Option Care Health at William Blair Conference: Strategic Growth Insights

On Tuesday, 03 June 2025, Option Care Health (NASDAQ:OPCH) presented at the 45th Annual William Blair Growth Stock Conference, showcasing a strong first-quarter performance and strategic initiatives. The company highlighted its revenue growth and strategic acquisitions but also addressed challenges such as potential tariff impacts. CEO John Rademacher expressed confidence in the company’s unique market position and future growth prospects.

Key Takeaways

• Revenue grew by over 16% year-over-year, with a significant increase in gross profit and adjusted EBITDA.
• The company repurchased $100 million worth of shares, indicating financial strength.
• Option Care Health operates over 170 locations and has expanded its pharmacy network in key regions.
• The focus is on expanding into new therapeutic areas and investing in AI and machine learning.
• The company maintains a balanced revenue mix, with 75% from chronic therapies and 25% from acute therapies.

Financial Results

• Revenue: Increased by over 16% compared to the previous year.
• Gross Profit: Rose by over 10.3% year-over-year.
• Adjusted EBITDA: Improved by approximately 13.7%.
• Diluted EPS: Increased by 14.3%.
• Share Repurchase: $100 million worth of shares bought back in the quarter.

Operational Updates

• Expansion: Acquired Intermed Plus in South Carolina and opened new pharmacies in Virginia, enhancing presence in the Southeast.
• Infrastructure: Operates more than 170 locations and over 90 pharmacies, with 750 chairs in infusion suites.
• Market Access: Access to all top 10 national payers through over 1,400 contracts.
• Partnerships: Collaborating with Palantir on AI and machine learning projects.
• Staffing: Employs over 5,000 healthcare professionals, including nurses and pharmacists.

Future Outlook

• Growth Strategy: Aims to capture market demand as competitors exit the acute patient segment.
• Investments: Continued focus on AI, machine learning, and expanding infusion clinics.
• Capital Allocation: Strong cash flow is expected to support share repurchases and M&A activities.
• Market Share: Holds an estimated 25%-30% of the $18-$20 billion home infusion market, with room for growth.

Q&A Highlights

• CEO John Rademacher emphasized the company’s unique market position and ability to scale.
• Addressed potential challenges related to tariffs and supply chain optimization.
• Highlighted the importance of maintaining a balanced revenue mix and focusing on patient outcomes.

In conclusion, Option Care Health’s presentation at the conference underscored its robust financial performance and strategic growth initiatives. For further details, readers are encouraged to refer to the full transcript below.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Matt Larue, Analyst, William Blair: Morning everyone. Oop, there we go. My name is Matt Larue. I I cover option care here at William Blair. And, pleased to be joined this morning by CEO John Rademacher, CFO Mike Shapiro, and Nicole Maggio from the team is also here somewhere.

Before we get to the presentation, two things. The breakout session is in Burnham A Upstairs. You can follow us up there. Second, I’m required to inform you that for a complete list of research disclosures or potential conflicts of interest, please visit williamblair.com. So again, very pleased to have Option Care here with us today.

I will turn it over to John.

John Rademacher, CEO, Option Care Health: Thank you, Matt. Good morning, everyone. Given the growth conference, we’ll spend a little bit of time just talking about the business itself and kind of the unique position that we believe that we hold in providing infusion services on a national basis. So we’ll spend a little bit of time on that and kind of walk you through, but just really pleased with the progress of the business moving forward from that. As normal, as part of our disclaimers, we may be making forward looking statements.

I ask that you kind of review any of the information on our Investor Relations website around all the full disclosures of anything that we may say today in the conversation. As an organization, reported the first quarter earnings, really strong performance as an organization, again capitalizing on what I believe to be a very unique position of Option Care Health in the marketplace. As a national provider and being able to have the broad portfolio of products, really capitalized on the opportunities that existed there. That financial performance equated into some very shareholder friendly actions of certainly doing things around the M and A front, which I’ll talk about, but more importantly around share repurchase and returning value to the shareholders through that process, as well as we raised guidance given the performance coming out of the blocks in the first quarter. As an organization, with that national presence, the ability to reach about 96% of The U.

S. Population, we really capitalized on some changes that are happening in the marketplace, some of the exits of the competitive dynamics in certain markets. And the team continued to perform from as an organization standpoint and really capitalized on that balance of the portfolio of the breadth of the products in both the acute as well as the chronic space. So from a revenue standpoint, up over 16% on a year over year basis. Gross profit was up over 10.3%.

