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DATE

Thursday, April 30, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — John Rademacher
  • Chief Financial Officer — Meenal Sethna

TAKEAWAYS

  • Total Revenue -- $1.4 billion, representing an increase of just over 1% with acute revenue growing in the high single digits and chronic revenue declining slightly due to chronic inflammatory disease (CID) portfolio headwinds.
  • CID Portfolio Impact -- Revenue growth was negatively impacted by approximately 600 basis points from the CID segment, which includes therapies undergoing patient census and therapy mix resets.
  • Gross Profit Headwind -- The estimated full-year gross profit headwind from the CID portfolio is $55 million, up from the prior estimate of $25 million–$35 million, reflecting higher-than-anticipated patient attrition and a less favorable therapy mix.
  • SG&A Expenses -- Increased 4%, primarily due to 2025 investment wraparound and additional investments to bolster commercial resources.
  • Adjusted EBITDA -- $105 million, down 6% over prior year but aligned with company expectations, with acute strength and strategic initiatives offsetting chronic segment pressures.
  • Adjusted EPS -- $0.40, flat from previous year, with a $0.02 benefit attributable to share repurchases.
  • Operating Cash Flow -- Usage of $12 million, conforming to typical seasonal patterns and timing of incentive compensation payments.
  • Revolving Credit Facility -- Expanded from $400 million to $850 million, aimed at enhancing financial flexibility for capital allocation initiatives.
  • Full-Year Revenue Guidance -- Revised to a range of $5.675 billion to $5.775 billion, incorporating a 600 basis point CID headwind, with expected growth just over 1% at the midpoint.
  • Full-Year EBITDA and Adjusted EPS Guidance -- Maintained at $480 million to $505 million for EBITDA and $1.82 to $1.92 for adjusted EPS, implying midpoint growth rates of 5% and 9%, respectively.
  • Full-Year SG&A Guidance -- Projected SG&A growth to remain at or slightly below gross profit growth through 2026.
  • Net Debt to Leverage Ratio -- Ended the quarter at 2.2x.
  • Capital Allocation Priorities -- Continued prioritization of organic investment, targeted acquisitions, and periodic share repurchases, as evidenced by repurchasing over $17 million of shares during the quarter.
  • Ambulatory Infusion Clinic Metrics -- Clinic visits increased 14% with 34% of all nursing visits conducted in suites or clinics, spanning 28 locations.
  • Second Quarter Sequential Outlook -- Anticipates mid-single-digit revenue growth and high-single-digit EBITDA growth over the previous quarter, consistent with expected seasonal patterns.

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RISKS

  • The revised full-year guidance incorporates a $55 million gross profit headwind from the CID portfolio, elevated from prior estimates due to unexpected patient attrition and less favorable therapy mix, which "will take some time to recover" per company statements.
  • Management explicitly stated, "our revenue growth of 1% did not meet our expectations," attributing the shortfall primarily to the chronic therapy segment.
  • John Rademacher said, "we saw that this was different than how we had originally modeled and planned for it due to these different factors through that process. And so 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."
  • Commercial team investments and operational realignments may elevate short-term costs, though core earnings guidance is maintained through variable cost reductions and execution focus.

SUMMARY

Option Care Health (OPCH 24.34%) delivered 1% total revenue growth, primarily constrained by acute CID portfolio headwinds that drove a 600 basis point drag, increased patient benefit reverification workloads, and an estimated $55 million full-year gross profit headwind. The company took decisive action by revising revenue guidance downward while maintaining full-year EBITDA and adjusted EPS projections, supported by expansion of its credit facility to $850 million and targeted SG&A management. Sequential improvements are expected as commercial resources are strengthened, with an emphasis on rebuilding chronic patient census and leveraging acute portfolio performance. Management indicated that Q1 marked a unique patient census reset, primarily involving Stelara and biosimilar transitions, with no additional carryover impact envisaged for 2027.

  • Company executives presented specific near-term cost containment measures, including reduced variable incentive compensation, as part of the offset for revenue and gross profit weakness.
  • Acute revenue growth remained in the high single digits and is viewed as an ongoing contributor to improved margins due to higher gross margin profile relative to chronic offerings.
  • Operational momentum in ambulatory infusion clinics was highlighted, with 14% growth in visits and expanded local presence with advanced practitioner capabilities.
  • Pharma program development and payer-partner initiatives were described as progressing as expected, with existing site-of-care initiatives outperforming initial company forecasts.

