What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-03 · 129 added, 291 removed, 302 unchanged (58% of the section changed)

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(IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

CURRENT ASSETS:

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$ 0.0001 par value;

12,500,000 shares authorized, no shares outstanding as of September 30, 2020 and December 31, 2019, respectively

12,500,000 shares authorized, no shares outstanding as of March 31, 2021 and December 31, 2020, respectively

Common stock;

$ 0.0001 par value:

250,000,000 shares authorized, 187,141,475 shares issued and 186,757,753 shares outstanding as of September 30, 2020;

250,000,000 shares authorized, 180,203,422 shares issued and 179,819,700 shares outstanding as of March 31, 2021;

180,178,308 shares issued and 179,794,586 shares outstanding as of December 31, 2020

Treasury stock;

383,722 shares outstanding, at cost, as of September 30, 2020 and December 31, 2019, respectively

383,722 shares outstanding, at cost, as of March 31, 2021 and December 31, 2020, respectively

( 2,403 ) ( 2,403 )

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

NET REVENUE $ 759,237 $ 705,440

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Total operating expenses 136,379 149,381

OPERATING INCOME (LOSS) 34,556 ( 11,725 ) 66,412 ( 14,600 )

OPERATING INCOME 29,094 8,648

OTHER INCOME (EXPENSE):

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Total other expense ( 30,677 ) ( 27,517 )

INCOME (LOSS) BEFORE INCOME TAXES 2,419 ( 39,218 ) ( 23,648 ) ( 63,378 )

INCOME TAX EXPENSE (BENEFIT) 756 3,576 2,267 ( 3,269 )

NET INCOME (LOSS) $ 1,663 $ ( 42,794 ) $ ( 25,915 ) $ ( 60,109 )

LOSS BEFORE INCOME TAXES ( 1,583 ) ( 18,869 )

INCOME TAX EXPENSE 1,278 1,041

NET LOSS $ ( 2,861 ) $ ( 19,910 )

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Change in unrealized gains (losses) on cash flow hedges, net of income tax expense (benefit) of $ 0 , $ 32 , $ 0 and $ 259 , respectively

Change in unrealized gains (losses) on cash flow hedges, net of income tax expense of $ 0 and $ 0 , respectively

4,081 ( 16,632 )

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NET COMPREHENSIVE INCOME (LOSS) $ 1,220 $ ( 36,542 )

EARNINGS (LOSS) PER COMMON SHARE:

Earnings (loss) per share, basic $ 0.01 $ ( 0.26 ) $ ( 0.14 ) $ ( 0.40 )

Earnings (loss) per share, diluted $ 0.01 $ ( 0.26 ) $ ( 0.14 ) $ ( 0.40 )

Weighted average common shares outstanding, basic 184,232 162,894 179,220 149,448

Weighted average common shares outstanding, diluted 184,822 162,894 179,220 149,448

LOSS PER COMMON SHARE

Loss per share, basic and diluted $ ( 0.02 ) $ ( 0.11 )

Weighted average common shares outstanding, basic and diluted 179,808 176,661

The notes to unaudited condensed consolidated financial statements are an integral part of these statements.

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(IN THOUSANDS)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Amortization of deferred financing costs 1,253 1,396

Paid-in-kind interest capitalized as principal 7,525 —

Loss on interest rate swaps upon discontinuing hedge accounting 3,746 —

Equity in earnings of joint ventures ( 1,205 ) ( 562 )

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Acquisition of property and equipment ( 3,123 ) ( 5,353 )

Other investing cash flows 541 636

Business acquisitions, net of cash acquired — ( 700,170 )

Net cash used in investing activities ( 3,123 ) ( 5,353 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Redemptions to related parties — ( 2,000 )

Sale of management notes receivable — 1,310

Proceeds from issuance of debt 355,200 —

Exercise of stock options, vesting of restricted stock, and related tax withholdings ( 69 ) ( 549 )

Proceeds from debt — 981,050

Repayments of debt principal ( 6,937 ) ( 2,075 )

Retirement of debt obligations ( 125,000 ) ( 226,738 )

Repayments of debt ( 2,944 ) ( 2,313 )

Deferred financing costs ( 2,880 ) —

Net proceeds from issuance of common stock 118,934 —

Other financing cash flows ( 2,500 ) —

Net cash (used in) provided by financing activities ( 16,407 ) 712,512

Debt prepayment fees ( 2,458 ) —

Retirement of debt ( 352,009 ) —

Net cash used in financing activities ( 5,160 ) ( 2,862 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 10,097 10,188

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(IN THOUSANDS)

Preferred Stock Common Stock Treasury Stock Paid-in Capital Management Notes Receivable Accumulated Deficit Accumulated Other Comprehensive (Loss)

Preferred Stock Common Stock Treasury Stock Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive (Loss)

Income Total Stockholders’ Equity

Balance - December 31, 2019 $ — $ 18 $ ( 2,403 ) $ 1,008,362 $ ( 91,955 ) $ ( 7,195 ) $ 906,827

Interest on management notes receivable — — — — ( 21 ) — — ( 21 )

Stockholders' redemption — — — ( 2,000 ) — — — ( 2,000 )

Stock-based incentive compensation — — — 584 — — — 584

Net loss — — — — — ( 3,712 ) — ( 3,712 )

Other comprehensive loss — — — — — — ( 505 ) ( 505 )

Balance - March 31, 2019 $ — $ 14 $ — $ 618,205 $ ( 1,640 ) $ ( 19,747 ) $ 339 $ 597,171

Interest on management notes receivable — — — — ( 18 ) — — ( 18 )

Stockholders' redemption — — — ( 371 ) 371 — — —

Stock-based incentive compensation — — — 569 — — — 569

Net loss — — — — — ( 13,603 ) — ( 13,603 )

Other comprehensive income — — — — — — 27 27

Balance - June 30, 2019 $ — $ 14 $ — $ 618,403 $ ( 1,287 ) $ ( 33,350 ) $ 366 $ 584,146

Interest on management notes receivable — — — — ( 23 ) — — ( 23 )

Repayment of management notes receivable — — — — 1,310 — — 1,310

Purchase of BioScrip, Inc.

