OPCH - Earnings call transcript Q2 2020 | Option Care Health, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Option Care Health's Second Quarter 2020 Earnings Call. [Operator Instructions]. I would now like to introduce you host for today's call, Mr. Mike Shapiro.

You may begin.

Michael Shapiro

you quarter us earnings thank Care the and second Health's call. morning, for for joining Option Good I'm joined this Officer. morning by John Rademacher, Chief Executive

we market that that make the note financial performance, related begin, call, and future forward-looking Before will industry statements events our review risks we and actual to during our the certain the These results materially our in from reflect cause the with this uncertainties to to you statements could future current comments. conditions. views we that and forward-looking encourage SEC please subject are specific to uncertainties. We file risks reports information differ regarding and

Forward-Looking should in press this review morning's section You also entitled Statements release. the

talking company's the financial condition. and about the During will measures we call, performance use non-GAAP when financial

these the additional our John. portion over Relations non-GAAP in find the posted turn this of release can information I'll morning's call on that, measures press You Investor to website. With on

John Rademacher

thank our Mike, you Thanks, everyone, us quarter. second to and joining for good morning, and review

Overall, As on the the amount and merger made plan X-year to has This May been reflect days and it patients. we anniversary on had ahead it offer clinically the released to Reflecting organization progress Care and is our Clearly, a I pandemic the operations. the have creating ability resilience we period unique the been of we truly how our of past the quite BioScrip has resilience and, Health, value responded. services over confidence opportunity since we opportunities focus the enterprise. Option during us of we we Option us. we enterprise X, have our Care of Health remarkable between X in results building differentiated in of and eventful of quarter an here sit form of more situation has importantly, on the significant Care the first a of the seize have to on COVID-XX Option past amount the current meaningful creation impact morning, today, our ground results in affected our the over have us front covered and how year year our and tests gives

dedicated Given defer past Mike serve. we results. gratitude care But I during I who Option a review situation. express and improved challenges have safely the continuity members growth the patients of pride transition and delivered by honestly to in cannot and preannouncement, the very of I the new and financial the the the quarter ensure I will to dynamic the on encouraged Care towards second thousands financial we of overall, for patients board am of profile strong Health the endured the team the feel months very to effectively company that

of much the the lift, quarter squarely continued On integration longer-term for heels the laying very a we of strong growth. and framework focused having now accelerated on are

the pandemic referral with COVID a home our we manage and and sources focus one to safety our for suites. center As infusion in situation our articulated of first patients our to transition call, to actively I crisis, to continuity quarter the quickly of of team, the response to patients collaborate on established command ensure the care actively on or

unique the have proactive and storm hurdles despite management Our as weathered proven challenges. effective, and efforts many we well have

being not we unable protection referral quarter have chain drugs efforts vital supply. proactive and care, because or management patient and turn to in ensure continuity of and personal levels did of procurement ensured transfer X away Our of the supply to adequate equipment us

payers strengthened our a period of partner this and in turbulent has choice. providers dependability only relationships Our with as

double-digit a procedures. in the Early negatively of patient hospitalizations direct referrals scheduled we new therapy or lower decline cancellation as in referrals impacted the and acute by the pandemic. expected, COVID-XX second postponement were result saw As a quarter, of

modest of recovery overall, to the remained markets, continue recoveries at market While and degrees we in acute saw certain referrals below level. varying levels, see pre-COVID we

referrals uniformly not across not gradually acute to country recovery. over improve time V-shaped expect a We but and the

Our portfolio continued care sites growth of second the us perform therapies payer strong very well in chronic low in with transfers quarter. from collaboration, onto double-digit second other quarter and patient the to of with service drove

benefit frankly situation. from work which represents also home is infusion continue to in second sources referral progress the efforts. considerable in current patients lower who given with actively patients by to payers merger a the preferred cost of or integration In the care suite receiving We we and made identify setting, and therapy will our site quarter,

on Sitting accelerated here have the that of today, we at merger, focus in operational organization, be net goal from XX like year goal Given both to rate and synergies pull million XX net integration-related million Recall achieved cost tightening least X every postmerger. of we synergies. realized to at efforts other number benefits. a a we to of least months belt forward $XX the the in our $XX articulated within our run financial

