Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 23, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-11993 | |
Entity Registrant Name | OPTION CARE HEALTH, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 05-0489664 | |
Entity Address, Address Line One | 3000 Lakeside Dr. | |
Entity Address, Address Line Two | Suite 300N, | |
Entity Address, City or Town | Bannockburn, | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60015 | |
City Area Code | 312 | |
Local Phone Number | 940-2443 | |
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Trading Symbol | OPCH | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 177,130,539 | |
Entity Central Index Key | 0001014739 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 386,489 | $ 294,186 |
Accounts receivable, net | 382,957 | 377,542 |
Inventories | 251,366 | 224,281 |
Prepaid expenses and other current assets | 95,473 | 98,330 |
Total current assets | 1,116,285 | 994,339 |
NONCURRENT ASSETS: | ||
Property and equipment, net | 107,960 | 108,321 |
Operating lease right-of-use asset | 83,732 | 72,424 |
Intangible assets, net | 20,868 | 22,371 |
Referral sources, net | 323,126 | 341,744 |
Goodwill | 1,540,246 | 1,533,424 |
Other noncurrent assets | 51,399 | 40,313 |
Total noncurrent assets | 2,127,331 | 2,118,597 |
TOTAL ASSETS | 3,243,616 | 3,112,936 |
CURRENT LIABILITIES: | ||
Accounts payable | 429,536 | 378,763 |
Accrued compensation and employee benefits | 81,159 | 76,906 |
Accrued expenses and other current liabilities | 88,921 | 84,302 |
Current portion of operating lease liability | 18,468 | 19,380 |
Current portion of long-term debt | 6,000 | 6,000 |
Total current liabilities | 624,084 | 565,351 |
NONCURRENT LIABILITIES: | ||
Long-term debt, net of discount, deferred financing costs and current portion | 1,057,016 | 1,058,204 |
Operating lease liability, net of current portion | 85,423 | 71,441 |
Deferred income taxes | 33,921 | 22,154 |
Other noncurrent liabilities | 3,089 | 9,683 |
Total noncurrent liabilities | 1,179,449 | 1,161,482 |
Total liabilities | 1,803,533 | 1,726,833 |
STOCKHOLDERS’ EQUITY: | ||
Preferred stock; $0.0001 par value; 12,500,000 shares authorized, no shares outstanding as of September 30, 2023 and December 31, 2022 | 0 | 0 |
Common stock; $0.0001 par value: 250,000,000 shares authorized, 182,901,785 shares issued and 177,129,378 shares outstanding as of September 30, 2023; 182,341,420 shares issued and 181,957,698 shares outstanding as of December 31, 2022 | 18 | 18 |
Treasury stock; 5,772,407 and 383,722 shares outstanding, at cost, as of September 30, 2023 and December 31, 2022, respectively | (179,205) | (2,403) |
Paid-in capital | 1,197,874 | 1,176,906 |
Retained earnings | 400,336 | 190,423 |
Accumulated other comprehensive income | 21,060 | 21,159 |
Total stockholders’ equity | 1,440,083 | 1,386,103 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 3,243,616 | $ 3,112,936 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 12,500,000 | 12,500,000 |
Preferred stock, shares, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares, issued (in shares) | 182,901,785 | 182,341,420 |
Common stock, shares, outstanding (in shares) | 177,129,378 | 181,957,698 |
Treasury stock, at cost (in shares) | 5,772,407 | 383,722 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
NET REVENUE | $ 1,093,014 | $ 1,020,918 | $ 3,177,934 | $ 2,917,522 |
COST OF REVENUE | 838,748 | 802,917 | 2,443,834 | 2,281,685 |
GROSS PROFIT | 254,266 | 218,001 | 734,100 | 635,837 |
OPERATING COSTS AND EXPENSES: | ||||
Selling, general and administrative expenses | 158,214 | 142,015 | 459,644 | 417,771 |
Depreciation and amortization expense | 15,005 | 15,268 | 44,417 | 46,027 |
Total operating expenses | 173,219 | 157,283 | 504,061 | 463,798 |
OPERATING INCOME | 81,047 | 60,718 | 230,039 | 172,039 |
OTHER INCOME (EXPENSE): | ||||
Interest expense, net | (11,786) | (13,997) | (38,816) | (39,008) |
Equity in earnings of joint ventures | 1,273 | 1,472 | 4,107 | 4,065 |
Other, net | (449) | 3,888 | 84,487 | 3,891 |
Total other (expense) income | (10,962) | (8,637) | 49,778 | (31,052) |
INCOME BEFORE INCOME TAXES | 70,085 | 52,081 | 279,817 | 140,987 |
INCOME TAX EXPENSE | 13,783 | 13,258 | 69,904 | 37,960 |
NET INCOME | 56,302 | 38,823 | 209,913 | 103,027 |
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: | ||||
Change in unrealized gain (loss) on cash flow hedges, net of income tax benefit (expense) of $8, $(1,398), $57 and $(5,917), respectively | 53 | 9,255 | (99) | 24,962 |
OTHER COMPREHENSIVE INCOME (LOSS) | 53 | 9,255 | (99) | 24,962 |
NET COMPREHENSIVE INCOME | $ 56,355 | $ 48,078 | $ 209,814 | $ 127,989 |
EARNINGS PER COMMON SHARE: | ||||
Earnings per share, basic (in dollars per share) | $ 0.31 | $ 0.21 | $ 1.17 | $ 0.57 |
Earnings per share, diluted (in dollars per share) | $ 0.31 | $ 0.21 | $ 1.16 | $ 0.57 |
Weighted average common shares outstanding, basic (in shares) | 178,826 | 181,884 | 179,956 | 180,829 |
Weighted average common shares outstanding, diluted (in shares) | 180,528 | 183,022 | 181,286 | 181,760 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Change in unrealized gain (loss) on cash flow hedges, net of income tax (expense) benefit | $ 8 | $ (1,398) | $ 57 | $ (5,917) |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 209,913 | $ 103,027 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation and amortization expense | 46,423 | 49,723 |
Non-cash operating lease costs | 14,610 | 14,451 |
Deferred income taxes - net | 11,767 | 37,631 |
Amortization of deferred financing costs | 3,312 | 3,206 |
Equity in earnings of joint ventures | (4,107) | (4,065) |
Stock-based incentive compensation expense | 22,908 | 12,581 |
Capital distribution from equity method investments | 4,000 | 2,500 |
Other adjustments | 1,769 | 695 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (5,075) | (23,153) |
Inventories | (28,362) | (52,749) |
Prepaid expenses and other current assets | 3,197 | (10,335) |
Accounts payable | 50,726 | 129,859 |
Accrued compensation and employee benefits | 4,197 | (26,711) |
Accrued expenses and other current liabilities | 9,829 | 19,495 |
Operating lease liabilities | (13,019) | (15,372) |
Other noncurrent assets and liabilities | (11,762) | (16,691) |
Net cash provided by operating activities | 320,326 | 224,092 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisition of property and equipment | (21,981) | (17,111) |
Business acquisitions, net of cash acquired | (12,855) | (87,315) |
Other investing activities | (5,889) | 0 |
Net cash used in investing activities | (40,725) | (104,426) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Exercise of stock options, vesting of restricted stock, and related tax withholdings | (1,940) | (37) |
Proceeds from warrant exercises | 0 | 20,916 |
Repayments of debt principal | (4,500) | (4,500) |
Purchase of company stock | (175,108) | 0 |
Other financing activities | (5,750) | 0 |
Net cash (used in) provided by financing activities | (187,298) | 16,379 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 92,303 | 136,045 |
Cash and cash equivalents - beginning of the period | 294,186 | 119,423 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 386,489 | 255,468 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 46,377 | 29,578 |
Cash paid for income taxes | 53,699 | 6,690 |
Cash paid for operating leases | $ 20,272 | $ 18,964 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Preferred Stock | Common Stock | Treasury Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Equity, beginning balance at Dec. 31, 2021 | $ 1,175,886 | $ 0 | $ 18 | $ (2,403) | $ 1,138,855 | $ 39,867 | $ (451) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options, vesting of restricted stock, and related tax withholdings | 355 | 355 | |||||
Stock-based incentive compensation | 4,178 | 4,178 | |||||
Net income | 30,275 | 30,275 | |||||
Other comprehensive income (loss) | 11,070 | 11,070 | |||||
Equity, ending balance at Mar. 31, 2022 | 1,221,764 | 0 | 18 | (2,403) | 1,143,388 | 70,142 | 10,619 |
Equity, beginning balance at Dec. 31, 2021 | 1,175,886 | 0 | 18 | (2,403) | 1,138,855 | 39,867 | (451) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 103,027 | ||||||
Other comprehensive income (loss) | 24,962 | ||||||
Equity, ending balance at Sep. 30, 2022 | 1,337,335 | 0 | 18 | (2,403) | 1,172,315 | 142,894 | 24,511 |
Equity, beginning balance at Mar. 31, 2022 | 1,221,764 | 0 | 18 | (2,403) | 1,143,388 | 70,142 | 10,619 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options, vesting of restricted stock, and related tax withholdings | 168 | 168 | |||||
Exercise of warrants | 20,098 | 20,098 | |||||
Stock-based incentive compensation | 4,398 | 4,398 | |||||
Net income | 33,929 | 33,929 | |||||
Other comprehensive income (loss) | 4,637 | 4,637 | |||||
Equity, ending balance at Jun. 30, 2022 | 1,284,994 | 0 | 18 | (2,403) | 1,168,052 | 104,071 | 15,256 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options, vesting of restricted stock, and related tax withholdings | (560) | (560) | |||||
Exercise of warrants | 818 | 818 | |||||
Stock-based incentive compensation | 4,005 | 4,005 | |||||
Net income | 38,823 | 38,823 | |||||
Other comprehensive income (loss) | 9,255 | 9,255 | |||||
Equity, ending balance at Sep. 30, 2022 | 1,337,335 | 0 | 18 | (2,403) | 1,172,315 | 142,894 | 24,511 |
Equity, beginning balance at Dec. 31, 2022 | 1,386,103 | 0 | 18 | (2,403) | 1,176,906 | 190,423 | 21,159 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options, vesting of restricted stock, and related tax withholdings | (1,902) | (1,902) | |||||
Stock-based incentive compensation | 5,988 | 5,988 | |||||
Purchase of company stock | (75,735) | (75,735) | |||||
Net income | 39,208 | 39,208 | |||||
Other comprehensive income (loss) | (3,443) | (3,443) | |||||
Equity, ending balance at Mar. 31, 2023 | 1,350,219 | 0 | 18 | (78,138) | 1,180,992 | 229,631 | 17,716 |
Equity, beginning balance at Dec. 31, 2022 | 1,386,103 | 0 | 18 | (2,403) | 1,176,906 | 190,423 | 21,159 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 209,913 | ||||||
Other comprehensive income (loss) | (99) | ||||||
Equity, ending balance at Sep. 30, 2023 | 1,440,083 | 0 | 18 | (179,205) | 1,197,874 | 400,336 | 21,060 |
