|
|
|
|
|
(Mark One)
|
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended March 31, 2020
|
|
OR
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from to
|
Delaware
|
05-0489664
|
(State of incorporation)
|
(I.R.S. Employer Identification No.)
|
3000 Lakeside Dr. Suite 300N, Bannockburn, IL
|
60015
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each Class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.0001 par value per share
|
OPCH
|
Nasdaq Global Select Market
|
|
|
Page
Number
|
PART I
|
||
|
|
|
|
||
|
||
|
||
|
||
|
||
|
|
|
PART II
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
Item 1.
|
Financial Statements
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
NET REVENUE
|
$
|
705,440
|
|
|
$
|
476,492
|
|
COST OF REVENUE
|
547,411
|
|
|
378,298
|
|
||
GROSS PROFIT
|
158,029
|
|
|
98,194
|
|
||
|
|
|
|
||||
OPERATING COSTS AND EXPENSES:
|
|
|
|
||||
Selling, general and administrative expenses
|
129,280
|
|
|
82,787
|
|
||
Depreciation and amortization expense
|
20,101
|
|
|
9,969
|
|
||
Total operating expenses
|
149,381
|
|
|
92,756
|
|
||
OPERATING INCOME
|
8,648
|
|
|
5,438
|
|
||
|
|
|
|
||||
OTHER INCOME (EXPENSE):
|
|
|
|
||||
Interest expense, net
|
(28,087
|
)
|
|
(11,045
|
)
|
||
Equity in earnings of joint ventures
|
562
|
|
|
549
|
|
||
Other, net
|
8
|
|
|
(76
|
)
|
||
Total other expense
|
(27,517
|
)
|
|
(10,572
|
)
|
||
|
|
|
|
||||
LOSS BEFORE INCOME TAXES
|
(18,869
|
)
|
|
(5,134
|
)
|
||
INCOME TAX EXPENSE (BENEFIT)
|
1,041
|
|
|
(1,422
|
)
|
||
|
|
|
|
||||
NET LOSS
|
$
|
(19,910
|
)
|
|
$
|
(3,712
|
)
|
|
|
|
|
||||
OTHER COMPREHENSIVE LOSS, NET OF TAX:
|
|
|
|
||||
Change in unrealized losses on cash flow hedges, net of income tax benefit of $0, and $242, respectively
|
(16,632
|
)
|
|
(505
|
)
|
||
OTHER COMPREHENSIVE LOSS
|
(16,632
|
)
|
|
(505
|
)
|
||
NET COMPREHENSIVE LOSS
|
$
|
(36,542
|
)
|
|
$
|
(4,217
|
)
|
|
|
|
|
||||
LOSS PER COMMON SHARE
|
|
|
|
||||
Net loss per share, basic and diluted
|
$
|
(0.11
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
||||
Weighted average common shares outstanding, basic and diluted
|
176,661
|
|
|
142,614
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net loss
|
$
|
(19,910
|
)
|
|
$
|
(3,712
|
)
|
Adjustments to reconcile net loss to net cash provided by operations:
|
|
|
|
||||
Depreciation and amortization expense
|
21,844
|
|
|
10,749
|
|
||
Non-cash operating lease costs
|
4,764
|
|
|
4,231
|
|
||
Deferred income taxes - net
|
300
|
|
|
(2,082
|
)
|
||
Amortization of deferred financing costs
|
1,396
|
|
|
799
|
|
||
Equity in earnings of joint ventures
|
(562
|
)
|
|
(549
|
)
|
||
Stock-based incentive compensation expense
|
757
|
|
|
584
|
|
||
Other adjustments
|
(882
|
)
|
|
(535
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable, net
|
(12,781
|
)
|
|
266
|
|
||
Inventories
|
(23,252
|
)
|
|
(6,690
|
)
|
||
Prepaid expenses and other current assets
|
3,603
|
|
|
7,263
|
|
||
Accounts payable
|
42,302
|
|
|
(3,395
|
)
|
||
Accrued compensation and employee benefits
|
6,651
|
|
|
(1,139
|
)
|
||
Accrued expenses and other current liabilities
|
(1,650
|
)
|
|
7,217
|
|
||
Operating lease liabilities
|
