Skip to Content

Option Care: Higher costs are ‘new world order’

Option Care: Higher costs are ‘new world order’

John RademacherBANNOCKBURN, Ill. – Option Care Health closed out 2022 with $294 million in cash on hand, despite inflationary pressures across the broader economy, said company execs on a recent call to discuss their financial results. 

Conservatively, the company “digested” more than $40 million in year-over-year cost pressures in labor, medical supplies, oil-derived products and operating inputs. Those increased costs are likely here to stay, says CFO Mike Shapiro. 

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

Option Care reported net revenue of $1.2 billion for the fourth quarter 2022, up 10.8% compared to the same period in 2021. Gross profit was $231.1 million; and net income was $47.5 million. 

Building clinical staff 

The company increased the number of nursing roles in 2022 as it builds a national nursing network. After making several key acquisitions in 2021 and 2022, its strategy is to fill that out with a mix of contract labor and full-time employees, says CEO John Rademacher.  

“Where we have density of patient population, we will be recruiting full-time nurses,” he said. “But now, having the ability to augment that with the per diems, it just gives us a significant amount of flexibility to utilize our own full-time nurses to the fullest.” 

Launching infusion suites 

Option Care also continues to invest in ambulatory infusion centers, opening 22 in 2022, for a total of 150 sites and more than 575 infusion chairs. It plans an additional 20 sites in key markets in 2023. 

“We're quite bullish on the infusion suite strategy,” said Shapiro. “We're in investment mode. The team has really refined our thinking around how we geographically map to get maximum coverage and convenience. And what we found is, typically, these are three to four chairs. We do design them that, if we had to expand and pass few more chairs in, we have that flexibility.” 

Funding M&A 

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

“We've always talked about the disciplined approach that we'll take to M&A, looking for those types of opportunities where we believe it's going to bring some competitive advantage and/or augment our existing infrastructure,” he said.


To comment on this post, please log in to your account or set up an account now.