Option Care Health, Inc.

Hello, and thank you for standing by. Welcome to today's conference call to discuss the combination of option care health and emeticis. At this time, all participants have been placed in a listen-only mode. The calls will be opened for your questions following the prepared remarks. As a reminder, this conference call is being recorded, and the press release and slide presentation regarding the transaction announcement are available on the investor relations sections of the company's website. The archived replay can be accessed there following the call. If you should need operator assistance, please press star zero. I would now like to hand the conference over to Nick Moscato, Chief Strategy Officer of Amedisys. Sir, you may begin.

Thank you, operator, and welcome, everyone, to our conference call to discuss the combination of option care health and Amedisys. Before we begin, I want to remind you that in addition to today's transaction announcements, OptionCare Health and Amedisys each issued financial results for the first quarter of 2023. Today's call will be focused on the transaction we just announced. However, you can find more detail on each company's quarterly financial results and 2023 outlooks on the respective investor relations website. Both OptionCare Health and Amedisys will be available to discuss their results in the normal course. Please note that today's discussion will include certain forward-looking statements that reflect our current assumptions and expectations. including those related to our future financial performance and industry and market conditions, as well as the benefits of the transaction for the combined company. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. We encourage you to review the information in today's press release, as well as in each of our Form 10Ks filed with the SEC regarding the specific risks and uncertainties. We do not undertake any duty to update any forward-looking statements except as required by law. During the call, we will use non-GAAP financial measures when talking about company performance and financial condition. You can find additional information on these non-GAAP measures in this afternoon's press release posted on our investor relations portions of our website. Presenting on today's call is John Rademacher, Option Care Health President and CEO, Mike Shapiro, Option Care Health CFO, and Richard Ashworth, Amedisys President and CEO. They are joined by Scott Ginn, Amedisys Acting COO and CFO. After the prepared remarks, we'll open it up for Q&A on the transaction. Please limit yourself to one question and one follow-up. With that, I will now turn the call over to John. Thank you, Nick.

