Earnings call transcript: Option Care Health beats Q2 2025 earnings forecasts

Option Care Health (NASDAQ:OPCH) reported its second-quarter earnings for 2025, surpassing Wall Street expectations. The company achieved an earnings per share (EPS) of $0.41, exceeding the forecasted $0.38, marking a surprise of 7.89%. Revenue reached 1.42 billion dollars, beating the forecast of 1.35 billion dollars. According to InvestingPro analysis, the company maintains a "GREAT" financial health score of 3.16, and current metrics suggest the stock is trading below its Fair Value. Despite the positive earnings news, the stock fell 4.51% in pre-market trading, reflecting broader market trends and investor concerns.

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Key Takeaways

• Option Care Health’s Q2 2025 EPS of $0.41 surpassed expectations.
• Revenue grew 15.4% year-over-year to 1.42 billion dollars.
• Stock declined 4.51% in pre-market trading despite strong earnings.
• Full-year guidance was increased, reflecting management’s confidence.
• The company is expanding its advanced practitioner model and investing in AI.

Company Performance

Option Care Health demonstrated robust performance in Q2 2025, with significant growth in both revenue and profits. The company’s focus on expanding its advanced practitioner model and increasing operational efficiency through partnerships, such as with Palantir, has contributed to its strong results. The healthcare provider is gaining market share in both acute and chronic therapies, supported by its national scale and local responsiveness.

Financial Highlights

• Revenue: 1.42 billion dollars (15.4% YoY growth)
• Gross Profit: 269 million dollars (8% growth)
• Adjusted EBITDA: 114 million dollars (5.2% growth)
• Adjusted EPS: $0.41 (10.8% growth)

Earnings vs. Forecast

Option Care Health’s Q2 2025 earnings exceeded analyst expectations, with an EPS of $0.41 compared to a forecast of $0.38, resulting in a 7.89% positive surprise. Revenue also surpassed projections, reaching 1.42 billion dollars against the forecasted 1.35 billion dollars, a 5.19% surprise. This performance indicates consistent growth and effective strategy execution.

Market Reaction

Despite the earnings beat, Option Care Health’s stock declined by 4.51% in pre-market trading, closing at 30 dollars. This movement could be attributed to broader market trends or investor concerns about future challenges. With a beta of 0.73, the stock historically shows lower volatility than the market, and InvestingPro data indicates management has been actively buying back shares. The stock remains within its 52-week range, with a high of 35.53 dollars and a low of 21.39 dollars.

Outlook & Guidance

For the full year 2025, Option Care Health raised its revenue guidance to between 5.5 billion and 5.65 billion dollars. Adjusted EBITDA is expected to range from 465 million to 475 million dollars, with adjusted EPS projected between $1.65 and $1.72. The company anticipates cash flow from operations to exceed 320 million dollars, reflecting its strategic investments and market expansion efforts.

Executive Commentary

"Our team continued to execute on all levels, and we’re excited to continue to expand patient access," stated John Rademacher, CEO. CFO Mike highlighted, "We’re seeing more than 20% nurse productivity uplift," underscoring the company’s operational improvements. Rademacher also noted, "We have not yet seen that be a material aspect of the way that they’re contracting with us," regarding manufacturer relationships.

Risks and Challenges

• Potential tariff and MFN pricing impacts could affect costs.
• Market saturation in certain therapeutic areas may limit growth.
• Macroeconomic pressures could influence healthcare spending.
• Integration challenges with recent acquisitions like Intramed.
• Continued investment in AI and analytics may not yield expected returns.

Q&A

During the earnings call, analysts inquired about the Stellara biosimilar transition and the utilization strategy for infusion suites. Concerns about potential tariff impacts and payer relationship developments were also addressed, providing insights into the company’s strategic focus and market positioning.

Full transcript - Option Care Health Inc (OPCH) Q2 2025:

Conference Operator: Good day and thank you for standing by. Welcome to the Option Care Health Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your speaker today, Nicole Maggio, Senior Vice President of Finance. Please go ahead.

Nicole Maggio, Senior Vice President of Finance, Option Care Health: Good morning. Please note that today’s discussion will include certain forward looking statements that reflect our current assumptions and expectations, including those related to our future financial performance and industry and market conditions. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. We encourage you to review the information in today’s press release as well as in our Form 10 ks filed with the SEC regarding the specific risks and uncertainties. We do not undertake any duty to update any forward looking statements except as required by law.

During this call, we will use non GAAP financial measures when talking about the company’s performance and financial condition. You can find additional information on these non GAAP measures in this morning’s press release posted on the Investor Relations portion of our website. And with that, I will turn the call over to John Rademacher, President and Chief Executive Officer.