INDUSTRY GLOSSARY

  • CID (Chronic Inflammatory Disease Portfolio): A group of therapies for chronic autoimmune and inflammatory conditions, specifically including Stelara and associated biosimilars in Option Care Health's reporting.
  • Stelara: A monoclonal antibody therapy used to treat autoimmune diseases, referenced in the transcript as transitioning to various biosimilars within the CID portfolio.
  • Biosimilars: Medications highly similar to already approved reference biologic drugs, often leading to price and reimbursement pressure—especially in the context of formulary changes noted during the call.
  • IG Neuro Portfolio: A segment that includes immunoglobulin infusion therapies targeting neurological and immunological disorders, cited as a source of growth within the chronic therapy segment.

Full Conference Call Transcript

John Rademacher: Thanks, Nicole. Good morning, and thank you for joining us. We're pleased to share updates on our first quarter 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 first quarter with an unwavering commitment to our mission of transforming health care 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 health care, 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 Scores in the mid-70s. Turning to our results. The first quarter 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 on to 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've mentioned previously, providing these therapies require 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 hyper local, 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 Disease Portfolio, which we refer to as CID, we saw a 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 first quarter are a key input in understanding whether results align with our assumptions. We saw a 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. And 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 rightsize 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 in 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. And with that, I will turn the call over to Meenal. Meenal?

Meenal Sethna: Thanks, John, and good morning, everyone. Our first quarter 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 subsets 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 to $35 million. With clarity of those CID portfolio resets, 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 investments 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. First quarter 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. And 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 to $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 investments 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. And our final priority is periodic share buybacks. In the first quarter, 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 to $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 to $505 million and adjusted EPS range of $1.82 to $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 gross 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 to $55 million and a full year tax rate in the range of 26% to 28%. We are adjusting our operating cash flow target to at least $320 million, which incorporates the lower revenue and cash-based EBITDA reduction. I also wanted to provide some color on the second quarter for modeling purposes.

The following assumptions are on a sequential basis, reflecting second quarter growth over the first quarter of 2026. We expect second quarter 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. And with that, I'll turn it over to the operator to open up for questions. Operator?

Operator: [Operator Instructions] Our first question comes from the line of Lisa Gill of JPMorgan.

Lisa Gill: Just two things I just want to try to understand a little bit better. I understand looking at the [ IQVIA ] data, what happened with Stelara in the quarter. But can you help me to understand the increase in the headwind versus the initial on the gross profit side? I understand the revenue side, but help me to understand that. And then 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 some of the changes that we've had, whether it's the ACA or something else?

Just want to understand what's happening there and how we'll see that come back around as we go through the other quarters.

John Rademacher: Yes, 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. So as we went through the quarter, we called out, and I think everyone is aware that the first quarter is a really important quarter as you go through the process of turning the calendar and all of the things associated with benefit reverification and 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 on to service as we went into the new year. And 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 and 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 time frame as we went through the process and really worked through that bolus of activity. And 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 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 the chronic inflammatory disease have the same profit dynamics.

So as we looked at the -- 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. And so 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.

So 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.

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

So 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 a number of Stelara patients converting to some other therapy as part of our portfolio, and that didn't happen. So the loss of that patient is what that is. And then secondly, with the patients we did retain on census, we saw a slightly unfavorable mix when all is said and done 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, given the fact that we have this reset in the first quarter, and we -- 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.

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

Operator: Our next question comes from the line of Pito Chickering of Deutsche Bank.

Pito Chickering: On the guidance, you talked about 2Q EBITDA up high single digits. So that's $112 million, $114 million range, which implies a very large ramp-up into the back half of the year. Can you bridge us, one, how we get to the 2Q EBITDA growth of high single digits? And then two, I think just solving into the back half of the year ramp, I'm looking at teens sequential growth in 3Q and 4Q and how we accelerate from, I guess, from 2Q. So basically, how can you bridge us from 1Q to 2Q growth? And then can you bridge us from the large back half of the year ramp?