— 4 — 387,040 — — — 387,044

Stock-based incentive compensation — — — 2,745 — — — 2,745

Exercise of stock options, vesting of restricted stock and related tax withholdings — — — ( 549 ) — — ( 549 )

Net loss — — — — — ( 42,794 ) — ( 42,794 )

Other comprehensive loss — — — — — — ( 8,249 ) ( 8,249 )

Balance - September 30, 2019 $ — $ 18 $ ( 2,399 ) $ 1,008,090 $ — $ ( 76,144 ) $ ( 7,883 ) $ 921,682

Balance - December 31, 2019 $ — $ 18 $ ( 2,403 ) $ 1,008,362 $ — $ ( 91,955 ) $ ( 7,195 ) $ 906,827

Exercise of stock options, vesting of restricted stock and related tax withholdings — — — ( 549 ) — — — ( 549 )

Stock-based incentive compensation — — — 757 — — 757

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Balance - March 31, 2020 $ — $ 18 $ ( 2,403 ) $ 1,008,570 $ ( 111,865 ) $ ( 23,827 ) $ 870,493

Balance - December 31, 2020 $ — $ 18 $ ( 2,403 ) $ 1,129,312 $ ( 100,031 ) $ ( 11,172 ) $ 1,015,724

Exercise of stock options, vesting of restricted stock, and related tax withholdings — — — ( 69 ) — — ( 69 )

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Other comprehensive income — — — — — 4,081 4,081

Balance - June 30, 2020 $ — $ 18 $ ( 2,403 ) $ 1,009,135 $ — $ ( 119,533 ) $ ( 19,251 ) $ 867,966

Exercise of stock options, vesting of restricted stock and related tax withholdings — — — ( 259 ) — — — ( 259 )

Stock-based incentive compensation — — — 1,170 — — — 1,170

Net proceeds from the issuance of common stock — 1 — 118,933 — — — 118,934

Net income — — — — — 1,663 — 1,663

Other comprehensive income — — — — — — 4,022 4,022

Balance - September 30, 2020 $ — $ 19 $ ( 2,403 ) $ 1,128,979 $ — $ ( 117,870 ) $ ( 15,229 ) $ 993,496

Balance - March 31, 2021 $ — $ 18 $ ( 2,403 ) $ 1,130,448 $ ( 102,892 ) $ ( 7,091 ) $ 1,018,080

The notes to unaudited condensed consolidated financial statements are an integral part of these statements.

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The Merger was accounted for as a reverse merger under the acquisition method of accounting for business combinations with Option Care being considered the accounting acquirer and BioScrip being considered the legal acquirer.

Under the terms of the Merger Agreement, shares of HC II common stock issued and outstanding immediately prior to the Merger Date were converted into 135,565,392 shares of BioScrip common stock, par value $ 0.0001 (the “BioScrip common stock”).

BioScrip also issued an additional 7,048,357 shares to HC I in respect of certain outstanding unvested contingent restricted stock units of BioScrip, which are held in escrow to prevent dilution related to potential additional vesting on certain share-based instruments.

See Note 15, Stockholders’ Equity , for additional discussion of these shares held in escrow.

In conjunction with the Merger, holders of BioScrip preferred shares and certain warrants received 864,603 additional shares of BioScrip common stock and preferred shares were repurchased for $ 125.8 million of cash.

In addition, all legacy BioScrip debt was settled for $ 575.0 million.

As a result of the Merger, BioScrip’s stockholders held approximately 19.3 % of the combined company, and HC I held approximately 80.7 % of the combined company.

Following the close of the transaction, BioScrip was rebranded as Option Care Health, Inc.

(“Option Care Health”, or the “Company”).

The combined company’s stock is listed on the Nasdaq Global Select Market as of September 30, 2020.

See Note 3, Business Acquisitions , for further discussion of the Merger.

The combined company’s stock is listed on the Nasdaq Global Select Market as of March 31, 2021.

See Note 14, Stockholders’ Equity , for further discussion of HC I’s ownership as of March 31, 2021.

Option Care Health, and its wholly-owned subsidiaries, provides infusion therapy and other ancillary health care services through a national network of 98 full service pharmacies.

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and its subsidiaries.

The BioScrip results have been included in the consolidated financial results since the Merger Date.

All intercompany transactions and balances are eliminated in consolidation.

The Company has investments in companies that are 50 % owned and are accounted for as equity-method investments.

The Company’s share of earnings from equity-method investments is included in the line entitled “Equity in earnings of joint ventures” in the consolidated statements of comprehensive income (loss).

The Company’s share of earnings from equity-method investments is included in the line entitled “Equity in earnings of joint ventures” in the unaudited condensed consolidated statements of comprehensive income (loss).

See Equity-Method Investments within Note 2, Summary of Significant Accounting Policies , for further discussion of the Company’s equity-method investments.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

In April 2020, the Company received $ 11.7 million in Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) grant funds from the federal government, which was reflected in the second quarter as a cash inflow from financing activities within other financing cash flows in the unaudited condensed consolidated statements of cash flows.

During the third quarter, the Company returned the funds as unused to the federal government, which was reflected as a cash outflow from financing activities within other financing cash flows in the unaudited condensed consolidated statements of cash flows.

Prepaid expenses and other current assets — Included in prepaid expenses and other current assets are rebates receivable from pharmaceutical and medical supply manufacturers of $ 31.7 million and $ 35.2 million as of March 31, 2021 and December 31, 2020, respectively.

There were no other items included in prepaid expenses and other current assets that comprised 5% or more of total current assets.

Equity Method Investments — The Company’s investments in certain unconsolidated entities are accounted for under the equity method.

The balance of these investments is included in other noncurrent assets in the accompanying condensed consolidated balance sheets.

As of September 30, 2020 and December 31, 2019, the balance of the investments were $ 16.6 million and $ 17.0 million, respectively.

The investments are increased to reflect the Company’s capital contributions and equity in earning of the investees.

As of March 31, 2021 and December 31, 2020, the balance of the investments were $ 18.2 million and $ 17.0 million, respectively.

The investments are increased to reflect the Company’s capital contributions and equity in earnings of the investees.

The investments are decreased to reflect the Company’s equity in losses of the investees and for distributions received that are not in excess of the carrying amount of the investments.

The Company’s proportionate share of earnings or losses of the investees are recorded in equity in earnings of joint ventures in the accompanying unaudited condensed consolidated statements of comprehensive income (loss).

The Company’s proportionate share of earnings was $ 0.8 million and $ 2.4 million for the three and nine months ended September 30, 2020.

The Company’s proportionate share of earnings was $ 0.8 million and $ 2.0 million for the three and nine months ended September 30, 2019.

The Company’s proportionate share of earnings was $ 1.2 million and $ 0.6 million for the three months ended March 31, 2021 and 2020, respectively.

Distributions from the investees are treated as cash inflows from operating activities within other adjustments in the unaudited condensed consolidated statements of cash flows.

