OPCH

Good day, and thank you for standing by. Welcome to the Option Care Health Q1 2026 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. Please be advised that today's conference call 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. Welcome to the Option Care Health Q1 2026 earnings conference call. With me today are John Rademacher, President and Chief Executive Officer, and Meenal Sethna, Executive Vice President and Chief Financial Officer. Before we begin, a reminder that today's discussion will include certain forward-looking statements that reflect our current assumptions and expectations. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. We assume no obligation to update any forward-looking statements except as required by law. We will also use non-GAAP financial measures when talking about the company's performance and financial condition.

For more information on the specific risks and uncertainties, as well as non-GAAP measures, we encourage you to review the information in today's press release and presentation posted on the investor relations portion of our website, as well as our Form 10-K filed with the SEC. Additionally, for the Q&A portion of today's call, we ask that you limit questions to one question and one follow-up per participant. With that, I will turn the call over to John. John?

Thanks, Nicole. Good morning, and thank you for joining us. We're pleased to share updates on our Q1 of 2026 today. Before I do this, I want to take a moment to say thank you to the Option Care Health team for managing through a dynamic Q1 with an unwavering commitment to our mission of transforming healthcare by improving outcomes, lowering the total cost of care, and delivering hope to patients and their families. As the nation's largest independent provider of home and alternate site infusion therapy, our strategy is built on national scale with the patient at the center of everything we do. Our network of home infusion pharmacies and specialty pharmacy centers of excellence that focus on chronic and rare disease therapies, along with our comprehensive nursing capabilities, uniquely positions us in the marketplace.

We combine consistent high-quality clinical care with local responsiveness, leveraging our platform of infusion suites and clinics to drive clinical innovation while meeting patients where they want to be. This model helps us deliver reliable, clinically excellent care for hospitals and health systems, specialty physician practices, and health plans across the country. In an environment of ongoing economic pressures across healthcare, we are on the right side of the cost curve, partnering to deliver high-quality care at the appropriate cost in settings where patients prefer to receive it. As affirmation of the great work our team does every single day, we continue to receive patient satisfaction scores in the low 90s and Net Promoter Score in the mid-70s. Turning to our results, the Q1 reflected mixed performance for our business.

Adjusted EBITDA and adjusted EPS performance were aligned with our expectations, but our revenue growth of 1% did not meet our expectations. We had strong execution across our acute therapy portfolio, a transitional period for our chronic therapy portfolio, and continued focus on strategic initiatives that will better position us to win. On the acute side, our commitment to strengthening our capabilities to transition patients onto service, invest in broadening our referral source relationships, and focus on resources driving clinical value realization helped us deliver revenue growth in the high single digits, well above market growth. As I have mentioned previously, providing these therapies requires strong partnerships with hospitals and health systems, are very time sensitive, and demand tight coordination across our expert and clinical resources.

This area of service is hyperlocal, and our teams continue to operate at a very high level and position Option Care Health as the partner of choice. Across our chronic therapies, revenue for the quarter was a slight decline versus last year, reflecting certain industry dynamics that were more challenging than we anticipated. Breaking this down across the larger therapeutic categories we serve, we delivered solid growth in our IG Neuro portfolio in alignment with our expectations. Across our autoimmune and chronic inflammatory portfolio, which we refer to as CID, we saw greater reset than anticipated in patient census. Our guidance from earlier this year included a number of assumptions given the multitude of variables impacting shifts in our patient census and therapy mix.

As we discussed on our last earnings call, patient registration activities throughout the Q1 are a key input in understanding whether results align with our assumptions. We saw significantly higher volume of patients that had insurance plan, benefit design, or formulary management changes, doubling the number of patients requiring benefit reverification and reauthorization versus last year. This elongated many approval decisions into late March. As we closed out the quarter, therapy transition and patient retention patterned differently than we expected, reducing our patient census more than we anticipated. In addition, the therapy mix of our remaining patient census was less favorable than originally planned. As we have previously discussed, given the recurring nature of revenues for patients on chronic therapies, an unfavorable drop in census will take some time to recover. Moving beyond CID, in our other specialty portfolio, we saw slower than expected growth of certain therapies.

We expanded the breadth of our targeted specialty call points, but did not achieve the acceleration we initially expected. Across our rare and orphan program portfolio, we were also notified of launch delays or slower ramp for a few of our rare and orphan programs due to regulatory or commercial launch readiness that will impact our growth expectations for later in the year. We remain confident in the strength of our platform to support these clinically complex therapies and the value they will provide despite these delays. With these forces converging as we exit Q1, we are revising our full year revenue guidance as the industry dynamics are more impactful than anticipated. Meenal will provide additional details in her commentary. In response, we are taking decisive actions to sharpen execution, focus and invest in the most attractive growth opportunities, and strengthen our commercial and operational competitiveness.