Equity, beginning balance at Mar. 31, 2023 | 1,350,219 | 0 | 18 | (78,138) | 1,180,992 | 229,631 | 17,716 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options, vesting of restricted stock, and related tax withholdings | (247) | (247) | |||||
Stock-based incentive compensation | 7,685 | 7,685 | |||||
Purchase of company stock, and related tax effects | 32 | 32 | |||||
Net income | 114,403 | 114,403 | |||||
Other comprehensive income (loss) | 3,291 | 3,291 | |||||
Equity, ending balance at Jun. 30, 2023 | 1,475,383 | 0 | 18 | (78,106) | 1,188,430 | 344,034 | 21,007 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options, vesting of restricted stock, and related tax withholdings | 209 | 209 | |||||
Stock-based incentive compensation | 9,235 | 9,235 | |||||
Purchase of company stock, and related tax effects | (101,099) | (101,099) | |||||
Net income | 56,302 | 56,302 | |||||
Other comprehensive income (loss) | 53 | 53 | |||||
Equity, ending balance at Sep. 30, 2023 | $ 1,440,083 | $ 0 | $ 18 | $ (179,205) | $ 1,197,874 | $ 400,336 | $ 21,060 |
NATURE OF OPERATIONS AND PRESEN
NATURE OF OPERATIONS AND PRESENTATION OF FINANCIAL STATEMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS AND PRESENTATION OF FINANCIAL STATEMENTS | NATURE OF OPERATIONS AND PRESENTATION OF FINANCIAL STATEMENTS Corporate Organization and Business — HC Group Holdings II, Inc. (“HC II”) was incorporated under the laws of the State of Delaware on January 7, 2015, with its sole shareholder being HC Group Holdings I, LLC. (“HC I”). On April 7, 2015, HC I and HC II collectively acquired Walgreens Infusion Services, Inc. and its subsidiaries from Walgreen Co., and the business was rebranded as Option Care, Inc. (“Option Care”). On March 14, 2019, HC I and HC II entered into a definitive agreement (the “Merger Agreement”) to merge with and into a wholly-owned subsidiary of BioScrip, Inc. (“BioScrip”) (the “Merger”), a national provider of infusion and home care management solutions, which was completed on August 6, 2019 (the “Merger Date”). Following the close of the transaction, BioScrip was rebranded as Option Care Health. The combined Company’s stock is listed on the Nasdaq Global Select Market as of September 30, 2023. During the nine months ended September 30, 2023, HC I completed sales of 23,771,926 shares of common stock. In addition, the Company repurchased 2,475,166 shares from HC I on March 3, 2023 under the Company’s share repurchase program. See Note 15, Stockholders’ Equity , for further discussion of the Company’s share repurchase program. As of September 30, 2023, HC I no longer holds shares of the Company’s common stock. Option Care Health, and its wholly-owned subsidiaries, provides infusion therapy and other ancillary health care services through a national network of 93 full service pharmacies and 81 stand-alone ambulatory infusion suites. 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. The Company operates in one segment, infusion services. Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States and contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for interim financial reporting. The results of operations for the interim periods presented are not necessarily indicative of the results of operations for the entire year. These unaudited condensed consolidated financial statements do not include all of the information and notes to the financial statements required by GAAP for complete financial statements and should be read in conjunction with the 2022 audited consolidated financial statements, including the notes thereto, as presented in our Form 10-K. Principles of Consolidation — The Company’s unaudited condensed consolidated financial statements include the accounts of Option Care Health, Inc. and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation. The Company has investments in companies that are 50% owned and are accounted for as equity-method investments. The Company’s share of earnings from equity-method investments is included in the line entitled “Equity in earnings of joint ventures” in the unaudited condensed consolidated statements of comprehensive income. See Equity-Method Investments within Note 2, Summary of Significant Accounting Policies , for further discussion of the Company’s equity-method investments. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of September 30, 2023, cash equivalents consisted of money market funds. Prepaid Expenses and Other Current Assets — Included in prepaid expenses and other current assets are rebates receivable from pharmaceutical and medical supply manufacturers of $51.0 million and $53.4 million as of September 30, 2023 and December 31, 2022, respectively. Equity-Method Investments — The Company’s investments in certain unconsolidated entities are accounted for under the equity method. The balance of these investments is included in other noncurrent assets in the accompanying condensed consolidated balance sheets. As of September 30, 2023 and December 31, 2022, the balance of the investments was $19.5 million and $19.4 million, respectively. The balance of these investments is increased to reflect the Company’s capital contributions and equity in earnings of the investees. The balance of these investments is decreased to reflect the Company’s equity in losses of the investees and for distributions received that are not in excess of the carrying amount of the investments. The Company’s proportionate share of earnings or losses of the investees is recorded in equity in earnings of joint ventures in the accompanying unaudited condensed consolidated statements of comprehensive income. The Company’s proportionate share of earnings was $1.3 million and $4.1 million for the three and nine months ended September 30, 2023, respectively. The Company’s proportionate share of earnings was $1.5 million and $4.1 million for the three and nine months ended September 30, 2022, respectively. Distributions from the investees are treated as cash inflows from operating activities in the unaudited condensed consolidated statements of cash flows. During the three and nine months ended September 30, 2023, the Company received distributions from the investees of $1.5 million and $4.0 million, respectively. During the three and nine months ended September 30, 2022, the Company received distributions from the investees of $1.5 million and $2.5 million, respectively. See Note 16, Related-Party Transactions , for discussion of related-party transactions with these investees. Concentrations of Business Risk — The Company generates revenue from managed care contracts and other agreements with commercial third-party payers. Revenue related to the Company’s largest payer was approximately 14% for the three and nine months ended September 30, 2023. Revenue related to the Company’s largest payer was approximately 14% and 15% for the three and nine months ended September 30, 2022, respectively. There were no other managed care contracts that represent greater than 10% of revenue for the periods presented. For the three and nine months ended September 30, 2023, approximately 11% and 12%, respectively, of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid. For the three and nine months ended September 30, 2022, approximately 12% of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid. As of September 30, 2023 and December 31, 2022, approximately 11% and 13%, respectively, of the Company’s accounts receivable was related to these programs. Governmental programs pay for services based on fee schedules and rates that are determined by the related governmental agency. Laws and regulations pertaining to government programs are complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change in the near term. The Company does not require its patients or other payers to carry collateral for any amounts owed for goods or services provided. Other than as discussed above, concentration of credit risk relating to trade accounts receivable is limited due to the Company’s diversity of patients and payers. Further, the Company generally does not provide charity care; however, Option Care Health offers a financial assistance program for patients that meet certain defined hardship criteria. For the three and nine months ended September 30, 2023, approximately 73% of the Company’s pharmaceutical and medical supply purchases were from four vendors. For the three and nine months ended September 30, 2022, approximately 74% and 73%, respectively, of the Company’s pharmaceutical and medical supply purchases were from four vendors. Although there are a limited number of suppliers, the Company believes that other vendors could provide similar products on comparable terms. However, a change in suppliers could cause delays in service delivery and possible losses in revenue, which could adversely affect the Company’s financial condition or operating results. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Amedisys, Inc. — On May 3, 2023, the Company entered into a definitive merger agreement (the “Merger Agreement”) with Amedisys, Inc. (“Amedisys”), a leading provider of healthcare in home health and hospice settings. Under the terms of the merger agreement, the Company would issue new shares of its common stock to Amedisys’s stockholders, which would result in the Company’s stockholders holding approximately 64.5% of the combined company. On June 26, 2023, the Company entered into an agreement to terminate the Merger Agreement (the “Mutual Termination Agreement”). Under the terms of the Mutual Termination Agreement, the Company received a payment of $106.0 million in cash on behalf of Amedisys (“Termination Fee”). The Termination Fee is included in Other, net in the unaudited condensed consolidated statements of comprehensive income and in Net cash provided by operating activities in the unaudited condensed consolidated statements of cash flows. During the nine months ended September 30, 2023, the Company incurred $21.1 million in merger-related expenses, which are included in Other, net in the unaudited condensed consolidated statements of comprehensive income and in Net cash provided by operating activities in the unaudited condensed consolidated statements of cash flows. Revitalized, LLC — In May 2023, pursuant to the equity purchase agreement dated May 1, 2023, the Company completed the acquisition of 100% of the membership interests in Revitalized, LLC (“Revitalized”) for a purchase price, net of cash acquired, of $12.5 million, inclusive of a $0.4 million non-cash receivable adjustment, which primarily consisted of $6.7 million of goodwill and $5.5 million of intangible assets. Rochester Home Infusion, Inc. — In August 2022, pursuant to the stock purchase agreement dated June 10, 2022, the Company completed the acquisition of 100% of the equity interests in Rochester Home Infusion, Inc. (“RHI”) for a purchase price, net of cash acquired, of $27.4 million. The allocation of the purchase price of RHI was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations , with the total purchase price being allocated to the assets and liabilities acquired based on the relative fair value of each asset and liability. The following is a final allocation of the consideration transferred to acquired identifiable assets and assumed liabilities, net of cash acquired (in thousands): Amount Accounts receivable $ 686 Intangible assets 5,449 Other assets 394 Accounts payable and other liabilities (434) Fair value identifiable assets and liabilities 6,095 Goodwill (1) 21,323 Cash acquired 201 Purchase price 27,619 Less: cash acquired (201) Purchase price, net of cash acquired $ 27,418 (1) Goodwill is attributable to cost synergies from procurement and operational efficiencies and elimination of duplicative administrative costs. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE The following table sets forth the net revenue earned by category of payer for the three and nine months ended September 30, 2023 and 2022 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Commercial payers $ 957,601 $ 888,162 $ 2,765,513 $ 2,526,354 Government payers 124,122 122,793 370,648 357,383 Patients 11,291 9,963 41,773 33,785 Net revenue $ 1,093,014 $ 1,020,918 $ 3,177,934 $ 2,917,522 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES During the three months ended September 30, 2023, the Company recorded tax expense of $13.8 million. During the nine months ended September 30, 2023, the Company recorded tax expense of $69.9 million, which includes $22.1 million of tax expense related to the Termination Fee payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses. The tax expense for the three and nine months ended September 30, 2023 represents an effective tax rate of 19.7% and 25.0%, respectively. The variance in the Company’s effective tax rate of 19.7% and 25.0% for the three and nine months ended September 30, 2023, respectively, compared to the federal statutory rate of 21%, is primarily attributable to the difference between federal and state tax rates, various non-deductible expenses, and a change in state valuation allowance. During the three months ended September 30, 2023, the Company released $5.8 million of state valuation allowance. During the three and nine months ended September 30, 2022, the Company recorded tax expense of $13.3 million and $38.0 million, respectively, which represents an effective tax rate of 25.5% and 26.9%, respectively. The variance in the Company’s effective tax rate of 25.5% and 26.9% for the three and nine months ended September 30, 2022, compared to the federal statutory rate of 21%, is primarily attributable to current and deferred state taxes as well as various non-deductible expenses. The Company maintains a valuation allowance of $7.2 million against certain state net operating losses. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. In making this assessment, the Company considers the scheduled reversal of deferred tax liabilities, including the effect in available carryback and carryforward periods, projected taxable income, and tax-planning strategies. On a quarterly basis, the Company evaluates all positive and negative evidence in determining if the valuation allowance is fairly stated. The Company’s tax expense for the three and nine months ended September 30, 2023 of $13.8 million and $69.9 million, respectively, consists of quarterly federal and state tax liabilities as well as recognized deferred federal and state tax expense. The Company’s tax expense for the three and nine months ended September 30, 2022 of $13.3 million and $38.0 million, respectively, consists of quarterly tax liabilities attributable to specific state taxing authorities as well as recognized deferred federal and state tax expense. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The Company presents basic and diluted earnings per share for its common stock. Basic earnings per share is calculated by dividing the net income of the Company by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is determined by adjusting the profit or loss and the weighted average number of shares of common stock outstanding for the effects of all potentially dilutive securities. The earnings are used as the basis of determining whether the inclusion of common stock equivalents would be anti-dilutive. The computation of diluted shares for the three and nine months ended September 30, 2023 and 2022 includes the effect of shares that would be issued in connection with warrants, stock options, restricted stock awards and performance stock unit awards, as these common stock equivalents are dilutive to the earnings per share recorded in those periods. The following table presents the Company’s common stock equivalents that were excluded from the calculation of earnings per share as they would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock option awards 984,567 520,944 1,180,376 794,887 Restricted stock awards 16,564 13,561 569,831 476,329 Performance stock unit awards — — 288,680 — The following table presents the Company’s basic earnings per share and shares outstanding (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income (1) $ 56,302 $ 38,823 $ 209,913 $ 103,027 Denominator: Weighted average number of common shares outstanding 178,826 181,884 179,956 180,829 Earnings per common share: Earnings per common share, basic $ 0.31 $ 0.21 $ 1.17 $ 0.57 (1) Net income for the nine months ended September 30, 2023 includes $62.8 million related to the termination payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses and taxes. See Note 3, Business Combinations , for further discussion. The following table presents the Company’s diluted earnings per share and shares outstanding (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income (1) $ 56,302 $ 38,823 $ 209,913 $ 103,027 Denominator: Weighted average number of common shares outstanding 178,826 181,884 179,956 180,829 Effect of dilutive securities 1,702 1,138 1,330 931 Weighted average number of common shares outstanding, diluted 180,528 183,022 181,286 181,760 Earnings per common share: Earnings per common share, diluted $ 0.31 $ 0.21 $ 1.16 $ 0.57 (1) Net income for the nine months ended September 30, 2023 includes $62.8 million related to the termination payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses and taxes. See Note 3, Business Combinations , for further discussion. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
LEASES | LEASES During the three and nine months ended September 30, 2023, the Company incurred operating lease expenses of $7.8 million and $22.3 million, respectively, including short-term lease expenses, which were included as a component of selling, general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income. During the three and nine months ended September 30, 2022 , the Company incurred operating lease expenses of $7.8 million and $22.7 million, respectively, including short-term lease expenses, which were included as a component of selling, general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income. As of September 30, 2023, the weighted-average remaining lease term was 6.9 years and the weighted-average discount rate was 6.04%. Operating leases mature as follows (in thousands): Fiscal Year Ended December 31, Minimum Payments 2023 $ 9,410 2024 23,564 2025 21,350 2026 18,490 2027 15,315 Thereafter 44,262 Total lease payments 132,391 Less: interest (28,500) Present value of lease liabilities $ 103,891 During the nine months ended September 30, 2023, the Company commenced new leases, extensions and amendments, resulting in non-cash operating activities in the unaudited condensed consolidated statements of cash flow o f $26.1 million re lated to increases in the operating lease right-of-use assets and operating lease liabilities. During the nine months ended September 30, 2022, the Company commenced new leases, extensions and amendments, resulting in non-cash operating activities in the unaudited condensed consolidated statements of cash flow of $13.6 million related to increases in the operating lease right-of-use assets and operating lease liabilities. As of September 30, 2023, the Company did not have any significant operating or financing leases that had not yet commenced. |