Nonetheless, examine our target. further drive cost as given for inherent we And will recent model the COVID-XX But business overachieve we versus synergy of our additional synergies from from cost leverage will become get we quantifying efficiency. will date, less savings. sources continue situation, will the We merger learnings apparent. to

and efforts, over efficiency platforms, several As that Oracle, we others. growth. patients transfer intensify built Workday, leverages including and frees on Wellsky, and months to we organic effectively focus up is AlayaCare, leadership few accelerating time the over ability leading resources to technology integration Salesforce.com begin winding amongst our past our down quickly last team's Underlying and my this years, which integration proprietary our the platform have

discharge applications as patient growth a scalable come. will provides is that patient engagement quality, coordination, of suite market-leading years and We for and enable have clinical onboarding, providers provides established platform future as ensures to suite to solid tools payers. best-in-class and This highly that expedites integrated maximizes feedback registration support well and timely of a

into new health quarter as with and well last can beneficial scaled national our our we national second our Humana making we that announce into years, announced as Aetna. is in patients, groundwork never in the Health. engagement our focus closing, we with disruptive and integration them. in road the Option a value UnitedHealthcare through In accelerating future provider delivering tremendous relationships. We pride what clinical for multiyear We as of network strategic with most memory partner reaffirms about the arguably with multiyear successfully for our independence. payers agreement U.S. I We and the providers recently payers. several remain the an been we're Finally, with and all on and terms expanded Humana, with Care better progress based challenging to for fronts. the many differentiation had to payer the with in privilege for Today, on excited was payers, mutually take ahead preferred efforts care deliver is scale, partnerships therapy, only outcomes entered extraordinary merger-related while our future laying on agreement collaborate to have of We in are proactive late both ability that managed with the year very have infusion innovative entered more excited collaborative through of collaboration. strategic growth have confident whom to I'm periods and the we foster payers growth that agreements a key we and payer on one efforts, exceptional provider stronger

the common in our proceeds With in sale bit I lien specific the regarding thoughts impacts shareholder beneficial wanted from to At the explicit detail. with long run. well will shares. same the to also we pay increase XX progress to million over a weeks Mike a offering. the sold X our X XX, established share the deleverage walk some the primary the down company's time, intent that, making I are of results of our will in Mike? July of to turn which of be as financial recently believe using few that a Finally, perspective, our ago. shelf the call under Mike net float shares our second review will through the the as are to On quite public common we of sold notes. portion million registration we excited shareholders more of our to both commitments shares, we against But shares

Michael Shapiro

John. Thanks,

earnings As in reinitiated reiterated financial we and this flow quarter full initially cash on guidance. and and XX morning, announced strong July year the delivered we second results

results and possible, low Just a quarter policies. I second prior financial comparable and periods impact growth, X-K harmonized Revenue growth will estimated of that Care based comprised legacy in reminder in our is or morning's only over suites. results. therapy provide as where this year Option are chronic infusion offset prior reported, care combined on of prior relative to the and million of accounting of other try the reported revenue the of infusion the double-digit growth, from comparable acute the by from growth benefited sites one the decline which year. $XXX transfer to a in of represents Chronic patients of hospital, modest HOPD X%, approximately driven our to home

acute into anticipate given we and referrals seasonality modest in trends. heading hospital uptick typical expect softness activity a forward, in given fall, continued Going current the levels referrals

of our therapies. Regarding chronic portfolio

to of continue specialists to fewer We treatment new patient also conditions lag. as anticipate visits patient referrals for chronic the

systems, basis reported higher physicians profit to to legacy continue we net therapies. lower-margin in challenging and still And we differences Gross P&Ls actively referrals. given organizations, the comparisons $XXX chronic while the However, year geography margin health drive results over XXX revenue. of Option payers represented of points legacy gross growth expanded collaborate in with patient Care by million are XX.X% the despite of to new prior

drive realization and to integration-related also press our of EBITDA which the morning's that Spending is in continues synergies revenue, team the of cost represented detailed expansion. of to XX.X% operations in approximately and margin includes serve the in expenses, release. $X.X of adjusted of million Our $XXX.X million patients, this contributed it reconciliation efficiencies note to

expenses and leverage spending to as to take expect improve continue further We synergies hold. decline integrated-related

of mentioned decline. integration-related are spending As the many on we to leverage we in scalability to especially we and have expenses continue as infrastructure, expect occasions, our improve, confident