(4,740
|
)
|
|
(3,765
|
)
|
||
Other noncurrent assets and liabilities
|
563
|
|
|
(162
|
)
|
||
Net cash provided by operating activities
|
18,403
|
|
|
9,080
|
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Acquisition of property and equipment
|
(5,353
|
)
|
|
(5,367
|
)
|
||
Other investing cash flows
|
—
|
|
|
636
|
|
||
Net cash used in investing activities
|
(5,353
|
)
|
|
(4,731
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Redemptions to related parties
|
—
|
|
|
(2,000
|
)
|
||
Exercise of stock options, vesting of restricted stock, and related tax withholdings
|
(549
|
)
|
|
—
|
|
||
Repayments of debt principal
|
(2,313
|
)
|
|
(1,038
|
)
|
||
Net cash used in financing activities
|
(2,862
|
)
|
|
(3,038
|
)
|
||
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
10,188
|
|
|
1,311
|
|
||
Cash and cash equivalents - beginning of the period
|
67,056
|
|
|
36,391
|
|
||
CASH AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
77,244
|
|
|
$
|
37,702
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
25,936
|
|
|
$
|
6,321
|
|
Cash paid for income taxes
|
$
|
307
|
|
|
$
|
180
|
|
Cash paid for operating leases
|
$
|
6,798
|
|
|
$
|
4,671
|
|
|
Preferred Stock
|
|
Common Stock
|
|
Treasury Stock
|
|
Paid-in Capital
|
|
Management Notes Receivable
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive (Loss)
Income
|
|
Total Stockholders’ Equity
|
||||||||||||||||
Balance - December 31, 2018
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
619,621
|
|
|
$
|
(1,619
|
)
|
|
$
|
(16,035
|
)
|
|
$
|
844
|
|
|
$
|
602,825
|
|
Interest on management notes receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
||||||||
Stockholders' redemption
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,000
|
)
|
||||||||
Stock-based incentive compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
584
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
584
|
|
||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,712
|
)
|
|
—
|
|
|
(3,712
|
)
|
||||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(505
|
)
|
|
(505
|
)
|
||||||||
Balance - March 31, 2019
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
618,205
|
|
|
$
|
(1,640
|
)
|
|
$
|
(19,747
|
)
|
|
$
|
339
|
|
|
$
|
597,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance - December 31, 2019
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
(2,403
|
)
|
|
$
|
1,008,362
|
|
|
$
|
—
|
|
|
$
|
(91,955
|
)
|
|
$
|
(7,195
|
)
|
|
$
|
906,827
|
|
Exercise of stock options, vesting of restricted stock and related tax withholdings
|
—
|
|
|
—
|
|
|
—
|
|
|
(549
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(549
|
)
|
||||||||
Stock-based incentive compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
757
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
757
|
|
||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,910
|
)
|
|
—
|
|
|
(19,910
|
)
|
||||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,632
|
)
|
|
(16,632
|
)
|
||||||||
Balance - March 31, 2020
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
(2,403
|
)
|
|
$
|
1,008,570
|
|
|
$
|
—
|
|
|
$
|
(111,865
|
)
|
|
$
|
(23,827
|
)
|
|
$
|
870,493
