OPCH - Earnings call transcript Q2 2021 | Option Care Health, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Option Care Health Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Mike Shapiro.

You may begin.

Michael Shapiro

for this thanks and morning, joining morning. us Good

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

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

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

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

John Rademacher

everyone. and Mike, good morning, Thanks,

progress As in you this making, that never quarter. we pleased has number are team the financial quite can our confidence the And imagine, second enterprise been patients delivered are has the serving, we the higher. expanded results and are the of we in overall with

to And earnings are the strong first growth here sit full continue in on based unique and momentum. initiatives the into invest year, national our We strategic upon scalable our earnings platform. half to important, growth revenue we expansion as increasing on translate to leveraged continue we platform. we our today, build expectations Equally for

to guided revenue also managing certain dynamics pandemic in growth. midst the were wave, XXXX, X% therapies. to second and for remained entered we chain we X% the we Consequently, we As supply of

above chronic through sequential momentum newer quarter, Recall to the given And balanced and comparative growth, quarters, onset so multiple is payer levels. myasthenia we quarter acute focused including and referral over sources. strong pre-COVID for and both to referral chronic offense, growth patterns both high some collaboration pre-COVID considerably and speak, growth The clearly single-digit portfolios, increased. we've Regardless, XXXX in therapies, quarter saw portfolios, sclerosis, strength therapies the past our challenging the we instances, we've for seen of prior second has team partners in the across and gravis. on the referral seen with pandemic. referrals our Over as patterns remained saw levels. the first the high acute few with several chronic we’ve in with over return on therapy year growth particular In disruptive has teens

our Our we resonating for referral expect first Despite full on topline unique the And year, with and now manufacturers, dynamic results remain results, strong topline a in affirm our that in we double-digit topline the very growth is half. based generate value momentum environment. generated to sources. the proposition, payers,

manage tight Our situation we strategic and immunoglobulins, risk to with companies, a we for most labor facing markets, supply chain is expertise, entering investments which respect we given continue the clinical highlighted clearly Like into especially to labor in our clinician. are year. challenging improving, skilled conditions as

to has that Health successfully referral with the over Option been labor the able of of reputation been Care navigate challenging have a We dependability challenging the far maintain to sources situation. pandemic thus hallmark market, the team

situation the deepening agencies. closely, with home efficiencies, enhancements, the situation to partnerships continue and are labor through technology talent monitor and development, we We proactively addressing health

our tuck-in efforts, in future complete. the of markets This acquisition, in for solid IG we closed geographic number the integration from and catalysts. and I'm invest to go-to-market BioCure on already us. that a Early key we growth reinforced has QX, the pleased to growth Aside continue second complementary quarter, the report strengthened in is

partners, technology with collaboration technology existing software. trusted patient engagement co-develop to a announced recently clinical also one our market-leading We management and AlayaCare, of

we suite, been introduce we of AlayaCare patient tens experience integrated quite a optimize improve millions articulated are while, dollars of with trenches experience, additional have families. excited the our and into patients on in technology the the for for our invested model. we efficient tools therapy to has operating As us have and their occasions, many to maintain and an to

will a and Over patient centers point, Kumbhat, perspective suite market Seema do, created Officer. with newly XX initiative profitability. of role improve helps standalone to in key I'm the are the industry. of invested this earlier team, I'm by raise in the infusion the labor experience The capacity partially to labor Seema we but past my infusion we year-end. thrilled a additional center our topline Mike patient unique and and higher to provides challenging currently a clinical Medical leverage face. moving addition my optimize open six is at everything brings of To Infusion encouraged the in the additional to minutes, few infusion very ability XX mitigate to forefront months, an by and as also we've efficiency, to we to deliver our experience Dr. workforce. to capacity, levels capacity continue center growth the Chief and the our of leadership results additional bar unpack aggressively is infrastructure, growth-enabling clinical the

implies started. for this been and team half the release of million first has have ability range increased the earnings flow delivering year. morning, margin in established full the based the announced The the quarter. the translate we're EBITDA guidance cash both EBITDA, significantly the to adjusted strong, operations guidance over in momentum north getting from flow of $XX our the quite of for cash our in the X% for to of we year midpoint on As an year, revenue and we And only

of strategy We market year four I of execute achieved light continued how mid-year. our to target of be in also and prouder the at full continue couldn't Again, times leverage dynamics. team they our

the Aduhelm for want I a minutes over Mike, Alzheimer's. Before on approval of I to turn few recent to spend

that what condition devastating As patients therapy. the challenging given fits site an for that are of their with day, setting, a preference complicating population, the patient patients every and an older conditions, well with and we clinically, a chronic encouraged conditions limited are alternate is for profile serves emerging families. many Aduhelm quite And new therapies organization with for travel for

