Q4 2023 Option Care Health Inc Earnings Call

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I would now like to hand, the conference over to your speaker today.

Mike Shapiro Chief Financial Officer. Please go ahead.

Good morning. Please note that today's discussion will include certain forward looking statements that reflect our current assumptions and expectations, including those related to our future financial performance and industry and market conditions.

Operator: Good day, and thank you for standing by. Welcome to the Option Care Health Ltd fourth quarter 2023 earnings conference call. At this time, all participants are in listen-only mode.

Good day, and thank you for standing by.

Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations.

Speaker Change: Welcome to the option care Health fourth quarter 2023 earnings conference call.

We encourage you to review the information in today's press release as well as in our Form 10-K filed with the SEC regarding the specific risks and uncertainties. We do not undertake any duty to update any forward looking statements, except as required by law. During the call. We will use non-GAAP financial measures when talking about the company's performance and financial condition.

Speaker Change: At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your handwriting is erasable.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: Twice a question during the session you will need to press star one one on your telephone.

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Operator: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Shapiro, Chief Financial Officer. Please go ahead.

Can find additional information on these non-GAAP measures in this morning's press release posted on the Investor Relations portion of our website with that I'll turn the call over to John <unk>, Our Chief Executive Officer.

Speaker Change: To withdraw your question. Please press star one one again.

Speaker Change: Please be advised today's conference is being recorded.

Speaker Change: I would now like to hand, the Congress over to your speaker today.

Thanks, Mike and good morning, everyone to say that 2023 was an eventful year for option care health is quite the understatement.

Speaker Change: Mike Shapiro Chief Financial Officer. Please go ahead.

Michael H. Shapiro: Good morning. Please note that today's discussion will include certain forward-looking statements that reflect our current assumptions and expectations, including those related to our future financial performance and industry and market conditions. These forward-looking statements are subject to risks and uncertainties that could cause actual results that differ materially from our expectations. We encourage you to review the information in today's press release as well as in our Form 10-K filed with the SEC regarding the specific risks and uncertainties. We do not undertake any duty to update any forward-looking statements except as required by law.

Michael H. Shapiro: Good morning. Please note that today's discussion will include certain forward looking statements that reflect our current assumptions and expectations, including those related to our future financial performance and industry and market conditions.

It was a dynamic year for the team and we advanced our mission to set the pace in home and alternate site infusion care and treat more patients by providing innovative services designed to improve outcomes reduce costs and deliver hope for our patients and their families.

Michael H. Shapiro: Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations.

In 2023, we treated more than 270000 distinct patient.

Michael H. Shapiro: We encourage you to review the information in today's press release as well as in our Form 10-K filed with the SEC regarding the specific risks and uncertainties. We do not undertake any duty to update any forward looking statements, except as required by law. During the call. We will use non-GAAP financial measures when talking about the company's performance and financial condition.

And expanded our portfolio of lifesaving therapies through our collaboration with referral sources payer and Biopharma partner.

As always Mike will dive into the financials in a few minutes, but it could not be more pleased with the effort dedication and result generated by by devoted colleagues that option care health.

Michael H. Shapiro: During the call, we will use non-GAAP financial measures when talking about the company's performance and financial conditions. You can find additional information on these non-GAAP measures in this morning's press release posted on the investor relations portion of our website. With that, I'll turn the call over to John Rademacher, Chief Executive Officer. Thanks, Mike, and good morning, everyone.

Michael H. Shapiro: Can find additional information on these non-GAAP measures in this morning's press release posted on the Investor Relations portion of our website with that I'll turn the call over to John Rademacher, Chief Executive Officer.

For the full year, we delivered a revenue of $4 3 billion rep.

Representing nine 1% growth over the prior year.

Adjusted EBITDA of $425 million.

John C. Rademacher: Thanks, Mike and good morning, everyone. Let's say the 2023 was an eventful year for option care health is quite be understatement.

John C. Rademacher: To say that 2023 was an eventful year for Option Care Health is quite an understatement. It was a dynamic year for the team, and we advanced our mission to set the pace in home and alternate site infusion care and treat more patients by providing innovative services designed to improve outcomes, reduce costs, and deliver hope for our patients and their families. In 2023, we treated more than 270,000 distinct patients and expanded our portfolio of life-saving therapies through our collaboration with referral sources, payers, and biopharma partners. As always, Mike will dive into the financials in a few minutes, but I could not be more pleased with the effort, dedication, and results generated by my devoted colleagues at Option Care Health. For the full year, we delivered revenue of $4.3 billion, representing 9.1% growth over the prior year.

