Unless the context requires otherwise, references in this report to “Option Care Health,” the “Company,” “we,” “us” and “our” refer to Option Care Health, Inc. and its consolidated subsidiaries. Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to assist the reader in understanding and assessing significant changes and trends related to our results of operations and financial condition. The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and the related notes thereto included in Item 1 of Part I of this Quarterly Report on Form 10-Q (this “Form 10-Q”). Certain statements in this Item 2 of Part I of this Form 10-Q, and in Item 1A, “Risk Factors” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025 (our “Form 10-K”), may cause our actual results, financial position, and cash and cash equivalents generated from operations to differ materially from these forward-looking statements.
Business Overview
Option Care Health, and its wholly-owned subsidiaries, provide infusion therapy and other ancillary health care services through a national network of 86 full service pharmacies and 187 ambulatory infusion suites, including 32 with advanced practitioner capabilities. Our services are provided in coordination with, and under the direction of, the patient’s physician. Our multidisciplinary team of clinicians, including pharmacists, nurses, and dietitians work with the physician to develop a plan of care suited to each patient’s specific needs. We provide home infusion services consisting of anti-infectives, nutrition support, therapies for neurological disorders and chronic inflammatory disorders, immunoglobulin therapy, and other therapies for chronic and acute conditions. Our national footprint enables us to collaborate with health systems and national payers to provide high quality care at an appropriate cost in a comfortable setting. We have established key relationships that allow us access to local resources to ensure responsiveness to our patients’ needs. At the center of everything we do is the patient. This is the driving force behind all of our actions and the partnerships that we have across the healthcare ecosystem.
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Composition of Results of Operations
The following results of operations include the accounts of Option Care Health and our subsidiaries for the three and six months ended June 30, 2026 and 2025.
Gross Profit
Gross profit represents our net revenue less cost of revenue.
Net Revenue. Infusion and related healthcare services revenue is reported at the estimated net realizable amounts from third-party payers and patients for goods sold and services rendered. When pharmaceuticals are provided to a patient, revenue is recognized upon delivery of the goods. When nursing services are provided, revenue is recognized when the services are rendered.
Due to the nature of the healthcare industry and the reimbursement environment in which the Company operates, certain estimates are required to record revenue and accounts receivable at their net realizable values at the time goods or services are provided. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payers may result in adjustments to amounts originally recorded.
Cost of Revenue. Cost of revenue consists of the actual cost of pharmaceuticals and other medical supplies dispensed to patients. In addition to product costs, cost of revenue includes warehousing costs, purchasing costs, depreciation expense relating to revenue-generating assets, such as infusion pumps, shipping and handling costs, and wages and related costs for the pharmacists, nurses, and all other employees and contracted workers directly involved in providing service to the patient.
The Company receives volume-based rebates and prompt payment discounts from some of its pharmaceutical and medical supplies vendors. These payments are recorded as a reduction of inventory and are accounted for as a reduction of cost of revenue when the related inventory is sold.
Operating Costs and Expenses
Selling, General and Administrative Expenses. Selling, general and administrative expenses consist principally of salaries for administrative employees that directly and indirectly support the operations, occupancy costs, marketing expenditures, insurance, and professional fees.
Depreciation and Amortization Expense. Depreciation within this caption relates to property and equipment and amortization relates to intangibles. Depreciation of revenue-generating assets, such as infusion pumps, is included in cost of revenue.
Other Income (Expense)
Interest Expense, Net. Interest expense consists principally of interest and fee payments on the Company’s outstanding borrowings under the First Lien Term Loan, Revolver Facility, Senior Notes, amortization of discount and deferred financing fees, payments associated with the interest rate cap, and interest income earned on cash and cash equivalents. Refer to the “Liquidity and Capital Resources” section below for further discussion of these outstanding borrowings.
Equity in Earnings of Joint Ventures. Equity in earnings of joint ventures consists of our proportionate share of equity earnings or losses from equity investments in two infusion joint ventures with healthcare systems.