Welcome, everyone, and thank you for joining us today. Following the market close, we announced that we have entered into a definitive merger agreement to combine with Ametasys in an all-stock transaction that values Ametasys at approximately $3.6 billion, including the assumption of net debt. I'll start by providing an overview of the combination before turning it over to Richard to share some additional color. I'll then discuss the strategic rationale and significant value creation of the combination. Mike will discuss the synergies and financial details, and then we'll open the line for questions. This is an exciting combination and one which positions us to create a leading independent platform for home and alternate site care. Through this transaction, we are bringing together Amedisys' home health, hospice, palliative and high acuity care services with the option care health, complimentary home and alternate site infusion services. Together, we will unlock significant benefits for our patients, providers, payers, and care teams. This, in turn, will drive value for stockholders who get to participate in the tremendous upside we see in this transaction. Let me touch on some of the key terms outlined on slide four. Amedisys stockholders will receive 3.0213 shares of OptionCare Health common stock for each share of Amedisys common stock they hold at closing. This is the equivalent of $97.38 per Amedisys share based on OptionCare Health's closing stock price yesterday, May 2nd, 2023. Upon closing, which we expect to occur in the second half of 2023, OptionCare Health stockholders will own approximately 64.5% of the combined company and Amedisys stockholders will own approximately 35.5%. As for leadership post-close, I will continue to serve as CEO of the combined company alongside Mike as CFO. Richard will move into a special advisor role in support of the integration, reporting to me, and Scott and Nick will remain part of the leadership team moving forward. The broader leadership team will comprise the best talent from both organizations, This will allow us to take advantage of the complementary nature of the two companies and their respective enterprise and strength. And we will also expect to benefit from three Amedisys directors joining our board of directors. We look forward to drawing on our strong track record of operational integration as we bring Obstacare Health and Amedisys together. Importantly, we anticipate enhanced revenue and earnings growth. with significant annual run rate revenue and cost synergies of approximately $75 million by year three following the close of the transaction. We expect the combined company will also benefit from a strong balance sheet and financial profile. With that, let's turn to slide five, outlining how OptionCare Health and Amedisys are stronger together. Option Care Health has always been guided by our mission to transform healthcare by providing innovative services that improve outcomes, reduce costs, and deliver hope and dignity for patients and their families. We've done this by providing cutting-edge infusion medications, nursing support, and seamless transitional care for patients of all ages in their homes and at conveniently located ambulatory infusion suites across the U.S. In 2019, when we combined with BioScript, we became the only independent provider focused on delivering a full spectrum of infusion therapies to patients across the country. Since then, we have served hundreds of thousands of patients and continue to set the standard for patient care. And today, we are the largest independent provider of infusion therapy in the nation. In 2022 alone, our clinical team of more than 4,500 members served more than 265,000 patients and their families. And as we've continued to evolve, we consistently sought out opportunities to grow and advance our mission. Joining forces with Amedisys will allow us to do just that. Amedisys and OptiCare Health are highly complementary. Together, we will bolster our offerings to meet the increasing demand for personalized care in the home or alternative sites. we'll move deeper into value-based care while also creating significant long-term value for stockholders. Of course, a transaction of this nature and within the industry in which we operate is people-driven. By joining our teams of passionate and highly skilled professionals, we will be able to better serve patients. Together, we will be able to touch more than 720,000 patients annually, and will have 674 community-based centers across the U.S. committed to delivering high-quality care in the home or at an alternate site. To put the scale into perspective, the combination of OpsiCare Health and Amedisys will result in a national clinical workforce of more than 16,500 professionals. This includes but is not limited to nursing professionals, pharmacists, pharmacy technicians, dieticians, physical, occupational, and speech therapists, social workers, and aides. I'll now turn it over to Richard to discuss more about how our two companies fit together. Richard? Thanks, John. I want to echo John's sentiment and emphasize our excitement to be joining forces with Option Care Health. Our hospital at home, home health, hospice, palliative, and high acuity care services are an excellent strategic fit. This combination is a testament to the incredible work and quality outcomes Amedisys delivers daily for our patients wherever they call home. Indeed, since I joined Amedisys as CEO, two things have been apparent. First, the high quality in-home care we provide to over 455,000 people each year and how Amedisys changes the lives of patients and their families. Second, Our diverse team of over 12,000 caregivers across the organization who have an extraordinary commitment to providing incredible care every single day. As members of the leadership teams have gotten to know each other leading up to today's announcement, we've been thoroughly impressed by the level of excellence applied across their business. It's clear to us that our organizations have highly complementary capabilities and possess impressive cultural overlap on the core values that matter most. providing quality care and taking care of our caregivers. We are confident that combining our expertise with option care health will accelerate our ability to deliver on our mission to provide excellent patient outcomes and our vision to provide more clinical services. This transaction also reflects the strength of our business and the great potential of care delivery in the home. And we believe that will result in significant value for Ametis' stockholders, who will receive a premium of approximately 26% to the share price as of May 2, 2023, for the value of the shares they own and the benefit from the opportunity inherent in a financially stronger company with greater scale that is well-positioned in alternate site care and homes. For context, together we would have generated revenues of approximately $6.2 billion and adjusted EBITDA of approximately $622 million on a combined basis for the full year in 2022. The bottom line is we see tremendous upside from joining with OptionCare Health for our patients, their families, providers, payers, care teams, and our stockholders. I'll now turn it back to John to highlight the strategic merits of the transaction and what our combined platform will look like. John? Thanks, Richard. Turning to slide six, let's jump into why the strategic fit between the two platforms is so powerful. First, this is a complimentary transaction. It will expand access through the creation of broad capabilities across the care continuum. As Richard mentioned, Amedisys brings strong presence in hospital at home, home health, hospice, palliative, and high-acuity care services. This fits directly with option care health existing home and alternate site infusion services, allowing us to bolster our offerings and meet the growing demand for personalized care in the home and alternate sites. Second, the combined businesses will be positioned to deliver significant benefits to patients through better care coordination and a simplified patient journey. Third, and I can't emphasize this enough, We will unite two mission-driven clinical teams across a broad range of professional disciplines to deliver scale and provide increased access and care for patients. Fourth, we will benefit from enhanced data sets that will allow for deeper insights to produce better clinical outcomes and reduce the cost of care for patients and their families. And finally, we will be able to build on our respective track records of quality care and patient satisfaction. Underpinning all of this is our mission to transform healthcare and deliver hope and dignity to patients and their families. I'll now provide more detail on each of these. Turning to slide seven, by uniting option care health and a medicine, we will be able to provide more comprehensive clinical services across the care continuum. from prevention and maintenance care to acute and post-acute care, all the way through end-of-life care. Together with Amedisys, this represents more than $100 billion in total addressable markets. Today, we are seeing not only aging populations and growing desire for at-home healthcare services, but also increasing therapeutic pathways. Importantly, by expanding beyond our existing services, we'll be able to better meet increasing demand for alternative site care. And we believe the combined company's capabilities and scale will position us to capture a significant share of the market. Turning to slide eight, this transaction will enhance our relationships with payers, health systems, and providers, as well as biopharma, which will in turn benefit patients. Both companies have track records of working closely with payers and will expand those relationships across both government and commercial. Notably, the transaction is expected to result in a more diversified revenue base through improving the company's access to private payers and government-managed health plans. On a combined basis for 2022, 65% of our revenue base was with commercial payers and 35 with government payers. This compares to option care health, 12% government payer base on a standalone basis in 2022. Our relationships with providers and health systems are paramount to enabling patient care. Health system referral networks are increasingly looking for single provider partners for home health, infusion, and hospice pathways and transitions. Following the closing of the transaction, the combined company will be well-positioned to serve as that single partner with its offering across the alternate site care spectrum. Our extensive experience with sophisticated biopharmaceutical products and manufacturers contributes to our ability to deliver effective care solutions. Together, Amedisys and OptiCare Health we'll be able to provide a broader care model, deeper clinical insights, and a more robust platform to support decentralized clinical trials through post-launch support. We're excited about these expanded relationships and what they will directly benefit for patients. Patients will see better outcomes, a more seamless experience with greater care coordination and services, and broader access to high-quality care at a lower cost. Slide 9 demonstrates the unparalleled clinical team we will have with Amedisys. Another way we'll serve patients even better. Together, we will have more than 16,500 clinicians across a broad range of specialties. As a combined company, we'll continue to focus on being an employer of choice and invest in training and development for our employees. which helped to make us a 2023 Gallup Exceptional Workplace Award winner. As we've discussed, OxenCare Health recently announced the formation of a nationwide home infusion nursing network and clinical platform called Navin Health, which focuses on delivering specialized, truly exceptional care. With the Metasys, we'll build on our recent investments, including in technologies, to unlock productivity, drive efficiency, and better optimize staffing and retention to help meet growing market demand. Slide 10 gives a sense of the broad scale we'll have as a combined company with sites across 46 states. As I've discussed before, we've been working to expand our footprint to allow for greater operating efficiencies and continued high patient satisfaction scores. It's not always easy for patients to get the treatment they need when they need it the most. And we understand the critical importance of our convenient community-based sites in addition to care in the home. Option Care Health currently has 163 sites across the country. And through this transaction, we will have 674 total. With the addition of Omedisys, we're giving patients more options and increasing their access to high-quality care. we will also be able to leverage Amedisys' Contessa technology platform to coordinate the seamless delivery of care for high-acuity patients. Importantly, we'll maintain our local community focus that is a hallmark of both Option Care Health and Amedisys. Turning to slide 11, it is no surprise that having informed, intelligent patient insights can enhance patient outcomes. As a combined company, we will aggregate patient data across a critical population, drawing from over 720,000 patient experiences. These insights include clinical trial management capabilities and real-time feedback to coordinate and optimize care, the ability to enable value-based care models and other payer insights, and to utilize data to streamline patient care pathways. as well as drive clinical efficiency with robust analytics. The results will improve the patient experience by lowering the total cost of care and delivering quality outcomes. Turning to slide 12, both of our companies are known for the quality of our care. Our ability to consistently deliver for patients is what makes our company successful. The broad accreditation and respected patient satisfaction scores of both AuctionCare Health and Amedisys speak volumes and are both above industry averages. This is a great foundation for us to build upon and a responsibility which we do not take lightly. Needless to say, there is a lot to be excited about as we look to the future with Amedisys. I'll now turn it over to Mike to talk through the financial merits of the transaction.

