What changed in this filing

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Item 1. Business

2023-02-23 compared with 2022-02-23 · 55 added, 66 removed, 148 unchanged (45% of the section changed)

1 unchanged sentence

(“Option Care Health”, “we”, “us”, “our”, or the “Company”) is the largest independent provider of home and alternate site infusion services through its national network of 163 locations in 44 states.

Option Care Health draws on nearly 40 years of clinical care experience to offer patient-centered, cost-effective infusion therapy.

Option Care Health draws on over 40 years of clinical care experience to offer patient-centered, cost-effective infusion therapy.

Option Care Health’s infusion services include the clinical management of infusion therapy, nursing support and care coordination.

Option Care Health’s multidisciplinary team of approximately 4,300 clinicians, including pharmacists, pharmacy technicians, nurses and dietitians, are able to provide infusion service coverage for nearly all patients across the United States needing treatment for complex and chronic medical conditions.

HC Group Holdings II, Inc.

(“HC II”) was incorporated under the laws of the State of Delaware on January 7, 2015, with its sole shareholder being HC Group Holdings I, LLC.

On April 7, 2015, HC I and HC II collectively acquired Walgreens Infusion Services, Inc.

Option Care Health’s multidisciplinary team of more than 4,500 clinicians, including pharmacists, pharmacy technicians, nurses and dietitians, are able to provide infusion service coverage for nearly all patients across the United States needing treatment for complex and chronic medical conditions.

On April 7, 2015, HC Group Holdings II, Inc.

(“HC II”) and its sole shareholder, HC Group Holdings I, LLC.

(“HC I”), collectively acquired Walgreens Infusion Services, Inc.

and its subsidiaries from Walgreen Co., and the business was rebranded as Option Care, Inc.

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On March 14, 2019, HC I and HC II entered into a definitive agreement (the “Merger Agreement”) to merge with and into a wholly-owned subsidiary of BioScrip, Inc.

(“BioScrip”), a national provider of infusion and home care management solutions, along with certain other subsidiaries of BioScrip and HC II.

The merger contemplated by the Merger Agreement (the “Merger”) was completed on August 6, 2019 (the “Merger Date”).

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

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

(“BioScrip”) (the “Merger”), a national provider of infusion and home care management solutions, which was completed on August 6, 2019 (the “Merger Date”).

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

Option Care Health contracts with managed care organizations, third-party payers, hospitals, physicians and other referral sources to provide pharmaceuticals and complex compounded solutions to patients for intravenous delivery in the patients’ homes or other nonhospital settings.

Our services are provided in coordination with, and under the direction of, the patient’s physician.

Our multidisciplinary team of clinicians, including pharmacists, nurses, dietitians and respiratory therapists, work with the physician to develop a plan of care suited to each patient’s specific needs.

We provide home infusion services consisting of anti-infectives, nutrition support, chronic inflammatory disorders and neurological disorders, immunoglobulin therapy, and other therapies for chronic and acute conditions.

The Company operates in one segment, infusion services.

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Quality is at the core of the Company’s mission as it strives to deliver quality healthcare, leading to favorable outcomes and more cost-effective care.

The Company offers comprehensive services that align with specific healthcare provider needs and has demonstrated success in improving outcomes across a broad range of therapies through improved clinical-reported patient adherence rates and decreased rates of un-planned hospital re-admissions.

The Company’s commitment to continuous quality improvement to provide optimal outcomes for its patients is evidenced by its national accreditations, including accreditations from Accreditation Commission for Health Care (“ACHC”), Pharmacy Compounding Accreditation Board (“PCAB”), American Society of Health-System Pharmacists (“ASHP”) and Utilization Review Accreditation Commission (“URAC”).

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The Company is the largest independent provider of home and alternate site infusion services.

The Company’s services are most typically provided in the patient’s home, but may also be provided at clinics, the physician’s office or at one of its ambulatory infusion suites.

The Company’s services are most typically provided in the patient’s home, but may also be provided at clinics, physicians’ offices or ambulatory infusion suites.

The Company provides a broad therapy portfolio through its network of 96 full-service pharmacies and 67 stand-alone ambulatory infusion suites.

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The Company’s anti-infective therapy and services help avoid hospitalizations for many infections that can be safely treated at home.

• Nutrition Support Infusion.

• Nutrition Support.

The Company delivers comprehensive nutrition support across pediatric, adult, and geriatric patients.

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• Immunoglobulin Infusion.

The Company offers industry-leading expertise, access, and support in immunoglobulin (“IG”) infusion therapy designed to treat immune deficiencies.

The Company offers expertise, access, and support in immunoglobulin (“IG”) infusion therapy designed to treat immune deficiencies.