in on expect balances, any continue made million our flow cash of As $XX investments in leverage achieved we behind our profitably, revenue Adjusted X.X% continue time scenes grants. net the of ensure related we flow. we minimizing and becomes our define we'll was that synergies. to quarter to team what are cost actively ahead is cash of net Free laser-focused further drugs in patient cash thereafter, merger line. clinical and of to integration early date, we've disruption, XXXX. drive of We quarter, job. in encouraging the $XX.X exited adjusted initially well from away in profit HHS include quarter from an million has million to what Shifting been margin cash cost the and anticipate efforts change in CARES across result shared on million supplies. July in million to use But while as second results modest in of the and EBITDA quarter of a we we tremendous receipts merger-related technology does from represented margin operations. regarding harmonized strategic $XX.X medical and evaluate capabilities initial vital into compared at is us X.X% it we Integration the some the synergy quarter those the XX, disclosed, our $XX.X and continue XXXX. goal cost our least a progress as operations Act $XX trajectory. which, we synergies. second our leverage activities which Ultimately, to overachievement as despite of a is ability EBITDA platforms cash The flow, grow accelerating will and doing EBITDA And net efforts our are net the cost having reaffirm optimized, spending second muddy we are generated metric get a our to the as

quarter, second million $XXX total than $XX the finished borrowings with cash our Excluding more million. was the still the on revolver. quarter grant with no in flow free receipt We outstanding liquidity in

of appreciate entirety. in consideration government health responsiveness return the we in Regarding care and decided have to We proactively federal grant program's funds to grant CARES analysis HHS intentions, service Act receipts. careful of the providers. their After the supporting the the

a utilized results at we for successfully issued the second Subsequent However, common of XX price return for of determined flow of that best be statement. fees. $XXX shares after have funds of grant is net quarter, The discount will money XX outflow million grant reflected as and our we financing on in purposes. the million underwriting third estimated $XX.XX other to a stock July cash on proceeds our the quarter

positive will we senior due a the PIK secured rate portion to Despite flexible about interest the profile, forward. month we our floating the as proceeds patient debt disclosed, offering a excited As cash of notes to having modification lien million retire and to use capital maturity XXXX. are a in second going our and will deleverage enables structure $X quicker than reduced more result in us toggle

ultimate to Our well goal on a to way. and of are below is migrate profile leverage our we Xx,

that, free million and the cash will given our Q&A. Operator? results for of expect of the second full the we call in generate year. than guidance strength flow With $XXX adjusted quarter, to more in the reinstated in year $XX EBITDA $XXX Finally, we for million open to million

Operator

[Operator Instructions].

with Our from first comes Securities. question David SunTrust MacDonald

David MacDonald

remind of reflected Mike, then cash and just the to think is that XXXX around about some headwinds about that? $XXX interest free payment free the around And guidance, of CapEx number? us expense can in think million cash terms cash $XX way right that cash flow, in when XXXX million flow you are we

Michael Shapiro

cash Sure, flow. cash flow the Dave. Thanks free free question. Yes. for least at was generate original to Yes, positive guidance

call, in you positive cash net of cash free at from we free about year-end million as If again, define flow. ops And back least flow talked on we cash remember change our the cash. $XX and flow

generated of half. excess free million strong first we through $XX -- halfway cash the from flow very As the year, we through ops through and cash in in obviously today here sit flow

And and so realization. working a capital effective the accelerating lot of that is management synergy some of

And quarter We for is year, least million, in about to relentless flow think funds, guidance midyear. where be we're think an outflow you is we free the again, floor. grant to do the are which I our returning through and we cover. we effectively have the at going the million $XX which related able view be to generating think cash we'll third of as cash, should more than again, around So free $XX as

that But decline to XXXX. retire of relates interest. between now end the those mature meaningful XXXX, to and lien fix obviously, we it cover portion of underlying the rate rate X%, meaningful on are quarter. second expect at the going cash some lien, to fourth around we a locks ground the and As second lot Not the in would we a only a of have at

cash So is of year we've be that million. as will a also help us. I I high to conservatively, would around interest next about this I the year consistent that's probably investment But of of watermark. expect below million, think levels reasonable think talked And CapEx assumption. $XXX $XX for

David MacDonald

you quickly in improvement the paydown rating then additional what maybe help you broadly second down commentary get the comment capital lien additional the of remaining And paying further second flexibility does you that anything you structure in in and the Mike, Okay. about portion in could capital any just, lien think potentially or of how provides place on a that, can terms agencies for and of and potential a structure, there? Just the around the terms flexibility.