Medicare. for infusion However, of at emerging the Medicare and covered as as therapy, home the population this levels site is for the reimburse not occasions, have to support far challenging currently reimbursement pathway communicated setting, home in the on by remains multiple we adequately majority alternate And targeted care. does

CMS coverage with work see to coalition the as from guidance the improvement benefit home Aduhelm determination, and of near-term a and to opportunity we legislative reflects the at this We not Aduhelm for any to time. continue In our payers current approach to do separately environment landscape, none until infusion. Medicare industry changes. reimbursement monitor seek a the Consequently, reimbursement

overall, into pleased quarter year. and second So, team, results, the positioned half where the are second of very with I’m the by heading the we the performance entire

in turn from You'll recall clearly, we a that quarter made that Mike to the detail. in results to that, pivoting the review With to first turn. we've call, call bit more integration over Mike? the I'll commented were and acceleration, I quickly

Michael Shapiro

growth single expansion in quarter the initial enterprises, to over generation. into over deliver be stayed volumes morning, in away the quarter as second individuals referrals, and an and Sequentially, a everyone. little generated accelerated summed quarter, topline leverage followed as earnings growth we in spike to cash all digit XX% chronic strong million high similar generated and Remember we growth from and of patient growth to first with period that in, up can XXXX high stagnant comp, revenue as overall, teens the a by spending lows. topline the the that facilities. saw second Overall, we virtually John, flow acute, rebound pandemic Nonetheless, off good margin Thanks, $XXX referral translated continued is in medical healthcare atypical an portfolio. growth

Our debt, rate more faster the expansion we Despite therapies, but we volumes procurement drive for than to strategies our each improvement as in bad over years, portfolio, manage drove the down has over about chronic quarter, within ASP drove debt quarter, X%, but a percentage it year. the in portfolio. efficiencies we bad past headwind which clearly certain reflect results point and continue margin the the improved gross little network over a We offset. don't a few to talk as considerably half to the represents much growing continue some prior a about

second John accelerate. from to million, we we've chronic of of and as $XX the In leverage line. just headwind mix at that cash getting basis QX, every BioCure. translate As margin margin team and Again, million fights driving points, we the of our far, SG&A as point deploying X.X leverage of is which ratio to able we quarter Spending finished despite quarter with was net increased full the flow, not dropped continues ability X.X%. XXX the started. continues we're at a than cash percent operations impact. $XX and acquire EBITDA, light have our straight commitment. improvement a basis thus of of year an by balances by leverage line, improve and been offset mix the helped that pays bills, for into to revenue Cash And margin times, earnings mentioned, gross the debt to through, the cash generated more the delivered million, EBITDA north offset first that as This flow dropped to than more $XX a margin to X%,

as just our we no a and working favorable cove-light opportunities. So, improve inorganic a to the XXXX. reminder provides open until continues profile with capital structure, debt on considerable aperture flexibility that maturities And and maintain cash we

profit year our guidance. of guidance about the strategies. We million we this maintained exceed contribution our guidance based M&A remain higher any acquisition. and and we on in see solid expect back to we chronic we And to to not expectations cash increased on not at the saw leverage XX%, level the and generation deployment. topline, and our flow XX% acute acceleration, the does revenue from into to based BioCure half, Relative translate increasing expectations better full sequential we incorporate on procurement March, solid an our than other issued inorganic increasing around XX% levels the clearly continued guidance on we've to profile revised As QX previously revenue by will back are That $XXX think before initial anticipate morning. the midpoint approximately QX. $XXX trends are back improvement, in albeit potential improved the With communicated revenue EBITDA and visibility half, We front, to EBITDA based capital growth million. active

offering merger share and in by our Alliance, prepared clarify to items two I the open Madison the wrap an been of entity since total the have remarks excluding recent shares. our few call Q&A, Walgreens escrowed XX% Boots to and shares, time a the outstanding we the approximately held secondary years approximately that shareholder canceled, ago, of or regarding million At primary Before by June. most formed Dearborn wanted Partners shares XXX

year, of investment, past XX through most on which or shares, Madison approximately the in XX/XX offerings million outstanding million to shares. XX that been, the Madison approximately on the be based a the basis, such interest sold has to Dearborn the XX% reduced proceeds series its controlled today, recent or has Over shares, allocated a from continues pro-rata and under and offerings, as Walgreens, secondary of total secondary Dearborn, just entity, approximately entity, offering, by has respectively. of their Until and

the million indirect holding today, Madison shares, Health, Option of Dearborn total and to affiliates remaining Walgreens the XX.XX with Dearborn XX%. indirectly Madison recent and XX% Dearborn of and outstanding Thus, offering of other an shares of principle financial Care proceeds offering agreed Walgreens shareholders. as of Madison all interest approximately in in to has with However, the allocate the

by we wanted dynamics, position, of on on investment respective shareholders. given strategy, their clarify future comments the any financial we the to either or recent intentions their have further insight don't While any

based And in encouraged we'll by very operator? momentum. strength second with of quarter our the the are the half, have that, considerably we the half first on call and second closing, in results, raised open the to expectations Q&A. So,

