Medical services continue to improve, allowing patients with more minor but chronic diseases to be treated at home on a regular basis.
The increase in demand for treatment at home or at an outpatient medical service provider benefits Option Care Health (NASDAQ: OPCH), whose sales have more than doubled during the past six years.
The $4.5 billion market cap company’s management estimates that revenue will rise to $5.5 billion in 2025. Option Care Health’s second-quarter revenue increased by 15.4% to $1.41 billion on net income of $50.5 million, up 3.3%.
People with acute illness prefer to receive their treatments in the comfort of their home, saving them the time and hassle of driving to a hospital or doctor’s office and having to wait for their appointment. Or they can go to one of 170 Option Care Health clinics in the U.S. to receive infusion therapy for IV antibiotics, nutrition support for acute and chronic conditions for infant, pediatric, adult, and geriatric patients, immunoglobulin, chronic inflammatory, neurological, and bleeding disorders, women’s health, heart failure, and specialized therapies.
As Americans age, the number of chronic illnesses is also increasing. Giving patients the option to receive care at home remains popular since medical technology has now made it possible to treat chronic diseases such as psoriasis, psoriatic arthritis, Crohn’s disease, rheumatoid arthritis, and ulcerative colitis. The number of patients in the infusion therapy market is estimated to increase by 8.6% each year, based on industry predictions.
Patients are also receiving better care today since they can receive personalized treatments for infusion.
Option Care Health benefits because insurance companies prefer covering home treatment options over hospital visits, since this method is less expensive.
Hurdle in 2024
The company ran into a slight hiccup late last year, sending shares of Option Care Health on a downward trajectory. Janssen Biotech, the manufacturer of Stelara, which is used for patients who have Crohn’s disease and plaque psoriasis, told Option Care Health, which also serves as a specialty pharmacy, that the amount it would earn from charging its customers would decline.
The price change was expected to decrease the company’s gross profit margin by $60 million to $70 million. Shares of Option Care Health are down 19% during the past six months, but have rebounded during the past month with a slight decline of 0.78%.
But Option Care Health reassured investors that the change in pricing would not have a large impact on the company’s profit margins because none of its available therapy treatments consist of over 5% of its total revenue, and only 12% of its revenue came from government reimbursements in 2024.
Market share could increase in the future
Option Care Health generates revenue from serving as a managed care home as well as being a specialty pharmacy. The company currently has over 5,000 clinicians and is set up to attain a larger percentage of the market.
The company is also working on expanding its portfolio and purchased Intramed Plus, a regional infusion specialist which has four locations, in January. The acquisition increases Option Care’s presence in South Carolina.
Management estimates that sales will increase by 13% for 2025 and predicts adjusted earnings per share will grow 8% at the midpoint to between $1.65 and $1.72.
The stock was rated “outperform” by Citizens JMP Securities analyst Constantine Davides, giving it a price target of $38, which is a 38% increase.
But Option Care Health has several competitors, including large insurance companies such as Cigna Group (NYSE: CI) and UnitedHealth Group (NYSE: UNH), which are providing their own smaller network of locations, as well as BrightSpring Health Services (NASDAQ: BTSG), which not only offers infusion therapy but also has rehabilitation centers and hospice locations.
As the percentage of Americans who are getting older and are diagnosed with chronic illnesses that need a steady amount of infusion treatments increases, Option Care Health is likely to expand its market share in the future and increase its revenue.
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