We are increasing the strength and size of our commercial team, realigning resources and rebalancing coverage across our top specialty practices and accounts. We continue to focus on operational excellence to further capture therapy-level economics and enhance our admission conversion rate, while deploying technology designed to ensure a more seamless workflow from referral to start. We are refining our go-to-market model to scale efficiently, simplify the provider experience, and strengthen our specialty pharmacy offerings for chronic and rare disease. Moving on to our alliances. We continue to foster positive momentum across the relationships with payer and pharma partners. Our relationships with health plans and conveners continue to provide significant value to their members as we partner to right-site care. Our existing site of care initiatives are performing better than expected, and we anticipate this momentum to carry throughout the year.

The consistent feedback from the various plan sponsors who have active programs with us is that these initiatives bring real cost savings to the plans and provide increased choice and satisfaction to their members. Our portfolio breadth of both acute and chronic therapies, as well as our ability to provide clinical insights and our quality and cost efficiency, make us well-aligned with our payer partners to help them lower the total cost of care and reduce waste in the system. We believe our performance positions us well to both capitalize on current programs as well as capture new offerings. Pharma program development also progressed as expected, and we are preparing for new launches later this year. We continue to actively pursue additional opportunities to support pharma partners in commercialization of their new-to-market products, and we believe our unique pharmacy network, nursing excellence, and clinical competencies make us a logical choice.

We are also seeing a strong pipeline of infused and injectable drugs to treat clinically complex patients, and we are engaged with pharma manufacturers and innovators who are seeking partners with our capabilities to add to our over 600 therapies already in our portfolio. We believe these opportunities will continue to be an important catalyst to drive our growth. Our ambulatory infusion clinic utilization continues to increase, with visits growing 14% year-over-year, driven by commercial and operational collaboration and market access expansion. We are now operating 28 locations with advanced practitioner capabilities in key markets, and we will continue to drive performance through deeper partnership with local providers.

These trends reinforce our confidence in clinic-based growth as an important complement to our diversified model, and we continue to leverage our entire network of infusion suites, conducting 34% of our nursing visits in one of our suites or clinics during the quarter. We also saw continued traction in our oncology portfolio, a small but growing part of our business. We believe this represents a meaningful opportunity for continued growth as the market dynamics shift and more oncology products move into the infusion clinic and home setting. I want to close by emphasizing that while I am not satisfied with our revenue growth momentum, I do believe our business fundamentals remain intact and solid. We are in an execution-driven organization and are focused on building from this reset through coverage, conversion, and enhanced service levels, which we believe will translate into sustainable growth and long-term value creation.

With that, I will turn the call over to Meenal. Meenal?

Thanks, John. Good morning, everyone. Our Q1 revenue was $1.4 billion, up slightly over 1% compared to last year. Our acute revenue growth was in the high single digits and our chronic revenue declined slightly versus last year. Total company revenue growth in the quarter was negatively impacted by approximately 600 basis points due to headwinds within our CID portfolio. As a reminder, our CID portfolio incorporates a number of different therapies, and we still expect the Stelara and related biosimilar subset of these therapies to represent less than 1% of 2026 company net revenue and gross profit. Gross profit dollars also declined slightly over last year due to the decline in chronic revenue. We had previously estimated that the gross profit dollar headwind related to the CID portfolio would be $25 million-$35 million.

With clarity of the CID portfolio reset, we now estimate an approximately $55 million gross profit headwind for the year, which includes the additional patient loss John spoke about earlier. SG&A grew 4%, reflecting the wraparound of investments made in 2025 along with ongoing investment in commercial resources to support future growth. Adjusted EBITDA of $105 million was down 6% over prior year, but in line with our expectations as the acute performance and execution on our strategic initiatives offset the dynamics in the chronic portfolio. Adjusted EPS of $0.40 was flat with prior year, with an uplift of $0.02 from the year-over-year benefit of share repurchases. Operating cash flow for the quarter was a usage of $12 million, in line with our seasonal expectations.

Q1 is typically the lowest quarter in the year due to seasonal patterns and incentive compensation payments. We saw measurable improvement from our early inventory management initiatives in the quarter, including better supply and demand alignment. We expect to see additional benefits from our working capital initiatives as the year progresses. We ended the quarter at a net debt to leverage ratio of 2.2x. During the quarter, we also expanded our revolving credit facility to enhance financial flexibility from $400 million-$850 million. This increased capacity better aligns our capital structure to our capital allocation strategy. As a reminder, our capital allocation priorities start with organic investment to drive revenue growth, capacity, and optimization of our cost structure. Acquisitions are next, focusing on adjacencies and tuck-ins that align with the breadth of our portfolio.

Our final priority is periodic share buybacks. In the Q1, we repurchased over $17 million of our shares. Moving on to our full year forecast, we are adjusting our full year net revenue guidance to a range of $5.675 billion-$5.775 billion. This represents just over 1% growth versus prior year at the midpoint. This incorporates a negative 600 basis point revenue growth headwind higher than the 400 basis point headwind we had previously estimated due to the lower CID patient retention and therapy mix noted earlier. We are maintaining our full-year EBITDA and adjusted EPS ranges with our February guidance, with projected EBITDA of $480 million-$505 million and adjusted EPS range of $1.82-$1.92.