<unk> represents 24% growth over 2022 and significantly exceeded the initial expectations, we articulated in early 2023.

John C. Rademacher: It was a dynamic year for the team and we advanced our mission to set the pace in home and alternate site infusion care and treat more patients by providing innovative service designed to improve outcome.

Since the merger in August of 2019, the option care health team has consistently delivered solid growth and met or exceeded our commitments to our shareholders.

John C. Rademacher: <unk> cost and deliver for our patients and their families.

Reflecting back on 2023 beyond the solid financial results I'd like to highlight a number of key accomplishments and milestones.

John C. Rademacher: In 2023, we treated more than 270000 distinct patient.

John C. Rademacher: And expanded our portfolio of lifesaving therapies through our collaboration with referral sources payer and Biopharma partner.

In the second quarter, we launched <unk> health one of the largest infusion nursing platforms in the industry comprised of more than 500 clinical professionals.

John C. Rademacher: As always Mike will dive into the financials in a few minutes, but it could not be more pleased with the effort dedication and result generated by by devoted colleagues that option care health.

Nathan is critical component in our mission to serve more patients and strategically the platform is vital to our continued success.

John C. Rademacher: For the full year, we delivered a revenue of $4 $3 billion, representing nine 1% growth over the prior year.

We continue to invest in our ambulatory infusion suites footprint and in 2023, we expanded our network to 164 suites and over 660 carats nationwide.

John C. Rademacher: Adjusted EBITDA of $425 million represents 24% growth over 2022 and significantly exceeds the initial expectations we articulated in early 2020. Since the merger in August of 2019, the Option Care Health team has consistently delivered solid growth and met or exceeded our commitments to our shareholders. Reflecting back on 2023, beyond the solid financial results, I'd like to highlight a number of key accomplishments and milestones. In the second quarter, we launched Naven Health, one of the largest infusion nursing platforms in the industry, comprised of more than 1,500 clinical professionals.

John C. Rademacher: Adjusted EBITDA of $425 million.

John C. Rademacher: Represent 24% growth over 2022 and significantly exceeded the initial expectations, we articulated in early 2023.

Again this is a key investment strategy designed to enable continued growth while unlocking clinical labor efficiency.

John C. Rademacher: Since the merger in August of 2019, the option care health team has consistently delivered solid growth and met or exceeded our commitments to our shareholders.

We advanced our use of advanced analytics and repetitive process automation within our pharmacy and revenue cycle management operations to reduce waste and improve cash philosophy.

John C. Rademacher: Reflecting back on 2023.

We also recently announced that our multiyear collaboration with <unk> to deploy their artificial intelligence technology across our operations to drive efficiencies and improve the patient experience.

John C. Rademacher: The solid financial results I'd like to highlight a number of key accomplishments and milestones.

John C. Rademacher: In the second quarter, we launched even health one of the largest infusion nursing platforms in the industry comprised of more than 500 clinical professionals.

We launched a number of new therapies in 2023 through our collaborations with Biopharma, including Baidu Vic.

John C. Rademacher: NABIN is a critical component in our mission to serve more patients, and strategically, the platform is vital to our continued success. We continue to invest in our ambulatory infusions footprint, and in 2023, we expanded our network to 164 suites and over 660 chairs nationwide.

John C. Rademacher: Median is critical component in our mission to serve more patients and strategically the platform is vital to our continued success.

<unk> Gard by Ft, and <unk> to name a few.

We believe our integrated international network of state of the art pharmacies and expanded number of infusion suites.

John C. Rademacher: We continue to invest in our ambulatory infusion suites footprint and in 2023, we expanded our network to 164 suites and over 660 carats nationwide.

Bind with the clinical Knowhow and our leading technology platform continues to resonate with the Biopharma.

John C. Rademacher: Again, this is a key investment strategy designed to enable continued growth while unlocking clinical labor efficiency. We are advancing our use of advanced analytics and repetitive process automation within our pharmacy and revenue cycle management operations to reduce waste and improve cash flow. We also recently announced our multi-year collaboration with Palantir to deploy their artificial intelligence technology across our operations to drive efficiencies and improve the patient experience. We launched a number of new therapies in 2023 through our collaborations with Biopharma, including Vijuvik. Vizgard, Biasi, and Kabanuva, to name a few.

Partners and positions us well to continually expand our portfolio.

John C. Rademacher: Again this is a key investment strategy designed to enable continued growth while unlocking clinical labor efficiency.

Every member of the option care health team understands that behind every dose is a loved one and.