Operator

Bank. [Operator Our Deutsche first with question from Instructions] the of comes line Pito Chickering

open. is line Your

Pito Chickering

Hey, my taking good morning, Thanks questions. guys. for

a ones here. couple Just

area. us on of growth as then more the obviously within you some versus On think, growth And give chronic the mentioned, Can I multiple extremely you topline chronic, this color quarter, sort acute. sclerosis a strong. just

it's give what outperformed Just as versus really whether us more to sequentially year-over-year. quarter, details this

John Rademacher

Good morning, Pito. Yes. It's John.

So, portfolio. first balance pleased and the across foremost, acute saw that really both with we and the chronic

the we and in opening the been and to about acute in process. hospital, up expected I receiving increased think as had mentioned, flow within referrals area we as we things of had before, that really lagging some to talked as care, start as we've some ways strength patients through return saw that

done we up. made reach had increased and job to those referrals we as good pay starts. as starting that some So, referrals converting think called the investments I of And a out. open to are We've frequency, increase things our to of really dividends

side, chronic good team. the again, On by execution the

see we I called believe continue adeptly. portfolio across to as there. IG strength the to were pretty navigate the We out, do marketplace we that able

because And constraints supply any chain so, the really issues. feel of didn't IG side from

transition with partner all, patients in good all, all of those very balanced. team. care to as with looking deepening in on us. referral be execution choice they're So, the to And for their relationships All by to opportunities the sources

Michael Shapiro

I'd the from look, thing is given little the and quarter comp second the is, only year of a then. The the state market add mentioned, Mike. it's prior we Pito, just the results obviously back as wonky, Hey,

an John the comp. collaboration, as challenging side, we’ve we the side, And ourselves great as on our think think, dependability on said payer had what in I again, and dynamic. easier and a acute more prided on chronic resonating. remains the said, we've market very proposition and value I the reliability is same, of

there's time the on relative focus, hits box. prior the think more field their box. into and to batter's year, getting first the and team based in into batter's we're quarter so, walking the phenomenal And every And more we're the trips I

Pito Chickering

margins. on you for question poll A

growth these sort you of of just or continue you help revenue did revenues the For assuming topline understand or sort what to next got that on beats, SG&A, should ratio? here. levels, we the line fix is the huge kind that’s next guess, some where within when understand, be as two, the in like I trying of margin sequentially. think at how of variable or We've SG&A component couple can much Kind you to of about driver forward leverage going he realistic as year the leverage SG&A have primary us grow SG&A, obviously conversion the modeling years.

John Rademacher

XXXX, spending the leverage we've XX% strategy that we the forward, are this is gives line, it's last leverage. the really confidence our of the a on confident can But efficiently again, There's look - to will at second we've with where we'll synergies. for we realized organization, over at roughly more to topline growth outlook obviously, that that. integration every forward, part over those never highly overall us our we’ve give that natural to inflation, have, us pandemic SG&A as parcel to not variable continue how are a are forward, operate, years, which that The we've think estimated don't like we We continue confidence and the meaningfully last our in included below that to decelerate the harvesting components, SG&A going up We're very several we quarter going Again, driving the learned are high margin of line, expansion. that also XX%, obviously and And as And during fixed. a to leverage. a will I and topline. gives going we that really drive just going in cost-outs. about more the because the confidence, on have remember continue spending some we spending have of in starting it pace degree grow That even process have able we'll look a in of still other that within infrastructure the costs, percent as confidence year, be spending the Yes. we disclosure Maybe much I lot in there established drop. pace based but that well. think the that some and with this revenue again, were nonetheless, morning, to

Pito Chickering

follow-up. one, to commercial they're will number any questions, not this you so sort Alzheimer's. any all generally And margins smaller in and what - but line pushback? track - you’re seeing to understand infusion, customer much quick the with business, curious, this but year two Alzheimer's on I fall relative gross just guys that side those are home should on within of color customers, then guiding those of much. the although chronic a base it's Alzheimer's, impact or is a cordial the business did just the on physician Thanks managed care, of a if a

John Rademacher

some it's on Yes. too tell to Pito. think Look, that I stuff, of soon

trying prepared authorization lot to at There which from we and remarks, in in mean, very are to way I determination, the my this. coverage I be of that a allow we're around look said standpoint. still this payers going As thoughtful are questions

to time, that So, and actually what going to answer we near have term, my it's as comments, in have conservative in a think as in why types understand as support don't that that in we're bring I and with at will question, of population. these our we don't in of a payer expect knowing matter this can an value say, a our let to platform to really which in in this kind of determination, I in it's products, look, without patient approach Washington, But said point to we and of, we payers are order really opening great them is provide were working, well community, the how we value. making the that do both certain guidance, significant not really of coverage amount our they're

Pito Chickering

quarter. Excellent guys. lot a Thanks Great.

