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Option Care Health Announces Financial Results for the Third Quarter Ended September 30, 2023

Option Care Health, Inc.
Option Care Health, Inc.

BANNOCKBURN, Ill., Oct. 25, 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 third quarter ended September 30, 2023.

Third Quarter 2023 Financial Results and Highlights

  • Net revenue of $1,093.0 million, up 7.1% compared to $1,020.9 million in the third quarter of 2022

  • Gross profit of $254.3 million, or 23.3% of net revenue, up 16.6% compared to $218.0 million, or 21.4% of net revenue, in the third quarter of 2022

  • Net income of $56.3 million, or $0.31 basic earnings per share, up 45.0% compared to net income of $38.8 million, or $0.21 basic earnings per share, in the third quarter of 2022

  • Adjusted EBITDA of $109.8 million, up 28.2% compared to $85.6 million in the third quarter of 2022

  • Cash flow from operations of $61.0 million compared to $87.0 million in the third quarter of 2022

  • Cash and cash equivalents balance was $386.5 million at the end of the third quarter of 2023

John C. Rademacher, Chief Executive Officer, commented, “The Option Care Health team continues to execute on outstanding clinical outcomes and extraordinary patient care, which helped translate into solid financial results in the third quarter. I am excited to build on this momentum as we close out the year and look forward to seeing the impact we believe the team will make in the post-acute and ambulatory setting in the years to come.”

Updated Full Year 2023 Financial Guidance

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

  • Net revenue of $4.23 billion to $4.28 billion

  • Adjusted EBITDA of $420 million to $425 million

  • Cash flow from operations of at least $350 million, inclusive of the Amedisys merger termination fee net of merger-related expenses

Additionally, the Company anticipates an effective tax rate of approximately 27% and net interest expense of approximately $52.0 million to $54.0 million.

Conference Call

Option Care Health will host a conference call to discuss its third 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)

 


 

September 30, 2023

 

December 31, 2022

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

386,489

 

$

294,186

Accounts receivable, net

 

382,957

 

 

377,542

Inventories

 

251,366

 

 

224,281

Prepaid expenses and other current assets

 

95,473

 

 

98,330

Total current assets

 

1,116,285

 

 

994,339

 

 

 

 

NONCURRENT ASSETS:

 

 

 

Property and equipment, net

 

107,960

 

 

108,321

Intangible assets, net

 

20,868

 

 

22,371

Referral sources, net

 

323,126

 

 

341,744

Goodwill

 

1,540,246

 

 

1,533,424

Other noncurrent assets

 

135,131

 

 

112,737

Total noncurrent assets

 

2,127,331

 

 

2,118,597

TOTAL ASSETS

$

3,243,616

 

$

3,112,936

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

429,536

 

$

378,763

Other current liabilities

 

194,548

 

 

186,588

Total current liabilities

 

624,084

 

 

565,351

 

 

 

 

NONCURRENT LIABILITIES:

 

 

 

Long-term debt, net of discount, deferred financing costs and current portion

 

1,057,016

 

 

1,058,204

Other noncurrent liabilities

 

122,433

 

 

103,278

Total noncurrent liabilities

 

1,179,449

 

 

1,161,482

Total liabilities

 

1,803,533

 

 

1,726,833

 

 

 

 

STOCKHOLDERS’ EQUITY

 

1,440,083

 

 

1,386,103

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

3,243,616

 

$

3,112,936


Schedule 2

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

 


 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

NET REVENUE

$

1,093,014

 

 

$

1,020,918

 

 

$

3,177,934

 

 

$

2,917,522

 

COST OF REVENUE

 

838,748

 

 

 

802,917

 

 

 

2,443,834

 

 

 

2,281,685

 

GROSS PROFIT

 

254,266

 

 

 

218,001

 

 

 

734,100

 

 

 

635,837

 

 

 

 

 

 

 

 

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

158,214

 

 

 

142,015

 

 

 

459,644

 

 

 

417,771

 

Depreciation and amortization expense

 

15,005

 

 

 

15,268

 

 

 

44,417

 

 

 

46,027

 

Total operating expenses

 