LEASES | LEASES During the three and nine months ended September 30, 2023, the Company incurred operating lease expenses of $7.8 million and $22.3 million, respectively, including short-term lease expenses, which were included as a component of selling, general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income. During the three and nine months ended September 30, 2022 , the Company incurred operating lease expenses of $7.8 million and $22.7 million, respectively, including short-term lease expenses, which were included as a component of selling, general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income. As of September 30, 2023, the weighted-average remaining lease term was 6.9 years and the weighted-average discount rate was 6.04%. Operating leases mature as follows (in thousands): Fiscal Year Ended December 31, Minimum Payments 2023 $ 9,410 2024 23,564 2025 21,350 2026 18,490 2027 15,315 Thereafter 44,262 Total lease payments 132,391 Less: interest (28,500) Present value of lease liabilities $ 103,891 During the nine months ended September 30, 2023, the Company commenced new leases, extensions and amendments, resulting in non-cash operating activities in the unaudited condensed consolidated statements of cash flow o f $26.1 million re lated to increases in the operating lease right-of-use assets and operating lease liabilities. During the nine months ended September 30, 2022, the Company commenced new leases, extensions and amendments, resulting in non-cash operating activities in the unaudited condensed consolidated statements of cash flow of $13.6 million related to increases in the operating lease right-of-use assets and operating lease liabilities. As of September 30, 2023, the Company did not have any significant operating or financing leases that had not yet commenced. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment was as follows as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Infusion pumps $ 37,027 $ 34,942 Equipment, furniture and other 35,955 31,929 Leasehold improvements 101,283 99,085 Computer software, purchased and internally developed 47,878 34,922 Assets under development 26,915 29,411 249,058 230,289 Less: accumulated depreciation (141,098) (121,968) Property and equipment, net $ 107,960 $ 108,321 Depreciation expense is recorded within cost of revenue and operating expenses within the unaudited condensed consolidated statements of comprehensive income, depending on the nature of the underlying fixed assets. The depreciation expense included in cost of revenue relates to revenue-generating assets, such as infusion pumps. The depreciation expense included in operating expenses is related to infrastructure items, such as furniture, computer and office equipment, and leasehold improvements. The following table presents the amount of depreciation expense recorded in cost of revenue and operating expenses for the three and nine months ended September 30, 2023 and 2022 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Depreciation expense in cost of revenue $ 616 $ 1,205 $ 2,006 $ 3,696 Depreciation expense in operating expenses 6,365 6,778 18,665 21,337 Total depreciation expense $ 6,981 $ 7,983 $ 20,671 $ 25,033 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Changes in the carrying amount of goodwill consist of the following activity for the three and nine months ended September 30, 2023 (in thousands): Balance at December 31, 2022 $ 1,533,424 Purchase accounting adjustments 145 Balance at March 31, 2023 $ 1,533,569 Acquisitions 6,998 Balance at June 30, 2023 $ 1,540,567 Purchase accounting adjustments (321) Balance at September 30, 2023 $ 1,540,246 The carrying amount and accumulated amortization of intangible assets consist of the following as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Gross intangible assets: Referral sources $ 514,388 $ 509,646 Trademarks/names 39,136 38,508 Other amortizable intangible assets 1,003 912 Total gross intangible assets 554,527 549,066 Accumulated amortization: Referral sources (191,262) (167,902) Trademarks/names (18,973) (16,901) Other amortizable intangible assets (298) (148) Total accumulated amortization (210,533) (184,951) Total intangible assets, net $ 343,994 $ 364,115 Amortization expense for intangible assets was $8.6 million and $25.6 million for the three and nine months ended September 30, 2023, respectively. Amortization expense for intangible assets was $8.4 million and $24.6 million for the three and nine months ended September 30, 2022, respectively. |
INDEBTEDNESS
INDEBTEDNESS | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
INDEBTEDNESS | INDEBTEDNESS Long-term debt consisted of the following as of September 30, 2023 (in thousands): Principal Amount Discount Debt Issuance Costs Net Balance Asset-based-lending (“ABL”) Facility $ — $ — $ — $ — First Lien Term Loan 589,500 (7,313) (10,149) 572,038 Senior Notes 500,000 — (9,022) 490,978 $ 1,089,500 $ (7,313) $ (19,171) 1,063,016 Less: current portion (6,000) Total long-term debt $ 1,057,016 Long-term debt consisted of the following as of December 31, 2022 (in thousands): Principal Amount Discount Debt Issuance Costs Net Balance ABL Facility $ — $ — $ — $ — First Lien Term Loan 594,000 (8,307) (11,529) 574,164 Senior Notes 500,000 — (9,960) 490,040 $ 1,094,000 $ (8,307) $ (21,489) 1,064,204 Less: current portion (6,000) Total long-term debt $ 1,058,204 Effective June 30, 2023, the Company entered into an agreement, dated as of June 8, 2023, to amend the First Lien Term Loan (the “First Lien Credit Agreement Amendment”) solely to replace London Interbank Offered Rate (“LIBOR”) and related definitions and provisions with Secured Overnight Financing Rate (“SOFR”) as the new reference rate. The Company elected an optional expedient allowed under ASC Topic 848 such that we will account for the modification as a continuation of the existing contract. The interest rate on the First Lien Term Loan was 8.20% and 6.82% as of September 30, 2023 and December 31, 2022, respectively. The weighted average interest rate incurred on the First Lien Term Loan was 8.11% and 7.71% for the three and nine months ended September 30, 2023, respectively. The weighted average interest rate incurred on the First Lien Term Loan was 4.94% and 3.90% for the three and nine months ended September 30, 2022, respectively. The interest rate on the Senior Notes was 4.375% as of September 30, 2023 and December 31, 2022. The weighted average interest rate incurred on the Senior Notes was 4.375% for the three and nine months ended September 30, 2023, respectively. The weighted average interest rate incurred on the Senior Notes was 4.375% for the three and nine months ended September 30, 2022, respectively. Long-term debt matures as follows (in thousands): Fiscal Year Ended December 31, Minimum Payments 2023 $ 1,500 2024 6,000 2025 6,000 2026 6,000 2027 6,000 Thereafter 1,064,000 Total $ 1,089,500 During the three and nine months ended September 30, 2023 and 2022, the Company engaged in hedging activities to limit its exposure to changes in interest rates. See Note 11, Derivative Instruments , for further discussion. The following table presents the estimated fair values of the Company’s debt obligations as of September 30, 2023 (in thousands): Financial Instrument Carrying Value as of September 30, 2023 Markets for Identical Item (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) First Lien Term Loan $ 572,037 $ — $ 591,740 $ — Senior Notes 490,979 — 430,000 — Total debt instruments $ 1,063,016 $ — $ 1,021,740 $ — See Note 12, Fair Value Measurements , for further discussion. Effective January 13, 2023, the Company entered into an agreement to amend the ABL Facility, to among other things, increase the amount of borrowing availability by $50.0 million to $225.0 million total borrowing availability and to replace LIBOR with SOFR as the new reference rate. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company uses derivative financial instruments for hedging and non-trading purposes to limit the Company’s exposure to increases in interest rates related to its variable interest rate debt. Use of derivative financial instruments in hedging programs subjects the Company to certain risks, such as market and credit risks. Market risk represents the possibility that the value of the derivative financial instrument will change. In a hedging relationship, the change in the value of the derivative financial instrument is offset to a great extent by the change in the value of the underlying hedged item. Credit risk related to a derivative financial instrument represents the possibility that the counterparty will not fulfill the terms of the contract. The notional, or contractual, amount of the Company’s derivative financial instruments is used to measure interest to be paid or received and does not represent the Company’s exposure due to credit risk. Credit risk is monitored through established approval procedures, including reviewing credit ratings when appropriate. In October 2021, the Company entered into an interest rate cap hedge with a notional amount of $300 million for a 5-year term beginning November 30, 2021. The hedge partially offsets risk associated with the First Lien Term Loan’s variable interest rate. The interest rate cap instrument perfectly offsets the terms of the interest rates associated with the variable interest rate of the First Lien Term Loan. As a result of the First Lien Credit Agreement Amendment, the Company elected an optional expedient allowed under ASC Topic 848 such that we will continue the hedging relationship for the interest rate cap hedge. The following table summarizes the amount and location of the Company’s derivative instruments in the condensed consolidated balance sheets (in thousands): Fair Value - Derivatives in Asset Position Derivative Balance Sheet Caption September 30, 2023 December 31, 2022 Interest rate cap designated as cash flow hedge Prepaid expenses and other current assets $ 5,927 $ 10,926 Interest rate cap designated as cash flow hedge Other noncurrent assets 22,185 17,342 Total derivative assets $ 28,112 $ 28,268 The gain (loss) associated with the change in the fair value of the effective portion of the hedging instrument is recorded in other comprehensive income (loss). The following table presents the pre-tax gain (loss) from derivative instruments recognized in other comprehensive income (loss) in the Company’s unaudited condensed consolidated statements of comprehensive income (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Derivative 2023 2022 2023 2022 Interest rate cap designated as cash flow hedge $ 45 $ 10,653 $ (156) $ 30,879 The following table presents the amount and location of pre-tax income (loss) recognized in the Company’s unaudited condensed consolidated statements of comprehensive income related to the Company’s derivative instruments (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Derivative Income Statement Caption 2023 2022 2023 2022 Interest rate cap designated as cash flow hedge Interest expense, net $ 2,931 $ (1,775) $ 8,002 $ (591) |
FAIR VALUE MEASURMENTS