During the three and nine months ended September 30, 2020, the Company received distributions from the investees of $ 2.3 million and $ 2.8 million, respectively.

During the three and nine months ended September 30, 2019, the Company received distributions from the investees of $ 0.5 million and $ 0.5 million, respectively.

The Company did not receive a distribution from the investees for the three months ended March 31, 2021.

During the three months ended March 31, 2020, the Company received distributions from the investees of $ 0.5 million.

See Footnote 16, Related-Party Transactions , for discussion of related-party transactions with these investees.

Concentrations of Business Risk — The Company generates revenue from managed care contracts and other agreements with commercial third-party payers.

Revenue related to the Company’s largest payer was approximately 16 % and 15 % for the three and nine months ended September 30, 2020.

Revenue related to the Company’s largest payer was approximately 15 % and 13 % for the three and nine months ended September 30, 2019, respectively.

Revenue related to the Company’s largest payer was approximately 16 % and 13 % for the three months ended March 31, 2021 and 2020, respectively.

In December 2019, the Company renewed and expanded its multi-year contract with this payer.

The contract renewal was effective in February 2020 for a two-year term and auto-renews at the end of that term.

The contract renewal was effective in February 2020 for a two-year term and auto-renews annually thereafter unless notice is provided.

There were no other managed care contracts that represent greater than 10% of revenue for the periods presented.

For the three and nine months ended September 30, 2020, approximately 16 % and 14 %, respectively, of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid.

For the three and nine months ended September 30, 2019, approximately 13 % and 12 %, respectively, of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid.

As of September 30, 2020 and December 31, 2019, respectively, approximately 13 % and 12 %, respectively, of the Company’s accounts receivable was related to these programs.

For the three months ended March 31, 2021 and 2020, approximately 18 % and 12 %, respectively, of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid.

As of March 31, 2021 and December 31, 2020, approximately 13 % and 15 %, respectively, of the Company’s accounts receivable was related to these programs.

Governmental programs pay for services based on fee schedules and rates that are determined by the related governmental agency.

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Other than as discussed above, concentration of credit risk relating to trade accounts receivable is limited due to the Company’s diversity of patients and payers.

Further, the Company generally does not provide charity care.

For the three and nine months ended September 30, 2020, approximately 71 % and 72 %, respectively, of the Company’s pharmaceutical and medical supply purchases were from three vendors.

For the three and nine months ended September 30, 2019, approximately 69 % and 72 %, respectively, of the Company’s pharmaceutical and medical supply purchases were from three vendors.

Further, the Company generally does not provide charity care, however, Option Care Health offers a financial assistance program for patients that meet certain defined hardship criteria.

For the three months ended March 31, 2021 and 2020, approximately 67 % and 70 %, respectively, of the Company’s pharmaceutical and medical supply purchases were from three vendors.

Although there are a limited number of suppliers, the Company believes that other vendors could provide similar products on comparable terms.

However, a change in suppliers could cause delays in service delivery and possible losses in revenue, which could adversely affect the Company’s financial condition or operating results.

Although there is uncertainty regarding the COVID-19 pandemic, as of September 30, 2020 the Company has been able to maintain adequate levels of supplies and pharmaceuticals to support its operations.

Recently-Adopted Accounting Pronouncements — In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which requires measurement and recognition of expected credit losses for financial assets held.

The Amendments in ASU 2016-13 eliminate the probable threshold for initial recognition of a credit loss in current GAAP and reflect an entity’s current estimate of all expected credit losses.

ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, and is to be applied using a modified retrospective transition method.

The Company adopted the standard as of January 1, 2020.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

BUSINESS ACQUISITIONS

Merger with BioScrip, Inc.

— As discussed in Note 1, Nature of Operations and Presentation of Financial Statements, Option Care merged with BioScrip on August 6, 2019.

BioScrip was a national provider of infusion and home care management solutions.

The Merger of Option Care and BioScrip into Option Care Health created an expanded national platform and the opportunity to drive economies of scale through procurement savings, facility rationalization and other operating cost savings.

The fair value of purchase consideration transferred on the closing date includes the value of the number of shares of the combined company owned by BioScrip shareholders at closing of the Merger, the value of common shares issued to certain warrant and preferred shareholders in conjunction with the Merger, the fair value of stock-based instruments that were vested or earned as of the Merger, and cash payments made in conjunction with the Merger.

The fair value per share of BioScrip’s common stock was $ 2.67 per share.

This is the closing price of the BioScrip common stock on August 6, 2019.

Under the acquisition method of accounting, the calculation of total consideration exchanged is as follows (in thousands):

Number of BioScrip common shares outstanding at time of the Merger (1) 129,181

Common shares issued to warrant and preferred stockholders at time of the Merger (1) 3,458

Total shares of BioScrip common stock outstanding at time of the Merger (1) 132,639

BioScrip share price as of August 6, 2019 $ 2.67

Fair value of common shares $ 354,146

Fair value of share-based instruments $ 32,898

Cash paid in conjunction with the Merger included in purchase consideration $ 714,957

Fair value of total consideration transferred $ 1,102,001

cash acquired $ 14,787

Fair value of total consideration acquired, net of cash acquired $ 1,087,214

(1) These shares were not adjusted for the one share for four share reverse stock split effective on February 3, 2020.

See Note 15, Stockholders’ Equity , for further discussion of the one share for four share reverse stock split.

Cash paid in conjunction with the Merger includes payments made for settlement of $ 575.0 million in legacy BioScrip debt, $ 125.8 million in existing BioScrip preferred shares, and $ 14.1 million in legacy BioScrip success-based fees owed to third-party advisors.

HC II financed these payments primarily through cash on hand and debt financing.

The Company's allocation of consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed, net of cash acquired, in the Merger is as follows (in thousands):

Accounts receivable, net (1) $ 96,532

Inventories (2) 19,683

Property and equipment, net (3) 48,732

Intangible assets, net (4) 193,245

Deferred tax assets, net of deferred tax liabilities (5) 26,731

Operating lease right-of-use asset (6) 22,378

Operating lease liability (6) ( 28,897 )

Accounts payable (7) ( 66,668 )

Other assumed liabilities, net of other acquired assets (7) ( 20,663 )

Total acquired identifiable assets and liabilities 291,073

Goodwill (8) 796,141

Total consideration transferred $ 1,087,214

(1) Management has valued accounts receivables based on the estimated future collectability of the receivables portfolio.

(2) Inventories are stated at fair value as of the Merger Date.

(3) The fair value of the property and equipment was determined based upon the best and highest use of the property with final values determined based upon an analysis of the cost, sales comparison, and income capitalization approaches for each property appraised.

