Option Care Health, Inc.

Previous wording

Unless the context requires otherwise, references in this report to "Option Care Health," the “Company,” “we,” “us” and “our” refer to Option Care Health, Inc. and its consolidated subsidiaries. Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to assist the reader in understanding and assessing significant changes and trends related to our results of operations and financial condition. The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and the related notes thereto included in Item 1 of Part I of this Quarterly Report on Form 10-Q (this “Form 10-Q”). Certain statements in this Item 2 of Part I of this Form 10-Q, and in Item 1A, “Risk Factors” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024 (our “Form 10-K”), may cause our actual results, financial position, and cash and cash equivalents generated from operations to differ materially from these forward-looking statements.

Current wording

Unless the context requires otherwise, references in this report to “Option Care Health,” the “Company,” “we,” “us” and “our” refer to Option Care Health, Inc. and its consolidated subsidiaries. Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to assist the reader in understanding and assessing significant changes and trends related to our results of operations and financial condition. The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and the related notes thereto included in Item 1 of Part I of this Form 10-Q. Certain statements in this Item 2 of Part I of this Form 10-Q, and in Item 1A, “Risk Factors” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024 (our “Form 10-K”), may cause our actual results, financial position, and cash and cash equivalents generated from operations to differ materially from these forward-looking statements.

Previous wording

Option Care Health, and its wholly-owned subsidiaries, provides infusion therapy and other ancillary health care services through a national network of 190 locations around the United States. The Company contracts with managed care organizations, third-party payers, hospitals, physicians, and other referral sources to provide pharmaceuticals and complex compounded solutions to patients for intravenous delivery in the patients’ homes or other nonhospital settings. Our services are provided in coordination with, and under the direction of, the patient’s physician. Our multidisciplinary team of clinicians, including pharmacists, nurses, and dietitians work with the physician to develop a plan of care suited to each patient’s specific needs. We provide home infusion services consisting of anti-infectives, nutrition support, therapies for neurological disorders and chronic inflammatory disorders, immunoglobulin therapy, and other therapies for chronic and acute conditions. The Company operates in one reporting segment, infusion services.

Current wording

Option Care Health, and its wholly-owned subsidiaries, provides infusion therapy and other ancillary healthcare services through a national network of 190 locations around the United States. The Company contracts with managed care organizations, third-party payers, hospitals, physicians, and other referral sources to provide pharmaceuticals and complex compounded solutions to patients for intravenous delivery in the patients’ homes or other nonhospital settings. Our services are provided in coordination with, and under the direction of, the patient’s physician. Our multidisciplinary team of clinicians, including pharmacists, nurses, and dietitians work with the physician to develop a plan of care suited to each patient’s specific needs. We provide home infusion services consisting of anti-infectives, nutrition support, therapies for neurological disorders and chronic inflammatory disorders, immunoglobulin therapy, and other therapies for chronic and acute conditions. The Company operates in one reporting segment, infusion services.

Previous wording

The following results of operations include the accounts of Option Care Health and our subsidiaries for the three months ended March 31, 2025 and 2024.

Current wording

The following results of operations include the accounts of Option Care Health and our subsidiaries for the three and six months ended June 30, 2025 and 2024.

Previous wording

The following table presents Option Care Health’s consolidated results of operations for the three months ended March 31, 2025 and 2024 (in thousands, except for percentages):

Current wording

The following table presents Option Care Health’s consolidated results of operations for the three and six months ended June 30, 2025 and 2024 (in thousands, except for percentages):

Previous wording

The increase in net revenue was primarily driven by organic growth in the Company’s portfolio of therapies, consisting of acute revenue that grew in the mid-teens relative to the prior year while chronic revenue grew in the high-teens. Acute growth was largely driven by the impact of shifts in the competitive landscape, which increased the volume of patient service. The increase in cost of revenue was primarily driven by the growth in revenue and therapy mix. The decrease in gross profit margin was primarily due to certain higher cost therapies included within chronic growth (including rare and orphan therapies). Additionally, the company executed on several initiatives to temporarily mitigate the impact of the previously disclosed reduction in procurement spread in the first quarter. The Company expects the full negative impact to gross profit to materialize in the second quarter through the remainder of the year.

Current wording

The increase in net revenue was primarily driven by organic growth in the Company’s portfolio of therapies, consisting of balanced growth in the mid-teens relative to prior year for both the acute and chronic revenue portfolios. Acute growth was largely driven by the impact of shifts in the competitive landscape, which increased the volume of patient service. The increase in cost of revenue was primarily driven by the growth in revenue and therapy mix. The decrease in gross profit margin was primarily due to certain higher cost therapies included within chronic growth (including rare and orphan therapies). Gross profit was also impacted by the previously disclosed reduction in the procurement spread, which the Company expects to continue for the remainder of the year.

Previous wording

The increase in selling, general and administrative expenses during the three months ended March 31, 2025 was primarily due to an increase in salaries, benefits, and general costs to support the business; however, these expenses have declined as a percentage of revenue to 12.6% for the three months ended March 31, 2025 compared to 13.5% for the three months ended March 31, 2024, due to the Company’s focus on leveraging existing infrastructure to control spending. The increase in depreciation and amortization expense was primarily due to the Intramed Plus acquisition. See Note 3, Business Combinations, of the unaudited condensed consolidated financial statements for further information.

Current wording

The increase in selling, general and administrative expenses during the three months ended June 30, 2025 was primarily due to an increase in salaries, benefits, and general costs to support the business. These expenses have declined as a percentage of revenue to 12.0% for the three months ended June 30, 2025 compared to 12.5% for the three months ended June 30, 2024, due to the Company’s focus on leveraging existing infrastructure to control spending. The increase in depreciation and amortization expense was primarily due to the Intramed Plus acquisition. See Note 3, Business Combinations, of the unaudited condensed consolidated financial statements for further information.

Previous wording

The Company recorded income tax expense of $16.8 million and $12.2 million for the three months ended March 31, 2025 and 2024, respectively, which represents an effective tax rate of 26.5% and 21.4%, respectively. The variance in the Company’s effective tax rate of 26.5% for the three months ended March 31, 2025, compared to the federal statutory rate of 21%, was primarily attributable to the difference between federal and state tax rates, and various non-deductible expenses. The variance in the Company’s effective tax rate of 21.4% for the three months ended March 31, 2024, compared to the federal statutory rate of 21%, was also primarily attributable to the difference between federal and state tax rates, various non-deductible expenses, and a change in state valuation allowance.

Current wording

The Company recorded income tax expense of $18.3 million and $19.0 million for the three months ended June 30, 2025 and 2024, respectively, which represents an effective tax rate of 26.6% and 26.4%, respectively. The variance in the Company’s effective tax rate of 26.6% for the three months ended June 30, 2025, compared to the federal statutory rate of 21.0%, was primarily attributable to the difference between federal and state tax rates and various non-deductible expenses. The variance in the Company’s effective tax rate of 26.4% for the three months ended June 30, 2024, compared to the federal statutory rate of 21.0%, was primarily attributable to the difference between federal and state tax rates, various non-deductible expenses, and a change in state valuation allowance.

Previous wording

Net Income and Other Comprehensive (Loss) Income

Current wording

Net Income and Other Comprehensive Income (Loss)

Previous wording

The increase in Other, net is primarily attributable to accruals related to an abandoned or unclaimed property voluntary disclosure agreement program which is related to the pre-merger operations of BioScrip, Inc. (“BioScrip”), which was entered into by BioScrip prior to its merger with the Company in 2019. As of March 31, 2025, the matters related to this program are ongoing.

Current wording

The increase in interest expense, net during the six months ended June 30, 2025 was primarily attributable to less interest income generated from our cash and cash equivalents, partially offset by a decrease in the interest rate on the Company’s First Lien Term Loan, compared to the six months ended June 30, 2024. See Note 10, Indebtedness, of the unaudited consolidated financial statements for further information. The change in other, net during the six months ended June 30, 2025 was primarily attributable to accruals related to an abandoned or unclaimed property voluntary disclosure agreement program which was related to the pre-merger operations of BioScrip, Inc. (“BioScrip”), which was entered into by BioScrip prior to its merger with the Company in 2019. As of June 30, 2025, the matters related to this program are ongoing.

Previous wording

Net comprehensive income decreased to $44.3 million for the three months ended March 31, 2025, compared to net comprehensive income of $46.3 million for the three months ended March 31, 2024, primarily as a result of the changes in the fair market value of the cash flow hedge.

