OPCH - Earnings call transcript Q4 2021 | Option Care Health, Inc.

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Operator

Thank you for standing by, and welcome to the Option Care Health Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s program maybe recorded. And now, I’d like to introduce your host for today’s program, Mike Shapiro, Chief Financial Officer and Senior Vice President.

begin. may You

Mike Shapiro

Good morning.

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

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

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

Investor additional You website. in these our morning’s Relations information measures the non-GAAP portion on can of press find this on release posted

to will have this over comments the our brief I posted to Investor I highlight on to our Rademacher, Finally, Executive we that, a turn website With that Officer. to presentation Chief augment John call morning’s call. wanted

John Rademacher

was deliver despite to many for Thanks, Mike. Option financial And the our and continues the team strong quite say to XXXX shareholders. patients Health results Care care challenges, least. for extraordinary our year dynamic a

discuss members. a we the we team this I to manage focus continue of through and dedication and Mike not be As Option of challenging Health Care will nonetheless, but of environment, morning, could prouder the thousands

systems, physicians our were the in disruptive. in ways COVID-XX optimism, as an on in expanding yet, an on build environment XXXX on to we and vaccines more to exited while entered setting patients, of year our reputation payers, We as and industry. the continue access the health partner as We And that commitments, in trusted was the and a treatments improved well financial introduced. care delivers as team that standard many care for being patient environment

variant, models referrals and patterns. more in volatility we the the widespread of With experienced disruption our in of Omicron emergence our labor

The manage to December team year, with impacted pleased today, we and late we engaging labor sit disruptive quarter. disruptions in we the delivered we through of continue challenges a our it’s broader sources. environment last start a are As here resurgence has referral challenges COVID difficult Despite also as to the first faced, our of in results clearly all in financial results the very exited the with XXXX. we and resulted with

For we improved portfolios. growth the chronic mid performance teens top across drove our acute year, line with and both

in unsurpassed since with capital M&A portfolio line growth contributor as top Our XXXX. chronic our increased top come line engagement is Mike capital therapy same time, upon, X% set and will biggest margins the progress the points continues be million our the to in $XXX while the expanding XXX At which over in for and over EBITDA year. above more our expanded to sources to leverage year, prior the basis of referral expand leveraged earnings to translated to and over structure with we’ve growth therapy with growth, profile we’ve improved their deploying we approximately EBITDA for ensure investments adjusted up XX% the patients. into merger the care XXXX And and as growth clinical dramatically

component operational are the XXX clinical centers, cares both XX% to our open to centers our our across and Chicago, existing more to convenient efficiency continue infusion pleasing esthetically capacity our suites than a execution, improving invest on in management facilities Cleveland new standalone we also infusion care In for and Jersey, in and care New offer XX opened and and invested near-term These we country. logistically three XXXX, by While focus continue infusion Northern footprint, critical future to we increasing state-of-the-art for new strategy. growth. center patients

of network this expanding on progress make technology connected enabled and facilities. to continue We

With we acquisitions from team. the acquired and which here their of from in capabilities complementary in I’m M&A more our our executed centers, team unique in on and experience flight infusion learned to to to center great West. acceleration one we focusing and progress. existing our very In three rearview sit as highly We’ve is and expand already mirror, XXXX Wasatch have efforts complementary the squarely leader has operations created infusion today. we’ve Infusion, December, four we integration a the in merger integration patient market network Wasatch Mountain by a Wasatch deal Utah the Utah, our pleased across in pivoted The with our

the Although, is encouraging. is early quite read new, relatively this acquisition

Infinity previously As support access clinical acquired in objectives. capabilities to of growth clinical our broaden our to Nursing increased resources announced Infusion in October, we and

uses simulation progress been unique and to participants network ongoing, efforts highly This of market has growth. that infrastructure to infusion Again, other focus will tremendous. care the capitalize on the market model on our meet Infinity’s excellence a to While supports qualified nursing nurses care complementary pharmacy allow vectors to a us are additional date point business of is its at has and aggregated of demand.

built infusion we nurses, to As labor it access the infusion some alleviate an nurses experiencing organization resources. nursing improves pressures in for are that of by is

consummation clearly created unique will support at network we same can we we in anticipate is highly support Infinity value SPNN. on additional Infusion clinical definitive Nursing providing we providing while national the Nursing the Pharmacy time. later SPNN morning, a and Nursing the that Upon and this broadens and to have this up to and growth On our the will the of a closing the manufacturer complementary chain. SPNN’s we’ve Specialty pharmaceutical nursing national deepen a in collaborations, on resources nursing the year. signed SPNN, leader agreement biopharmaceutical focused that acquisition our Infinity heels network of Infusion down have services of acquire administration our services or relationship Network of acquisition, aperture announced expanding services provide is

their to care by M&A health So and our patients solid reimagining we have on strategy care infusion transform reduces cost families. the outcomes, hope to progress that improves and our achieved executing experience help delivers our efforts and to-date