Other, Net. Other income (expense) primarily includes activity related to non-operating income and expenses.
Income Tax Expense. The Company is subject to taxation in the United States and various states. The Company’s income tax expense is reflective of the current federal and state tax rates.
Change in Unrealized (Loss) Gain on Cash Flow Hedge, Net of Income Tax Benefit (Expense). Change in unrealized (loss) gain on cash flow hedge, net of income tax benefit (expense), consists of the (loss) gain associated with the changes in the fair value of derivatives designated as hedging instruments related to the interest rate cap hedge, net of income taxes.
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Results of Operations
The following table presents Option Care Health’s consolidated results of operations for the three and six months ended June 30, 2026 and 2025 (in thousands, except for percentages):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Amount % of Revenue Amount % of Revenue Amount % of Revenue Amount % of Revenue
NET REVENUE $ 1,442,400 100.0 % $ 1,416,085 100.0 % $ 2,793,054 100.0 % $ 2,749,057 100.0 %
COST OF REVENUE 1,175,149 81.5 % 1,147,042 81.0 % 2,263,789 81.1 % 2,216,962 80.6 %
GROSS PROFIT 267,251 18.5 % 269,043 19.0 % 529,265 18.9 % 532,095 19.4 %
OPERATING COSTS AND EXPENSES:
Selling, general and administrative expenses 164,659 11.4 % 170,092 12.0 % 339,221 12.1 % 338,210 12.3 %
Depreciation and amortization expense 17,452 1.2 % 16,241 1.1 % 32,359 1.2 % 31,987 1.2 %
Total operating expenses 182,111 12.6 % 186,333 13.2 % 371,580 13.3 % 370,197 13.5 %
OPERATING INCOME 85,140 5.9 % 82,710 5.8 % 157,685 5.6 % 161,898 5.9 %
OTHER INCOME (EXPENSE):
Interest expense, net (14,020) (1.0) % (14,447) (1.0) % (27,324) (1.0) % (27,678) (1.0) %
Equity in earnings of joint ventures 1,704 0.1 % 1,395 0.1 % 3,393 0.1 % 3,124 0.1 %
Other, net 1,163 0.1 % (797) (0.1) % 1,236 — % (4,927) (0.2) %
Total other (expense) income (11,153) (0.8) % (13,849) (1.0) % (22,695) (0.8) % (29,481) (1.1) %
INCOME BEFORE INCOME TAXES 73,987 5.1 % 68,861 4.9 % 134,990 4.8 % 132,417 4.8 %
INCOME TAX EXPENSE 20,074 1.4 % 18,338 1.3 % 35,734 1.3 % 35,152 1.3 %
NET INCOME $ 53,913 3.7 % $ 50,523 3.6 % $ 99,256 3.6 % $ 97,265 3.5 %
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Change in unrealized (loss) gain on cash flow hedges, net of income tax benefit (expense) of $374, $548, $613 and $1,331, respectively (1,142) (0.1) % (1,684) (0.1) % (1,874) (0.1) % (4,082) (0.1) %
OTHER COMPREHENSIVE (LOSS) INCOME (1,142) (0.1) % (1,684) (0.1) % (1,874) (0.1) % (4,082) (0.1) %
NET COMPREHENSIVE INCOME $ 52,771 3.7 % $ 48,839 3.4 % $ 97,382 3.5 % $ 93,183 3.4 %
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Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
The following tables present selected consolidated comparative results of operations from Option Care Health’s unaudited condensed consolidated financial statements for the three months ended June 30, 2026 and 2025.
