What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-06 · 167 added, 97 removed, 334 unchanged (44% of the section changed)

3 unchanged sentences

(IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

CURRENT ASSETS:

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$ 0.0001 par value;

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

12,500,000 shares authorized, no shares outstanding as of June 30, 2021 and December 31, 2020, respectively

Common stock;

$ 0.0001 par value:

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

250,000,000 shares authorized, 180,251,351 shares issued and 179,867,629 shares outstanding as of June 30, 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 March 31, 2021 and December 31, 2020, respectively

383,722 shares outstanding, at cost, as of June 30, 2021 and December 31, 2020, respectively

( 2,403 ) ( 2,403 )

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Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

NET REVENUE $ 860,272 $ 740,848 $ 1,619,509 $ 1,446,288

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Total other expense ( 15,545 ) ( 30,406 ) ( 46,222 ) ( 57,923 )

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

INCOME (LOSS) BEFORE INCOME TAXES 32,547 ( 7,198 ) 30,964 ( 26,067 )

INCOME TAX EXPENSE 731 470 2,009 1,511

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

NET INCOME (LOSS) $ 31,816 $ ( 7,668 ) $ 28,955 $ ( 27,578 )

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

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

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

4,199 4,576 8,280 ( 12,056 )

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NET COMPREHENSIVE INCOME (LOSS) $ 36,015 $ ( 3,092 ) $ 37,235 $ ( 39,634 )

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

EARNINGS (LOSS) PER COMMON SHARE:

Earnings (loss) per share, basic $ 0.18 $ ( 0.04 ) $ 0.16 $ ( 0.16 )

Earnings (loss) per share, diluted $ 0.18 $ ( 0.04 ) $ 0.16 $ ( 0.16 )

Weighted average common shares outstanding, basic 179,843 176,711 179,826 176,686

Weighted average common shares outstanding, diluted 181,037 176,711 180,975 176,686

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

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(IN THOUSANDS)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Adjustments to reconcile net loss to net cash provided by operations:

Net income (loss) $ 28,955 $ ( 27,578 )

Adjustments to reconcile net income (loss) to net cash provided by operations:

Depreciation and amortization expense 35,705 41,813

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Amortization of deferred financing costs 2,512 2,764

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

Equity in earnings of joint ventures ( 2,891 ) ( 1,574 )

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Acquisition of property and equipment ( 6,808 ) ( 9,269 )

Other investing cash flows — 541

Business acquisitions, net of cash acquired ( 18,852 ) —

Net cash used in investing activities ( 25,660 ) ( 8,728 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of debt 355,200 —

Exercise of stock options, vesting of restricted stock, and related tax withholdings ( 78 ) ( 645 )

Proceeds from issuance of debt 355,200 —

Repayments of debt ( 5,888 ) ( 4,625 )

Retirement of debt ( 352,009 ) —

Deferred financing costs ( 2,880 ) —

Debt prepayment fees ( 2,458 ) —

Retirement of debt ( 352,009 ) —

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

Other financing cash flows — 11,651

Net cash (used in) provided by financing activities ( 8,113 ) 6,381

NET INCREASE IN CASH AND CASH EQUIVALENTS 58,261 51,043

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

Exercise of stock options, vesting of restricted stock and related tax withholdings — — — ( 96 ) — — ( 96 )

Stock-based incentive compensation — — — 661 — — 661

Net loss — — — — ( 7,668 ) — ( 7,668 )

Other comprehensive income — — — — — 4,576 4,576

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

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

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

Exercise of stock options, vesting of restricted stock, and related tax withholdings — — — ( 9 ) — — ( 9 )

Stock-based incentive compensation — — — 2,525 — — 2,525

Net income — — — — 31,816 — 31,816

Other comprehensive income — — — — — 4,199 4,199

Balance - June 30, 2021 $ — $ 18 $ ( 2,403 ) $ 1,132,964 $ ( 71,076 ) $ ( 2,892 ) $ 1,056,611

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

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

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.

The combined Company’s stock is listed on the Nasdaq Global Select Market as of June 30, 2021.

See Note 15, Stockholders’ Equity , for further discussion of HC I’s ownership as of June 30, 2021.

Option Care Health, and its wholly-owned subsidiaries, provides infusion therapy and other ancillary health care services through a national network of 97 full service pharmacies.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

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 2020 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 2020, the Company returned the funds as unused to the federal government.

Prepaid expenses and other current assets — Included in prepaid expenses and other current assets are rebates receivable from pharmaceutical and medical supply manufacturers of $ 39.9 million and $ 35.2 million as of June 30, 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.

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

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

As of June 30, 2021 and December 31, 2020, the balance of the investments were $ 19.9 million and $ 17.0 million, respectively.

