Option Care Health’s third quarter results surpassed Wall Street’s revenue and profit expectations, yet the market reacted negatively, reflecting concerns highlighted by management about margin headwinds and evolving product dynamics. CEO John Rademacher cited strong double-digit growth in both acute and chronic therapies, aided by a favorable shift toward home and ambulatory care. However, management acknowledged that increased adoption of Stelara biosimilars—drugs designed to closely mimic already approved biologic therapies—reduced gross margins due to lower reimbursement rates. CFO Meenal Sethna noted that the chronic portfolio’s margin was pressured by this trend, leading to a 380 basis point negative impact.
Is now the time to buy OPCH? Find out in our full research report (it’s free for active Edge members).
Option Care Health (OPCH) Q3 CY2025 Highlights:
- Revenue: $1.44 billion vs analyst estimates of $1.41 billion (12.2% year-on-year growth, 1.4% beat)
- Adjusted EPS: $0.45 vs analyst estimates of $0.43 (4.9% beat)
- Adjusted EBITDA: $119.5 million vs analyst estimates of $118.3 million (8.3% margin, 1% beat)
- The company slightly lifted its revenue guidance for the full year to $5.63 billion at the midpoint from $5.58 billion
- Management slightly raised its full-year Adjusted EPS guidance to $1.70 at the midpoint
- EBITDA guidance for the full year is $470.5 million at the midpoint, in line with analyst expectations
- Operating Margin: 5.9%, in line with the same quarter last year
- Market Capitalization: $4.30 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Option Care Health’s Q3 Earnings Call
- Pito Chickering (Deutsche Bank) asked about the current and future impact of Stelara biosimilar uptake. CEO John Rademacher responded that the company expects continued incremental headwinds in both revenue and gross profit, with further effects likely as biosimilar adoption grows in 2026.
- Joanna Gajuk (Bank of America) questioned whether the biosimilar transition would also pressure gross margin rates. Rademacher confirmed it’s too early to specify the full impact, as outcomes depend on which biosimilar products patients transition to and payer negotiations.
- David MacDonald (Truist) inquired about sustained acute therapy market share gains following competitor exits. Rademacher stated that while growth will likely moderate from current levels, the company remains focused on leveraging its national network and payer partnerships to maintain momentum.
- Matthew Larew (William Blair) probed rising general and administrative (G&A) costs and the timeline for returning to “inflation plus” growth targets. CFO Meenal Sethna explained the increase was driven by acquisitions, variable compensation normalization, and technology investments, with cash flow benefits expected to offset higher G&A in the long term.
- Constantine Davides (Citizens) asked about M&A strategy and the disconnect between private transaction multiples and Option Care Health’s valuation. Rademacher explained that the company remains focused on disciplined, tuck-in acquisitions and technology adjacencies, with no plans for transformative deals at this time.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will focus on (1) the pace and profitability of biosimilar adoption, especially for Stelara and other chronic therapies, (2) the continued rollout and patient uptake of advanced practitioner services and new infusion suite locations, and (3) the execution of technology-driven efficiency initiatives. We will also monitor regulatory developments and their potential impact on reimbursement and therapy mix.
Option Care Health currently trades at $27.62, down from $28.68 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
The Best Stocks for High-Quality Investors
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