John Rademacher, President and Chief Executive Officer, Option Care Health: Thanks, Nicole, and good morning, everyone. As you will see in our second quarter results, the Option Care Health team delivered another strong quarter with balanced growth across the portfolio. As a result, we are increasing our guidance range for the year across revenue, adjusted EBITDA and adjusted EPS. Option Care Health operates in an industry with growing demand, and we believe we are well positioned as a leading independent provider of home and alternate site infusion services with significant scale, a diverse portfolio and a resilient operating model. During the quarter, our team continued to capitalize on shifting competitive dynamics and deepening partnerships with payers and pharma manufacturers.

We also capitalized on our national scale with local responsiveness, which we believe remains a differentiator. And we continue to see positive impacts on the resilient and nimble operating model we have created, which enables us to deliver consistent results in any operating environment. Indeed, over my nearly ten years leading this organization, Option Care Health has thrived through regulatory change, biosimilar events, changing competitive dynamics, therapy administration shifts, and labor and supply shortages. This quarter was no different, and I believe we are well positioned for success going forward. Mike will go deeper into the financials in a few minutes, but to highlight some key takeaways.

Revenue momentum continued in the second quarter with balanced performance across the portfolio. Building on first quarter results, we delivered revenue growth of 15% over the second quarter of last year. Acute therapy growth was in the mid teens and the team executed well to capitalize on shifting industry dynamics and to leverage our continued investments in capabilities to be locally responsive to serve the specific needs of patients on these therapies. Our chronic therapies also performed well with growth in the mid teens. We continue to see solid performance in our rare and orphan and limited distribution therapies, a testament to our national scale and ability to reach smaller cohorts of patients as we continue to partner with pharma to develop and deliver innovative programs customized to their therapy.

The strength of the top line performance across the broad set of therapies, along with disciplined spending drove 5% adjusted EBITDA growth on a year over year basis, despite the previously articulated headwinds that we faced. During the quarter, we continue to focus on our relationships with health plans, as we believe our value proposition provides a meaningful opportunity to reduce the total cost of care for their members and help them better manage their medical loss ratios. Providing high quality care at an appropriate cost in a setting in which their members want to receive it makes us an important part of the solution to the pressures they’re facing of an aging population and increased disease prevalence and utilization of healthcare services. Our market access team continue to work closely with national payers and health plans across the country to develop meaningful programs to broaden access and provide better, more cost effective care for their members. We also continue to deepen our relationships with our pharma partners by leveraging our clinical capabilities, pharmacy infrastructure and broad geographic coverage to help enable tailored programs and services to patient populations with complex needs.

Our network of nearly 90 pharmacies coupled with our clinical centers of excellence and extensive nursing network of over 3,000 nurses, including Navin Health provides a strong platform and unparalleled capabilities. We continue to expand our portfolio of therapies, including Yastuga and Zasturi, as well as a number of other limited distribution and rare and orphan drugs, demonstrating our capabilities to serve the needs of patients with these complex situation. Shifting gears, one of the hallmarks of our business has been our focus on operating effectiveness and cash generation. As a result, we have a strong balance sheet and flexibility to deploy capital to increase value to our shareholders. In the second quarter, we generated over $90,000,000 in cash flow from operations and we are well on our way to delivering more than $320,000,000 of cash flow from operations in the full year.

Our multifaceted approach to capital deployment allows us to thoughtfully assess opportunities to utilize our cash through M and A, internal investments or share repurchases. We remain active in assessing both M and A and internal investment opportunities as we look to strengthen our platform and to add to our solution set and clinical capabilities. Share repurchase continues to be an attractive way to create value for our shareholders as evidenced in our adjusted EPS performance and underscores the confidence we have in the business and its long term potential. To that end, we executed on $50,000,000 of share repurchases during the quarter. We also continue to invest in our people, process, technology and facilities.

For example, the investments we made in artificial intelligence, advanced analytics and our partnership with Palantir support our commitment to improving operating efficiency and have been critical to our leverage growth. On the clinical resource efficiency front, approximately thirty five percent of our nursing visits occurred in one of our suites this quarter, and Navin Health conducted almost 54,000 nursing visits in the quarter. Both of these remain key enablers of our ability to effectively take on new patients. Further on the advanced practitioner model, we continue to believe this represents an attractive complement to our current home infusion services and an opportunity to drive growth, both through expanding our competencies, as well as providing access to new patient cohorts. This clinical model provides a platform to serve higher acuity patients under the care of a nurse practitioner, as well as to leverage therapies already in our portfolio to support patients who otherwise may not have been able to be served profitably.

