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Item 9A. Controls and Procedures

2021-03-11 compared with 2020-03-05 · 37 added, 54 removed, 155 unchanged (37% of the section changed)

2 unchanged sentences

The Company maintains disclosure controls and procedures (as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act) that are designed to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, management evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2019.

Based on that evaluation, the Company’s Chief Executive Officer and its Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2019.

Management Report on Internal Control over Financial Reporting

1 unchanged sentence

Our internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S.

On August 6, 2019, BioScrip and Option Care completed the Merger, and, after giving effect to the Merger, the stockholders of Option Care as of immediately prior to the Merger Date owned approximately 80% of BioScrip common stock on a fully diluted basis following the closing, and the stockholders of BioScrip as of immediately prior to the Merger Date owned approximately 20% of BioScrip common stock on a fully diluted basis following the closing.

BioScrip was the legal acquirer in the Merger.

Option Care was the accounting acquirer in the Merger under U.S.

Prior to the Merger, Option Care was a privately-held company and was not subject to Section 404 of the Sarbanes-Oxley Act (“SOX”), while BioScrip was a publicly-traded company subject to Section 404 of SOX.

For all filings under the Exchange Act after the Merger, the historical financial statements for the period prior to the Merger are and will be those of Option Care.

BioScrip’s businesses are and will be included in consolidated financial statements for all periods subsequent to the Merger.

As noted above, BioScrip was the legal acquirer in the Merger and subject to Section 404 of SOX.

As of the date of its report, management was able to evaluate the effectiveness of the design and operation of our ongoing internal controls related to BioScrip.

As the Merger occurred during the third quarter of 2019, and Option Care was the accounting acquirer and not previously subject to Section 404 of SOX, management concluded there was insufficient time to complete its assessment of the internal controls over financial reporting related to Option Care, and, therefore, Option Care internal control over financial reporting was excluded from our report on internal control over financial reporting.

Our management, with the participation of the CEO and CFO, assessed the effectiveness of the Company’s internal control over financial reporting, by focusing on those controls that relate exclusively to ongoing BioScrip operations (covering approximately 13% of the revenue on the Consolidated Statements of Income for the year ended December 31, 2019 and 7% of the total assets on the Consolidated Balance Sheet as of December 31, 2019).

Our management, with the participation of the CEO and CFO, assessed the effectiveness of the Company’s internal control over financial reporting.

Based on the criteria for effective internal control over financial reporting established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), management concluded that the internal control over financial reporting was effective as of December 31, 2020.

2 unchanged sentences

Changes in Internal Controls over Financial Reporting

The Merger, which was completed on August 6, 2019, has had a material impact on the financial position, results of operations, and cash flows of the combined company from the date of acquisition through December 31 2019.

The business combination also resulted in material changes in the combined company's internal controls over financial reporting.

The Company is in the process of designing and integrating policies, processes, operations, technology, and other components of internal controls over financial reporting of the combined company.

Management will monitor the implementation of new controls and test the operating effectiveness when instances are available in future periods.

As described in Part II, Item 9a of our Annual Report on form 10-K for the year ended December 31, 2019, the Merger with BioScrip was completed on August 6, 2019, and represented a change in internal control over financial reporting.

During the year ended December 31, 2020 management consolidated and integrated BioScrip’s system of controls.

The processes and controls for significant areas, including business combinations, intangibles and goodwill valuations, income taxes, treasury, consolidations and the preparation of financial statements and related disclosures, compensation and benefits, procure to pay, inventory and order to receipt have all been substantially impacted by the integration activities.

The primary changes in these areas are related to the consolidation of process owner leadership and control owners, and where required, the modification of inputs, processes and associated systems.

For all areas of change noted, management believes the control design and implementation thereof are being appropriately modified to address underlying risks.

There were no other changes during the year ended December 31, 2020 that have materially affected, or reasonably likely to materially affect, our internal controls over financial reporting.

Report of Independent Registered Public Accounting Firm

2 unchanged sentences

Opinion on Internal Control Over Financial Reporting

We have audited Option Care Health, Inc.

and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have audited Option Care Health, Inc.and subsidiaries (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated March 11, 2021 expressed an unqualified opinion on those consolidated financial statements.

As described in the Management Report on Internal Control Over Financial Reporting, HC Group Holdings I, Inc.

and HC Group Holdings II, Inc.

(collectively, Option Care) merged with and into a wholly owned subsidiary of BioScrip, Inc.

(BioScrip) on August 6, 2019, forming the Company, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019, Option Care’s internal control over financial reporting associated with 93% of total assets and 87% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2019.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Option Care.

Basis for Opinion

20 unchanged sentences

Our Code of Ethics is posted on our website located at http://investors.optioncarehealth.com/corporate-governance/highlights.

