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    Option Care Health (OPCH)

    OPCH Q4 2024: $500M Buyback to Offset $60M STELARA Headwind

    Reported on Jun 8, 2025 (Before Market Open)
    Pre-Earnings Price$32.63Last close (Feb 25, 2025)
    Post-Earnings Price$31.44Open (Feb 26, 2025)
    Price Change
    $-1.19(-3.65%)
    • Easing Supply Chain Constraints: Management highlighted that supply chain issues have improved significantly, allowing the company to onboard new patients without capacity constraints, which supports sustainable revenue growth going forward.
    • Strategic Acquisitions and Expanded Capabilities: The acquisition of Intramed Plus expands the advanced practitioner model and regional footprint, positioning the company to leverage its integrated care network and capture additional market share.
    • Disciplined Capital Deployment: With robust free cash flow and a new $500 million share repurchase authorization, management demonstrated a commitment to deploying capital efficiently—whether through further M&A or buybacks—to enhance adjusted EPS and drive long-term shareholder value.
    • STELARA Headwinds: The company projected a $60–70 million gross profit headwind from STELARA due to deteriorating economics, which could pressure overall margins if trends persist.
    • Acquisition Integration Risk: The recent Intramed Plus acquisition, although strategic, introduces uncertainty around realizing expected margin improvements, with inherent risks in integrating a business that historically had mid-teen EBITDA margins.
    • Seasonality and Operational Pressure: Discussions highlighted typical Q1 seasonality challenges and ongoing operational pressures (e.g., managing supply chain and labor costs), which could negatively affect near-term performance.
    1. Adjusted EPS
      Q: EPS growth driver long-term?
      A: Management stressed that share repurchases and accretive acquisitions will drive adjusted EPS to outpace EBITDA growth—even with a $60–$70M STELARA headwind—supporting high single-digit revenue and low double-digit EBITDA growth over time.

    2. Intramed Margins
      Q: What EBITDA margin for Intramed?
      A: They expect Intramed, acquired at a mid-teen multiple, to achieve low double-digit EBITDA margins post-integration, thanks to cost synergies and procurement improvements.

    3. M&A Strategy
      Q: How will M&A target assets?
      A: The team is pursuing a disciplined, unlimited acquisition strategy, seeking assets with sustainable strategic value that complement share repurchases to further strengthen the balance sheet.

    4. Acute Operations
      Q: How are acute therapy trends?
      A: After early supply chain challenges eased, acute therapy growth is now returning to high single-digit gains with a modest Q1 seasonal step-down expected as operations normalize.

    5. Labor Dynamics
      Q: Impact on labor costs?
      A: Despite market pressures, proactive staffing and robust recruitment have kept labor challenges in check, ensuring capacity can expand to meet growing demand.

    6. Payer Negotiations
      Q: Do payer exits affect chronic deals?
      A: The company’s broad, integrated portfolio continues to deliver value to payers, keeping chronic care contracts stable despite shifts in the acute market.

    7. Pharmacy Expansion
      Q: Role of new pharmacies?
      A: Opening 2 state‑of‑the‑art pharmacies in New York and Tampa enhances local responsiveness and expands capacity in strategic markets for future growth.

    8. In‑Suite Utilization
      Q: What’s the infusion suite trend?
      A: Nursing visits in infusion suites have more than doubled over four years—now exceeding 33%—which drives over 20% improvement in clinical labor productivity.

    9. Advanced Model
      Q: Purpose of advanced practitioner clinics?
      A: With about 15 sites already in operation, the advanced practitioner model broadens clinical capabilities and market access, complementing traditional infusion services.

    10. SG&A Investments
      Q: How is SG&A evolving?
      A: SG&A expenses dropped to 12.2% of revenue in Q4, with targeted investments in technology, commercialization, and operational support to drive efficiency and growth.

    11. VYJUVEK Economics
      Q: How are VYJUVEK unit economics?
      A: VYJUVEK remains a clinical success with consistent mid-single digit gross margins, and its unit economics are expected to remain stable as the therapy matures.

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