(4) The allocation of consideration exchanged to intangible assets acquired is as follows (in thousands):

Fair Value Weighted Average Estimated Life (in years)

Trademarks/Names $ 12,536 2

Patient referral sources 180,329 20

Licenses 380 1.5

Total intangible assets, net $ 193,245 18.8

The Company valued trademarks/names utilizing the relief of royalty method and patient referral sources utilizing the multi-period excess earnings method, a form of the income approach.

(5) Net deferred tax assets represented the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases.

(6) The fair value of the operating lease liability and corresponding right-of-use asset (current and long-term) was based on current market rates available to the Company.

(7) Accounts payable as well as certain other current and non-current assets and liabilities are stated at fair value as of the Merger Date.

(8) The Merger resulted in $ 796.1 million of goodwill, which is attributable to cost synergies resulting from procurement and operational efficiencies and elimination of duplicative administrative costs.

The goodwill created in the Merger is not expected to be deductible for tax purposes.

Assuming BioScrip had been acquired as of January 1, 2018, and the results of BioScrip had been included in operations beginning on January 1, 2018, the unaudited pro forma results of operations for the three and nine months ended September 30, 2019 were net revenue of $ 690.4 million and $ 2,034.6 million, respectively, and net loss of $ 18.7 million and $ 54.2 million, respectively.

The pro forma net loss adjusts for the effect of fair value adjustments related to the Merger, transaction costs and other non-recurring costs directly attributable to the Merger and the impact of the additional debt to finance the Merger.

Unaudited pro forma information is not necessarily indicative of the results that actually would have occurred had the Merger been completed on the date indicated or the future operating results.

The following table sets forth the net revenue earned by category of payer for the three and nine months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Although there remains some uncertainty regarding the COVID-19 pandemic, as of March 31, 2021 the Company has been able to maintain adequate levels of supplies and pharmaceuticals to support its operations.

The following table sets forth the net revenue earned by category of payer for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,

Commercial payers $ 611,434 $ 605,994

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Net revenue $ 759,237 $ 705,440

During the three and nine months ended September 30, 2020, the Company recorded tax expense of $ 0.8 million and $ 2.3 million, respectively, which represents an effective tax rate of 31.3 % and ( 9.6 )%, respectively.

During the three and nine months ended September 30, 2019 the Company recorded a tax expense (benefit) of $ 3.6 million and $( 3.3 ) million, respectively, which represents an effective tax rate of ( 9.1 )% and 5.2 %, respectively.

The Company maintains a full valuation allowance against all of its net U.S.

During the three months ended March 31, 2021, the Company recorded tax expense of $ 1.3 million, which represents a negative effective tax rate of 80.7 %.

During the three months ended March 31, 2020, the Company recorded a tax expense of $ 1.0 million, which represents a negative effective tax rate of 5.5 %.

The Company maintains a full valuation allowance of $ 112.3 million against all of its net U.S.

federal and state deferred tax assets with the exception of $ 0.5 million of estimated state net operating losses (“NOL”).

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On a quarterly basis, the Company evaluates all positive and negative evidence in determining if the valuation allowance is fairly stated.

Based on the Company’s full valuation allowance, as noted above, the Company’s tax expense for the three and nine months ended September 30, 2020 of $ 0.8 million and $ 2.3 million consists of quarterly tax liabilities attributable to specific state taxing authorities as well as recognized deferred tax expense.

The Company recorded no income tax expense or benefit for the three or nine months ended September 30, 2020 and 2019 associated with the tax provisions of the CARES Act.

EARNINGS (LOSS) PER SHARE

The Company presents basic and diluted earnings (loss) per share for its common stock.

Basic earnings (loss) per share is calculated by dividing the net income (loss) of the Company by the weighted average number of shares of common stock outstanding during the period.

Diluted earnings (loss) per share is determined by adjusting the profit or loss and the weighted average number of shares of common stock outstanding for the effects of all potentially dilutive securities.

As a result of the Merger, which has been accounted for as a reverse merger, all historical per share data and number of shares and equity awards were retroactively adjusted.

The earnings (loss) is used as the basis of determining whether the inclusion of common stock equivalents would be anti-dilutive.

The computation of diluted shares for the three months ended September 30, 2020 includes the effect of shares that would be issued in connection with warrants, stock options and restricted stock awards, as these common stock equivalents are dilutive to the earnings per share recorded in the quarter.

The computation of diluted shares for the nine months ended September 30, 2020 and the three and nine months ended September 30, 2019 excludes the effect of these common stock equivalents as their inclusion would be anti-dilutive to the loss per share recorded in those periods.

As of September 30, 2020 there were 2,328,120 warrants, 424,878 stock options and 600,483 restricted stock awards outstanding that were excluded from the calculation of earnings (loss) per share for the nine months ended September 30, 2020 as they would be anti-dilutive.

As of September 30, 2019, there were 2,987,336 warrants, 657,846 stock options and 109,905 restricted stock awards outstanding that were excluded from the calculation of earnings (loss) per share for the three and nine months ended September 30, 2019 as they would be anti-dilutive.

The following table presents the Company’s basic earnings (loss) per share and shares outstanding (in thousands, except per share data):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net income (loss) $ 1,663 $ ( 42,794 ) $ ( 25,915 ) $ ( 60,109 )

Weighted average number of common shares outstanding 184,232 162,894 179,220 149,448

Earnings (loss) per common share:

Earnings (loss) per common share, basic $ 0.01 $ ( 0.26 ) $ ( 0.14 ) $ ( 0.40 )

The following table presents the Company’s diluted earnings (loss) per share and shares outstanding (in thousands, except per share data):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net income (loss) $ 1,663 $ ( 42,794 ) $ ( 25,915 ) $ ( 60,109 )

Based on the Company’s full valuation allowance, as noted above, the Company’s tax expense for the three months ended March 31, 2021 of $ 1.3 million consists of quarterly tax liabilities attributable to specific state taxing authorities as well as recognized deferred tax expense.

The Company has accumulated U.S.

federal net operating loss carryovers that are subject to one or more Section 382 limitations.

This may limit the Company’s ability to utilize its U.S.

federal net operating losses.

(LOSS) EARNINGS PER SHARE

The Company presents basic and diluted (loss) earnings per share for its common stock.

Basic (loss) earnings per share is calculated by dividing the net (loss) income of the Company by the weighted average number of shares of common stock outstanding during the period.

Diluted (loss) earnings per share is determined by adjusting the profit or loss and the weighted average number of shares of common stock outstanding for the effects of all potentially dilutive securities.

