, and their new Columbus Pharmacy will improve service to the communities we already serve in this area and continue their growth.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

And you'll remember, we also have the following contiguous startups coming up to scale, Oklahoma City, Omaha and Naples. The impact of tariffs is top of mind for many in our industry right now. At Guardian, we feel comfortable we will avoid major impact, and I'd like to share why. First, our pricing structure for branded drugs should insulate us. As a reminder, 70% of our revenue comes from Part D, and we are paid on a spread based on the average wholesale price or AWP of the drug.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

On the branded drug side, if manufacturers pass on tariffs in the form of a price increase, Guardian is protected because the AWP will increase commensurately and our reimbursement algorithm is calculated off that AWP. On generic drugs, it's a more complicated picture impacted by where the APIs are sourced and or where the final product is manufactured as well as how many generic manufacturers produce the drug. But that said, the generic marketplace is highly competitive such that manufacturers will have a hard time raising prices on multisource products. And if they do, most of these products are very low in cost, so we should see a relatively low impact. Finally, I'd like to provide a brief update on the important topic of a potential impact stemming from the Inflation Reduction Act on our performance in 2026 and beyond.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

We are continuing to have constructive conversations with key policymakers and our PBM partners. There are no significant developments to report since our last earnings call a little over a month ago. Hence, we continue to remain confident in our ability to navigate the potential margin impact related to the IRA and hope to have more visibility over the next several months.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

Now I'll turn the call over to David to review the quarter in greater detail. David?

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

Good afternoon and thank you all for joining the call today. I'll

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

share

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

a review of our first quarter performance and then provide some additional color on our expectations for the balance of 2025. I'll then close our comments today with some details on our integration playbook and what to expect from our new pharmacy expansions. For the first quarter of twenty twenty five, revenue increased 20% to $329,300,000 driven by organic growth in the acquisitions of Heartland and Freedom pharmacies, the former which we'll anniversary this quarter. Resident count grew 15% to 189,000. Gross profit of $64,400,000 increased 17% and adjusted EBITDA grew to $23,400,000 compared to $20,300,000 a year ago, representing growth of 16% and an EBITDA margin of 7.1%.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

Excluding PUBCO, adjusted EBITDA growth is 20% year over year. One important thing to note as it relates to our EBITDA is that we decided to begin the transition of Heartland's IT operating infrastructure over to our primary platform beginning in the first quarter. As with all acquisitions, we closely monitored the integration efforts and made the decision that expediting the operating system conversion was the right thing to do for the long term success of the business. This will accelerate the Locals team's access to proprietary tools only available on our primary operating system. We began the operating system conversions in the two Idaho locations and plan to complete both in the first half of twenty twenty five.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

The remaining two locations in Denver and Salt Lake City are on track to be completed in the latter half of this year. The accelerated operating system conversions will add several benefits allowing for full access to guarding data analytics platform, the operating workflow enhancement and efficiencies as well that will allow us to improve the customer experience. We continue to be on track with our three to four year integration process, which includes continuing to strengthen the teams, implementing Guardian's purchasing platform and relocating and expanding the two pharmacies in the high growth markets of Denver and Salt Lake City throughout the remainder of 2025. Expediting the operating system transition also accelerated cost, putting pressure on Q1 profitability. However, we believe it was important for the overall pharmacy integration.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

Further, this is a good reminder that these acquisitions and our de novo start ups are dilutive to operating profits the first two to three years as they transition to the Guardian systems infrastructure and our overall business model. In fact, 10 of our 52 pharmacies currently or roughly 20% of our network have tenure of about one year or less. These newer pharmacies represent embedded earnings power as they are still ramping up to the Guardian's margins profile. Turning to the balance sheet, we ended the first quarter with $14,000,000 in cash and we remain in a strong financial position with zero debt and plenty of dry powder on our existing revolver. As Fred mentioned, we believe that revenue will come in at the higher end of our $1,330,000,000 to $1,350,000,000 range as a result of the upside in the first quarter.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