Gross Profit
Three Months Ended June 30,
2026 2025 Variance
(in thousands, except for percentages)
Net revenue $ 1,442,400 $ 1,416,085 $ 26,315 1.9 %
Cost of revenue 1,175,149 1,147,042 28,107 2.5 %
Gross profit $ 267,251 $ 269,043 $ (1,792) (0.7) %
Gross profit margin 18.5 % 19.0 %
The increase in net revenue was primarily driven by continued strong growth in the Company's acute portfolio of therapies, which saw high single-digit growth over the prior year, reflecting ongoing success in maintaining referral source and payer relationships and strong partnerships with hospitals and health systems. The Company’s chronic portfolio of therapies was flat versus the prior year. This was driven by growth in both the IG/neuro and rare and orphan portfolio and offset by a decline within the chronic inflammatory disease ("CID") portfolio, primarily due to patient attrition and unfavorable therapy mix. Management continues to expect CID-related dynamics to negatively impact gross profit by approximately $55 million during 2026.
The increase in cost of revenue was primarily attributable to higher revenue volumes and changes in therapy mix. Gross profit decreased slightly primarily due to the impact of shifts in therapy mix, including the continued headwinds in the CID portfolio, partially offset by growth in higher-margin therapies and ongoing operational initiatives.
Operating Expenses
Three Months Ended June 30,
2026 2025 Variance
(in thousands, except for percentages)
Selling, general and administrative expenses $ 164,659 $ 170,092 $ (5,433) (3.2) %
Depreciation and amortization expense 17,452 16,241 1,211 7.5 %
Total operating expenses $ 182,111 $ 186,333 $ (4,222) (2.3) %
The decrease in selling, general and administrative expenses during the three months ended June 30, 2026 was primarily attributable to lower performance-based compensation expense, and disciplined execution of cost management and efficiency initiatives. These decreases were partially offset by continued investments in strategic growth initiatives, including commercial and operational capabilities that support long-term business growth.
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Other Income (Expense)
Three Months Ended June 30,
2026 2025 Variance
(in thousands, except for percentages)
Interest expense, net $ (14,020) $ (14,447) $ 427 (3.0) %
Equity in earnings of joint ventures 1,704 1,395 309 22.2 %
Other, net 1,163 (797) 1,960 NM(1)
Total other (expense) income $ (11,153) $ (13,849) $ 2,696 (19.5) %
(1) Not meaningful
The change in Other, net during the three months ended June 30, 2026 was primarily attributable to adjustments related to certain unclaimed property liabilities recorded in the prior year with no comparable activity in the current-year quarter.
Income Tax Expense
Three Months Ended June 30,
2026 2025 Variance
(in thousands, except for percentages)
Income tax expense $ 20,074 $ 18,338 $ 1,736 9.5 %
Income tax expense increased $1.7 million, or 9.5%, to $20.1 million for the three months ended June 30, 2026 compared to $18.3 million for the three months ended June 30, 2025. The Company’s effective tax rates were 27.1% and 26.6% for the three months ended June 30, 2026 and 2025, respectively, compared to the U.S. federal statutory rate of 21.0%. The Company’s effective tax rate for the three months ended June 30, 2026 and three months ended June 30, 2025 were higher than the U.S. federal statutory rate primarily due to state income taxes and various non-deductible expenses.
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Net Income and Other Comprehensive (Loss) Income
Three Months Ended June 30,
2026 2025 Variance
(in thousands, except for percentages)
Net income $ 53,913 $ 50,523 $ 3,390 6.7 %
Other comprehensive income (loss), net of tax:
Change in unrealized (loss) gain on cash flow hedges, net of income taxes (1,142) (1,684) 542 (32.2) %
Other comprehensive (loss) income (1,142) (1,684) 542 (32.2) %
Net comprehensive income $ 52,771 $ 48,839 $ 3,932 8.1 %
The change in net income was attributable to the factors described in the above sections.
For the three months ended June 30, 2026 and 2025, the change in unrealized (loss) gain on cash flow hedges, net of income taxes was related to the change in fair market value of the $300.0 million interest rate cap hedge executed in October 2021.