Adjusted EBITDA, up about 13.7%, and then, given some of the things that we’ve been able to do with our share repurchase, diluted EPS up 14.3%. So again, strong execution by the team, strong opportunity to capitalize on the market dynamics and more importantly to be in a position as things like the bag shortages and other things were put in the rearview mirror and the strength of the supply chain continue to move forward with that. As I said, return of value to shareholders, both in what we’ve done in the investment side of the M and A as well as the repurchase program, Bought back $100,000,000 of shares in the quarter, again, building off of the strength of the balance sheet, the continued performance and the strong cash flow of the organization. Also made an investment in an acquisition in South Carolina and really the Southeast with Intermed Plus, a very unique provider of services, somebody that we knew well over the years of the relationship. We thought that they had a unique platform and sustainable value creation and one in which we could really strengthen our presence in the Southeast and operate both the pharmacy as well as the infusion clinic capability set.

We also continue to invest into our infrastructure, opening up state of the art pharmacies in Virginia, kind of building on the momentum that we had outlined last year around the investments that we made in the Florida market and New York market really to ensure that we have strength of quality as well as capacity to continue to grow. As mentioned, raised guidance on the first quarter based on that momentum. And as we looked at the year and kind of laid out the ability that we’ve had to grow through some of the challenges and consistently deliver quarter after quarter around the commitments that we’ve made, again, really proud of the execution of what the team has been able to do and how that translates into both the financial performance and what we were able to return back to shareholders. And then we kind of outlined there’s been a lot of news certainly around tariffs and implications of that. Team spent a lot of time in the first quarter really evaluating.

We sized that up on the first quarter call just around the different areas that we have, certainly around med supplies and some of the aspects of that as well as potential implications around drug price and certainly some of the API and other aspects of the active pharmaceutical ingredients and the components of some of the drugs. So as the team continues to look and kind of respond to some of the changing market dynamics, have a very nimble team that focuses around supply chain optimization, looking for alternative sources, doing different aspects of that to minimize and mitigate risk where possible, and then also just continue to look at the strength of the diversity of our supply chain and kind of building off that as we move forward. So again, we think we can navigate through that, certainly mitigate the impacts wherever possible through alternate sourcing and or over the longer run have mechanisms within the way that we seek reimbursement to be able to offset any of the impacts that they have over the longer run. When you look at the value proposition of the enterprise, again, this national scale that we have and being able to use scale as a competitive advantage on a national basis, but also realizing that you have to be extremely responsive at a local basis.

Health care remains local, and a lot of the referral sources that we’re working with to identify patients that could come on to service with us need to be very responsive at that local level. And so the investments that we’ve made into that infrastructure, the investments that we continue to make into the pharmacy network and platform, our nursing network, all of that is to kind of have this balance between national scale and consistency of clinical outcome with that local responsiveness necessary to really capitalize on that. So over 170 locations that we operate today, over 90 pharmacies in which we compound dispense and distribute the product to really be locally focused and drive that forward. We have over seven fifty chairs that we operate within our infusion suites, infusion clinics, as part of the value chain that we believe there and giving patients choice. Certainly, we’ll continue to service patients in the home for the medically fragile, immunocompromised, those patients that are ambulatory constrained.

But we also want to offer choice for patients that are out doing activities of daily living, that are, going to work or going to school and being able to be, closer to where they are, where they live, where they work, so that we’re convenient and we can operate within that. The licensure that we have across all 50 states gives us flexibility to be able to meet the needs of the national payers and those local payers through that standpoint. And as patients move either for aspects of snowbirds that are traveling south in the winter and or patients that are receiving care at centers of excellence and then transitioning back to their homes. That national platform, that 50 state licensure allows us to help assist with those transitions, either to meet the needs of the patients and or to meet the needs of the referral sources through that process. The diversity of our portfolio, we talk a lot about the acute and chronic portfolios, but when you look, there’s hundreds of drugs that are part of our portfolio.

And the strength of that balance in the portfolio, we think, gives us a competitive advantage, whether it’s in the conversations that we’re having with payers or the hospitals in helping to transition those acute patients out of the hospital into their home to safely and effectively transition them into these lower cost settings but have equal quality from an outcome standpoint, again, is a differentiator for us and allows us to then be well positioned for the breadth of the portfolio and thinking about not only supporting those acute, but chronic as well as rare and orphan and limited distribution drugs. The platform allows us to do that. The strength of our clinical team allows us to, take on complex patients, through that process and really, leverage the clinical resources that we have over 5,000 nurses and pharmacists and pharmacy technicians and dietitians and physicians that are part of that overall clinical training team. The industry itself is still fragmented. There’s over 800 providers of infusion services across the country.