Thanks, John. And let's jump to slide 13. We're always looking for opportunities to enhance option care health strategic position, increase and improve our capabilities for patients, and create value for our stockholders. As part of our broader capital allocation strategy, and as I've mentioned on previous earnings calls, M&A has been the primary area of focus for capital deployment. We're excited about our combination with the Metasys, which fits squarely into that strategy. OptionCare Health has a strong track record of identifying and executing on transactions in a disciplined way, and we're confident that this combination will be no different. Beyond the many strategic benefits just discussed, this is a compelling transaction financially. From a synergy perspective, we expect to generate annual run rate synergies of approximately $75 million by year three following close. This includes approximately $50 million of cost synergies and approximately $25 million in incremental adjusted EBITDA from revenue synergies. The revenue synergies will be derived from the complementary nature of the businesses and referral growth in a substantially larger market. And, as we have shared, the combined company will benefit from a more diversified revenue base and through improving our collective access to private payers and government-managed health plans. The combined company's financial profile will be stronger overall with substantial scale and cash flow generation, as well as an enhanced credit profile. Of note, on a combined basis, the company's leverage profile was 2.0 times as of December 31st. With the all-stock structure, stockholders from both companies will have the opportunity to participate in the upside of the combined company. And the option care health has a proven track record regarding complex integration efforts and disciplined execution to deliver on the targets we laid out today. Before we open up the call for Q&A, I want to leave you with three key takeaways from today's announcements. First, this complementary transaction means our combined company will have comprehensive offerings across the alternate site care spectrum, which will drive growth as we meet increasing demand. Second, our larger platform and broader relationships across the healthcare ecosystem will allow us to deliver superior clinical outcomes to patients at a more affordable cost of care. And third, stockholders will benefit from the stronger financial profile of the combined company, which we will leverage to execute on the compelling growth opportunities inherent in bringing a medicis and options care health together. And with that, we're happy to take your questions.