Michael Shapiro

over I Dave, bet. structure. roughly Despite over This could Xx, medium as thought you very a focused thought to a very the we just time. taking out below be and on I patient journey Sure, would which maturity term. look, the deleveraging get we opportunistically Yes, profile, improve think, leverage, talked, half consistently we our are we capital turn naturally of have John what's accelerates

cash gives be of of us accelerates locks pocket, look, rate the years, second should which I the can reinvest obviously a Xx, that's flexibility. $X think that portion our strategically additional taking between we think than a And I of couple we more maturing which it. below out within And think business. and just in I lien, the in million

with to think actions fact speak reaffirms louder the flexibility. I I think, equity opportunity commitment. And the I profile, So leverage it our improve saw agencies, And the to that reaffirms we than overall just it adds to think our just rating words. utilize

David MacDonald

any Last just with these having of these outcomes outcome? providers. portion and of some in a or for mentioned comments, outcomes, better contractual Okay. your kind the patients, back of Is on payers about you're And in in of conversation portion increasingly you more seeing John, broadly, couple, tying contract payers. When engagement a at risk-based narrowing you looking prepared there Humana are terms either networks? to upside chats of a conversations,

John Rademacher

thanks the for Dave, Yes. question.

doing foundation said have be we're before, relationships that to to incredible is as these and work strategic us able ability we've multiyear So our with to from. payers build the the for an

we payers us foundation. extremely to so as be secure as that our around this, on time, We that most embarked where guarantees. doing certainly point important to this of large put do. about that more as on And work able the mouth in We we're organization, we our when was performance these making that. -- put said, is really we national At the for the We're certain an I thrilled is. money

As organization, behind those willing are stand with outcomes the that to an community. and behind we partnership payer stand

as evolve positive we over We that nature. We these into and a guarantee, think a of expect networks that of profile think time. relationship. with and as reassessing steps that tightening well direction reimbursement things first the network locking everyone's about they're agreements multiyear and that their narrowing value-based strategic to Ultimately, partnerships as stronger their is talked will building performance

David MacDonald

last me. guess for question I

an that you novo that's months, point? come you're the think where area footprint thinking dots to the the more de and everything the some to spend back wanted Just is to this And handful and ability leverage how is infusion about of happened that about on given guys a adequate way. pretty suites. last map? Or Just putting channel ambulatory in that additional in at meaningful the maybe some

John Rademacher

look, CapEx we've to is investments continued profile take into continued Dave, Yes. business. within the at the a that Mike that look outlined,

we opportunities. And for are those looking so

we're that when within We have the from we opportunities certainly infusion of doing normal facilities, part a that We're to just for that highest standpoint. build-out. couple things standard them of our suites embed looking our of are rebuild

ahead. looking we there's as well as key we're markets So natural some with de move novo stand-alone expansion in that at as

a level and to have We having comfort to adds one that to the on that of patients our is confidence our be a suites. pandemic, found infusion through infusion focused only suite in focused care receive that able of

continuing to market on be value very to we're capitalize to and So we're the continue need in it bullish demand confident footprint as we're the going very to able to expand our that on that. and identify that be we very, drives,

Operator

question Our Larew with next William Matt from Blair. comes

Matthew Larew

some cases I of bit more case of to wanted trend seen like relative and time country country sustained normalized about to to of ask health parts that standpoint the the across a are some looked has where of been sort seeing not the volumes actually what But here the had returned counts. in country. have there what as that in at for And you then you parts there a have recovery this point July rising low care counts? still are have from some interactions, rising case mentioned markets universal little the

John Rademacher

Yes.

bit is across comments, deferment see erratic said So the country. tightening number be we we counts we the of reopen, I from flare-ups, uptick of that, it the the said, of a in in where the I'd that markets we case with seen little of we control, certainly, of kind scheduled more seen corresponding where and And we're say where as it, procedures have see referrals. as have an is, hospitalizations would prepared in positive trend you seeing characterize standpoint. COVID

and metros to the major into that in of hardest were July. even the part of in early the the up the quarter started back hit Some quarter half of open

we're going across that's inconsistent those referral from be to expect flow we rural seeing so think areas, We increase the And country. in sources. some that

