What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-03-11 · 262 added, 258 removed, 734 unchanged (41% of the section changed)

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 11, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 8 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of the Financial Acccounting Standards Board’s Accounting Standards Codification Topic 842 Leases .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 23, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of transaction price adjustments

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We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s transaction price adjustment process, including controls related to the historical price concessions, historical payments, and management’s manual price concession adjustments.

We tested the relevance and reliability of the underlying data that served as the basis for the transaction price adjustments which included the historical price concessions and historical payments within the classes of payors by selecting certain historical price concessions and historical payments and agreeing to underlying support.

We tested the relevance and reliability of the underlying data that served as the basis for the transaction price

adjustments which included the historical price concessions and historical payments within the classes of payors by selecting certain historical price concessions and historical payments and agreeing to underlying support.

We evaluated management’s manual price concession adjustments by comparing management’s prior-year recorded balance to actual write-offs during the current year.

Evaluation of the realizability of deferred tax assets

As discussed in Note 6 to the consolidated financial statements, the Company recorded a reduction in its valuation allowance on its deferred tax assets during the year ended December 31, 2021.

In assessing the realizability of deferred tax assets, management considered the application of tax regulations, including those that limit the use of net operating losses following previous ownership changes.

The Company had gross deferred tax assets of $174.9 million as of December 31, 2021.

We identified the evaluation of the realizability of deferred tax assets as a critical audit matter.

Specifically, auditor judgment was required to evaluate the Company’s application of tax regulations, including those that limit the use of net operating losses following previous ownership changes.

This matter required involvement of tax professionals with specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s evaluation of the realizability of deferred tax assets, including controls related to the application of tax regulations that limit the use of net operating losses following previous ownership changes.

We involved tax professionals with specialized skills and knowledge, who assisted by evaluating the Company’s analysis of tax regulations that limit the use of net operating losses following previous ownership changes.

We have served as the Company’s auditor since 2015.

Chicago, Illinois

March 11, 2021

February 23, 2022

OPTION CARE HEALTH, INC.

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Intangible assets, net 21,433 23,429

Referral sources 344,587 327,623

Goodwill 1,477,564 1,428,610

Deferred income taxes 27,033 —

Other noncurrent assets 23,733 20,821

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Paid-in capital 1,138,855 1,129,312

Accumulated deficit ( 100,031 ) ( 91,955 )

Retained earnings (Accumulated deficit) 39,867 ( 100,031 )

Accumulated other comprehensive loss ( 451 ) ( 11,172 )

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Total other expense ( 74,347 ) ( 115,998 ) ( 77,875 )

LOSS BEFORE INCOME TAXES ( 5,243 ) ( 78,194 ) ( 8,768 )

INCOME TAX EXPENSE (BENEFIT) 2,833 ( 2,274 ) ( 2,653 )

NET LOSS $ ( 8,076 ) $ ( 75,920 ) $ ( 6,115 )

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX:

Change in unrealized (losses) gains on cash flow hedges, net of income taxes of $ 0 , $ 259 and $ 234 , respectively

INCOME (LOSS) BEFORE INCOME TAXES 116,494 ( 5,243 ) ( 78,194 )

INCOME TAX (BENEFIT) EXPENSE ( 23,404 ) 2,833 ( 2,274 )

NET INCOME (LOSS) $ 139,898 $ ( 8,076 ) $ ( 75,920 )

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

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

10,721 ( 3,977 ) ( 8,039 )

OTHER COMPREHENSIVE (LOSS) INCOME ( 3,977 ) ( 8,039 ) 774

NET COMPREHENSIVE LOSS $ ( 12,053 ) $ ( 83,959 ) $ ( 5,341 )

LOSS PER COMMON SHARE

Net loss per share, basic and diluted $ ( 0.04 ) $ ( 0.49 ) $ ( 0.04 )

Weighted average common shares outstanding, basic and diluted 180,971 156,280 142,614

OTHER COMPREHENSIVE INCOME (LOSS) 10,721 ( 3,977 ) ( 8,039 )

NET COMPREHENSIVE INCOME (LOSS) $ 150,619 $ ( 12,053 ) $ ( 83,959 )

EARNINGS (LOSS) PER COMMON SHARE

Earnings (loss) per share, basic $ 0.78 $ ( 0.04 ) $ ( 0.49 )

Earnings (loss) per share, diluted $ 0.77 $ ( 0.04 ) $ ( 0.49 )

Weighted average common shares outstanding, basic 179,855 180,971 156,280

Weighted average common shares outstanding, diluted 181,205 180,971 156,280

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

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CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 8,076 ) $ ( 75,920 ) $ ( 6,115 )

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

Net income (loss) $ 139,898 $ ( 8,076 ) $ ( 75,920 )

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

Depreciation and amortization expense 68,804 77,896 57,869

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Loss on sale of assets 767 742 3,269

Business casualty loss — ( 626 ) 3,549

Loss on extinguishment of debt 13,387 11,545 5,469

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Stock-based incentive compensation expense 9,575 2,920 4,170

Interest on management notes receivable — ( 62 ) ( 78 )

Capital distribution from equity method investments 2,900 3,250 500

Change in contingent consideration liability — ( 1,500 ) ( 300 )

Other adjustments 844 — ( 688 )

Changes in operating assets and liabilities:

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Net cash (used in) provided by financing activities ( 76,870 ) ( 68,849 ) 719,024

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 32,209 30,665 ( 16,725 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 20,158 32,209 30,665

Cash and cash equivalents - beginning of the period 99,265 67,056 36,391

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(IN THOUSANDS)

Preferred Stock Common Stock Treasury Stock Paid-in Capital Management Notes Receivable Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity

Balance - December 31, 2017 $ — $ 14 $ — $ 617,057 $ ( 1,116 ) $ ( 9,920 ) $ 70 $ 606,105

Stockholders' contributions — — — 425 ( 425 ) — — —

Interest on management notes receivable — — — — ( 78 ) — — ( 78 )

Stock-based incentive compensation — — — 2,139 — — — 2,139

Net loss — — — — — ( 6,115 ) — ( 6,115 )

Other comprehensive income — — — — — — 774 774

Preferred Stock Common Stock Treasury Stock Paid-in Capital Management Notes Receivable Retained Earnings

(Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity

Balance - December 31, 2018 $ — $ 14 $ — $ 619,621 $ ( 1,619 ) $ ( 16,035 ) $ 844 $ 602,825

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

Stock-based incentive compensation — — — 9,575 — — — 9,575

Exercise of stock options, vesting of restricted stock, and related tax withholdings — — — ( 32 ) — — — ( 32 )

Net income — — — — — 139,898 — 139,898

Other comprehensive income — — — — — — 10,721 10,721

Balance - December 31, 2021 — 18 ( 2,403 ) 1,138,855 — 39,867 ( 451 ) 1,175,886

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

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Inventory — Inventory, which consists primarily of pharmaceuticals, is stated at the lower of first‑in, first‑out cost or net realizable value basis, which the Company believes is reflective of the physical flow of inventories.