|
|
|
|
Amount
|
||
Number of BioScrip common shares outstanding at time of the Merger (1)
|
|
129,181
|
|
|
Common shares issued to warrant and preferred stockholders at time of the Merger (1)
|
|
3,458
|
|
|
Total shares of BioScrip common stock outstanding at time of the Merger (1)
|
|
132,639
|
|
|
BioScrip share price as of August 6, 2019
|
|
$
|
2.67
|
|
Fair value of common shares
|
|
$
|
354,146
|
|
Fair value of share-based instruments
|
|
$
|
32,898
|
|
Cash paid in conjunction with the Merger included in purchase consideration
|
|
$
|
714,957
|
|
Fair value of total consideration transferred
|
|
$
|
1,102,001
|
|
Less: cash acquired
|
|
$
|
14,787
|
|
Fair value of total consideration acquired, net of cash acquired
|
|
$
|
1,087,214
|
|
|
|
Amount
|
||||
Accounts receivable, net (1)
|
|
$
|
96,532
|
|
||
Inventories (2)
|
|
19,683
|
|
|||
Property and equipment, net (3)
|
|
48,732
|
|
|||
Intangible assets, net (4)
|
|
193,245
|
|
|||
Deferred tax assets, net of deferred tax liabilities (5)
|
|
26,731
|
|
|||
Operating lease right-of-use asset (6)
|
|
22,378
|
|
|||
Operating lease liability (6)
|
|
(28,897
|
)
|
|||
Accounts payable (7)
|
|
(66,371
|
)
|
|||
Other assumed liabilities, net of other acquired assets (7)
|
|
(20,233
|
)
|
|||
Total acquired identifiable assets and liabilities
|
|
291,800
|
|
|||
Goodwill (8)
|
|
795,414
|
|
|||
Total consideration transferred
|
|
$
|
1,087,214
|
|
(1)
|
Management has valued accounts receivables based on the estimated future collectability of the receivables portfolio.
|
(2)
|
Inventories are stated at fair value as of the Merger Date.
|
(3)
|
The fair value of the property and equipment was determined based upon the best and highest use of the property with final values determined based upon an analysis of the cost, sales comparison, and income capitalization approaches for each property appraised.
|
(4)
|
The preliminary allocation of consideration exchanged to intangible assets acquired is as follows (in thousands):
|
|
|
Fair Value
|
|
Weighted Average Estimated Life (in years)
|
||
Trademarks/Names
|
|
$
|
12,536
|
|
|
2
|
Patient referral sources
|
|
180,329
|
|
|
20
|
|
Licenses
|
|
380
|
|
|
1.5
|
|
Total intangible assets, net
|
|
$
|
193,245
|
|
|
18.8
|
(5)
|
Net deferred tax assets represented the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases. See Note 5, Income Taxes, for additional discussion of the Company’s combined income tax position subsequent to the Merger.
|
(6)
|
The fair value of the operating lease liability and corresponding right-of-use asset (current and long-term) was based on current market rates available to the Company.
|
(7)
|
Accounts payable as well as certain other current and non-current assets and liabilities are stated at fair value as of the Merger Date.
|
(8)
|
The Merger preliminarily resulted in $795.4 million of goodwill, which is attributable to cost synergies resulting from procurement and operational efficiencies and elimination of duplicative administrative costs. The goodwill created in the Merger is not expected to be deductible for tax purposes.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Numerator:
|
|