That corresponds to growth at the midpoint of 5% and 9% respectively. Our EBITDA guidance range incorporates the forecasted $55 million CID portfolio headwind noted earlier. We expect that to be realized evenly through the year. Our EBITDA guidance also reflects reductions in variable operating costs, including variable incentive compensation and other cost management actions. We now expect SG&A growth to remain at or slightly below growth profit growth for the full year 2026. Additionally, for the year, we're maintaining our estimates of net interest expense to be in the range of $50 million-$55 million and a full year tax rate in the range of 26%-28%. We are adjusting our operating cash flow target to at least $320 million, which incorporates the lower revenue and cash-based EBITDA reductions.

I also wanted to provide some color on the Q2 for modeling purposes. The following assumptions are on a sequential basis reflecting Q2 growth over the Q1 of 2026. We expect Q2 sequential revenue growth in the mid-single digits with EBITDA sequential growth in the high single digits. We anticipate seasonality to be consistent with prior years with sequential growth over the course of the year. With that, I'll turn it over to the operator to open up for questions. Operator?

Thank you. Our first question comes from the line of Lisa Gill of JPMorgan. Your line is now open.

Thanks very much, and thanks for all of the detail today. There's just two things I just wanna try to understand a little bit better. I understand looking at the IQVIA data, what happened with Stelara in the quarter. Can you help me to understand the increase in the headwind versus the initial on the gross profit side? I understand the revenue side, you know, help me to understand that. Just secondly, I just wanted to follow up on the benefit reverification that you talked about as far as timing goes and what you saw in the quarter. Is that commercial? Is that, you know, some of the changes that we've had, whether it's the ACA or something else?

I just wanna understand what's happening there and, you know, how we'll see that come back around as we go through the other quarters.

Lisa, it's John. I'll start with your second question first, and then I'll turn it to Meenal to talk about the product profit drivers and the headwinds from that perspective. You know, as we went through the quarter, we called out, and I think everyone is aware that the Q1 is a really important quarter as you go through the process of turning the calendar and all of the things associated with benefit reverification, authorizations, and those types of things.

As we had called out in the prepared remarks, we saw a significant increase in the patients that we had on service that either had a switch in health plans, had a benefit design or a formulary change that increased the amount of work we had to do to qualify them and to move them onto service as we went into the new year. This doubled the amount of patients that were impacted on that. We also saw that the payers increased some of the standards that they had set to qualify patients for the enhanced clinical services that were provided, also that influenced some of the product selection that the formulary management moved forward.

This elongated that process over the quarter, and many of those determinations and decisions really weren't made until the March timeframe as we went through the process and really worked through that bulk of activity. As we exited the quarter, we saw not only that changes in the portfolio and the census due to the switch out of Stelara, but also, you know, the mix of products we had talked about. Not all biosimilars have the same economic value to us on that, as well as not all of the products, and there's about 40 different products in what we categorize as a chronic inflammatory disease, have the same profit dynamics.

As we rolled through the end of the quarter and looked where we were exiting, we saw that this was different than how we had originally modeled and planned for it due to these different factors through that process. Starting with that lower census, and then carrying that through the rest of the year is really what is driving a big portion of where the revenue reset is, knowing that it's going to take time for us to fill, knowing that you lose that annuity of a patient that is on census for a chronic condition and carry that forward.

That's what we saw, and it was really pushed towards the back half of the quarter, as that increase in volume and the increase of activities associated with all of the changes given this year and the dynamics in Medicare Advantage plans, the IRA implications, and the biosimilar switch in a formulary management perspective.

Lisa, it's Meenal. Your first question was about the GP headwind and the increase to the $55 million. Just, you know, going back a few months here, we'd originally, as we put forward our assumptions for our full year guide, back in January, we'd assumed that that headwind would be $25 million-$35 million, somewhere in the middle there, really with the focus around Stelara, the Stelara IRA, and then the biosimilar conversion. As John just mentioned, you know, as we've gone through the quarter, through the Q1, what we found was there were some significant changes versus what our assumptions were, one, you know, in the patient census itself, but then also therapy mix.

This $55 million now represents the bigger part of that change is really related to the change in the patient census, where we had assumed the number of Stelara patients converting to some other therapy, as part of our, you know, as part of our portfolio, and that didn't happen. The loss of that patient is what that is. Secondly, with the patients we did retain on census, we saw a slightly unfavorable mix when all of a sudden, given the multiple therapies out there. I'm sure that one of the next questions will be, how do you feel about the $55 million over the course of the year?

You know, given the fact that we have this reset in the Q1 and you know, it's going to take us a while to build up the census, but we're assuming this particular headwind will pattern out evenly through the rest of the year, through the rest of 2026.

Yeah. The only thing I would add to that, Lisa, is we now have clarity around how we are how the portfolio, you know, evolved and how the patient census moved forward. We believe we have gone through the process of the reverification and reauthorization with the patients as you do at the beginning of the year. The Q1 is really that driving force to give us that clarity and now confidence that we will build sequentially moving forward.