The (loss) earnings is used as the basis of determining whether the inclusion of common stock equivalents would be anti-dilutive.

The computation of diluted shares for the three months ended March 31, 2021 and 2020 excludes the effect of these common stock equivalents as their inclusion would be anti-dilutive to the loss per share recorded in those periods.

As of March 31, 2021 there were 2,285,784 warrants, 789,586 stock options and 1,080,334 restricted stock awards outstanding that were excluded from the calculation of loss per share for the three months ended March 31, 2021 as they would be anti-dilutive.

As of March 31, 2020, there were 2,328,120 warrants, 531,747 stock options and 484,326 restricted stock awards outstanding that were excluded from the calculation of loss per share for the three months ended March 31, 2020 as they would be anti-dilutive.

The following table presents the Company’s basic and diluted (loss) earnings per share and shares outstanding (in thousands, except per share data):

Three Months Ended March 31,

Net loss $ ( 2,861 ) $ ( 19,910 )

Weighted average number of common shares outstanding 179,808 176,661

Effect of dilutive securities 590 — — —

Weighted average number of common shares outstanding, diluted 184,822 162,894 179,220 149,448

Earnings (loss) per common share:

Earnings (loss) per common share, diluted $ 0.01 $ ( 0.26 ) $ ( 0.14 ) $ ( 0.40 )

During the three and nine months ended September 30, 2020, the Company incurred operating lease expenses of $ 7.6 million and $ 23.0 million, respectively, including short-term lease expense, which were included as a component of selling, general and administrative expense in the unaudited condensed consolidated statements of comprehensive income (loss).

During the three and nine months ended September 30, 2019, the Company incurred operating lease expense of $ 7.4 million and $ 21.5 million, respectively, including short-term lease expenses, which were included as a component of selling, general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income (loss).

As of September 30, 2020, the weighted-average remaining lease term was 6.8 years and the weighted-average discount rate was 5.30 %.

Loss per common share:

Loss per common share, basic $ ( 0.02 ) $ ( 0.11 )

During the three months ended March 31, 2021 and 2020, the Company incurred operating lease expenses of $ 7.5 million and $ 7.7 million, respectively, including short-term lease expenses, which were included as a component of selling, general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income (loss).

As of March 31, 2021, the weighted-average remaining lease term was 6.6 years and the weighted-average discount rate was 5.22 %.

Operating leases mature as follows (in thousands):

Fiscal Year Ending December 31, Minimum Payments

2021 $ 19,618

Thereafter 28,423

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Present value of lease liabilities $ 87,147

During the three and nine months ended September 30, 2019, the Company did not enter into any significant new operating or financing leases.

During the three and nine months ended September 30, 2020, the Company commenced new leases, extensions and amendments, resulting in non-cash investing and financing activities in the unaudited condensed consolidated statements of cash flow of $ 20.1 million related to increases in the operating lease right-of-use asset and operating lease liabilities, respectively.

As of September 30, 2020, the Company did not have any significant operating or financing leases that had not yet commenced.

During the three months ended March 31, 2020, the Company did not enter into any significant new operating or financing leases.

During the three months ended March 31, 2021, the Company commenced new leases, extensions and amendments, resulting in non-cash investing and financing activities in the unaudited condensed consolidated statements of cash flow of $ 1.6 million related to increases in the operating lease right-of-use asset and operating lease liabilities, respectively.

As of March 31, 2021, the Company did not have any significant operating or financing leases that had not yet commenced.

PROPERTY AND EQUIPMENT

Property and equipment was as follows as of September 30, 2020 and December 31, 2019 (in thousands):

September 30, 2020 December 31, 2019

Property and equipment was as follows as of March 31, 2021 and December 31, 2020 (in thousands):

March 31, 2021 December 31, 2020

Infusion pumps $ 31,419 $ 31,678

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The depreciation expense included in operating expenses is related to infrastructure items, such as furniture, computer and office equipment, and leasehold improvements.

The following table presents the amount of depreciation expense recorded in cost of revenue and operating expenses for the three and nine months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

The following table presents the amount of depreciation expense recorded in cost of revenue and operating expenses for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,

Depreciation expense in cost of revenue $ 1,377 $ 1,742

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GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill consists of the following activity for the three and nine months ended September 30, 2020 (in thousands):

Balance at December 31, 2019 $ 1,425,542

Purchase accounting adjustments 2,341

Balance at March 31, 2020 $ 1,427,883

Purchase accounting adjustments 727

Balance at June 30, 2020 $ 1,428,610

Balance at September 30, 2020 $ 1,428,610

Changes in the carrying amount of goodwill consists of the following activity for the three and nine months ended September 30, 2019 (in thousands):

There was no change in the carrying amount of goodwill for the three months ended March 31, 2021.

Changes in the carrying amount of goodwill consists of the following activity for the three months March 31, 2020 (in thousands):

Balance at December 31, 2019 1,425,542

Merger purchase accounting adjustments 2,341

Balance at March 31, 2020 1,427,883

Balance at June 30, 2019 $ 632,469

Acquisitions 786,904

Balance at September 30, 2019 $ 1,419,373

The carrying amount and accumulated amortization of intangible assets consists of the following as of September 30, 2020 and December 31, 2019 (in thousands):

September 30, 2020 December 31, 2019

The carrying amount and accumulated amortization of intangible assets consists of the following as of March 31, 2021 and December 31, 2020 (in thousands):

March 31, 2021 December 31, 2020

Gross intangible assets:

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Total intangible assets, net $ 342,379 $ 351,052

Amortization expense for intangible assets was $ 8.8 million and $ 26.3 million for the three and nine months ended September 30, 2020, respectively.

Amortization expense for intangible assets was $ 7.5 million and $ 17.3 million for the three and nine months ended September 30, 2019, respectively.

Long-term debt consisted of the following as of September 30, 2020 (in thousands):

Amortization expense for intangible assets was $ 8.7 million and $ 8.8 million for the three months ended March 31, 2021 and 2020, respectively.

Long-term debt consisted of the following as of March 31, 2021 (in thousands):

Principal Amount Discount Debt Issuance Costs Net Balance

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Total long-term debt $ 1,115,103

The interest rate on the first lien term loan was 4.65 % and 6.20 % as of September 30, 2020 and December 31, 2019, respectively.

The weighted average interest rate incurred on the first lien term loan was 4.67 % and 5.29 % for the three and nine months ended September 30, 2020.

The weighted average interest rate incurred on the first lien term loan was 6.67 % for the period August 6, 2019 through September 30, 2019.