At this time, if you would like to ask a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, please press star 2. To get as many questions as time permits, we ask that you please limit yourself to one question and one follow-up. When posing your question, we ask that you pick up your handset to allow for optimal sound quality. And our first question will come from David McDonald with TrueRisk Securities. Your line is open.

Yeah, good afternoon, guys. So I guess just first question, wanted to zoom out a little bit, ask a little bit of a strategic question just from 35,000 feet, I guess.

Kind of why now is this something, you know, payers are increasingly asking for in terms of a, you know, combined offering? And then, you know, just how you think about the positioning around value-based care with regards to, you know, the announced transaction?

And then I got a quick follow-up.

Yeah, Dave, it's John. Thank you for the question. As we have been looking at our strategic intentions and really understanding the needs of the marketplace, we have evaluated and know that we need to have more scale and play a more important role in the home. As we've talked before about the infusion services, we know that that's a very important part of the post-acute and in-home care model. But there are other things that happen within the home that we believe we can have value and we can better coordinate as we move ahead. We think this positions us extremely well in an evolving market in which value-based care begins to take bigger hold on the future and, more importantly, the needs of the payer communities. So we really like the ability to extend our reach to build on a capability set that is well developed and has high quality and be able to capitalize on what we think are the right moves to play a more important role in the home and alternate site care model. And then, guys, just a quick follow-up. You talked about the number of ambulatory infusion suites you have and then how many sites you're going to have.

including emeticis, is the expectation that both services will be offered out of kind of all of those. So infusion will now be offered out of the emeticis locations. And then, you know, just was wondering if you could provide a little bit more detail. You mentioned twice just the benefit of the new payer mix. And just if you could provide a little bit more detail in terms of who you're referring to, you will get better reach with MA or, you know, what exactly you're kind of referring to there.

Yeah, Dave, starting with the footprint, certainly we are going to take a look to optimize the footprint and make certain that we are able to serve patients where they want to be met. This will allow for an acceleration of that evaluation and taking a look to see where opportunities will exist to expand into those community-based settings. And so this will give us additional opportunities to evaluate and to understand where we can expand and where we can meet greater patient needs. On the second part of your question, certainly this does allow a differentiation in being able to move into areas like Medicare Advantage and managed Medicaid and expand the reach from that perspective in a much more coordinated way. We know that there is waste in the system as it exists in its current form, and so the ability for us to have a better coordination of care and make certain that we are delivering superior clinical outcomes through the interventions of both of our clinical resources, we believe will be of high value to payers who are very concerned about the ability to curb costs and to make certain that they're offering high quality at an appropriate cost.

Thank you. Our next question will come from Brian Pinkiewicz with Jefferies. Your line is open.

Hey, good afternoon. I guess, John or Mike, you know, as I think about, back to David's question, right, if I'm thinking about the strategic rationale on the why or the why now, maybe if you can walk us through, you know, I think a lot of investors that we've heard from today are asking what the strategic synergies would be and why do this now ahead of potentially some changes in Medicare reimbursement coming up and the ongoing shift to Medicare Advantage within the home nursing space. So just curious how you thought about that and how you're thinking that this could all come together for it to all click where it becomes successful.

Hey, Brian, it's Mike. Maybe I'll let John take a quick breath of air, and he can definitely provide some additional color. Look, the reality is we've had a tremendous collaborative relationship with Amedisys dating back to Operation Warp Speed when we were trying to deliver monoclonal antibodies. That evolved, you know, over the last six months. We've deepened our relationship with the Contessa platform to help coordinate care as well. And I think, you know, The more time we spend together as we think about some of the strategic overlaps, a lot of the comments that John made around a more cohesive and coordinated phase two health systems with more efficiently onboarding patients, I think it clearly spills over, as John mentioned, into especially like the Medicare Advantage population. So I think there's a lot of things to get excited about around leveraging the complementary assets. And I think just based on the relationship we've developed over the last couple of years, we just realized there's more and more areas for collaboration.

Yeah, the only other thing I'd add, Brian, is when we take a look at the clinical resources and the scarcity of value that exists there, our ability to better coordinate the way that we utilize the clinicians in the home and in our infusion suites and expand into additional service lines, given the capability sets that we have, just allows a much more efficient model as we're looking forward. And as Mike said, we started with a deepening relationship with Hospital at Home And we realize that there's opportunities for us to look more broadly at the better coordination of home health as well as home infusion services for many patients that are suffering with complex needs.

Gotcha. And then I guess my follow-up, and this is a question that we've gotten on email probably 15 times already this afternoon. I mean, as we look at the aftermarket reaction to the deal, a lot of investors are wondering, how would you convince the market that this is the right strategy and that this is the right capital allocation move today and the right risk profile given what was an attractive or is an attractive strategic and financial and growth profile for option care?

Yeah, Brian, obviously, look, you know, we're not going to speculate on some of the initial off market reaction is whether it's technical, whether it's conviction around the opportunity. I think, you know, as as we said in our prepared remarks the the economics for for this combination um we we believe is is quite compelling um this will be a creative the first year out of the gate um and we think when you layer on the the fact that we still are maintaining that capital structure that we've fought to develop over the last couple years along with the synergy harvesting opportunity across both commercial traction and cost synergy harvesting. We think the economics are going to be quite compelling when people truly understand the opportunity that lies ahead for us.

Thank you. Our next question will come from Matt LaRue with William Blair. Your line is open.

Hey, good morning. Maybe just following up on that point. If we think about just how value has been created and sort of the posting landscape, of course, it's been by doing some smaller tuck-ins, but it's been a lot of organic growth, so sort of building value rather than acquiring value. If I think about some of the larger transactions that have been done based both of public companies and by public companies, those have been much more challenging. So in terms of the confidence that this combination will be the exception there, not just in terms of delivering financial value, but I think the quote you gave, Micah John, was improving the strategic position, delivering glad for shareholders. What really gives you confidence that these two entities are sort of the right two to combine and can kind of be the exception to that rule?

Yeah, Matt, from my belief is as the healthcare system has continued to evolve and as we look at many of the services that are required as care moves into the home and outside of the hospital into the alternate setting, the ability for us to coordinate care more effectively and efficiently is going to be a big part of that equation. This allows a much broader ability for us to execute that strategy, to be able to build on strengths that both organizations have, and to come up with new models as we're looking at the opportunities moving forward. We know that both organizations have been focused around the patient and providing superior clinical outcomes and high quality. And so with that as the foundation that we're building on and knowing that the model is going to evolve, we want to be a part of the lead of that evolution, knowing that the demand is going to be there, knowing that the desire is going to be there to find more efficient models. And with the clinical resources we have, the technology that we've enabled, and with the desire to truly transform healthcare in the home and alternate site, we think we are well positioned and now even better positioned at the close of the transaction to be able to fulfill the promise of that mission.

And then to the financial side here, it looks like you categorized expenses a little differently, but it seems like you know, GNA pet costs is over a billion between the two companies combined. And I think the target on the cost side is $50 million. So, you know, give us maybe a sense for how you arrived at that number and whether there might be additional opportunities. And then in terms of the sort of targets you laid out for revenue in the future, what are you assuming for Medicare reimbursement on the home health side?

Yeah, Matt, it's Mike. I like how you diplomatically asked the question around our confidence level around the cost of energy. Look, when you look at the combined organization, the SG&A, not the direct spend with the caregivers, but when you look at the infrastructure and the indirect, it's a pool of $1.6 billion. And I think both organizations, one of the cultural overlaps is the continuous focus on efficiency, deploying technology to create a more efficient platform. Again, the way we characterize the synergy target is run rate by year three, and so that's not the end zone. That's not the finish line. That's to give some perspective on where we would expect to be after year three. And I think you know our approach around where we fall on the conservatism and aggressive spectrum. And we lay out things that we have a high degree of confidence. And so maybe I'll hand it over to others who have thoughts around the Medicare.

You know, I mean, I think as we look at it and we've laid it out as we've gone forward is around kind of as we view into next year, kind of a negative 0.9 type of a percentage impact to that. So we'll continue to work hard. We're working hard in Washington around that to get the best outcome. We're looking at what our market baskets have been. We've got thoughts around that. Feel good about hospice reimbursement right now and where that's led. You know, we've got a decent number proposed for this year. Expect that to move slightly. So we feel good about it, but not beyond understanding there's work to be done.

All right, thank you. Our next question will come from John Stancil with JPMorgan. Your line is open.

Hi, thanks for taking the question. I know a lot of ink has been spilled around nursing networks and kind of the labor side here. Could you help us think a little bit about the combined requirements for the entity when you have your combined offerings? Is there any incremental work that needs to be done there, or do you feel like you have kind of like a pretty solid labor base as is?

Thanks. Yeah, as we have said before, and I think both organizations have talked about, you know, the ability to recruit and retain talent is a top priority for both organizations. And we have had a really good track record of making certain that we are on that side of being an employer of choice and that we can provide opportunities for our team members to develop and grow. We think that with the combination here, as well as the investments that we've made in Navin Health, it will provide us with a broader ability to access the nursing community and will continue to invest in all of those areas of the clinical resources that are required to deliver care. So this scale will allow us to continue to be a leader in that recruiting and retention. It will allow us to have clearly defined career roadmaps and the ability to create career positioning for our team members. And we think we'll give opportunities for them to have different experiences as they're looking to expand and grow within their roles. So we're really excited about the potential that this brings and we think it makes us a destination for many clinicians who are passionate about delivering high quality care in a setting which patients want to receive it.

Okay, thank you. Our next question will come from AJ Rice with Credit Suisse. Your line is open.

