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Option Care Health, Inc. (OPCH)·Q3 2025 Earnings Summary

Executive Summary

  • Net revenue was $1.435B (+12.2% YoY), adjusted EBITDA $119.5M (+3.4% YoY), and adjusted EPS $0.45 (+9.8% YoY); acute therapies grew mid-teens and chronic low-double digits, offset by Stelara biosimilar headwinds in chronic .
  • Management tightened and raised midpoints of FY25 guidance: revenue $5.60–$5.65B, adjusted EBITDA $468–$473M, adjusted EPS $1.68–$1.72, while maintaining ≥$320M CFO and 25–27% tax rate; net interest narrowed to ~$55–$57M .
  • Gross margin mix pressure (limited distribution/rare orphan and Stelara), but operating discipline and technology initiatives helped sustain EBITDA margin at 8.3% .
  • Capital allocation remains active: YTD cash from ops ~$223M, leverage at 1.9x, term loan refinanced (lower rate, +$50M liquidity), and $62.5M buybacks in Q3—supporting flexibility and shareholder returns .

What Went Well and What Went Wrong

What Went Well

  • “Delivered another strong quarter with balanced growth across a portfolio of therapies” and continued to benefit from shift of care to home/ambulatory settings .
  • Acute therapy revenue grew mid-teens; national scale and local responsiveness continue to differentiate OPCH in transitions from hospital to home .
  • Management launched three enhanced applications to drive efficiency in onboarding, staffing, utilization, and deliveries, reinforcing margin resilience and scalability .

What Went Wrong

  • Chronic portfolio growth negatively impacted by ~380 bps due to Stelara biosimilars’ lower reference price/reimbursement; gross margin rate pressured by Stelara dynamics and lower-margin limited distribution/rare/orphan mix .
  • SG&A grew ~10% YoY, reflecting Intramed Plus acquisition cost layering, normalization of variable comp, debt refi-related “noise,” and ongoing technology/AI investments (Palantir, RPA, ML) .
  • Stelara headwind now expected at upper end (~$70M) for FY25, with Q3 and Q4 each a “little over $20M” impact on gross profit; biosimilar conversion adds revenue drag and uncertain gross margin outcomes .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Net Revenue ($USD Millions)$1,278.546 $1,332.972 $1,416.085 $1,435.016
GAAP Diluted EPS ($)$0.31 $0.28 $0.31 $0.32
Adjusted EPS ($)$0.41 $0.40 $0.41 $0.45
Gross Profit ($USD Millions)$256.749 $263.052 $269.043 $272.902
Adjusted EBITDA ($USD Millions)$115.583 $111.767 $114.018 $119.498
Adjusted EBITDA Margin (%)N/AN/A8.1% 8.3%
Net Income ($USD Millions)$53.856 $46.742 $50.523 $51.816

Segment/Portfolio growth and mix

Portfolio TopicQ2 2025Q3 2025
Acute therapies YoY growthMid-teens Mid-teens
Chronic therapies YoY growthMid-teens Low double digits
Chronic growth headwind from Stelara biosimilarsN/A-380 bps

KPIs and operating footprint

KPIQ2 2025Q3 2025
Nursing visits (Option Care)N/A~175,000
Share of visits in infusion suites (%)~35% ~34%
NavenHealth nursing visits~54,000 ~55,000
Infusion facilities (count)~170 ~175
Advanced practitioner-capable centers (count)N/A24

Guidance Changes

MetricPeriodPrevious Guidance (Q2)Current Guidance (Q3)Change
Net RevenueFY 2025$5.50–$5.65B $5.60–$5.65B Raised floor; midpoint higher
Adjusted EBITDAFY 2025$465–$475M $468–$473M Tightened range; midpoint higher
Adjusted Diluted EPSFY 2025$1.65–$1.72 $1.68–$1.72 Raised floor; midpoint higher
Cash Flow from OperationsFY 2025≥$320M ≥$320M Maintained
Effective Tax RateFY 202525%–27% 25%–27% Maintained
Net Interest ExpenseFY 2025~$55–$60M ~$55–$57M Narrowed/lowered top end