XXXX. momentum the expect in to We continue

the call turning the to spend minutes current I situation. Mike, wanted pandemic a on Before to and few labor over

have QX, there In closing care previously, stated on our saw isn’t Omicron, enterprise. considerable sources to variability acute reverting onset statement we procedures. with back late situation describe simple referral a several with pandemic to uniform of facilities numerous delaying we the referral As the doors and in patterns

rates. experience disruptions to continue and the force the saw labor variant infection also nature Omicron broader to our widespread given a and the of We

best This impacted pharmacy the us lean it from and is labor the we but economy. same to are model, has nonetheless. pressure but wages. a access challenging to and also We not almost staffing scarcity We is resources, have our out every time, particular impacting operational network very ability affected on resources focus remain At proactive to nursing of in on the enterprise attempted with that our placing dynamic immune force across dynamic and it labor our managing the environment. our remains redundant

well-being employee continue to diversity choice support to team steps through and program. and remain and members various employer health take initiatives, to We recruit our daily and programs an retain inclusion talented and training of our

on sources. team trusted we our referral of disruptions, the reputation Thus had on partner. our far, some closely Given our to have our level as and we working although, a with build commitment market focus continue

impact. investments clear model. the situation Wasatch, SPNN and steps of through manage to examples Significant try to actively minimize are to to continue in will and how taking Infinity have a operating We we nimble the proactive are resourceful

million year the XXXX by are So $XXX strong encouraged over we very to as results I’ll and With in the environment and in Mike guidance dynamic cautious remain million we in the EBITDA the bit detail. call $XXX the while new we communicated range the platform find to enter results adjusted are reflects review building, to ourselves. we turn a we more of we this morning Mike? that, which the

Mike Shapiro

as reaffirms resulting the and the pressures times million, this almost headwinds, Noted on morning, do balance earnings exceeded of revenue prior rate which teens, perform represented The in X% portfolio, that foundation anticipate of XX% growth towards single million, margin established $XX net reversal the million. one-time in conditions. our to the portfolio and mix expansion well tax in income was The rate reported fourth revenue just inflationary mix myasthenia held therapies of team sheet not acute chronic first while the deferred the high low XX% quarter to and Fourth portfolio margin on well and over share we’ve line a impact John. balanced therapies of $XX.X as most of operational at X.X% valuation forward. XXXX our saw chronic Adjusted gravis Despite sustainable solid recognized in X margin year prior digit. under led and across a and over QX allowance to the bps continues quarter continues with assets margin or for grew we utilization EBITDA from over of in our Thanks, gain we and net we going gross time focus the expanded by MS grew growth shift but leveragability XX which we’ve of XX.X%, EBITDA efficiencies from established. therapies, newer per grew on of for contribution chronic year. lower QX on the growth. offset chronic inflammatory gross the $XXX

assets cash inflow deployed tax really reversed based As where gain. three we of QX, our our from capital in reassess be have indebtedness And more and one-time a of we the all $XX improved reduction thoughtfully to year, exited acquisitions. flow perspective. across million deployment $XXX the flow for deferred We resulting capital operations. on the most structure of the strong. continues utilize to and about expenditures, substantially very good required, we And million we of than exceeded feel from we year of profitability, the reserves through in regularly ability Cash

of we of extension and the debt exited the to profile that with With the times. recent net ratio our and a year fact EBITDA debt improvement X.X maturity

earlier. as many basis, billion morning, to X% X% generate John we we obviously to we growth. $X.XX develop the expect the a As articulated revenue $X.XX preliminary this or of that billion to dynamics incorporated guidance of articulated On topline

Our and emerged later XXXX. in EBITDA that as inflationary operational well range continued topline challenges reflects the as expansion

from go corrugated the that our that and We from SPNN transaction guidance everything fully of acquisition to not the medical transportation just has PPE. closed. are plastics any of cost yet beyond which labor some note include incorporate pending Also yet not to does pressures, and contribution the as contain inflationary

our operations Finally, on to capital we flow expenditures well opportunities. be continue would from the and focus to as least at generate in M&A anticipate cash $XXX million as expect in infrastructure, primary to uses continued

updates naturally will Operator? we the our guidance provide open that, throughout We the with will to for call And year. Q&A.