Our investments in Intramed Plus and elsewhere across the country have provided valuable insights into our successful execution of this model, which we believe are critical to expanding across our national network. Given the strength of the first half of this year, we have increased our full year revenue, adjusted EBITDA and adjusted EPS guidance range, which reflects our confidence in the momentum underway and the continued resilience of our platform and execution of our team. With that, I’ll hand the call over to Mike to provide additional details.

Mike, Chief Financial Officer, Option Care Health: Thanks, John, and good morning, everyone. As John mentioned, the second quarter was quite strong as we built up the solid momentum from the first quarter. Revenue growth of 15.4% was balanced with mid teens growth within both our acute and chronic portfolios of therapy. The acute therapy growth we delivered in the quarter was notably higher than we believe the overall market to be growing. And as John conveyed, the team executed well across the country.

Gross profit of $269,000,000 grew almost 8% versus the second quarter last year. This reflects the benefit from therapy mix with outsized acute growth as well as the performance of the chronic therapies. Gross margin rate was negatively impacted by some of the lower margin limited distribution and rare and orphan therapies, but we continue to be encouraged by their gross profit dollar contribution. SG and A was in line with our expectations, and we expect continued strong spending leverage for the year as we see the benefits from the investments we have made in our infrastructure. Adjusted EBITDA of $114,000,000 grew 5.2% over the prior year and represented 8.1 of net revenue.

And adjusted earnings per share of $0.41 grew 10.8% over the prior year. As John mentioned, we were active in deploying capital in the second quarter, repurchasing $50,000,000 in stock. We will continue to thoughtfully consider the balance across M and A, internal investments and share repurchase. And we maintain a strong balance sheet and capital structure with the capacity to continue executing our multifaceted strategy. Finally, I want to provide a quick update on our expectations for the full year.

Given the strong momentum in the first half, for the full year 2025, we now expect to generate revenue of $5,500,000,000 to $5,650,000,000 and adjusted EBITDA of $465,000,000 to $475,000,000 which we believe will translate into adjusted earnings per share of $1.65 to $1.72 Additionally, we continue expect to generate more than $320,000,000 in cash flow from operations. Consistent with our previous comments, our guidance considers our current expectations on the impact of potential tariffs, MFN pricing and similar policy changes, which we believe will not have a material financial impact in 2025. Overall, we are excited about the strong 2025 and we expect it will be another year of growth for Option Care Health. And with that, we will open the call for questions. Operator?

Conference Operator: Thank you. Our first question comes from the line of David MacDonald with Truist. Your line is now open.

David MacDonald, Analyst, Truist: Yes, good morning guys. A couple of questions here. First of all, can you guys just talk a little bit about just conversations with payers? I mean, it’s obviously been a bit of a challenging environment at the payer level and just anything incremental or accelerating in terms of just conversations around site of service redirection around candidly them looking more aggressively at things to help offset some of the cost pressures that they’re seeing.

John Rademacher, President and Chief Executive Officer, Option Care Health: Good morning, Dave. It’s John. Yes, very productive conversations. Our market access team is in constant contact. I would say there is a heightened level of interest in not only utilizing our services, as we call out, offer a high quality care in an appropriate cost or at an appropriate cost in a setting in which patients want to receive it.

So, that continues to move forward. Interest in site of care initiatives continues to increase, and we’re seeing volumes starting to tick up in those areas where some of the payers are taking a more aggressive approach to help provide their members with alternatives to some of the higher cost setting.

David MacDonald, Analyst, Truist: A couple of others. Guys, just first on the Ambulatory Infusion Suites, are you continuing to see chronic run pretty meaningfully ahead of acute and this year with some of the business that you’ve picked up, maybe that shift gets muted a little bit. But is there any reason we shouldn’t expect that number to continue to drift higher just as in a normalized year, your chronic business is growing more quickly than the acute business?

Mike, Chief Financial Officer, Option Care Health: Yeah, think that’s fair. Again, as we mentioned, we’re up to 35%. We basically doubled the penetration since we initiated our center strategy a couple of years ago. And again, the majority of the utilization of the infusion suites are those chronic patients with recurring scheduled interactions with us. The fact that we were able to increase the penetration in the quarter where we still delivered mid teens growth in the acute just speaks to your point, which is the penetration on the chronic side continues to be very, very encouraging.