|
|
|
||||
Net loss
|
|
$
|
(19,910
|
)
|
|
$
|
(3,712
|
)
|
Denominator:
|
|
|
|
|
|
|
||
Weighted average number of common shares outstanding
|
|
176,661
|
|
|
142,614
|
|
||
Loss per Common Share:
|
|
|
|
|
||||
Loss per common share, basic and diluted
|
|
$
|
(0.11
|
)
|
|
$
|
(0.03
|
)
|
Fiscal Year Ending December 31,
|
|
Minimum Payments
|
||
2020
|
|
$
|
18,202
|
|
2021
|
|
19,201
|
|
|
2022
|
|
14,103
|
|
|
2023
|
|
10,767
|
|
|
2024
|
|
8,008
|
|
|
Thereafter
|
|
18,327
|
|
|
Total lease payments
|
|
$
|
88,608
|
|
Less: Interest
|
|
14,715
|
|
|
Present value of lease liabilities
|
|
$
|
73,893
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Infusion pumps
|
$
|
33,386
|
|
|
$
|
30,416
|
|
Equipment, furniture and other
|
50,988
|
|
|
51,454
|
|
||
Leasehold improvements
|
82,140
|
|
|
80,916
|
|
||
Computer software, purchased and internally developed
|
35,079
|
|
|
34,884
|
|
||
Assets under development
|
5,438
|
|
|
14,150
|
|
||
|
207,031
|
|
|
211,820
|
|
||
Less: accumulated depreciation
|
81,245
|
|
|
78,622
|
|
||
Property and equipment, net
|
$
|
125,786
|
|
|
$
|
133,198
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Depreciation expense in cost of revenue
|
|
$
|
1,742
|
|
|
$
|
780
|
|
Depreciation expense in operating expenses
|
|
11,319
|
|
|
5,073
|
|
||
Total depreciation expense
|
|
$
|
13,061
|
|
|
$
|
5,853
|
|
Balance at December 31, 2019
|
|
$
|
1,425,542
|
|
Purchase accounting adjustments
|
|
2,341
|
|
|
Balance at March 31, 2020
|
|
$
|
1,427,883
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Gross intangible assets:
|
|
|
|
|
||||
Referral sources
|
|
$
|
438,121
|
|
|
$
|
438,121
|
|
Trademarks/names
|
|
44,536
|
|
|
44,536
|
|
||
Other amortizable intangible assets
|
|
402
|
|
|
402
|
|
||
Total gross intangible assets
|
|
483,059
|
|
|
483,059
|
|
||
|
|
|
|
|
||||
Accumulated amortization:
|
|
|
|
|
||||
Referral sources
|
|
(90,846
|
)
|
|
(84,295
|
)
|
||
Trademarks/names
|
|
(14,845
|
)
|
|
(12,748
|
)
|
||
Other amortizable intangible assets
|
|
(172
|
)
|
|
(106
|
)
|
||
Total accumulated amortization
|
|
(105,863
|
)
|
|
(97,149
|
)
|
||
Total intangible assets, net
|
|
$
|
377,196
|
|
|
$
|
385,910
|
|
|
|
Principal Amount
|
|
Discount
|
|
Debt Issuance Costs
|
|
Net Balance
|
||||||||
ABL facility
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
First lien term loan
|
|
922,688
|
|
|
(8,120
|
)
|
|
(22,069
|
)
|
|
892,499
|
|
||||
Second lien notes
|
|
412,256
|
|
|
(11,455
|
)
|
|
(7,721
|
)
|
|
393,080
|
|
||||
|
|
$
|
1,334,944
|
|
|
$
|
(19,575
|
)
|
|
$
|
(29,790
|
)
|
|
1,285,579
|
|
|
Less: current portion
|
|
|
|
|
|
|
|
(9,250
|
)
|
|||||||
Total long-term debt
|
|
|
|
|
|
|
|
$
|
1,276,329
|
|
|
|
Principal Amount
|
|
Discount
|
|
Debt Issuance Costs
|
|
Net Balance
|
||||||||
ABL facility
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
First lien term loan
|
|
925,000
|
|
|
(8,399
|
)
|
|
(22,825
|
)
|
|
893,776
|
|
||||
Second lien notes
|
|
412,256
|
|
|
(11,672
|
)
|
|
(7,864
|
)
|
|
392,720
|
|
||||
|
|
$
|
1,337,256
|
|
|
$
|
(20,071
|
)
|
|
$
|
(30,689
|
)
|
|
1,286,496
|
|
|
Less: current portion
|
|
|
|
|
|
|
|
(9,250
|
)
|
|||||||