Thank you. Our next question comes from the line of Pito Chickering of Deutsche Bank. Your line is now open.

Hey, guys, good morning. On the guidance, you talk about Q2 EBITDA up high single digits. That's, you know, $112 million-$114 million range, which implies a very large ramp-up into the back half of the year. Can you bridge us, you know, one, how we get to the Q2 EBITDA growth of high single digits? Two, I think just solving into the back half of your ramp, I'm looking at teen sequential growth in 3Q and 4Q and, you know, how we accelerate from, you know, I guess, you know, from 2Q. Basically how do you can you bridge us from 1Q to 2Q growth, and then can you bridge us from the large back half of the year ramp? Thank you.

You know, it's done. Let me start. As I said in my prepared remark, it was mixed results, but there were positive aspects of the business. Again, we believe that the fundamentals remain intact. When you look at the progress that we've made and really the strength of the results in our acute therapies, which tend to have higher gross profit as well as really good dynamics for us on that. You look at the growth that we saw that was continue to move forward in our IG Neuro portfolio. You look at how we have been partnering with payers on site of care initiatives and that moving better than we had expected.

The continued work with our pharma partners and the programs and the pipeline that remains, we're going to continue to move that forward, as well as what we're seeing in the infusion clinics. There is a lot of areas that continue to make really solid progress and continue to drive that growth, which is why you saw the adjusted EBITDA, you know, strength that we had in the 1st quarter, even though we were going through this reset. You know, I do want to emphasize that there are really positive things happening in the business and the foundation, we're going to continue to focus our energy and effort on driving the growth, not only in those areas where we're having success, but then shoring up in these areas where we know we have to re-accelerate our growth through that process.

Sure. Pito, it's Meenal. I'll add just a few other comments to what John mentioned. You know, specifically, we wanted to give, wanted to offer just some ramping thoughts, which is why we provided the Q2 guidance. As I mentioned in some of my prepared remarks, there's work that we have been doing around some cost reductions, and so that's some of the carry that goes forward. As well as, you know, naturally, we of course, have some variable costs also that are aligned to revenue, so we're doing a little more scrubbing there with some cost down. Importantly, I also wanna reiterate what John said.

We've got large parts of our business that are doing very, very well, like on the acute side of the house, on the IG Neuro side of the house within our chronic portfolio. We expect to drive, you know, some growth through there, which will also help us from an EBITDA perspective, as well as growth profit dollars that we're working on also. On your question on the, on the back half of the year, I'll take a step back and also say, look, we have a normal seasonal pattern on top of everything else, which is, which is in any normal year, we tend to see sequential growth starting from the Q1, which we've always said is our lowest point, up to the fourth quarter, which tends to be our busiest quarter of the year. There is a natural lift that we have.

Then also John talked about, look, it's gonna take us some time to rebuild that census loss that we have. Our expectation is that rebuild starts now, right? We're working on the rebuild, starting the Q2, a number of actions that we're taking going forward to move that. We would expect to get some continued tailwind from our efforts, with all the investments that we're making in our commercial resources as well, to really drive some additional growth on a sequential basis, Q3 into Q4.

Thank you. Our next question comes from the line of David MacDonald of Truist. Your line is now open.

Good morning, guys. John, just a quick question. You talked about, you know, conversion and that being a little bit lower, which, I just wanna make sure I'm interpreting this right. You know, suggests to me that on the front end, you guys weren't able to kind of muscle through some of the administrative workload just given, you know, the heavier design changes and things like that. A, is that correct? B, in terms of fixing that, is it a matter of kind of adding more resources on the front end? Was it just competitors were processing these folks a little bit more quickly than you guys, and you were losing a little bit of share? Just a little bit more detail there would be helpful.

Yeah, David MacDonald, thanks for the question. What we saw is that elongated process was really a part of the reverification process. I would say, yes, it taxed the team, but we're prepared for that. I don't want to make it that we were not processing them through. What we found was there are some PBMs that have preferred biosimilars. We expect that we lost some of the patients to some of the competitors through that process. The economics are not the same on all of the biosimilars for us, there are some that just didn't make sense for us to take if that was the preferred route of therapy. As I said in my comments, there were higher standards.

If you remember, a lot of our patients required additional or enhanced clinical services that wrapped around that, and therefore, there were some denials in other aspects where patients no longer qualified based on those higher standards. They moved to, you know, other forms of administration, whether it's self-administration, you know, with the product set within that. That's where we really looked at it. Yes, we're always looking at making certain we have the right staff in place and that we're being responsive as possible, and that it took longer this time around, given all of the different things associated with it.

I think as we're moving forward and we've gotten through the bullets of activity, I don't see that as being anything that would be, would hold us back for getting back on and re-accelerating our growth as we're looking to bring on new referrals and new patients into Option Care Health service lines.