One some hospitals have the the population, as two seasonal and a being get well is we that move year. as health And expect seasonality, rhythm time, COVID the the positive should we we come that to systems as into We manage normal things expect of we is as able be of in over know both there back. we'll general that from back uptick see will we that that back that. manage demand the patients and of see half

recovery. said, going the We a to gradual transition as our certain As well positioned make we it's time, with of choice our selling of to should as goal and to think resources be as we market. we have team are not that well partner over a capture more and it be V-shaped specialists that returns demand is care seen our to

Matthew Larew

talked Okay. ask, sources. including in call, And referral sources an technology quarter led highlighted then take on onboarding, patients footprint the to quickly uptick ability on of the the the to referral to some first virtual I the capabilities, about also the you how wanted and and and really

So not away sort a I'm woods, wondering, standpoint, you've that Option from forward? in that better moving maybe taken COVID a understand capability Care out but competitive things just I the of from of position put we're just

Michael Shapiro

saying, invention." we've been sophisticated As investing a mother I in The of is talked learned lot. suite of Yes. Matt, about, think John "Necessity very scalable old the we've tools. a

lot really to so a and it's uncovered a era. lot hood, the opportunity of horsepower speak, the the think through under I of COVID

onboarding. lot of our technology It's that virtual an As around expeditiously authorization, patient setting the is in John transitioned benefit and a physician's mentioned, seamlessly office care through is a sure acute and verification, around delivery each in the of making or compounding scheduling, patients therapy. of efficiency

utilize could process that on that were tools a efficiently we which through first the patient that to to highlighted those. to, in we our front of with where especially have enablement burner transfers able is efficiency make really the developed have sure being of and come we the we really quarter, lot flood a able so And virtual our Northeast, technology

because, on call of on that that, we our some So reach first into also smaller team metro the we a ground. areas, coverage again, encouraging us the clinical have technology lot the and frankly, didn't helped the where, that's highlighted rural from of

I that think and efficiency we we've over that we us the couple more emerge, maintain proven of I the months. so of that span the And can gives as think confidence reach last

John Rademacher

and only add other we point being source that of had year is that the trend of I Matt, and of -- thing we postmerger would that the year. we really talked second quarter. the was expanding see the we positive as about realigning continue of new only had continuing and really reset into were October, half through as as to not highlighted, Yes. just the the referral forming in half we had resetting, first reset back the of Part from the relationships first the of the but selling team, we through team

important adequate expect within be our the aspect to frequency we And our we be make for ground hold relationships And tools their we So resources. we'll have are of an -- that our track will providing that certain coverage are to markets. able cover selling recent that expectations those those to the activities we're building.

Matthew Larew

Okay. mix you they just margins difficult increasingly given to moving And out we as be about understand forward, already I But synergies. upside the will for about margin moving the and think cadence? improvement set, specific one Mike, terms you I think potentially both that well that it should been delivered has operating target as we forward the quarters, as mentioned and the the guess of X hit improvement there, have some break synergies. how what additional you've margins some last me. of strongest EBITDA in over core last

Michael Shapiro

single-digit we assured, rest single we're very high mean, a at business. high been digits. stop going And margin this open that not to I we've see Yes. as EBITDA

to can I leverage. about. than EBITDA we think fact lot and expansion. reaffirmed something going we drive margin we're days a spending given the And talk to spending dollars, that's grow That's that gross the last lower has confident profit the the considerably -- XX scalability continue the that

again, the the of one encouraged synergies. merger So of that we're theses or the thesis primary unlocking primary was the cost

can inside at some are leverage. areas has And and back and leverage. also months, where Again, will we revisit leverage. we loose going looking as see the where spending else having mentioned, additional Here we of shake achieved model the relentless last days we're John at we're overachieve. the some think XX cost uncovered I XX to And go again, operating

not So We're stopping. encouraged. again, we're

You're points expanded right, year-over-year. XXX in more EBITDA more by we've it's our only basis than putting margins And sales. wind