Operator

David of line from the from comes Truist. question first Macdonald Our Instructions) (Operator Certainly.

Your please. question,

David Macdonald

morning. Good

couple a So of questions.

just sounds bit then on for have little guys just a how First, the and little you angle acquisition. provide capabilities specialty staffing, more more SPNN, towards just it those may a you talk can the Infinity? like has some since it book capabilities the done bit on you Infinity And in that detail of what about kind complements Can on chronic bring incremental side. the the

John Rademacher

Good John. Hey, morning. Yes. It’s Dave.

First and foremost, with morning this thrilled really SPNN. announcement with the Infinity and

First firsthand and our having is of that a we critical to access trajectory. growth know nurses path foremost,

the part qualified strategic infusion is broad and imperative. for to of access ability And us have center front network so to our a of nurses

about lot our of our then part these a of to utilize patient these with centers fill we so give operate resources. we having time, model agencies moves diem flexibility. two time utilization the where of the and full the able of to really – strength really existing And talked have don’t us And augment augment. We’ve team be to and especially, to density these per in, that

team value stages of to chain different the with angle and really to SPNN, they an and certainly out gives little they greater up able aperture biopharmaceutical just with opportunity that had so you the fully. that have in access that us Infinity, called bit down with we’ve a that And and opened but as a at were the basis. much And that manufacturer early positive participate collaborations team being focusing seen chronic, simulation the around utilize

David Macdonald

the know just stride. Wondering And just networks of made some part narrowing of chronic, there in growth the you’re the then there. other XXXX as hitting a I any on terms team. guys increasingly sales of further this, guys, couple of in you investments One questions. if seeing strength

Just anything chronic. terms in the that strength you’d call of in out ongoing

John Rademacher

Yes. Look, referral think, closings although, year openings and I does do disruptive streams some on and with patterns. it the

the investment that which region center of the would towards of given increasing that, a still did is was part hold. of is job some sales of made being care, we in I that think the I look, the chronic of we the movement team very team. frequency, good a the we’ve gotten home which there benefit say, that in position

And to to we’ve hold right quality able in the the continuing so that in been can our XX% capitalize payer we of the able and site to looking be wherever They with conversations I to the we to the reach are cost think they that and balance look level, and strength get and the on working that platform of at reach that have to partners U.S. population. and have position Dave. of care

David Macdonald

it think like like $XX to infusion Mike then little It suite bit with Okay. pick number a chop in coming then of the that secondly, of numbers kind of range. about questions. we in And it couple $XX just just is looks will what of million sounds million And out year-end. up CapEx, a still XXXX. quick

I of of EBITDA the being was percentage the just lower terms EBITDA? a year think first last touch full quarter kind about of in XX% think full year Should of XX%, that we in year. adjusted the

Mike Shapiro

Yes. Sure, Dave.

we the in CapEx CapEx, million to $XX be would to on $XX million spot You’re expect range.

expanding our We’re offense around are on efficient relatively These suite infusion capacity. build.

I accommodate So we expect first within don’t and rate. look, In trend that yes, base quarter, sluggishness hold will is typically QX sure. caveat absolutely is I But year as beginning, the for true the quarterly you’re mean, guidance. lightest, the at to that this going can my again, typically the of give we think strongest, for well run some normal given that QX the our

David Macdonald

and and pressures of potential out uptick you Okay. there. And seeing noticeable then a in smaller killing – just I’ve guys incoming is got some of the with the you M&A Have imagine Have just last activity? folks. question calls of some this guys. Look, to terms we’re regional seen seen phone

Mike Shapiro

– the redundancy his as and the mean things imagine, I scalability. I in on John the Yes. as one is of can really touched think the you remarks,

So that us just something And which really be that that’s partner. the think areas, confidence participants a are certain higher of degree if interconnected to we a have that in gives got of lacking. we’ve dependable network, disruptions I number frankly,

access expect broadest we one on offense And nursing lot the folks challenges so think labor and keys the a to the we’ve challenging and clinical number as obviously, I of of inbounds of and team sure. best are more the having I remained remains industry. in robust is have you think ensure posed the environments, would to And that is for

David Macdonald

Okay. guys. Thanks

Mike Shapiro

Thanks, Dave.

John Rademacher

Dave. Thanks,

Operator

you, of from the line from question Joanna comes of next Bank Thank America. Gajuk Our

please. question, Your

Joanna Gajuk

much Good the taking morning. for you so Thank question.

labor. which couple pressure on are to follow-up here So on flagged, But seen doing good I some nurses, a guess, different on different and guess, the these just you’ve to guess you see you you your access acquisitions and topics. is obviously I I great expanding

I give labor that guess, how you of correct within how you’ve guess can I is magnitude got revenues. XX%, have it seeing in this your terms what is you it a us of So XX% kind things I to your seen, guess, year, in it business? And seen of a of assume so trends quarter. employees And in far you sense in maybe of quarantine, bad

John Rademacher

not Omicron that that our I that members say, family our of diagnosed infection impact situation knowing we be everyone in members in the as I’ll quarantine that members question. needless with really going team last call being Look, Look, else challenges person spread, and what themselves the on John. bit that team of well labor in for saw was certainly variant a had to of or the is the not community It’s quarantine. who the quickly of we were very on as that created. start was – had with Joanna. that the how out either the did team the your a the great need strain nimble and as the first and Yes, responsive next their rate control, market. disruption out some field Omicron part with we work to and feeling in with level do our to of to that

just has team we’ve lot a from technology-enabled broadly education kind a it effective in make that have pressures, and we So comments, be more as dynamic certain of else my that in our have platform training that allows than then model, on we The to going a we and of development. feel to overall outlined access inflationary got an we in – programs are employer us to standpoint. wages choice everyone our is we look, does, of

that. And continue so we’ll to focus on

we but we the continue but process, med saying That’s of team team from the we’re that We manage a aspects. where include increased day. that pressures and our in to leadership single supplies every cost here, through goods managers aspects as recruit outlined and expectation also have around and of the other feel inflationary our on members Mike to will effectively wages, pressures other going

Joanna Gajuk

So be over Are to of you the you – historical? acceleration kind expecting this versus costs views terms outlook I would going the willing in share year. meaningful and your to guess labor for of

John Rademacher

is, a a to I articulate Look, frankly in around a little more for drive categories. clinical our that. efficiencies try than just inflation cry around bit other is and us to teams, the to also higher especially very continue is rally thoughtful to we’re our look, where labor it’s inflation But what I offset of a not mean, with mean, that. Yes. there because lot position disciplines, rate moving specifically we’re certain there’s labor pieces

to other which again just is the more efficiency. every with rally continue pressures, we’re across inflationary like struggling economy cry the to look, drive enterprise So labor

Joanna Gajuk

And this guess, you you. that. I acquisition that asset previously it’s that acquired Thanks great. for mentioned when acquisition, Okay, Thank you to depending complementary on Infinity. the

the us any So in of had to any or understand or margin you’ve that of profile asset. or similarities expect the for for of ways pay that to the multiple size kind terms you’ve

John Rademacher

Joanna. Yes,

a would We’ll again So little be the actually to definitive transaction, would naturally agreement. a a as distant we color consummate we not we here too mentioned, signed in we in more which the once position be future. hope provide

the So when color provide get into more we’ll SPNN around we the definitely and specifics hang actually tight on zone. end on

Joanna Gajuk

I sense. business guess That And guess, makes last very chronic nicely. I growing my question,

in the, a sales guess, of the efforts the But terms little terms contracting. of base. own any, any payer their bit grow I on guess, kind also grown there payer your about I You Thank equation they United infusion I on of and business in other, a the was and touched bit capabilities updates you. I contracting the guess, force. on this as of side guess,

John Rademacher

fact Look, the pleased all growth platform. be would we’ve Joanna. that payer think Yes, the about that seen I thing is across of most our

really think of look the across those. we the we all XX growth that national of when top payers payers, at So have we all and

think of testament team so the put at there platform together. lot payer With necessarily that fact that, and that to moving into I a pieces. And level been, a the go rates we just the is has we the given that look, the don’t

of There’s really feel strengthened the the payers, payer team. pleased XXX overall, we’re relationships with we takes entire our over given market relationship We X,XXX and have all like that of and as puts we work marketplace. prices across portfolio happen But the over have the access in and that contract.

Joanna Gajuk

Thank for question. the you so much

John Rademacher

Joanna. Thanks,

Operator

you. Thank

next Chickering from Bank. the of Our Deutsche comes question Pito line from

Your please. question,

Pito Chickering

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

costs, margin pressure labor How refresh pressures points any acute got within versus one gross walk XXXX. margins margin or you expansion you chronic you us grows. there supply chronic versus SG&A. Those And SG&A The can to basis changes the to got the be much versus for to we margin are us through flat as of gross and Can from on see model natural guidance? as first if same fixed component how are margins XX topic, XXXX, pressures? of And the there should have gross XXXX. you variable is EBITDA in

Mike Shapiro

we We Okay, parts. Look, given one dynamics I Keep I cautiously most is growing going of the forward portfolio margin, initial leverage for chronic’s as the Pito. EBITDA But XX pandemic. we’re the of things One the me it’s obviously, The nature to are treading Hey, in had XXXX growth because business. that sure frankly, question as base onset we single in in that We this our to of Mike. is digits. expecting low a lower mentioned, the make folks still believe to some ability acute. you going here. outpace year. the the John stop nice acute with mean, continue see honest of in of obviously some the had disruptive XXXX, we and in

don’t not cost margin And some provide for significantly with to clearly, though, but it’s margin because robust profile again, over is expect growth. time, margin dollar every margin I team gross expect faster defeat so modest we But the gross even leverage. still realistic fights of rate guidance, sound gross the declines, basis growing the we with point slice that think

relatively the made we around our fixed our of variable, given is in infrastructure, question like, within that we’ve fixed. the SG&A base, technology on the XX% versus approximately SG&A especially estimate investments Your

margin support, Now gives to overall, the that’s grow cetera, continue wages, within dollars. functional a significantly those that gross than SG&A that will inflationary of the some are component. lower there et at in that fixed terms confidence pressures us But around pace

confidence that guidance EBITDA gives to again our initial net we that today, expand think margin, leverage accrete over time, so And I again, to better doesn’t our we will as us and confidence the undermine that in continue ability. a outlined

is what given it facing think pressures unprecedented a all frankly just us. tone reflects of inflationary I cautious

Pito Chickering

so, clinical to costs guess, percent total of just labor. from a what sub come then your And two questions, back follow one, I Okay. last

Mike Shapiro

our only with dietitians, including the X,XXX that specifically. techs, out nurses Infinity. nurses, our a We is but pharmacists, team nature, of – more about cetera. having with don’t respiratory registered majority pharma diem that than break therapists, per et not talked added which again, clinical we of combined The We’ve folks that’s

team than more of are our of clinicians. it’s comprised So half

Pito Chickering

due then assuming revenues meant lot And what came you from in percent what to for XXXX. are question and year. I this a versus kind the that acute year disruptions chronic COVID last last Okay. of of beginning your here, of of XXXX there’s and definitely guess,

Mike Shapiro

Yes.

XX-XX We’re chronic, was again, the right acute. And around XX-XX the that around at of merger. time

guidance again, be we give end So those don’t if but have and going barbell of that you portfolio the in we chronic two, interpolate we think is digit, will acute implies to grow obviously other obviously around the that where said growing the low single faster. the

Pito Chickering

quick last as building infusion then for more And Okay. suite. just down D&A numbers XXXX question ticked throughout you

in Just you D&A curious XXXX. for we what should modeling

Mike Shapiro

Yes.

will infrastructure is million And I is modestly. to the down that as made CapEx adequate built slightly. so than we’re where again, well $XX infrastructure you think, modeled think growth continue invest state to in maintain of that mean, if that in several it’s to the many million I D&A in to significant initiatives. pharmacy the we’ve I $XX we’re last decline flat investing and under a more technology not years we continue investments to over as

that from where increase And think so right I now. D&A don’t expect is just to I it given

Pito Chickering

of guidance how two so today, Thanks those that then included of kind you are have deals guidance. added Okay. And the XXXX and in much much. that you announced

Mike Shapiro

million. Again, Wasatch morning, acquisition. the So as paid obviously, really as $XX we we about as this Infinity excited disclosed is well Wasatch

we You double digits. paid that low can think

experience just around excited not overall the we’re impact, But immediate So more and into patient mentioned, really benefit. infusion extraordinary suite strategy. team as and an their it’s their about incorporating from model it’s our broader John

guidance as short are as is is closed. mentioned the not date have Infinity I to Wasatch yes, into yet not both our So we Pito SPNN well answer incorporated because as

Pito Chickering

Right. Thank guys. you so much

Mike Shapiro

Thanks you.

Operator

you. Thank

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

please. question, Your

Matt Larew

Hi, good morning.

be that on Your kind that would lead I’m any challenge labor getting referrals a do were uptick contract one. the that of and disruption labor comments you you to actually have side. curious, in part filling around

deal that be, been the of preferentially second piece The have allocate referrals shortages. you Care to to with staff any yet would Infinity able those to Option resources of

John Rademacher

Hey, it’s John. Matt. Yes,

a ability very foremost, at. team model has we’ve across in one is to the move and pretty adept we as first So, operations which work about dynamic look, and have gotten the talked the network

in have kind to a Monday we But and level. that come level quickly your delay or trusted sources. certain and comments, to said those partners we is that put because And there we as on of disruptions, variant to where things around, make we referral bit a team local a of that there some of out, partner, of start have work a partner in they market. work referral some and And did say So we continue a that there where of our in a and believe any to you a responded on did be come behind to needless and effectively. as prioritize could kind we look, certainly we that third with very that that, outlined, the that for were move disruptions Omicron everyone’s puts Tuesday market the – on you been strain at referral little may

we we them us assimilate to It to Care. Infinity does into beyond As continued there aggregate organization. that we market allows and the demand. aggressively to are market look, said, that support have for very what model it Option question participants is, is the part And work as of

for services. to fully of continued to network on part-time We are incredible path. qualified uptick But able seen then and to nurses. wherever can tap And early continue the with into be with on quickly capacity them down use say, utilize and our their Care be so augment leverage and will that. They’re And we Infinity there that and Option close full-time growth side that, to house we asset infusion needless we’re then of have. feed behind utilize that certainly that our SPNN We’ve post the that to great is first, that broad we working maximize to wherever them and will work we trajectory.

Matt Larew

Okay.

think I you Next, XX%. exited in inventory terms of utilization QX of suite, about at the

give expecting about talked XX% exited you sense us be where and of should just year You’ve what for a the Maybe kind XXXX. we longer-term. for

John Rademacher

more as the and we Yes, in into add we’re or Look, year continue we Matt. exited entered the this to facilities mix year. to going continue

to would online. progress we a And we you amount we utilization up change I bringing it’s it’s other mean, bit that of to working goals, in facilities drive toward sense I are We work, see So think time towards. in achieving perspective the things could saw that this strong of really point additional look, at those and little in got start there. those think on don’t that fantastic. anything our around the

Matt Larew

and back let questions. ask jump I’ll others Okay.

Mike Shapiro

Okay. Thanks, Matt.

John Rademacher

Thanks, Matt.

Operator

Thank you.

next Our Lisa Gill from Morgan. J.P. the line comes question with of

please. question, Your

Lisa Gill

Thanks are the guidance. very to when about want both understand I just Mike. John each revenue end on of for Mike, me drivers and start much. I the getting and think range upper to the just What the let side. guidance the range Good EBITDA? to morning, with key

Mike Shapiro

short model pressures. enter the Good trying two is The the and referral key we Lisa. Sure, the is, are array morning. of Obviously, patterns year. variables answer we’re to a broad there things inflationary as

cetera. shutting quick the we of doors, around disruption a onset the restricting of some et John referral Omicron, pretty saw, asset, the mentioned, sources, as With

duration One our look. longer therapy, as you chronic a is that’s the benefits have you forward of of know, so portfolio, more

guidance ends front back our and range that the commercial are can get so the replenish think to of teams we the primarily quickly referrals. patterns us as how get the the in referral various watching QX, higher, patient And sources things those new about our of in here we’re referral scenarios lower

And et management without the other they’re side of and cost chain facing. that, many our on time the managing – aren’t cetera. chain transportation of corrugated, suppliers our costs, to it’s supply of supply challenges disruptions through obviously, that On real the

that the So out, those we are to model the and thoughts to and a entering key being things the where tighten well. that move trying and year we’re admittedly cautious we’ve as expect throughout do tried year we’d our to historically, narrow as little

Lisa Gill

areas see referral the patterns to a But the obviously, mirror, it’s knows little at starting up the you As in feels we Omicron February, have virus starts another of variant. sit if in of bit different kind pick the to country. like as wane moving are of here end we’ll rearview hopefully, who

John Rademacher

Lisa, with Yes. back to or within normal, see we’ve look, cetera. start we bit little start local hospital office pattern behind, the as go see visits to back a the John. things There’s et bit seeing you’re as it’s follow that rates the kind yes, of people rebound. normally start infection But in of rescheduled things to Yes, get that a going to markets. little what latency

as And before, consistent so, across said not it’s the again, we’ve country.

see by of that market pattern really we it’s with before but and it following to we variant. other and Delta that start the the saw So market,

Lisa Gill

Okay, great.

Just one last question for me.

to of areas distribution have of impact do about them I about kind two XXXX Just drugs any limited we think biosimilars and either XXXX. then how for think as meaningful

John Rademacher

said working biopharma in And a order a as but to and we’ve business always normally think Yes. the a three upstream with distribution that. launches dedicated we Look, and of build to year, we to launched, on kind them do it really a those they got and that before, limited that’s I said they with we’ve to the drugs team we’ve have process. forward one development they support the limited from two, move on help expect if as two impact through standpoint year

given On pattern forward generic it introduced, kinds of continues have we opportunity they as through And launched those are and the we we’ll manage that move-in. given as process to to we and through through those us and as product be get equivalent. overall not of therapy to we the see so provide as the traditional biosimilars, follow portfolio provide that we year. do we that sets services. they don’t remain certainly and portfolio unique for that impact that expect look, But that different of in kind pharmaceutical expect and has move able the get of event that them those a therapies part Again, the they go the

Lisa Gill

for thanks the comments. Great,

Mike Shapiro

Lisa. Thanks, Yes.

John Rademacher

Lisa. Thanks,

Operator

you. Thank

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

Your question, please.

Jamie Perse

disruption first Hey, given of How when good the the and morning, XQ or impacts quarter, on the did weighted the to start up. timing labor wanted to line just from more XQ, top Omicron. patterns picking growth infection just started were with the referral the I much that guys. in comments impact

Mike Shapiro

if really second saw when I rates. think and was really affected, half the It you in astronomical December, Jamie. of we mean, it really Yes, the about in the increase December infection

patterns, more December was even really referral it, it impacting So into call late late, rolling momentum of our that’s the which again, QX.

So it it momentum. results in really QX as did didn’t the affect as the reported much

Jamie Perse

perspective about exiting you within And across can last if comment if and That’s from and staff or on year on leaving a the turnover more you can talk are you’re Okay. healthcare what helpful. that healthcare. then recently seeing just labor,

John Rademacher

we that into our make that look, allow the organization. an the in we’ve continue for program Yes. all manage and across put and participate creation to members we place aspects programs and organization bonus time as in our the monitor Look, team other that team. had to value We investments

focus got we have And some as seen. choice. different focused We as that and an turnover think, rate, merger of in different organization really bit making turnover there others articulated. in we had the our mission all, it forward. employer We that people, we’re the vision we’ve we And continue job categories are we’re there. effectively, to move investing everyone look, really uptick around post that I really little compensation as from is standpoint. really meet to look, have a able But certain of all as Certainly, monitor an them career being that believe every as that we which said, every on and organization, know recruit cause a an cared and got feels I our that a to that got of a team we We one dose and they’re there’s And end the receiving we’ve like to to helping their We we aspirations. trying deliver single knowing environment we’ve care we’ve our got great know loved that dispensing. the members competitive day. we’re create be we’re for saw we managing and team we consolidate that and develop seen good that a focused around rates on

life knowing organization, machine that’s team and north star we’re around it so those a for good that the the of and drive an in we areas change better us. in what that investing that really a to rallies our And fact helps do, all as

Jamie Perse

you’re one adding on other same then a Okay, us this and the bunch EBITDA in just question as and great. headwinds XXXX? on give year. you then And year expect last on and in a you EBITDA Can smaller up from of the or centers little relative and I you what guidance, headwind know bit detail those is And XXXX greater any kind Is year XXXX? in government of sequestration to it ramp guidance. of

Mike Shapiro

were – Sorry, of your on of I your missed the Jamie. question. what the missed headwinds first guidance, part I the part the first

Jamie Perse

like, centers, XXXX drag, comments Just that and as for in can it the impact than impact there on smaller, on add programs. and new you greater XXXX sequestration EBITDA, is you the then just what’s government or

Mike Shapiro

CAM – cost, we glad Yes. got online, Look, good new the these for a charges infrastructure centers rent, bring you we a Okay. I got utilities, because turnkey. ramp fixed that you you. there as up, it’s as question. I’m asked is the to the

typically And XX break months XX to even around months. so are these

big bringing be to incrementally really Not centers online burden, was future SG&A we’ve So couple opened. on XXXX, a will million XXXX online, of it’s the growth. which fueling the around to that will million is of a couple that on dollars dollars relative of a bringing new in centers bring

little million a that gross but bit in of infrastructure. efficiency be of a couple And so of for up yes, incremental a cost dollars there margin the lagging there’s benefit will

Jamie Perse

Okay.

