bios-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


(Mark One)
☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended March 31, 2022
			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission file number: 001-11993

OPTION CARE HEALTH, INC.

(Exact name of registrant as specified in its charter)

Delaware

05-0489664

(State of incorporation)

(I.R.S. Employer Identification No.)

3000 Lakeside Dr.

Suite 300N,

Bannockburn,

60015

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code:

312-940-2443

Securities registered pursuant to Section 12(b) of the Act:


Title of each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	OPCH	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

On April 26, 2022, there were 180,052,037 shares of the registrant’s Common Stock outstanding.

TABLE OF CONTENTS


		Page Number
PART I

Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets	5
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	6
	Unaudited Condensed Consolidated Statements of Cash Flows	7
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

PART II

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 6.	Exhibits	33

SIGNATURES		33

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1.Financial Statements

Table of Contents

OPTION CARE HEALTH, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)


	(unaudited)
	March 31, 2022		December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	145,600	$	119,423
Accounts receivable, net	366,285		338,242
Inventories	217,184		183,095
Prepaid expenses and other current assets	76,643		69,496
Total current assets	805,712		710,256

NONCURRENT ASSETS:
Property and equipment, net	109,066		111,535
Operating lease right-of-use asset	74,662		74,777
Intangible assets, net	20,669		21,433
Referral sources	337,882		344,587
Goodwill	1,478,500		1,477,564
Deferred income taxes	14,037		27,033
Other noncurrent assets	37,748		23,733
Total noncurrent assets	2,072,564		2,080,662
TOTAL ASSETS	$	2,878,276	$	2,790,918

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	356,118	$	279,246
Accrued compensation and employee benefits	42,046		83,503
Accrued expenses and other current liabilities	85,286		71,857
Current portion of operating lease liability	18,689		19,089
Current portion of long-term debt	6,000		6,000
Total current liabilities	508,139		459,695

NONCURRENT LIABILITIES:
Long-term debt, net of discount, deferred financing costs and current portion	1,059,449		1,059,900
Operating lease liability, net of current portion	75,479		74,492
Other noncurrent liabilities	13,445		20,945
Total noncurrent liabilities	1,148,373		1,155,337
Total liabilities	1,656,512		1,615,032

STOCKHOLDERS’ EQUITY:
Preferred stock; $0.0001 par value; 12,500,000 shares authorized, no shares outstanding as of March 31, 2022 and December 31, 2021, respectively	—		—
Common stock; $0.0001 par value: 250,000,000 shares authorized, 180,429,758 shares issued and 180,046,036 shares outstanding as of March 31, 2022; 180,309,637 shares issued and 179,925,915 shares outstanding as of December 31, 2021	18		18
Treasury stock; 383,722 shares outstanding, at cost, as of March 31, 2022 and December 31, 2021, respectively	(2,403)		(2,403)
Paid-in capital	1,143,388		1,138,855
Retained earnings	70,142		39,867
Accumulated other comprehensive income (loss)	10,619		(451)
Total stockholders’ equity	1,221,764		1,175,886
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,878,276	$	2,790,918

The notes to unaudited condensed consolidated financial statements are an integral part of these statements.

Table of Contents

OPTION CARE HEALTH, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


	Three Months Ended March 31,
	2022		2021
NET REVENUE	$	915,784	$	759,237
COST OF REVENUE	714,848		593,764
GROSS PROFIT	200,936		165,473

OPERATING COSTS AND EXPENSES:
Selling, general and administrative expenses	133,969		120,040
Depreciation and amortization expense	14,722		16,339
Total operating expenses	148,691		136,379
OPERATING INCOME	52,245		29,094

OTHER INCOME (EXPENSE):
Interest expense, net	(12,246)		(19,481)
Equity in earnings of joint ventures	1,267		1,205
Other, net	2		(12,401)
Total other expense	(10,977)		(30,677)

INCOME (LOSS) BEFORE INCOME TAXES	41,268		(1,583)
INCOME TAX EXPENSE	10,993		1,278

NET INCOME (LOSS)	$	30,275	$	(2,861)

OTHER COMPREHENSIVE INCOME, NET OF TAX:
Change in unrealized gains on cash flow hedges, net of income tax expense of $3,763 and $0, respectively	11,070		4,081
OTHER COMPREHENSIVE INCOME	11,070		4,081
NET COMPREHENSIVE INCOME	$	41,345	$	1,220

EARNINGS (LOSS) PER COMMON SHARE:
Earnings (loss) per share, basic	$	0.17	$	(0.02)
Earnings (loss) per share, diluted	$	0.17	$	(0.02)

Weighted average common shares outstanding, basic	179,961		179,808
Weighted average common shares outstanding, diluted	181,681		179,808

The notes to unaudited condensed consolidated financial statements are an integral part of these statements.

Table of Contents

OPTION CARE HEALTH, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)


	Three Months Ended March 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	30,275	$	(2,861)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Depreciation and amortization expense	15,979		17,716
Non-cash operating lease costs	3,884		3,810
Deferred income taxes - net	12,996		634
Loss on extinguishment of debt	—		12,403
Amortization of deferred financing costs	1,049		1,253
Equity in earnings of joint ventures	(1,267)		(1,205)
Stock-based incentive compensation expense	4,178		1,205
Other adjustments	291		96
Changes in operating assets and liabilities:
Accounts receivable, net	(28,766)		4,450
Inventories	(34,089)		(15,021)
Prepaid expenses and other current assets	(6,241)		12,946
Accounts payable	76,872		8,026
Accrued compensation and employee benefits	(41,481)		(18,208)
Accrued expenses and other current liabilities	13,520		(2,357)
Operating lease liabilities	(4,246)		(5,160)
Other noncurrent assets and liabilities	(10,273)		653
Net cash provided by operating activities	32,681		18,380

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment	(5,359)		(3,123)
Net cash used in investing activities	(5,359)		(3,123)

CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options, vesting of restricted stock, and related tax withholdings	355		(69)
Proceeds from issuance of debt

SEC Form 10-Q filed by Option Care Health Inc.