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

Rhea-AI Summary

Option Care Health, the largest independent provider of home infusion services, reported Q3 2022 financial results with net revenue increasing 14.5% to $1,020.9 million from $891.9 million a year earlier. Gross profit rose 7.4% to $218.0 million, representing 21.4% of net revenue. Net income grew to $38.8 million, or $0.21 per share, up from $35.5 million a year ago. Adjusted EBITDA was $85.6 million, reflecting a 9.8% increase. The company also announced an acquisition of Rochester Home Infusion for $27.4 million. Guidance for 2022 is revised to $3.90 to $3.95 billion in revenue.

Positive

• Net revenue increased by 14.5% to $1,020.9 million.
• Gross profit up 7.4% to $218.0 million.
• Net income rose to $38.8 million, or $0.21 per share.
• Adjusted EBITDA grew by 9.8% to $85.6 million.
• Cash flow from operations improved to $87.0 million.
• Completed acquisition of Rochester Home Infusion for $27.4 million.

Negative

• Gross profit margin decreased from 22.8% to 21.4%.
• Adjusted EBITDA margin decreased from 8.7% to 8.4%.

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

FAQ

What were Option Care Health's Q3 2022 financial results?

Option Care Health reported net revenue of $1,020.9 million, up 14.5% year-over-year, with a net income of $38.8 million.

How did the acquisition of Rochester Home Infusion affect Option Care Health?

The acquisition for $27.4 million was financed through cash balances and supports future growth.

What is Option Care Health's guidance for 2022?

The company expects net revenue between $3.90 billion and $3.95 billion for the full year 2022.