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Q2 2025Current Period (Q3 2025)Trend
AI/Tech efficiencyInvesting for future growth (guidance raised; buybacks) Ongoing investments incl. Palantir/RPA/ML Launched 3 new applications to streamline onboarding/staffing/deliveries Accelerating efficiency initiatives
Supply chain/inventoryN/AInventory up ~2 days; procurement strategies actively managed No material update; operations resilient Stable
Tariffs/MFN/regulatoryN/AMFN mechanics unclear; not material to 2025 Guidance incorporates tariffs/MFN; not material to 2025 Unchanged/contained
Product performance (Stelara/biosimilars)N/AStelara headwind ~$20M in Q2; FY $60–$70M likely high end Chronic growth -380 bps from biosimilars; FY ~upper end $70M; Q3/Q4 “a little over $20M” each Headwind intensifying; mitigated by portfolio breadth
Acute growth/competitionN/AMid-teens growth; competitor exits; comps tougher into Q4 Mid-teens growth; opportunity continues though pace to moderate Strong but normalizing
Advanced practitioner modelN/AExpansion underpinning higher-acuity care 175 facilities; 24 AP-capable centers; expansion planned Expanding footprint
Payer partnerships/site of careN/ADeeper engagements; site-of-care initiatives Expanded bed day management and site-of-care programs Deepening partnerships
Capital allocationRepurchased ~$100M Repurchased ~$50M Repurchased ~$62.5M; term loan refi (+$50M liquidity) Consistent buybacks; enhanced flexibility

Management Commentary

  • CEO: “We are well positioned for success as we continue to navigate a dynamic regulatory environment, changing competitive landscapes, and our evolving portfolio of therapies” .
  • CEO: “We have raised the midpoints of our full year revenue, adjusted EBITDA, and adjusted EPS guidance, which reflects our continued confidence in our platform and the execution by our team” .
  • CFO: Chronic growth “negatively impacted 380 basis points from the additional adoption of Stelara biosimilars… Gross margin rate was also negatively impacted by the shifting Stelara dynamics as well as the impact from lower margin, limited distribution, and rare and orphan therapies” .
  • CFO: “We also continued to invest in technology, artificial intelligence, and advanced analytics… launched three new enhanced applications… drive efficiencies in our patient onboarding process… staffing, utilization, and deliveries” .
  • CEO: Advanced practitioner model “expands access to a broader set of patients… oversee higher acuity patients… part of our comprehensive strategy” .

Q&A Highlights

  • Stelara/biosimilar impact: Management now expects FY25 headwind at ~upper end of $65–$70M; Q3 and Q4 impacts each a “little over $20M”; biosimilar conversion mainly a revenue event with uncertain margin outcomes by molecule .
  • Acute opportunity: Ongoing share capture from select competitor exits, likely at a slower pace into 2026; payer conversations emphasize fair value extraction and total cost-of-care programs (bed day management, site of care) .
  • G&A dynamics: ~10% YoY increase driven by debt refi noise (~1pt), Intramed Plus cost layering, normalization of variable comp, and tech investments (Palantir, RPA/ML) .
  • Advanced practitioner footprint: 175 infusion facilities; 24 AP-capable centers; planned expansion via both existing infrastructure and greenfield markets; enables higher-acuity care and broader access .
  • Capital deployment: Prioritize organic/tech investments and strategic tuck-ins/adjacencies; buybacks remain a tool but rank after growth investments; leverage at ~1.9x with refi-enhanced liquidity .

Estimates Context

  • S&P Global consensus estimates for Q1–Q3 2025 (revenue, EPS, EBITDA) were unavailable via our feed at the time of analysis; therefore, we cannot assess beat/miss versus Wall Street averages (values unavailable; consensus from S&P Global was not returned).

Where estimates may need to adjust:

  • Raised FY25 ranges (revenue, EBITDA, EPS) and execution through Q3 suggest potential upward adjustments to Street models’ midpoints, though chronic headwinds and mix pressure should temper margin assumptions .

Key Takeaways for Investors

  • Balanced top-line growth continued despite chronic portfolio headwinds; acute remains a growth engine supported by national scale and local responsiveness .
  • Guidance midpoints for FY25 were raised/tightened, signaling confidence in execution and pipeline, while regulatory/tariff risks are modeled as immaterial in 2025 .
  • Margin mix pressure (Stelara/rare-orphan/limited distribution) persists, but efficiency and tech initiatives (new apps) plus suite utilization and AP model should support EBITDA margin durability (~8.3% in Q3) .
  • Stelara headwind is sizable (~$70M FY25) and biosimilar conversion adds revenue drag; portfolio breadth and acute momentum mitigate impact—watch conversion trajectory into 2026 .
  • Capital allocation remains shareholder-friendly and growth-focused (refi lowers interest, adds $50M liquidity; leverage ~1.9x; buybacks $62.5M in Q3), providing flexibility for tuck-ins and internal investments .
  • Payer partnerships deepen via site-of-care and bed-day programs—key to sustaining share gains and negotiating fair value amidst MLR pressures .
  • Near-term trading: Guidance raise and acute strength are positives; caution on margin mix and biosimilar conversion pace. Medium-term: AP model/suite utilization and technology leverage underpin scalable growth; monitoring 2026 biosimilar and next-gen CID therapy uptake is critical .