173,219

 

 

 

157,283

 

 

 

504,061

 

 

 

463,798

 

OPERATING INCOME

 

81,047

 

 

 

60,718

 

 

 

230,039

 

 

 

172,039

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

Interest expense, net

 

(11,786

)

 

 

(13,997

)

 

 

(38,816

)

 

 

(39,008

)

Other, net

 

824

 

 

 

5,360

 

 

 

88,594

 

 

 

7,956

 

Total other (expense) income

 

(10,962

)

 

 

(8,637

)

 

 

49,778

 

 

 

(31,052

)

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

70,085

 

 

 

52,081

 

 

 

279,817

 

 

 

140,987

 

INCOME TAX EXPENSE

 

13,783

 

 

 

13,258

 

 

 

69,904

 

 

 

37,960

 

NET INCOME

$

56,302

 

 

$

38,823

 

 

$

209,913

 

 

$

103,027

 

 

 

 

 

 

 

 

 

Earnings per share, basic

$

0.31

 

 

$

0.21

 

 

$

1.17

 

 

$

0.57

 

Earnings per share, diluted

$

0.31

 

 

$

0.21

 

 

$

1.16

 

 

$

0.57

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, basic

 

178,826

 

 

 

181,884

 

 

 

179,956

 

 

 

180,829

 

Weighted average common shares outstanding, diluted

 

180,528

 

 

 

183,022

 

 

 

181,286

 

 

 

181,760

 


Schedule 3

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

 


 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

209,913

 

 

$

103,027

 

Adjustments to reconcile net income to net cash provided by operations:

 

 

 

Depreciation and amortization expense

 

46,423

 

 

 

49,723

 

Other non-cash adjustments

 

54,259

 

 

 

66,999

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

 

(5,075

)

 

 

(23,153

)

Inventories

 

(28,362

)

 

 

(52,749

)

Accounts payable

 

50,726

 

 

 

129,859

 

Other

 

(7,558

)

 

 

(49,614

)

Net cash provided by operating activities

 

320,326

 

 

 

224,092

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Acquisition of property and equipment

 

(21,981

)

 

 

(17,111

)

Business acquisitions, net of cash acquired

 

(12,855

)

 

 

(87,315

)

Other investing activities

 

(5,889

)

 

 

 

Net cash used in investing activities

 

(40,725

)

 

 

(104,426

)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Purchase of company stock

 

(175,108

)

 

 

 

Proceeds from warrant exercises

 

 

 

 

20,916

 

Other financing cash flows

 

(12,190

)

 

 

(4,537

)

Net cash (used in) provided by financing activities

 

(187,298

)

 

 

16,379

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

92,303

 

 

 

136,045

 

Cash and cash equivalents - beginning of the period

 

294,186

 

 

 

119,423

 

CASH AND CASH EQUIVALENTS - END OF PERIOD

$

386,489

 

 

$

255,468

 


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,

 

 

2023

 

 

2022

 

 

 

2023

 

 

 

2022

Net income

$

56,302

 

$

38,823

 

 

$

209,913

 

 

$

103,027

Interest expense, net

 

11,786

 

 

13,997

 

 

 

38,816

 

 

 

39,008

Income tax expense

 

13,783

 

 

13,258

 

 

 

69,904

 

 

 

37,960

Depreciation and amortization expense

 

15,622

 

 

16,474

 

 

 

46,423

 

 

 

49,723

EBITDA

 

97,493

 

 

82,552

 

 

 

365,056

 

 

 

229,718

 

 

 

 

 

 

 

 

EBITDA adjustments

 

 

 

 

 

 

 

Stock-based incentive compensation

 

9,235

 

 

4,005

 

 

 

22,908

 

 

 

12,581

Restructuring, acquisition, integration and other (1)

 

3,029

 

 

(934

)

 

 

(74,383

)

 

 

6,282

Adjusted EBITDA

$

109,757

 

$

85,623

 

 

$

313,581

 

 

$

248,581

(1) Restructuring, acquisition, integration and other for the nine months ended September 30, 2023 includes the Amedisys merger termination fee, net of merger-related expenses



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