Net comprehensive income increased to $52.8 million for the three months ended June 30, 2026, compared to net comprehensive income of $48.8 million for the three months ended June 30, 2025, primarily as a result of the factors described in the above sections.
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Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
The following tables present selected consolidated comparative results of operations from Option Care Health’s unaudited condensed consolidated financial statements for the six months ended June 30, 2026 and 2025.
Gross Profit
Six Months Ended June 30,
2026 2025 Variance
(in thousands, except for percentages)
Net revenue $ 2,793,054 $ 2,749,057 $ 43,997 1.6 %
Cost of revenue 2,263,789 2,216,962 46,827 2.1 %
Gross profit $ 529,265 $ 532,095 $ (2,830) (0.5) %
Gross profit margin 18.9 % 19.4 %
The increase in net revenue was primarily driven by continued strong growth in the Company's acute portfolio of therapies, which saw high single-digit growth over the prior year, reflecting ongoing success in maintaining referral source and payer relationships and strong partnerships with hospitals and health systems. The Company’s chronic portfolio of therapies experienced a slight decline versus the prior year. This was driven by growth in both the IG/neuro and rare and orphan portfolio and offset by a decline within the CID portfolio, primarily due to patient attrition and unfavorable therapy mix.
The increase in cost of revenue was primarily attributable to higher revenue volumes and changes in therapy mix. Gross profit decreased slightly primarily due to the impact of shifts in therapy mix, including the continued headwinds in the CID portfolio, partially offset by growth in higher-margin therapies and ongoing operational initiatives.
Operating Expenses
Six Months Ended June 30,
2026 2025 Variance
(in thousands, except for percentages)
Selling, general and administrative expenses $ 339,221 $ 338,210 $ 1,011 0.3 %
Depreciation and amortization expense 32,359 31,987 372 1.2 %
Total operating expenses $ 371,580 $ 370,197 $ 1,383 0.4 %
Selling, general and administrative expenses during the six months ended June 30, 2026 remained relatively flat primarily due to lower performance-based compensation expense, disciplined expense management, and continued benefits from initiatives focused on improving operating efficiencies and optimizing administrative processes, partially offset by investment in internal resources, technology, and other general costs to support both ongoing business needs as well as future business growth. The Company anticipates these investments will drive revenue growth and enhance profitability and cash generation over time.
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Other Income (Expense)
Six Months Ended June 30,
2026 2025 Variance
(in thousands, except for percentages)
Interest expense, net $ (27,324) $ (27,678) $ 354 (1.3) %
Equity in earnings of joint ventures 3,393 3,124 269 8.6 %
Other, net 1,236 (4,927) 6,163 NM(1)
Total other (expense) income $ (22,695) $ (29,481) $ 6,786 (23.0) %
(1) Not meaningful
The change in other, net during the six months ended June 30, 2026 was primarily attributable to an accrual for an unclaimed property audit recorded in the prior year related to an abandoned or unclaimed property voluntary disclosure agreement (“VDA”) program with no comparable accruals in the current period. This VDA is related to the pre-merger operations of BioScrip, Inc. (“BioScrip”), which was entered into by BioScrip prior to its merger with the Company in 2019. As of June 30, 2026, the matters related to this program are ongoing.
Income Tax Expense
Six Months Ended June 30,
2026 2025 Variance
(in thousands, except for percentages)
Income tax expense $ 35,734 $ 35,152 $ 582 1.7 %
Income tax expense increased $0.6 million, or 1.7%, to $35.7 million for the six months ended June 30, 2026 compared to $35.2 million for the six months ended June 30, 2025. The Company’s effective tax rates were 26.5% for both six months ended June 30, 2026 and 2025, compared to the U.S. federal statutory rate of 21.0%. The Company’s effective tax rate for the six months ended June 30, 2026 and six months ended June 30, 2025 was higher than the U.S. federal statutory rate primarily due to state income taxes and various non-deductible expenses.