During the year ended December 31, 2018, one Company location was destroyed by a hurricane, resulting in a loss of $ 2.9 million of inventory.

This business casualty loss was recorded as a component of operating costs and expenses within the consolidated statements of comprehensive income (loss).

The Company received insurance proceeds of $ 0.8 million during the year ended December 31, 2018, and recorded a receivable of $ 1.0 million.

Both of these amounts were recorded as a partial offset to the business casualty loss in the consolidated statements of comprehensive income (loss).

The $ 0.8 million of insurance proceeds were reflected as a component of cash flows from operating activities in the consolidated statements of cash flows.

During the year ended December 31, 2019, $ 3.0 million in proceeds were received related to recovery of inventory and business interruption and was included as a component of cash flows from operating activities in the consolidated statements of cash flows.

These proceeds resulted in a gain on business casualty loss of $ 2.0 million recorded as a component of selling, general and administrative expense in the consolidated statement of comprehensive income (loss).

Prepaid expenses and other current assets — Included in prepaid expenses and other current assets are rebates receivable from pharmaceutical and medical supply manufacturers of $ 43.0 million and $ 35.2 million for the years ended December 31, 2021 and 2020, respectively.

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

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

Leases — The Company has lease agreements for facilities, warehouses, office space and property and equipment.

Effective as of January 1, 2019, at the inception of a contract, the Company determines if the contract is a lease or contains an embedded lease arrangement.

At the inception of a contract, the Company determines if the contract is a lease or contains an embedded lease arrangement.

Operating leases are included in the operating lease right-of-use asset (“ROU asset”) and operating lease liabilities in the consolidated financial statements.

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Intangible assets arising from the Company’s acquisitions are amortized on a straight‑line basis over the estimated useful life of each asset.

Referral sources have a useful life of 15 - 20 years.

Referral sources have a useful life of fifteen to twenty years .

Trademarks/names have a useful life ranging from two to fifteen years .

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Interest and penalties related to unrecognized tax benefits are reported in income tax expense.

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, March 31, 2021, and June 30, 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 tables:

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

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 %

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

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

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

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

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

Three Months ended March 31, 2021 Three Months ended June 30, 2021 Six Months ended June 30, 2021

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

As Previously Reported $ 611,434 80.5 % $ 703,429 81.8 % $ 1,314,862 81.2 %

Adjustment 37,073 4.9 % 43,218 5.0 % 80,292 4.9 %

As Revised 648,507 85.4 % 746,647 86.8 % 1,395,154 86.1 %

As Previously Reported 134,914 17.8 % 145,799 16.9 % 280,714 17.3 %

Adjustment ( 37,073 ) ( 4.9 ) % ( 43,218 ) ( 5.0 ) % ( 80,292 ) ( 4.9 ) %

As Revised 97,841 12.9 % 102,581 11.9 % 200,422 12.4 %

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 %, 15 % and 16 % for the years ended December 31, 2021, 2020 and 2019, 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 Company renewed its contract with this payer effective February 2022.

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

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Further, the Company generally does not provide charity care.

For the years ended December 31, 2020 and 2019, approximately 70 % and 70 %, respectively, of the Company’s pharmaceutical and medical supply purchases were from three vendors.

For the year ended December 31, 2018, approximately 66 % of the Company’s pharmaceutical and medical supply purchases were from two vendors.

For the year ended December 31, 2021, approximately 74 % of the Company’s pharmaceutical and medical supply purchases were from four vendors.

For the years ended December 31, 2020 and 2019, approximately 70 % 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.

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While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

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.

Recently Issued Accounting Pronouncements — In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The FASB further issued ASU 2021-01 to clarify the scope of Topic 848.

The ASU can be adopted no later than December 1, 2022 with early adoption permitted.

The Company does not expect adoption will have any material impact on the Company’s results of operations, cash flows or financial position.

BUSINESS ACQUISITIONS

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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, which occurred on February 3, 2020.

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, which is discussed in Note 11, Indebtedness .

The fair value of purchase consideration transferred of $ 1,087,214 , 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 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):

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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.

See Note 6, Income Taxes , for additional discussion of the Company’s combined income tax position subsequent to the Merger.

(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 following tables provide estimated unaudited pro forma results of operations for the years ended December 31, 2019 and 2018 (in thousands).

Assuming BioScrip had been acquired as of January 1, 2019, and the results of BioScrip had been included in operations beginning on January 1, 2019, the following tables provide estimated unaudited pro forma results of operations for the year ended December 31, 2019 (in thousands).

The estimated pro forma net income 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.

Year Ended December 31,

Net revenue $ 2,755,361

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Transaction expenses consisted of professional fees for advisory, consulting and underwriting services as well as other incremental costs directly related to the acquisition.

Baptist Health Asset Acquisition — In August 2018, pursuant to the Purchase and Sale Agreement dated August 8, 2018, Option Care completed the acquisition of certain assets of Baptist Health in Little Rock, Arkansas for a purchase price of $ 1.0 million.

Specialists, Inc.

Acquisition — In September 2018, pursuant to the Stock Purchase Agreement dated September 18, 2018, Option Care completed the acquisition of 100 % of the outstanding shares of Home I.V.

Specialists, Inc.

(“Home I.V.”) for a purchase price of $ 11.6 million, net of cash acquired.

The total consideration was comprised of cash paid of $ 9.8 million and a contingent payment of $ 1.8 million payable one year after the acquisition date.

During the year ended December 31, 2019, the Company reduced the contingent liability by $ 0.3 million.

During the year ended December 31, 2020, the Company determined that the contingent payment was not payable and reduced the remaining contingent liability by $ 1.5 million.

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, amortized on a straight-line basis.

Infinity Infusion Nursing LLC — In October 2021, pursuant to the equity purchase agreement dated October 1, 2021, the Company completed the 100 % acquisition of the equity interest in Infinity Infusion LLC (“Infinity”) for a purchase price, net of cash acquired of $ 59.6 million, which is comprised of a $ 50.0 million cash payment, two contingent $ 5.0 million payments (included as a non-cash change in other noncurrent assets and liabilities within the consolidated statements of cash flows), and $( .4 ) million of other purchase price adjustments.

The allocation of the purchase price of Infinity was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations , with the total purchase price being allocated to the assets and liabilities acquired based on the relative fair value of each asset and liability.

The following is a preliminary estimate of the allocation of the consideration transferred, open for accounts receivable and accounts payable, to acquired identifiable assets and assumed liabilities, net of cash acquired, as of December 31, 2021 (in thousands):

Accounts receivable $ 2,219

Intangible assets 25,400

Accounts payable and other assumed liabilities ( 539 )

Fair value identifiable assets and liabilities 27,080

Goodwill (1) 32,524

Cash acquired 1,426

Purchase Price 61,030

cash acquired ( 1,426 )

Purchase price, net of cash acquired 59,604

(1) Goodwill is attributable to cost synergies from operational efficiencies and establishing a more comprehensive clinical platform through the Company’s national infrastructure and Infinity’s nursing network.

