Option Care Health Announces Financial Results for the Third Quarter Ended September 30, 2022

BANNOCKBURN, Ill., Oct. 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 third quarter ended September 30, 2022.

Third Quarter 2022 Financial Highlights

  • Net revenue of $1,020.9 million, up 14.5% compared to $891.9 million in the third quarter of 2021
  • Gross profit of $218.0 million, or 21.4% of net revenue, up 7.4% compared to $203.0 million, or 22.8% of net revenue, in the third quarter of 2021
  • Net income of $38.8 million, or $0.21 per share, compared to net income of $35.5 million, or $0.20 per share, in the third quarter of 2021
  • Adjusted EBITDA of $85.6 million, or 8.4% of net revenue, up 9.8% compared to $78.0 million, or 8.7% of net revenue, in the third quarter of 2021
  • Cash flow from operations of $87.0 million compared to $51.2 million in the third quarter of 2021
  • Cash balances were $255.5 million at the end of the third quarter
  • Completed the acquisition of Rochester Home Infusion, Inc. for $27.4 million, financed through cash balances on hand

John C. Rademacher, Chief Executive Officer, commented, “The Option Care Health team continued to execute on our commitment to delivering extraordinary care to our patients. Our focus on quality patient care, as well as our investments for future growth, have allowed us to capitalize on dynamic market opportunities and deliver solid financial results in the third quarter, despite an ongoing challenging inflationary environment.”

Full Year 2022 Guidance

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

  • Net Revenue of $3.90 billion to $3.95 billion
  • Adjusted EBITDA of $336 million to $341 million
  • Cash Flow from Operations of at least $250 million

Conference Call

Option Care Health will host a conference call to discuss its third 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
mike.shapiro@optioncare.com optioncarehealth@westwicke.com

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, acquisition, integration and other. As part of restructuring, acquisition, integration and other, 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)

 

  September 30,   December 31,
    2022     2021
  (unaudited)    
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 255,468   $ 119,423
Accounts receivable, net   364,187     338,242
Inventories   236,020     183,095
Prepaid expenses and other current assets   96,289     69,496
Total current assets   951,964     710,256
       
NONCURRENT ASSETS:      
Property and equipment, net   96,312     111,535
Intangible assets, net   23,066     21,433
Referral sources   349,487     344,587
Goodwill   1,533,043     1,477,564
Other noncurrent assets   119,391     125,543
Total noncurrent assets   2,121,299     2,080,662
TOTAL ASSETS $ 3,073,263   $ 2,790,918
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
CURRENT LIABILITIES:      
Accounts payable $ 409,737   $ 279,246
Other current liabilities   177,063     180,449
Total current liabilities   586,800     459,695
       
NONCURRENT LIABILITIES:      
Long-term debt, net of discount, deferred financing costs and current portion   1,058,606     1,059,900
Other noncurrent liabilities   90,522     95,437
Total noncurrent liabilities   1,149,128     1,155,337
Total liabilities   1,735,928     1,615,032
       
STOCKHOLDERS’ EQUITY   1,337,335     1,175,886
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,073,263   $ 2,790,918

Schedule 2

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

 

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2022       2021       2022       2021  
NET REVENUE $ 1,020,918     $ 891,937     $ 2,917,522     $ 2,511,446  
COST OF REVENUE   802,917       688,969       2,281,685       1,944,037  
GROSS PROFIT   218,001       202,968       635,837       567,409  
               
OPERATING COSTS AND EXPENSES:              
Selling, general and administrative expenses   142,015       134,633       417,771       388,930  
Depreciation and amortization expense   15,268       15,452       46,027       48,410  
Total operating expenses   157,283       150,085       463,798       437,340  
OPERATING INCOME   60,718       52,883       172,039       130,069  
               
OTHER INCOME (EXPENSE):              
Interest expense, net   (13,997 )     (16,000 )     (39,008 )     (52,717 )
Other, net   5,360       1,680       7,956       (7,825 )
Total other expense   (8,637 )     (14,320 )     (31,052 )     (60,542 )
               
INCOME BEFORE INCOME TAXES   52,081       38,563       140,987       69,527  
INCOME TAX EXPENSE   13,258       3,087       37,960       5,096  
NET INCOME $ 38,823     $ 35,476     $ 103,027     $ 64,431  
               
Earnings per share, basic $ 0.21     $ 0.20     $ 0.57     $ 0.36  
Earnings per share, diluted $ 0.21     $ 0.20     $ 0.57     $ 0.36  
               
Weighted average common shares outstanding, basic   181,884       179,872       180,829       179,841  
Weighted average common shares outstanding, diluted   183,022       181,430       181,760       181,055  

Schedule 3

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

 

  Nine Months Ended
September 30,
    2022       2021  
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income $ 103,027     $ 64,431  
Adjustments to reconcile net income to net cash provided by operations:      
Depreciation and amortization expense   49,723       52,820  
Other non-cash adjustments   66,999       32,842  
Changes in operating assets and liabilities:      
Accounts receivable, net   (23,153 )     (27,310 )
Inventories   (52,749 )     (31,472 )
Accounts payable   129,859       35,648  
Other   (49,614 )     16,300  
    Net cash provided by operating activities   224,092       143,259  
       
CASH FLOWS FROM INVESTING ACTIVITIES:      
Acquisition of property and equipment   (17,111 )     (11,744 )
Business acquisitions, net of cash acquired   (87,315 )     (18,852 )
    Net cash used in investing activities   (104,426 )     (30,596 )
       
CASH FLOWS FROM FINANCING ACTIVITIES:      
Proceeds from issuance of debt         355,200  
Retirement of debt obligations         (352,009 )
Proceeds from warrant exercises   20,916        
Other financing cash flows   (4,537 )     (14,263 )
    Net cash provided by (used in) financing activities   16,379       (11,072 )
NET INCREASE IN CASH AND CASH EQUIVALENTS   136,045       101,591  
Cash and cash equivalents – beginning of the period   119,423       99,265  
CASH AND CASH EQUIVALENTS – END OF PERIOD $ 255,468     $ 200,856  

Schedule 4

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

 

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
    2022       2021     2022     2021
Consolidated net income $ 38,823     $ 35,476   $ 103,027   $ 64,431
Interest expense, net   13,997       16,000     39,008     52,717
Income tax expense   13,258       3,087     37,960     5,096
Depreciation and amortization expense   16,474       17,115     49,723     52,820
Consolidated EBITDA   82,552       71,678     229,718     175,064
               
EBITDA adjustments              
Stock-based incentive compensation   4,005       2,516     12,581     6,246
Loss on extinguishment of debt                 12,403
Restructuring, acquisition, integration and other   (934 )     3,808     6,282     9,342
Consolidated adjusted EBITDA $ 85,623     $ 78,002   $ 248,581   $ 203,055
               

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