Mike Shapiro

then stroke commercial our our of not on and XX% revenue you since business in that material as direct sequestration, has not major assuming the we’re counterparts. size again, And know is with a of there any change risks pen or

material from programs. expecting government any we’re not any So impact

Jamie Perse

the Okay, thanks color. for

Mike Shapiro

Thanks, Jamie.

John Rademacher

Jamie. Thanks,

Operator

you. Thank

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

please. question, Your

Mike Petusky

Hey, morning, to down, talk just stack priorities like of based of Can debt priorities morning, Mike $XXX it A rank looks how of this commentary just guidance investment, on about your M&A, good in on couple you and would flow. million those internal terms questions. free your you me of guys. – free about pay maybe cash cash.

Mike Shapiro

morning. Good Mike. Sure,

to think create I as we think to way the for no I think an through primarily We’ve our brought the best structure mentioned, with level deployment. XXXX. top maturities now capital shareholders value I priority until just extraordinary is our and M&A

profile going cash continue and $XX interest a drift is to or X.X leverage With million to burn we’re of around times. maybe nudge just Our less now growth, naturally southward.

operating X in to range. we’ve said And X very the so comfortable times that we are

year. be we to with efficient And model, CapEx so, expect million, look, around $XX little maybe bit a a this less capital very

the we’re we that for doing, so of looking opportunities both what for continue think And which opportunities – considerable is to leverage economic is us platform capital a affords and to there doing universe and us. out robust strategic there

Mike Petusky

the that debt end guess the would you be XXXX. was absolute Would number at total lower of the it at than of XXXX though end

Mike Shapiro

is cash. of top feel, additional considerable gross profile $XXX a unsecured $X.X debt of point paying don’t paying loans down as We’ve this got leverage that and notes. that at given being straightforward. I priority got the top have, million indebtedness the that priority fact Given got additional at billion a of this ours. don’t point. And a down senior we’ve know just pretty we we’ve I the

Mike Petusky

a a could of actually shifts. true, have how least of And et site impact That’s as about just there in pressures, fund to from lot talked helpful. inflationary or about I think site. thought – way did But and think possibly see you on reversal you great. related of is I cetera. shifting we I to that site Okay, sort if guys a any first, hospital and then is you thought XXXX there XXXX of at guess, headwinds, that’s And Thanks. COVID home from sort that you alternate the – that any or you care XXXX, does that, quantify of benefited did care if

John Rademacher

one or as it’s that site home the care hard as our patients But for anecdotally, a department of a the some John. of infusion expect. as preference to payer it’s totality, there the some outpatient of you Mike, yes, that out we move would the Yes. patient both service in well initiatives Look, forces perspective, believe from as in standpoint were it hospital those hospital and of from suites. helped quantify

that on take as to well-positioned volume came we’re available. so And it

being the know have that number constrained. the also of been diagnosis office of though new number constrained, We and visits

as so are the be still year, the that business going that I expectations there think of are we of we back. and move those kind through pull hospitals of to fully some some and out expect puts And takes try to are

identifying path looking are expect are of operate how the integrated down that they continue We at that going within delivery play. to where that networks they communities can

still consumer-centric one view will We to that want incredible patients we’ve or our an suites. think of be think got We choice. served of in that home the be a We point offering. infusion from a of partner

fight as look, that’s be going on and we’re street capture so, to the to market for feel have, good competitive referral And really we’re And every to continue to environment we like also that have in it’s a fight demand we to every we’ve position, a and but there out we start. operate got to being the going we’ve recognize feet we’re created. continue and got for to

Mike Petusky

guys. very right, good. All Thanks,

Mike Shapiro

Thanks, Mike.

John Rademacher

Mike. Thanks, Yes.

Operator

like to for hand would management program back remarks. question-and-answer conclude you. the of This program. the to today’s does further session any Thank I

John Rademacher

forward Thanks, safe. Look, the we We to outlined look our the as joining very Thank the care, proud platform team of that dynamics and please performance as very we’ve through Jonathan. Take we’re XXXX of with pleased made morning today, for the work us XXXX. this stay and we’ve and we Yes. progress on a you capitalize created. market near-term everyone. in productive

Operator

gentlemen, does participation conclude program. in your the today’s Thank ladies you, conference. and for This

day. Good disconnect. now may You

Option Care Health (OPCH) 23 Feb 222021 Q4 Earnings call transcript