Hi, everybody. Thanks for the question. First, just a technical deal related question. Obviously, it's a stock deal. Is there any collars around the exchange rate, depending on how the stocks move? And is there a breakup fee associated with the deal? And then I'll ask you a strategic question.

Hey, AJ. It's Mike. No, as we outlined in the press release today, the exchange rate has been fixed, so that is static. And, yes, there will be more details coming out, but, yes, as you would expect as a public deal, there is an embedded break fee.

Okay. So I guess from the perspective of you looking at a Metasys, I wonder – If a medicist or you can comment on what percentage of their clients, either home health or hospice, use infusion therapy today. And then on the flip side of it, you've got all these contracts. Eighty-eight percent, I think, is commercial, and obviously a big portion of that is M.A., One of the challenges for the home health side has been to figure out how to contract appropriately with MA. When you look at how you've been successful in generating those contracts, is there anything about your approach that you see automatically has some applicability in the home health side that gives you a reason to think you could make some headway on dealing with that challenging issue for the home health providers?

Hey, Jay, it's John. I'll start and look for others to add. So with the back part of your question, we know that, you know, being a partner of choice for the payers and making certain that we have programs that meet their needs, especially as their health plans evolve and take more risk, will be an important aspect of an evolving healthcare ecosystem. The relationships that we have that are very productive across all of the commercial payers is something that we believe has value. Part of the way that we looked at the synergies and the way that we looked at the revenue synergy was knowing that it was going to take time for an evolving model. But we think over time there is a great opportunity to look at the combined services that we can provide in a much more coordinated way and produce programs that would meet the needs of the evolving market and drive deeper partnerships with the payers. AJ, it's Richard. Just one kind of round-around comment on that is, you know, in our home health and our hospice business, you know, we have a pretty good density of patients who need the services that option care provides and vice versa with option care providing infused services for folks who consume home health and hospice and, of course, the high acuity, which was one of the ones that we outlined. So I think there's a fantastic opportunity between both organizations to increase the health outcomes for the patients we have by combining our services, let alone the ability to develop, recruit, and retain an 18,000-plus clinician workforce. It's pretty exciting. Okay. Thanks a lot. Thanks, RJ.

Thank you. Our next question will come from Joanna Gajek with Bank of America. Your line is open.

Oh, yes, thank you. So I guess the first question that I have here, When it comes to the combined entity and what growth algorithm do you expect for the combined entity? Because obviously, when I think about how option care, right, as a standalone entity, talking about their long-term algorithm, you know, in a sense of growing revenue organically 5% to 7%, and then this should be driving, you know, double-digit speed with our growth. So how does that change with this combination?

Hey, Joanna. It's Mike. Look, I don't think we're in a position to provide, you know, longer-term, you know, granular growth. Alex, what I would tell you and what I guess the way I would answer your question is, I think both organizations who both just delivered solid first-quarter results would reaffirm our convictions in the growth trajectories of the respective organizations. And really the opportunity is that white space between to build a connective tissue relationship and get after some of the the new to world revenue program so you know i i think you guys are better at modeling the world than us and so i think um you know what i would reaffirm is that both organizations have strong conviction around our uh preceding growth trajectories which we see is is just the beginning as we think about the revenue opportunities thank you and my follow-up so you mentioned

This positions you well, so I guess Ajay's question was about Medicare Advantage, but also you mentioned in terms of value-based care specifically. So how fast do you think you can move on this? Because I guess we've been hearing all these discussions different provider types, you know, talking tangentially about moving forward that, but obviously very small steps. So, you know, when should we hear about more of this actually taking place? Are there some contracts already in place that are actually, you know, calling for something like this where they want different types of offerings from the company that was kind of the driver here for this transaction?

Yeah, Joanne, it's John. Certainly the conversations, and there's nothing that we can do until we close the transaction to have anything that would be in alignment to what you asked. But conceivably, where we're in conversations, and I believe the Ametis team can comment, where they're in conversations, is the need for new models as we're looking forward, and that ability to have better coordination of care, to be thinking about all of the services that can be rendered when you have a clinician in the home, not in a piecemeal way, but in a more comprehensive approach. It's something that we've had conversations from the option care health side all along. So we think that this will be a really great opportunity to continue to understand what it means to have a comprehensive set of solutions, be able to have only potentially one person knocking on the door as opposed to two or three people knocking on the door of their home to deliver the services. and to be able to link that with data and insights that will drive better outcomes and reduce the total cost of care. So a lot of what we believe is the strategic intent is certainly the existing capabilities that we have today and better coordinating those. But I think what I'm most excited about is what we can build tomorrow when we have all of these resources available to us, and we have the ability to have a more uh collaborative conversation with the payer community around where are the holes and where are the needs that they have that we can fill with this combined entity yeah just to support john's comments that's richard you know we we have We have conversations with health plans, health systems, referral sources all the time about what John just said. Is there a way that we can bundle these services together into a commercial contract for simplicity and efficiency at the local level to deliver care or at the health plan level around value-based arrangements? And so what we've done here over time is we're able to put all of our services together in a more comprehensive care delivery platform. And that should enable us to engage with our health plan partners in a way to bring them value, but also bring some for our patients and the organization.