David MacDonald, Analyst, Truist: Okay. Last two guys. John, during your prepared remarks, you talked about the advanced practitioner model and some patients in your portfolio that maybe you’re able to service now. I would assume that that’s something reimbursement related, maybe Medicare or whatever, but I was wondering if you could just drill down on that and then I just had one quick follow-up.

John Rademacher, President and Chief Executive Officer, Option Care Health: Yes, so as you know, we don’t have a broad access for Medicare fee for service beneficiaries. This allows us to expand our the portfolio of patients that we can serve utilizing that advanced practitioner model, as well as also in my prepared remarks, we’re also utilizing it for more complex patients that may have some additional needs that a nurse practitioner can provide better oversight or deeper oversight, as well as help manage that care plan. So, we’re encouraged by the progress that we’re making on this, and we think that it will continue to be a vector of growth for us as we’re moving ahead.

David MacDonald, Analyst, Truist: And then guys, just last question, a recent proposed rule seemed to acknowledge the cost differential in terms of different sites of care around infusion. I’m just curious, any high level thoughts or any updates just in terms of the Hill and conversations down there and just the acknowledgement of kind of what you guys do and how much money you save?

John Rademacher, President and Chief Executive Officer, Option Care Health: Yes, there’s been a couple positive moves on that. Certainly, there’s recognition of the reduced cost of utilizing services in home and alternate sites. There is continued efforts both as an industry as well as us individually to continue to advance that wherever we can. If site neutrality or other things continue to pick up momentum as ways that they’re going to mitigate some of

Constantine Davides, Analyst, Citizens: the cost

John Rademacher, President and Chief Executive Officer, Option Care Health: trends over time. We feel like we’re really well positioned given the cost structure that we operate with as well as the reimbursement comparables to some of the other sites that are chosen. So, we’re going to continue to have the conversations on the hill and with key legislators to try to advance on behalf of the industry, but feel as if we’re on the right side of most of those conversations where cost and quality are being measured.

David MacDonald, Analyst, Truist: Okay. Thanks, guys. Appreciate it.

Mike, Chief Financial Officer, Option Care Health: Thanks, Dave.

Conference Operator: Our next question comes from the line of Meyer MacPherson with William Blair. Your line is now open. Meyer, your line is open. Please check your mute button. Our next question comes from the line of Constantine Davides with Citizens.

Your line is now open.

Constantine Davides, Analyst, Citizens: Thanks. A couple of quick financial questions. Just, Mike, wondering if you can update us on the Savara expectations for the year. I know it’s around $5,000,000 in the first quarter. Just wondering how you’re thinking about the impact across the balance of 2025.

Thanks.

Mike, Chief Financial Officer, Option Care Health: Yes, Constantine, in the quarter, as we mentioned on our first quarter call, the negative impact for the second quarter was right around $20,000,000 It was actually probably a nudge above, but for the full year, and I think that’s a decent proxy for the subsequent two quarters. So I think we’re probably thinking for the year, our initial impact range was 60,000,000 to $70,000,000 I think we’re probably in the higher end of that range. And that’s been fully contemplated in the guidance, which again, as John mentioned, given the strength of the business, we’ve been able to more than mitigate.

Constantine Davides, Analyst, Citizens: And then just a follow-up on the therapeutic mix. Is it right to think that I mean, you’ve had so much acute momentum in recent quarters. Are the operating margins on the chronic and the acute portfolio, are they still pretty comparable at this point?

Mike, Chief Financial Officer, Option Care Health: In terms of what we previously said, yes, very consistent. What we’ve said, Constantine, is that the acute portfolio, the product margins are north of 50%. The chronic portfolio presents anywhere from 5% to 30% margin profiles. Again, a couple of moving dynamics, especially when you look at the margin rate year over year, obviously the Stellara headline had a pretty meaningful impact on that. But obviously we love the trajectory of the acute portfolio as well.

And with the rare and orphan momentum we’ve seen, those therapies tend to be in the lower end of that 5% to 30% range. So a lot of moving pieces. Again, the way as you know, we’re really looking at the product or the gross profit dollars, which we’re thrilled with the performance in the quarter.

Constantine Davides, Analyst, Citizens: Great. And then just last, John, I think you alluded to sort of M and A opportunities, and it still seems like there’s a decent amount of infusion activity occurring in the market. Is it still right to sort of classify your interest as focused on the core or are you seeing opportunities in some adjacent areas that you’d love to explore?