Dave, I just wanted to add one other point to John's. You know, what we were trying to emphasize, when we talked about really double the number of patient authorizations and reverifications that we needed to work through, it just took a bit longer. Not because of necessarily just us and our resources, but also, you know, the multitude of back and forth that had to happen. It really went into late March this year, which is longer than the typical cycle that we see given a lot of the market dynamics going on with plan changes, you know, I'd say, a lot more dialogue around the verification and prior authorization work.

Thank you. Our next question comes from the line of Brian Tanquilut of Jefferies. Your line is now open.

Hey, good morning. Maybe just to double-click on this, right? I mean, these patients need to go somewhere is my guess. I mean, they obviously still need their drugs. You know, just curious, like, I mean, back to David's question, how confident are we? I mean, it seems like this is a market share loss situation on one hand. Also, curious, like, your visibility into this, given that, you know, you did your earnings call in March and this feels like it's the first time we're hearing about it. Just curious, like, how can you impart confidence in an investor base to believe that this is an issue that will improve quickly and to have visibility into guidance for the year? Thanks.

Yeah, Brian. As we called out, the Q1 is the busiest quarter for all of the work associated with the benefit reverification and authorization process. You know, as we exit the quarter, we have gone through the entire patient census as part of that activity associated with it. To your, I guess, your question, but again, we reaffirm, yes, we lost those patients to other service providers, so it was retention loss, and those patients went somewhere. As we have talked about before, there is a portion of this where there is self-administration as part of the therapy plan moving forward. Some of those patients potentially converted over to self-administration.

We can continue to try to support them through our specialty pharmacy capability set. There's also opportunities where it just didn't make economic sense for us to hold onto those patients, given some of the dynamics with different biosimilars than others through that process. We expect that, you know, that they did go somewhere else and they're not on census with us. We believe we are through the work that's necessary in that Q1 to get through the entire patient census and understand where that is. Now this is the base that we believe is where we're building on as we move forward. To your comment, you know, when we had the earnings call and as we've called out, a vast number of the patients that we had on service had not gone through that process.

If you look at the therapies, many of the patients aren't receiving care for 8-12 weeks is their cycle. Many of them had not even gone through the process of their next dose by the time we had and relayed the earnings call. There was still a lot of unknown. We tried to call out that the Q1 was going to be something that we were monitoring closely, but at that point in time, we didn't have enough evidence to know where the patient census was going to land. That's where again, as we now have this clarity, as we're exiting the Q1, we are bringing forward kind of our new view that is different than the modeling that we've done, you know, as we entered into the year.

Brian, you know, I just wanted to take a step back and maybe just add some comments. You know, this was a really unique situation across Stelara and one that, you know, is we expect at this point, this is 1 time and it's done and this gives us clarity going forward. When we've been, I know, talking about this for a while with the IRA backdrop, which really drove some significant shifts that we see now in the 1st quarter around categories and, you know, a lot of different category economics going on. Separately, there were a lot of market shifts that also occurred, right? Significant changes in Medicare Advantage plans and memberships and enrollments and transfers. Actually, a large portion of our patient census, Stelara patient census were skewed towards MA plans as well.

That added to the complexity of this, along with, you know, this particular transition also included a large number of biosimilars and other brands. I would call this a pretty unusual, pretty unique set of circumstances. We believe at this point that we've had the reset, we have a patient census now, we have clarity. From here we're going to move forward starting with the Q2 sequential growth that I talked about earlier.

Thank you. Our next question comes from the line of Joanna Gajuk of Bank of America. Your line is now open.

Yes. Hi, good morning. Couple of follow-ups. Just to confirm, when you, when you're talking about, you know, these therapy mix changes and lower patient census, are we still talking about Stelara and therapies sort of in that category? Or are we talking about the sort of impacting some other therapies like Entyvio, I guess, which is also big for you?

I mean, it's been primarily around the shift of the Stelara patient census. Again, as we had outlined, the full chronic inflammatory disease therapeutic set was in alignment with that. The vast amount of this is the reset of those Stelara patients as they have transitioned to other products, moving forward.

I think, Joanna, you could think about it this way, right? We had a census of ex-Stelara patients. There were multiple different therapy choices that those Stelara patients had, which were when we refer to the CID portfolio, there are a number of different therapies, some of which you mentioned, that those patients could go to, as well as some other biosimilars, as well as, you know, potentially staying on Stelara. That's how we think about it is Stelara patients with a lot of different choices as they were working with their providers and their particular insurance plans.

If I may, a clarification. I appreciate the answer around the ramp-up you expect. It sounds like there's some cost savings that allowed you to keep your EBITDA guidance the same, even though now this headwind is $20 million or so higher than previously assumed. Is that really the $20 million is a cost savings, or can you help us kinda break down that offset, that number into buckets? Thank you.

Sure. I think just for reference, what you're referring to is back in January, we talked about a gross profit headwind of approximately $25 million-$35 million relating to Stelara and, you know, the biosimilar conversion. Based on where we are today, we estimate that headwind to be $55 million, and again, in large part because of the patient census and the loss of the patient census and a little bit on the therapy mix. You know, for us, as we took a step back and looked at this, you know, I don't want us to forget that we had really good momentum across other parts of the business.

