Option Care Health, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Option Care Health second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star then one on your telephone. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your speaker for today, Mike Shapiro. You may begin.

Good morning, and thanks for joining us this morning. Before we begin, please note that during the call, we will make certain forward-looking statements that reflect our current views related to our future financial performance, future events, and industry and market conditions. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our comments. We encourage you to review the information in the reports we file with the SEC regarding the specific risks and uncertainties. You should also review the section entitled Forward-Looking Statements in this morning's press release. During the call, we will use non-GAAP financial measures when talking about the company's performance and financial condition. You can find additional information on these non-GAAP measures in this morning's press release posted on the investor relations portion of our website. With that, I'll turn the call over to John Rademacher, Chief Executive Officer.

Thanks, Mike, and good morning, everyone. As you can imagine, we are quite pleased with the overall progress we are making, the expanded number of patients we are serving, and the financial results the team has delivered in the second quarter. And our confidence in this enterprise has never been higher. We continue to translate strong revenue expansion into leveraged earnings growth on our scalable platform. And as we sit here today, we are increasing our growth and earnings expectations for the full year based on the first half momentum. Equally important, we continue to invest in strategic initiatives to build upon our unique national platform. As we entered 2021, we remained in the midst of the pandemic second wave, and we were also managing supply chain dynamics for certain therapies. Consequently, we guided to 6% to 7% revenue growth. Over the past few quarters, we've seen referral patterns return to pre-COVID levels, and in some instances, including several chronic therapies, we've seen referrals considerably above pre-COVID levels. The team has remained on offense, so to speak. and we focused on balanced growth across both our acute and chronic portfolios through collaborations with our payer partners and referral sources. In the second quarter, we saw strong sequential growth over the first quarter in both therapy portfolios as momentum has clearly increased. Recall, the comparative quarter for 2020 is challenging given the disruptive referral patterns with the onset of the pandemic. Regardless, we saw high single-digit acute growth over prior year and high teens' chronic growth, with particular strength in newer therapies for multiple sclerosis and myasthenia gravis. Our top-line results affirm that our unique value proposition is resonating with manufacturers, payers, and referral sources. And for the full year, we now expect to generate double-digit top-line growth based on the momentum generated in the first half. Despite our strong top-line results, we remain in a very dynamic environment. Our supply chain situation is clearly improving, especially with respect to immunoglobulins, which we highlighted as a risk entering into the year. Like most companies, we are facing challenging labor market, and given our strategic investments in clinical expertise, we continue to manage tight labor conditions for skilled clinicians. We have been able thus far to successfully navigate the challenging labor market to maintain our reputation of dependability with referral sources that has been the hallmark of the Ops and Care Health team over the challenging pandemic situation. We continue to monitor the situation closely, and we are proactively addressing the situation through talent development, technology enhancements, labor efficiencies, and deepening partnerships with home health agencies. Aside from the solid growth in the second quarter, we continue to invest in future growth catalysts. Early in Q2, we closed on the BioCare acquisition, and I'm pleased to report that the integration is already complete. This complimentary tuck-in has reinforced our IG go-to-market efforts and strengthened a number of key geographic markets for us. We also recently announced a technology collaboration with AlayaCare, one of our existing trusted technology partners, to co-develop market-leading patient engagement and clinical management software. As we have articulated on many occasions, we have invested tens of millions of dollars into our integrated technology suite to optimize the patient experience and maintain an efficient operating model. AlayaCare has been in the trenches with us for quite a while, and we are excited to introduce additional tools to improve the therapy experience for our patients and their families. Over the past six months, we've invested in an additional infusion suite capacity to and are aggressively moving to open 10 to 15 additional standalone infusion centers by year end. Infusion center capacity is a key growth-enabling initiative to improve the patient experience and optimize our clinical workforce. To my earlier point, infusion center capacity provides additional labor efficiency and partially mitigates the challenging labor market we currently face. I'm also thrilled with the addition of Dr. Seema Khumbhat to the newly created role of chief medical officer. The patient experience is at the forefront of everything we do, and Seema brings a unique perspective to my leadership team as we continue to raise the clinical bar in this industry. Mike will unpack the results in a few minutes, but I'm very encouraged by the top-line growth and our ability to leverage our infrastructure to deliver higher levels of profitability. As we announced in the release this morning, we have significantly increased our guidance for the full year for both revenue and adjusted EBITDA based on the momentum the team established in the first half of the year. The midpoint of the guidance range implies an EBITDA margin north of 8% for the year, and we're only getting started. And our ability to translate earnings to cash flow has been quite strong, delivering over $70 million of cash flow from operations in the quarter. We also achieved our full year leverage target of four times at mid-year. Again, I couldn't be prouder of the team and how they continue to execute our strategy in light of continued market dynamics. Before I turn over to Mike, I want to spend a few minutes on the recent approval of Agihelm for Alzheimer's. As an organization that serves patients with challenging chronic conditions every day, we are encouraged that new therapies are emerging for what is a devastating condition for patients and their families. And clinically, the profile of Adjahelm fits quite well with the alternate site setting, given an older patient population, many with complicating conditions, and a preference for limited travel for therapy. However, the reimbursement pathway for this emerging therapy remains challenging in the home and alternate site settings. as the far majority of the targeted population is covered by Medicare. And, as we have communicated on multiple occasions, Medicare currently does not adequately reimburse for home infusion at levels to support care. We continue to monitor CMS and the payer's approach to coverage determination and separately work with the industry coalition to seek a legislative improvement to reimbursement for home infusion. In the current landscape, we do not see EDGE Helm as a near-term opportunity until the Medicare reimbursement environment changes. Consequently, none of our guidance reflects any benefit from EDGE Helm at this time. So overall, I am very pleased with the second quarter results, the performance by the entire team, and where we are positioned heading into the second half of the year. You'll recall in the first quarter call, I commented that we were quickly pivoting from integration to acceleration, and clearly we've made that turn. With that, I'll turn the call over to Mike to review the results in a bit more detail. Mike?