Wasatch Infusion LLC Acquisition — In December 2021, pursuant to the executed asset purchase agreement on December 29, 2021, the Company completed the acquisition of Wasatch Infusion LLC (“Wasatch”) for a purchase price of $ 19.5 million, which is comprised of a $ 17.8 million cash payment, a contingent $ 2.0 million payment (included as a non-cash change in other noncurrent assets and liabilities within the consolidated statements of cash flows), and $( .3 ) million of other purchase price adjustments.

The allocation of the purchase price of Wasatch was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations , with the total purchase price being allocated to the assets and liabilities acquired based on the relative fair value of each asset and liability.

Accounts receivable $ 3,410

Inventories 2,038

Intangible assets 4,245

Other assets 958

Accounts payable ( 6,686 )

Other assumed liabilities ( 940 )

Fair value Identifiable assets and liabilities 3,025

Goodwill (1) 16,430

Purchase Price 19,455

(1) Goodwill is attributable to cost synergies from procurement and operational efficiencies and elimination of duplicative administrative costs.

The following table sets forth the net revenue earned by category of payer for the years ended December 31, 2021, 2020 and 2019 (in thousands):

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2021 2020 2019

US federal income tax expense (benefit):

US federal income tax (benefit) expense:

Current $ — $ ( 69 ) $ —

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( 30,411 ) 927 ( 3,072 )

State income tax expense (benefit):

State income tax expense:

Current 6,817 1,707 2,074

Deferred 190 199 ( 1,276 )

Total income tax expense (benefit) $ 2,833 $ ( 2,274 ) $ ( 2,653 )

7,007 1,906 798

Total income tax (benefit) expense $ ( 23,404 ) $ 2,833 $ ( 2,274 )

The difference between the statutory federal income tax rate and the effective tax rate is as follows for the years ended December 31, 2021, 2020 and 2019:

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Non-deductible compensation 0.1 % ( 16.3 ) % ( 0.7 ) %

Changes in uncertain tax positions 0.0 0.0 14.7

Non-deductible expenses 0.3 % ( 8.2 ) % ( 2.8 ) %

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Deferred tax liabilities ( 134,719 ) ( 128,380 )

Net deferred tax liabilities $ ( 3,339 ) $ ( 2,143 )

As a result of the Merger, the Company recorded a full valuation allowance against all of its net U.S.

federal and state deferred tax assets except for certain state net operating losses (“NOL”) which were estimated to be $ 0.4 million as of December 31, 2020.

Net deferred tax assets (liabilities) $ 27,033 $ ( 3,339 )

As a result of the Merger, the Company had recorded a full valuation allowance against all of its net U.S.

federal and state deferred tax assets except for certain state net operating losses (“NOL”).

The initial recognition of this valuation allowance by the Company was reflected in the opening balance sheet of BioScrip and, to that extent, did not impact the Company’s tax expense (benefit) for the years ended December 31, 2020 and 2019.

The valuation allowance for deferred tax assets as of December 31, 2020 was $ 112.1 million.

The company adjusted its valuation allowance to offset tax benefits that would have otherwise been recognized for the years ended December 31, 2020 and 2019.

In the current year ended December 31, 2021, the company has assessed that it more likely than not will realize its deferred tax assets, with the exception of certain state NOL’s valued at $ 13.2 million, resulting in a reversal of the company’s valuation allowance in the current period.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some or all of the deferred tax assets will not be realized.

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

In the current period, the company determined the positive evidence to outweigh any negative evidence, such that the realization of the deferred tax assets is more likely than not and the reversal of the Company’s valuation allowance is warranted.

Compelling objective positive evidence is the Company now realizing a multi-year cumulative income position combined with actual utilization of its deferred tax assets in the current period due to the Company generating positive pre-tax book income.

Other objective positive factors include the Company’s January 2021 and October 2021 debt refinancing transactions, which result in reduced interest expense for the company compared to historical trends as well as the Company’s 2021 business acquisitions, which provide for a new and objective source of future income compared to prior year earnings.

With the exception of the federal NOL carryovers noted below that are expected to expire unutilized due to limitations under Internal Revenue Code (“Code”) Section 382, the Company expects to fully utilize all of its deferred tax assets prior to any expiration based on current period income trends of the company.

The Company is subject to taxation in the United States and various states.

As a result of the Merger, BioScrip carried over $ 458.9 million of federal net operating losses, $ 479.6 million of state net operating losses, and $ 85.0 million of interest limitation carryforwards.

At December 31, 2020, the Company had $ 577.9 million of gross federal NOL carryforwards of which $ 438.1 million are available to offset future taxable income in the United States.

These NOL’s will begin to expire in 2026 if not utilized.

The remaining gross federal NOL’s of $ 139.8 million at December 31, 2020 are expected to expire unutilized due to limitations under Internal Revenue Code Section 382.

At December 31, 2019, the Company had $ 548.0 million of gross federal NOL’s.

At December 31, 2020 and 2019, the Company had $ 154.8 million and $ 145.6 million of interest limitation carryforwards.

At December 31, 2020 and 2019, the Company also had $ 600.1 million and $ 578.5 million of cumulative gross state NOL carryforwards available to offset future taxable income in various states.

These state NOL’s will begin to expire starting in 2021 if not utilized.

At December 31, 2021, the Company had $ 358.4 million of gross federal NOL carryforwards all of which are currently available to offset future taxable income in the United States and reflected as a deferred tax asset of the company.

Gross federal NOL carryforwards of $ 223.7 million expire beginning in 2025 through 2037 and $ 134.7 million have an indefinite carryforward period.

Excluded from this figure and not reflected as a deferred tax asset is $ 139.8 million of federal NOL carryovers that are expected to expire unutilized due to limitations under Code Section 382 and were written off in the current year.

At December 31, 2020, the Company had $ 577.9 million of gross federal NOL’s, which included $ 139.8 million of fully reserved federal NOL carryovers that are expected to expire unutilized due to limitations under Code Section 382.

At December 31, 2021 and 2020, the Company had $ 140.2 million and $ 154.8 million of interest limitation carryforwards which have an indefinite carryforward period.

At December 31, 2021

and 2020, the Company also had $ 405.1 million and $ 600.1 million of cumulative gross state NOL carryforwards available to offset future taxable income in various states.

These state NOL carryforwards will begin to expire beginning in 2022 through 2041, with some having an indefinite carryforward period.

At December 31, 2021 and 2020, the unrecognized tax benefits for uncertain tax positions was $ 0 .

The following table presents the valuation allowance for deferred tax assets for the years ended December 31, 2021, 2020 and 2019 (in thousands):

Description Balance at Beginning of Period Charged (Benefit) to Costs and Expenses Charged to Other Accounts Balance at End Period

Description Balance at Beginning of Period Charged (Benefit) to Costs and Expenses Charged (Benefit) to Other Accounts Balance at End Period

Valuation allowance for deferred tax assets $ 1,373 $ 15,395 $ 92,763 $ 109,531

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The Company is subject to various state tax audits, and believes that the outcome of these audits will not have a material impact on the Company.

