• Revenue Growth: 19.7% increase over Q4 2023.
• Gross Profit Growth: 8.6% growth over the prior year fourth quarter.
• SGNA as Percentage of Revenue: 12.2% in the quarter.
• Adjusted EBITDA: $121.6 million, nearly 9% growth.
• Adjusted Earnings Per Share (Q4): $0.44, 15.8% growth over the prior year.
• Adjusted Earnings Per Share (Full Year): $1.08, more than 10% growth year-over-year.
• Cash Flow Generation (Full Year 2024): $323 million.
• Stock Repurchase: $250 million repurchased in 2024.
• 2025 Revenue Guidance: $5.3 billion to $5.5 billion.
• 2025 Adjusted EBITDA Guidance: $450 million to $470 million.
• 2025 Adjusted Earnings Per Share Guidance: $1.09 to $1.69.
• Net Interest Expense (2025): Projected to be $55 million to $60 million.
• Effective Tax Rate (2025): Expected to be 25% to 27%.
• 2025 Cash Flow from Operations: At least $320 million expected.

• Warning! GuruFocus has detected 2 Warning Sign with OPCH.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Option Care Health Inc (NASDAQ:OPCH) reported high teen revenue growth in the fourth quarter, marking the 20th consecutive quarter of meeting financial commitments.
• The company successfully navigated supply chain challenges, particularly with IV solutions, allowing for the onboarding of new patients.
• OPCH expanded its infrastructure by opening two new state-of-the-art compounding pharmacies in New York City and Tampa.
• The acquisition of Intramed Plus enhances OPCH's presence in the southeastern United States and expands its advanced practitioner model.
• The company has a strong cash flow generation, allowing for strategic capital deployment, including a new $500 million share repurchase authorization.

Negative Points

• OPCH faces a significant gross profit impact due to less favorable economics for Stelara, estimated at $60 to $70 million for 2025.
• The company anticipates a meaningful gross profit reset, which could affect overall earnings growth.
• Despite improvements, supply chain disruptions earlier in the quarter impacted the ability to take on new patients.
• The competitive environment remains challenging with over 800 home infusion providers in the market.
• There is pressure on labor costs due to the need to scale up quickly in response to market exits by competitors.

Q & A Highlights

Q: Can you discuss the alleviation of supply chain challenges and competitive dynamics in the acute therapy market? A: John Rademacher, President and CEO, explained that supply chain dynamics improved significantly, allowing Option Care Health to onboard new patients without constraints. The company is well-positioned to capture market demand, focusing on being a partner of choice by providing consistent, high-quality care and reliability in transitioning patients from hospital to home settings.

Q: How does the addition of adjusted EPS as a metric impact your long-term growth algorithm? A: Michael Shapiro, CFO, stated that Option Care Health views itself as a high single-digit top-line, low double-digit EBITDA growth enterprise. The addition of adjusted EPS reflects the company's confidence in cash flow generation and capital deployment, suggesting that EPS growth could outpace EBITDA growth due to share repurchases and M&A activities.

Q: What are the expectations for Q1 seasonality and the impact of Stelara on gross profit? A: Michael Shapiro noted that while Q1 typically sees a step-down due to benefit re-verifications and plan changes, the shift towards chronic therapies provides a more stable revenue base. The impact of Stelara on gross profit is managed through targeted clinical programs, and the company remains committed to supporting complex patients.

Q: Can you elaborate on the Intramed Plus acquisition and its impact on margins? A: Michael Shapiro highlighted that Intramed Plus expands Option Care Health's presence in South Carolina. The acquisition is expected to leverage procurement and technology tools, aiming to achieve low double-digit EBITDA margins over time. The integration efforts are underway to enhance efficiencies and market access.

Q: How is Option Care Health addressing labor challenges in the acute therapy market? A: Michael Shapiro mentioned that the company is well-positioned to recruit and retain clinical talent due to its stability and employee benefits. The company has a strong playbook for recruiting talent and is prepared to handle additional patient volumes as market dynamics shift.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.