John Rademacher, President and Chief Executive Officer, Option Care Health: Yeah, we continue to be very focused around looking for opportunities on the core and looking to expand capability set. I think as we’ve said, we’ve also continued to think about areas that are enablement, whether it’s in nursing and other capability set that help us continue to advance to grow and increase some

AJ Rice, Analyst, UBS: of the clinical

John Rademacher, President and Chief Executive Officer, Option Care Health: capabilities. So, it’s a pretty active market. Our commitment to shareholders has always been that it’ll be both strategic and economic when we’re evaluating where we deploy your capital in those type of activities. And therefore, I think you’ll see us in a very disciplined way, continue to look for opportunities to utilize the strength of the balance sheet in ways that will enhance value for our shareholders.

Conference Operator: Thank you. Our next question comes from the line of Pito Chickering with Deutsche Bank. Your line is now open.

Pito Chickering, Analyst, Deutsche Bank: Hey, good morning guys. Thanks for taking my question. I guess looking at sort of the second quarter gross profit dollars, if I adjust the first quarter with the $5,000,000 headwind from Stellara and the second quarter with a $20,000,000 headwind from STELARA, the gross profit dollar growth accelerated pretty nice year over year from 1Q to 2Q. With the acute growth being similar, I think you said mid teens in 1Q and mid teens in 2Q. Can you sort of read us where the gross profit growth dollars are coming from if we exclude the Staller impact?

Thank you.

Mike, Chief Financial Officer, Option Care Health: Yes. I mean, that’s a lot of moving pieces, Pito. Mean, look, at the end of the day, you stole our thunder. The way we manage this business is we look to maximize the gross profit dollar growth. When you normalize for the impact year over year and again, we don’t spend a lot of time looking at the world with and without, but our gross margins actually were consistent and expanded year over year despite the fact that within our chronic portfolio, again, as we mentioned in our prepared remarks, there is some downward pressure because of the mix towards those faster growing rare and orphan and limited distribution drugs.

So look, the 8% reported gross profit dollar growth, That’s really an amalgamation of great execution on the acute side of the house, which again has been very productive for us thus far this year, as well as just solid execution both within those lower gross margin rate LDDs and rare and orphan therapies, but also in what I’ll call the more established chronic therapies for the infliximab and immune globulins and MS therapies, etcetera.

Pito Chickering, Analyst, Deutsche Bank: Okay. And then the follow-up here is, as you’ve taken acute market share from the exits of Coram and Optum, on acute side, have you seen any market share growth on the chronic side? And then the second question there is, as you renegotiate with payers on both acute and chronic with the market access, does this give you guys more leverage to get better negotiating rates on the chronic side and acute side in 2026? Thanks.

Mike, Chief Financial Officer, Option Care Health: Yes, from a market, I’ll start and I’ll pass it to John to answer the second part of your question. Peter, as we’ve talked broadly, and again, are estimates, the acute therapy portfolio, those are very mature therapies that we administer. Estimate that those market dynamics suggest a low single digit market growth. So I’ll let you project market share, but we’re very encouraged delivering mid teens growth in what we think is a very mature therapeutic category. The chronic side is a very broad portfolio of therapies.

We’ve estimated that collectively those chronic therapies are growing in the low double digits, given all the dynamics with new therapy introductions and things going sub q or oral etc. So again, in a quarter where we’re delivering mid teens growth across both of those portfolios, we’re feeling very good about the execution of the team across the board.

John Rademacher, President and Chief Executive Officer, Option Care Health: And on the payer side, again, continued strong progress in deepening our relationships there. As you point out, the strength of our portfolio and the balance that we have across both the acute and chronic therapeutic categories is one that we use to reinforce the value that we bring, as you would expect at this point in time, given some of the medical loss ratio challenges, things like bed day management and the total cost of care are front in mind. That ability for us to be a meaningful partner in network to provide products across the portfolio that we have is something that we reinforce as we are articulating to them the value of our partnership. So we’re always going to make certain that we are being paid fairly for the value that we deliver, and is part of the conversation. But the national scale that we have, but the local responsiveness, and then the breadth of the portfolio, we think is a differentiator and something that we’re going to continue to invest in and continue to capitalize on in this marketplace today and into the future.

Pito Chickering, Analyst, Deutsche Bank: Great. Thanks so much. Nice job, guys.

Mike, Chief Financial Officer, Option Care Health: Thank you.

Conference Operator: Our next question comes from the line of Joanna Gajuk with Bank of America. Your line is now open.

Joanna Gajuk, Analyst, Bank of America: Hey, good morning. Thanks so much for taking my questions. So couple, I guess, follow ups to other comments that were made on the advanced practitioner model. So that’s very interesting, you know, what you’re doing there. So can you tell us a little bit more in terms of, you know, the progress they’re using this model?