The Company recorded no income tax expense or benefit for the year ended December 31, 2020 associated with the tax provisions of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).

The Company recorded no income tax expense or benefit for the years ended December 31, 2021 and 2020 associated with the tax provisions of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).

However, certain adjustments were made to the Company’s components of deferred tax assets and liabilities to reflect the tax provisions of the CARES Act.

These adjustments were the result of the CARES Act’s tax provisions associated with interest expense limitations and bonus depreciation on leasehold improvements.

These adjustments to the Company’s components of deferred tax assets and liabilities were offset by one another or the Company’s valuation allowance.

(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 dilutive potential common shares.

As a result of the Merger, all historical per share data and number of shares and equity awards were retroactively adjusted.

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

Accordingly, the computation of diluted shares for the years ended December 31, 2020 and 2019 excludes the effect of shares that would be issued in connection with warrants, stock options and restricted stock awards, as their inclusion would be anti-dilutive to the loss per share.

These adjustments to the Company’s components of deferred tax assets and liabilities were offset by one another or the Company’s previously recognized valuation allowance.

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 year ended December 31, 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.

The computation of diluted shares for the years ended December 31, 2020 and 2019 excludes the effect of shares that would be issued in connection with warrants, stock options and restricted stock awards, as their inclusion would be anti-dilutive to the loss per share.

As of December 31, 2021 there were 457,753 warrants, 490,968 stock options and 316,454 restricted stock awards outstanding that were excluded from the calculation as they would be anti-dilutive.

As of December 31, 2020 there were 2,285,784 warrants, 412,831 stock options and 549,650 restricted stock awards outstanding that were excluded from the calculation as they were anti-dilutive.

There were no dilutive potential common shares for the years ended December 31, 2018.

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

As of December 31, 2019, there were 2,328,120 warrants, 644,975 stock options and 231,562 restricted stock awards outstanding that were excluded from the calculation as they were anti-dilutive.

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

Year Ended December 31,

2021 2020 2019

Net loss $ ( 8,076 ) $ ( 75,920 ) $ ( 6,115 )

Net income (loss) (1) $ 139,898 $ ( 8,076 ) $ ( 75,920 )

Weighted average number of common shares outstanding 179,855 180,971 156,280

Loss per Common Share:

Loss per common share, basic and diluted $ ( 0.04 ) $ ( 0.49 ) $ ( 0.04 )

On January 1, 2018, the Company adopted ASC 842, Leases, using an optional transition method that permitted application of the standards as of the effective date without requiring the standard to be applied to the comparative periods presented in the consolidated financial statements.

The Company elected the transition package of three practical expedients, which allowed the Company not to reassess prior conclusions about lease identification, lease classification and initial, direct costs.

The Company did not elect the practical expedient to use hindsight and accordingly, the initial lease term did not differ under the new standards versus prior accounting practice.

Earnings (loss) per Common Share:

Earnings (loss) per common share, basic $ 0.78 $ ( 0.04 ) $ ( 0.49 )

(1) Net income (loss) for the year ended December 31, 2021 includes the impact of the Company’s release of its valuation allowance.

See Note 6, Income Taxes , for further discussion.

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

Year Ended December 31,

2021 2020 2019

Net income (loss) (1) $ 139,898 $ ( 8,076 ) $ ( 75,920 )

Weighted average number of common shares outstanding 179,855 180,971 156,280

Effect of dilutive securities 1,350 — —

Weighted average number of common shares outstanding, diluted 181,205 180,971 156,280

Earnings (loss) per Common Share:

Earnings (loss) per common share, diluted $ 0.77 $ ( 0.04 ) $ ( 0.49 )

(1) Net income (loss) for the year ended December 31, 2021 includes the impact of the Company’s release of its valuation allowance.

See Note 6, Income Taxes , for further discussion.

During the years ended December 31, 2021 and 2020, the Company incurred operating lease expenses of $ 29.8 million and $ 30.8 million including short-term lease expenses, which were included as a component of selling, general and administrative expenses in the consolidated statements of comprehensive income (loss).

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During the year ended December 31, 2021, the Company commenced new leases, extensions and amendments, resulting in non-cash investing and financing activities in the consolidated statements of cash flows of $ 20.7 million related to the increases in the operating lease right-of-use asset and operating lease liabilities, respectively.

During the year ended December 31, 2019, the Company did not enter into any significant new operating or financing leases.

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

During the year ended December 31, 2018, the Company incurred rent expense of $ 17.3 million, under ASC Topic 840, Leases , which was included as a component of selling, general and administrative expenses in the consolidated statements of comprehensive income (loss).

PROPERTY AND EQUIPMENT

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Total depreciation expense $ 35,611 $ 42,766 $ 31,808

During the year ended December 31, 2018, one company location was destroyed by a hurricane, resulting in a loss of $ 0.6 million of property and equipment.

A business casualty loss was recorded as a component of operating costs and expenses within the consolidated statements of comprehensive income (loss).

During the year ended December 31, 2019, $ 0.6 million in proceeds were received related to recovery of property and equipment.

These proceeds resulted in a gain on business casualty loss of $ 0.6 million recorded as a component of selling, general, and administrative expenses in the consolidated statements of comprehensive income (loss) during the year ended December 31, 2019.

These proceeds were reflected as a component of cash flows from investing activities in the consolidated statement of cash flows.

GOODWILL AND OTHER INTANGIBLE ASSETS

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The Company determined that there was no goodwill impairment in 2021, 2020, or 2019.

A quantitative impairment analysis was performed in the fourth quarter of 2018, and the Company estimated the fair value of its reporting unit using an income approach.

The income approach requires management to estimate a number of factors for its reporting unit, including projected future operating results, economic projections, anticipated future cash flows, and discount rates.

The fair value determined using the income approach was then compared to marketplace fair value data from within a comparable industry grouping for reasonableness.

The Company determined that there was no goodwill impairment in 2018.

The determination of fair value and the allocation of that value to individual assets and liabilities within the reporting unit requires the Company to make significant estimates and assumptions.

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

Acquisitions 793,073

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

Purchase accounting adjustments 3,068

Balance at December 31, 2020 $ 1,428,610

Acquisitions 48,954

Balance at December 31, 2021 $ 1,477,564

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

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First Lien Term Loan 600,000 ( 9,605 ) ( 13,331 ) 577,064

Second Lien Notes 245,781 ( 6,102 ) ( 4,113 ) 235,566

Senior Notes 500,000 — ( 11,164 ) 488,836

$ 1,100,000 $ ( 9,605 ) $ ( 24,495 ) 1,065,900

9 unchanged sentences

Total long-term debt $ 1,115,103

Retired Debt Obligations — Prior to the Merger, the Company had two credit arrangements that provided for up to $ 645.0 million in senior secured credit facilities through an $ 80.0 million revolving credit facility (the “Previous Revolving Credit Facility”), a $ 415.0 million first lien term loan (the “Previous First Lien Term Loan”), and a $ 150.0 million second lien term loan (the “Previous Second Lien Term Loan”, and together with the Previous First Lien Term Loan, the “Previous Term Loans”, and the Previous Term Loans, together with the Previous Revolving Credit Facility, the “Previous Credit Facilities”).