The weighted average interest rate incurred on the previous first lien term loan was 6.06 % and 6.20 % for the three and nine months ended September 30, 2019, respectively, prior to the retirement of the previous credit facilities on August 6, 2019.

The interest rate on the second lien notes was 9.00 % and 10.66 % as of September 30, 2020 and December 31, 2019, respectively.

The weighted average interest incurred on the second lien notes was 9.51 % and 10.17 % for the three and nine months ended September 30, 2020.

The weighted average interest rate incurred on the second lien notes was 10.89 % for the period August 6, 2019 through September 30, 2019.

The weighted average interest incurred on the previous second lien term loan was 11.02 % and 11.36 % for the three and nine months ended September 30, 2019, respectively, prior to the retirement of the previous credit facilities on August 6, 2019.

The Company elected to pay-in-kind (“PIK”) the quarterly interest payment due in August 2020 for the second lien notes, which resulted in the Company capitalizing $ 7.5 million in interest expense to the principal balance of the second lien term loan on the interest payment date.

In connection with the PIK election, the Company was charged an additional 1.00 % in interest expense during the quarterly interest period.

During the three months ended September 30, 2020, the Company completed a public offering of stock for net proceeds of $ 118.9 million.

Those proceeds, along with additional cash on hand, were used to prepay $ 125.0 million of the second lien notes, which is reflected as a cash outflow from financing activities in the Company’s unaudited condensed consolidated statements of cash flows.

The Company recognized a loss on extinguishment of debt of $ 8.3 million, of which $ 2.5 million related to a prepayment penalty and $ 5.8 million related to deferred financing fees, which were written off upon extinguishment.

The $ 2.5 million prepayment penalty was reflected as a cash outflow from financing activities in the unaudited condensed consolidated statements of cash flows.

See Note 15, Stockholders’ Equity , for further discussion of the public offering.

In January 2021, the Company entered into an amendment on the First Lien Term Loan (the “First Lien Credit Agreement Amendment”).

The First Lien Credit Agreement Amendment resulted in an additional $ 250.0 million of incremental First Lien Term Loan indebtedness being issued and reduced the interest rate on all outstanding First Lien Term Loan indebtedness from LIBOR plus 4.25 % to LIBOR plus 3.75 %.

The proceeds of the $ 250.0 million incremental First Lien Term Loan indebtedness were used to prepay the remaining $ 245.8 million outstanding balance of the Second Lien Notes.

Following the First Lien Credit Agreement Amendment, the First Lien Term Loan is repayable in quarterly installments of $ 2.9 million plus interest, with a final payment of all remaining outstanding principal due on August 6, 2026.

The Company assessed whether the repayment of the Second Lien Notes by issuing incremental First Lien Term Loan indebtedness resulted in an insubstantial modification or an extinguishment of the existing debt for each loan in the syndication by grouping lenders as follows:

(i) Lenders participating in both the First Lien Term Loan and Second Lien Notes;

(ii) previous lenders that exited;

and (iii) new lenders.

The Company determined that $ 161.2 million of the First Lien Term Loan was extinguished and $ 122.9 million of the Second Lien Term Loan was extinguished, which is disclosed as an outflow from financing activities in the condensed consolidated statements of cash flows.

The First Lien Term Loan and Second Lien Notes had insubstantial modifications for lenders that participated in both debt instruments, which resulted in a cash outflow from financing activities of $ 352.0 million in the condensed consolidated statements of cash flows.

The Company determined that $ 356.2 million of new debt was issued related to the First Lien Term Loan, which is disclosed as an inflow from financing activities in the condensed consolidated statements of cash flows.

In connection with the prepayment of the Second Lien Notes and incremental First Lien Term Loan indebtedness, the Company incurred $ 7.2 million in debt issuance costs and third-party fees, of which $ 3.7 million was capitalized, $ 0.9 million was expensed as a component of other expense and $ 2.6 million was expensed as a loss on extinguishment as a component of other expense in the condensed consolidated statements of comprehensive income (loss).

Further, $ 1.0 million of the total fees incurred of $ 7.2 million was netted against the $ 356.2 million of proceeds from debt as a component of the cash flows from financing activities, $ 2.9 million was presented as deferred financing costs as a component of cash flows from financing activities, $ 2.4 million was presented as debt prepayment fees as a component of cash flows from financing activities, and the remaining $ 0.9 million was included in cash flows from operating activities in the condensed consolidated statements of cash flows.

The Company recognized a loss on extinguishment of debt of $ 12.4 million included in the line entitled “Other, net” in the unaudited condensed consolidated statements of comprehensive income (loss), of which $ 2.6 million related to debt issue costs incurred with the incremental First Lien Term Loan indebtedness and prepayment of the Second Lien Notes, as discussed above, and $ 9.8 million related to existing deferred financing fees that were written off upon extinguishment.

All remaining

deferred financing fees that existed prior to the First Lien Credit Agreement Amendment were attributed to modified loans, and were capitalized and amortized over the remaining term of the First Lien Term Loan.

The interest rate on the First Lien Term Loan was 3.86 % and 4.40 % as of March 31, 2021 and December 31, 2020, respectively.

The weighted average interest rate incurred on the First Lien Term Loan was 3.97 % and 6.18 % for the three months ended March 31, 2021 and 2020, respectively.

The interest rate on the Second Lien Notes was 8.98 % as of December 31, 2020.

The weighted average interest rate incurred on the Second Lien Notes was 8.98 % for the period January 1, 2021 through January 20, 2021, prior to the repayment of the outstanding balance.

The weighted average interest rate incurred on the Second Lien Notes was 10.54 % for the three months ended March 31, 2020.

Long-term debt matures as follows (in thousands):

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Total 1,162,806

During the three and nine months ended September 30, 2020 and 2019, the Company engaged in hedging activities to limit its exposure to changes in interest rates.

During the three months ended March 31, 2021 and 2020, the Company engaged in hedging activities to limit its exposure to changes in interest rates.

See Note 10, Derivative Instruments , for further discussion.

