BANNOCKBURN, Ill., Aug. 04, 2020 (GLOBE NEWSWIRE) -- Option Care Health, Inc. (the “Company” or “Option Care Health”) (Nasdaq: OPCH), the nation’s largest independent provider of home and alternate site infusion services, announced today financial results for the second quarter ended June 30, 2020.

Given the merger between HC Group Holdings II, Inc. (“Option Care”) and BioScrip, Inc. (“BioScrip”) to form Option Care Health on August 6, 2019, comparisons to historical periods are relative to legacy Option Care only and incorporate BioScrip results from August 6, 2019 prospectively. Further, as reported on February 3, 2020, the Company completed a reverse 1-for-4 stock split in the first quarter and, as a result, all per share data below is reported incorporating the effect of the reverse stock split as if it was effective for all periods reported.

Second Quarter 2020 Financial Highlights

  • Net revenue of $740.8 million, up 49% compared to $497.3 million in the second quarter of 2019
  • Gross profit of $166.3 million, or 22.4% of net revenue, up 64% compared to $101.4 million, or 20.4% of revenue, in the second quarter of 2019
  • Net loss of $7.7 million, or $0.04 per share, compared to net loss of $13.6 million, or $0.10 per share, in the second quarter of 2019
  • Run rate merger-related synergies at the end of the second quarter of more than $60 million
  • Adjusted EBITDA of $54.6 million, up 131% compared to $23.7 million in the second quarter of 2019
  • Cash flow from operations of $35.0 million, up 163% compared to $13.3 million in the second quarter of 2019
  • Cash balances of $118.1 million at the end of the second quarter and no outstanding borrowings on the Company’s $150.0 million revolver

Additionally, subsequent to the second quarter, the Company completed a sale of 18 million shares of common stock.  Eight million shares were sold by HC Group Holdings, I, the primary shareholder of the Company. The Company also sold 10 million shares and received net proceeds of approximately $118 million, which will be used to retire a portion of its senior secured second lien PIK toggle floating rate notes due 2027. The impact of the sale of common stock will be reflected in the Company’s third quarter results.

John C. Rademacher, Chief Executive Officer, commented, “I am very pleased with the second quarter financial results given the COVID-19 pandemic situation and the dynamic environment in which we are operating.  Most importantly, I am proud of the dedication of the Option Care Health team who safely and effectively deliver on their promises every day ensuring patients receive the critical care they need.”

Update on the Impact of the COVID-19 Pandemic

As anticipated, the COVID-19 pandemic had a significant impact on the Company’s second quarter results.  New patient referrals were negatively impacted across the portfolio of both acute and chronic therapies, with the largest impact on acute referrals that typically originate from hospital discharge events.  Option Care Health incurred higher expenses related to both the procurement of personal protection equipment and medical supplies as well as with respect to its clinical labor.

Offsetting the impact of the negative factors, the Company benefitted from the transfer of existing patients receiving infusion therapy in a hospital or other setting to receive therapy in the home or one of the Company’s infusion suites. Comparable revenue growth for the quarter is estimated at approximately 7% when considering the impact of the merger and harmonization of accounting policies, with acute therapies declining in low single digits and chronic therapies growing in the low double digits.

As previously disclosed, as part of the Coronavirus Aid, Relief, and Economics Security Act (the “Cares Act”), the Company received approximately $11.7 million from the Public Health and Social Services Emergency Fund in the second quarter.  The cash receipt was reflected in the second quarter results as a cash inflow from financing activities. Having considered the terms of the Cares Act and the second quarter results, the Company has decided to return the funds in their entirety in the third quarter.  The outflow will be reflected as a cash outflow due to financing activities and there will be no impact on the Company’s results from operations.

Full Year 2020 Guidance

For the full year, the Company expects to generate between $200 million and $210 million in Adjusted EBITDA and at least $50 million in free cash flow, defined by the Company as net change in ending cash balance compared to the cash balance at December 31, 2019.

Conference Call

The conference call can be accessed by dialing (866) 360-3136 for U.S. participants, or (602) 563-8603 for international participants, and referencing conference ID 9790835; or via a live audio webcast that will be available online at https://investors.optioncarehealth.com. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

About Option Care Health

Option Care Health is the nation’s largest independent provider of home and alternate site infusion services. With over 5,000 teammates, including approximately 2,900 clinicians, we work compassionately to elevate standards of care for patients with acute and chronic conditions in all 50 states. Through our clinical leadership, expertise and national scale, Option Care Health is reimagining the infusion care experience for patients, customers and employees. To learn more, please visit our website at OptionCareHealth.com.

Investor Contacts

Mike ShapiroBob East, Asher Dewhurst, Jordan Kohnstam
Chief Financial OfficerWestwicke
T:  (312) 940-2538T:  (413) 213-0500
mike.shapiro@optioncare.comoptioncarehealth@westwicke.com
  

Forward-Looking Statements - Safe Harbor

This press release may contain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “believe,” “project,” “estimate,” “expect,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we may make regarding future revenues, future earnings, regulatory developments, market developments, new products and growth strategies, integration activities and the effects of any of the foregoing on our future results of operations or financial conditions.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market conditions and receptivity to our services and offerings; (iii) results of litigation; (iv) the loss of one or more key payers; and (v) the spread and impact of the COVID-19 pandemic. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the SEC.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Note Regarding Use of Non-GAAP Financial Measures