Operator

you. Thank

with comes Matt the question Blair. William Larew line from next Our of

open. is line Your

Matthew Larew

and quarter. the Hi, good on congratulations morning,

comment on a Just wanted made. you up to follow

were therapies pre-COVID. trending there above I think mentioned were several well you that chronic

where involved strength? more a for give sense a would could that efforts? little redirection there new payer Just from that you particular color maybe you're So, And in you're us Is of is side in? seeing therapies interesting. be care

John Rademacher

morning, John. good Matt. It's Yes,

initiatives, specifically outpatient were is as we've to site decisions from out ahead patients where helping they're a on practices hospital receive sometimes to of disease, question, a support move historical A us. care, So, in seen of physician making around In your payer that lot areas. inflammatory we with so to choice chronic in collaboration, of of working departments service and where care that basis. couple around of and

to and find to payer their we deepen to supporting closely opportunities, appropriate ways community partnership providing identify So, of work at across quality those goals an the cost. continue our in care high

So, part in of that's second the been strategy, our strong execution the overall and quarter. was

Matthew Larew

Okay. It sustainable. sounds

again, interesting you have one, comments, and second both The John today. Mike, made

X% I think couple margin, in we're years was, levels from And getting terms ago, building level over of it started idea just just this some of to today. the X%, EBITDA I think sort a of time. off getting the was

So, you I think I've heard long-term on as is margin this picture. the as bullish

So, on encouraged what particular I guess maybe in comments, we're if just been you you've by and getting the, could there. expand started

Michael Shapiro

I demonstrate middle areas we of curve just it's of number we've lot locker think phenomenal AlayaCare, able we technology so this announced of quarters, were we can bricks partner out and virtually can, when the And it provide number same expectations efficient level is, to and around a that need, In the how pandemic, room, now paint And together, ours. on just where learn we And comments how been has same more making we organizations we think balls a add scalable Sure, to platform I the made this continues payers where leverage and and expansion. improve with in the to confidence. got can we Matt. it a just We collaboration additional put experience manner. been how to the gives around can to that were that the time the integration, patients, which these mortar areas continue Look, infrastructure. the think much technology to a Mike. at of the with we of and us we of truly for operate business. of Those the at the A, a in we speak. see it couple the do have margin and higher been we value patient time

of as so, able the faster go look, benefits some Again, - regardless topline. this than we capital that what headwinds, efficiency we to candid to got acute. of spending able business reality we’ve the are believe received debt chronic that we be the procurement portfolio strategies. grow bad reality And been to the as mix considerably shift we and components we view forward, and portfolio the we confident grow highly of continue mix with the offset the that will and business this will below But of

that of see I think EBITDA don't think steps over a on the we But seen I higher almost have that of a limit years, two and And EBITDA continue two-year confidence a nonetheless, to so, expansion higher merger. put we'll what high at as the last away of the be. big chip we've wouldn't the margin, we'll at I upward could the anniversary degree and we're

Matthew Larew

Thanks. Okay. That's great.

Operator

Thank you.

next comes of from MacDonald line with Our Truist. David question the

Your open. line is

David MacDonald

just Thank a you. Guys, morning. couple of questions. Good

bigger look whole more is acute they're some across First, health announcements when you treating of home we've the And guys a home some bringing, on home at about interesting patients. board. seen really services of that health, out the infusion the

bit can work you prepared spend during with the to you et on helpful. that'd collaboratively a about just players? So, cetera. home the But could more little mentioned opportunity talk if that, staffing, remarks You minute the a health be around major just

John Rademacher

morning. Good Hey, Dave.

those So, look continue to relationship. for look, to opportunities deepen we the

again Amedisys in population. team, to clinical opportunities is their well opportunities leverage both to support then around of us with do for we the this I had looking process, sort year, Amedisys with in on the at some as be think you'll monoclonal as think that year, We patient doing are the we work as late partner antibodies. announced a last earlier earlier and of resources as recall, there did we

additional position well activity new we're some move of And that in we're positioned opportunities think that there. in and we there at in. are the partnerships for we're participate We to So, as forward. deepening ones creation pleased of order

David MacDonald

Okay.

currently Secondly, percentage you percentage Can sense, the hours, of you think centers, are leverage and either pretty a revenue through that XX infusion nursing how running can XX these you give the metric, by then talked you or of much those that, is given - new potentially within centers about to in you best year-end. us around or significant push think centers? just whatever labor

John Rademacher

Yes, Dave.