The following table presents the estimated fair values of the Company’s debt obligations as of September 30, 2020 (in thousands):

Financial Instrument Carrying Value as of September 30, 2020 Markets for Identical Item (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

The following table presents the estimated fair values of the Company’s debt obligations as of March 31, 2021 (in thousands):

Financial Instrument Carrying Value as of March 31, 2021 Markets for Identical Item (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

First lien term loan $ 1,132,918 $ — $ 1,158,504 $ —

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Total debt instruments $ 1,132,918 $ — $ 1,158,504 $ —

The following table sets forth the changes in Level 3 measurements for the three and nine months ended September 30, 2020 (in thousands):

The following table sets forth the changes in Level 3 measurements for the three months ended March 31, 2021 (in thousands):

Level 3 Measurements

Second lien notes fair value as of January 1, 2021 $ 266,438

Change in fair value ( 71,748 )

Second lien notes fair value as of March 31, 2020 $ 339,371

Change in fair value 78,539

Second lien notes fair value as of June 30, 2020 $ 417,910

Interest rate PIK 7,525

Principal prepayment ( 245,781 )

Change in fair value ( 20,657 )

Second lien notes fair value as of September 30, 2020 $ 321,172

Second lien notes fair value as of March 31, 2021 $ —

See Note 11, Fair Value Measurements , for further discussion.

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Credit risk is monitored through established approval procedures, including reviewing credit ratings when appropriate.

During 2017, Option Care entered into interest rate caps that reduce the risk of increased interest payments due to interest rates rising.

The hedges offset the risk of rising interest rates through 2020 on the first $ 250.0 million of the previous first lien term loan.

The interest rate caps perfectly offset the terms of the interest rates associated with the variable interest rate previous first lien term loan.

Option Care entered into the interest rate caps as a cash flow hedge for a notional amount of $ 1.9 million.

In April 2019, Option Care terminated its interest rate caps.

In August 2019, the Company entered into interest rate swap agreements that reduce the variability in the interest rates on the newly-issued debt obligations following the Merger with BioScrip.

The first interest rate swap for $ 925.0 million notional was effective in August 2019 with $ 911.1 million designated as a cash flow hedge against the underlying interest rate on the first lien term loan interest payments indexed to one-month London Interbank Offered Rate (“LIBOR”) through August 2021.

The remaining $ 13.9 million notional amount of the interest rate swap is not designated as a hedging instrument.

The second interest rate swap of $ 400.0 million notional was effective in November 2019 and is designated as a cash flow hedge against the underlying interest rate on the second lien notes interest payments indexed to three-month LIBOR through November 2020.

In May 2020, the Company elected to PIK the second lien note’s quarterly interest payment due in August 2020.

Upon making the PIK election, the Company determined that the hedged interest payment would no longer occur, resulting in an ineffective hedge, so the Company discontinued hedge accounting on its $ 400.0 million notional interest rate swap.

As a result, the Company reclassified accumulated comprehensive loss of $ 3.7 million to interest expense, net in the unaudited condensed consolidated statements of comprehensive income (loss).

The gains and losses associated with the $ 400.0 million notional swap will be recognized in net income (loss) through interest expense until the swap expires in November 2020.

See Note 10, Indebtedness , for further discussion of the PIK.

In accordance with ASU 2017-12, Targeted Improvements to Accounting for Hedges, the Company has determined that the $ 911.1 million designated cash flow hedge is perfectly effective.

The remaining $ 13.9 million notional amount of the interest rate swap is not designated as a hedging instrument.

The second interest rate swap of $ 400.0 million notional was effective in November 2019 and was designated as a cash flow hedge against the underlying interest rate on the second lien notes interest payments indexed to three-month LIBOR through November 2020.

The following table summarizes the amount and location of the Company’s derivative instruments in the condensed consolidated balance sheets (in thousands):

Fair value - Derivatives in liability position

Derivative Balance Sheet Caption September 30, 2020 December 31, 2019

Derivative Balance Sheet Caption March 31, 2021 December 31, 2020

Interest rate swaps designated as cash flow hedges Accrued expenses and other current liabilities $ 7,091 $ 11,172

Interest rate swaps not designated as cash flow hedges Accrued expenses and other current liabilities 108 170

Interest rate swaps designated as cash flow hedges Other non-current liabilities — 5,920

Interest rate swaps not designated as cash flow hedges Other non-current liabilities — 90

Total derivatives $ 7,199 $ 11,342

The gain and loss associated with the changes in the fair value of the effective portion of the hedging instrument are recorded into other comprehensive (loss) income.

The gain and loss associated with the changes in the fair value of the $ 400.0 million notional swap and the $ 13.9 million notional amount not designated as a hedging instrument are recognized in net income (loss) through interest expense.

The gain and loss associated with the changes in the fair value of the $ 13.9 million notional amount not designated as a hedging instrument is recognized in net income (loss) through interest expense.

The following table presents the pre-tax gains (losses) from derivative instruments recognized in other comprehensive (loss) income in the Company’s unaudited condensed consolidated statements of comprehensive income (loss) (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Derivative 2021 2020

Interest rate caps designated as cash flow hedges $ — $ ( 398 ) $ — $ ( 1,103 )

Interest rate swaps designated as cash flow hedges 4,081 ( 16,632 )

Interest rate swaps that discontinued hedge accounting — — 3,746 —

$ 4,081 $ ( 16,632 )

The following table presents the amount and location of pre-tax income (loss) recognized in the Company’s unaudited condensed consolidated statement of comprehensive income (loss) related to the Company’s derivative instruments (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Derivative Income Statement Caption 2021 2020

Interest rate caps designated as cash flow hedges Interest expense $ — $ 269 $ — $ ( 125 )

Interest rate swaps designated as cash flow hedges Interest expense ( 4,149 ) ( 799 )

Interest rate swaps not designated as hedges Interest expense ( 1 ) ( 234 )

Interest rate swaps that discontinued hedge accounting Interest expense — — ( 3,746 ) —

$ ( 4,150 ) $ ( 1,033 )

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Second lien notes :

The fair value of the second lien notes is derived from a cash flow model that discounted the cash flows based on market interest rates (Level 3 inputs).

The fair value of the second lien notes was derived from a cash flow model that discounted the cash flows based on market interest rates (Level 3 inputs).

See Note 9, Indebtedness , for further discussion of the carrying amount and fair value of the second lien notes.

3 unchanged sentences

See Note 10, Derivative Instruments , for further discussion of the fair value of interest rate swaps.

There were no other assets or liabilities measured at fair value at September 30, 2020 and December 31, 2019.

There were no other assets or liabilities measured at fair value at March 31, 2021 and December 31, 2020.

COMMITMENTS AND CONTINGENCIES

11 unchanged sentences

A total of 4,101,735 shares of common stock were initially authorized for issuance under the 2018 Plan.

The Company had stock options and restricted stock outstanding related to the 2018 Plan as of September 30, 2020.

As of September 30, 2020, the Company also had incentive units outstanding related to the HC I equity incentive plan, which was implemented in October 2015, for certain officers and employees of the Company.