John Rademacher: It's John. Let me start. As I said in my prepared remarks, it was a mixed result, but there were positive aspects of the business. And again, we remain -- 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, and we're going to continue to move that forward. As well as what we're seeing in the infusion clinic, 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 strength that we had in the first quarter, even though we were going through this reset.

So I do want to emphasize that there are really positive things happening in the business and the foundation, and 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 accelerate, reaccelerate our growth through that process.

Meenal Sethna: Sure. And Pito, it's Meenal. I'll add just a few other comments to what John mentioned. Specifically, we wanted to give -- wanted to offer just some ramping thoughts, which is why we provided the second quarter 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 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.

But importantly, I also want to 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 health within our chronic portfolio. So we expect to drive some growth through there, which will also help us from an EBITDA perspective as well as gross profit dollars that we're working on also.

On your question 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 in any normal year, we tend to see sequential growth starting from the first quarter, which we've always said is our lowest point up to the fourth quarter, which tends to be our busiest quarter of the year. So there is a natural lift that we have. And then also, John talked about, look, it's going to 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 in the second quarter, a number of actions that we're taking going forward to move that. So 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 and Q4.

Operator: Our next question comes from the line of David MacDonald of Truist.

David MacDonald: John, just a quick question. You talked about conversion and that being a little bit lower. which I just want to make sure I'm interpreting this right, 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 the heavier design changes and things like that. A, is that correct? And then B, in terms of fixing that, is it a matter of kind of adding more resources on the front end? And 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.

John Rademacher: Yes, Dave, thanks for the question. What we saw is that elongated process was really part of the -- just the reverification process. I would say, yes, it passed the team, but we're prepared for that. I don't want to make it that it was -- we were not processing them through. What we found was there are some PBMs that have preferred biosimilars. And so 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. So there are some that just didn't make sense for us to take if that was the preferred route of therapy.

And then 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 and other aspects where patients no longer qualify based on those higher standards. And so they moved to other forms of administration, whether it's self administration with the products that within that. So 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 in that it took longer this time around given all of the different things associated with it.

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

Meenal Sethna: And Dave, I just wanted to add one other point to John's is 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 the multitude of back and forth that had to happen, and 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, I'd say, a lot more dialogue around the verification and prior authorization work.

Operator: Our next question comes from the line of Brian Tanquilut of Jefferies.

Brian Tanquilut: 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 the drug. So 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. And also curious like your visibility into this given that you did your earnings call in March, and it feels like it's the first time we're hearing about it. So just curious like how can you impart confidence in the investor base to believe that this is an issue that will improve quickly and to have visibility into guidance for the year?

John Rademacher: Yes, Brian. So as we called out, the first quarter is the busiest quarter for all of the work associated with the benefit reverification and authorization process. And as we exit the quarter, we have gone through the entire patient census as part of that activity associated with it. So 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. And so some of those patients potentially converted over to self-administration.

We can continue to try to support them through our specialty pharmacy capability set. But there's also opportunities where it just didn't make economic sense for us to hold on to those patients given some of the dynamics with different biosimilars and others through that process. So we expect that they did go somewhere else and they're not on census with us. But we believe we are through the work that's necessary in that first quarter to get through the entire patient census and understand where that is. And now this is the base that we believe is where we're building on as we move forward.

To your comment, 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 to 12 weeks is their cycle. So many of them had not even gone through the process of their next dose by the time we had and we laid the earnings call. So there was still a lot of unknown. We tried to call out that the first quarter 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. And so that's where, again, as we now have this clarity, as we're exiting the first quarter, we are bringing forward kind of our new view that is different than the modeling that we've done as we entered into the year.

Meenal Sethna: And Brian, I just wanted to take a step back and maybe just add some comments. This was a really unique situation across Stelara and one that is -- we expect at this point, this is onetime and it's done, and this gives us clarity going forward. But 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 first quarter around categories and 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.

And actually, a large portion of our patient Stelara patient census were skewed towards MA plans as well. So that added to the complexity of this, along with this particular transition also included a large number of biosimilars and other brands. So 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. And from here, we're going to move forward with the -- starting with the second quarter sequential growth that I talked about earlier.

Operator: Our next question comes from the line of Joanna Gajuk of Bank of America.

Joanna Gajuk: So a couple of follow-ups. Just to confirm, when you're talking about the 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?