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

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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 $ 1.2 million and $ 0.6 million for the three months ended March 31, 2021 and 2020, respectively.

The Company’s proportionate share of earnings was $ 1.7 million and $ 2.9 million for the three and six months ended June 30, 2021.

The Company’s proportionate share of earnings was $ 1.0 million and $ 1.6 million for the three and six months ended June 30, 2020.

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

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.

During the three and six months ended June 30, 2021, the Company did not received any distributions from the investees.

During the three and six months ended June 30, 2020, the Company received distributions from the investees of $ 0 and $ 0.5 million, respectively.

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

Immaterial Error Correction — During the three months ended June 30, 2021, the Company identified prior period misstatements related to the net revenue earned by category of payer for the periods ended September 30, 2020, December 31, 2020, and March 31, 2021.

Certain individual payers were improperly classified as direct government and instead should have been classified as commercial payers.

This error over-stated the Company’s government revenues and under-stated the Company’s commercial revenues in those periods.

The Company assessed the materiality of these misstatements both quantitatively and qualitatively and determined the correction of these errors to be immaterial to the prior consolidated financial statements taken as a whole.

As a result, the Company has corrected the misstatements as disclosed in the following table:

Three Months ended September 30, 2020 Nine Months ended September 30, 2020 Three Months ended December 31, 2020 Twelve Months ended December 31, 2020 Three Months ended March 31, 2021

Amount % of Revenue Amount % of Revenue Amount % of Revenue Amount % of Revenue Amount % of Revenue

As Previously

Reported $ 644,385 82.4 % $ 1,893,105 85.0 % $ 649,880 80.8 % $ 2,542,985 83.9 % $ 611,434 80.5 %

Adjustment 34,321 4.4 % 34,321 1.5 % 40,806 5.1 % 75,127 2.5 % 37,073 4.9 %

As Revised 678,706 86.8 % 1,927,426 86.5 % 690,686 85.9 % 2,618,112 86.4 % 648,507 85.4 %

As Previously Reported 127,435 16.3 % 308,830 13.9 % 141,237 17.6 % 450,067 14.8 % 134,914 17.8 %

Adjustment ( 34,321 ) ( 4.4 ) % ( 34,321 ) ( 1.5 ) % ( 40,806 ) ( 5.1 ) % ( 75,127 ) ( 2.5 ) % ( 37,073 ) ( 4.9 ) %

As Revised 93,114 11.9 % 274,509 12.4 % 100,431 12.5 % 374,940 12.3 % 97,841 12.9 %

There was no impact to the Company’s consolidated balance sheets, consolidated statements of comprehensive income (loss) or the consolidated statements of cash flows for any of these periods.

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 13 % for the three months ended March 31, 2021 and 2020, respectively.

Revenue related to the Company’s largest payer was approximately 16 % and 16 % for the three and six months ended June 30, 2021.

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

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

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

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.

For the three and six months ended June 30, 2021, approximately 12 % and 12 %, respectively, of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid.

For the three and six months ended June 30, 2020, approximately 12 % and 12 %, respectively, of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid.

As of June 30, 2021 and December 31, 2020, respectively, 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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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.

For the three and six months ended June 30, 2021, approximately 64 % and 65 %, respectively, of the Company’s pharmaceutical and medical supply purchases were from three vendors.

For the three and six months ended June 30, 2020, approximately 72 % and 72 %, 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 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,

Although there remains some uncertainty regarding the COVID-19 pandemic, as of June 30, 2021 the Company has been able to maintain adequate levels of supplies and pharmaceuticals to support its operations.

BUSINESS COMBINATIONS AND ASSET ACQUISITIONS

BioCure Asset Acquisition — In April 2021, pursuant to the Asset Purchase Agreement dated April 7, 2021, the Company completed the acquisition of certain assets of BioCure, LLC (“BioCure”) for a purchase price of $ 18.9 million.

The allocation of the purchase price of BioCure was accounted for as an asset acquisition in accordance with ASC Topic 805, Business Combinations , with the total purchase price being allocated to the assets acquired based on the relative fair value of each asset.

The purchase price was allocated to the assets acquired as follows:

Inventories $ 601

Intangible assets, net 18,251

Total consideration transferred $ 18,852

Intangibles assets, net consists of referral sources which were assigned a useful life of 15 years.

The following table sets forth the net revenue earned by category of payer for the three and six months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Commercial payers $ 703,429 $ 642,726 $ 1,314,862 $ 1,248,720

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Net revenue $ 860,272 $ 740,848 $ 1,619,509 $ 1,446,288

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 %.