Thank you. Our next question will come from Justin Bowers with Deutsche Bank. Your line is open.

Hey, good afternoon, everyone. Just wanted to understand the revenue synergy and how you're thinking about that more specifically. Can you help sort of break that apart for us? You know, whether it's around services or, you know, rates, and then also discuss where high acuity fits in the puzzle. And the second part of that would be, is there any metrics you can provide us on, you know, how much overlap there is among the patients between the various care centers?

Hey, Justin, it's Mike Shapiro. I'll maybe start and let others jump in. Look, as we look at the inherent, you know, strengths of the organizations, I think there is just an inherent productivity with our commercial go-to-market strategy. In many of the leading health systems, we have, you know, complementary teams that are approaching those health systems every single day. So as we think about how do we deploy health technology and the resources we have in the field, I think there's an opportunity to drive, you know, higher referrals just with the resources that we have. I think beyond that, I think as, you know, as John had talked about, I think there's an opportunity to take a pretty unique set of capabilities and collaborate with payers who are looking for, you know, more economical, more risk-based programs that, again, is broader than, you know, just some of the capabilities that each organization has individually. I think as we think about some of the high acuity opportunities with the Contessa platform and the technology they bring, along with, you know, our infrastructure, our network of infusion centers, and demonstrated ability to support chronic patients, I think there's a tremendous opportunity to bring some new-to-world programs, again, especially on the heels of the technology that they possess.

Yeah, and I would only echo what Mike said in the sense of we do think there's some cross-sell upsell opportunities while we're in the market. As Mike said, we're calling on discharge planners and case managers as well as hospitalists looking for opportunities to help assist them in transition of care. That is an opportunity that we're looking at. And I'd say, look, as we've developed and I think as we've established, we take a pretty thoughtful approach, albeit probably more conservative than aggressive in the way that we're looking at moving this forward, and know that the revenue synergies are probably going to take a little bit longer. given the sales cycle of selling programs into the payer, you know, community. So we will continue to take a look at those opportunities, but we're pretty confident that there's opportunities for us to capitalize on the existing capabilities that we have and, as Mike said, build those new-to-world programs that will help develop deliver more clinical outcomes, better clinical outcomes, and participate in the $100 billion market that we believe now exists as a combined organization.

Appreciate it.

Thank you. Our next question will come from Jamie Peirce with Goldman Sachs. Your line is open.

Hey, thank you. Good afternoon. um curious about some of the comments you guys have made on one person knocking on your door versus two and just given it's been a really challenging labor market environment for for a while now although getting better i mean how do you think about the efficiency you can drive from a labor perspective with the combination look hey jamie it's mike i'll start look everybody in healthcare services is is

is recruiting clinical labor every single day. One of the things we get excited about is, you know, the track record of deploying technology through our Navin platform, which we just rolled out, utilizing our infusion center footprint really to drive productivity to a whole different level. And I think, you know, one of the things that gets us excited is when you think about the more than 16,000 clinicians that this organization will have, it gives us a critical mass to really take our recruiting and our career opportunity pathways for clinicians to a whole different level. And so, look, I mean, we both focus, and you've heard it on both organizations' earnings calls and in our investor conversations, where recruiting and retaining clinical labor is vital to both organizations' earnings. success, and I think this just gives us a lot more opportunity to create that employer of choice destination.

Okay, thank you. And then just one more on the vision. You know, both companies have a wide range of acuity levels that you can serve, maybe in medicine in particular with, you know, basic home health and plasticity. hospital at home, so a wide range there. And I'm just trying to understand the longer-term vision, maybe the high-acuity piece in the context of value-based care, and as you integrate the platforms and invest incrementally, is the high-acuity setting, you know, a core piece of what you're going after? Maybe any more thoughts there? Thank you.