Again, everything from small single site operators, those that are part of hospitals and health systems that are embedded within them, as well as regional players through that process. But when you look at a national scale and national provider and the breadth of product, again, no other organization has the scale and or the portfolio of products that we offer into the marketplace. And that opportunity to take a look for, the Intramed Pluses and other, opportunities to look for combinations and consolidation certainly is part of the playbook as we’re looking forward. A strategy is, you know, kind of building on that and our ability to integrate those types of organizations and folks around using our scale so that from a procurement and network optimization and technology as well as clinical capabilities, it allows us to leverage the capabilities that we have on the national scale and bring those into those acquisitions to really release trapped value, create broader synergies and look for both cost as well as revenue synergies as we’re expanding the portfolio of products that they have. And then the consistent cash flow.

We’ve focused a lot as an organization really over the last nine years, ten years since the carve out from Walgreens around building a more efficient model and focusing around creating the perfect claim from the moment that we receive a referral. So that ability to extract and differentiate around being able to have an efficient process and focus around terming every claim to cash and focusing around making certain that we’re doing everything that’s required to submit a clean claim for payment from the payers as well as collecting any patient balances. We think, again, gives us an opportunity to drive that cash flow and really then strengthen the balance sheet and deploy that capital in forms of whether share repurchase or investing in the business or M and A activities. As you can see by the map, again, broad coverage, density in the major markets that’s necessary, and that expansion of not only the pharmacy infrastructure but the Infusion Suite capabilities, we think, continues to position us well in the marketplace to be a partner of choice. When you look at the market, in general, home infusion, again, anywhere between, best estimates between 18,000,000,000 to $20,000,000,000 addressable market within home infusion.

On that, we think that we’re probably in the 25% to 30% of the market that we have based on the revenue that we generate. And so still opportunity for us to take share, continue to be vigorously in the marketplace to be well positioned around capturing that market demand and looking at the breadth of the portfolio, both in the acute and the chronic, kind of leveraging that consistency of service and the consistency of our clinical value proposition in order to be that partner for those different sides. When you look at the makeup of the revenue, about 75% of our revenue is from the chronic therapies. Again, these are higher priced products that are branded in many instances in the marketplace. And about 25% of it is acute.

A lot of that is generic products or ones that are of lower value on a revenue per day basis or a revenue per dispense. But again, both very important in the portfolio, and they have different dynamics when you think about the profit contribution, which I’ll talk about briefly in a future slide. The other aspect when you look at our payer mix and the way that we’re aligned, only 12% is from government payers on that, so that is Medicare fee for service. It’s Medicaid that’s direct Medicaid and some of the other military programs. Behind that, about 88% of our volume comes from a commercial counterparty, So that would include Medicare Advantage programs, but again, the commercial payers are those counterparties that we operate with.

And so the exposure around pen stroke risk is limited in the portfolio on a government payer standpoint. And the diversity of the portfolio, we have over 800 payer relationships, over 1,400 contracts, and that’s everything from being in all 10 of the top 10 national payers and having access to their membership, but also down to those local plans, whether it’s the Blue Cross Blue Shield plans or local plans within those markets. We have a dedicated market access team that’s really focused around driving that market access and being able to serve as many patients as possible. Made a lot of investments in our technology enablement, and it really focuses around our key constituents. So that ability to have a smooth transition with health systems to be able to support their patients that are stable enough to be discharged and come onto service with us in that transition of care.

A lot of the focus that we have is help to manage those bed days. Patients that are on DRG capitated programs on that, that help to move those patients safely and effectively out of the inpatient setting, allows them to help to support moving patients through in a more efficient way. We have clinical resources dedicated. We have nurses that are embedded in a lot of those hospitals to help with that transition to identify and work with discharge planners, case managers, hospitalists in order to identify patients that are stable enough to be discharged and then help with that transition of care onto service with us. And we provide comprehensive solutions, whether it’s helping to support 340B programs where necessary, where we can provide those savings back to the qualified organizations, whether it’s things that we’re doing to help support clinical effectiveness and efficiency and the quality of outcomes, all of those kind of fit within the stakeholders and making certain that we’re meeting the needs and driving value for them.

For payers, some of the areas that we focus on is really around that total cost of care and helping with those transitions out of those higher cost settings, whether it’s a hospital inpatient stay, whether it’s in a hospital outpatient department. Again, focusing around the clinical outcomes and the consistency that we can drive there at that lower cost setting resonates well with payers, especially as they’re focusing around medical loss ratios and dealing with that total cost of care. We offer a real utility and a real solution for them as they’re helping to support their members that require infusion services or healthcare professionally overseen injections. That national platform, but really being able to be specific at the local level and driving that consistency and quality of outcomes, is something that we’re able to articulate clearly in our value proposition, not only with the national and regional players but at that local level for the local payers. That is important because it allows us to have clinical competencies and invest in clinical quality and outcomes that we can deploy consistently and effectively across the country and develop those best practices that are used at those local settings as well as on a national basis.