John C. Rademacher: We advanced our use of advanced analytics and repetitive process automation within our pharmacy and revenue cycle management operations to reduce waste and improve cash philosophy.

And behind the scenes as a comprehensive team of pharmacists pharmacy technician dietitians infusion nurses patient support professionals and supply chain experts.

John C. Rademacher: We also recently announced that our multiyear collaboration with talent here to deploy their artificial intelligence technology across our operations to drive efficiencies and improve the patient experience.

Their focus dedication and collaboration help ensure that we deliver unparallel care in the comfort and convenience of our patients' homes or in one of our infusion.

Making certain we are an employer of choice and a destination for health care professionals is also critical to our continued success.

John C. Rademacher: We launched a number of new therapies in 2023 through our collaborations with Biopharma, including Baidu Vic.

John C. Rademacher: If guard by Ft, and <unk> to name a few.

In 2023, we were thrilled to have earned the designation of the Gallup exceptional workplace and a military friendly employer.

John C. Rademacher: We believe our integrated national network of state-of-the-art pharmacies and expanded number of infusions, combined with clinical know-how and our leading technology platform continues to resonate with our Biopharma partners and positions us well to continually expand our portfolio. Every member of the Option Care Health team understands that behind every dose is a love. And behind the scenes, there is a comprehensive team of pharmacists, pharmacy technicians, dieticians, infusion nurses, patient support professionals, and supply chain experts.

John C. Rademacher: We believe our integrated National network of state of the art permit fees and expanded number of infusion suites combined with the clinical Knowhow and our leading technology platform continues to resonate with the Biopharma.

These recognitions affirm our relentless focus on recruiting our team every day and delivering extraordinary care to our patients.

As the old team goes you can do well by doing good and we believe that our financial results for 2023 demonstrate that we are doing just that.

John C. Rademacher: <unk> and positions us well to continually expand our portfolio.

John C. Rademacher: Every member of the option care health team understands that behind every dose is a loved one.

Exiting 2023, our balance sheet has never been stronger and our.

John C. Rademacher: And behind the scenes as a comprehensive team of pharmacists pharmacy technician dietitian infusion nurses patient support professionals and supply chain experts.

Quiddity position is in great shape.

During 2023, both S&P and Moody's upgraded our credit profile to the highest ratings yet.

John C. Rademacher: Their focused dedication and collaboration help ensure that we deliver unparalleled care in the comfort and convenience of our patients' homes or in one of our infusion centers. Making certain we are an employer of choice and a destination for healthcare professionals is also critical to our continued success. In 2023, we were thrilled to have earned the designations of the Gallup Exceptional Workplace and a Military-Friendly Employer. These recognitions affirm our relentless focus on recruiting the right team every day and delivering extraordinary care to our patients. As the old saying goes, you can do well by doing good.

Our net debt leverage profile is well under two times and we generated more than $370 million in operating cash flow in 2023.

John C. Rademacher: Their focus dedication and collaboration help ensure that we deliver unparalleled care in the comfort and convenience of our patients' homes or in one of our infusion.

And deployed $250 million towards the share repurchases.

John C. Rademacher: Making certain we are an employer of choice and a destination for healthcare professionals is also critical to our continued success.

So reflecting on 2023, we continue to deliver strong growth while investing in this unique platform and our capabilities to enable sustainable growth.

John C. Rademacher: In 2023, we were thrilled to have earned the designation of the Gallup exceptional workplace and a military friendly employer.

As we outlined in our 2020 guidance. This morning, we expect to continue this trend of delivering strong financial performance as we grow and serve more patients.

John C. Rademacher: These recognitions affirm our relentless focus on recruiting our team every day and delivering extraordinary care to our patients.

I've never been prouder of the option care health team and the level of service that we deliver to our patients every single day and I remain confident in the road ahead.

John C. Rademacher: As the old team goes you can do well by doing good and we believe that our financial results for 2023 demonstrate that we are doing just that.

John C. Rademacher: And we believe that our financial results for 2023 demonstrate that we are doing just that. Exiting 2023, our balance sheet has never been stronger, and our liquidity position is in great shape. During 2023, both S&P and Moody's upgraded our credit profile to the highest ratings. Our net debt leverage profile is well under two times, and we generated more than $370 million in operating cash flow in 2020 and deployed $250 million towards the share. So, looking ahead to 2023, we continue to deliver strong growth while investing in this unique platform and our capabilities to enable sustainable growth. As we outlined in our 2024 guidance this morning, we expect to continue this trend of delivering strong financial performance as we grow and serve more people. I've never been prouder of the Option Care Health team and the level of service that we deliver to our patients every single day, and I remain confident in the road ahead. Mike.