John Rademacher: Yes. I mean it's 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. But the vast amount of this is the reset of those Stelara patients as they have transitioned to other products moving forward.

Meenal Sethna: Yes. I think, Joanna, you could think about it this way, right? We had a census of 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 potentially staying on Stelara. So 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.

Joanna Gajuk: And if I may, a clarification. So I appreciate the answer around the ramp-up you expect. And it sounds like there's some cost savings that allowed you to keep your EBITDA guidance the same even until now this headwind is $20 million or so higher than previously assumed. So is that really the $20 million is the cost savings? Or can you help us kind of break down that offset, that number into buckets?

Meenal Sethna: Sure. So 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 to $35 million relating to Stelara and 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. For us, as we took a step back and looked at this, I don't want us to forget that we had really good momentum across other parts of the business.

So 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. So part one, to answer your question is we really want to 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 reinvesting into the business with the additional commercial resources that John spoke about.

So we're continuing to do that. And then invariably, we have some -- as we've reduced our revenue guidance, we have some variable costs now that we're going to scrub through and as we reduce some additional variable costs, including, frankly, some incentive compensation that will be reduced. The combination of all that is why we felt comfortable maintaining both our EBITDA and our earnings per share EPS guide.

Operator: Our next question comes from the line of Constantine Davides of Citizens.

Constantine Davides: Just a couple of quick ones. Maybe a 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 where is your conviction? Or what would have to happen to get to the higher end of your EBITDA outlook? And then second, John, you kind of called out the acute performance still pretty strong in the first quarter. 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 second quarter?

John Rademacher: Yes, Constantine, it's John, I'll start and then I'll let Meenal 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 on to 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. So 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.

Meenal Sethna: Yes. And Constantine, just your questions on the guidance, I would say, one, first quarter for us really gave us the clarity that we've been talking about, right? We've had this patient reset. And 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. And if you'll -- you probably noticed that we reduced the range of the guidance and that's part of that confidence. I would say what are some of the levers that we have.

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. But our team is very execution oriented. So 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, and I feel good about that.

So that's what gives us confidence in the low end -- or sorry, in the high end, but just thinking about a number of variables. And I would say revenue growth for us is the single largest opportunity when you think about fall-through from an EBITDA perspective. So that's our primary growth. But again, we're not going to forget that as needed, we will make adjustments into our cost structure if that's what it takes. So I feel confident about both the revenue guide we put forward as well as the EBITDA and the earnings per share guide.

John Rademacher: And the only other thing I'd add is, look, our decisive actions and what we're looking to do to really drive the reacceleration of the business focuses around coverage, conversion and enhanced service levels. And so we have plans in place that we are executing around that, 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 on to service with us.

And 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.

Operator: Our next question comes from the line of Erin Wright of Morgan Stanley.

Unknown Analyst: This is Michelle on for Erin. So I just wanted to check for this headwind with Stelara and the chronic therapies. So would you still expect now that there's any risk transitioning into 2027, where prior, we thought we would be through this period now that we have this reset census data? And 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?

Meenal Sethna: Sure, Michelle. It's Meenal. So I'll give you the short answer is no, we don't expect additional headwind in 2026 nor any carryover in 2027. 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 patient shifts as they're working with their particular provider, but we don't expect anything outsized 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 want to be able to talk about the other growth vectors and other growth opportunities that we have as we continue to expand our portfolio.

Operator: Our next question comes from the line of Charles Rhyee of TD Cowen.

Lucas Romanski: This is Lucas on for Charles. I want to ask about the strong acute revenue growth you saw in the first quarter, high single digits above your medium- to long-term target of mid-single digits. Does your '26 guide assume that this high single-digit growth continues throughout the rest of 2026? And then 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 at the EBITDA margin level?

Meenal Sethna: Yes. Why don't I -- Lucas, why don't I start with just the acute growth? So we've been -- as both John and I've 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. I would say we have lapped the number of the competitive closures that we've been talking about for a while. But 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.

So 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. And I think the team is really executing on all cylinders when we think about that. Beyond that, we haven't gotten into a lot of detail around profit markers between acute and chronic. But I would just say that 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 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 therapies. So we become a real important part of the health care ecosystem to all of our stakeholders. And that's why we really want to ensure that portfolio we have, the therapy mix we have is quite broad.