For adjusted EBITDA, we are reiterating our EBITDA range of 97,000,000 to 101,000,000 At this early point in the fiscal year, we want to remain conservative in our forecast given the quarter to quarter variability associated with integration related expenses. Historically, our quarterly cadence of revenue and adjusted EBITDA has been evenly distributed across the quarters, but we want to remind you of the new seasonality factor we experienced in 2024 as you think about the full year 2025. As referenced in our March 26 earnings call, changes in the profitability profile of our COVID and flu vaccine clinics created a notable seasonality increase in Q4 of twenty twenty four, which we expect will be repeated this year. As we think about the second quarter twenty five, we expect it to be consistent with Q1 of twenty five in terms of revenue and adjusted EBITDA. Driving the assumption for revenue is the upside in resident count we experienced in Q1, which was a result of pulling forward residents that we expected to onboard in Q2.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

In terms of adjusted EBITDA, accelerating the timing of Heartland's IT conversion will likely result in it being a flat quarter to quarter. Finally, as I mentioned on our fourth quarter call, but want to remind you today that 2025 will include a full year of PUBCO cost of around 4,000,000 compared to just one quarter and approximately $1,000,000 of those related expenses in 2024. To close out my comments today, I'll share some details about our integration playbook that we've honed through the years of executing our pharmacy acquisition strategy. We typically execute two small acquisitions of new locations each year. We take a very thoughtful and strategic approach when considering acquisitions and aim only for targets that meet our rigorous criteria, including strong collaborative operators, rich territory for national accounts and the ability to continue to grow and improve the business.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

And I'll remind you again that these acquisitions are not baked into our initial annual guidance that we provided. Utilizing our playbook, it typically takes three to four years to complete integration and have the pharmacies achieving our overall operating metrics. Recall that many of these independent pharmacies don't have the scale or efficiencies that we're able to achieve and are also struggling to breakeven at the time of acquisition. In our first year, we focused on launching a collaborative integration process, onboarding such things as payroll, benefits, accounting, licensing, credentialing and vendor management. In addition, in year one, we're transitioning to Guardian's reimbursement model.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

We're strengthening and training the local leadership teams, including supervisory skill development, and we began implementing Guardian's IT structure. Turning to year two, we focus on solidifying the foundation, to including the continuing development of the local leadership team and positioning the business for continued growth. From an operational standpoint, we bring them on to the Guardian purchasing model and margin management tools. We ramp up the sales and marketing effort providing access to our national accounts. We're focused on efficiency initiatives that include automation and reconfiguring and or moving the pharmacy.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

We'll continue to work to improve the revenue cycle and margin management. And as we move into years three and four, that's when we really start seeing the improvements in profitability and begin achieving leverage. Once we are fully integrated, typically in year three or four is when we see the growth and profitability start to mirror Guardian's overall profitability profile. We currently have seven sites that are somewhere along this path and look forward to continuing to add to the pipeline as we execute our acquisition strategy. I'll close today by echoing Fred's remarks that we're pleased with our strong start to 2025.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

This year, we will remain focused on leveraging the core operations, expanding our operating reach and continuing to invest in our teams. I also want to thank the entire Guardian team for their continued effort and dedication to making this an incredible place to work every day and ensuring we're able to provide the highest level of service to all of our customers. I look forward to keeping you updated as we continue to progress through the year. Operator, let's open the call to questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session.

[Operator]

Session.

[Operator]

Your Your first question is from John Ransom from RGF. David,

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

could you maybe size the Heartland drag in the first quarter and for the full year versus what you contemplated initially? And I guess specifically the integration costs that run through the P and L.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

Hey, John. How are you?

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

I'm up.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

Good, good. Just a couple of things on the comments around the Heartland integration. The first being that the cost associated that is in our guidance and in our numbers. And with us making the decision to expedite the conversion to the operating system, it did pull a little bit of cost from Q2, Q3 into Q1 and it's plus or minus, I would say, 500,000.