And our focus around the member experience, really important, our patient satisfaction and making certain that the outcomes are of the highest value. Again, create value for the health plan that’s really trying to manage effectively their access to those members and their retention rates. We focus on the patient, that patient experience, supportive on that twenty fourseven, three sixty five with the infrastructure that we have around it, the ability to deploy nurses into the home or into the infusion suite, really supporting the clinical pathways of the prescribing physician or our advanced practitioner to drive the best outcome and to support them and their family in living either the best life with a chronic condition and or recovery from an acute episode of care. And then we work upstream with pharma, focusing on developing programs, utilizing the clinical resources and the platform that we have to give access to patients, whether it’s rare and orphan products that have small cohorts of patients that may be spread across the country or whether it’s offering a channel partner for broader, more general programs, we’ve demonstrated the ability to use our clinical resources to develop unique programs for those pharma and those therapies in order to not only capture information and data that is important for them through that process, but also ensuring that the quality of care and the delivery of the infusion event is at the standards that they set.

So when you look at the consistency of the record of growth, again, lot of challenges through that environment, but the organization and the team is very resilient in being able to work through some of the challenges that are out there. We certainly have questions, and you look back in the last year, change health and bag shortages, the team can consistently find ways to navigate around that, consistently offer value for what we provide into the marketplace, supporting those patients, supporting the objectives of high quality care at an appropriate cost, and really, focusing around being a channel access, partner for pharma through that process. And so that ability to continue to drive net revenue, to continue to drive adjusted leverage adjusted EBITDA growth, the ability for us to generate that cash flow from focusing around converting claims to cash and really the consistency of the referral process for patient registration through billing and collections. All of that kind of fits into the strengthening of the balance sheet, strengthening of the or the consistency of the performance. And then ultimately, the way that we look to deploy capital, whether it’s through share repurchase or whether it’s through investing in our business and or M and A activities.

When you look at really the resilience of the enterprise and the revenue base and really the balance that we talk about from that perspective, again, we define in acute and chronic therapies because they have different characteristics, not only in the duration of the product. So a lot of the acute products, when you’re thinking of things like an antibiotic and some of the nutrition support, they’re shorter duration. So those patients aren’t on service for months and years. They’re weeks in many of those measurements on that. But most of these are generic drugs in their current form.

A lot of that is of higher margin given the generic environment in which we’re operating and the way that we can acquire those products. They have a higher burden from a cost structure for a cost of service in the sense of high volume and the nursing intensity and other aspects that are associated with that. But the underlying therapies are extremely valuable, not only to our stakeholders from that standpoint, for us as an organization and the competencies that drives and the ability that allows us to sweat the assets in a broader basis, we really appreciate and focus around driving those acute therapies and capturing that through the process. It drives savings both to the hospitals and to the payers, as I talked about, not only in helping to manage bed days and total cost of care, but also to help with that patient flow to really optimize the infrastructure that they have. On the, branded products, again, most of the chronic products, most of these are branded or biosimilar, in their, context.

Again, profit, from the product margins, a little bit different than in the acute, higher priced products, but the profit is probably in the 5% to 30% range on those based on the competitive dynamics and the products themselves and the unique positions they have. But these patients are on service for months, years, and in many instances, a lifetime. And so that ability to have that consistency of the census of managing those patients over that longer duration, the ability for us to impact their course of treatment and be a strong provider of the clinical oversight and the care for that is an important aspect. And depending on the frequency, whether it’s every four weeks, every six weeks, every six months, the consistency that we can provide, the ability that we have to wrap around them with all of the clinical services, the 20 fourseven, three sixty five aspects of our organization, again, support the needs of those patients and really, driving better clinical outcomes. When you look at the balance of the gross profit, and again, this is just, kind of breaking out the way that we look at it.

You know, about 50% of the revenue is, on biosimilar and generic. About 50% of the revenue is branded. But when you look at the product profit, it kind of flips on that. So, generic and, biosimilar, about 75% of our gross profit. Only about 25% of the gross profit is coming from the branded pharmaceuticals.