In addition to reporting financial information in accordance with generally accepted accounting principles (GAAP), the Company is also reporting Adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be used in isolation or as a substitute or alternative to net income, operating income or any other performance measure derived in accordance with GAAP, or as a substitute or alternative to cash flow from operating activities or a measure of the Company’s liquidity. In addition, the Company's definition of Adjusted EBITDA may not be comparable to similarly titled non-GAAP financial measures reported by other companies. Adjusted EBITDA, as defined by the Company, represents net income before net interest expense, income tax expense, depreciation and amortization, stock-based compensation expense, and restructuring, integration and other expenses. As part of restructuring, integration and other expenses, the Company may incur significant charges such as the write down of certain long−lived assets, temporary redundant expenses, professional fees, potential retention and severance costs and potential accelerated payments or termination costs for certain of its contractual obligations. Management believes that Adjusted EBITDA provides useful supplemental information regarding the performance of Option Care Health’s business operations and facilitates comparisons to the Company’s historical operating results. For a full reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, please see the attachment to this earnings release.

  Schedule 1

OPTION CARE HEALTH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

 
 (unaudited)  
 June 30, December 31,
 2020 2019
ASSETS   
CURRENT ASSETS:   
Cash and cash equivalents$118,099  $67,056 
Accounts receivable, net320,222  324,416 
Inventories149,115  115,876 
Prepaid expenses and other current assets50,107  51,306 
Total current assets637,543  558,654 
    
NONCURRENT ASSETS:   
Property and equipment, net117,629  133,198 
Intangible assets, net368,481  385,910 
Goodwill1,428,610  1,425,542 
Other noncurrent assets74,002  86,243 
Total noncurrent assets1,988,722  2,030,893 
TOTAL ASSETS$2,626,265  $2,589,547 
    
LIABILITIES AND STOCKHOLDERS’ EQUITY   
CURRENT LIABILITIES:   
Accounts payable$260,120  $221,060 
Other current liabilities134,491  108,944 
Total current liabilities394,611  330,004 
    
NONCURRENT LIABILITIES:   
Long-term debt, net of discount, deferred financing costs and current portion1,275,385  1,277,246 
Other noncurrent liabilities88,303  75,470 
Total noncurrent liabilities1,363,688  1,352,716 
Total liabilities1,758,299  1,682,720 
    
STOCKHOLDERS’ EQUITY867,966  906,827 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$2,626,265  $2,589,547 
        

Schedule 2

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

    
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2020 2019 2020 2019
NET REVENUE$740,848  $497,266  $1,446,288  $973,758 
COST OF REVENUE574,528  395,876  1,121,939  774,174 
GROSS PROFIT166,320  101,390  324,349  199,584 
        
OPERATING COSTS AND EXPENSES:       
Selling, general and administrative expenses124,918  99,245  254,198  182,032 
Depreciation and amortization expense18,194  10,150  38,295  20,119 
Total operating expenses143,112  109,395  292,493  202,151 
OPERATING INCOME (LOSS)23,208  (8,005) 31,856  (2,567)
        
OTHER INCOME (EXPENSE):       
Interest expense, net(31,432) (11,563) (59,519) (22,608)
Other, net1,026  542  1,596  1,015 
Total other expense(30,406) (11,021) (57,923) (21,593)
        
LOSS BEFORE INCOME TAXES(7,198) (19,026) (26,067) (24,160)
        
INCOME TAX EXPENSE (BENEFIT)470  (5,423) 1,511  (6,845)
NET LOSS$(7,668) $(13,603) $(27,578) $(17,315)
        
Net loss per share, basic and diluted$(0.04) $(0.10) $(0.16) $(0.12)
                

Schedule 3

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

  
 Six Months Ended
June 30,
 2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net loss$(27,578) $(17,315)
Adjustments to reconcile net loss to net cash provided by operations:   
Depreciation and amortization expense41,813  21,591 
Other non-cash adjustments17,423  (73)
Changes in operating assets and liabilities:   
Accounts receivable, net4,194  26,050 
Inventories(33,239) 8,321 
Accounts payable36,422  (18,692)
Other14,355  2,524 
Net cash provided by operating activities53,390  22,406 
    
CASH FLOWS FROM INVESTING ACTIVITIES:   
Acquisition of property and equipment(9,269) (8,502)
Other investing cash flows541  636 
Net cash used in investing activities(8,728) (7,866)
    
CASH FLOWS FROM FINANCING ACTIVITIES:   
Other financing cash flows6,381  (4,076)
Net cash provided by (used in) financing activities6,381  (4,076)
NET INCREASE IN CASH AND CASH EQUIVALENTS51,043  10,464 
Cash and cash equivalents - beginning of the period67,056  36,391 
CASH AND CASH EQUIVALENTS - END OF PERIOD$118,099  $46,855 
        

Schedule 4

OPTION CARE HEALTH, INC.
QUARTERLY RECONCILIATION BETWEEN GAAP AND NON-GAAP MEASURES
(IN THOUSANDS)
(UNAUDITED)

 
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2020 2019 2020 2019
Consolidated net loss$(7,668) $(13,603) $(27,578) $(17,315)
Interest expense, net31,432  11,563  59,519  22,608 
Income tax expense (benefit)470  (5,423) 1,511  (6,845)
Depreciation and amortization expense19,969  10,842  41,813  21,591 
Consolidated EBITDA44,203  3,379  75,265  20,039 
        
EBITDA adjustments       
Accounting principle changes and non-cash charges  2,723    4,258 
Stock-based incentive compensation661  569  1,418  1,153 
Restructuring, acquisition, integration and other9,759  16,989  18,119  17,566 
Consolidated adjusted EBITDA$54,623  $23,660  $94,802  $43,016