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Net Income and Other Comprehensive (Loss) Income
Six Months Ended June 30,
2026 2025 Variance
(in thousands, except for percentages)
Net income $ 99,256 $ 97,265 $ 1,991 2.0 %
Other comprehensive income (loss), net of tax:
Change in unrealized (loss) gain on cash flow hedges, net of income taxes (1,874) (4,082) 2,208 (54.1) %
Other comprehensive (loss) income (1,874) (4,082) 2,208 (54.1) %
Net comprehensive income $ 97,382 $ 93,183 $ 4,199 4.5 %
The change in net income was attributable to the factors described in the above sections.
For the six months ended June 30, 2026 and 2025, the change in unrealized (loss) gain on cash flow hedges, net of income taxes was related to the change in fair market value of the $300.0 million interest rate cap hedge executed in October 2021.
Net comprehensive income increased to $97.4 million for the six months ended June 30, 2026, compared to net comprehensive income of $93.2 million for the six months ended June 30, 2025, primarily as a result of the factors described in the above sections.
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Liquidity and Capital Resources
For the six months ended June 30, 2026 and the twelve months ended December 31, 2025, the Company’s primary sources of liquidity were cash and cash equivalents of $193.8 million and $232.6 million, respectively. As of June 30, 2026, the Company had $846.0 million of borrowings available under its credit facilities (net of $4.0 million undrawn letters of credit issued and outstanding). As of December 31, 2025, the Company had $396.0 million of borrowings available under its credit facilities (net of $4.0 million undrawn letters of credit issued and outstanding). During the six months ended June 30, 2026 and 2025, the Company’s cash flows from operations have been invested in pharmacies, infusion suites, and information technology infrastructure to support growth and create additional capacity in the future, as well as the pursuit of acquisitions and the periodic repurchases of Company shares.
The Company’s primary uses of cash and cash equivalents include supporting our ongoing business activities, internal investment in resources to support future growth, investment in capital expenditures in both facilities and technology, the pursuit of share repurchases, and the pursuit of acquisitions.
Ongoing operating cash outflows are associated with procuring and dispensing drugs, personnel and other costs associated with servicing patients, as well as paying cash interest on outstanding debt and cash taxes. Ongoing investing cash flows are primarily associated with capital projects and business acquisitions, the improvement and maintenance of our pharmacy facilities and investment in our information technology systems. Ongoing financing cash flows are primarily associated with the quarterly principal payments on our outstanding debt, along with potential future repurchases of Company shares.
Our business strategy includes strategic deployment of capital to internal investments in resources, infrastructure, and technologies to support future growth, the periodic repurchases of Company shares and the pursuit of strategic tuck-in and adjacent acquisitions that complement our existing operations. We continue to evaluate acquisition opportunities and view acquisitions as a key part of our growth strategy. The Company has historically funded its acquisitions with cash and cash equivalents. The Company may require additional capital in excess of current availability in order to complete future acquisitions. It is impossible to predict the amount of capital that may be required for acquisitions, and there is no assurance that sufficient financing for these activities will be available on acceptable terms.
Short-Term and Long-Term Liquidity Requirements
The Company’s ability to make principal and interest payments on any borrowings under our credit facilities and our ability to fund planned capital expenditures will depend on our ability to generate cash and cash equivalents in the future, which to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. Based on our current level of operations and planned capital expenditures, we believe that our existing cash and cash equivalents balances, expected cash flows generated from operations, and availability under our credit facility will be sufficient to meet our operating requirements over the next 12 months and beyond. We may require additional borrowings under our credit facilities and alternative forms of financings or investments to achieve our longer-term strategic plans.
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Credit Facilities
The principal balance of the First Lien Term Loan is repayable in quarterly installments of $1.7 million plus interest, with a final payment of all remaining outstanding principal due on September 22, 2032. Interest on the First Lien Term Loan is payable monthly on either (i) the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 1.75% for Term SOFR Loans; or (ii) a base rate, plus 0.75% for Base Rate Loans.
