Option Care pushes through disaster for strong quarter

BANNOCKBURN, Ill. – Despite disruption to its supply chain, Option Care Health’s quick and “aggressive” response allowed the provider to continue servicing patients, with minimal impact, CEO John Rademacher said. 

In the aftermath of Hurricane Helene, flooding halted production of intravenous solution bags at the Baxter International plant in Marion, N.C. 

“From the moment of the closure, needless to say, there were immediate actions that we took to not only start to drive conservation, but also to prioritize the way that we are going to look at the inventory that we had,” Rademacher said on a call to discuss the company’s Q3 earnings. “We are working as aggressively as possible with all of the alternate suppliers, as well as with the impacted suppliers, around making certain that we can get the most amount of allocation as possible. We think it’s going to continue to improve over the weeks and months.” 

Despite the disruptive ending to the quarter, Option Care posted revenue of nearly $1.3 billion for the third quarter of 2024, an increase of 17% compared to the same quarter in 2023.  

Competitor’s exit 

The shortage could complicate Option Care’s efforts to gain market share in the wake of CVS Health’s decision to exit its core infusion business in the coming months. 

“We believe that the investments that we have made create a really attractive opportunity for us to continue to capture market demand to be a partner of choice for the referral sources, given the breadth of the products that we’re able to support,” Rademacher said. “That disruption has to resolve for us to be able to really ramp that up. We need to make certain we take care of our existing patient centers.” 

Change Healthcare 

Option Care has substantially recovered from Change Healthcare’s February cyberattack, though it is still playing catch-up on patient payment collections, which remain impacted, says Rademacher. 

“We utilized a lot of their capabilities and applications to correspond with patients and enable efficient patient collections and payment through our website,” he said. “And much of that functionality was down even into the third quarter.” 

2025 & beyond 

Looking ahead, Option Care expects to see an impact from pricing changes for Stelara, a treatment for several chronic conditions, including psoriatic arthritis. CMS recently announced that effective in 2026, it negotiated an approximate 66% reduction in cost for Part D patients, a therapy previously announced as part of the first 10 drugs subject to negotiation under the Inflation Reduction Act. The therapy is also expected to see biosimilar competition beginning in early 2025, says Rademacher. 

“Based on discussions this month we now believe the manufacturer of this therapy intends to drastically and rapidly reduce the spread in which we acquire this therapy relative to reference price,” he said. “We believe this is unprecedented and inconsistent with how pricing changes have generally transpired with respect to biosimilar introductions, including our previous experience with this manufacturer. While we remain actively engaged with them, we believe the impact of their pricing actions will materially impact the gross profit we realized on providing infusion services to these patients beginning in early 2025.” 

Further reading 

• Rademacher details Option Care's response to the Change Healthcare cyberattack. 
• Option Care spent much of Q2 mopping up after the cyberattack.