We were have - facilities, home. we XX% suites. nursing We’ve Through we visits of continue opposed of infusion to the focusing monitor one the we've been we've nursing running and we our track, in in about to being visits the and talked on percentage really second that at we conduct teens, and I were as think before, as look those our that. the quarter, done of high been at in in

the about Our side. more population, especially move pushing talked that centers, having of and expansion post available centers opening patient patient that the can by as on expectations the more well we as the seeing forward chronic convenient that for growth we're in we the be is, we facilities as

a to I to on we facilities retention benefits XX%, the we get of satisfaction only level is and There and patient kind are that satisfaction the of I organization gain of efficiencies think population, we're convenience that's to think just we're the And patient pushing of factoring those that, that realistic. push that that features the build out that. in the goals given north XX% that we can whether we're the that, and into, the and looking there. not of can

do rationalize redundant a infrastructure of So, lot the talked we a historically of have to to and do of work to we that integration, there. we around lot work look, on had some had

And move a part growth So, plans into we're expect our will bigger care our that we ahead. looking our that of as model and CapEx service focusing strategy as of building levers, we the opportunity around start part effort bigger that integration past go-to-market point at we really and of be this move forward. as we're now a these

as you've it's to kind we're a So, a in not from able way. capital-light of stand in efficient what being deviation up historically these seen pretty

David MacDonald

look go-forward about debt if Okay. further And denominator, would When for range me, in then to last assume at like outlook here, net leverage? is times. deleveraging kind of it think the four I south guidance, a of actually then terms midpoint what more of of ‘XX business basis, as in, just question the will it’s long-term the you EBITDA shrinking numerator? be to to you on opposed fair And growing run the the to

John Rademacher

Dave. for the question. Thanks, waiting was I leverage

you cash generation levered I we're mean, capital efficiency with be So, business. at wanted the one. owe the year. times or of thrilled the end the by we Look, flow mentioned to and of I four we the below net

that's We’re we there at M&A. mid-year, and in a where quarter deployed $XX.X for million

and incremental see cash dropping area earnings relatively excited with interest we the with to CapEx quite significant. because really where flow static, cash another we so, that's get And incremental

tell robust. are will And of we dictated M&A far to the that to I - four we think what How partially expect below business below, be you ahead is activity would that - I it's the times. opportunities going lie that us. strategic operate this by

south, based will And capital we value think, drift cash the of additional the I some exciting and continue serious likely best of fact create and the an that flow given I will that we we're for trajectory. it's to more Access mid-year, terms think we shareholders. the news just how aspect will share in that to to to I than where end we have year. take a do given on earnings think not and responsibility before And that's deploy the - are we substantial. capital be

on come to And more so, that front.

David MacDonald

Okay. Thanks. Congratulations.

Operator

Thank you.

Goldman from Our the next line question of Sachs. Perse with comes Jamie

open. is line Your

Jamie Perse

about Hey. Good thinking morning, and level-set growth long-term you to are on and wanted algorithm Mike. just touch how that. all the John guys I

the given think growth investments the where time us grow this can Just suite, growth level-set business this step-up you long-term? you new the quarter, infusion talked on it about, of in kind is to

John Rademacher

we've way obviously position we're a not it single longer the term high topline. to Yes, provide but a see digit this characterized Jamie, in industry to look, in is, we mid guidance,

reputation tried I we a that laying to think deliver. out extremely of high of will we've guidance that degree we confidence an establish have

believe low couple also of the we’ve that based that see we of the this note momentum we're over aspect we've And - in it use. demonstrated little thrilled this of to said one just than that before I market, mid-teens. with case of atypical, XXXX, a gets we comp inorganic unique of the in deployment years, business as a the to we've capital the like the last Again, somewhere is the guess, the Look, model. relative caution We I'd can built. term on to we grow base think faster around year, in a just

go XXXX, as now, so, we in focus still zip I logical a think base we for And code confidence that a that And I very get of case. longer degree closer think is as term we'll that. look, to have still we high forward, But revisit to on.

Jamie Perse

the Okay, barrier I'm that confidence enough. wanted that's base to I to to if that back to side. business. a the to Medicare and improve, on know what fair wondering the I the there. issues increase reimbursement would come mean Aduhelm were

the change the how are for So, forgetting the addressed sites and that of that therapies for these Alzheimer's outlook could in the your moment, alternate number business?