Operator

Our question Bank of Fischbeck America. comes from Kevin next with

Kevin Fischbeck

I operationally. rate run seem It year. of seasonal doesn't sounds of the when guidance a guidance. in the the QX wanted improvement at to going very half that was half ask back the year, in think being back Obviously, about the assuming to first in doesn't you It to be like much the as particularly seem a about synergies fully we're the it uptick. like be facing quarter difficult as

So it would just to the is that see you Or to to the second just would guidance? be out that headwind year. something point kind there's wanted half a if conservative of of

John Rademacher

it's John. Kevin, Yes. question. for Thanks the

do see that the factor something from looking an as the the is there's flare-ups thoughtful the trying the organization, year, that trying line, happen, looking we're uncertainty standpoint. that of be a we're preparing I that we, process. as some half way That, within inconsistency as in for recovery in and we there just were of as as level think, we're to right, that of we As is the back we're inconsistency expect to going about to we the be top at forward there

focusing efficient in, comes effectively, very how in As can Mike can that just squeeze use costs, where said, a we take leverage relentlessly way. the we on around we're the infrastructure where and we can effective volume and

organization, we're an we're to so drive on conservatism It's that of the right build the we're well knowing a think that path, has And as just that that and approaching capture foundation demand. forward added is optimistic that the way that how solid we're we're to to really it. recover not positioned that cautiously to continuing level I to demand going

Michael Shapiro

add, it have And et Kevin, is, a shocked number geographies, look, the at therapies $XXX guidance I a optionality I'd have, for line still floor able million, year. thing And the scenarios think to of that obviously and deliver to of across original while productive be the degree important a and top of we obviously and reaffirm very cetera. only we'll us modeled that high we've given that was we our the confidence levers

going think view and I to to out with obviously sure say go what doing a we're we we So want make we're conservative that do.

Kevin Fischbeck

about that mean, you maybe if you the hadn't bit period? about there this. evidence you least patient. Great. at a commented but an remarks, a Okay. any I dealt prepared or saw And you referral with competition that little you I then talk know is -- can smaller in guess of of something the gaining I tell, a anecdotal has how turned away how could guess some maybe if from do? share this don't I Is players competitors during your

John Rademacher

smaller of There What ahead on and patients game where to unable competitors, given supply there. competitors that were the say we certain so making clear is things. strength protection range, on environment. some within of them were because we of that of that of we key in take of we Kevin, were Yes, adequate equipment strategic situations team can know it's our personal process. competitive really sites adequate lack the a of hard the procurement our couple there that of in supplies to we had aware the get were visibility And of were again, sourcing, of in situations do where some the

that to of know the into choice be that suites out the hospital we had, of ability partner those of So our home. position and infusion of that out the help we the lean with or of to patients we to transitions given really into one the in, HOPD had

stability sources So our were ground we've that the time through will that, making the that expectations demonstrate very maintain the we difficult us we very to forward. able -- in and the on gained positive for do are will of moving and be hold choice that we referral reliability partner a believe and

Michael Shapiro

add, is matter this I'd it Kevin, I thing Yes. industry. reaffirms in And scale think I think that the truly only does

nurses service our infusion is clinicians employ some we the higher same strategic direct and country. of A given in chain. suppliers, we our our us else to of mentioned, that believe we the we think infusion ability maintain lot manufacturers and of supply anyone the those than confidence procurement all that a John And of that had we terms to and us key and with in ensure, I around advantage again, challenges not with another And relationships more the to overcome. have have with nurses work. relationships, compromised As think degree have think, of challenging of I competitors, was I continuity. staffing that's it's allowed a smaller clinical that's relative to difficult to outside some at situations home patient testament And was just the our frankly speaking, have model challenge a But of in one that flexibility team. that the kids

Kevin Fischbeck

home reg? it. infusion Got thoughts Great. the guess any then on CMS I And

John Rademacher

in about to is making close we certain the continues hear expectations is work move our against to in Look, on that right that we taken collaboration One the approach heard Hill. a continue There's should that are NHIA and shortly. voice forward. NHIA that that has two-pronged litigation partnership now and Yes. CMS, with

well and as support response a for and a the of working support home and gain mechanism mechanism reimbursement the other either fair well some as in with the Act to partnership bipartisan we're improvements As that. of additional of just as as in HEALS general reimbursement COVID for legislative infusion, part aspects support the better

and We're a of in hoping prospects as to our effective there expectations the delivery And an has to population. are well Medicare So of, going the the populations, that that. of as wizens I high to leader going be level elderly really And we're guess, a the as that safety push value really can been industry care. vulnerable are to both the home the voice. infusion -- loud gets that embracing provide that one for the continue we're industry most and wiser to of patient being that continue on those and to home CMS