Yeah, Jamie, it's Richard. And, John, you can comment on this, I think, too. This combination, what it does is it brings this end-to-end home-based health solution to the front. And so we can take people all the way from preventative all the way to end-of-life. And to your point, I think there's a strong amount of connectivity in our clinicians being able to work on new areas of health care, whether it be in a palliative setting or an acute setting or in a chronic setting. And I think that would be fun from a clinician's perspective. But then from a business perspective allows us to take up all this growing demand for for all these unique healthcare pathways that are being created. People are moving from high-acute over to low, in and out of home, into different centers and community locations. And now what we have is kind of that end-to-end platform. So I think that enables us to, A, do what Mike was just commenting on on the staffing side. I think we're going to be a compelling destination for people to work. to come and do that kind of work. And I think we're uniquely positioned commercially to work in partnership with our health systems and our health plans to deliver value. From a high acuity perspective, obviously big growth trajectory for us at Amedisys and something we continue to be very excited about, and there's strong connection into infusion services in that high acuity space. John, anything you want to add? Yeah, and that is where the relationship has really evolved over the last, you know, six to nine months is in that high acuity space in support of what Contessa is doing at Hospital Home, but also looking for additional opportunities with SNF at Home and other areas. And I believe, you know, the first area of focus will be around that high acuity, which is across both of our organizations and within what we do today. And I think it will expand to there. And when you look at how many chronic patients that we are serving on the infusion side, Many of them have complex conditions, and many of them have comorbidities that require more than just infusion services, but also wraparound services, including home health. And so that opportunity to expand with that patient population and provide more comprehensive care and additional service lines we think is a near-term opportunity. for us to really participate differently and provide value across the stakeholder spectrum on that.

Thank you. Our next question will come from Scott Bedell with Stevens. Your line is open.

Hi, thanks. Good evening. First question, just interested if you can give us a little color just maybe on how the process entailed. And just interested from the medicine's perspective, you know, whether you can, how you can track this against some of the alternative arrangements that came about with some of the peers in terms of the vertical integration with payers. And then just the follow-up question would just be, just remind us around the regulatory approval process. Obviously, not much direct overlap between the two companies, but just if you can remind us which regulators specifically would need to approve the transaction. Thank you.

Yeah, sure. Thanks, Scott. Richard, I'll start off. I think, you know, from a medicine perspective, there's still the standalone growth agenda that our organization and OptinCare's organization has still available to us, not mutually exclusive, but it's coming together. So we're excited about the growth story individually and then more excited about the growth story collectively. For us, one of the things that we think is valuable here is a, you know, unique, large, independent healthcare services provider that can operate in the marketplace. And so we're excited about that. We've always had a great respect for option care, you know, for their large kind of independent provider of the home infusion space. And through our conversations, it's become really clear that we've got a great fit on a couple of areas. One, we've got a great fit culturally, so the organizations really are going to, I think, at the right time, blend really nicely together. But we're also fit really well from a business perspective, as we just talked about that end-to-end care that we're going to be able to deliver. And then lastly, I think there's going to be a lot of value to be created, you know, for our stockholders as we fit up front and the way that we put the transaction together. In terms of, you know, approvals, you know, Mike, if you want to just comment on what the approval process is. Pretty standard and customary for our transaction.

Yeah, Scott. Hey, it's Mike. Yeah, as you'd imagine, obviously, there's the HSR in the regulatory process. And as you'd expect with two health care services organizations, there's commensurate regulatory filings across the country. But, again, as John highlighted in his comments, we have a high degree of conviction that we should be able to close this before year end.

Thanks, Scott.

Thank you. Our last question will come from Ben Hendrix with RBC Capital Markets. Your line is open.

Thank you very much, guys, for squeezing me in. AMED has long cited the mixed shift to MA as an issue on the rate side, and I think we've touched on it a little earlier in the call. I was just wondering, you talked about the bundling opportunity with all your services and your strategy with managed care payers. I'm wondering if this could help kind of create some of those revenue synergies in terms of being able to negotiate higher rates or a case rate strategy as AMED has been pursuing, given this more negotiating power with more services under your belt. Thank you.

Yeah. Ben, it's Richard. Great points. I think this is net opportunity. You know, we spend a lot of time thinking about the different payment verticals we've got, whether it be fee-for-service on our side or private pay or, of course, MA. And I think one of the ways this is really going to benefit us is from a case rate perspective because, you know, we've got some large contracts that we've been putting together that are, you know, case rate oriented, which takes into account kind of the full value of the services that we provide and the higher clinical capability and outcomes that we have, which obviously benefits the payers. And that's really the biggest thing here is that by putting the companies together, we should be able to put them together in a way that allows us to you know, contract from a case rate perspective, a bundled perspective, or whatever other terminology you want to use because each payer is a little bit different in the way that they approach it. But what we have is an in-depth, comprehensive clinical set that's unmatched in the marketplace. You put that together and the value that provides all the way through the verticals. not just for families and their patients and the service and the quality they get, but all the way up to, you know, to the funding source. And so we're excited about, you know, engaging in those conversations at the right time and think it's going to unlock a tremendous amount of value for both parties.

Thanks, Ben.

Thank you. That's all the time we have for questions, and I would like to turn the call back over to Mr. Rotemacher for closing remarks.

thank you everyone for your questions i want to reiterate my excitement for the combination of option care health with the medicines we look forward to working with the medicines team to bring our two companies together and execute this extraordinary opportunity together i am confident we we will accelerate our ability to transform health care and provide unsurpassed care and superior clinical outcomes to patients thank you very much and have a great evening

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation.