Option Care Health Announces Financial Results For The Second Quarter Ended June 30, 2022

BANNOCKBURN, Ill., July 27, 2022 (GLOBE NEWSWIRE) — Option Care Health, Inc. (the “Company” or “Option Care Health”) (Nasdaq: OPCH), the nation’s largest independent provider of home and alternate site infusion services, today announced financial results for the second quarter ended June 30, 2022.

Second Quarter 2022 Financial Highlights

  • Net revenue of $980.8 million, up 14.0% compared to $860.3 million in the second quarter of 2021
  • Gross profit of $216.9 million, or 22.1% of net revenue, up 9.0% compared to $199.0 million, or 23.1% of net revenue, in the second quarter of 2021
  • Net income of $33.9 million, or $0.19 per share, compared to net income of $31.8 million, or $0.18 per share, in the second quarter of 2021
  • Adjusted EBITDA of $85.2 million, or 8.7% of net revenue, up 17.0% compared to $72.8 million, or 8.5% of net revenue, in the second quarter of 2021
  • Cash flow from operations of $104.4 million compared to $73.7 million in the second quarter of 2021
  • Cash balances were $204.0 million at the end of the second quarter
  • Completed the acquisition of Specialty Pharmacy Nursing Network for $60.0 million, financed through cash balances on hand

John C. Rademacher, Chief Executive Officer, commented, “Overall the second quarter was very productive for the Option Care Health team. We continue to execute on our purpose of providing extraordinary care that changes lives. Despite continued inflationary challenges, we delivered strong financial results and we believe we are well positioned going into the second half of the year.”

Full Year 2022 Guidance

For the full year 2022, Option Care Health is increasing its guidance and now expects to generate:

  • Net Revenue of $3.85 billion to $3.95 billion
  • Adjusted EBITDA of $330 million to $342 million
  • Cash Flow from Operations of at least $250 million

Conference Call

Option Care Health will host a conference call to discuss its second quarter 2022 financial results later today at 8:30 a.m. EDT. The conference call can be accessed via a live audio webcast that will be available online at https://investors.optioncarehealth.com. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

About Option Care Health

Option Care Health is the nation’s largest independent provider of home and alternate site infusion services. With over 7,500 team members including more than 4,500 clinicians, we work compassionately to elevate standards of care for patients with acute and chronic conditions in all 50 states. Through our clinical leadership, expertise and national scale, Option Care Health is reimagining the infusion care experience for patients, customers and team members. To learn more, please visit our website at OptionCareHealth.com.

Investor Contacts

Mike Shapiro Bob East, Asher Dewhurst, Jordan Kohnstam
Chief Financial Officer Westwicke
T: (312) 940-2538 T: (413) 213-0500
[email protected]  [email protected] 

Forward-Looking Statements – Safe Harbor
This press release may contain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, without limitation, statements concerning our full year 2022 guidance and our expectations regarding industry and macroeconomic trends and our operating performance. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “believe,” “project,” “estimate,” “expect,” “may,” “should,” “will” and similar references to future periods.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market conditions and receptivity to our services and offerings; (iii) results of litigation; and (iv) the loss of one or more key payers. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our most recent Annual Report on Form 10-K as filed with the SEC.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Note Regarding Use of Non-GAAP Financial Measures

In addition to reporting financial information in accordance with generally accepted accounting principles (GAAP), the Company is also reporting Adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be used in isolation or as a substitute or alternative to net income, operating income or any other performance measure derived in accordance with GAAP, or as a substitute or alternative to cash flow from operating activities or a measure of the Company’s liquidity. In addition, the Company’s definition of Adjusted EBITDA may not be comparable to similarly titled non-GAAP financial measures reported by other companies. Adjusted EBITDA, as defined by the Company, represents net income before net interest expense, income tax expense, depreciation and amortization, stock-based compensation expense, loss on extinguishment of debt, and restructuring, integration and other expenses. As part of restructuring, integration and other expenses, the Company may incur significant charges such as the write down of certain long‑lived assets, temporary redundant expenses, professional fees, potential retention and severance costs and potential accelerated payments or termination costs for certain of its contractual obligations. Management believes that Adjusted EBITDA provides useful supplemental information regarding the performance of Option Care Health’s business operations and facilitates comparisons to the Company’s historical operating results. We have not reconciled Adjusted EBITDA guidance to net income as management believes creation of this reconciliation would not be practicable due to the uncertainty regarding, and potential variability of, material reconciling items. For a full reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, please see below.

