Alternate site health provider Option Care Health (NASDAQ: OPCH) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 16.3% year on year to $1.33 billion. The company’s full-year revenue guidance of $5.5 billion at the midpoint came in 1.3% above analysts’ estimates. Its non-GAAP profit of $0.40 per share was 19% above analysts’ consensus estimates.
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Option Care Health (OPCH) Q1 CY2025 Highlights:
- Revenue: $1.33 billion vs analyst estimates of $1.26 billion (16.3% year-on-year growth, 6.1% beat)
- Adjusted EPS: $0.40 vs analyst estimates of $0.34 (19% beat)
- Adjusted EBITDA: $111.8 million vs analyst estimates of $102.8 million (8.4% margin, 8.8% beat)
- The company lifted its revenue guidance for the full year to $5.5 billion at the midpoint from $5.4 billion, a 1.9% increase
- Management slightly raised its full-year Adjusted EPS guidance to $1.66 at the midpoint
- EBITDA guidance for the full year is $462.5 million at the midpoint, in line with analyst expectations
- Operating Margin: 5.9%, in line with the same quarter last year
- Free Cash Flow was -$16.59 million compared to -$74.6 million in the same quarter last year
- Market Capitalization: $5.42 billion
Company Overview
With a nationwide network of 177 locations serving 43 states and a team of over 4,500 clinicians, Option Care Health (NASDAQ: OPCH) is the largest independent provider of home and alternate site infusion services, delivering medications and clinical support to patients across the United States.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Option Care Health’s 15.3% annualized revenue growth over the last five years was solid. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful starting point for our analysis.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Option Care Health’s annualized revenue growth of 13.2% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Option Care Health reported year-on-year revenue growth of 16.3%, and its $1.33 billion of revenue exceeded Wall Street’s estimates by 6.1%.
Looking ahead, sell-side analysts expect revenue to grow 6.9% over the next 12 months, a deceleration versus the last two years. Still, this projection is above the sector average and implies the market is baking in some success for its newer products and services.
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Operating Margin
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Option Care Health was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.1% was weak for a healthcare business.
On the plus side, Option Care Health’s operating margin rose by 2.2 percentage points over the last five years, as its sales growth gave it operating leverage. This performance was mostly driven by its past improvements as the company’s margin was relatively unchanged on two-year basis.
This quarter, Option Care Health generated an operating profit margin of 5.9%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Option Care Health’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.
In Q1, Option Care Health reported EPS at $0.40, up from $0.35 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Option Care Health’s full-year EPS of $1.63 to grow 1.4%.
Key Takeaways from Option Care Health’s Q1 Results
We were impressed by how significantly Option Care Health blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a good quarter with some key areas of upside. The stock traded up 4.9% to $34.60 immediately after reporting.
Sure, Option Care Health had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