Immune deficiencies are disorders that reduce the patient’s ability to identify and destroy substances that do not belong in the human body and are characterized by reduced levels of antibodies.

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• Neurological Disorders.

The Company provides an array of treatments to manage the progression of neurological disorders such as Amyotrophic Lateral Sclerosis (“ALS” or “Lou Gehrig’s disease”) and Duchenne Muscular Dystrophy.

The Company provides an array of treatments to manage the progression of neurological disorders such as Duchenne Muscular Dystrophy, Multiple Sclerosis, and other neurological disorders.

• Bleeding Disorders Infusion.

As a leading provider of home infusion therapy for hemophilia and von Willebrand disease, the Company streamlines the administrative burdens associated with infusion therapies for bleeding disorders.

As a provider of home infusion therapy for hemophilia and von Willebrand disease, the Company streamlines the administrative burdens associated with infusion therapies for bleeding disorders.

The Company works with medical specialists across the country to offer access to all approved factor products, a full range of therapies, and dedicated support services.

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The Company believes that its reputation for providing quality services, the strength of its national presence and its ability to effectively market its services at national, regional and local levels places it in a strong position against existing and potential competitors.

The Company believes that the value created by the Merger has put the Company in a unique position to efficiently capture market share through its expanded footprint and synergies.

Intellectual Property

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However, some drugs are only available through the manufacturer and may be subject to limits on distribution.

In such cases, it is important the Company establishes and maintains good working relations with the manufacturer to secure sufficient supply to meet its patients’ needs.

In such cases, it is important that the Company establishes and maintains good working relations with the manufacturer to secure a sufficient supply to meet its patients’ needs.

Additionally, certain drugs may become subject to supply shortages.

Such shortages can result in cost increases or hamper the Company’s ability to obtain sufficient quantities to meet the needs of its patients.

The Company actively manages its relationships with direct manufacturers and distributors to ensure consistent supply and cost-effective procurement.

The Company actively manages its relationships with direct manufacturers and distributors for consistent supply and cost-effective procurement.

These relationships provide the Company the opportunity to become a selected partner in the launch of their new products.

The Company may receive fees, which it records as revenue, from certain biotech manufacturers for providing them with clinical outcomes data.

The Company receives fees, which it records as revenue, from certain biotech manufacturers for providing them with clinical outcomes data.

The Company’s continued growth will be dependent on maintaining its existing relationships with manufacturers and establishing new relationships with additional manufacturers as the Company launches new products.

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

For the year ended December 31, 2022, approximately 73% of the Company’s pharmaceutical and medical supply purchases were from four 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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Pharmaceuticals are typically reimbursed on a percentage discount from the published average wholesale price (“AWP”) of each drug or on a percentage premium to average sales price (“ASP”).

Nursing services are typically billed separately, while other patient support services, such as pharmacy compounding service, delivery service and ancillary medical supplies are reimbursed either separately or on a per diem basis, where applicable.

The Company’s largest payer represented approximately 14% of its revenue for the year ended December 31, 2022.

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For the year ended December 31, 2022, approximately 12% of the Company’s revenue was reimbursable through direct governmental programs, such as Medicare and Medicaid.

Matters Affecting Drug Prices

Pricing benchmarks in the pharmacy industry are periodically published by third parties such as First DataBank, Medi-Span, RJ Health, and the Centers for Medicare & Medicaid Services (“CMS”), and the benchmark reimbursement varies by payer contract.

The most commonly used benchmarks are AWP and ASP.

AWP is based on self-reported prices charged by wholesalers and manufacturers and reimbursement is generally AWP minus a percentage and may include a per diem fee or a fixed dispensing fee.

ASP is based on actual sales transactions reported by wholesalers and is generally lower than AWP;

reimbursement is generally ASP plus a percentage.

The Company may also receive a fixed dispensing fee or a per diem fee for each day a patient is on service.

Changes to these pricing benchmarks may have a significant impact on the profitability of the Company’s business.

Governmental Regulation

The home infusion industry is subject to extensive regulation by a number of federal, state and local governmental entities.

The industry is also subject to frequent regulatory change.

Laws and regulations in the healthcare industry are complex and, in many instances, the industry does not benefit from significant regulatory or judicial interpretation that would clarify how these laws and regulations should be applied.

The industry is also subject to frequent regulatory changes.

Laws and regulations in the healthcare industry are complex and, at times, the industry does not benefit from significant regulatory or judicial interpretation that would clarify how these laws and regulations should be applied.

Moreover, the Company’s business is also impacted by certain laws and regulations that are applicable to its managed care and other clients.

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Pharmacy Licensing and Registration

State laws require that each of its pharmacy locations be licensed as an in-state pharmacy to dispense pharmaceuticals in that state.

Certain states also require that its pharmacy locations be licensed as an out-of-state pharmacy if the Company delivers prescription pharmaceuticals into those states from locations outside of the state.