The Senior Notes bear interest at a rate of 4.375% per annum and are payable semi-annually in arrears on October 31 and April 30 of each year. The Senior Notes mature on October 31, 2029.
The Company’s Revolver Facility provides for borrowings up to $850.0 million. The Revolver Facility matures on the date that is the earlier of (i) September 22, 2030 and (ii) the date that is 91 days prior to the stated maturity date applicable to the Senior Notes to the extent any amount of the Senior Notes remains unpaid and outstanding as of the date that is 91 days prior to the stated maturity date applicable to the Senior Notes. Borrowings under the Revolver Facility will bear interest at a rate equal to, at the option of the Company, either (i) the Term SOFR applicable thereto plus the Applicable Rate or (ii) the then-applicable Base Rate plus the Applicable Rate, which Applicable Rate shall be, subject to certain caveats thereto, as follows (i) until delivery of financial statements and related Compliance Certificate for the first full fiscal quarter ending after the effective date of the fourth amendment to the Credit Agreement, (A) for Term SOFR Loans, 1.75%, or (B) for Base Rate Loans, 0.75% and (ii) thereafter, the Applicable Rate for Term SOFR Loans and Base Rate Loans, based upon the Total Net Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to the terms of the Credit Agreement (as such terms are defined in the Credit Agreement). As of June 30, 2026, the Company had $4.0 million of undrawn letters of credit issued and outstanding, resulting in net borrowing availability under the Revolver Facility of $846.0 million.
Interest payments over the course of long-term debt obligations total an estimated $295.5 million based on final maturity dates of the Company’s credit facilities. Interest payments are calculated based on current rates as of June 30, 2026. Actual payments are based on changes in SOFR and exclude the interest rate cap derivative instrument.
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Cash Flows
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
The following table presents selected data from Option Care Health’s unaudited condensed consolidated statements of cash flows:
Six Months Ended June 30,
2026 2025 Variance
(in thousands)
Net cash provided by operating activities $ 171,485 $ 83,119 $ 88,366
Net cash used in investing activities (21,000) (135,713) 114,713
Net cash used in financing activities (189,342) (161,153) (28,189)
Net (decrease) increase in cash and cash equivalents (38,857) (213,747) 174,890
Cash and cash equivalents - beginning of period 232,624 412,565 (179,941)
Cash and cash equivalents - end of period $ 193,767 $ 198,818 $ (5,051)
Cash Flows from Operating Activities
The increase in cash provided by operating activities during the six months ended June 30, 2026 was primarily driven by a reduction in inventory levels resulting from the Company's ongoing supply chain management initiatives and working capital optimization efforts. The Company continued to focus on improving inventory purchasing practices, enhancing demand forecasting, and aligning inventory levels with patient needs, which reduced the amount of cash invested in inventory during the period.
Cash Flows from Investing Activities
Cash used in investing activities during the six months ended June 30, 2026 was primarily related capital expenditures. Cash used in investing activities during the six months ended June 30, 2025 was primarily attributable to the Intramed Plus acquisition with no comparable activity during the six months ended June 30, 2026.
Cash Flows from Financing Activities
The increase in cash used in financing activities was primarily related to the Company’s $167.5 million repurchase of common stock during the six months ended June 30, 2026, compared to the Company’s $150.0 million repurchase of common stock during the six months ended June 30, 2025.
Critical Accounting Policies and Estimates
The Company prepares its unaudited condensed consolidated financial statements in accordance with GAAP, which requires the Company to make estimates and assumptions. The Company evaluates its estimates and assumptions on an ongoing basis. Estimates and assumptions are based on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making assumptions about the carrying values of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period presented. The Company’s actual results may differ from these estimates, and different assumptions or conditions may yield different estimates.
There have been no material changes to the Company’s critical accounting policies and estimates as presented in our Form 10-K, which are hereby incorporated by reference.
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