With that Mike will provide additional color on the results Mike.

John C. Rademacher: Exiting 2023, our balance sheet has never been stronger and our liquidity position is in great shape.

Thanks, and good morning, everyone as John mentioned, we're quite encouraged by the solid finish to 2023.

John C. Rademacher: During 2023, both S&P and Moody's upgraded our credit profile to the highest ratings yet.

Fourth quarter revenue of $1 billion $124 million.

John C. Rademacher: Our net debt leverage profile is well under two times and we generated more than $370 million in operating cash flow in 2023.

Represented nine 5% growth over Q4 of 2022.

Performance was solid across the portfolio and execution in the field was very strong full.

John C. Rademacher: And deployed $250 million towards the share repurchases.

Full year revenue of just over $4 3 billion was up nine 1%. Despite a number of headwinds we've talked about throughout last year, including two exited therapies and the impact of the divested respiratory therapy assets.

John C. Rademacher: So reflecting on 2023, we continue to deliver strong growth while investing in this unique platform and our capabilities to enable sustainable growth.

John C. Rademacher: As we outlined in our 2024 guidance. This morning, we expect to continue this trend of delivering strong financial performance as we grow and serve more patients.

So overall, we're quite pleased with the top line performance.

Q4 gross margin of 22% represented dollar growth of six 9% as we saw some mix shift impact towards the chronic portfolio as well as the smaller procurement benefit in the quarter.

John C. Rademacher: I've never been prouder of the option care health team and the level of service that we deliver to our patients every single day.

John C. Rademacher: And I remain confident in the road ahead.

In recent quarters I've spoken about the favorable procurement dynamic that persisted in 2023 and in Q4, we estimate we realized approximately $8 million in benefit related to the dynamic.

John C. Rademacher: With that Mike will provide additional color on the results Mike.

Michael H. Shapiro: Thanks and good morning, everyone. As John mentioned, we're quite encouraged by the solid finish to 2023. Fourth quarter revenue of $1,124,000,000 represented 9.5% growth over Q4 of 2022. Performance was solid across the portfolio, and execution in the field was very strong.

Michael H. Shapiro: Thanks, and good morning, everyone as John mentioned, we're quite encouraged by the solid finish to 2023.

Michael H. Shapiro: Fourth quarter revenue of $1 billion $124 million.

For the year, we estimate that we realized $33 million to $35 million of these transitory procurement benefits, which we believe will not continue into 2024.

Represented nine 5% growth over Q4 of 2022.

Michael H. Shapiro: Performance was solid across the portfolio and execution in the field was very strong full year revenue of just over $4 3 billion.

SG&A of $147 8 million actually declined versus Q4 of 2022 and spending leverage improved to 13, 1% of revenue, which we believe are firms the scalability of the platform.

Michael H. Shapiro: Full year revenue of just over $4.3 billion was up 9.1% despite a number of headwinds we've talked about throughout the last year, including two exited therapies and the impact of the divested respiratory therapy app. So overall, we're quite pleased with the top line's performance. Q4 gross margin of 22% represented dollar growth of 6.9%, as we saw some makeshift impact towards the chronic portfolio, as well as a smaller procurement benefit in the quarter. In recent quarters, I've spoken about the favorable procurement dynamic that persisted in 2023, and in Q4, we estimate we realized approximately $8 million in benefits related to the dynamic. For the year, we estimate that we realized $33 million to $35 million of these transitory procurement benefits, which we believe will not continue into 2024.

Michael H. Shapiro: <unk> was up nine 1% despite a number of headwinds we've talked about throughout last year, including two exited therapies and the impact of the divested respiratory therapy assets.

And adjusted EBITDA of $111 6 million in Q4 represented nine 9% of revenue and was up 18, 4% over the prior year again Q4, adjusted EBITDA included roughly an $8 million procurement benefits.

Michael H. Shapiro: So overall, we're quite pleased with the top line performance.

Michael H. Shapiro: Q4 gross margin of 22% represented dollar growth of six 9% as we saw some mix shift impact towards the chronic portfolio as well as a smaller procurement benefit in the quarter.

Beyond the P&L, we generated more than $370 million of cash flow from operations for the year, which again includes approximately $85 million from the <unk> transaction termination fee net of related expenses.

Michael H. Shapiro: In recent quarters I've spoken about the favorable procurement dynamic that persisted in 2023 and in Q4, we estimate we realized approximately $8 million in benefit related to the dynamic for.

During the year, we deployed $250 million towards share repurchases and still finished the year with approximately $344 million of cash on hand, and a net leverage ratio of one eight times.