John Rademacher

our way that, the in both the a we better approaches Yes, and truly scheme process reimbursement patient their Look, only plan multiple care the a we're when getting getting think diem focus. provide, fixed the the focus drug as as that's that as of we're calendar care talked through the the a I and oversight, not care. home, that near-term, managing provided. And is independently especially the per getting about working not inadequate on per and for the the the well we've current with drug our for Jamie and process, t's to industry around nursing the just reflects look, reimburses, been reimbursement dates that interventions before, on that's Medicare that them under through process. is just

all given access time in of the I expand priorities this pretty Medicare the it's Washington, look think for opportunities to to take continue to to is broadly, population, and different we'll more complex, going but DC. expansion

Jamie Perse

Okay. the Thank quarter. you. Congrats on

Operator

Thank you.

line comes of Gill JPMorgan. question from next Lisa the Our with

open. is line Your

Michael Minchak

morning. Mike actually for Lisa It's Minchak Thanks. this on

Just a couple of questions.

respect first, of with And within this there of or seeing the just - the quarter the segments the are are trends at was the you maybe given margins, all I if the both you of could nice key on gross categories? therapies, growth more there? sort what if growth growth. Was within very saw so, trends drivers you was favorable in business. year-over-year there wondering mixed margin clearly sort a acute of So, driven comment pickup with both to strong

Michael Shapiro

Mike, Hey, Shapiro. I'll start. it's

dynamics look, I within think a couple key So, margin. gross of

First and down bad foremost, debt we it bad couple continue to aggressively percentage a Any of and year. last we've driven drive of the full debt. is unacceptable, points down amount over

drift we've towards bad as benefit. immediate down so, an debt seen X%, And that's gross margin

with from benefit the also Aside to continue in none. from working better that a margins promoting strategies. market therapy categories, most have second Again, relationships and got our them that, we expansion And procurement each we to and each the can with having of our those within therapy, of result within as on work team suppliers. on manufacturers And aggressively collaborate of We’ve we, we categories. suppliers. been with procurement we direct that's

traction it faster mix comp we saw benefit in a saw margin of little would the the of acute individual say, that is some easy A, I we think chronic headwind. good terms from would did Again, acute. within year-over-year, We but latter I assertion from than way So, an your probably ASP still the still I each headwind growing some characterize saw portfolios.

Operator

you. Thank

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

Your open. line is

Joanna Gajuk

filling the it today. taking expect for questions. you these for of the up Good follow XX before to want Gajuk couple like infusion in guess, Kevin I half a on add, things on in morning. Thanks sounds to that I that year. Joanna discussing to this of is second suite were Actually, you XX, right this

kind that of many mentioned, did the a very point, way you And the of I - you it's guess acceleration you suites about of as months, So, to reference this pandemic, last year, kind since add in of of the for a can suites XX cost how sense or being over maybe growing. those efficient that, before the added? get talk

expectations of CapEx the for So, can I you guess, ballpark, give a us year?

Michael Shapiro

Mike. It's Sure.

this to strategy, again, almost these we XX% have growth well clinical amenable we So, of management today, roughly that events coast. conditions centers these infusion XXX of and are lot coast our are view are we suites. And XXX as of one many our a chronic into a as of lot labor is of efficiency the occur And a both support chairs - little suites quite of a mentioned, as as Again, these cohorts care platform standalone. this north suites, as incorporated nursing A support. in our to and today, patient pharmacies. - this John

John Rademacher

we as And added in look, about - the half. think first we've some so,

very These is That aggressive I We investments. as an amount in that We $XX we infrastructure quite would have funded what to our $XX estimate. back to And a And our growing. has XX million suite been, plan capital within and expansion in to we've an basis. efficient and don't we a other are investment absorbed to that addition be in projects the can see through million say view on that expansions accommodate really the range. half. XX technology few characterized annual CapEx relatively continue efficient and will

Joanna Gajuk

getting growing the market. what because because Okay, you're was these added it's recently I faster have at you suites, than is, clear

is those any last sustainable. think suites assess sustainable. markets are gains of ahead it to these just what there, that it’s whether driving trying all we’re that. the reason maybe to color sounds adding And like another But is So, couple quarters

John Rademacher

we reach are payer they're make getting have team adding But to that that would of deepening by, and that ways. again, from the that. certain and that the we the partnerships the our additional platform access, I and the a in certainly on and referral guess, capitalize on the infusion sources, we chairs the that Yes, that I the driven John. of to into partnerships was respond with have. - have it's focus commercial did, with the community, give the we’ll we lot Certainly, they market deepening and suites two broader out capitalizing a that frequency, that growth

the it's strategy. investments our that demand of share to them, the expectations component we're one provided given is that capture growth made our be marketplace, opportunities And continue going the momentum look of given and have the what team, well-positioned the those in for think just the to we continue down to fair to go-to-market I are So, we've into comprehensive training that