During the three and six months ended June 30, 2021, the Company recorded tax expense of $ 0.7 million and $ 2.0 million, respectively, which represents an effective tax rate of 2.2 % and 6.5 %, respectively.

During the three and six months ended June 30, 2020 the Company recorded a tax expense of $ 0.5 million and $ 1.5 million, respectively, which represents an effective tax rate of ( 6.5 )% and ( 5.8 )%, respectively.

The Company maintains a full valuation allowance of $ 105.4 million against all of its net U.S.

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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 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.

Based on the Company’s full valuation allowance, as noted above, the Company’s tax expense for the three and six months ended June 30, 2021 of $ 0.7 million and $ 2.0 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.

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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 )

The Company recorded no income tax expense or benefit for the three or six months ended June 30, 2020 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.

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 and six months ended June 30, 2021 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 those periods.

The computation of diluted shares for the three and six months ended June 30, 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.

For the three months ended June 30, 2021 there were 915,507 warrants and 547,310 stock option awards outstanding that were excluded from the calculation of earnings per share as they would be anti-dilutive.

For the six months ended June 30, 2021 there were 915,507 warrants and 433,440 stock option awards outstanding that were excluded from the calculation of earnings per share as they would be anti-dilutive.

For the three and six months ended June 30, 2020, there were 2,328,120 warrants, 497,517 stock options and 562,575 restricted stock awards outstanding that were excluded from the calculation of loss per share 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 June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income (loss) $ 31,816 $ ( 7,668 ) $ 28,955 $ ( 27,578 )

Weighted average number of common shares outstanding 179,843 176,711 179,826 176,686

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 %.

Earnings (loss) per common share:

Earnings (loss) per common share, basic $ 0.18 $ ( 0.04 ) $ 0.16 $ ( 0.16 )

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

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income (loss) $ 31,816 $ ( 7,668 ) $ 28,955 $ ( 27,578 )

Weighted average number of common shares outstanding 179,843 176,711 179,826 176,686

Effect of dilutive securities 1,194 — 1,149 —

Weighted average number of common shares outstanding, diluted 181,037 176,711 180,975 176,686

Earnings (loss) per common share:

Earnings (loss) per common share, diluted $ 0.18 $ ( 0.04 ) $ 0.16 $ ( 0.16 )

During the three and six months ended June 30, 2021, the Company incurred operating lease expenses of $ 6.9 million and $ 14.5 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 six months ended June 30, 2020, the Company incurred operating lease expense of $ 7.6 million and $ 15.3 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 June 30, 2021, the weighted-average remaining lease term was 6.5 years and the weighted-average discount rate was 5.24 %.

Operating leases mature as follows (in thousands):

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Present value of lease liabilities $ 88,130

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.

During the three and six months ended June 30, 2020, the Company did not enter into any significant new operating or financing leases.

During the three and six months ended June 30, 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 $ 5.7 million related to increases in the operating lease right-of-use asset and operating lease liabilities, respectively.

As of June 30, 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 March 31, 2021 and December 31, 2020 (in thousands):

March 31, 2021 December 31, 2020

Property and equipment was as follows as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

Infusion pumps $ 31,165 $ 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 months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,

The following table presents the amount of depreciation expense recorded in cost of revenue and operating expenses for the three and six months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Depreciation expense in cost of revenue $ 1,369 $ 1,747 $ 2,747 $ 3,489

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GOODWILL AND OTHER INTANGIBLE ASSETS

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):

There was no change in the carrying amount of goodwill for the three or six months ended June 30, 2021.

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

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

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

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

Merger purchase accounting adjustments 727

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

The carrying amount and accumulated amortization of intangible assets consists of the following as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

Gross intangible assets:

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Total intangible assets, net $ 351,675 $ 351,052

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):

Amortization expense for intangible assets was $ 9.0 million and $ 17.6 million for the three and six months ended June 30, 2021, respectively.

Amortization expense for intangible assets was $ 8.8 million and $ 17.6 million for the three and six months ended June 30, 2020, respectively.

Long-term debt consisted of the following as of June 30, 2021 (in thousands):

Principal Amount Discount Debt Issuance Costs Net Balance

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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 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) for the six months ended June 31, 2021, 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 3.85 % and 4.40 % as of June 30, 2021 and December 31, 2020, respectively.

The weighted average interest rate incurred on the First Lien Term Loan was 3.85 % and 3.91 % for the three and six months ended June 30, 2021.

The weighted average interest rate incurred on the previous First Lien Term Loan was 5.02 % and 5.60 % for the three and six months ended June 30, 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.

The weighted average interest rate incurred on the Second Lien Notes was 10.33 % and 10.44 % for the three and six months ended June 30, 2020.

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

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Total $ 1,159,862

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.