FAIR VALUE MEASURMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value measurements are determined by maximizing the use of observable inputs and minimizing the use of unobservable inputs. The hierarchy places the highest priority on unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1 measurements) and gives the lowest priority to unobservable inputs (Level 3 measurements). The categories within the valuation hierarchy are described as follows: • Level 1 — Inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities. • Level 2 — Inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. • Level 3 — Inputs to the fair value measurement are unobservable inputs or valuation techniques. While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. First Lien Term Loan : The fair value of the First Lien Term Loan is derived from a broker quote on the loans in the syndication (Level 2 inputs). See Note 10, Indebtedness , for further discussion of the carrying amount and fair value of the First Lien Term Loan. Senior Notes: The fair value of the Senior Notes is derived from a broker quote (Level 2 inputs). See Note 10, Indebtedness , for further discussion of the carrying amount and fair value of the Senior Notes. Interest Rate Cap: The fair value of the interest rate cap is derived from the interest rates prevalent in the market and future expectations of those interest rates (Level 2 inputs). The Company determines the fair value of the investments based on quoted prices from third-party brokers. See Note 11, Derivative Instruments , for further discussion of the fair value of the interest rate cap. Money Market Funds: The fair value of the money market funds is derived from the closing price reported by the fund sponsor and classified as cash and cash equivalents on the Company’s condensed consolidated balance sheets (Level 1 inputs). There were no other material assets or liabilities measured at fair value at September 30, 2023 and December 31, 2022. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company is involved in legal proceedings and is subject to investigations, inspections, audits, inquiries, and similar actions by governmental authorities, arising in the normal course of the Company’s business. Some of these suits may purport or may be determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary damages, and may remain unresolved for several years. From time to time, the Company may also be involved in legal proceedings as a plaintiff involving antitrust, tax, contract, intellectual property, and other matters. Gain contingencies, if any, are recognized when they are realized. The results of legal proceedings are often uncertain and difficult to predict, and the costs incurred in litigation can be substantial, regardless of the outcome. The Company believes that its defenses and assertions in pending legal proceedings have merit and does not believe that any of these pending matters, after consideration of applicable reserves and rights to indemnification, will have a material adverse effect on the Company’s condensed consolidated balance sheets. However, substantial unanticipated verdicts, fines, and rulings may occur. As a result, the Company may from time to time incur judgments, enter into settlements, or revise expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on its results of operations in the period in which the amounts are accrued and/or its cash flows in the period in which the amounts are paid. |
STOCK-BASED INCENTIVE COMPENSAT
STOCK-BASED INCENTIVE COMPENSATION | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED INCENTIVE COMPENSATION | STOCK-BASED INCENTIVE COMPENSATIONEquity Incentive Plans — Under the Company’s 2018 Equity Incentive Plan (the “2018 Plan”), approved at the annual meeting by the BioScrip stockholders on May 3, 2018 and amended and restated on May 19, 2021, the Company may issue, among other things, incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, stock grants, and performance units to key employees and directors, resulting in a total of 9,101,734 shares of common stock authorized for issuance. The 2018 Plan is administered by the Company’s Compensation Committee, a standing committee of the Company’s Board of Directors. The Company had stock options, restricted stock units and performance stock units outstanding related to the 2018 Plan as of September 30, 2023 and 2022. During the three and nine months ended September 30, 2023, total stock-based incentive compensation expense recognized by the Company related to the 2018 Plan was $9.2 million and $22.9 million, respectively. During the three and nine months ended September 30, 2022, total stock-based incentive compensation expense recognized by the Company related to the 2018 Plan was $4.0 million and $12.6 million, respectively. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY 2017 Warrants — During the three and nine months ended September 30, 2023, warrant holders elected to exercise 188,350 warrants to purchase shares of common stock. During the three months ended September 30, 2022, warrant holders did not elect to exercise any warrants to purchase shares of common stock. During the nine months ended September 30, 2022, warrant holders elected to exercise 1,130,089 warrants to purchase shares of common stock. As of September 30, 2023 and December 31, 2022, the remaining warrant holders are entitled to purchase 51,838 and 240,188 shares of common stock, respectively. 2015 Warrants — During the three and nine months ended September 30, 2023, warrant holders exercised an immaterial number of warrants to purchase shares of common stock. During the three and nine months ended September 30, 2022, warrant holders elected to exercise 31,968 and 900,272 warrants to purchase shares of common stock, respectively. As of September 30, 2023 and December 31, 2022, the remaining warrant holders are entitled to purchase 13,892 and 15,231 shares of common stock, respectively. Share Repurchase Program — On February 20, 2023, the Company’s Board of Directors approved a share repurchase program of up to an aggregate $250.0 million of common stock of the Company. Under the share repurchase program, repurchases may occur in any number of methods depending on timing, market conditions, regulatory requirements, and other corporate considerations. The share repurchase program has no specified expiration date. During the three and nine months ended September 30, 2023, the Company purchased 2,913,520 and 5,388,686 shares of common stock for an average share price of $34.32 and $32.48, totaling $100.0 million and $175.0 million, respectively. All repurchased shares became treasury stock. As of September 30, 2023, the Company is authorized to repurchase up to a remaining $75.0 million of common stock of the Company. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONS Transactions with Equity-Method Investees — The Company provides management services to its joint ventures such as accounting, invoicing and collections in addition to day-to-day managerial support of the operations of the businesses. The Company recorded management fee income of $1.3 million and $3.9 million for the three and nine months ended September 30, 2023, respectively. The Company recorded management fee income of $1.1 million and $2.9 million for the three and nine months ended September 30, 2022, respectively. Management fees are recorded in net revenues in the accompanying unaudited condensed consolidated statements of comprehensive income. During the three and nine months ended September 30, 2023, the Company received distributions from the investees of $1.5 million and $4.0 million, respectively. During the three and nine months ended September 30, 2022, the Company received distributions from the investees of $1.5 million and $2.5 million, respectively. The Company had an amounts due from its joint ventures of $0.2 million and due to its joint ventures of $0.6 million as of September 30, 2023. Receivables were included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets. Payables were included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets. The Company also had amounts due to its joint ventures of $1.5 million as of December 31, 2022. These payables were included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets. These balances primarily relate to cash collections received by the Company on behalf of the joint ventures, offset by certain pharmaceutical inventories and other expenses paid for by the Company on behalf of the joint ventures. Share Repurchase Agreement — On February 28, 2023, we entered into a Share Repurchase Agreement (the “Share Repurchase Agreement”) with HC I, pursuant to which we agreed to repurchase, subject to the terms and conditions contained therein, up to $75.0 million of our common stock then held by HC I at the same purchase price per share as the underwriter in a concurrent underwritten public offering of our common stock held by HC I. On March 3, 2023, the transactions contemplated by the Share Repurchase Agreement closed, and we repurchased directly from HC I 2,475,166 shares of our common stock. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net income | $ 56,302 | $ 114,403 | $ 39,208 | $ 38,823 | $ 33,929 | $ 30,275 | $ 209,913 | $ 103,027 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States and contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for interim financial reporting. The results of operations for the interim periods presented are not necessarily indicative of the results of operations for the entire year. These unaudited condensed consolidated financial statements do not include all of the information and notes to the financial statements required by GAAP for complete financial statements and should be read in conjunction with the 2022 audited consolidated financial statements, including the notes thereto, as presented in our Form 10-K. |
Principles of Consolidation | Principles of Consolidation — The Company’s unaudited condensed consolidated financial statements include the accounts of Option Care Health, Inc. and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of September 30, 2023, cash equivalents consisted of money market funds. |
