Option Care Health, Inc.

Good day and thank you for standing by. Welcome to the OptionCare Health third quarter 2024 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 a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Nicole Maggio, Senior Vice President of Finance.

Good morning. 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. 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 our Form 10-K and latest Form 10-Q 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 this 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 will turn the call over to John Rademacher, President and Chief Executive Officer.

Thanks, Nicole, and good morning, everyone. There have been quite a few developments for option care health over the past 90 days, so I'd like to jump right in. Overall, the third quarter results were quite encouraging and generally consistent with how we've expected the quarter to materialize. Mike will provide additional color in a few minutes, but we continue to deliver double-digit revenue growth and sequential improvement in gross profit dollar generation through our organic growth initiative. While we have substantially recovered operationally from the changed healthcare incident that we discussed in the past, we continue our efforts to catch up on patient payment obligations, which remain impacted and delayed from the disruption earlier in the year. In addition to solid revenue and earnings results, even with the delayed collections from patients, cash flow generation continues to be strong. And we finished the quarter with a net debt to EBITDA leverage ratio of 1.5 times, the lowest reported level since our merger with BioScript in 2019. This performance is inclusive of the repurchase of $41.9 million in stock during the quarter. Over the past month, the dedicated team at OptionCare Health has continued our focus on delivering extraordinary care, even in the face of Hurricanes Helene and Milton. Hurricane Helene impacted our operations in the southeast in the closing days of the third quarter, and the aftermath of Helene continues to impact our operations, which I will expand upon in a moment. Most importantly, despite considerable disruptions, We don't believe our ability to support our patients was materially impacted, and our teams worked tirelessly to prepare for and then respond to these disasters. The oxygen care health team in the southeast helped ensure seamless patient support and collaboration with our referral partners during these considerably challenging conditions. I continue to be humbled by our team members' focus and dedication, and I am grateful for their efforts. The supply chain disruption from Hurricane Helene regarding intravenous solution production has had and continues to have a meaningful impact on our operations. A large number of our acute patients received therapeutic doses compounded using intravenous solution containers, also known as IV bags. Upon learning of the supplier's plant closure and disruption, our teams in the field implemented immediate inventory conservation initiatives and worked quickly and proactively with manufacturers and distributors to secure supply. Having said that, we, along with most other care providers, continue to receive less than optimal levels of IV bags. Our first priority has been and will continue to be providing therapies for our existing patients on service. We believe we have a sophisticated and agile approach to reacting to market conditions like these using our national logistic capabilities that can adjust operations as supply dynamics hopefully improve in the coming weeks and months. However, as we sit here today, we are limited in our ability to onboard new patients who are primarily receiving intravenous antibiotics and nutrition support therapy. We intend to be supportive of these patient communities as collaborative with our referral sources as possible, and we remain in continuous contact with relevant stakeholder groups. At this point, we cannot accurately predict when supply will be more readily available and alleviate restrictions and conservation plans that we've had to put in place. Over the past month, we also learned that a certain large infusion provider has announced its intentions to exit certain acute therapies and no longer accept new patients. As we have articulated on many occasions, we have made significant investments over the past several years to establish what we believe is an efficient network of compounding pharmacies and clinical capabilities that support acute therapeutic administration in the home and alternate site settings. We continue to view these therapeutic areas as an attractive opportunity for us based on these investments and our broad capabilities. Notwithstanding the IV solution disruption just discussed, we see these market developments as a growth opportunity over the medium term once supply chain dynamics improve. Despite a very competitive marketplace, we continue to believe OptiCare Health possesses unique, differentiated capabilities that position us well to more deeply collaborate with referral sources and serve their patients in need of acute therapies and clinical oversight. Finally, I want to spend a few minutes discussing recent developments impacting our chronic inflammatory therapies portfolio. Since our second quarter call on July 31st, CMS announced that effective in 2026, it negotiated an approximate 66% reduction in the cost for Part D patients on Stelara, a therapy previously announced as part of the first 10 drugs subject to negotiation under the Inflation Reduction Act. Additionally, that therapy is expected to experience biosimilar competition beginning in early 2025. 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. 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. Although we recognize the Inflation Reduction Act, negotiations are a new factor here. While we remain actively engaged with them, we believe the impact of their pricing actions will materially impact the gross profit we realize on providing infusion services to these patients beginning in early 2025. At this point, we are not in a position to provide an estimated dollar impact for 2025 as negotiations are ongoing and there remain a number of uncertainties. As we have reiterated on many occasions, we do not control drug reference prices, nor do we set the spread off the reference prices at which we acquire the drug. Rest assured, this team remains focused on identifying cost efficiencies and additional growth initiatives to help offset some of these headwinds in 2025. So to close, to reiterate, I am very pleased with the team's performance in the third quarter, especially when considering the unique challenges that we were presented with in the quarter and continue to impact us today. We delivered solid financial results and continue to navigate challenging supply chain dynamics for our acute therapies. On the areas in which we have direct control, our team has executed well and demonstrated agility and resilience. And despite the unexpected drug price actions by a certain manufacturer, I believe this enterprise is well positioned to deliver growth and serve more patients over the medium term. With that, I'll hand the call over to Mike to provide additional details. Mike?