How many chairs are in this model? And also, you starting to take more oncology patients or Alzheimer patients? Any additional color you might have on that?

John Rademacher, President and Chief Executive Officer, Option Care Health: Yeah, Joanna. As we’ve called out before, we operate 170 facilities across The US, and we have over seven fifty chairs that we operate. We are in the process of looking at how do we utilize them for both an alternate site to the home as well as this advanced practitioner model and continue to evolve our model through that process. So we really like that progress as you would expect, given corporate practice of medicine and other aspects. It really is at a state by state level in which we’re looking to roll that out.

And the progress continues to advance in alignment with kind of our expectations there. To the second part of your question, we have seen expanded portfolio and use of the advanced practitioner model to be able to serve oncology patients, as well as patients that have neurological disorders like Alzheimer’s. That is a part of that care model and things that we can look at as we’re looking to expand there. There are other products that are in our portfolio that don’t make as much sense to be able to do in the home just because of the utilization of a nursing resource and drive time and things of that nature. To be able to have an alternative to the home with the center based capabilities, we think just enhances our capabilities and broadens the population of patients in which we can serve.

So we’re going to continue to move that forward. Again, encouraging signs for those vectors of growth in Alzheimer’s and in oncology. At this point in time, it’s ticking up. It’s not a meaningful part of the overall portfolio, but we think it just positions us well as we’re thinking about where growth will come into the future.

Joanna Gajuk, Analyst, Bank of America: And I guess, if I may, I guess, the broader suite portfolio, right? So, I understand seven fifty chairs you have there. Can you talk about the utilization of those? I mean, you did say 35% of the nursing visits you deliver were in the settings, but the reverse question as in like how much, I guess, more you can do without the need to grow? And then to that end, since you mentioned how you can leverage better the nurse and reduce the draft time and such, Can you help us understand the margin contribution when you have these settings being utilized more and more?

Mike, Chief Financial Officer, Option Care Health: Yeah, Joanna, look, mean, the way we think about these centers, and as you’ve been following us in ’twenty one when we really started our strategy of aggressive suite expansion, we’ve been very thoughtful and methodical to make sure that as we open the utilization was following. We’re very encouraged. We’ve gone from around seventeen percent of our nurse visits occurring in one of our chairs to 35 plus. And so first and foremost, think as you’ve heard us say in the past, utilization or capacity isn’t something we necessarily worry about. Most of our centers aren’t operating seven days a week or eight hours a day.

And so as we think about the theoretical capacity, we have plenty and we’ll continue to add brick and mortar as the local market dynamic dictate. The great thing is they don’t have to be running at capacity to create tremendous value for us. And we haven’t said what the dollar figure is in terms of the drop. But there’s really two key benefits. First and foremost for those mature centers, we’re seeing more than 20% nurse productivity uplift.

Said another way that nursing labor component for a typical infusion is 20% more efficient because we’re not paying for windshield time. They can oversee multiple patients at the same time. It’s just a more efficient scheduling. We’re also creating 20% more nursing capacity, which is a finite clinical resource for us, which gives us the confidence to continue to aggressively expand our therapeutic portfolio. So this is a key enabler, as John said, to our growth.

It drops value to the bottom line, but it continues fuel our confidence around clinical labor capability.

Joanna Gajuk, Analyst, Bank of America: Thank you. And if I may, a different follow-up. In your prepared remarks at the end, you said that you don’t expect the tariff and to be any material in this year. I guess now we hearing right about tariffs on products from Europe and I guess that includes drugs in there too. So there’s debate about the 15% or the 7%.

But can you talk about, are you doing anything in preparation for that? Do you need to build like an inventory because maybe you’re knowing things are happening and how to think about the specific exposure to Europe? Thank you.

Mike, Chief Financial Officer, Option Care Health: Yeah, look, as we’ve said previously, obviously we spent a lot of time on our first quarter call and thereafter addressing some of the concerns. As we’ve said, part of our economics are we’re maintaining a spread on the cost of the therapies and drug prices increase and decrease on a regular basis and our procurement and market access teams are managing procurement strategies constantly. And we don’t just sit back and wait. We have very proactive relationships with pharma, with distributors, with our suppliers. We haven’t been shy, as you’ve seen in the past, around using our balance sheet where necessary.

And there’s a lot of strategies that we can deploy behind the scenes really to proactively address what we anticipate are changes in the drug costs. You know, as we’ve modeled countless scenarios, we don’t see a scenario this year. What you know, and our guidance ranges incorporate what we think would be the impact, which again, as we collectively assess is just not material.