Joanna Gajuk

you to with for share, said of payers dynamic? market you these that And something topic on I the clear on up about shrink talk Is also this follow could to you of And networks? guess, are can their your relationships payers? you gain your there drive beneficiary a

John Rademacher

give to superior positioned sets on an on from that will a we offering we’ll that our are confidence have, Yes. cost appropriate capability well in gives their that have. of which regardless want we're setting clinical and that. high outcomes or Look, The we you in have based strategy think national we if care care, location, be Look, the their the network members, the patients them we patients well-served perspective. their really quality receive at

side narrowing we be we patient conversations. and we’ll And that’s on of those there. on the look, the - a our high because networks expect partner side around of so, right that do be think of if we're And preferred outcomes. satisfaction we we quality should them focus for of right any is And that,

Joanna Gajuk

home definitely, more how for guess yes, unified guess progresses. guess but I it's relationship because scoring I really this there's about deliver relationship then would payer quality the you I I really and system not infusion, guess Oh, them, to a

So, that, the understand you and Thanks. answering thank I for questions.

John Rademacher

You’re welcome.

Operator

Thank you.

of the comes question from Mike line Research. next Our Petusky with Barrington

open. is line Your

Michael Petusky

done. you get if I maybe you expense Mike, the of couple stuff below on Thanks. - questions. through cleared I debt morning, guess as good or driven BioScrip there. guys. A thought think X% some meaningful guys there's of room about there it by as cleared then, out or was And I think improvement, was guess, old that things bad that maybe have X%. just good And through, I'm gone I curious always the could Hey, being that had

Michael Shapiro

our in I'll Converting too getting way Look, revenue call it cash who we've arrange the high. light pay on Yes. with for bank. look, that bill. All will Mike, is five what the assure to the last X% Revenue cash team years. this is aside, a focused cycle doesn't kidding you and

the Option side. well improved legacy as BioScrip we so, the call And side, technology, what through I Care our have both as dramatically on our collectability, would

that with thing a would pay an we're up clean payers. timely I we're we're say claim payer, so, around and more And sure you present is accurate, amazing the providing you they following timely. making claims it's The presenting when to very services, if

relentless. And some came since nowhere as close We just so, look a - revenue. gets, doing complex And that's down is there's it as growth, accounts on so. if modest we've basis. but on And it receivable combined our as focused and the become merger, you dramatically

theoretical the below I we'll front. getting in And on the matters might've cash got How our low. say, to And I just will that been started team that dip that is really a would would improve. far? X% expect X%. so, getting is And we've bank. that that just continues DSO I you tell What

Michael Petusky

a you other XXXX I COVID sort guess then, in any that into guys, have that with And related earlier companies, you there well learned deal call if just out about another Thanks guys of at a variant least healthcare or a period this position to that heating Okay, variant learned you variant time, they've will ’XX. becomes things curious, for John, during their or things year, this Delta that terrific. And lot you and you up. that expressed feel early of year, along I'm are challenges of with can as thing businesses last you of

John Rademacher

Yes.

talked that we’ve of things couple a So, previously. about

us on stack, and the us virtual to And features, that efficient. on charges patients’ for Some allows to of the improve in ability tool be on virtual engagement basis, technology to the investment this support. a utilize

going we're to So, to that appropriate. continue where leverage

access. restricted marketplace, had Our while, team the into become capture to even being allowed very a has we facilities, or for we the able in at weren't though adept demand the

those so, execute we're continue to to going And around paths.

Mike - just we're effective the that to those we from leveraging had and honestly, to to the the because out. operating get of how as we going as standpoint, remote efficiency the Look, very with ways pandemic, workforce from tools figured and look technology we forward, in weren't we'll and advance of continue in expect think those that to doing collaboration continue we effectiveness called have I out collaborate ahead. be move an we

Michael Petusky

looks the dip couple Can the I to any key bigger States of I according States or in that meaningful morning, noticed appear of like variant variant? to ripping ask, hardest you think in it Have a with be Delta States. else just hit anything this sort read or patient referrals I guys through article an is the this

John Rademacher

being they Yes. impacts towards their or Look, responsive as we of that. certainly pandemic towards moved the move feel elective reducing If feel reset. the more they or the eliminating to in surgeries, marketplace, hospitals impact we

specialists to diagnosis We also or feel the when care. for patients aren't going impact for

and But and duration trying that monitor market-by-market closely. short manage of we're kind we it's And I a so, those. now, on the that’s - been for the that a to of very mean, pretty But right impacts yes, monitor feel basis. we variant

Michael Petusky

guys. Thanks, Okay.

