Option Care eyes infusion of O2

Thursday, February 28, 2002

BANNOCKBURN, Ill. - Infusion giant Option Care plans to boost its offering to managed care - and pump up its bottomline - by dipping its toes into the home respiratory therapy market.

"That's a very lucrative, repetitive business," company President Raj Rai told HME News last month. "We want to offer managed care a comprehensive portfolio of services, and we don't have to invest in infrastructure. We can expand into oxygen and respiratory meds in our existing facilities."

The move is quite a shift for Option Care, which derives the bulk of its income from the home infusion (60%) and specialty drug markets (30%), and only about 3% of its revenue from DME. The company entered the home respiratory market officially in January when it acquired Healix Health Services, a Texas provider of home infusion and respiratory therapy. (Option Care's closed its home health division in January.)

Option Care wants to boost its home respiratory business to about 10%-15% of its total revenue.

While some industry watchers believe the company should stick to its core competency of infusion and seriously consider making a run at Gentiva's home IV business, which is up for grabs, others think the move into home respiratory makes sense.

"Ten percent is not too much," said one industry watcher. "It's like, 'Hmm, interesting. Lets take a run at it. Let's not get all committed, but let's see what we can do with it.' Good companies are always doing live market tests."

Option Care's strategy is to acquire home respiratory companies in various regions of the country and use them as staging grounds for expanding that business. Raj doesn't envision competing with the Lincare's and Apria's of the world; Option Care won't be able to handle large national contracts. He plans to focus on local markets where the company already has a presence.

"We are not going to acquire respiratory companies all over the country," Raj said. "We are going to acquire one regional company and get the experts and then have those people roll out other locations." HME