Equity Method Investments | Equity-Method Investments — The Company’s investments in certain unconsolidated entities are accounted for under the equity method. The balance of these investments is included in other noncurrent assets in the accompanying condensed consolidated balance sheets. As of September 30, 2023 and December 31, 2022, the balance of the investments was $19.5 million and $19.4 million, respectively. The balance of these investments is increased to reflect the Company’s capital contributions and equity in earnings of the investees. The balance of these investments is decreased to reflect the Company’s equity in losses of the investees and for distributions received that are not in excess of the carrying amount of the investments. The Company’s proportionate share of earnings or losses of the investees is recorded in equity in earnings of joint ventures in the accompanying unaudited condensed consolidated statements of comprehensive income. The Company’s proportionate share of earnings was $1.3 million and $4.1 million for the three and nine months ended September 30, 2023, respectively. The Company’s proportionate share of earnings was $1.5 million and $4.1 million for the three and nine months ended September 30, 2022, respectively. Distributions from the investees are treated as cash inflows from operating activities in the unaudited condensed consolidated statements of cash flows. During the three and nine months ended September 30, 2023, the Company received distributions from the investees of $1.5 million and $4.0 million, respectively. During the three and nine months ended September 30, 2022, the Company received distributions from the investees of $1.5 million and $2.5 million, respectively. See Note 16, Related-Party Transactions , for discussion of related-party transactions with these investees. |
Concentrations of Business Risk | Concentrations of Business Risk — The Company generates revenue from managed care contracts and other agreements with commercial third-party payers. Revenue related to the Company’s largest payer was approximately 14% for the three and nine months ended September 30, 2023. Revenue related to the Company’s largest payer was approximately 14% and 15% for the three and nine months ended September 30, 2022, respectively. There were no other managed care contracts that represent greater than 10% of revenue for the periods presented. For the three and nine months ended September 30, 2023, approximately 11% and 12%, respectively, of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid. For the three and nine months ended September 30, 2022, approximately 12% of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid. As of September 30, 2023 and December 31, 2022, approximately 11% and 13%, respectively, of the Company’s accounts receivable was related to these programs. Governmental programs pay for services based on fee schedules and rates that are determined by the related governmental agency. Laws and regulations pertaining to government programs are complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change in the near term. The Company does not require its patients or other payers to carry collateral for any amounts owed for goods or services provided. Other than as discussed above, concentration of credit risk relating to trade accounts receivable is limited due to the Company’s diversity of patients and payers. Further, the Company generally does not provide charity care; however, Option Care Health offers a financial assistance program for patients that meet certain defined hardship criteria. For the three and nine months ended September 30, 2023, approximately 73% of the Company’s pharmaceutical and medical supply purchases were from four vendors. For the three and nine months ended September 30, 2022, approximately 74% and 73%, respectively, of the Company’s pharmaceutical and medical supply purchases were from four vendors. Although there are a limited number of suppliers, the Company believes that other vendors could provide similar products on comparable terms. However, a change in suppliers could cause delays in service delivery and possible losses in revenue, which could adversely affect the Company’s financial condition or operating results. |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Fair value measurements are determined by maximizing the use of observable inputs and minimizing the use of unobservable inputs. The hierarchy places the highest priority on unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1 measurements) and gives the lowest priority to unobservable inputs (Level 3 measurements). The categories within the valuation hierarchy are described as follows: • Level 1 — Inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities. • Level 2 — Inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. • Level 3 — Inputs to the fair value measurement are unobservable inputs or valuation techniques. While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. First Lien Term Loan : The fair value of the First Lien Term Loan is derived from a broker quote on the loans in the syndication (Level 2 inputs). See Note 10, Indebtedness , for further discussion of the carrying amount and fair value of the First Lien Term Loan. Senior Notes: The fair value of the Senior Notes is derived from a broker quote (Level 2 inputs). See Note 10, Indebtedness , for further discussion of the carrying amount and fair value of the Senior Notes. Interest Rate Cap: The fair value of the interest rate cap is derived from the interest rates prevalent in the market and future expectations of those interest rates (Level 2 inputs). The Company determines the fair value of the investments based on quoted prices from third-party brokers. See Note 11, Derivative Instruments , for further discussion of the fair value of the interest rate cap. Money Market Funds: The fair value of the money market funds is derived from the closing price reported by the fund sponsor and classified as cash and cash equivalents on the Company’s condensed consolidated balance sheets (Level 1 inputs). |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Acquired Identifiable Assets and Assumed Liabilities | The following is a final allocation of the consideration transferred to acquired identifiable assets and assumed liabilities, net of cash acquired (in thousands): Amount Accounts receivable $ 686 Intangible assets 5,449 Other assets 394 Accounts payable and other liabilities (434) Fair value identifiable assets and liabilities 6,095 Goodwill (1) 21,323 Cash acquired 201 Purchase price 27,619 Less: cash acquired (201) Purchase price, net of cash acquired $ 27,418 (1) Goodwill is attributable to cost synergies from procurement and operational efficiencies and elimination of duplicative administrative costs. |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Net Revenue Earned by Category of Payer | The following table sets forth the net revenue earned by category of payer for the three and nine months ended September 30, 2023 and 2022 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Commercial payers $ 957,601 $ 888,162 $ 2,765,513 $ 2,526,354 Government payers 124,122 122,793 370,648 357,383 Patients 11,291 9,963 41,773 33,785 Net revenue $ 1,093,014 $ 1,020,918 $ 3,177,934 $ 2,917,522 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table presents the Company’s common stock equivalents that were excluded from the calculation of earnings per share as they would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock option awards 984,567 520,944 1,180,376 794,887 Restricted stock awards 16,564 13,561 569,831 476,329 Performance stock unit awards — — 288,680 — |
Schedule of Basic and Diluted Earnings Per Share | The following table presents the Company’s basic earnings per share and shares outstanding (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income (1) $ 56,302 $ 38,823 $ 209,913 $ 103,027 Denominator: Weighted average number of common shares outstanding 178,826 181,884 179,956 180,829 Earnings per common share: Earnings per common share, basic $ 0.31 $ 0.21 $ 1.17 $ 0.57 (1) Net income for the nine months ended September 30, 2023 includes $62.8 million related to the termination payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses and taxes. See Note 3, Business Combinations , for further discussion. The following table presents the Company’s diluted earnings per share and shares outstanding (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income (1) $ 56,302 $ 38,823 $ 209,913 $ 103,027 Denominator: Weighted average number of common shares outstanding 178,826 181,884 179,956 180,829 Effect of dilutive securities 1,702 1,138 1,330 931 Weighted average number of common shares outstanding, diluted 180,528 183,022 181,286 181,760 Earnings per common share: Earnings per common share, diluted $ 0.31 $ 0.21 $ 1.16 $ 0.57 (1) Net income for the nine months ended September 30, 2023 includes $62.8 million related to the termination payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses and taxes. See Note 3, Business Combinations , for further discussion. |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Maturities of Lease Liabilities, Operating | Operating leases mature as follows (in thousands): Fiscal Year Ended December 31, Minimum Payments 2023 $ 9,410 2024 23,564 2025 21,350 2026 18,490 2027 15,315 Thereafter 44,262 Total lease payments 132,391 Less: interest (28,500) Present value of lease liabilities $ 103,891 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment was as follows as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Infusion pumps $ 37,027 $ 34,942 Equipment, furniture and other 35,955 31,929 Leasehold improvements 101,283 99,085 Computer software, purchased and internally developed 47,878 34,922 Assets under development 26,915 29,411 249,058 230,289 Less: accumulated depreciation (141,098) (121,968) Property and equipment, net $ 107,960 $ 108,321 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Depreciation expense in cost of revenue $ 616 $ 1,205 $ 2,006 $ 3,696 Depreciation expense in operating expenses 6,365 6,778 18,665 21,337 Total depreciation expense $ 6,981 $ 7,983 $ 20,671 $ 25,033 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of the Carrying Amount of Goodwill | Changes in the carrying amount of goodwill consist of the following activity for the three and nine months ended September 30, 2023 (in thousands): Balance at December 31, 2022 $ 1,533,424 Purchase accounting adjustments 145 Balance at March 31, 2023 $ 1,533,569 Acquisitions 6,998 Balance at June 30, 2023 $ 1,540,567 Purchase accounting adjustments (321) Balance at September 30, 2023 $ 1,540,246 |