  Schedule 1

OPTION CARE HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

 

  (unaudited)    
  June 30,   December 31,
    2022     2021
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 204,046   $ 119,423
Accounts receivable, net   362,772     338,242
Inventories   231,766     183,095
Prepaid expenses and other current assets   78,555     69,496
Total current assets   877,139     710,256
       
NONCURRENT ASSETS:      
Property and equipment, net   105,210     111,535
Intangible assets, net   23,161     21,433
Referral sources   352,368     344,587
Goodwill   1,512,246     1,477,564
Other noncurrent assets   115,788     125,543
Total noncurrent assets   2,108,773     2,080,662
TOTAL ASSETS $ 2,985,912   $ 2,790,918
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
CURRENT LIABILITIES:      
Accounts payable $ 380,516   $ 279,246
Other current liabilities   174,792     180,449
Total current liabilities   555,308     459,695
       
NONCURRENT LIABILITIES:      
Long-term debt, net of discount, deferred financing costs and current portion   1,059,017     1,059,900
Other noncurrent liabilities   86,593     95,437
Total noncurrent liabilities   1,145,610     1,155,337
Total liabilities   1,700,918     1,615,032
       
STOCKHOLDERS’ EQUITY   1,284,994     1,175,886
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,985,912   $ 2,790,918
           

Schedule 2

OPTION CARE HEALTH, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

 

  Three Months Ended June 30,   Six Months Ended June 30,
    2022       2021       2022       2021  
NET REVENUE $ 980,820     $ 860,272     $ 1,896,604     $ 1,619,509  
COST OF REVENUE   763,920       661,304       1,478,768       1,255,068  
GROSS PROFIT   216,900       198,968       417,836       364,441  
               
OPERATING COSTS AND EXPENSES:              
Selling, general and administrative expenses   141,787       134,257       275,756       254,297  
Depreciation and amortization expense   16,037       16,619       30,759       32,958  
Total operating expenses   157,824       150,876       306,515       287,255  
OPERATING INCOME   59,076       48,092       111,321       77,186  
               
OTHER INCOME (EXPENSE):              
Interest expense, net   (12,765 )     (17,236 )     (25,011 )     (36,717 )
Other, net   1,327       1,691       2,596       (9,505 )
Total other expense   (11,438 )     (15,545 )     (22,415 )     (46,222 )
               
INCOME BEFORE INCOME TAXES   47,638       32,547       88,906       30,964  
INCOME TAX EXPENSE   13,709       731       24,702       2,009  
NET INCOME $ 33,929     $ 31,816     $ 64,204     $ 28,955  
               
Earnings per share, basic $ 0.19     $ 0.18     $ 0.36     $ 0.16  
Earnings per share, diluted $ 0.19     $ 0.18     $ 0.35     $ 0.16  
               
Weighted average common shares outstanding, basic   180,621       179,843       180,293       179,826  
Weighted average common shares outstanding, diluted   181,618       181,037       181,176       180,975  
                               

Schedule 3

OPTION CARE HEALTH, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

 

  Six Months Ended June 30,
    2022       2021  
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income $ 64,204     $ 28,955  
Adjustments to reconcile net income (loss) to net cash provided by operations:      
Depreciation and amortization expense   33,249       35,705  
Other non-cash adjustments   44,371       22,688  
Changes in operating assets and liabilities:      
Accounts receivable, net   (22,950 )     (9,866 )
Inventories   (48,671 )     (14,651 )
Accounts payable   100,924       26,532  
Other   (34,173 )     2,671  
Net cash provided by operating activities   136,954       92,034  
       
CASH FLOWS FROM INVESTING ACTIVITIES:      
Acquisition of property and equipment   (10,055 )     (6,808 )
Business acquisitions, net of cash acquired   (59,897 )     (18,852 )
Net cash used in investing activities   (69,952 )     (25,660 )
       
CASH FLOWS FROM FINANCING ACTIVITIES:      
Proceeds from debt         355,200  
Retirement of debt obligations         (352,009 )
Proceeds from warrant exercises   20,098        
Other financing cash flows   (2,477 )     (11,304 )
Net cash used in financing activities   17,621       (8,113 )
NET INCREASE IN CASH AND CASH EQUIVALENTS   84,623       58,261  
Cash and cash equivalents – beginning of the period   119,423       99,265  
CASH AND CASH EQUIVALENTS – END OF PERIOD $ 204,046     $ 157,526  
               

Schedule 4

OPTION CARE HEALTH, INC.
QUARTERLY RECONCILIATION BETWEEN GAAP AND NON-GAAP MEASURES
(IN THOUSANDS)
(UNAUDITED)

 

  Three Months Ended
June 30,
  Six Months Ended June 30,
    2022     2021     2022     2021
Consolidated net income $ 33,929   $ 31,816   $ 64,204   $ 28,955
Interest expense, net   12,765     17,236     25,011     36,717
Income tax expense   13,709     731     24,702     2,009
Depreciation and amortization expense   17,270     17,989     33,249     35,705
Consolidated EBITDA   77,673     67,772     147,166     103,386
               
EBITDA adjustments              
Stock-based incentive compensation   4,398     2,525     8,576     3,730
Loss on extinguishment of debt               12,403
Restructuring, acquisition, integration and other   3,105     2,526     7,216     5,534
Consolidated adjusted EBITDA $ 85,176   $ 72,823   $ 162,958   $ 125,053
               

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