Total long-term debt
|
|
|
|
|
|
|
|
$
|
1,277,246
|
|
Year Ending December 31,
|
|
Minimum Payments
|
||
2020
|
|
$
|
6,938
|
|
2021
|
|
9,250
|
|
|
2022
|
|
9,250
|
|
|
2023
|
|
9,250
|
|
|
2024
|
|
9,250
|
|
|
Thereafter
|
|
1,291,006
|
|
|
Total
|
|
1,334,944
|
|
Financial Instrument
|
|
Carrying Value as of March 31, 2020
|
|
Markets for Identical Item (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||||
First lien term loan
|
|
$
|
892,499
|
|
|
$
|
—
|
|
|
$
|
775,058
|
|
|
$
|
—
|
|
Second lien notes
|
|
393,080
|
|
|
—
|
|
|
—
|
|
|
339,371
|
|
||||
Total debt instruments
|
|
$
|
1,285,579
|
|
|
$
|
—
|
|
|
$
|
775,058
|
|
|
$
|
339,371
|
|
|
|
Level 3 Measurements
|
||
Second lien notes fair value as of January 1, 2020
|
|
$
|
411,119
|
|
Change in fair value
|
|
(71,748
|
)
|
|
Second lien notes fair value as of March 31, 2020
|
|
$
|
339,371
|
|
|
|
Fair value - Derivatives in liability position
|
||||||||
Derivative
|
|
Balance Sheet Caption
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Interest rate swaps designated as cash flow hedges
|
|
Accrued expenses and other current liabilities
|
|
$
|
3,122
|
|
|
$
|
1,275
|
|
Interest rate swaps designated as cash flow hedges
|
|
Other non-current liabilities
|
|
20,705
|
|
|
5,920
|
|
||
Interest rate swaps not designated as hedges
|
|
Other non-current liabilities
|
|
315
|
|
|
90
|
|
||
Total derivatives
|
|
|
|
$
|
24,142
|
|
|
$
|
7,285
|
|
|
Three Months Ended March 31,
|
||||||
Derivative
|
2020
|
|
2019
|
||||
Interest rate caps designated as cash flow hedges
|
$
|
—
|
|
|
$
|
(747
|
)
|
Interest rate swaps designated as cash flow hedges
|
(16,632
|
)
|
|
—
|
|
||
|
$
|
(16,632
|
)
|
|
$
|
(747
|
)
|
|
|
|
|
Three months ended March 31,
|
||||||
Derivative
|
|
Income Statement Caption
|
|
2020
|
|
2019
|
||||
Interest rate caps designated as cash flow hedges
|
|
Interest expense
|
|
$
|
—
|
|
|
$
|
(183
|
)
|
Interest rate swaps designated as cash flow hedges
|
|
Interest expense
|
|
(799
|
)
|
|
—
|
|
||
Interest rate swaps not designated as hedges
|
|
Interest expense
|
|
(234
|
)
|
|
—
|
|
||
|
|
|
|
$
|
(1,033
|
)
|
|
$
|
(183
|
)
|
•
|
Level 1 — Inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 — Inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
|
•
|
Level 3 — Inputs to the fair value measurement are unobservable inputs or valuation techniques.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Selling, General and Administrative Expenses Savings. Merged corporate infrastructure has created significant opportunity for streamlining corporate and administrative costs, including headcount and functional spend.
|
•
|
Network Optimization. The previous investments in technology and compounding pharmacies, along with the overlapping geographic footprint, allows for facility rationalization and the optimization of assets.
|
•
|
Procurement Savings. The enhanced scale of the Company generates supply chain efficiencies through increased purchasing leverage. The Company’s platform is also positioned to be the partner of choice for pharmaceutical manufacturers seeking innovative distribution channels and patient support models to access the market.