During the three and nine months ended September 30, 2020, total stock-based incentive compensation expense recognized by the Company related to these plans was $ 1.2 million and $ 2.6 million, respectively.

During the three and nine months ended September 30, 2019, total stock-based incentive compensation expense recognized by the Company related to these plans was $ 2.7 million and $ 3.9 million, respectively.

The Company had stock options, restricted stock and performance stock units outstanding related to the 2018 Plan as of March 31, 2021.

As of March 31, 2021, the Company also had incentive units outstanding related to the HC I equity incentive plan, which was implemented in October 2015, for certain officers and employees of the Company.

During the three months ended March 31, 2021 and 2020, total stock-based incentive compensation expense recognized by the Company related to these plans was $ 1.2 million and $ 0.8 million, respectively.

STOCKHOLDERS’ EQUITY

4 unchanged sentences

All common shares, warrants and stock awards presented in the unaudited condensed consolidated financial statements have been retrospectively adjusted for the reverse stock split.

During the three months ended September 30, 2020, the Company completed a public offering of 20,700,000 shares of the Company’s common stock at a price of $ 12.50 per share, consisting of 10,000,000 shares of common stock issued and sold by the Company and 10,700,000 shares of common stock sold by HC I.

Following the public offering, HC I holds approximately 70.6 % of the common stock of the Company.

The Company received net proceeds from the offering of $ 118.9 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

The Company used the proceeds from the offering, along with additional cash on hand, to repay $ 125.0 million on the principal balance of its second lien notes outstanding.

See Note 10, Indebtedness , for further discussion of the repayment of the second lien note.

2017 Warrants — During the three and nine months ended September 30, 2020, warrant holders did not elect to exercise any warrants to purchase shares of common stock.

During the three and nine months ended September 30, 2019, warrant holders did not elect to exercise any warrants to purchase shares of common stock.

No warrants existed in 2019 prior to the Merger.

As of September 30, 2020 and December 31, 2019, the remaining warrant holders are entitled to purchase 1.4 million shares of common stock, respectively.

2015 Warrants — During the three and nine months ended September 30, 2020, warrant holders did not elect to exercise any warrants to purchase shares of common stock.

During the three and nine months ended September 30, 2019, warrant holders did not elect to exercise any warrants to purchase shares of common stock.

No warrants existed in 2019 prior to the Merger.

As of September 30, 2020 and December 31, 2019, warrant holders are entitled to purchase 0.9 million shares of common stock, respectively.

Home Solutions Restricted Stock — In conjunction with BioScrip’s 2016 acquisition of Home Solutions, Inc., 1.8 million restricted shares of common stock were issued, of which 0.8 million of these units vest upon the closing price of the Company’s common stock averaging at or above $ 16.00 per share over 20 consecutive trading days prior to December 31, 2019 and 1.0 million of these units vest upon the closing price of the Company’s common stock averaging at or above $ 20.00 per share over 20 consecutive trading days prior to December 31, 2019.

The restricted stock expired on December 31, 2019.

As discussed in Note 1, Nature of Operations and Presentation of Financial Statements , 7,048,357 common shares issued to HC I in conjunction with the Merger are held in escrow to prevent dilution related to the vesting of the Home Solutions restricted stock.

In the event the Home Solutions restricted stock expires unvested, the 7,048,357 common shares held in escrow will be returned to the Company and canceled.

As of September 30, 2020, the Home Solutions restricted stock remained in escrow pending final resolution of this matter.

During the three months ended March 31, 2021, HC I completed secondary offerings of 29,250,000 shares of common stock.

Following these offerings, HC I holds approximately 47.3 % of the common stock of the Company.

2017 Warrants — During the three months ended March 31, 2021 and 2020, warrant holders did not elect to exercise any warrants to purchase shares of common stock.

As of March 31, 2021 and December 31, 2020, the remaining warrant holders are entitled to purchase 1.4 million shares of common stock, respectively.

2015 Warrants — During the three months ended March 31, 2021 and 2020, warrant holders did not elect to exercise any warrants to purchase shares of common stock.

As of March 31, 2021 and December 31, 2020, warrant holders are entitled to purchase 0.9 million shares of common stock, respectively.

RELATED-PARTY TRANSACTIONS

Transactions with Equity-Method Investees — The Company provides management services to its joint ventures such as accounting, invoicing and collections in addition to day-to-day managerial support of the operations of the businesses.

The Company recorded management fee income of $ 0.8 million and $ 2.1 million for the three and nine months ended September 30, 2020, respectively.

The Company recorded management fee income of $ 0.6 million and $ 1.8 million for the three and nine months ended September 30, 2019, respectively.

The Company recorded management fee income of $ 0.8 million and $ 0.7 million for the three months ended March 31, 2021 and 2020, respectively.

Management fees are recorded in net revenues in the accompanying unaudited condensed consolidated statements of comprehensive income (loss).

The Company had amounts due from its joint ventures of $ 1.8 million as of September 30, 2020.

This receivable was included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.

The Company also had amounts due to its joint ventures of $ 4.3 million as of December 31, 2019.

This payable was included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets.

The Company had amounts due to its joint ventures of $ 1.1 million as of March 31, 2021.

The Company had amounts due from its joint ventures of $ 2.4 million as of December 31, 2020.

These payables were included in accrued expenses and other current liabilities and these receivables were included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.

These balances primarily relate to cash collections received by the Company on behalf of the joint ventures, offset by certain pharmaceutical inventories and other expenses paid for by the Company on behalf of the joint ventures.

SUBSEQUENT EVENTS

The Company has evaluated whether any subsequent events occurred since September 30, 2020, and noted the following subsequent event:

In October 2020, the Company increased the borrowing capacity of its ABL facility from $ 150.0 million to $ 175.0 million, with net borrowings available of $ 165.4 million due to the Company’s $ 9.6 million of undrawn letters of credit issued and outstanding.

In conjunction with the increase in borrowing capacity, the terms of the ABL facility were amended to call for monthly interest payments to be charged at the greater of 0.25 % or LIBOR, plus 1.25 % to 1.75 %, depending on the historical excess availability as a percentage of the line cap, as defined in the ABL facility agreement.

No other terms of the ABL facility were amended.

The Company incurred bank and legal fees of approximately $ 0.1 million, which will be capitalized and amortized over the remaining term of the ABL facility.

The Company has evaluated whether any subsequent events occurred since March 31, 2021, and noted the following subsequent event:

On April 7, 2021, the Company completed the acquisition of certain assets from BioCure, LLC for a purchase price of $ 18.5 million.

The assets acquired were primarily comprised of referral sources and inventories.

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-Q

Item 1. Financial Statements