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Option Care: Higher costs are the ‘new world order’

BANNOCKBURN, Ill. Option Care Health ended 2022 with $294 million in cash despite inflationary pressures across the broader economy, company executives said in a recent call to discuss their financial results.

Conservatively, the company “digested” more than $40 million in year-over-year cost pressures on labor, medical supplies, petroleum products, and operating inputs. These cost increases are likely to stay here, says CFO Mike Shapiro.

“We don’t see clinical labor costs going down,” he said. “We don’t see medical supplies, transportation costs and mileage reimbursements drop miraculously as some of those oil-derived supplies go up. I think our expectation is that this is the new world order and we don’t expect these key inputs to decrease.

Option Care reported net revenues of $1.2 billion for the fourth quarter 2022, an increase of 10.8% over the same period in 2021. Gross income was $231.1 million; and net income was $47.5 million.

Building clinical staff

The company increased the number of nursing roles in 2022 by establishing a National Nursing Network. After making several key acquisitions in 2021 and 2022, its strategy is to top it all off with a mix of contract work and full-time employees, says CEO John Rademacher.

“Where we have a dense patient population, we will be recruiting full-time nurses,” he said. “But now, having the ability to augment that on per diems, it just gives us a lot of flexibility to make the best use of our full-time nurses.”

Infusion suites launched

Option Care also continues to invest in outpatient infusion centers, opening 22 in 2022, totaling 150 sites and more than 575 infusion chairs. It expects 20 more sites in key markets in 2023.

“We’re pretty optimistic about the infusion suite strategy,” Shapiro said. “We are in investment mode. The team has really refined our thinking on how to map geographically for maximum coverage and convenience. And what we’ve found is that, typically, it’s three to four chairs. We design them so that if we were to expand and fit in a few more chairs, we would have that flexibility.

Financing mergers and acquisitions

The company also announced plans to buy back up to $250 million of its common stock, which it plans to use to fuel its acquisition pipeline, Rademacher says.

“We’ve always talked about the disciplined approach we will take to mergers and acquisitions, looking for those types of opportunities where we believe will bring competitive advantage and/or augment our existing infrastructure,” he said.

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