Michael H. Shapiro: For the year, we estimate that we realized $33 million to $35 million of these transitory procurement benefit, which we believe will not continue into 2024.

Michael H. Shapiro: SG&A of $147.8 million actually declined versus Q4 of 2022 and spending leverage improved to 13.1% of revenue, which we believe affirms the scalability of the platform. An adjusted EBITDA of $111.6 million in Q4 represented 9.9% of revenue and was up 18.4% over the prior year. Again, Q4 adjusted EBITDA included roughly an $8 million procurement benefit. Beyond the P&L, we generated more than $370 million of cash flow from operations for the year, which again includes approximately $85 million from the Amethyst Transaction Termination Fee, net of related expenses.

This is the fifth year and that we have reported as option care health and reflecting back to 2019, when we completed the merger we socialize the combined enterprise at the time is generating roughly $2 $7 billion in revenue and roughly $200 million in pro forma adjusted EBITDA.

Michael H. Shapiro: SG&A of $147 8 million actually declined versus Q4 of 2022 and spending leverage improved to 13, 1% of revenue, which we believe are firms the scalability of the platform.

Michael H. Shapiro: And adjusted EBITDA of $111 6 million in Q4 represented nine 9% of revenue and was up 18, 4% over the prior year again Q4, adjusted EBITDA included roughly an $8 million procurement benefits.

Four years later, we have increased revenue by 50% to $4 3 billion and more than double the adjusted EBITDA of $425 million.

We've also driven dramatic improvements in our balance sheet reduce the leverage profile by more than two thirds from six two times to one eight times and slash net interest expense by more than half from $110 million to $51 million.

Michael H. Shapiro: Beyond the P&L, we generated more than $370 million of cash flow from operations for the year, which again includes approximately $85 million from the <unk> transaction termination fee net of related expenses.

And while we're proud of how far we've come we're equally excited about the road ahead.

Michael H. Shapiro: During the year, we deployed $250 million towards share repurchases and still finished the year with approximately $344 million of cash on hand and a net leverage ratio of 1.8 times. This is the fifth year in that we have reported as Option Care Health, and reflecting back to 2019, when we completed the merger, we socialized the combined enterprise at the time as generating roughly $2.7 billion in revenue and roughly $200 million in pro forma adjusted EBITDA. Four years later, we've increased revenue by 50% to $4.3 billion and more than doubled adjusted EBITDA to $425 million. We've also driven dramatic improvements in our balance sheet, reduced the leverage profile by more than two-thirds, from 6.2 times to 1.8 times, and slashed net interest expense by more than half, from $110 million to $51 million.

Michael H. Shapiro: During the year, we deployed $250 million towards share repurchases and still finished the year with approximately $344 million of cash on hand, and a net leverage ratio of one eight times.

As disclosed in this morning's press release, we anticipate delivering another year of solid growth for our shareholders. In 2024, we expect to generate revenue of $4 6 billion to $4 8 billion.

Michael H. Shapiro: This is the fifth year and that we have reported as option care health and reflecting back to 2019, when we completed the merger we socialize the combined enterprise at the time of generating roughly $2 $7 billion in revenue and roughly $200 million in pro forma adjusted EBITDA.

We expect to generate adjusted EBITDA of $425 million to $450 million and we expect to generate cash flow from operations of at least $300 million to.

To provide some additional data points, we expect net interest expense of $55 million to $60 million approximately $45 million in stock comp expense.

Michael H. Shapiro: Four years later, we've increased revenue by 50% to $4 3 billion and more than doubled adjusted EBITDA of $425 million we've.

And in an effective tax rate of 26% to 28%.

Michael H. Shapiro: We've also driven dramatic improvements in our balance sheet reduced our leverage profile by more than two thirds from six two times to one eight times and slash net interest expense by more than half from $110 million to $51 million.

So overall 2023 was a very productive year and we expect to continue our track record of leveraged growth into 2024.

With that we're happy to take your questions operator.

Michael H. Shapiro: And while we're proud of how far we've come, we're equally excited about the road ahead. As disclosed in this morning's press release, we anticipate delivering another year of solid growth for our shareholders. In 2024, we expect to generate revenue of $4.6 billion to $4.8 billion. Additionally, we expect to generate adjusted EBITDA of $425 million to $450 million. And we expect to generate cash flow from operations of at least $300 million. To provide some additional data points, we expect net interest expense of $55 million to $60 million, approximately $45 million in stock comp expense, and an effective tax rate of 26 to 28 percent.

As a reminder to ask them.