Joanna Gajuk, Analyst, Bank of America: Great. Thank you so much.

John Rademacher, President and Chief Executive Officer, Option Care Health: Thanks, Joanna.

Conference Operator: Our next question comes from the line of AJ Rice with UBS. Your line is now open.

AJ Rice, Analyst, UBS: Hi, everybody. Maybe just to follow-up on that last train of thought first. I think your inventories are up about 35,000,000 sequentially. Obviously, there’s sort of is some ongoing chatter about the tariffs, the MFN, etcetera. Are are you doing anything now, or that’s a tool in the toolbox that you have?

It wouldn’t seem like a 35,000,000 sequential quarterly step up was that much in inventories in anticipation of tariffs or anything like that. But just trying to think about how quick you can move to take advantage of that and offset any impact from tariffs.

Mike, Chief Financial Officer, Option Care Health: Yeah, AJ, mean, look, we’re constantly managing. That’s less than two days impact. We typically operate with about a month of inventory across the board. We’re constantly looking at it. As John mentioned, there’s some new therapies that launching.

Obviously with mid teens growth, we want to make sure given what has been robust growth thus far this year that we have adequate supplies and inventory in the local markets to be responsive. So I would say

Brian Tanquilut, Analyst, Jefferies: that

Mike, Chief Financial Officer, Option Care Health: the inventory increase has been deliberate and methodical, but something that we’re very comfortable with, again, given the strength of the balance sheet and capital structure.

AJ Rice, Analyst, UBS: Okay. And I know there’s no other problem in your portfolio that doesn’t work close to Solaris. But I just I was wondering, as you have your discussions with manufacturers, and obviously, they’re going through tremendous changes now. Is even though it wouldn’t be necessarily that meaningful to you, are you seeing any movement on their part to try to change the way they contract with you in light of what happened with Stelera or just because of the pressures they’re feeling themselves? Is there anything happening on that end of it that’s worth calling out?

John Rademacher, President and Chief Executive Officer, Option Care Health: It’s John. The conversations that we’ve had have been probably more aligned towards the clinical capabilities and the ability that we have to help ensure adherence of their products. As you called out, our relationship with Janssen and specifically on that product is just was unique. And so, across the board, the rest of the manufacturers that we have relationships with, I think they’re all trying to understand what the future will hold with some of the actions being announced around pricing, etcetera. But we have not yet seen that be a material aspect of the way that they’re contracting with us.

AJ Rice, Analyst, UBS: Okay. And then just the last question on OpEx growth embedded in your second half guidance. I know generally your annual increases, I think, on on that area or in the three to five percent range. Is there anything unusual about what you’re seeing in the back half that would either step that up or or make that rate of increase somewhat more modest?

Mike, Chief Financial Officer, Option Care Health: Yes. Look, mean, the great news is with the leveragability of our infrastructure, we drove 50 bps. OpEx was up, I think, high single digits or in the 10% range in the quarter. We still grow 50 basis points of leverage as a percent of revenue. A couple of things that we had at play there.

First and foremost, we closed on the Intramed acquisition, which we absorbed their burn. So on a year over year basis, we have the indirect spend of the Intermed enterprise that’s now being reported. And frankly, as John mentioned, we’re investing in a number of areas, whether it’s our advanced practitioner model supporting some of the new therapies that we’re ramping up for launch. And so we have the agility to pull forward some of those investments. And frankly, given the strength of the quarter, we’re managing for the near term and the longer term and we’re making some investments for future growth initiatives.

So I think it’ll be a little bit above that in the back half relative to our historical range. But there’s nothing fundamental or structural. It’s just the opportunistic ability for us to invest future growth in a period where we’re seeing really, really encouraging top line.

AJ Rice, Analyst, UBS: Okay, great. Thanks so much.

Mike, Chief Financial Officer, Option Care Health: Thanks, Nick.

Conference Operator: Our next question comes from the line of Brian Tanquilut with Jefferies. Your line is now open.

Brian Tanquilut, Analyst, Jefferies: Hey, good morning. Mike, maybe just as I think about kind of like A. J. Question, how should I be thinking about your MFN exposure? I mean, just the mechanics around how that would flow through to you guys?

Mike, Chief Financial Officer, Option Care Health: Well, Brian, again, based on what we’ve seen and there hasn’t been a lot of updates since the original executive order. Again, there’s some conceptual things in there around MFN that frankly it’s hard to understand exactly how that’s going to play out. Determining what the reference prices are and what things would ultimately impact us, it’s just way too early to tell. We haven’t seen anything at least for the balance of ’twenty five where that’s going to impact us. We’ll continue to keep an eye on it.

