bios-20240331

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, 2024
			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.

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 19, 2024, there were 173,816,267 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	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	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

PART II

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 5.	Other Information	29
Item 6.	Exhibits	30

SIGNATURES		30

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q (this “Form 10-Q”) to "Option Care Health," the “Company,” “we,” “us” and “our” refer to Option Care Health, Inc. and its consolidated subsidiaries.

Forward-Looking Statements

This Form 10-Q includes 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 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. If any of these risks materialize, or if any of our assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. 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, those set forth in Item 1A, “Risk Factors,” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2023 (our “Form 10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”). Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. We caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this Form 10-Q. Any forward-looking statement made by us in this Form 10-Q speaks only as of the date hereof. We undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.


	March 31, 2024		December 31, 2023
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	219,513	$	343,849
Accounts receivable, net	573,650		377,658
Inventories	241,948		274,004
Prepaid expenses and other current assets	94,603		98,744
Total current assets	1,129,714		1,094,255

NONCURRENT ASSETS:
Property and equipment, net	120,969		120,630
Operating lease right-of-use asset	87,789		84,159
Intangible assets, net	19,317		20,092
Referral sources, net	307,482		315,304
Goodwill	1,540,246		1,540,246
Other noncurrent assets	44,045		42,349
Total noncurrent assets	2,119,848		2,122,780
TOTAL ASSETS	$	3,249,562	$	3,217,035

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	485,736	$	426,513
Accrued compensation and employee benefits	42,624		92,508
Accrued expenses and other current liabilities	83,383		75,010
Current portion of operating lease liability	19,209		18,278
Current portion of long-term debt	6,000		6,000
Total current liabilities	636,952		618,309

NONCURRENT LIABILITIES:
Long-term debt, net of discount, deferred financing costs and current portion	1,056,282		1,056,650
Operating lease liability, net of current portion	89,207		85,484
Deferred income taxes	37,884		34,920
Other noncurrent liabilities	89		—
Total noncurrent liabilities	1,183,462		1,177,054
Total liabilities	1,820,414		1,795,363

STOCKHOLDERS’ EQUITY:
Preferred stock; $0.0001 par value; 12,500,000 shares authorized, no shares outstanding as of March 31, 2024 and December 31, 2023	—		—
Common stock; $0.0001 par value: 250,000,000 shares authorized, 183,397,817 shares issued and 173,816,056 shares outstanding as of March 31, 2024; 182,905,559 shares issued and 174,575,537 shares outstanding as of December 31, 2023	18		18
Treasury stock; 9,581,761 and 8,330,022 shares outstanding, at cost, as of March 31, 2024 and December 31, 2023, respectively	(295,396)		(255,107)
Paid-in capital	1,205,693		1,204,270
Retained earnings	502,304		457,513
Accumulated other comprehensive income	16,529		14,978
Total stockholders’ equity	1,429,148		1,421,672
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,249,562	$	3,217,035


	Three Months Ended March 31,
	2024		2023
NET REVENUE	$	1,146,052	$	1,015,848
COST OF REVENUE	907,552		786,843
GROSS PROFIT	238,500		229,005

OPERATING COSTS AND EXPENSES:
Selling, general and administrative expenses	154,742		147,866
Depreciation and amortization expense	14,728		14,514
Total operating expenses	169,470		162,380
OPERATING INCOME	69,030		66,625

OTHER INCOME (EXPENSE):
Interest expense, net	(13,202)		(13,834)
Equity in earnings of joint ventures	1,125		1,437
Other, net	2		1
Total other expense	(12,075)		(12,396)

INCOME BEFORE INCOME TAXES	56,955		54,229
INCOME TAX EXPENSE	12,164		15,021
NET INCOME	$	44,791	$	39,208

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Change in unrealized gain (loss) on cash flow hedges, net of income tax (expense) benefit of $(454) and $1,152, respectively	$	1,551	$	(3,443)
OTHER COMPREHENSIVE INCOME (LOSS)	1,551		(3,443)
NET COMPREHENSIVE INCOME	$	46,342	$	35,765

EARNINGS PER COMMON SHARE:
Earnings per share, basic	$	0.26	$	0.22
Earnings per share, diluted	$	0.26	$	0.21

Weighted average common shares outstanding, basic	173,928		181,262
Weighted average common shares outstanding, diluted	175,624		182,735


	Preferred Stock		Common Stock		Treasury Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Balance - December 31, 2022	$	—	$	18	$	(2,403)	$	1,176,906	$	190,423	$	21,159	$	1,386,103
Exercise of stock options, vesting of restricted stock, and related tax withholdings	—		—		—		(1,902)		—		—		(1,902)
Stock-based incentive compensation	—		—		—		5,988		—		—		5,988
Purchase of company stock	—		—		(75,735)		—		—		—		(75,735)
Net income	—		—		—		—		39,208		—		39,208
Other comprehensive loss	—		—		—		—		—		(3,443)		(3,443)
Balance - March 31, 2023	$	—	$	18	$	(78,138)	$	1,180,992	$	229,631	$	17,716	$	1,350,219