State laws require that each pharmacy location be licensed as an in-state pharmacy to dispense pharmaceuticals in that state.

Certain states also require that pharmacy locations be licensed as out-of-state pharmacies if the Company delivers prescription pharmaceuticals into those states from locations outside of the state.

The Company believes that it materially complies with all applicable state licensing laws.

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Federal and state laws also require that the Company follow specific labeling, reporting and record-keeping requirements for controlled substances.

The Company maintains federal and state controlled substance registrations for each of its facilities that require such registration and follows procedures intended to comply with all applicable federal and state requirements regarding controlled substances.

The Company maintains federal and state controlled substance registrations for each of its facilities that require such registration and materially follows procedures intended to comply with all applicable federal and state requirements regarding controlled substances.

Many states in which the Company operates also require home infusion companies to be licensed as home health agencies.

The Company believes it is in compliance with these laws, as applicable.

The Company believes that it materially complies with all applicable state licensing laws, including any applicable change of control requirements that may have triggered in connection with the Merger.

Matters Affecting Drug Prices

The most commonly used benchmarks are AWP and ASP.

AWP is based on self-reported prices charged by wholesalers and manufacturers.

Reimbursement is generally AWP minus a percentage and may include a per diem fee or a fixed dispensing fee.

ASP is based on actual sales transactions reported by wholesalers, and is generally lower than AWP.

Reimbursement is generally ASP plus a percentage.

The Company may also receive a fixed dispensing fee or a per diem fee for each day a patient is on service.

Changes to these pricing benchmarks may have a significant impact on the profitability of the Company’s business.

The Company believes it is in material compliance with these laws, as applicable.

Privacy and Security Requirements

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The federal privacy regulations (the “Privacy Regulations”) are designed to protect health-related information that could be used to identify an individual’s protected health information.

The requirements imposed by HIPAA are extensive, and the Company has taken and intends to continue to take steps to ensure its policies and procedures are in compliance with the applicable provisions.

The requirements imposed by HIPAA are extensive, and the Company has taken and intends to continue to take steps to ensure its policies and procedures are in material compliance with the applicable provisions.

Food, Drug and Cosmetic Act.

Certain provisions of the Food, Drug and Cosmetic Act (“FDCA”) govern the handling and distribution of pharmaceutical products.

This law exempts many pharmaceuticals and medical devices from federal labeling and packaging requirements as long as they are not adulterated or misbranded and are dispensed in accordance with and pursuant to a valid prescription.

The Company believes it complies with all applicable requirements.

This law exempts certain pharmaceuticals and medical devices from federal labeling and packaging requirements as long as they are not adulterated or misbranded and are dispensed in accordance with and pursuant to a valid prescription.

The Company believes it materially complies with all applicable requirements.

The FDCA also governs interstate commerce for pharmaceutical products.

The Company cannot predict the impact of any proposed FDCA regulations on its ability to ship drugs to different states from its pharmacies.

The Company cannot predict the impact of any future FDCA regulations on its ability to ship drugs to different states from its pharmacies.

The Drug Quality and Security Act (“DQSA”) amended the FDCA to grant the Food and Drug Administration (“FDA”) authority to regulate the manufacturing of compounded pharmaceutical drugs.

The Company complies with the PCAB and Accreditation Standards for Sterile and Non-Sterile Pharmacy Compounding, and aggressively pursues accreditation from quality associations.

The Company materially complies with the PCAB Accreditation Standards for Sterile and Non-Sterile Pharmacy Compounding and pursues accreditation from quality associations.

The Company believes it complies in all material respects with all applicable requirements of a non-outsourcing-facility pharmacy.

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Violations can lead to significant criminal or civil penalties, including imprisonment.

The Office of the Inspector General (“OIG”) of the U.S.

The Office of the Inspector General (“OIG”) could also seek Civil Monetary Penalties (“CMP”) or exclusion against individuals or entities who knowingly and willfully:

(1) offer or pay remuneration, directly or indirectly, to induce referrals of government health care program business;

or (2) solicit or receive remuneration, directly or indirectly, in return for referrals of government health care program business.

The OIG of the U.S.

Department of Health and Human Services (“HHS”) has published clarifying regulations that identify a limited number of safe harbors from criminal enforcement or civil administrative actions.

The Company attempts to structure its business relationships to comply with these statutes and to satisfy an applicable safe harbor where applicable.

However, in situations where a business relationship does not fully satisfy the elements of a safe harbor, or where no safe harbor exists, the Company attempts to satisfy as many elements of an applicable safe harbor as possible.

The Company attempts to structure its business relationships to materially comply with these statutes and to satisfy an applicable safe harbor, where applicable.

False Claims Act .