When we take a look at the acute side of the business, which was growing in the high single digits, very solid growth across our IG Neuro portfolio as well. Part one, to answer your question, is we really wanna maximize the momentum across areas of the business to really drive some additional gross profit, and we've been successful doing that. I think that's part of it. Clearly, we are going to have to take a look at cost. We've already been doing that. We've already taken some actions this year, and there's some other things that we will do. That's also net of, you know, reinvesting into the business with the additional commercial resources that John spoke about. We're continuing to do that.

Invariably, you know, we have some, as we've reduced our revenue guidance, we have some variable costs now that we're gonna scrub through, and as we reduce some additional variable costs, including, frankly, some incentive compensation that'll be reduced. You know, the combination of all that is why we felt comfortable maintaining both our EBITDA and our earnings per share EPS guide.

Thank you. Our next question comes from the line of Constantine Stavridis of Citizens. Your line is now open.

Thanks. Just a couple quick ones. Maybe follow up on guidance. Can you just talk about maybe some of the assumptions, low end versus high end? Is that purely a function of kind of the revenue brackets you provided and, you know, where's your conviction or what would have to happen to get to the higher end of your EBITDA outlook? Second, John, you kinda called out the acute performance still pretty strong in the Q1. What are you seeing now that you've kind of lapped that competitor withdrawal and what's your expectation for growth here as you're seeing it in the Q2? Thanks.

Yeah, Constantine, it's Scott. I'll start and then, I'll let Meenal, you know, reply to really the first part of your question. On the acute, again, the team continues to perform extremely well. As you called out, I mean, we've lapped some of the competitive closure and continue to see strength in the growth of that business. We believe there still is opportunity. We are deepening our partnerships with health plans or with health systems and hospitals in those local markets. We know this business is one that requires to be very local and very responsive, in helping to transition those patients onto care. The investments that we've made into our people, our process, our technology allows us to do that.

Our nursing network is a strength of this enterprise and one that we will continue to rely on as we move forward. We are extremely confident that we can continue to grow and be that partner of choice given the investments we've made, but also given the way that the team is executing and performing and deepening those relationships.

Yeah, Constantine, you know, just your questions on the guidance. I would say one, you know, Q1 for us really gave us the clarity as we've been talking about, right? We've had this patient reset, from here we're going to grow, we'll grow sequentially throughout the year. I'd say our confidence, we feel good about the guidance that we put out from a revenue perspective. If you'll, you probably noticed, we reduced the range of the guidance, that's, you know, part of that confidence. I would say, you know, what are some of the levers that we have? You know, first of all, at close to a $6 billion revenue, there's always going to be some puts and takes that go on over the course of the year.

Our team is very execution-oriented. I would say everybody is on deck. All of our commercial resources and those supporting those commercial resources are on deck to really look at how do we grow? What are the vectors of growth that we have, ones that we've been going after, new ones that we're going after? How do we rebuild that patient census? What are some other areas of growth opportunities that we can add into the pipeline? I feel good about that. That's what gives us confidence in the low end or sorry, in the high end, but just thinking about a number of variables. I would say revenue growth for us is the 1 largest opportunity when you think about, you know, fall through from an EBITDA perspective. That's our primary growth.

Again, we're not going to forget that as needed, we will make adjustments into our cost structure if that's what it takes. I feel confident about both the revenue guide we've put forward as well as the EBITDA and the earnings per share guide.

The only other thing I'd add is, look, our decisive actions and what we're looking to do to really drive the re-acceleration of the business focuses around coverage, conversion, and enhanced service levels. We have plans in place that we are executing around that elevate the commercial execution, that increase the size and strength of our commercial presence to capture more of the market demand. We're focusing around converting more of the patients that we receive as referrals onto service with us. We are focused around some of the enhancements in our service capabilities and service levels to not only attract with payers and pharma partners the strength of that portfolio, but also to continue to execute and be that partner of choice for the providers that are referring patients on to us.

Thank you. Our next question comes from the line of Erin Wright of Morgan Stanley. Your line is now open.

Hi, this is Michelle on for Erin. just wanna check for this headwind with Stelara and the chronic therapy. Would you still expect now that there's any risk transitioning into 2027, where prior we thought, you know, we would be through this period, you know, now that we have this reset census data? Is it possible that throughout the rest of 2026, there would be any other resetting expectations or that it won't sequence kind of the way you're thinking in terms of being relatively stable over the next few quarters in terms of the headwind? Thanks.

Sure, Michelle, it's Meenal. I'll give you the short answer is no, we don't expect additional headwind in 2026, nor any carryover in 2027. You know, as we've been talking about, we feel that Q1 was the reset. We now have clarity, and we now know what our patient census is from here. We don't expect any shifts other than normal, you know, normal patient shifts as they're working with their particular provider. We don't expect anything outside from that. We expect 2026. Our hope is also that this is the last year that we're having to talk about Stelara, and from here, we really wanna be able to talk about the other growth vectors and other growth opportunities that we have as we continue to expand our portfolio.