The principal balance on the Previous First Lien Term Loan was repayable in quarterly installments of $ 1.0 million.

On August 6, 2019, the Company repaid the outstanding balance of Previous Term Loans and retired the outstanding Previous Credit Facilities by entering into two new credit arrangements and a notes indenture, described below under “New Debt Obligations”.

The weighted average interest rate paid on the Previous First Lien Term Loan was 6.20 % for the year ended December 31, 2019, prior to the retirement of the debt obligations.

The weighted average interest paid on the Previous Second Lien Term Loan was 11.36 % for the year ended December 31, 2019, prior to the retirement of the debt obligations.

New Debt Obligations — In conjunction with the Merger, the Company entered into an asset-based-lending revolving credit facility administered by Bank of America, N.A.

The Company also issued senior secured second lien PIK toggle floating rate notes due 2027 (the “Second Lien Notes”) under an indenture with Ankura Trust Company, LLC.

The two new credit agreements and the indenture were entered into on August 6, 2019 and initially provided for up to $ 1,475.0 million in senior secured credit facilities through a $ 150.0 million asset-based-lending revolving credit facility (the “ABL Facility”), a $ 925.0 million first lien term loan (the “First Lien Term Loan”, and together with the ABL Facility, the “Loan Facilities”), and a $ 400.0 million issuance of Second Lien Notes.

On August 6, 2019, the Company repaid the outstanding balance of an $ 80.0 million revolving credit facility, a $ 415.0 million first lien term loan (“Previous First Lien Term Loan”) and a $ 150.0 million second lien term loan (“Previous Second Lien”) and retired the outstanding Previous Credit Facilities by entering into two new credit arrangements and a notes indenture.

The two new credit agreements and the indenture initially provided for up to $ 1,475.0 million in senior secured credit facilities through a $ 150.0 million asset-based-lending revolving credit facility (the “ABL Facility”), a $ 925.0 million first lien term loan (the “First Lien Term Loan”, and together with the ABL Facility, the “Loan Facilities”), and a $ 400.0 million issuance of Second Lien Notes.

The ABL Facility initially provided for borrowings up to $ 150.0 million, which matures on August 6, 2024.

During the year ended December 31, 2020, the Company increased the borrowing capacity of its ABL Facility from $ 150.0 million to $ 175.0 million.

The ABL Facility bears interest at a per annum rate initially provided that is determined by the Company’s periodic selection of rate type, either the Base Rate or the Eurocurrency Rate.

Interest on the ABL Facility is charged on Base Rate loans at the greater of Base Rate, as defined, or 0.25 % 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 credit agreement.

Interest on the ABL Facility is charged on Eurocurrency Rate Loans at the Eurocurrency Rate, as defined, plus 2.25 % to 2.75 %, depending on the historical excess availability as a percentage of the Line Cap, as defined in the ABL Facility credit agreement.

The ABL Facility bore interest at a per annum rate initially provided that is determined by the Company’s periodic selection of rate type, either the Base Rate or the Eurocurrency Rate.

Interest on the ABL Facility was charged on Base Rate loans at the greater of Base Rate, as defined, or 0.25 % 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 credit agreement.

Interest on the ABL Facility was charged on Eurocurrency Rate Loans at the Eurocurrency Rate, as defined, plus 2.25 % to 2.75 %, depending on the historical excess availability as a percentage of the Line Cap, as defined in the ABL Facility credit agreement.

The ABL Facility contains commitment fees payable on the unused portion ranging from 0.25 % to 0.375 %, depending on various factors including the Company’s leverage ratio, type of loan and rate type, and letter of credit fees of 2.50 %.

Borrowings under the ABL Facility are secured by a first priority security interest in the Company’s and each of its subsidiaries’ inventory, accounts receivable, cash, deposit accounts and certain assets and property related thereto (the “ABL Priority Collateral”), in each case subject to certain exceptions, and a third priority security interest in the Term Loan Priority Collateral, as defined below.

The Company had no outstanding borrowings under the ABL Facility at December 31, 2020 and 2019.

The Company had no outstanding borrowings under the ABL Facility at December 31, 2020.

The Company had $ 9.6 million of undrawn letters of credit issued and outstanding, resulting in net borrowing availability under the ABL of $ 165.4 million as of December 31, 2020.

The principal balance of the First Lien Term Loan is repayable in quarterly installments which commenced in March 2020 of $ 2.3 million plus interest, with a final payment of all remaining outstanding principal due on August 6, 2026.

The principal balance of the First Lien Term Loan was repayable in quarterly installments which commenced in March 2020 of $ 2.3 million plus interest, with a final payment of all remaining outstanding principal due on August 6, 2026.

Interest on the First Lien Term Loan is payable monthly on Base Rate loans at Base Rate, as defined, plus 3.25 % to 3.50 %, depending on the Company’s leverage ratio.

Interest is charged on Eurocurrency Rate loans at the Eurocurrency Rate, as defined, plus 4.25 % to 4.50 %, depending on the Company’s leverage ratio.

The interest rate on the First Lien Term Loan was 4.40 % and 6.20 % as of December 31, 2020 and 2019, respectively.

The interest rate on the First Lien Term Loan was 4.40 % as of December 31, 2020.

The weighted average interest rate incurred was 5.09 % for the year ended December 31, 2020.

The weighted average interest rate incurred was 6.47 % for the period August 6, 2019 through December 31, 2019.

Amounts borrowed under the First Lien Term Loan are secured by a first priority security interest in each of the Company’s subsidiaries’ capital stock (subject to certain exceptions) and substantially all of the Company’s property and assets (other than the ABL Priority Collateral), (the “Term Loan Priority Collateral”), in each case subject to certain exceptions, and a second priority security interest in the ABL Priority Collateral.

The Second Lien Notes mature on August 6, 2027.

Interest on the Second Lien Notes is payable quarterly and is at London Interbank Offered Rate (“LIBOR”), plus 8.75 %.

Priority Collateral), (the “Term Loan Priority Collateral”), in each case subject to certain exceptions, and a second priority security interest in the ABL Priority Collateral.

The Second Lien Notes were set to mature on August 6, 2027.

Interest on the Second Lien Notes was payable quarterly and is at London Interbank Offered Rate (“LIBOR”), plus 8.75 %.

The Company elected to pay-in-kind (“PIK”) the first quarterly interest payment, due in November 2019, which resulted in the Company capitalizing $ 12.3 million in interest to the principal balance on the interest payment date.

1 unchanged sentence

In connection with the PIK elections, the Company was charged an additional 1.00 % in interest expense on those quarterly interest payments.

The interest rate on the Second Lien Notes was 8.98 % and 10.66 % as of December 31, 2020 and 2019.

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

The weighted average interest incurred was 9.39 % for the year ended December 31, 2020.

The weighted average interest incurred was 11.45 % for the period August 6, 2019 through December 31, 2019.

