Option Care Health (OPCH) Jefferies Global Healthcare Conference summary

Organizational performance and recovery

• Entered the year with strong momentum, despite disruption from the Change Healthcare situation in late February impacting the latter part of Q1.

• Recovery from the Change Healthcare disruption is progressing well, with claims processing reattached and ongoing cleanup expected through Q2 and into Q3.

• Full recovery from the disruption is anticipated by year-end, with business dynamics remaining strong and competitive at the local market level.

• Emphasis on leveraging national scale and technology infrastructure while focusing on local market execution and referral relationships.

• Balance sheet continues to strengthen, supporting ongoing growth trajectory.

Margin dynamics and growth strategy

• Gross margin dollar growth is prioritized over margin rate, with remediation efforts underway for supply chain disruptions and the Change Healthcare impact.

• Supply chain challenges are expected to be resolved by midyear, with confidence in ongoing progress.

• Lower margin rates in new, rare, and orphan therapies are offset by attractive gross margin dollars, with long-term focus on dollar growth.

• Gross profit dollars are expected to grow at a slightly slower pace than revenue due to portfolio mix shifts.

Limited distribution drugs (LDDs) and portfolio strategy

• LDDs, especially rare and orphan therapies, are a strategic focus, leveraging national infrastructure and clinical competencies for efficient commercialization.

• Initial margin rates for LDDs are low due to high therapeutic costs, but margins can improve over several years through patient support and biopharma collaboration.

• The platform's clinical capabilities and national reach differentiate the business in LDD partnerships.

• LDDs add diversity and de-risk the portfolio, but established therapies remain the main source of gross profit growth.

• Pricing for LDDs is disciplined and value-based, with selectivity in product participation to protect platform value.