Option Care Health Announces Financial Results for the Second Quarter Ended June 30, 2023

BANNOCKBURN, Ill., July 27, 2023 (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, announced today financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Financial Results and Highlights

  • Net revenue of $1,069.1 million, up 9.0% compared to $980.8 million in the second quarter of 2022
  • Gross profit of $250.8 million, or 23.5% of net revenue, up 15.6% compared to $216.9 million, or 22.1% of net revenue, in the second quarter of 2022
  • Net income of $114.4 million, or $0.64 basic earnings per share, up 237.2% compared to net income of $33.9 million, or $0.19 basic earnings per share, in the second quarter of 2022
  • Adjusted EBITDA of $110.1 million, up 29.2% compared to $85.2 million in the second quarter of 2022
  • Cash flow from operations of $169.5 million compared to $104.4 million in the second quarter of 2022
  • Cash and cash equivalents balance was $441.2 million at the end of the second quarter of 2023
  • Entered into and subsequently terminated the Merger Agreement with Amedisys, Inc. and received a payment of $106.0 million in cash on behalf of Amedisys

John C. Rademacher, Chief Executive Officer, commented, “The Option Care Health team executed on another solid quarter of financial results. Our commitment to providing unparalleled care that produces superior clinical outcomes makes us confident in our continued growth trajectory as we head into the back half of the year.”

Updated Full Year 2023 Financial Guidance

For the full year 2023, Option Care Health expects to generate:

  • Net Revenue of $4.2 billion to $4.3 billion
  • Adjusted EBITDA of $415 million to $425 million
  • Cash Flow from Operations of at least $350 million, inclusive of Amedisys termination fee, net of expenses

Additionally, the Company continues to anticipate an effective tax rate of 27% to 29% and net interest expense of approximately $55.0 million to $59.0 million.

Conference Call

Option Care Health will host a conference call to discuss its second quarter 2023 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. 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. Examples of forward-looking statements include, among others, statements we may make regarding future revenues, future earnings, regulatory developments, market developments, new products and growth strategies, integration activities and the effects of any of the foregoing on our future results of operations or financial conditions.

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: changes in laws and regulations applicable to our business model; changes in market conditions and receptivity to our services and offerings; pending and future litigation; potential liability for claims not covered by insurance; and loss of relationships with managed care organizations and other non-governmental third party payers. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our periodic reports 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)(UNAUDITED)

 

  June 30, 2023   December 31, 2022
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $ 441,166   $ 294,186
Accounts receivable, net   396,501     377,542
Inventories   262,924     224,281
Prepaid expenses and other current assets   97,629     98,330
Total current assets   1,198,220     994,339
       
NONCURRENT ASSETS:      
Property and equipment, net   106,777     108,321
Intangible assets, net   21,645     22,371
Referral sources, net   330,948     341,744
Goodwill   1,540,567     1,533,424
Other noncurrent assets   122,741     112,737
Total noncurrent assets   2,122,678     2,118,597
TOTAL ASSETS $ 3,320,898   $ 3,112,936
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
CURRENT LIABILITIES:      
Accounts payable $ 467,666   $ 378,763
Other current liabilities   200,801     186,588
Total current liabilities   668,467     565,351
       
NONCURRENT LIABILITIES:      
Long-term debt, net of discount, deferred financing costs and current portion   1,057,391     1,058,204
Other noncurrent liabilities   119,657     103,278
Total noncurrent liabilities   1,177,048     1,161,482
Total liabilities   1,845,515     1,726,833
       
STOCKHOLDERS’ EQUITY   1,475,383     1,386,103
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,320,898   $ 3,112,936

Schedule 2

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

 

  Three Months Ended June 30,   Six Months Ended June 30,
    2023       2022       2023       2022  
NET REVENUE $ 1,069,072     $ 980,820     $ 2,084,920     $ 1,896,604  
COST OF REVENUE   818,243       763,920       1,605,086       1,478,768  
GROSS PROFIT   250,829       216,900       479,834       417,836  
               
OPERATING COSTS AND EXPENSES:              
Selling, general and administrative expenses   153,564       141,787       301,430       275,756  
Depreciation and amortization expense   14,898       16,037       29,412       30,759  
Total operating expenses   168,462       157,824       330,842       306,515  
OPERATING INCOME   82,367       59,076       148,992       111,321  
               
OTHER INCOME (EXPENSE):              
Interest expense, net   (13,196 )     (12,765 )     (27,030 )     (25,011 )
Other, net   86,332       1,327       87,770       2,596  
Total other income (expense)   73,136       (11,438 )     60,740       (22,415 )
               
INCOME BEFORE INCOME TAXES   155,503       47,638       209,732       88,906  
INCOME TAX EXPENSE   41,100       13,709       56,121       24,702  
NET INCOME $ 114,403     $ 33,929     $ 153,611     $ 64,204  
               
Earnings per share, basic $ 0.64     $ 0.19     $ 0.85     $ 0.36  
Earnings per share, diluted $ 0.63     $ 0.19     $ 0.84     $ 0.35  
               
Weighted average common shares outstanding, basic   179,807       180,621       180,531       180,293  
Weighted average common shares outstanding, diluted   181,241       181,618       181,931       181,176  

Schedule 3

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

 

  Six Months Ended June 30,
    2023       2022  
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income $ 153,611     $ 64,204  
Adjustments to reconcile net income to net cash provided by operations:      
Depreciation and amortization expense   30,801       33,249  
Other non-cash adjustments   38,498       44,371  
Changes in operating assets and liabilities:      
Accounts receivable, net   (18,619 )     (22,950 )
Inventories   (38,643 )     (48,671 )
Accounts payable   88,896       100,924  
Other   4,744       (34,173 )
Net cash provided by operating activities   259,288       136,954  
       
CASH FLOWS FROM INVESTING ACTIVITIES:      
Acquisition of property and equipment   (13,554 )     (10,055 )
Business acquisitions, net of cash acquired   (12,855 )     (59,897 )
Net cash used in investing activities   (26,409 )     (69,952 )
       
CASH FLOWS FROM FINANCING ACTIVITIES:      
Purchase of company stock   (75,000 )      
Proceeds from warrant exercises         20,098  
Other financing cash flows   (10,899 )     (2,477 )
Net cash (used in) provided by financing activities   (85,899 )     17,621  
NET INCREASE IN CASH AND CASH EQUIVALENTS   146,980       84,623  
Cash and cash equivalents – beginning of the period   294,186       119,423  
CASH AND CASH EQUIVALENTS – END OF PERIOD $ 441,166     $ 204,046  

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,
  2023   2022   2023   2022
Net income $ 114,403     $ 33,929   $ 153,611     $ 64,204
Interest expense, net   13,196       12,765     27,030       25,011
Income tax expense   41,100       13,709     56,121       24,702
Depreciation and amortization expense   15,576       17,270     30,801       33,249
EBITDA   184,275       77,673     267,563       147,166
               
EBITDA adjustments              
Stock-based incentive compensation   7,685       4,398     13,673       8,576
Restructuring, acquisition, integration and other (1)   (81,910 )     3,105     (77,412 )     7,216
Adjusted EBITDA $ 110,050     $ 85,176   $ 203,824     $ 162,958

(1) Inclusive of Amedisys merger termination fee, net of merger-related expenses

 

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