Thank you. Our next question comes from the line of Charles Rhyee of TD Cowen. Your line is now open.

Hi, this is Lucas on for Charles. Thanks for taking the question. I wanna ask about the strong acute revenue growth you saw in the Q1, high single digits above your medium to long-term target of mid-single digits. Does your 2026 guide assume that this high single-digit growth continues throughout the rest of 2026? you know, also thinking about the margin profile, in the past as well as on this call, you talked about acute having a higher gross margin compared to the chronic portfolio. Can you help us understand how those two categories compare, you know, at the EBITDA margin level?

Yeah. Why don't I, Lucas, why don't I start with just the acute growth? We've been, you know, as both John and I have talked about, we've been very pleased with how well the team has really been driving the growth opportunities that we believe we have in acute. You know, I would say we have lap-lapped the, you know, the number of the competitive closures that we've been talking about for a while. At the same time, the team has done a great job at really building those even more relationships with referral sources and really driving both additional patient growth, but also clinical value realization opportunities as well.

You know, our, as we look ahead to the acute side of the business, we feel really good about being able to continue a momentum that is above market growth, which we're doing right now. I think the team is really executing on all cylinders when we think about that. You know, beyond that, we haven't gotten into a lot of detail around profit markers between acute and chronic, but I would just say that, you know, overall both parts of the business are important to our portfolio. They really fit together when we think about the value that we provide to, you know, all of our stakeholders, the payer communities, the pharma communities, and frankly, to our patients at different points in time. There may be patients who need both sets of therapy.

We become a real important part of the healthcare ecosystem to all of our stakeholders, and that's why we really wanna ensure that the portfolio we have, the therapy mix we have is quite broad.

Our next question comes from the line of Michael Petusky of Barrington Research. Your line is now open.

Hey. Good morning. I guess probably this is for me. In terms of what you guys expect from the mix, but, you know, chronic and acute and sort of putting together what you said about the second half and, you know, full year guidance and all the rest. I know historically you guys like to talk about gross profit dollars, but to me it looks like gross margin needs to lift for the remainder of the year, you know, sort of to get to your guidance. I mean, is that a fair statement in your view?

Well, look, I would say, if it comes to both gross profit dollars and margin, we do look at both. I don't want to minimize one or the other. I think ultimately, right, the dollars are the ones that drop to the bottom line when we think about, you know, are we growing our EBITDA? Are we growing our earnings per share? We also do take a look at the margin profiles of the different therapy mixes and the different parts of our business. You know, we are focused on both, but ultimately it's the gross profit dollars. By the way, we always ensure that the therapies that we are providing are profitable. That's, you know, that's a key element of what we're doing.

The gross profit dollars really allow us to reinvest back into the business, as we've talked about the commercial resources in other areas. The margin is one of the many metrics we keep an eye on.

Okay. Just sort of a follow-up in terms of the modeling of this. You know, you alluded to stock comp may be one place that you guys can look to, you know. Last year or year and a half or so, including the Q1, you guys basically have sort of looked at sort of $40 million, you know, on a yearly basis and sort of tracked to that in the Q1. What, what might that look like for the remainder of the year? Could that go more towards like a run rate of $30 million in terms of stock comp going forward?

Yeah. If I misspoke, I apologize. When I was talking earlier about cost reduction opportunities, I was referring to variable cash comp more than anything without getting into a lot of detail. Look, you know, if I take a step back, we have lowered our guidance. That was not a, you know, decision that we took lightly. If we don't achieve, you know, what we felt was our guidance, there are going to be implications to our variable compensation. It's more on the cash side. It was not a comment about our stock compensation.

Thank you. Our next question comes from the line of Matt LaRue of William Blair. Your line is now open.

Hi. Good morning. You know, John, I think back over the years, I think this is one of the first times probably where you referenced losing some patients to competitors. I realize there's some idiosyncrasies involving Stelara here that maybe make it an anomaly. This is also the time, I think, amidst an industry that's always been competitive, where there's been more competitive entrants that have been popping up. You've had a number of the larger payer-owned entities that have exited acute and are exclusively focused on chronic. It does seem like that market may, you know, be becoming more competitive.

I'm just curious, as you think about you referenced the reset in patient census in March and then the guide and sort of your forward outlook being predicated on building back that census and, you know, getting patients back. You referenced needing to deploy or expand commercial resources. I guess what do you assume about your share going forward or about your ability to get patients back on census? Is it possible, I guess, that the sort of costs for patient acquisition may be higher either temporarily or, you know, sustainably going forward given the competitive dynamics?

Yeah, Matt. It has, you know, it has always been a competitive environment. As we have called out before, I mean, there's over 800 providers of home infusion and alternate site infusion therapy. You know, the competitive dynamics have always been there, and we believe we have a competitive, you know, product that we can sell and service in the marketplace. What you called out is what we're seeing. There's just some very unique circumstances with the Stelara and the IRA that changed this part of our portfolio dramatically, right? As these events happen both with, you look at a significant number of patients that change their health plans.

