Option Care(OPCH) - 2024 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2024, net revenue was $1,278,546, a 17.0% increase from$ 1,093,014 in the same period of 2023[101] - Gross profit for the third quarter of 2024 was $256,749, representing a gross profit margin of 20.1%, down from 23.3% in the prior year[101] - Cost of revenue increased to$ 1,021,797, which is 79.9% of net revenue, compared to 76.7% in the same quarter of 2023[101] - Operating income for the third quarter of 2024 was $85,091, or 6.7% of revenue, compared to$ 81,047, or 7.4% of revenue in the same period of 2023[101] - Net income for the third quarter of 2024 was $53,856, representing 4.2% of revenue, compared to$ 56,302, or 5.2% in the prior year[101] - Net revenue for the nine months ended September 30, 2024, was $3,651.8 million, an increase of 14.9% compared to$ 3,177.9 million for the same period in 2023[117] - Gross profit for the nine months ended September 30, 2024, was $744.6 million, with a gross profit margin of 20.4%, down from 23.1% in 2023[117] - Net income for the nine months ended September 30, 2024, was$ 151.7 million, a decrease of 27.7% from $209.9 million in 2023[125] Expenses and Taxation - Selling, general and administrative expenses decreased to$ 156,999, or 12.3% of revenue, down from 14.5% in the same quarter of 2023[106] - Income tax expense for the three months ended September 30, 2024, was $19.7 million, representing a 42.9% increase from$ 13.8 million in 2023[110] - The effective tax rate for the three months ended September 30, 2024, was 26.8%, compared to 19.7% for the same period in 2023[110] - Selling, general and administrative expenses for the nine months ended September 30, 2024, were $465.5 million, representing 12.7% of revenue, down from 14.5% in 2023[118] Cash Flow and Liquidity - Cash and cash equivalents as of September 30, 2024, were$ 483.0 million, up from $343.8 million as of December 31, 2023[130] - The Company had net cash provided by operating activities of$ 287.3 million for the nine months ended September 30, 2024, a decrease of $33.1 million compared to$ 320.3 million for the same period in 2023[141] - Cash and cash equivalents at the end of the period increased to $483.0 million, up by$ 96.5 million from $386.5 million at the end of the same period in 2023[141] - The Company used$ 122.8 million in financing activities during the nine months ended September 30, 2024, a decrease of $64.5 million compared to$ 187.3 million in the same period in 2023[141] Debt and Financing - The Company entered into a Third Amendment on the First Lien Term Loan in May 2024, which included an additional $50.0 million of incremental indebtedness and reduced the interest rate from Term SOFR plus 2.75% to Term SOFR plus 2.25%[136] - Interest payments on long-term debt obligations are estimated to total$ 305.1 million based on current rates as of September 30, 2024[139] - The Company had $395.9 million of net borrowing availability under the Revolver Facility as of September 30, 2024, after accounting for$ 4.1 million of undrawn letters of credit[135] - The principal balance of the First Lien Term Loan is repayable in quarterly installments of $1.6 million plus interest, with a final payment due on October 27, 2028[137] - The Senior Notes bear interest at a rate of 4.375% per annum and mature on October 31, 2029[138] Operational Recovery and Future Outlook - The company has substantially recovered operationally from the Change Healthcare Cybersecurity Incident, with no material financial impact reported during the third quarter of 2024[89] - The company continues to maintain strong liquidity and has resumed submission of a majority of claims to payers following the cybersecurity incident[89] - The increase in net revenue was primarily driven by organic growth in the company's portfolio of therapies, with chronic revenue growing in the low-twenties percentage[105] - The company anticipates that gross profit will be negatively impacted in 2025 due to a proposed significant reduction in the spread for a key therapy[105] - The company continues to evaluate acquisition opportunities as a key part of its growth strategy, with a focus on funding through cash and cash equivalents[132] Other Financial Metrics - The company recorded total other expense of$ 32.2 million for the nine months ended September 30, 2024, compared to income of $49.8 million in 2023, reflecting a variance of 164.8%[120] - The decrease in cash used in investing activities was primarily due to prior year acquisition activity, with no comparable activity in the nine months ended September 30, 2024[143] - The Company received a$ 106.0 million payment on behalf of Amedisys under the Mutual Termination Agreement, impacting cash flows from operating activities[142]