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

Okay, perfect. And then, Fred, this is I get to ask you an unfair question, just the the Trump executive order, a lot of opinions about that. But I don't know if you had a chance to study that, and did you have any initial thoughts about how that would or would not complicate further negotiations with your payer partners?

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

What an interesting thing to happen today. I have been trying to think about it, and it's unknown at this point, John. It's so unclear what effect it would have. It's it's frustrating in some measures because as I reported earlier, we're really very positive in the discussions we're having with our payors to resolve the IRA issue. And now this comes along, we'll just have to monitor it very closely and and see where we go from here.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

But it strikes me that were this executive order to gain some traction. I believe our pay or partners are will be similarly interested in in resolving that. Based on my own personal knowledge and understanding of the MMA, this strikes me as very difficult given the noninterference clause, but I suspect that that will play out over the coming months in the judiciary and potentially the lead congress would have to make some changes to allow this. So that's all I can say at this point. Wish I knew more.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

We'll let's stay close and assess it as it as we Yeah. Get more information.

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

The the last one for me. So just sort of

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

a mechanics question. So the the PBM, you know, they have to set their party pricing annually. That's at the network. So the next available opportunity would be, I assume, you know, when you renegotiate 2026. And, of course, that's the IRA as well, but but I I assume you'd get an opportunity.

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

That would be the first opportunity. There's no like force majeure clause in your contracts that would reset this year. It's a negotiation opportunity for 2026. Do we have that right?

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

I would think so. I think you're right. I I don't envision this taking effect in the immediate term anyway.

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

Right. Right.

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

Okay. Well, nobody's told me I've

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

been right all day, Fred, so that you just made my day. So I'm I'm just gonna leave on top and let you get back in the queue.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

Okay. Good talking, Dave.

[John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial]

Thank you. Yes, sir.

[Operator]

Your next question is from David MacDonald from Truist Securities. Please go ahead.

[Grayson McAlister, Equity Research Associate at Truist Securities]

Hey, guys. This is actually Grace McAllister on for Dave. But I guess just one kind of follow-up for you. Obviously, count was really strong in the quarter. Was hoping you could break that out kind of, I guess, between a same store metric and the contribution from Heartland and Freedom would be helpful.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

Our resident growth year on year organically met the guidance that we've discussed, which is high single digit organic, and the balance would be from the acquisitions that you named.

[Grayson McAlister, Equity Research Associate at Truist Securities]

Got it. Okay. That's helpful. And then I think just my follow-up. Just wanted to see how the pipeline is shaping up and see if any of the uncertainty that we're seeing around tariffs, kind of around the economic environment is having any impact on opportunities that you

[Grayson McAlister, Equity Research Associate at Truist Securities]

guys are seeing come through? Thanks.

[David Morris, Co-Founder, EVP & CFO at Guardian Pharmacy Services]

From a pipeline standpoint, Fred mentioned that it's robust and as strong as it's ever been. And there's pressure out there on some of these smaller business in addition to the tariffs and IRA things that we discussed. So I would say it's consistent to even more robust is what we're seeing.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

And I mentioned that we have several active projects underway.

[Grayson McAlister, Equity Research Associate at Truist Securities]

Awesome. That's all I've got for you. Thanks, guys.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

Thank you.

[Operator]

There are no further questions at this time. Please proceed with closing remarks.

[Fred Burke, Co-Founder, President & CEO at Guardian Pharmacy Services]

Just let me take a minute and thank everyone from our teams to our investors for your support and trust in us. We look forward to continuing to move out through the year and achieve the guidance that we've set forward. Thanks for joining the call, and I look forward to seeing you soon. Thanks.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you do please disconnect your lines. Thank you.

Participants

Executives

• Fred Burke, Co-Founder, President & CEO
• David Morris, Co-Founder, EVP & CFO

Analysts

• John Ransom, Managing Director, Director of Healthcare Research at Raymond James Financial
• Grayson McAlister, Equity Research Associate at Truist Securities