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 ShapiroBob East, Asher Dewhurst, Jordan Kohnstam
Chief Financial OfficerWestwicke
T: (312) 940-2538T: (413) 213-0500
mike.shapiro@optioncare.comoptioncarehealth@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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