|
|
Three Months Ended March 31,
|
||||||||||||
|
2020 (unaudited)
|
|
2019 (unaudited)
|
||||||||||
|
Amount
|
|
|
% of Revenue
|
|
|
Amount
|
|
|
% of Revenue
|
|
||
NET REVENUE
|
$
|
705,440
|
|
|
100.0
|
%
|
|
$
|
476,492
|
|
|
100.0
|
%
|
COST OF REVENUE
|
547,411
|
|
|
77.6
|
%
|
|
378,298
|
|
|
79.4
|
%
|
||
GROSS PROFIT
|
158,029
|
|
|
22.4
|
%
|
|
98,194
|
|
|
20.6
|
%
|
||
|
|
|
|
|
|
|
|
||||||
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
129,280
|
|
|
18.3
|
%
|
|
82,787
|
|
|
17.4
|
%
|
||
Depreciation and amortization expense
|
20,101
|
|
|
2.8
|
%
|
|
9,969
|
|
|
2.1
|
%
|
||
Total operating expenses
|
149,381
|
|
|
21.2
|
%
|
|
92,756
|
|
|
19.5
|
%
|
||
OPERATING INCOME
|
8,648
|
|
|
1.2
|
%
|
|
5,438
|
|
|
1.1
|
%
|
||
|
|
|
|
|
|
|
|
||||||
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
(28,087
|
)
|
|
(4.0
|
)%
|
|
(11,045
|
)
|
|
(2.3
|
)%
|
||
Equity in earnings of joint ventures
|
562
|
|
|
0.1
|
%
|
|
549
|
|
|
0.1
|
%
|
||
Other, net
|
8
|
|
|
—
|
%
|
|
(76
|
)
|
|
—
|
%
|
||
Total other expense
|
(27,517
|
)
|
|
(3.9
|
)%
|
|
(10,572
|
)
|
|
(2.2
|
)%
|
||
|
|
|
|
|
|
|
|
||||||
LOSS BEFORE INCOME TAXES
|
(18,869
|
)
|
|
(2.7
|
)%
|
|
(5,134
|
)
|
|
(1.1
|
)%
|
||
INCOME TAX EXPENSE (BENEFIT)
|
1,041
|
|
|
0.1
|
%
|
|
(1,422
|
)
|
|
(0.3
|
)%
|
||
NET LOSS
|
$
|
(19,910
|
)
|
|
(2.8
|
)%
|
|
$
|
(3,712
|
)
|
|
(0.8
|
)%
|
|
|
|
|
|
|
|
|
||||||
OTHER COMPREHENSIVE LOSS, NET OF TAX:
|
|
|
|
|
|
|
|
||||||
Change in unrealized losses on cash flow hedges, net of income tax benefit of $0, and $242, respectively
|
(16,632
|
)
|
|
(2.4
|
)%
|
|
(505
|
)
|
|
(0.1
|
)%
|
||
OTHER COMPREHENSIVE LOSS
|
(16,632
|
)
|
|
(2.4
|
)%
|
|
(505
|
)
|
|
(0.1
|
)%
|
||
NET COMPREHENSIVE LOSS
|
$
|
(36,542
|
)
|
|
(5.2
|
)%
|
|
$
|
(4,217
|
)
|
|
(0.9
|
)%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
|
|
|
|||||||
|
(unaudited)
|
|
(unaudited)
|
|
Variance
|
|||||||||
|
|
|
|
|
|
|
|
|||||||
|
(in thousands, except for percentages)
|
|||||||||||||
Net revenue
|
$
|
705,440
|
|
|
$
|
476,492
|
|
|
$
|
228,948
|
|
|
48.0
|
%
|
Cost of revenue
|
547,411
|
|
|
378,298
|
|
|
169,113
|
|
|
44.7
|
%
|
|||
Gross profit
|
$
|
158,029
|
|
|
$
|
98,194
|
|
|
$
|
59,835
|
|
|
60.9
|
%
|
Gross profit margin
|
22.4
|
%
|
|
20.6
|
%
|
|
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
|
|
|
|||||||
|
(unaudited)
|
|
(unaudited)
|
|
Variance
|
|||||||||
|
|
|
|
|
|
|
|
|||||||
|
(in thousands, except for percentages)
|
|||||||||||||
Selling, general and administrative expenses
|
$
|
129,280
|
|
|
$
|
82,787
|
|
|
$
|
46,493
|
|
|
56.2
|
%
|
Depreciation and amortization expense
|
20,101
|
|
|
9,969
|
|
|
10,132
|
|
|
101.6
|
%
|
|||
Total operating expenses
|
$
|
149,381
|
|
|
$
|
92,756
|
|
|
$
|
56,625
|
|
|
61.0
|
%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
|
|
|
|||||||
|
(unaudited)
|
|
(unaudited)
|
|
Variance
|
|||||||||
|
|
|
|
|
|
|
|
|||||||
|
(in thousands, except for percentages)
|
|||||||||||||
Interest expense, net
|
$
|
(28,087
|
)
|
|
$
|
(11,045
|
)
|
|
$
|
(17,042
|
)
|
|
154.3
|
%
|
Equity in earnings of joint ventures
|
562
|
|
|
549
|
|
|
13
|
|
|
