SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 3, 2019
OPTION CARE HEALTH, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification Number)
3000 Lakeside Dr. Suite 300N, Bannockburn, IL 60015
(Address of principal executive offices)
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class
Name of each exchange on which registered
Common Stock, $0.0001 par value per share
Nasdaq Capital Market
Item 7.01. Regulation FD Disclosure.
On December 3, 2019, Option Care Health, Inc. (the “Company”) will be making a presentation at the Bank of America Merrill Lynch 2019 Leveraged Finance Conference in Boca Raton, Florida (the “Presentation”), a copy of which is furnished herewith as Exhibit 99.1. The Presentation will also be posted to the investor relations section of the Company’s website at https://investors.optioncarehealth.com.
Company management is scheduled to present at 10:50 a.m. Eastern time today, December 3, 2019. A live audio webcast and replay of the Presentation will also be available at https://investors.optioncarehealth.com.
The information furnished under this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such a filing. The furnishing and posting of the information in this report, including Exhibit 99.1, is not intended to, and does not, constitute a determination or admission by the Company that such information is material or complete, or that investors should consider such information before making an investment decision with respect to any security of the Company.
Item 9.01. Financial Statements and Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Option Care Health, Inc.
December 3, 2019
/s/ Michael Shapiro
Chief Financial Officer
Q4 2019 Investor Presentation NASDAQ: BIOS
Disclaimer This communication may contain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “believe,” “project,” “estimate,” “expect,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we may make regarding future revenues, future earnings, regulatory developments, market developments, new products and growth strategies, integration activities and the effects of any of the foregoing on our future results of operations or financial conditions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market conditions and receptivity to our services and offerings; (iii) results of litigation; and (iv) the loss of one or more key payers. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our reports as filed with the SEC. Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. All of the forward-looking statements herein are qualified by these cautionary statements. ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 2
Option Care Health at a Glance • Nation’s largest independent provider of home and 46 alternate site infusion services states • Clinical leadership and technology-enabled patient- 96% centered model of U.S. population covered National Footprint 3Q’19 Results (in millions) $2.7bn+ $616 combined 2018 revenue ~2,900 skilled clinicians $138 Top 10 $35 payers all in-network Revenue Gross Adj. 500+ Profit EBITDA frontline selling resources Option Care Health is reimagining the infusion care experience for patients, customers and employees ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 3
Leading Position in a Large and Growing Market1 U.S. Competitive Landscape – Home U.S. Infusion Market 1% Includes: hospitals, $100 B physician outpatient 6% / offices, SNFs and home 10% infusion $12 B U.S. Home Infusion Market 45% $12B 17% / Lowest-cost setting; growing penetration of overall market 21% Option Care Health $2.7 B2 Largest independent ⚫ Top 5 providers account for provider approximately half of the U.S. market ⚫ Significant market opportunity with 800+ infusion companies in the U.S. The U.S. Home Infusion Market is Growing by an Estimated 5-7% Per Year ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 1Market share based on management estimates 4 2Based on 2018 proforma revenue
Investment Highlights ✓ Only independent national provider in network with all national payers ✓ Right side of healthcare – independent, low cost care setting, patient centric ✓ Large, growing and highly fragmented market ✓ Significant merger-related cost synergies expected ✓ Improved free cash flow generation ✓ Balanced payer mix with mostly commercial reimbursement… low “pen stroke” risk ✓ Seasoned management team ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 5
On the Right Side of Healthcare Trends The Home is the Disruptive Service Model within the Infusion Market Remicade infusion example IG infusion example $10,000 $9,800 ~44% cost savings ~77% cost savings $5,500 $2,300 The right place, the right team, and the right time. Outpatient Hospital Outpatient Hospital Home Infusion Setting Home Infusion Setting Average cost for one infusion therapy cycle of Remicade (includes cost of drug) Average cost for one infusion therapy cycle (includes cost of drug) Care is moving from the Hospital… …to the Home • Higher cost setting • $4 billion potentially saved annually by shifting care to the home or alternate site • Potential for significant waste • Lower cost, safer site of care; lower risk of infection • Less desirable outcomes, including infections and preventable deaths • Patient preference, resulting in better quality of life ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 6