Michael H. Shapiro: And while we're proud of how far we've come we're equally excited about the road ahead.

Question. Please press star one on your telephone and wait for your name to be announced.

Michael H. Shapiro: As disclosed in this morning's press release, we anticipate delivering another year of solid growth for our shareholders. In 2024, we expect to generate revenue of $4 6 billion to $4 8 billion.

To withdraw your question. Please press star one again.

Please standby, while we compile the Q&A roster.

Our first question comes from Lisa Gill with Jpmorgan. Your line is now.

Michael H. Shapiro: We expect to generate adjusted EBITDA of 425 million to $450 million and we expect to generate cash flow from operations of at least $300 million to provide some additional data points. We expect net interest expense of $55 million to $60 million approximately $45 million in <unk>.

Thanks, very much and good morning and congratulations.

I, just really want to understand a couple of things a little bit better as we think about 2024 and the first would be just the mix. So.

I think Mike you noted in the quarter.

<unk> growth in chronic and acute which had an impact on the mix. How do we think about mix going forward that would be my first question and then secondly, as it plays into that how do we think about the swing factor between that 425 and $4 50.

Michael H. Shapiro: <unk> comp expense and.

Michael H. Shapiro: And in an effective tax rate of 26% to 28%.

Operator: So overall, 2023 was a very productive year, and we expect to continue our track record of leveraged growth into 2024. With that, we're happy to take your questions. Operator.

Michael H. Shapiro: So overall 2023 was a very productive year and we expect to continue our track record of leveraged growth into 2024.

EBITA line Flair for guidance.

Yes, good morning, Lisa maybe I'll give it a.

Speaker Change: With that we're happy to take your questions operator.

I'll start here look I mean, as we've talked about consistently.

Operator: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Stand by while we compile the Q&A roster. Our first question comes from Lisa Gill with J.P. Morgan. Your line is now open.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Within our two portfolios of therapies, we see the growth trajectory of the chronic portfolio being in that low double digit.

ZIP code with the acute therapies being those those therapies are really a more mature category thats growing in the low single digits.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please standby, while we compile the Q&A roster.

Having said that obviously during 2023 and 2022, there were some pretty interesting market dynamics with some competitive closures, which accelerated some of their reported acute growth I think as we're going into 2024.

Speaker Change: Our first question comes from Lisa Gill with Jpmorgan. Your line is now.

Lisa Christine Gill: Thanks very much, and good morning, and congratulations. I just really want to understand a couple of things a little bit better as we think about 2024. And the first would be just the mix.

Lisa Christine Gill: Thanks, very much and good morning, and congratulations Jim.

Absent any of those large shocks to the.

Lisa Christine Gill: Really want to understand a couple of things a little bit better as we think about 2024 and the first would be just the mix. So I think Mike you noted in the quarter.

The comparables are like the exited therapies, we talked about I think we're back to what we see are the underlying therapy growth dynamics, which is to say we see.

Michael H. Shapiro: So I think, Mike, you noted in the quarter, you know, stronger growth in chronic versus acute care, which had an impact on the mix. How do we think about mix going forward? And then, secondly, as it plays into that, how do we think about the swing factor between the 425 and 450 on the EBITDA line for guidance? Yeah, good morning, Lisa. Maybe I'll give it a start here.

Lisa Christine Gill: <unk> growth in chronic first in the queue, which had an impact on the mix. How do we think about mix going forward would be my first question and then secondly, as it plays into that how do we think about the swing factor between that $4 25, and $4 50.

That acute category growing in the low single digits and at the other end of the barbell the chronic therapies are growing.

Low double digits.

Lisa Christine Gill: The EBITDA line flair for guidance.

Given the fact that the chronic as we've talked about consistently carries a lower gross margin rate, we would expect going forward that theres going to be some some mixed shift towards that lower chronic therapy profitable profitability profile, having said that obviously you know we fight for every every basis point in the way.

Speaker Change: Yes, good morning, Lisa maybe I'll give it a.

Michael H. Shapiro: Look, I mean, as we've talked about consistently, within our two portfolios of therapies, we see the growth trajectory of the chronic portfolio being in that low double-digit zip code with the acute therapies being, you know, those are really a more mature category that's growing in the low single-digit. Having said that, obviously, during 2023 and 2022, there were some pretty interesting market dynamics with some competitive closures which accelerated some of the reported acute growth. I think as we're going into 2024, you know, absent any of those large shocks to, you know, the comparables or like the exit therapies we talked about, I think we're back to what we see are the underlying therapy growth dynamics, which is to say we see that acute category growing in the low single digits, and at the other end of the barbell, the chronic therapies are growing in the low double digits.