And why is that important? Well, when you’re looking at kind of the composite of the sustainability and the durability and the balance of the gross profit, the amount of disruption when it’s already in generic or biosimilar state gives a better stability. The branded products of that 50% that’s branded, about half of that is rare and orphan or limited distribution drugs. So again, unique in the platform to really leverage the clinical capabilities that we have but also have a much more sustainable product portfolio and formulary as we’re thinking about that path forward. So branded products, the evolution in that branded product of moving either to biosimilar or generic, well positioned to capitalize on those opportunities, continue to work with manufacturers not only of the unique product but then the biosimilar manufacturer, generic manufacturers to identify opportunities to get the best cost from an acquisition cost and really leverage the infrastructure and the relationships that we have with those patients over that duration.

When you think about the platform itself and where we’ve been investing, not only in the pharmacy infrastructure infusion suites and then that advanced practitioner model. It really provides a unique platform to be able to serve patients that require infusion services and or those that require healthcare professionally overseeing injections. So we’ve continued to invest into people, process, technology and facilities to be best positioned for that as we move forward. Certainly under the practice of pharmacy, serving patients in the home for those medically fragile, immunocompromised, ambulatory constrained, That will be a big part of our value proposition as we move forward. But we also offer alternative under that practice of pharmacy in being able to serve those patients in the infusion suite and for opportunities participate in things like 340B programs, opportunities for being more convenient for the patients, and for us to have a more efficient model for the nursing resources that don’t have a windshield time going to and from a home or could oversee multiple infusions at the same time, we’ll continue to look for those opportunities.

The other side of that is an advanced practitioner model that expands the portfolio of products that we can offer. Not only does it there are some changed economics based on the channel attributes of it, but it also expands access for some payers that may have limited access in home infusion therapy benefit, like Medicare fee for service, in which it opens up that opportunity for us to serve those patients. So that falls under as opposed to the practice pharmacy, it’s really in the physician fee schedule mindset, and it just opens up those opportunities, and overseeing those infusion events is an important aspect of what we can provide, and it’s the clinical competencies that we have as an organization. So a near adjacency that allows us to expand not only the portfolio product but also for patients that may be more medically complex, the opportunity to develop those care plans and effectively manage those patients in a much more comprehensive way allows us to do that. So expectations for the road ahead and where we’re continuing to focus our energy and where we see that growth to continue to come from.

So again, that national platform with local responsiveness, there have been some changes in the marketplace with some of our competitors stepping away from serving acute patients. That gives us an opportunity to capture that market demand, to deepen our partnership with the referral sources, to leverage that for the breadth of the portfolio and to demonstrate not only the resilience and durability of our relationships, but I think more importantly, the clinical competencies that we have as an enterprise. That ability to deepen our partnership with payers, fits in alignment with that. So, the focus around the total cost of care, the focus around right citing, patients so that they get equal clinical outcomes for a lower cost is something that we’re focused on and something that we can articulate not only in the data that we’re able to provide to them, but also in the way that we’re looking at, our contracting and network management for market access through that process. We think there’s opportunities to continue to expand the portfolio, whether it’s in neurological disorders and some of the products in Alzheimer’s and Parkinson’s that either have been introduced or are in the pathway for approval from FDA approval through that process.

We think there’s opportunities within oncology in some of the products like the PD-1s, the Keytrudas, Opdivo, Yervoy that have a lot of the characteristics of some of the chronic inflammatory disease products that we’re offering today. And we think it just leverages the clinical capabilities that we have as an enterprise to really look for those therapeutic categories that we can expand into and that we can capitalize on it. We’re going to continue to invest in our technology. Last year, in January, we announced a partnership with Palantir around using their foundry and continue to move forward around focusing around AI and machine learning and advanced analytics to drive better outcomes, right? The ability for us to drive efficiency in both the patient registration all the way through the billing and collections aspect just gives us an opportunity to unlock some trapped value that we believe exists there, and we’re going to continue to invest in that infrastructure in order to capitalize on some advancing technology but also some efficiencies that can be driven there.

Expansion into those infusion clinics, and making certain that we have, the right representation in those markets to not only support our infusion suites but also the clinics with the advanced practitioner model. We’re going to continue to invest in the collaborations with pharma in developing unique programs that support the needs of their patients and their cohorts or potentially the uniqueness of their therapy, and we can deploy the clinical competencies to our enterprise in order to get that done. And utilizing the national platform, not only of our pharmacy infrastructure but our nursing resources through that process. And then finally, we expect to continue to have strength in our cash flow generation that gives us flexibility not only in continuing to have a strong balance sheet but also deploying that capital in shareholder friendly ways, whether through the share repurchase programs and or M and A activities as well as we continue to invest in the business. So with that, Matt, that’s all.

Matt Larue, Analyst, William Blair: Very good. Thank you very much. And again, Q and A will be upstairs in Burnham A. Thank you.

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