Operator

question Our Street from comes Capital. O'Neil next Brooks Lake with

Brooks O'Neil

what over grow size opportunity. little could line you your the with biggest focused looking X% commented could a maybe John, bit to do but you suggest little accelerating by you seems on you And on future. accomplished areas see some time. you to first the us off organic you've wanted of growth, start industry I'm top forward year, Congratulations think team growth. about the rate I might leadership even and asking, give with a all you senior better the I'm your the and in hoping pretty you consistent scale. maybe could

John Rademacher

Yes. question. appreciate Brooks, again, the

the right? cost all has had the starts organization within incredible integration, integration, around the out to culture of through and work of want value and I realization have what ahead areas team the of the network, of realizing focused still call and synergy the efficiency the job in again, we done both moves us. with really an As It

if us. But work heavy will is lift, again, say, continued do So stop. it's harmonize. as that the of that There's to I behind portion not to would

the the We and industry the payers. I our aligned over drive And of better is are well in is before think are the the having our really coverage we've leadership a that can push relentless all seen. the that. should is around believe X% optimizing growth to been shifts run. that to to that under the of we well belt we in to downstream now chronic than moving sources potential team certain to were our line, together, never about and said future referral excited of around my build a stronger lot make the have were top previous of long a strength track relationships, look, the well into we to we positioned as to that revenue what had that building the focus harder to Mike have plan, instances, And that in to sustainable those and through As knowing to To be focus think order that's the we've and, in that is I little communicated that goal in many the longer to that do And a really had synergy we But And question, be selling better around is process. in organic I'll our are in create marketplace, didn't I conversations, take the we in the comments, talked capture about team those way been growth we got Care drive repositioning that mean, I year on think ability achieve bit we and to is grow a I've partner as and probably to value integration-related around focus team organization demand really referral in basis. now X% confident that sources with as help to ability the Health important we our direct think, think forward, area -- in at and look, to I the manufacturers -- positioned goal. focused advantage. a little and going happens being away as the in patients, this both my We and the biggest the bring opening more competitive integrated with more we growing area. I team That, I upstream acute from of efforts that. bandwidth move to business market the think of with per annum now a area business. Option as market sustainable we make clearly working running the the we're

Brooks O'Neil

Great.

questions States on you you of payers that utilization from see Medicare. government's guys? bigger Medicare. United Just from could curious home highlight any following relative infusion a to our the Kevin's I'm you traditional versus if Medicare to there the differences commercial Medicare payers Is up on Advantage response

Michael Shapiro

the our and that migrating of payers considerable from is establish satisfaction, great because again, economical that payers, plans, those been both patients when payers home that It's commercial we've to amazing whereas we Medicare Brooks, Advantage than reimbursement it's difference can a is challenged XX% more benefit, direct of revenue Medicare the cost obviously better our unlock, a commercial a see patient generated commercial think includes about to which is value outcomes the from logical, Mike. extraordinary and portfolio distinction and savings.

that So we why, see as Medicaid high plans, the payer collaborative them. we because John's relationships services comments, the value Medicare partners, commercial why Advantage a Advantage commercialized results of for our which commercial it, managed considerable is to our see an push earlier in partners utilization Medicare to the whether to as benefits aggressive we have savings by payer or and back possible. that's such They it's can bring or is ensure

Brooks O'Neil

I'm balance clarify you. second per Mike, XX% month up cover $X to of expense then, the of with lien And million an interest in that Great. the effort following that of reduction I roll-off just any the refinance to notes Does there. or currently your around interest hedges? think trying just assume rate

Michael Shapiro

Yes.

locks Brooks. bet, the any more and million of Again, of the million more on tranche an expensive rate in retiring $X result second than will than You out That a debt, $XXX expiration refinancing. is simply does what assume month. the not taking of the through lien lien second

about. adjustments that the leverage to our doesn't we've profile. That just that's contemplate further talked changes So any