During the year ended December 31, 2020, the Company completed a public offering of stock for proceeds of $ 118.9 million.

4 unchanged sentences

See Note 16, Stockholders’ Equity , for further discussion of the public offering.

During the year ended December 31, 2019, the Company assessed whether the repayment of the Previous Term Loans and subsequent issuance of the First Lien Term Loan and the Second Lien Notes 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 Previous Credit Facilities and the new Loan Facilities and Second Lien Notes;

January 2021 Refinancing - 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 $ 226.7 million of the Previous First Lien Term Loan was extinguished and none of the Previous Second Lien Term Loan was extinguished, which is disclosed as an outflow from financing activities in the consolidated statements of cash flows.

The Company determined that $ 752.4 million of new debt was issued related to the First Lien Term Loan and $ 250.0 million of new debt was issued related to the Second Lien Notes, which is disclosed as an inflow from financing activities in the consolidated statements of cash flows.

In connection with the issuance of the First Lien Term Loan, the Second Lien Notes, and the ABL Facility, the Company incurred $ 52.6 million in debt issuance costs and third-party fees, of which $ 48.1 million was capitalized, $ 1.3 million was expensed as a component of other expense and $ 3.2 million was expensed as a loss on extinguishment as a component of other expense.

Further, $ 21.3 million of the total fees incurred of $ 52.6 million was netted against the $ 981.1 million of proceeds from debt as a component of the cash flows from financing activities, $ 30.0 million was presented as deferred financing costs as a component of cash flows from financing activities, and the remaining $ 1.3 million was included in cash flows from operating activities.

During the year ended December 31, 2019, the Company recognized a loss on extinguishment of debt of $ 5.5 million, of which $ 3.2 million related to debt issue costs incurred with the issuance of the Loan Facilities and Second Lien Notes, as discussed above, and $ 2.3 million related to deferred financing fees on the Previous Credit Facilities, which were written off upon extinguishment.

All remaining deferred financing fees related to the Previous Credit Facilities of $ 7.6 million were attributed to modified loans, which are capitalized and will be amortized over the remaining term of the Loan Facilities and Second Lien Notes.

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 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 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 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 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 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 consolidated statements of comprehensive income (loss), of which $ 2.6 million related to debt issuance 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.

October 2021 Refinancing - In October 2021, the Company refinanced its $ 1,157.0 million outstanding existing First Lien Term Loan due 2026.

The Company amended the existing First Lien Term Loan, to provide $ 600.0 million of refinanced borrowings (the “First Lien Term Loan Facility”).

The refinancing changed the interest rate from LIBOR plus 3.75 % to, at the Parent Borrower’s option, either (i) LIBOR (or a comparable successor rate, with a floor of 0.50 % per annum) plus an applicable margin of 2.75 % for Eurocurrency Rate Loans (as such term is defined in the First Lien Term Loan Agreement) and (ii) a base rate determined in accordance with in the First Lien Term Loan Agreement, plus 1.75 % for Base Rate Loans (as such term is defined in the First Lien Term Loan Agreement).

The First Lien Term Loan Facility is repayable in quarterly installments, beginning in March 2022, of $ 1.5 million plus interest and extended its maturity to October 27, 2028.

The interest rate on the First Lien Term Loan was 3.25 % as of December 31, 2021.

The weighted average interest rate incurred was 3.79 % for the year ended December 31, 2021.

In conjunction with the refinancing, the Company also issued $ 500.0 million in aggregate principal of unsecured senior notes (“Senior Notes”).

The Senior Notes bear interest at a rate of 4.375 % per annum payable semi-annually in arrears on October 31 and April 30 of each year, commencing April 30, 2022.

The Senior Notes mature on October 31, 2029.

The Company assessed whether the refinancing of the First Lien Term Loan Facility and issuance of the Senior Notes 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 continuing to participate in either the First Lien Term Loan Facility and Senior Notes (ii) previous lenders that exited;

and (iii) new lenders.

The Company determined that $ 35.7 million of the First 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 had insubstantial modifications for lenders that continued to participate in either debt instrument, which resulted in a cash outflow from financing activities of $ 558.3 million in the consolidated statements of cash flows.

The Company determined that $ 501.4 million of new debt was issued related to the First Lien Term Loan, which is disclosed as an inflow from financing activities in the consolidated statements of cash flows.

In connection with the refinancing of the First Lien Term Loan and issuance of the Senior Notes, the Company incurred $ 10.7 million in debt issuance costs and third-party fees, of which $ 8.8 million was capitalized, $ 1.7 million was expensed as a component of other expense and $ 0.2 million was expensed as a loss on extinguishment as a component of other expense in the consolidated statements of comprehensive income (loss).

Further, $ 1.5 million of the total fees incurred of $ 10.7 million was netted against the $ 501.4 million of proceeds from debt as a component of the cash flows from financing activities, $ 7.4 million was presented as deferred financing costs as a component of cash flows from financing activities, and the remaining $ 1.8 million was included in cash flows from operating activities in the consolidated statements of cash flows.

The Company recognized a loss on extinguishment of debt of $ 1.0 million included in the line entitled “Other, net” in the consolidated statements of comprehensive income (loss), of which $ 0.2 million related to debt issuance costs incurred with the First Lien Term Loan refinancing and issuance of the Senior Notes, as discussed above, and $ 0.8 million related to existing deferred financing fees that were written off upon extinguishment.

The Company also entered into an agreement to amend its existing ABL Facility.

The ABL Facility bears interest at a rate equal to, at the Borrowers’ election, either (i) a base rate determined in accordance with the ABL Credit Agreement plus an applicable margin, which is equal to between 0.25 % and 0.75 % based on the historical excess availability as a percentage of the Line Cap (as such term is defined in the ABL Credit Agreement) and (ii) LIBOR (or a comparable successor rate, with a floor of 0.00 % per annum) plus an applicable margin, which is equal to between 1.25 % and 1.75 % based on the historical excess availability as a percentage of the Line Cap.

The Company had no outstanding borrowings under the ABL Facility at December 31, 2021.

The Company had $ 7.1 million of undrawn letters of credit issued and outstanding, resulting in net borrowing availability under the ABL Facility of $ 167.9 million as of December 31, 2021.

The ABL Facility matures on October 27, 2026.

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

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Total $ 1,100,000

In January 2021, the Company entered into an amendment on the First Lien Term Loan, which resulted in an additional $ 250.0 million of incremental First Lien Term Loan indebtedness being issued, which was used to prepay the remaining $ 245.8 million outstanding balance of the Second Lien Notes.

See Note 19, Subsequent Events , for further discussion.

During the year ended December 31, 2021, the Company engaged in hedging activities to limit its exposure to changes in interest rates.

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First Lien Note Facility $ 577,064 $ — $ 598,500 $ —

Second Lien Note Facility 235,566 — — 266,438

Senior Notes 488,836 — 501,250 —

Total debt instruments $ 1,065,900 $ — $ 1,099,750 $ —

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

As the Second Lien Notes were prepaid in Q1, there was no change in the fair value thereafter:

Level 3 Measurements

1 unchanged sentence

Principal prepayment ( 245,781 )

Interest rate PIK 7,525

Change in fair value ( 20,657 )

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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 rising interest rates.