You look at benefit design changes and formulary changes with the introduction of all of the biosimilars and some preferred products that are in those formularies for some of the different payers through that process. I would say this is unique to that situation. I do believe in the strength of the enterprise. I do believe in the strength of the foundation that we have. When you think of a position for being both a national provider but also being very local in our responsiveness, I think we will continue to be well-positioned as we move forward. This is just one of those situations where there was a shift away from some of the enhanced clinical services that we were providing for the patient cohort.

I think that has been the biggest driver behind the changes that we've seen, as well as some of the formulary management aspects that have driven different decisions around what product to move on and how that either remains or moves away from our service model.

Thank you. Our next question comes from the line of Raj Kumar of Stephens. Your line is now open.

Hi, good morning. Maybe just some data-related questions here on the kind of chronic growth. You know, you called out, you know, the strength in IG and Neuro, you kind of also saw some weakness in some of the other specialties just related to delays of program integration. Would be helpful just to kind of see how that the chronic business grew relative to the kind of high single-digit to low double-digit that you kind of had at the beginning of the year, ex the CID impact.

Yeah. We again, as we had called out, when we take a look at some of the other categories, we were very pleased with the progress that we're making on IG Neuro. That was that was an area again that had really solid growth, you know, across a broad spectrum of products within there. We saw across various other specialty products, again, continued strong growth on that. We called out on the other specialty is we had made some shifts in our commercial resources and made some investments in having better coverage across other specialties in order to enhance and to grow through that process. That has not accelerated the way that we had anticipated in the Q1.

It is one that we are continuing to be focused on and drive forward, we think that when you look at the breadth of the portfolio that we have, there are still opportunities for us to drive that growth as we move forward. We were calling out that we had less than expected performance and that is an area that we will focus on as we move ahead. I don't, you know, I don't believe that the rest of the portfolio is feeling what we felt in the chronic inflammatory. We are still seeing growth in those areas. It's just not at the pace that we had anticipated given some of the investments that we made.

Got it. Just maybe following up and kind of, you know, appreciate all the color on the revenue acceleration efforts. As we kind of think about what it means from a capital investment standpoint, and then, you know, some of the timelines associated with the different pillars, I guess, does that kind of, you know, drive still confidence in the overall kind of long-term framework of high single-digit top line growth? Maybe just kind of any color around the conviction around that going forward.

Yeah. Our investments are to reaccelerate growth, right? We are clear around the mandate, and as Meenal called out, I mean, the organization entirety, not just our commercial team, our entire organization understands the importance of getting us back on a growth trajectory in alignment with those expectations that are set. These investments and really our focus on the near term around these three pillars is to drive that acceleration and reacceleration and the focus as we move forward. Again, our belief in the fundamentals of this business, our belief in the foundation that we have, our belief in the clinical value and the clinical realization that we can drive given this platform remains intact.

This was a reset based on some of these unique market dynamics, and our belief is that we are going to drive the business. As a execution-minded organization, we are going to be able to get back on that moving forward.

Thank you. Our next question comes from the line of AJ Rice of UBS. Your line is now open.

Hi, this is James on for, AJ, and thanks for squeezing me in. My question is kind of similar to the last one you just answered, maybe just expanding on a little bit about the capital deployment priorities. It sounds like maybe that M&A and share repurchases, will that kind of just be on the back burner for the, for the remainder of the year, more of a 2027 item as you focus on getting back to that stronger revenue growth? Thank you.

Sure, James. This is Meenal. You know, I think the short answer is no. You know, we have priorities, and we're gonna continue to focus on all of those. You know, we have been talking a lot on the call and even recently about the organic investments that we're making, but that's also because that's really our first priority is how do we reinvest in the business to grow organically. We're absolutely still committed to M&A activity. You know, we've talked about adjacencies and tuck-ins. We have a very active process and an active funnel going on. You know, you probably saw that, you know, we expanded our revolving credit facility.

We more than doubled it. That was in large part to be able to enable us to fairly seamlessly move forward with some nice M&A deals. That's why we've expanded that revolver because it gives us quick access to capital when that happens. Lastly, you know, I've been talking about for several months now that we would continue to focus on periodic share buyback, but that's our third priority. You're not gonna see us in the market all the time with a standard program, you know, but where it makes sense on multiple variables, you'll definitely see us in the market buying back shares. Our capital allocation priorities remain intact, organic M&A, periodic share buyback, and there's no change to that.

Thank you.

Thank you. This concludes the question and answer session. I would now like to turn it back to John Rademacher for closing remarks.

Thanks, Elliot. In closing, we have demonstrated consistently over the years that we are a resilient and agile organization with a team that recognizes the important role we play in serving patients and delivering on our promises. We are moving quickly to develop and execute our near-term recovery plan while we continue to invest in the long-term growth of Option Care Health. The resolve of our team has never been stronger, nor have the opportunities been greater. Thank you for joining us this morning. Take care.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.