Operator

Thank you.

next comes line Genuity. Close with from question Richard Canaccord of the Our

line open. Your is

Richard Close

Mike, I obvious and Congratulations because past, year. asked all, some would of conservatism Great. merger, then foremost, the first with a respect to Thanks. here, comments your great A quarter. questions in COVID made then lot and obviously, ask, - on first of have you been the but and last

your despite Just guidance, changed, to clear, stance of correct? conservative be necessarily updated hasn't sort your

Michael Shapiro

I fair. think that's

Richard Close

a little maybe on the then And just Okay. side dive technology to in bit.

the previously, the forward on spent technology of and technology the quickly? maybe millions the to new technology, and this from how talked for as you that I'm tens you've you all collaboration, then about benefits do from on then of on dollars the now? this And You looking of do think realized benefits engagement. you curious, see with debt just coming collaboration bad respect where

John Rademacher

Yes.

So, first a and in foremost process. we are still

fully here platforms. all across our of will August technology We in the deploy

a out patient that. through that the is and and from can and and tightening receive co-development see to and opportunity there we with the better patient the some we have some of of opportunity efficiencies about We're that kind process AlayaCare So, there. experience of engagement still that the interoperability, interface collaboration excited drive really

So, instances, see and and outcome additional many for better a some still opportunities we engagement efficiencies drive and population. effectiveness, in patient the look, to

Michael Shapiro

integration lot Yes, we retooled with started market-leading of absolutely Rich, the I as years we've merger perspective, a and return and rooms we think I think from have infrastructure. ago and process, throughout using scalable we've - a about platforms, and talked very replaced platforms pharmacy clean

now continue digit have cash absolutely would pre-merger, going think I ROI, I - from highly those I the were that the from expected. And to in generated we scalable and we're printed and margins mid-single I think an say be earnings forward. we range, or the just EBITDA eight. think than the we the platforms And greater returns

Richard Close

to touch Okay. wanted helpful. I just then, the very John, labor market. on And That’s

Is You did thoughts as you prepared headwind component? bit forward, there managing guys that look is for biggest the mention Just just any helpful. you remarks. that the quite labor in a your

John Rademacher

certainly headwind. is mean, I a it Yes. look,

clinical that through I the of up and allows full-time, being process. the part-time per that our that eye one diem, closely. that You the of are on. some some many is don't of some It highlight we're nursing our then us that yes, we constraints. of, areas that market-by-market of Certainly resources, driven. strength of keeping sense flex is relationships we pick the have our agency area an mean, to those But like newspapers in don't model watching We

other had Delta the year. second to just that have we're talked eye going variant, think keeping the was half for we that's how and on is our I about the the impact in thing

Richard Close

Thanks. Okay, great. Congratulations.

Operator

Thank you.

Our next with Takkinen Capital the Lake of from comes Street question Frank Markets. line

is open. line Your now

Frank Takkinen

or refinance? Mike, rate the on expiration there's quarter. coming as it expense my taking questions one. covered. remind potential lock keep a A a for us up. well thanks thoughts, And on I you any I'll Hey, just and of relatively as to congrats one been interest can likelihood simple think lot's

and give think into as we back interest half maybe this XXXX. year So, just us overall the thought expense, about of around process

Michael Shapiro

Sure, Frank.

So, second an interest. $XXX swap to the a that quarter We're cash represents expires always it we time, journey, near and to in should in depending about at ago. XX% That the which a look, XX. cash to started were rates this still swaps where take And down me - in X% we fixed. annual are, the from low in keep now rate in we another low at rate couple into million the somewhere includes fourth on you burning years that our rates cut - of as end includes That step of the honest, interest the when LIBOR going a quarter. mid-XXs, our quarter, meaningful that third somewhere right

incremental So, earnings cash very back good to flow. around decline. converting And to our goes again, comment

mentioned refinancing, remarks, cove-light. a prepared the that's got cap great we've I as in Regarding structure look, my

maturities We'll opportunities We have capitalize years. XXX. further all for And cap continue look if bet five will no it's to opportunistically those you opportunities. can improve it, absolutely plus L on and to at at we there's our structure,

Frank Takkinen

on congrats Thanks and Perfect. quarter. again the

Operator

closing would John Thank now you. for call I'm the over like to back queue. showing no I to turn remarks. further the questions in

John Rademacher

of closing, first very our half the Great. the In strength Thank and performance pleased with team results. look, of I'm the you.

this and you the Our dynamic momentum capitalizing Thank care and on this providing joining us patients stay are morning, the even please gaining, focus safe. that remains in on extraordinary we to we serve, environment. for

Operator

concludes call. participation. you Thank this for today's Ladies and gentlemen, conference your

You may now disconnect.

Option Care Health (OPCH) 3 Aug 212021 Q2 Earnings call transcript