Option Care Health, Inc. Q1 FY2025 earnings call

• Revenue momentum continued in Q1 with balanced portfolio performance. Acute therapies grew due to improved IV bag supply and investments. Chronic therapies also showed strong growth. - Deepened partnerships with health plans, providing value in managing medical loss ratios. - Invested in people, process, technology, and facilities, including opening a compounding pharmacy, infusion clinics, and acquiring Intramed Plus. - Repurchased $100 million of stock during the quarter. - Monitored macroeconomic backdrop and potential tariff impacts.

Revenue grew 16% compared to the first quarter of the previous year. Acute therapies saw mid-teens growth, while chronic therapies had high teens growth, with solid performance in rare, orphan, and limited distribution therapies. Gross profit was $263 million, increasing over 10% year-over-year. Adjusted EBITDA was $111.8 million, marking a 13.7% year-over-year growth, representing 8.4% of net revenue.

• For full year 2025, expected revenue of $5.4 billion to $5.6 billion, adjusted EBITDA of $455 million to $470 million, adjusted earnings per share of $1.61 to $1.70, and over $320 million in cash flow from operations. - Guidance does not reflect extraordinary impact from tariffs or other policy changes at this time, as the impact is uncertain and unquantifiable.

• Uncertainty regarding how tariffs will affect pharmaceutical prices and whether costs will be passed through, impacting branded and generic businesses and different reimbursement mechanisms. - Macroeconomic uncertainties that could affect the business. - Potential impact of proposed Medicaid cuts and site neutrality policies related to where drugs are administered.

Q: Lisa Gill from JPMorgan inquired about the guidance update and underlying fundamental concerns.

A: Mike Shapiro noted the first quarter can be 'wonky' due to dynamics like holidays and benefit plan resets, and John Rademacher discussed MAPD changes' potential impact on the chronic side later in the year.

Q: Pito Chickering from Deutsche Bank asked about the mechanics of tariffs and the impact on IVIG.

A: Mike Shapiro explained drug price and reimbursement reference prices, and mentioned IVIG's domestic plasma component likely leading to lower tariff impact.

Q: Constantine Davides from Citizens asked about the payer value proposition.

A: John Rademacher discussed how Option Care Health partners with payers to manage medical loss ratios by providing high-quality care at appropriate costs in preferred settings.

Q: David MacDonald from Truist asked about the halo effect of acute growth on chronic business and Intramed Plus' best practices.

A: John Rademacher talked about goodwill from acute work potentially benefiting chronic business, and Mike Shapiro and John Rademacher highlighted Intramed Plus' advanced practitioner model and technology implementations.

Q: Matt Larew from William Blair asked about reference pricing duration and portfolio breakdown.

A: Mike Shapiro explained reference price update duration varies in payer contracts, and John Rademacher discussed the portfolio's biosimilar, generic, and branded therapy composition with no significant single product risk over 5% of revenue.

Q: Brian Tanquilut from Jefferies asked about tariff reference pricing lag and clinic expansion.

A: Mike Shapiro discussed tariff impact on reference pricing and John Rademacher emphasized clinic expansion focuses on increasing infusion chairs to serve patients.

Q: Joanna Gajuk from Bank of America asked about STELARA headwinds and acquisition capital deployment.

A: Mike Shapiro talked about STELARA impact timing and John Rademacher explained the acquisition capital deployment process, noting continued active pursuit of value creation strategies with a strong balance sheet.

Q: A. J. Rice from UBS asked about Washington policies and acquisition sellers.

A: John Rademacher discussed Washington policy focus on Medicaid cuts and site neutrality, and mentioned acquisition pace remains similar with no significant change in seller willingness