Operator: Our next question comes from the line of Michael Petusky of Barrington Research.

Michael Petusky: So I guess probably this is for Meenal. In terms of what you guys expect from the mix between Sonic and acute and sort of putting together what you said about the second half and full year guidance and all the rest. And 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 sort of to get to your guidance. I mean, is that a fair statement in your view?

Meenal Sethna: Look, I would say as it comes to both gross profit dollars and margin, we do look at both. So 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 are we growing our EBITDA, are we growing our earnings per share. But we also do take a look at the margin profiles of the different therapy mixes and the different parts of our business. So we are focused on both, but ultimately, it's the gross profit dollars. And by the way, we always ensure that the therapies that we are providing are profitable.

So 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 and other areas, but the margin is one of the many metrics we keep an eye on.

Michael Petusky: Okay. And then just sort of a follow-up in terms of the modeling of this. You alluded to stock comp may be one place that you guys can look to. The last year, 1.5 years or so, including the first quarter, you guys basically have sort of looked at sort of $40 million on a yearly basis and sort of track to that in the first quarter. I mean, what might that look like for the remainder of the year? I mean could that go more towards like a run rate of $30 million in terms of stock comp going forward?

Meenal Sethna: Yes. And 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. So that's really -- look, if I take a step back, we have lowered our guidance. That was not a decision that we took lightly. And if we don't achieve what we felt was our guidance, there are going to be implications to our variable compensation, but it's more on the cash side. It was not a comment about our stock compensation.

Operator: Our next question comes from the line of Matt Larew of William Blair.

Matthew Larew: John, if I think back over the years, I think this is one of the first times probably where you referenced losing some patients to competitors. And I realize there's some idiosyncrasies involving Stelara here that maybe make it an anomaly. But this is also the time, I think, in an industry has 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. So it does seem like that market may be becoming more competitive.

So I'm just curious, as you think about -- you referenced the reset of patient census in March and then the guide and sort of your forward outlook being predicated on building back that census and 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? And is it possible, I guess, that the sort of costs for patient acquisition may be higher either temporarily or sustainably going forward given the competitive dynamics?

John Rademacher: Yes, Matt. So 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. So it's -- the competitive dynamics have always been there, and we believe we have a competitive product that we can sell and service in the marketplace. I think 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. So 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. And 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.

Operator: Our next question comes from the line of Raj Kumar of Stephens.

Raj Kumar: Maybe just some data-related questions here on the kind of chronic growth. You called out the strength in IG and neuro, but you kind of also saw some weakness in some of the other specialties just related to delays of program integration. So it would be helpful just to kind of see how that 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.

John Rademacher: Yes. 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 an area, again, that had really solid growth across a broad spectrum of products within there. We saw across various other specialty products, again, continued strong growth on that. What 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 first quarter.

It is one that we are continuing to be focused on and drive forward. But 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. But we were calling out that we had less than expected performance and that, that is an area that we will focus on as we move ahead. 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.

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

John Rademacher: Yes. Our investments are to reaccelerate growth, right? And we are clear around the mandate. And as Meenal called out, I mean, the organization entirely, 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 and as an execution-minded organization, we are going to be able to get back on that moving forward.

Operator: Our next question comes from the line of A.J. Rice of UBS.

Unknown Analyst: This is James on for A.J. 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 remainder of the year, more of a 2027 item as you focus on getting back to that stronger revenue growth?

Meenal Sethna: Sure, James. This is Meenal. I'd say the short answer is no, we have priorities, and we're going to continue to focus on all of those. 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. We've talked about adjacencies and tuck-ins. We have a very active process and an active funnel going on. And you probably saw that we expanded our revolving credit facility. We more than doubled it.

And that was in large part to be able to enable us to fairly seamlessly move forward with some nice M&A deals. So that's why we've expanded that revolver because it gives us quick access to capital when that happens. And then lastly, 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. So you're not going to see us in the market all the time with a standard program. But where it makes sense on multiple variables, we'll definitely -- you'll definitely see us in the market buying back shares.

So our capital allocation priorities remain intact, organic M&A, periodic share buyback, and there's no change to that.

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

John Rademacher: 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.

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