Speaker Change: I'll start here look I mean, as we've talked about consistently.

Speaker Change: Within our two portfolios of therapies, we see the growth trajectory of the chronic portfolio being in that low double digit.

Speaker Change: ZIP code with the acute therapies being.

We were really focuses on maximizing the.

Speaker Change: Those therapies are really a more mature category that's growing in the low single digits.

The dollar growth and given the I would say about 425 to $4 50.

Speaker Change: Having said that obviously during 2023 and 2022, there were some pretty interesting market dynamics with some competitive closures, which accelerated some of their reported acute growth I think as we're going into 2024.

There's a lot of dynamics, obviously, we have some some new emerging therapies that we're still ramping up.

Given the fact that on the acute side the duration of our therapy is from two to six weeks. We haven't met the majority of the acute patients that will have the privilege of treating this year and so.

Speaker Change: Absent any of those large shocks to.

Speaker Change: The comparables are like the exited therapies, we talked about I think we're back to what we see are the underlying therapy growth dynamics, which is to say we see.

And behind the scenes Theres always a million moving dynamics.

That we're trying to manage on the procurement and payer in.

Speaker Change: That acute category growing in the low single digits and at the other end of the barbell the chronic therapies are growing.

And local competitive front so just.

I wouldn't I wouldn't attribute it anything more than just the typical volatility of the markets that we're operating in.

Speaker Change: Low double digits.

Michael H. Shapiro: Given the fact that chronic, as we've talked about consistently, carries a lower gross margin rate, we would expect, you know, going forward, that there will be some mixed shifts towards that lower chronic therapy profitability profile. Having said that, obviously, we fight for every basis point, and the way we really focus is on maximizing dollar growth. And look, the only thing I'd say about 425 to 450 is that look, there's a lot of dynamics.

Speaker Change: Given the fact that the chronic as we've talked about consistently carries a lower gross margin rate, we would expect going forward that theres going to be some some mixed shift towards that lower chronic therapy profitable profitability profile, having said that obviously you know we fight for every every basis point in the <unk>.

And then just last quarter, you talked about again strong cash flow and you've obviously decided to sit on cash flow of $300 million for 2024.

John when we think about the strategy around acquisitions I know last quarter, you talked about look there's kind of a sweet spot for us and tuck in and some other things, but maybe can you just update us on how youre thinking about capital allocation and how youre thinking about any kind of potential.

Speaker Change: We were really focuses on maximizing the.

Speaker Change: The dollar growth and given the I would say about $4 25 to $4 50.

Strategy around acquisitions and 24.

Speaker Change: There's a lot of dynamics, obviously, we have some some new emerging therapies that we're still ramping up.

Michael H. Shapiro: Obviously, we have some new emerging therapies that we're still ramping up, you know, given the fact that, you know, on the acute side, the duration of our therapy is from two to six weeks. We haven't met the majority of the acute patients that we will have the privilege of treating this year. And so, and behind the scenes, there's always a million moving dynamics that we're trying to manage on the procurement and payer fronts, and on the local competitive front. So I wouldn't I wouldn't attribute it anything more than just the typical volatility of the markets that we're operating in.

Yeah, Lisa good morning.

We are continuing to do a lot of work to understand.

Given the fact that on the acute side the duration of our therapy is from two to six weeks. We haven't met the majority of the acute patients that will have the privilege of treating this year and so.

Those market dynamics and what's the what's in the pipeline.

For consideration as we move forward I think one of the biggest things, Mike and I have talked about we talked about it on the last quarter.

Call as well is being very disciplined in the approach that we take.

Speaker Change: And behind the scenes Theres always a million moving dynamics.

Speaker Change: That we're trying to manage on the procurement and payer in.

We are looking at things, both strategically and economically it must meet those.

Speaker Change: And local competitive front so.

Those hurdles on both and as we're looking at that.

Speaker Change: I wouldn't I wouldn't attribute it anything more than just the typical volatility of the markets that we're operating in.

We're going to kiss a lot of frogs before we find a prince.

And that in that process.

John C. Rademacher: And then just last quarter, you talked about, again, strong cash flow, and you've obviously just guided to strong cash flow of $300 million for 2024. You know, John, when we think about the strategy around acquisitions, I know last quarter you talked about, look, there's kind of a sweet spot for us, tech in, and some other things. But maybe can you just update us on how you're thinking about capital allocation and how you're thinking about any kind of potential strategy around acquisitions in 2024? Yeah, Lisa. Good morning.