We intend to disclose future amendments to certain provisions of the Code of Ethics, and waivers of the Code of Ethics granted to executive officers and directors.

The other information required by this item s incorporated by reference from the information contained in our definitive proxy statement to be filed with the SEC no later than 120 days after December 31, 2019 in connection with our 2020 Annual Meeting of Stockholders.

We intend to disclose future amendments to certain provisions of the Code of Ethics, and waivers of the Code of Ethics granted to executive officers and directors, on our website.

The other information required by this item is incorporated by reference from the information contained in our definitive proxy statement to be filed with the SEC no later than 120 days after December 31, 2020 in connection with our 2021 Annual Meeting of Stockholders.

Executive Compensation

18 unchanged sentences

Index to Exhibits

Exhibit Number

Exhibit Number Description

Agreement and Plan of Merger, dated as of January 24, 2010, by and among BioScrip, Inc.

20 unchanged sentences

(incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed on August 7, 2019, SEC File Number 001-11993).

3.4 Certificate of Amendment of the Certificate of Incorporation, filed January 30, 2020.

4.1 Registration Rights Agreement, dated as of March 9, 2015, by and among the Company, Coliseum Capital Partners, L.P., Coliseum Capital Partners II, L.P., and Blackwell Partners, LLC, Series A.

20 unchanged sentences

4.11 Supplemental Indenture, dated November 18, 2019, by and between Option Care Health, Inc., as parent issuer, and Ankura Trust Company, LLC, as trustee and collateral agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 19, 2019, SEC File Number 001-11993).

Description of Option Care Health Inc.’s registered securities (filed herewith).

Employee Stock Purchase Plan.

(Incorporated by reference to the definitive proxy statement filed on April 2, 2013).

First Amendment to Employee Stock Purchase Plan.

(Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q filed on August 10, 2015, SEC File Number 000-28740).

4.12 Description of Option Care Health Inc.’s registered securities.

BioScrip, Inc.

2018 Equity Incentive Plan (Incorporated by reference to Appendix A to the definitive proxy statement filed on April 4, 2018).

Second Amendment to Employee Stock Purchase Plan (Incorporated by reference to Appendix B to the definitive proxy statement filed on April 4, 2018).

10.2 Amended and Restated Warrant Agreement, dated as of March 14, 2019, by and among BioScrip, Inc.

13 unchanged sentences

Harriet Booker Employment Agreement entered into on June 3, 2019 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on August 7, 2019, SEC File Number 001-11993).

10.12† Rich Denness Employment Agreement entered into on June 8, 2019 (filed herewith).

10.13† Cliff Berman Employment Agreement entered into on August 3, 2015 (filed herewith).

10.14 First Amendment to ABL Credit Agreement, dated as of October 5, 2020, among Option Care Health, Inc.

(f/k/a BioScrip, Inc.), each Guarantor party hereto, each lender party hereto and Bank of America, N.A., as administrative agent .

21.1 List of subsidiaries of Option Care Health, Inc.

11 unchanged sentences

(i) Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended December 31, 2020, 2019 and 2018, (ii) Consolidated Balance Sheets as of December 31, 2020 and 2019, (iii) Consolidated Statements of Stockholders’ Equity for the fiscal years ended December 31, 2020, 2019 and 2018, (iv) Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2020, 2019 and 2018, and (v) Notes to Consolidated Financial Statements.

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Labels Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Labels Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

104 XBRL Formatted Cover Page

† Designates the Company’s management contracts or compensatory plan or arrangement.

8 unchanged sentences

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.

Signature Title(s) Date

Chief Executive Officer, President and Director

(Principal Executive Officer)

March 5, 2020

(Principal Executive Officer) March 11, 2021

/ s/ Michael Shapiro

1 unchanged sentence

Chief Financial Officer and Senior Vice President

(Principal Financial Officer)

March 5, 2020

(Principal Financial Officer) March 11, 2021

/s/ Robert R.

Senior Vice President, Finance and Chief Accounting Officer

(Principal Accounting Officer)

March 5, 2020

(Principal Accounting Officer) March 11, 2021

Jansen Kraemer, Jr.

Non-Executive Chairman of the Board

March 5, 2020

Non-Executive Chairman of the Board March 11, 2021

Director March 11, 2021

/s/ Elizabeth Q.

March 5, 2020

Director March 11, 2021

/s/ Alan Nielsen

March 5, 2020

Director March 11, 2021

/s/ Nitin Sahney

March 5, 2020

Director March 11, 2021

/s/ Timothy P.

March 5, 2020

Director March 11, 2021

/s/ Mark Vainisi

March 5, 2020

Director March 11, 2021

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures