On January 17, 2025, BrightSpring entered into a definitive agreement to sell its Community Living business to National Mentor Holdings, Inc. (the “Purchaser”), for $835.0 million in cash upon closing, subject to certain post-closing adjustments. We entered into the transaction in order to streamline our service offerings and further focus on the senior and specialty populations. The transaction is currently expected to close in the first fiscal quarter of 2026, subject to receipt of customary regulatory approvals and other closing conditions.

The Company has determined the divestiture of the Community Living business represents a strategic shift that will have a major effect on its business and has concluded the criteria for classification as discontinued operations were met during the first fiscal quarter of 2025. Accordingly, the Community Living business is reported as discontinued operations in accordance with ASC 205-20, Discontinued Operations. The related assets and liabilities of the Community Living business are classified as assets and liabilities held for sale in the accompanying consolidated balance sheets and the results of operations from the Community Living business are classified as discontinued operations in the consolidated statements of operations. Applicable amounts in prior years have been retrospectively revised and recast to conform to this discontinued operations presentation. The Community Living business was historically presented as a part of the Provider Services reportable segment.

In accordance with ASC 205-20, Allocation of Interest to Discontinued Operations, the Company elected to allocate interest expense to discontinued operations for the Company’s debt that is not directly attributed to the Community Living business. Interest expense was allocated based on a ratio of net assets held for sale to the sum of consolidated net assets and consolidated debt. In addition, upon closing of the divestiture, we will enter into a transition services agreement (“TSA”) with the Purchaser to support the Purchaser's post-closing operations of the Community Living business by providing the Purchaser with certain transition services in exchange for service fees in the form of both fixed-price and pass through costs. Transition services will primarily include human resources, IT, facilities management, and compliance.

The financial results of the Community Living business are presented as income from discontinued operations on our consolidated statements of operations. The following table presents the financial results of the Community Living business (in thousands):


	For the Years Ended December 31,
	2025		2024		2023
Services revenue	$	1,234,403	$	1,194,258	$	1,135,159
Cost of services		840,172		872,250		840,361
Gross profit		394,231		322,008		294,798
Selling, general, and administrative expenses		254,753		223,588		205,743
Operating income of discontinued operations		139,478		98,420		89,055
Interest expense, net		29,917		37,840		52,694
Income from discontinued operations before income taxes		109,561		60,580		36,361
Income tax expense from discontinued operations		25,244		12,170		10,930
Income from discontinued operations, net of income taxes	$	84,317	$	48,410	$	25,431

The following table presents the aggregate carrying amounts of assets and liabilities held for sale for the Community Living business in the consolidated balance sheets (in thousands):


	December 31, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	107	$	299
Accounts receivable, net of allowance for credit losses		136,875		125,872
Inventories		3,294		4,007
Prepaid expenses and other current assets		2,717		1,269
Total current assets held for sale		142,993		131,447
Property and equipment, net of accumulated depreciation of $104,314 and $110,417 at December 31, 2025 and 2024, respectively		83,465		69,715
Goodwill		307,640		307,640
Intangible assets, net of accumulated amortization		216,192		216,258
Operating lease right-of-use assets, net		129,005		88,717
Deferred income taxes, net		—		287
Other assets		2,894		5,343
Total assets held for sale	$	882,189	$	819,407
Liabilities
Current liabilities:
Trade accounts payable	$	25,081	$	17,366
Accrued expenses		59,038		60,791
Current portion of obligations under operating leases		32,749		30,755
Current portion of obligations under financing leases		7,691		8,651
Total current liabilities held for sale		124,559		117,563
Obligations under operating leases, net of current portion		57,771		58,147
Obligations under financing leases, net of current portion		12,766		18,461
Deferred income taxes, net		390		—
Long-term liabilities		508		569
Total liabilities held for sale	$	195,994	$	194,740

In accordance with ASC 205-20, all assets and liabilities held for sale are reported as current on the consolidated balance sheet at December 31, 2025 as the Community Living transaction is expected to close within one-year of the balance sheet date. The presentation of assets and liabilities held for sale on the consolidated balance sheet at December 31, 2024 are reported as current and noncurrent, consistent with the conclusion in the period, as the transaction did not meet the requirements of held for sale at that point in time.

The following table presents the significant non-cash items and purchases of property and equipment for the discontinued operations that are included in the accompanying consolidated statements of cash flows (in thousands):


	For the Years Ended December 31,
	2025		2024		2023
Cash flows from operating activities of discontinued operations:
Depreciation and amortization	$	1,329	$	42,338	$	41,779
Share-based compensation		10,934		7,838		137
Impairment of long-lived assets		—		6,238		8,134

Cash flows from investing activities of discontinued operations:
Purchases of property and equipment		12,313		10,429		11,983