Schedule of Carrying Amount and Accumulated Amortization of Intangible Assets | The carrying amount and accumulated amortization of intangible assets consist of the following as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Gross intangible assets: Referral sources $ 514,388 $ 509,646 Trademarks/names 39,136 38,508 Other amortizable intangible assets 1,003 912 Total gross intangible assets 554,527 549,066 Accumulated amortization: Referral sources (191,262) (167,902) Trademarks/names (18,973) (16,901) Other amortizable intangible assets (298) (148) Total accumulated amortization (210,533) (184,951) Total intangible assets, net $ 343,994 $ 364,115 |
INDEBTEDNESS (Tables)
INDEBTEDNESS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Long-term debt consisted of the following as of September 30, 2023 (in thousands): Principal Amount Discount Debt Issuance Costs Net Balance Asset-based-lending (“ABL”) Facility $ — $ — $ — $ — First Lien Term Loan 589,500 (7,313) (10,149) 572,038 Senior Notes 500,000 — (9,022) 490,978 $ 1,089,500 $ (7,313) $ (19,171) 1,063,016 Less: current portion (6,000) Total long-term debt $ 1,057,016 Long-term debt consisted of the following as of December 31, 2022 (in thousands): Principal Amount Discount Debt Issuance Costs Net Balance ABL Facility $ — $ — $ — $ — First Lien Term Loan 594,000 (8,307) (11,529) 574,164 Senior Notes 500,000 — (9,960) 490,040 $ 1,094,000 $ (8,307) $ (21,489) 1,064,204 Less: current portion (6,000) Total long-term debt $ 1,058,204 |
Schedule of Long-term Debt Maturities | Long-term debt matures as follows (in thousands): Fiscal Year Ended December 31, Minimum Payments 2023 $ 1,500 2024 6,000 2025 6,000 2026 6,000 2027 6,000 Thereafter 1,064,000 Total $ 1,089,500 |
Schedule of Estimated Fair Values of Debt Obligations | The following table presents the estimated fair values of the Company’s debt obligations as of September 30, 2023 (in thousands): Financial Instrument Carrying Value as of September 30, 2023 Markets for Identical Item (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) First Lien Term Loan $ 572,037 $ — $ 591,740 $ — Senior Notes 490,979 — 430,000 — Total debt instruments $ 1,063,016 $ — $ 1,021,740 $ — |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Amount and Location of Derivatives in the Balance Sheet | The following table summarizes the amount and location of the Company’s derivative instruments in the condensed consolidated balance sheets (in thousands): Fair Value - Derivatives in Asset Position Derivative Balance Sheet Caption September 30, 2023 December 31, 2022 Interest rate cap designated as cash flow hedge Prepaid expenses and other current assets $ 5,927 $ 10,926 Interest rate cap designated as cash flow hedge Other noncurrent assets 22,185 17,342 Total derivative assets $ 28,112 $ 28,268 |
Schedule of Pre-tax Gains (Losses) Recognized in the Statements of Comprehensive Income (Loss) | The following table presents the pre-tax gain (loss) from derivative instruments recognized in other comprehensive income (loss) in the Company’s unaudited condensed consolidated statements of comprehensive income (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Derivative 2023 2022 2023 2022 Interest rate cap designated as cash flow hedge $ 45 $ 10,653 $ (156) $ 30,879 The following table presents the amount and location of pre-tax income (loss) recognized in the Company’s unaudited condensed consolidated statements of comprehensive income related to the Company’s derivative instruments (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Derivative Income Statement Caption 2023 2022 2023 2022 Interest rate cap designated as cash flow hedge Interest expense, net $ 2,931 $ (1,775) $ 8,002 $ (591) |
NATURE OF OPERATIONS AND PRES_2
NATURE OF OPERATIONS AND PRESENTATION OF FINANCIAL STATEMENTS (Details) | 3 Months Ended | 9 Months Ended | |
Mar. 03, 2023 shares | Sep. 30, 2023 pharmacy suite shares | Sep. 30, 2023 pharmacy suite segment shares | |
Business Acquisition [Line Items] | |||
Treasury stock, shares, acquired (in shares) | 2,475,166 | 2,913,520 | 5,388,686 |
Number of service locations | pharmacy | 93 | 93 | |
Number of infusion sites | suite | 81 | 81 | |
Number of operating segments | segment | 1 | ||
Common Stock | |||
Business Acquisition [Line Items] | |||
Number of shares issued in transaction (in shares) | 23,771,926 | ||
Legacy Health Systems | |||
Business Acquisition [Line Items] | |||
Ownership interest | 50% | 50% |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Concentration Risk [Line Items] | |||||
Rebate receivable | $ 51,000 | $ 51,000 | $ 53,400 | ||
Investments in equity-method investees | 19,500 | 19,500 | $ 19,400 | ||
Proportionate share of earnings in equity-method investees | $ 1,300 | $ 1,500 | 4,107 | $ 4,065 | |
Distributions received from the investees | $ 1,500 | $ 4,000 | $ 2,500 | ||
Revenue from Contract with Customer Benchmark | Company's Largest Payer | Largest Payer | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 14% | 14% | 14% | 15% | |
Revenue from Contract with Customer Benchmark | Governmental Healthcare Programs | Government Healthcare Programs | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 11% | 12% | 12% | 12% | |
Accounts Receivable, Benchmark | Governmental Healthcare Programs | Government Healthcare Programs | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 11% | 13% | |||
Cost of Goods and Service, Product and Service Benchmark | Medical Supply Vendors | Four Vendors | |||||
Concentration Risk [Line Items] | |||||
Concentration risk | 73% | 74% | 73% | 73% |
BUSINESS COMBINATIONS - Additio
BUSINESS COMBINATIONS - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||||||
May 31, 2023 | Aug. 31, 2022 | Sep. 30, 2023 | Jun. 30, 2023 | Jun. 26, 2023 | May 03, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | ||||||||
Business combination, acquisition-related expenses | $ 21,100 | |||||||
Goodwill | 1,540,246 | $ 1,540,567 | $ 1,533,569 | $ 1,533,424 | ||||
Amedisys | ||||||||
Business Acquisition [Line Items] | ||||||||
Business combination, contingent consideration, asset, termination fee | $ 62,800 | $ 106,000 | ||||||
Amedisys | Combined company, following merger | ||||||||
Business Acquisition [Line Items] | ||||||||
Company's stockholders, ownership percentage following merger | 64.50% | |||||||
Revitalized, LLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Percentage of the combined company held | 100% | |||||||
Purchase price, net of cash acquired | $ 12,500 | |||||||
Goodwill | 6,700 | |||||||
Non-cash working capital adjustment | 400 | |||||||
Intangible assets | $ 5,500 | |||||||
Rochester Home Infusion, Inc | ||||||||
Business Acquisition [Line Items] | ||||||||
Percentage of the combined company held | 100% | |||||||
Purchase price, net of cash acquired | $ 27,400 | |||||||
Goodwill | $ 21,323 |
BUSINESS COMBINATIONS - Prelimi
BUSINESS COMBINATIONS - Preliminary Estimate of the Allocation Consideration Transferred (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||||
Aug. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 1,540,246 | $ 1,540,567 | $ 1,533,569 | $ 1,533,424 | ||
Purchase price, net of cash acquired | $ 12,855 | $ 87,315 | ||||
Rochester Home Infusion, Inc | ||||||
Business Acquisition [Line Items] | ||||||
Accounts receivable | $ 686 | |||||
Intangible assets | 5,449 | |||||
Other assets | 394 | |||||
Accounts payable and other liabilities | (434) | |||||
Fair value identifiable assets and liabilities | 6,095 | |||||
Goodwill | 21,323 | |||||
Cash acquired | 201 | |||||
Purchase price | 27,619 | |||||
Purchase price, net of cash acquired | $ 27,418 |
REVENUE - Net Revenue Earned by
REVENUE - Net Revenue Earned by Category of Payer (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 1,093,014 | $ 1,020,918 | $ 3,177,934 | $ 2,917,522 |
Commercial payers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 957,601 | 888,162 | 2,765,513 | 2,526,354 |
Government payers | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 124,122 | 122,793 | 370,648 | 357,383 |
Patients | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 11,291 | $ 9,963 | $ 41,773 | $ 33,785 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax (benefit) expense | $ 13,783 | $ 13,258 | $ 69,904 | $ 37,960 |
Termination fee, tax expense | $ 22,100 | |||
Effective tax rate | 19.70% | 25.50% | 25% | 26.90% |
State valuation allowance, released | $ 5,800 | |||
Valuation allowance | $ 7,200 | $ 7,200 |
EARNINGS PER SHARE - Antidiluti
EARNINGS PER SHARE - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock option awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded (in shares) | 984,567 | 520,944 | 1,180,376 | 794,887 |
Restricted stock awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded (in shares) | 16,564 | 13,561 | 569,831 | 476,329 |
Performance stock unit awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded (in shares) | 0 | 0 | 288,680 | 0 |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Basic and Diluted Earnings (Loss) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 26, 2023 | |
Numerator: | |||||||||
Net income | $ 56,302 | $ 114,403 | $ 39,208 | $ 38,823 | $ 33,929 | $ 30,275 | $ 209,913 | $ 103,027 | |
Denominator: | |||||||||
Weighted average number of common shares outstanding (in shares) | 178,826 | 181,884 | 179,956 | 180,829 | |||||
Effect of dilutive securities (in shares) | 1,702 | 1,138 | 1,330 | 931 | |||||
Weighted average number of common shares outstanding, diluted (in shares) | 180,528 | 183,022 | 181,286 | 181,760 | |||||
Earnings per common share, basic | |||||||||
Earnings per common share, basic (in dollars per share) | $ 0.31 | $ 0.21 | $ 1.17 | $ 0.57 | |||||
Earnings per common share, diluted | |||||||||
Earnings per common share, diluted (in dollars per share) | $ 0.31 | $ 0.21 | $ 1.16 | $ 0.57 | |||||
Amedisys | |||||||||
Earnings per common share, diluted | |||||||||
Business combination, contingent consideration, asset, termination fee | $ 62,800 | $ 62,800 | $ 106,000 |
LEASES - Additional Information
LEASES - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||||
Operating lease cost | $ 7.8 | $ 7.8 | $ 22.3 | $ 22.7 |
Weighted-average remaining lease term, operating leases | 6 years 10 months 24 days | 6 years 10 months 24 days | ||
Weighted-average discount rate, operating leases | 6.04% | 6.04% | ||
Increase in operating lease right-of-use asset and lease liabilities | $ 26.1 | $ 13.6 |
LEASES - Maturities of Lease Li
LEASES - Maturities of Lease Liabilities (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Minimum Payments | |