During the three and six months ended June 30, 2021 and 2020, the Company engaged in hedging activities to limit its exposure to changes in interest rates.

See Note 11, Derivative Instruments , for further discussion.

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)

The following table presents the estimated fair values of the Company’s debt obligations as of June 30, 2021 (in thousands):

Financial Instrument Carrying Value as of June 30, 2021 Markets for Identical Item (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

First lien term loan $ 1,131,233 $ — $ 1,159,862 $ —

2 unchanged sentences

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

As the Second Lien Notes were prepaid in Q1, there was no change in the fair value for the three months ended June 30, 2021.

Level 3 Measurements

17 unchanged sentences

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.

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 were recognized in net income (loss) through interest expense until the swap expired in 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 March 31, 2021 December 31, 2020

Derivative Balance Sheet Caption June 30, 2021 December 31, 2020

Interest rate swaps designated as cash flow hedges Accrued expenses and other current liabilities $ 2,892 $ 11,172

4 unchanged sentences

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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

Derivative 2021 2020 2021 2020

Interest rate swaps designated as cash flow hedges $ 4,199 $ 830 $ 8,280 $ ( 15,802 )

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

$ 4,199 $ 4,576 $ 8,280 $ ( 12,056 )

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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

Derivative Income Statement Caption 2021 2020 2021 2020

1 unchanged sentence

Interest rate swaps not designated as hedges Interest expense ( 1 ) 244 ( 2 ) 9

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

$ ( 4,247 ) $ ( 7,156 ) $ ( 8,397 ) $ ( 8,190 )

12 unchanged sentences

Second lien notes :

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).

Prior to the January 2021 debt refinancing, 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 10, Indebtedness , for further discussion of the carrying amount and fair value of the second lien notes.

3 unchanged sentences

See Note 11, 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 March 31, 2021 and December 31, 2020.

There were no other assets or liabilities measured at fair value at June 30, 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, 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.

In May 2021, an additional 4,999,999 shares were authorized for issuance under the 2018 Plan, resulting in a total of 9,101,734 shares of common stock authorized for issuance.

The Company had stock options, restricted stock and performance stock units outstanding related to the 2018 Plan as of June 30, 2021.

As of June 30, 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 and six months ended June 30, 2021, total stock-based incentive compensation expense recognized by the Company related to these plans was $ 2.5 million and $ 3.7 million, respectively.

During the three and six months ended June 30, 2020, total stock-based incentive compensation expense recognized by the Company related to these plans was $ 0.7 million and $ 1.4 million, respectively.

STOCKHOLDERS’ EQUITY

On January 3, 2020, the Company’s board of directors and HC I, the stockholder of a majority of the Company’s common stock, approved a reverse stock split of the Company’s issued and outstanding common stock on a one share for four share basis and appropriately amended the Company’s Third Amended and Restated Certificate of Incorporation to reflect the change.

On February 3, 2020, the reverse stock split became effective.

In connection with the reverse stock split, the Company changed its ticker symbol from “BIOS” to “OPCH” and transferred the Company’s common stock from the Nasdaq Capital Market to the Nasdaq Global Select Market.

The par value of the Company’s common stock remained unchanged as a result of the reverse stock split, resulting in a decrease to the aggregate par value of common stock and corresponding increase to paid-in capital in the Company’s unaudited condensed consolidated financial statements, which was retrospectively applied to all periods presented in the unaudited condensed consolidated financial statements.

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 March 31, 2021, HC I completed secondary offerings of 29,250,000 shares of common stock.

During the three and six months ended June 30, 2021, HC I completed secondary offerings of 17,250,000 and 46,500,000 shares of common stock, respectively.

Following these offerings, HC I holds approximately 37.7 % 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.

2017 Warrants — During the three and six months ended June 30, 2021, warrant holders did not elect to exercise any warrants to purchase shares of common stock.

During the three and six months ended June 30, 2020, warrant holders did not elect to exercise any warrants to purchase shares of common stock.

As of June 30, 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 and six months ended June 30, 2021, warrant holders did not elect to exercise any warrants to purchase shares of common stock.

During the three and six months ended June 30, 2020, warrant holders did not elect to exercise any warrants to purchase shares of common stock.

As of June 30, 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 $ 0.7 million for the three months ended March 31, 2021 and 2020, respectively.

The Company recorded management fee income of $ 0.9 million and $ 1.7 million for the three and six months ended June 30, 2021, respectively.

The Company recorded management fee income of $ 0.7 million and $ 1.4 million for the three and six months ended June 30, 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 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.

The Company had amounts due from its joint ventures of $ 0.4 million and amounts due to its joint ventures of $ 1.5 million as of June 30, 2021.

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

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 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