Operator

Instructions]. [Operator

question comes Richard from Our Genuity. Canaccord next Close with

Brian Hoffman

provider? Aetna have a considered Humana anything question back there can you the preferred drill that And helpful. Is on I Any tell those had is you commentary Richard. in you expansion agreement? about would an This secondary us Was the when be you agreement think had as that, and into Are wanted expansion, for Brian this to a now this announced. back United to down to of announced we you then January. else coverage?

respect benefited you if to points so data have curious far that may this year. you out expansions have you how can any call from those I'm with So

John Rademacher

John. it's Brian, Yes.

question. with So Humana start I'll the

So we with relationship have long-standing Humana. had a

And program. so agreement an announced a in the multiyear agreement really of is that extension

both what a part benefits footprint their they're of -- with position additional add with could serve we preferred really site-of-care home and if will well as that is patient Our membership of as expansion is grow suites. growing we value our are we them they our identification of of other them like expectations believe out there partner no in expanding we get being as choice, cohorts that things out initiatives and one we grow, to the that. But and them as that of infusion and around than continue or would of work as

we strong we as there, to be benefits continued relationship are continue and in them. will work excited about with think out of that partnership So there we're the that that derived

As Aetna, the in that data have of have members we that. for disclose that brought considerable that number say and we on uptick have specific But service. the can don't a on United seen I I will

say, or of all those and network part of some well we to they hospital and of saw United us the us of things effect capture the I were the be partner the outpatient needless referral distortion, there. especially to out infusion a into one seeking or for a Aetna say to preferred suites. the as area the in for really ability be to a can parents transition our home and those transfers positioned of be the to into hospital with the takes members where some with allowed home constraints to moving for out chronic we in But that the area in around, and of is there COVID Now acute puts and the and saw transfers,

Michael Shapiro

establish. And trout. quite able And equate relationships you to to Mike. fishing I'd license. catch only mean, the guarantee It The of that I is, we forefront Brian, look, the add proud we're agreements payer the thing the that been portfolio obviously, of doesn't it's again, payers we've

the You transition quality systems promises. physicians of to and on the patients, go to your the provide and and deliver still service health have out level the service to ensure of service the

deliver doors the and it allows care. referral to really And sources with that to then us extraordinary by so the we're opened it's to encouraged us, compete

Brian Hoffman

have gross would maybe flat -- sequentially the the double-digit then more in you me on on it a for of been impact in more prepared in touched the acute Mike, negative the there decline would then chronic, margin. a was bit But Great. be gross with this quarter. I given and have remarks. growth that would thought margin. one And But the first to

you mix have and called that synergies of offsetting other commentary shift. would as that -- out on any you So I some helpful. think But be

Michael Shapiro

I You Look, you're think right. absolutely bet, -- it's Brian.

I balance the chronic or our pace. our high-cost considerably chronic the are no therapies than is testament Our absolutely downward to dispersion leverage gross are our as to we've dollars margin therapies will, our a growing team drive faster pride regimens. have through those the pressure and to is of per because, serve. efficiency. disruption who therapies. growing branded, time, it's driving dollar commercial -- the The of acute, national our as portfolio That with quality both that technology procurement our therapy higher-cost But and those grail But rate. scenes, holy But will patient patient think nominal the our higher over we a start. footprint, at cost our able of lower operations ourselves base, faster gross commercial behind a and never in therapies, it's our tremendous will of as again, extraordinary well been at for the geographic the on be compromised. strategies again, Again, margin on are rate And every of chronic as are most well

forward, Brian, headwinds going we mix continue will that right, expect on that to serve would are we also patients cost are those efficient. But we see faster. therapy again, you're a to so absolutely more And as chronic grow moderately

team margin I And achievement continue our going an we're rate is on flat for think so efficiencies. operations just to mix And to a part. shift holding gross extraordinary despite drive the

Operator

showing back to further this John. questions time. turn call And the over I'm like to not I any at would

John Rademacher

you. care build Care productive a Take expect made Option thanks very stay growth the the be dedication getting we XXXX over Thank started. half of progress the the just Care pleased with as attending and year and going the more sustained commitment for this Health back X,XXX we've we're and Health, very are team we for closing, first and of In poised platform morning. Based than Option on we Great. safe, members, to as unique truly forward.

Operator

today's gentlemen, and presentation. conclude this Ladies does

may day. and now have wonderful disconnect, a You

Option Care Health (OPCH) 5 Aug 202020 Q2 Earnings call transcript