Structurally, how there’s going to be these international reference prices, how things would be adjusted, how the government may step in to start administering and operating pharmacies. As we’ve read the executive order, it’s hard for us really to put our hands around. Again, I don’t know that there’s going to be anything implemented to impact ’25, but how it would logistically you know, be executed in even the, you know, the near term.

Brian Tanquilut, Analyst, Jefferies: Got it. Okay, I totally understand. Maybe shifting to Stellara biosimilars. Are you seeing any ramp there with new patients go in that direction for STELARA or for those patients that were would have been on STELARA? Like just curious what you’re seeing in terms of the ramp on BioPhims?

John Rademacher, President and Chief Executive Officer, Option Care Health: Yes, Brian, it’s Don. I’d say it was a slow start, but we’re starting to see that ramp up as we exited the quarter. Some of the PBMs are starting to make that a little bit more of an initiative for them as they move that ahead. Again, focus has been around making certain that we have access to the products and expanding them into our portfolio as we move forward. There certainly is other opportunities where there’s transition of some of those patients on to, let’s call it the next generation chronic inflammatory disease products that are part of our portfolio as well.

So I think the patient census is trending in alignment with our expectations and kind of how we had thought things were going to move. So nothing out of our expectation range. But as we exit the second quarter and go into the back half of the year, our expectations are that we’ll continue to see increased utilization of the biosimilars. That at this point in time are being deemed to be interchangeable. And therefore, the utilization we think will start to ramp up.

Brian Tanquilut, Analyst, Jefferies: Got it. Thank you.

Constantine Davides, Analyst, Citizens: Thanks, Brian.

Conference Operator: Our next question comes from the line of Jamie Perce with Goldman Sachs. Your line is now open.

Nicole Maggio, Senior Vice President of Finance, Option Care Health0: Hi, good morning. This is Sarah Conrad on for Jamie. You’ve continued to see strong mid teens acute growth following the competitor exits. But can you help us understand how we should think about acute growth progression for the balance of the year and into 2026 as you annualize these competitive exits?

Mike, Chief Financial Officer, Option Care Health: Hey, Sarah, it’s Mike. So a couple of things. One, I wouldn’t characterize the mid teen growth just the result of just the competitive dynamics in certain markets. Again, we’re seeing very solid execution even in markets where the competitive dynamics remain consistent with how they’ve been. I think that also is attributed to some of John’s comments around the fact that, look, as we engage with scaled health plans and payers, they see the utility and value of a consistent, dependable national clinical model, which I think has served us some wind in our sails across the country.

As it relates to this year, as you’ll recall in certain markets, there were some competitive changes late Q3, early Q4. So the prior year comps and we saw this in mid-twenty two as well, year over year comp is going to be tougher in the fourth quarter. So on a reported basis, while we’re confident we’ll maintain the revenue base, the reported growth we would expect to decrease a little bit in the fourth quarter. And as it relates to 2026, again, at this point, we’re just not in a position to provide forward guidance beyond the guidance for 2025.

Nicole Maggio, Senior Vice President of Finance, Option Care Health0: That’s super helpful. And then I just want to follow-up on AJ’s OpEx growth question. Can you help us understand what’s fueling that 10% SG and A growth that we saw in the first half? And where are you prioritizing investments going forward?

Mike, Chief Financial Officer, Option Care Health: Yeah, I think to break it down high level, there’s two to three points of SG and A impact from the acquisitions. So deal expenses as well as the fact that we’re now reporting the Intramed burn. And there’s a couple of points of growth of what I will call acceleration of growth initiatives. So just to overly simplify, the same store sales spending is still growing in that mid single digits. But as we always have, we’ve been able to accelerate some of the initiatives.

Again, back to my earlier comment, this is around expanding some of our clinical capabilities in the suite, investing in new therapy launches, etc. Sarah, at a high level I break it down as OpEx, which again decreases a percent of revenue by 50 bps year over year. That’s despite to your point 10% growth, half of which is really the impact of acquisitions and opportunistic growth initiatives.

Conference Operator: Thank you. This concludes the question and answer session. I would now like to turn the call back over to John Rademacher for closing remarks.

John Rademacher, President and Chief Executive Officer, Option Care Health: Yes. Thank you all for joining us this morning and participating on our call. Our team continued to execute on all levels, and we’re excited to continue to expand patient access and provide extraordinary care to more patients and their families, which is delivering value for our shareholders. Thank you, everyone, for joining us, and have a great day.

Conference Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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