Strength in Diversity Therapy Revenue Split Payer Mix1 ~13% ~40% ~60% ~87% Acute Commercial Chronic Government • No therapy category represents more • No payer more than 15% of revenue than 20% of revenue • Low direct government reimbursement risk • Broad portfolio of chronic and acute • Productive payer relationships given therapies including more than 50 limited independence distribution therapies 1Commercial also includes Medicare Advantage, Managed Medicaid and Patient Pay Balanced revenue base across therapies and payers ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 7
Acute vs Chronic Therapy Portfolios Acute Chronic ~40% % of Net Revenue ~60% 50-70% Product Margin 10-25% Shorter, typically Average length of Longer, typically months 1-12 weeks treatment or for life Anti-infectives, Immunoglobulin, nutritional support, Therapies inflammatory, other inotropic therapy chronic conditions Branded, specialty Generic, branded Type of drug utilized biologic, limited distribution Hospital Case Management / Physician Typical referral source Physician / Specialist ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 8
Roadmap for Growth Realize synergy opportunities • Execution of defined short and longer-term integration synergies • Utilize improved capital structure and liquidity position to create investment plan Optimize and expand offerings • Alignment of acute and chronic sales activity against top market opportunities • Therapeutic-level market penetration and potential to increase share Capture the ambulatory setting • Optimization of Ambulatory Infusion Suite footprint and business model • Implement strategies to drive utilization Add value to payer relationships • Partnerships and site-of-care initiatives to drive patient volume • Opportunities to expand and evolve economic relationship Invest in growth enablers • Technology investments (internal and customer facing applications) • Additional opportunities to leverage clinical expertise • Data analytics and outcome reporting ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 9
Synergy Capture Roadmap Network Savings $20-$25M 18-24 months to realization Optimize assets to best serve the market SG&A Optimization $60M+ 12-18 months to realization $35-$40M Streamline corporate and administrative Annualized functions Net Savings1 Procurement Synergies 9 -12 months to realization $10-$15M Maximize procurement savings and combined organization 3Q 2019 Year End 2021 1Represents high-confidence level synergies estimate before cost to implement ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 10
Proven, Experienced Leadership Team John Rademacher Mike Shapiro Harriet Booker Chris Hartman Rich Denness Chief Executive Officer Chief Financial Officer Chief Operating Officer Chief Growth Officer Chief Strategy Officer o Joined Option Care in o Joined Option Care in o Joined Option Care o Joined Option Care in o Joined Option Care 2015 as COO and was 2015 as CFO Health in August 2018 as Chief Health in August appointed CEO in 2018 o Served as SVP and 2019 as COO Commercial Officer, 2019 as Chief o following the merger named Chief Growth Strategy Officer Served as President and CFO of Catamaran with Bioscrip, where Officer of Option following the merger General Manager at Corporation and as she held the same Care Health in August with Bioscrip, where Cardinal Health CFO of Rexnord position since 2018 2019 he served as Chief Ambulatory Care and Corporation o o Commercial Officer Nuclear and Pharmacy o Former Executive Served as Vice Services divisions Spent fifteen years Vice President of President, North since 2018 with Baxter Sales and COO for America for Stryker o Former GM at o Former President at International, holding Coram/CVS Specialty Neurovascular Schering-Plough, CareAllies and COO of multiple positions of Infusion Services o Led U.S. Sales for President at IVAX the CIGNA Behavioral increasing o Prior to that, served Baxter International’s Laboratories, VP, Health business responsibility in various senior and BioSurgery Group Neurology at UCB, o Began career at executive-level roles and spent sixteen and CEO at Vycor Deloitte and is a CPA at Walgreens – years with Boston Medical (inactive) Option Care Scientific Corporation in sales and marketing leadership roles ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 11
Q3 2019 Financial Highlights $ in millions Net Revenue Adjusted EBITDA Quarterly Highlights • Revenue of $616M, up 24.7% on a $616 $35 reported basis; up 2.3% on a comparable basis $494 • Gross margin of 22.4% increased 50 $26 bps on a reported basis • Adj. EBITDA of $35M, up 32.1% on a reported basis, mid-teens growth on a comparable basis o Impacted by bad debt policy harmonization • Strong liquidity with $53M in cash and no borrowings on $150M revolver Q3 2018 Q3 2019 Q3 2018 Q3 2019 • Funded initial integration strategy with cash on hand • Management expects to provide 2020 guidance with Q4 2019 results Note: Results on an as reported basis unless otherwise stated ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 12
Improved Capital Structure $ in millions Q3’19 Capital Structure Key Highlights Pro Forma Capitalization • Simple capital structure First Lien Term Loan $925 Second Lien 400 • $150mm ABL Revolver - Strong liquidity Total Debt $1,325 Cash 53 • Covenant-lite Net Debt $1,272 • Path to deleveraging Leverage Profile Total First Lien Debt / PF Adj. EBITDA 4.1x1 Total Debt / PF Adj. EBITDA 5.9x1 1 Based on Adj. EBITDA of $214.1mm as of 9/30/19 as defined by the First Lien Credit Agreement ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 13
Mike Shapiro Bob East, Asher Dewhurst, Jordan Kohnstam Chief Financial Officer Westwicke (312) 940-2538 (413) 213-0500 firstname.lastname@example.org email@example.com ©2019 Option Care Health, Inc. All rights reserved. 19OCH00004 14