Option Care leans on ‘momentum of base business’ in wake of failed deal

BANNOCKBURN, Ill. – Option Care will return nearly all of a $106 million break-up fee to shareholders, as the company moves on from its failed merger with Amedisys, said CEO John Rademacher. 

Option Care announced in June that it had terminated its $3.6 billion merger with Amedisys, just weeks after the two companies announced the deal. 

“Given the strength of our balance sheet and forward outlook, we believe it is appropriate to return essentially all of the break fee to our shareholders through our existing share repurchase program, which our board approved earlier this year,” he said on a call to discuss the company’s financial results for the second quarter. “Our capital allocation strategy has been and will continue to be focused on generating favorable returns for our shareholders on a sustainable basis.” 

And while identifying “opportunistic M&A” is a capital allocation priority, Option Care will focus on smaller opportunities for now, said Mike Shapiro, CFO. 

“We see a multifaceted capital deployment strategy focused on strategic M&A and share repurchases as the current optimal strategy to maximize shareholder value,” he said. “Given the momentum in the base business, we expect that our near-term focus will be on driving organic growth and potentially on pursuing smaller adjacent or tuck-in acquisitions.”  

Emerging therapies 

Option Care is also focusing on emerging therapies, including an “innovative” gene therapy treatment for patients with dystrophic epidermolysis bullosa, through a partnership with Krystal Biotech announced in May, and is preparing for the emergence of infused therapies to treat Alzheimer’s disease, says Rademacher. 

“While we remain cautious on the near-term impact these therapies may have on our business due to the expected patient adoption pace and reimbursement challenges, I believe we are uniquely positioned to help ensure access to care for Alzheimer's patients and their families across the country,” he said. “We continue to work closely with key stakeholders to determine coverage, seek fair reimbursement, and to advocate on behalf of patients to allow us to provide high quality care at an appropriate cost in a safe and convenient setting in which they want to receive their care.” 

‘Points of penetration’ 

Shoring up Option Care’s ability to care for these patients: its growing infusion suite footprint, which saw the addition of four new centers during the quarter and an increase in utilization of those centers, which now comprise 29% of all nursing visits, says Shapiro. 

“We’ve added over 10 points of penetration on our nursing visits, which is important because obviously that helps us on the operating leverage line,” he said. “It also gives us the confidence to take on additional patients by better utilizing our clinical capacity. And it also sets us up well for future growth vectors for new disruptive therapies in the pipeline.”