2023 | $ 9,410 |
2024 | 23,564 |
2025 | 21,350 |
2026 | 18,490 |
2027 | 15,315 |
Thereafter | 44,262 |
Total lease payments | 132,391 |
Less: interest | (28,500) |
Present value of lease liabilities | $ 103,891 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 249,058 | $ 249,058 | $ 230,289 | ||
Less: accumulated depreciation | (141,098) | (141,098) | (121,968) | ||
Property and equipment, net | 107,960 | 107,960 | 108,321 | ||
Total depreciation expense | 6,981 | $ 7,983 | 20,671 | $ 25,033 | |
Depreciation expense in cost of revenue | |||||
Property, Plant and Equipment [Line Items] | |||||
Total depreciation expense | 616 | 1,205 | 2,006 | 3,696 | |
Depreciation expense in operating expenses | |||||
Property, Plant and Equipment [Line Items] | |||||
Total depreciation expense | 6,365 | $ 6,778 | 18,665 | $ 21,337 | |
Infusion pumps | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 37,027 | 37,027 | 34,942 | ||
Equipment, furniture and other | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 35,955 | 35,955 | 31,929 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 101,283 | 101,283 | 99,085 | ||
Computer software, purchased and internally developed | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 47,878 | 47,878 | 34,922 | ||
Assets under development | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 26,915 | $ 26,915 | $ 29,411 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | |
Goodwill [Roll Forward] | |||
Goodwill - net book value, begging of period | $ 1,540,567 | $ 1,533,569 | $ 1,533,424 |
Purchase accounting adjustments | (321) | 145 | |
Acquisitions | 6,998 | ||
Goodwill - net book value, end of period | $ 1,540,246 | $ 1,540,567 | $ 1,533,569 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Carrying Amount and Accumulated Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Total gross intangible assets | $ 554,527 | $ 554,527 | $ 549,066 | ||
Total accumulated amortization | (210,533) | (210,533) | (184,951) | ||
Total intangible assets, net | 343,994 | 343,994 | 364,115 | ||
Amortization expense for intangible assets | 8,600 | $ 8,400 | 25,600 | $ 24,600 | |
Referral sources | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Total gross intangible assets | 514,388 | 514,388 | 509,646 | ||
Total accumulated amortization | (191,262) | (191,262) | (167,902) | ||
Trademarks/names | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Total gross intangible assets | 39,136 | 39,136 | 38,508 | ||
Total accumulated amortization | (18,973) | (18,973) | (16,901) | ||
Other amortizable intangible assets | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Total gross intangible assets | 1,003 | 1,003 | 912 | ||
Total accumulated amortization | $ (298) | $ (298) | $ (148) |
INDEBTEDNESS - Debt (Details)
INDEBTEDNESS - Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Principal Amount | $ 1,089,500 | $ 1,094,000 |
Discount | (7,313) | (8,307) |
Debt Issuance Costs | (19,171) | (21,489) |
Net Balance | 1,063,016 | 1,064,204 |
Less: current portion | (6,000) | (6,000) |
Total long-term debt | 1,057,016 | 1,058,204 |
Senior Notes | First Lien Term Loan | ||
Debt Instrument [Line Items] | ||
Principal Amount | 589,500 | 594,000 |
Discount | (7,313) | (8,307) |
Debt Issuance Costs | (10,149) | (11,529) |
Net Balance | 572,038 | 574,164 |
Senior Notes | Senior Notes | ||
Debt Instrument [Line Items] | ||
Principal Amount | 500,000 | 500,000 |
Discount | 0 | 0 |
Debt Issuance Costs | (9,022) | (9,960) |
Net Balance | 490,978 | 490,040 |
Senior Notes | Asset-based-lending (“ABL”) Facility | ||
Debt Instrument [Line Items] | ||
Principal Amount | 0 | 0 |
Discount | 0 | 0 |
Debt Issuance Costs | 0 | 0 |
Net Balance | $ 0 | $ 0 |
INDEBTEDNESS - Additional Infor
INDEBTEDNESS - Additional Information (Details) - Senior Notes - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Jan. 13, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Asset-based-lending (“ABL”) Facility | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility, increase in borrowing capacity | $ 50 | |||||
Credit facility, borrowing availability | $ 225 | |||||
First Lien Term Loan | Credit Agreements Amendment | ||||||
Debt Instrument [Line Items] | ||||||
Effective rate on term loans at end of period | 8.20% | 8.20% | 6.82% | |||
Weighted average interest rate paid on term loans during period | 8.11% | 4.94% | 7.71% | 3.90% | ||
Second Lien Term Loan | Credit Agreements Amendment | ||||||
Debt Instrument [Line Items] | ||||||
Effective rate on term loans at end of period | 4.375% | 4.375% | 4.375% | |||
Weighted average interest rate paid on term loans during period | 4.375% | 4.375% | 4.375% | 4.375% |
INDEBTEDNESS - Long Term Debt M
INDEBTEDNESS - Long Term Debt Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
2023 | $ 1,500 | |
2024 | 6,000 | |
2025 | 6,000 | |
2026 | 6,000 | |
2027 | 6,000 | |
Thereafter | 1,064,000 | |
Total | $ 1,089,500 | $ 1,094,000 |
INDEBTEDNESS - Estimated Fair V
INDEBTEDNESS - Estimated Fair Values of Debt Obligations (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Debt Instrument [Line Items] | |
Total debt instruments | $ 1,063,016 |
Markets for Identical Item (Level 1) | |
Debt Instrument [Line Items] | |
Total debt instruments | 0 |
Significant Other Observable Inputs (Level 2) | |
Debt Instrument [Line Items] | |
Total debt instruments | 1,021,740 |
Significant Unobservable Inputs (Level 3) | |
Debt Instrument [Line Items] | |
Total debt instruments | 0 |
Senior Notes | |
Debt Instrument [Line Items] | |
Total debt instruments | 490,979 |
Senior Notes | First Lien Term Loan | |
Debt Instrument [Line Items] | |
Total debt instruments | 572,037 |
Senior Notes | Markets for Identical Item (Level 1) | |
Debt Instrument [Line Items] | |
Total debt instruments | 0 |
Senior Notes | Markets for Identical Item (Level 1) | First Lien Term Loan | |
Debt Instrument [Line Items] | |
Total debt instruments | 0 |
Senior Notes | Significant Other Observable Inputs (Level 2) | |
Debt Instrument [Line Items] | |
Total debt instruments | 430,000 |
Senior Notes | Significant Other Observable Inputs (Level 2) | First Lien Term Loan | |
Debt Instrument [Line Items] | |
Total debt instruments | 591,740 |
Senior Notes | Significant Unobservable Inputs (Level 3) | |
Debt Instrument [Line Items] | |
Total debt instruments | 0 |
Senior Notes | Significant Unobservable Inputs (Level 3) | First Lien Term Loan | |
Debt Instrument [Line Items] | |
Total debt instruments | $ 0 |
DERIVATIVE INSTRUMENTS - Additi
DERIVATIVE INSTRUMENTS - Additional Information (Details) - Interest rate cap designated as cash flow hedge - First Lien Term Loan - Designated as Hedging Instrument - Senior Notes | 1 Months Ended |
Oct. 31, 2021 USD ($) | |
Derivative [Line Items] | |
Notional amount of derivative | $ 300,000,000 |
Derivative, term of contract | 5 years |
DERIVATIVE INSTRUMENTS - Balanc
DERIVATIVE INSTRUMENTS - Balance Sheet Location of Derivatives (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Derivative [Line Items] | ||
Total derivative assets | $ 28,112 | $ 28,268 |
Designated as Hedging Instrument | Prepaid expenses and other current assets | Interest rate cap designated as cash flow hedge | ||
Derivative [Line Items] | ||
Total derivative assets | 5,927 | 10,926 |
Designated as Hedging Instrument | Other noncurrent assets | Interest rate cap designated as cash flow hedge | ||
Derivative [Line Items] | ||
Total derivative assets | $ 22,185 | $ 17,342 |
DERIVATIVE INSTRUMENTS - Pre-ta
DERIVATIVE INSTRUMENTS - Pre-tax Gain (Loss) on Derivative Instruments (Details) - Interest rate cap designated as cash flow hedge - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative [Line Items] | ||||
Interest rate cap designated as cash flow hedge | $ 45 | $ 10,653 | $ (156) | $ 30,879 |
Interest expense, net | ||||
Derivative [Line Items] | ||||
Interest rate cap designated as cash flow hedge | $ 2,931 | $ (1,775) | $ 8,002 | $ (591) |
STOCK-BASED INCENTIVE COMPENS_2
STOCK-BASED INCENTIVE COMPENSATION (Details) - 2018 Plan - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | May 03, 2018 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||||
Number of shares authorized (in shares) | 9,101,734 | ||||
HC I Incentive Units | |||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||||
Share-based compensation expense | $ 9.2 | $ 4 | $ 22.9 | $ 12.6 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Mar. 03, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Feb. 20, 2023 | Dec. 31, 2022 | |
Class of Warrant or Right [Line Items] | |||||||
Treasury stock, shares, acquired (in shares) | 2,475,166 | 2,913,520 | 5,388,686 | ||||
Treasury stock acquired, average cost per share (in dollars per share) | $ 34.32 | $ 32.48 | |||||
Shares repurchased | $ 75 | $ 100 | $ 175 | ||||
Stock repurchase program, authorized amount | $ 75 | $ 75 | |||||
Common Stock | |||||||
Class of Warrant or Right [Line Items] | |||||||
Number of shares authorized to be repurchased (in shares) | 250,000,000 | ||||||
Common Stock | 2017 Warrants | |||||||
Class of Warrant or Right [Line Items] | |||||||
Number of warrants exercisable (in shares) | 0 | ||||||
Number of warrants exercised (in shares) | 188,350 | 188,350 | 1,130,089 | ||||
Class of warrant or right, outstanding (in shares) | 51,838 | 51,838 | 240,188 | ||||
Common Stock | 2015 Warrants | |||||||
Class of Warrant or Right [Line Items] | |||||||
Number of warrants exercised (in shares) | 0 | 31,968 | 0 | 900,272 | |||
Class of warrant or right, outstanding (in shares) | 13,892 | 13,892 | 15,231 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Mar. 03, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | ||||||
Management fee income | $ 1,093,014 | $ 1,020,918 | $ 3,177,934 | $ 2,917,522 | ||
Distributions received from the investees | 1,500 | 4,000 | 2,500 | |||
Shares repurchased | $ 75,000 | $ 100,000 | $ 175,000 | |||
Treasury stock, shares, acquired (in shares) | 2,475,166 | 2,913,520 | 5,388,686 | |||
Joint Venture | ||||||
Related Party Transaction [Line Items] | ||||||
Management fee income | $ 1,300 | 1,100 | $ 3,900 | 2,900 | ||
Distributions received from the investees | 1,500 | $ 1,500 | 4,000 | $ 2,500 | ||
Due from joint ventures | 200 | 200 | ||||
Due to joint ventures | $ 600 | $ 600 | $ 1,500 |