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 and received cash proceeds of $ 1.7 million, net of early termination fees.

In conjunction with the termination of the interest rate caps, Option Care discontinued the hedge accounting associated with the 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.

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 LIBOR through August 2021.

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.

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

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

The second interest rate swap for $ 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 payment indexed to three-month LIBOR through November 2020.

The first interest rate swap expired in August 2021.

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 Notes’ 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.

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 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.

See Note 11, Indebtedness , for further discussion of the PIK.

In October 2021, the Company entered into an interest rate cap hedge with a notional amount of $ 300 million for a 5-year term beginning November 30, 2021.

The hedge partially offsets risk associated with the First Lien Term Loan Facility’s variable interest rate.

The interest rate cap instrument perfectly offsets the terms of the interest rates associated with the variable interest rate of the First Lien Term Loan.

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

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

Interest rate caps designated as cash flow hedges Accrued expenses and other current liabilities $ 601 $ —

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

Interest rate swaps not designated as hedges Accrued expenses and other current liabilities — 170

Interest rate swaps designated as cash flow hedges Other noncurrent liabilities — 5,920

Interest rate swaps not designated as hedges Other noncurrent liabilities — 90

Total derivatives $ 601 $ 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 effective portion of hedging instruments are recorded into other comprehensive (loss) income.

The gain and loss associated with the changes in the fair value of the hedging instruments not designated are 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 consolidated statements of comprehensive income (loss) (in thousands):

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First Lien Term Loan :

The fair value of the First Lien Term Loan is derived from a broker quote on the loans in the syndication (Level 2 inputs).

Prior to the October refinancing, the fair value of the First Lien Term Loan is derived from a broker quote on the loans in the syndication (Level 2 inputs).

See Note 11, Indebtedness , for further discussion of the carrying amount and fair value of the First Lien Term Loan.

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).

Prior to the January refinancing, 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).

See Note 11, Indebtedness , for further discussion of the carrying amount and fair value of the Second Lien Notes.

New First Lien Term Loan :

The fair value of the New First Lien Term Loan is derived from a broker quote on the loans in the syndication (Level 2 inputs).

See Note 11, Indebtedness , for further discussion of the carrying amount and fair value of the New First Lien Term Loan.

Senior Notes :

The fair value of the Senior Notes is derived from a broker quote (Level 2 inputs).

See Note 11, Indebtedness , for further discussion of the carrying amount and fair value of the Senior Notes.

Interest rate swaps :

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The Company determines the fair value of the investments based on quoted prices from third-party brokers.

Both interest rate swaps have been terminated.

See Note 12, Derivative Instruments , for further discussion of the fair value of the interest rate swaps.

Interest rate caps :

The fair values of interest rate caps are derived from the interest rates prevalent in the market and future expectations of those interest rates (Level 2 inputs).

Interest rate cap :

The fair values of the interest rate cap are derived from the interest rates prevalent in the market and future expectations of those interest rates (Level 2 inputs).

The Company determines the fair value of the investments based on quoted prices from third-party brokers.

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

See Note 12, Derivative Instruments , for further discussion of the fair value of the interest rate caps.

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

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

Stock Options — Options granted under the 2018 Plan typically vest over a three - or four-year period and, in certain instances, may fully vest upon a change in control of the Company.

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The Company did not recognize any compensation expense related to stock options prior to the Merger.

The weighted average grant-date fair value of options granted during the year ended December 31, 2020 was $ 5.94 .

The Company did no t grant any options during the years ended December 31, 2019 or 2018.

The weighted average grant-date fair value of options granted during the years ended December 31, 2021 and 2020 was $ 17.79 and $ 5.94 , respectively.

The Company did no t grant any options during the year ended December 31, 2019.

The fair value of stock options granted was estimated on the date of grant using a Black-Scholes pricing model.

The assumptions used to compute the fair value of options for the year ended December 31, 2020 are as follows:

The assumptions used to compute the fair value of options for the year ended December 31, 2021 and 2020 are as follows:

Years Ended December 31,

Expected volatility 51.92 % 45.7 %

Risk-free interest rate 1.4 % 0.53 %

Expected life of options 6.3 years

Expected life of options 6.5 years 6.3 years

Dividend rate — —

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During the year ended December 31, 2020, $ 0.4 million of cash was received from stock option exercises under share-based payment arrangements.

No cash was received from stock option exercises under share-based payment arrangements for the years ended December 31, 2019 or 2018.

No cash was received from stock option exercises under share-based payment arrangements for the year ended December 31, 2019.

The maximum term of stock options under these plans is ten years .

Options outstanding as of December 31, 2020 expire on various dates ranging from January 2021 through March 2030.

Options outstanding as of December 31, 2021 expire on various dates ranging from March 2023 through October 2031.

The following table outlines the outstanding and exercisable stock options as of December 31, 2021:

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1,250 $ 66.52 1.6 years 1,250 $ 66.52

$ 57.76 - $ 66.00

— $ — 0.0 years — $ —

$ 66.00 - $ 74.28

1,250 $ 66.52 2.6 years 1,250 $ 66.52

All options 1,170,141 150,890

13 unchanged sentences

During the year ended December 31, 2021, shares were surrendered to satisfy tax withholding obligations on the vesting of restricted stock awards with a cost basis of $ 0.0 million.

During the year ended December 31, 2019, shares were surrendered to satisfy tax withholding obligations on the vesting of restricted stock awards with a cost basis of $ 2.1 million, of which $ 2.0 million is held as treasury stock as of December 31, 2019.

During the year ended December 31, 2020, shares were surrendered to satisfy tax withholding obligations on the vesting of restricted stock awards with a cost basis of $ 0.3 million.

As of December 31, 2021, there was $ 31.2 million in unrecognized compensation expense related to unvested restricted stock awards that is expected to be recognized over a weighted average period of 2.1 years.

The total fair value of restricted stock awards vested during the years ended December 31, 2020, 2019 and 2018 was $ 1.5 million, $ 1.9 million and $ 0 , respectively.

The total fair value of restricted stock awards vested during the years ended December 31, 2021, 2020 and 2019 was $ 1.2 million, $ 1.5 million and $ 1.9 million, respectively.

HC I Incentive Units — Beginning in October 2015, HC I implemented an equity incentive plan for certain officers and employees of the Company.

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In accordance with ASC Topic 718, Compensation-Stock Compensation , compensation expense is recognized on a straight-line basis over the vesting period of the award or the employee’s retirement eligible date, if earlier.

During the years ended December 31, 2020, 2019 and 2018, the Company recognized compensation expense related to the HC I incentive units of $ 0.2 million, $ 1.9 million and $ 2.1 million, respectively.

No awards were issued during the year ended December 31, 2020.

The fair value of each award was determined using a Monte-Carlo simulation with the following weighted average assumptions:

Risk-free interest rate (1) 2.25 %

Average time to liquidity (years) (2) 2.1 years

Volatility (3) 47.00 %

Discount for lack of marketability (4) 30.00 %

Weighted-average grant-date fair value per share $ 1.13

(1) Represents the US Treasury security rate for the expected time to liquidity event.

(2) Represents the period of time expected prior to liquidity event.

(3) Based on historical volatility of comparable public companies.

(4) Represents a discount taken to reflect the private nature of the investment.

During the years ended December 31, 2021, 2020 and 2019, the Company recognized compensation expense related to the HC I incentive units of $ 0.1 million, $ 0.2 million and $ 1.9 million, respectively.There are no awards outstanding as of December 31, 2021 and no awards were issued during the year ended December 31, 2021.

STOCKHOLDERS’ EQUITY

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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.

Also, during the year ended December 31, 2020, HC I completed an additional secondary offering of 10,600,000 shares of common stock.

Following the offerings, HC I holds approximately 63.6 % of the common stock of the Company.

The Company used the proceeds from the offering, along with additional cash on hand, to repay $ 174.0 million on the principal balance of its Second Lien Notes outstanding.

See Note 11, Indebtedness , for further discussion of the repayment of the Second Lien Notes.

During the year ended December 31, 2021, HC I completed secondary offerings of 76,400,000 shares of common stock.

For the year ended December 31, 2021, HCI holds approximately 20.7 % of the common stock of the Company.

2017 Warrants — Prior to the Merger, BioScrip issued warrants to certain debt holders pursuant to a Warrant Purchase Agreement dated as of June 29, 2017.

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The 2017 Warrants are classified as equity instruments, and the fair value of these warrants of $ 14.1 million was recorded in paid-in capital as of the Merger Date.

During the years ended December 31, 2020 and 2019, warrant holders exercised warrants to purchase 0.0 million and 0.7 million shares of common stock.

During the years ended December 31, 2021 and 2020, warrant holders exercised warrants to purchase zero and 42,336 shares of common stock, respectively.

No proceeds were received from these exercises as the warrant holders elected to surrender shares to pay the exercise price.

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Following the close of the Merger, both Management Services Agreements were terminated.

The Company did not incur any management services expense during the year ended December 31, 2020.

The Company did not incur any management services expense during the years ended December 31, 2021 or December 31, 2020.

In 2019, prior to the Merger, the Company incurred $ 1.5 million of management services expense, which has been reflected as a component of selling, general and administrative expense in the consolidated statements of comprehensive income (loss) for the year ended December 31, 2019.

During the year ended December 31, 2018, management services expense of $ 2.0 million was recorded as a component of selling, general, and administrative expense in the consolidated statements of comprehensive income (loss).

Management Equity Ownership Plan — In October 2015, HC I implemented an equity ownership and incentive plan for certain officers and employees of Option Care.

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These loans were treated as a shareholder contribution in Option Care.

For the years ended December 31, 2020, 2019 and 2018, $ 0 , $ 0 and $ 0.4 million, respectively, were credited to paid-in capital related to HC I membership units purchased with a loan from Option Care.

There were no shareholder redemptions during the year ended December 31, 2020.

For the years ended December 31, 2021, 2020 and 2019, there was no activity credited to paid-in capital related to HC I membership units purchased with a loan from Option Care.

There were no shareholder redemptions during the year ended December 31, 2021 and 2020.

During the year ended December 31, 2019, shareholder redemptions totaled $ 2.4 million, comprised of a cash distribution to HC I of $ 2.0 million and notes redeemed of $ 0.4 million.

There were no shareholder redemptions during the year ended December 31, 2018.

During the year ended December 31, 2019, prior to the Merger, Option Care sold its notes receivable from management, along with all accrued interest expense, to a third-party bank.

Option Care received cash proceeds of $ 1.3 million, which represented payment of $ 1.1 million in outstanding notes receivable from management and payment of $ 0.2 million in accrued interest expense.

There were no notes receivable from management outstanding as of December 31, 2020 and 2019.

As of December 31, 2018, notes receivable from management and associated interest receivable of $ 1.6 million are recorded in management notes receivable as a reduction to equity in the Company’s consolidated statements of stockholders’ equity.

There were no notes receivable from management outstanding as of December 31, 2021, 2020 or 2019.

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.

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

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

The Company had amounts due to its joint ventures of $ 1.4 million as of December 31, 2021.

The Company had amounts due from its joint ventures of $ 2.4 million as of December 31, 2020 and due to its joint ventures of $ 4.3 million as of December 31, 2019.

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

These balances primarily relate to cash collections received by the Company on behalf of the joint ventures, offset by certain pharmaceutical inventories purchased by the Company on behalf of the joint ventures.

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

A summary of unaudited quarterly financial information for the years ended December 31, 2020 and 2019 is as follows (in thousands except per share amounts).

First Quarter Second Quarter Third Quarter Fourth Quarter

Year ended December 31, 2020

Net revenue $ 705,440 $ 740,848 $ 781,609 $ 804,713

Gross profit 158,029 166,320 174,153 183,762

Operating income 8,648 23,208 34,556 44,343

Net (loss) income $ ( 19,910 ) $ ( 7,668 ) $ 1,663 $ 17,839

(Loss) earnings per share, basic $ ( 0.11 ) $ ( 0.04 ) $ 0.01 $ 0.10

(Loss) earnings per share, diluted $ ( 0.11 ) $ ( 0.04 ) $ 0.01 $ 0.10

First Quarter Second Quarter Third Quarter Fourth Quarter

Year ended December 31, 2019

Net revenue $ 476,492 $ 497,266 $ 615,880 $ 720,779

Gross profit 98,194 101,390 137,773 175,642

Operating income (loss) 5,438 ( 8,005 ) ( 11,725 ) 13,973

Net loss $ ( 3,712 ) $ ( 13,603 ) $ ( 42,794 ) $ ( 15,811 )

Loss per share, basic $ ( 0.03 ) $ ( 0.10 ) $ ( 0.26 ) $ ( 0.09 )

Loss per share, diluted $ ( 0.03 ) $ ( 0.1 ) $ ( 0.26 ) $ ( 0.09 )

The net loss in the third quarter of 2019 included transaction expenses, integration costs and loss on extinguishment of debt incurred in conjunction with the Merger.

SUBSEQUENT EVENTS

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

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

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.

In connection with the First Lien Credit Agreement Amendment and prepayment of the Second Lien Notes the Company incurred debt prepayment penalties of $ 4.9 million, third party fees of $ 1.3 million and original issue discount of $ 1.0 million.

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.

In February 2021, HC I completed a secondary offering of 17,250,000 shares of the Company’s common stock.

Following the offering, HC I holds approximately 54 % of the Company’s common stock.

In February 2022, the Company entered into a definitive agreement to acquire Specialty Pharmacy Nursing Network, Inc.

The Company expects to complete the acquisition in 2022.

An estimate of the financial effect cannot be made as the acquisition has not yet been completed.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data