Balance - December 31, 2023	$	—	$	18	$	(255,107)	$	1,204,270	$	457,513	$	14,978	$	1,421,672
Exercise of stock options, vesting of restricted stock, and related tax withholdings	—		—		—		(8,182)		—		—		(8,182)
Stock-based incentive compensation	—		—		—		9,605		—		—		9,605
Purchase of company stock, and related tax effects	—		—		(40,289)		—		—		—		(40,289)
Net income	—		—		—		—		44,791		—		44,791
Other comprehensive income	—		—		—		—		—		1,551		1,551
Balance - March 31, 2024	$	—	$	18	$	(295,396)	$	1,205,693	$	502,304	$	16,529	$	1,429,148


Fiscal Year Ended December 31,	Minimum Payments
2024	$	19,522
2025	25,120
2026	22,276
2027	18,617
2028	12,198
Thereafter	42,303
Total lease payments	140,036
Less: interest	(31,620)
Present value of lease liabilities	$	108,416


	March 31, 2024		December 31, 2023
Infusion pumps	$	36,484	$	36,943
Equipment, furniture and other	24,685		23,593
Leasehold improvements	100,109		99,725
Computer software, purchased and internally developed	50,982		50,572
Assets under development	33,159		33,668
	245,419		244,501
Less: accumulated depreciation	(124,450)		(123,871)
Property and equipment, net	$	120,969	$	120,630


	March 31, 2024		December 31, 2023
Gross intangible assets:
Referral sources	$	514,388	$	514,388
Trademarks/names	39,136		39,136
Other amortizable intangible assets	985		995
Total gross intangible assets	554,509		554,519

Accumulated amortization:
Referral sources	(206,906)		(199,084)
Trademarks/names	(20,423)		(19,698)
Other amortizable intangible assets	(381)		(341)
Total accumulated amortization	(227,710)		(219,123)
Total intangible assets, net	$	326,799	$	335,396


	Principal Amount		Discount		Debt Issuance Costs		Net Balance
Revolver Facility	$	—	$	—	$	—	$	—
First Lien Term Loan	586,500		(6,636)		(9,209)		570,655
Senior Notes	500,000		—		(8,373)		491,627
	$	1,086,500	$	(6,636)	$	(17,582)	1,062,282
Less: current portion							(6,000)
Total long-term debt							$	1,056,282


Financial Instrument	Carrying Value as of March 31, 2024		Markets for Identical Item (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
First Lien Term Loan	$	570,655	$	—	$	588,729	$	—
Senior Notes	491,627		—		456,250		—
Total debt instruments	$	1,062,282	$	—	$	1,044,979	$	—


	Fair Value - Derivatives in Asset Position
Derivative	Balance Sheet Caption	March 31, 2024		December 31, 2023
Interest rate cap designated as cash flow hedge	Prepaid expenses and other current assets	$	10,421	$	9,746
Interest rate cap designated as cash flow hedge	Other noncurrent assets	11,513		10,183
Total derivative assets		$	21,934	$	19,929


		Three Months Ended March 31,
Derivative	Income Statement Caption	2024		2023
Interest rate cap designated as cash flow hedge	Interest expense, net	$	2,980	$	2,352


	Three Months Ended March 31,
	2024		2023
Commercial payers	$	988,043	$	873,911
Government payers	138,310		122,789
Patients	19,699		19,148
Net revenue	$	1,146,052	$	1,015,848


	Three Months Ended March 31,
	2024	2023
Stock option awards	880,815	871,491
Restricted stock awards	279,144	342,894
Performance stock unit awards	149,561	90,159


	Three Months Ended March 31,
	2024			2023			Variance

	(in thousands, except for percentages)
Net revenue	$	1,146,052		$	1,015,848		$	130,204	12.8	%
Cost of revenue	907,552			786,843			120,709		15.3	%
Gross profit	$	238,500		$	229,005		$	9,495	4.1	%
Gross profit margin	20.8		%	22.5		%


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
January 1, 2024 - January 31, 2024	756,893	$	31.82	756,893	$	225,913,205
February 1, 2024 - February 29, 2024	494,846	32.16		494,846	210,000,136
March 1, 2024 - March 31, 2024	—	—		—	210,000,136
	1,251,739	$	31.96	1,251,739	$	210,000,136


Exhibit Number			Description
10.1			Form of Option Care Health, Inc. Non-Qualified Stock Option Certificate (Executive) (filed herewith).
10.2			Form of Option Care Health, Inc. Restricted Stock Unit Certificate (Executive) (filed herewith).
10.3			Form of Option Care Health, Inc. Performance Stock Unit Certificate (Executive) (filed herewith).
10.4

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