2.4
|
%
|
|||
Other, net
|
8
|
|
|
(76
|
)
|
|
84
|
|
|
(110.5
|
)%
|
|||
Total other expense
|
$
|
(27,517
|
)
|
|
$
|
(10,572
|
)
|
|
$
|
(16,945
|
)
|
|
160.3
|
%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
|
|
|
|||||||
|
(unaudited)
|
|
(unaudited)
|
|
Variance
|
|||||||||
|
|
|
|
|
|
|
|
|||||||
|
(in thousands, except for percentages)
|
|||||||||||||
Income tax expense (benefit)
|
$
|
1,041
|
|
|
$
|
(1,422
|
)
|
|
$
|
2,463
|
|
|
(173.2
|
)%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
|
|
|
|||||||
|
(unaudited)
|
|
(unaudited)
|
|
Variance
|
|||||||||
|
|
|
|
|
|
|
|
|||||||
|
(in thousands, except for percentages)
|
|||||||||||||
Net loss
|
$
|
(19,910
|
)
|
|
$
|
(3,712
|
)
|
|
$
|
(16,198
|
)
|
|
436.4
|
%
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|||||||
Changes in unrealized losses on cash flow hedges, net of income taxes
|
(16,632
|
)
|
|
(505
|
)
|
|
(16,127
|
)
|
|
3,193.5
|
%
|
|||
Other comprehensive loss
|
(16,632
|
)
|
|
(505
|
)
|
|
(16,127
|
)
|
|
3,193.5
|
%
|
|||
Net comprehensive loss
|
$
|
(36,542
|
)
|
|
$
|
(4,217
|
)
|
|
$
|
(32,325
|
)
|
|
766.5
|
%
|
|
Three Months Ended March 31,
|
||||||||||
|
2020
|
|
2019
|
|
|
||||||
|
(unaudited)
|
|
(unaudited)
|
|
Variance
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Net cash provided by operating activities
|
$
|
18,403
|
|
|
$
|
9,080
|
|
|
$
|
9,323
|
|
Net cash used in investing activities
|
(5,353
|
)
|
|
(4,731
|
)
|
|
(622
|
)
|
|||
Net cash used in financing activities
|
(2,862
|
)
|
|
(3,038
|
)
|
|
176
|
|
|||
Net increase in cash and cash equivalents
|
10,188
|
|
|
1,311
|
|
|
8,877
|
|
|||
Cash and cash equivalents - beginning of period
|
67,056
|
|
|
36,391
|
|
|
30,665
|
|
|||
Cash and cash equivalents - end of period
|
$
|
77,244
|
|
|
$
|
37,702
|
|
|
$
|
39,542
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
Variability in acute therapy patient referrals from hospitals based on changes in hospital-based procedures and treatment patterns;
|
•
|
Variability in chronic therapy patient referrals based on disruptions in the diagnosis of chronic conditions requiring infusion therapy;
|
•
|
Inefficiencies in clinical labor expenses and higher labor costs from staffing disruptions and availability, potential overtime due to inefficient clinical staffing and utilization of contract labor;
|
•
|
Higher costs to procure, and potential unavailability of, critical personal protection equipment, pharmaceuticals and medical supplies given a constrained supply environment; and
|
•
|
Heightened operational risks from an extended period of remote work arrangements, which could strain our business continuity plans, including but not limited to cybersecurity risks, and could impair our ability to manage our business.
|
Item 6.
|
Exhibits
|
Exhibit Number
|
Description
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
OPTION CARE HEALTH, INC.
|
|
|
|
Date: May 7, 2020
|
/s/ Michael Shapiro
|
Michael Shapiro
|
|
Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Option Care Health, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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