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A number of states, including states in which the Company operates, have adopted their own false claims statutes as well as statutes that allow individuals to bring qui tam actions.

The Company believes that it has procedures in place to ensure the accuracy of its claims.

Medicare Home Health CY 2020 Home Health Prospective Payment Systems Rate Update .

On October 31, 2019, the CMS issued a final rule that includes updates to payment policies, payment rates, and quality provisions for services.

The final rule set forth routine updates to the home infusion therapy services for calendar year 2021 and subsequent years, and solicits comments on options to enhance future efforts to improve policies related to coverage of eligible drugs for home infusion therapy.

The Company believes that it has procedures in place to ensure the material accuracy of its claims.

Ethics in Patient Referrals Law (“Stark Law”)

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DHS includes outpatient pharmaceuticals, parenteral and enteral nutrition products, home health services, durable medical equipment, physical and occupational therapy services, and inpatient and outpatient hospital services.

Among other sanctions, a civil monetary penalty may be imposed for each bill or claim for a service a person knows or should know is for a service for which payment may not be made due to the Stark Law.

Among other sanctions, a CMP may be imposed for each bill or claim for a service a person knows or should know is for a service for which payment may not be made due to the Stark Law.

Such persons or entities are also subject to exclusion from the Medicare and Medicaid programs.

Any person or entity participating in a circumvention scheme to avoid the referral prohibitions is liable for civil monetary penalties, and additional fines may be imposed for failure to comply with reporting requirements regarding an entity’s ownership, investment and compensation arrangements for each day for which reporting is required to have been made under the Stark Law.

Any person or entity participating in a circumvention scheme to avoid the referral prohibitions is liable for CMPs, and additional fines may be imposed for failure to comply with reporting requirements regarding an entity’s ownership, investment and compensation arrangements for each day for which reporting is required to have been made under the Stark Law.

Human Capital Resources

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The majority of its part-time employees are clinicians due to the nature and timing of the services the Company provides.

Our business relies on our ability to attract and retain nursing staff, pharmacists and other professionals who possess the skills, experience and licenses necessary to meet the requirements of their job responsibilities.

Our ability to attract and retain personnel depends on several factors, including our ability to provide them with engaging assignments and competitive salaries and benefits.

Environment-Social-Corporate Governance Initiative

Option Care Health is committed to making a positive impact on not only our patients, but also our employees, the communities in which we serve and the environment at large.

Our ESG Initiative includes four distinct pillars around building a sustainable and responsible enterprise that is focused on providing extraordinary care that changes lives:

• Reducing Our Impact on the Environment – Through increased efforts in green packaging solutions, growing our network of Ambulatory Infusion Suites and the expanded use of ride share programs for our clinicians, we expect to reduce the company’s carbon footprint and waste.

• Caring for Our Patient Community – We intend to expand our current assistance programs to increase health access to patients and are launching new initiatives to improve the overall patient experience.

• Empowering Our People – We continue to improve and expand on our diversity, equity and inclusion initiatives, health and well-being programs and development and training opportunities for employees.

• Managing a Responsible and Resilient Enterprise – In addition to our comprehensive Enterprise Risk Management process, we are building a more robust privacy, data security and incident response program as well as continuing our commitment to best practices in corporate governance, compliance and business ethics.

The General Counsel and Assistant General Counsel serve as executive sponsors of the ESG Initiative and coordinate our corporate response to developing comprehensive ESG programs.

The Nominating and Corporate Governance Committee of the Board of Directors is charged with providing oversight on ESG matters.

The Company relies on our ability to attract and retain nursing staff, pharmacists and other professionals who possess the skills, experience and licenses necessary to meet the requirements of their job responsibilities.

The Company’s ability to attract and retain personnel depends on several factors, including the ability to provide them with engaging assignments and competitive salaries and benefits.

The Company is committed to empowering our people through specific initiatives in talent development, employee engagement, health and well-being, and diversity, equity and inclusion.

Available Information

The Company’s corporate headquarters is located at 3000 Lakeside Drive, Suite 300N, Bannockburn, IL 60015.

The Company maintains a website at http://www.optioncarehealth.com.

The information contained on its website is not incorporated by reference into this Annual Report and should not be considered part of this report.

The Company’s Annual Reports on Form

10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and Proxy Statements are available through the website at https://investors.optioncarehealth.com/, free of charge, as soon as reasonably practicable after they are filed with or furnished to the SEC.

The Company maintains a website at www.optioncarehealth.com.

The information contained on its website is not incorporated by reference into this Annual Report and should not be considered part of this Annual Report.

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and Proxy Statements are available through its website at https://investors.optioncarehealth.com, free of charge, as soon as reasonably practicable after they are filed with or furnished to the SEC.

The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

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 1. Business