Current wording

Net comprehensive income decreased to $93.2 million for the six months ended June 30, 2025, compared to net comprehensive income of $98.5 million for the six months ended June 30, 2024, primarily as a result of the changes in the fair market value of the cash flow hedge.

Previous wording

For the three months ended March 31, 2025 and the twelve months ended December 31, 2024, the Company’s primary sources of liquidity were cash and cash equivalents of $171.4 million and $412.6 million, respectively. As of March 31, 2025 and December 31, 2024, the Company had $395.9 million of borrowings available under its credit facilities (net of $4.1 million undrawn letters of credit issued and outstanding). During the three months ended March 31, 2025 and 2024, the Company’s cash flows from operations enabled investments in pharmacy, infusion suites, and information technology infrastructure to support growth and create additional capacity in the future, as well as to pursue acquisitions and share repurchases.

Current wording

For the six months ended June 30, 2025 and the twelve months ended December 31, 2024, the Company’s primary sources of liquidity were cash and cash equivalents of $198.8 million and $412.6 million, respectively. As of June 30, 2025 and December 31, 2024, the Company had $395.9 million of borrowings available under its credit facilities (net of $4.1 million undrawn letters of credit issued and outstanding). During the six months ended June 30, 2025 and 2024, the Company’s cash flows from operations enabled investments in pharmacy, infusion suites, and information technology infrastructure to support growth and create additional capacity in the future, as well as to pursue acquisitions and share repurchases.

Previous wording

The Company’s primary uses of cash and cash equivalents include supporting our ongoing business activities, investment in capital expenditures in both facilities and technology, and the pursuit of acquisitions and share repurchases. Ongoing operating cash outflows are associated with procuring and dispensing drugs, personnel and other costs associated with servicing patients, as well as paying cash interest on outstanding debt and cash taxes. Ongoing investing cash flows are primarily associated with capital projects and business acquisitions, the improvement and maintenance of our pharmacy facilities and investment in our information technology systems. Ongoing financing cash flows are primarily associated with the quarterly principal payments on our outstanding debt, along with potential future share repurchases.

Current wording

The Company’s primary uses of cash and cash equivalents include supporting our ongoing business activities, investment in capital expenditures in both facilities and technology, the pursuit of acquisitions, and share repurchases. Ongoing operating cash outflows are associated with procuring and dispensing drugs, personnel and other costs associated with servicing patients, as well as paying cash interest on outstanding debt and cash taxes. Ongoing investing cash flows are primarily associated with capital projects and business acquisitions, the improvement and maintenance of our pharmacy facilities and investment in our information technology systems. Ongoing financing cash flows are primarily associated with the quarterly principal payments on our outstanding debt, along with potential future share repurchases.

Previous wording

Interest payments over the course of long-term debt obligations total an estimated $249.2 million based on final maturity dates of the Company’s credit facilities. Interest payments are calculated based on current rates as of March 31, 2025. Actual payments are based on changes in SOFR and exclude the interest rate cap derivative instrument.

Current wording

Interest payments over the course of long-term debt obligations total an estimated $233.4 million based on final maturity dates of the Company’s credit facilities. Interest payments are calculated based on current rates as of June 30, 2025. Actual payments are based on changes in SOFR and exclude the interest rate cap derivative instrument.

Previous wording

The increase in cash used in investing activities during the three months ended March 31, 2025 was primarily related to the Intramed Plus acquisition with no comparable activity during the three months ended March 31, 2024.

Current wording

The increase in cash used in investing activities during the six months ended June 30, 2025 was primarily related to the Intramed Plus acquisition activity with no comparable activity during the six months ended June 30, 2024.

Previous wording

The increase in cash used in financing activities is primarily related to the Company’s $100.0 million repurchase of common stock during the three months ended March 31, 2025, whereas the three months ended March 31, 2024 activity primarily related to the Company’s $40.0 million repurchase of common stock.

Current wording

The increase in cash used in financing activities was primarily related to the Company’s $150.0 million repurchase of common stock during the six months ended June 30, 2025, whereas the activity during the six months ended June 30, 2024 was primarily related to the Company’s $118.1 million repurchase of common stock as well as $50.0 million in proceeds from issuance of debt related to the first lien debt refinance in May 2024.