Speaker Change: And then just last quarter, you talked about again strong cash flow and you've obviously just guided to strong cash flow of $300 million for 2024.

We really.

Get ourselves in the discipline that we that we adhere to as we're looking at that.

Arent many books that are.

Speaker Change: John when we think about the strategy around acquisitions I know last quarter, you talked about look there's kind of a sweet spot for us.

Out there that we don't get a look at.

<unk> been very active in our corporate development.

Speaker Change: And in some other things, but maybe can you just update us on how youre thinking about capital allocation and how youre thinking about any kind of potential.

Process and the ability to take a look at opportunities, but we apply that discipline and we're going to continue to do that as we've.

Speaker Change: Strategy around acquisitions and 24.

<unk> talked about before and as we outlined.

John C. Rademacher: Yeah, Lisa good morning.

In the third quarter.

John C. Rademacher: We are continuing to do a lot of work to understand.

John C. Rademacher: We are continuing to do a lot of work to understand, you know, those market dynamics and what's in the pipeline for consideration as we move forward. I think one of the biggest things Mike and I have talked about, we talked about it on the last quarterly call as well, is being very disciplined in the approach that we take. We are looking at things both strategically and economically. It must meet those hurdles on both ends as we're looking at it. And, you know, we're going to kiss a lot of frogs before we find a prince in that process. And we really pride ourselves on the discipline that we adhere to as we're looking at that. There aren't many books that are out there that we don't get a look at.

In the press release coming in the fourth quarter, we exhausted the $250 million of the original authorization, we have an additional authorization of $250 million per share repurchase.

John C. Rademacher: Those market dynamics and what's the what's in the pipeline for consideration as we move forward I think one of the biggest things, Mike and I have talked about we talked about it on the.

John C. Rademacher: The last quarter.

We will continue to balance that priority.

John C. Rademacher: Call as well is being very disciplined in the approach that we take we are looking at things both strategically and economically it must meet those.

Making certain that we're doing everything we can to maximize the value to our shareholders and whether that through deployment for M&A or whether it's through continued share repurchases.

John C. Rademacher: Those hurdles on both and as we're looking at that.

As well as.

From our our investments into our business as part of our normal flow of capital Capex, We will continue to balance across those dimensions and maximize the value for our shareholders.

John C. Rademacher: We're going to kiss a lot of frogs before we find a prince.

John C. Rademacher: In that process and we really.

John C. Rademacher: Pride ourselves in the discipline that we that we adhere to as we're looking at that there arent many books that are.

Great I appreciate the comments.

Thanks Lisa.

John C. Rademacher: Out there that we don't get a look at.

Lisa Christine Gill: We have been very active in our corporate development process and the ability to take a look at opportunities, but we apply that discipline, and we're going to continue to do that. As we've talked about before, and as we outlined in the third quarter and the press release coming in the fourth quarter, we exhausted the 250 million of the original authorization. We have an additional authorization of 250 million dollars per share repurchase. We will continue to balance that priority of making certain that we're doing everything we can to maximize the value to our shareholders. And whether that's through deployment for M&A or whether it's through continued share repurchase, as well as, you know, from our investments into our businesses, part of our normal flow of CapEx, we will continue to balance across those dimensions and maximize the value for our shareholders. Great, I appreciate the comments. Thank you. Thank you.

Thank you one moment for our next question.

John C. Rademacher: We have been very active in our corporate development.

Our next question comes from Peter Chickering with Deutsche Bank. Your line is now open.

Hey, good morning, guys. Thanks for taking my questions.

Looking at the mid point of 24 guidance, if we exclude let's say at $34 million procurement benefit EBIT.

EBIT guidance is 11.

8% growth are there any one timers in next year that we should be thinking thinking about as we think about 2025 Disney procurement benefit just really stop on January one.

And on the chronic side what are the new language therapies. You. Just reference now are there any therapies that we should be aware of.

On the negative side and on the chronic side, we saw pretty strong in patient utilization in 2023.

That continues into 'twenty.

<unk>.

Thanks, Peter while one question in 15 parts I appreciate that.

Hey, listen.

At the midpoint the good thing and I think you've heard this in some of our public comment is a good thing going into 2024, we don't have.

The prior year comp challenges the exited respiratory therapy assets.

Speaker Change: Thank you one moment for our next question.

Operator: One moment for our next question. Our next question comes from... Peter Chickering with Deutsche Bank. Your lines are now open. Hey, good morning, guys. Thanks for taking my questions.

Exhibit therapies so.

I think the growth algorithm and the stories a lot cleaner and a lot more digestible for all of you to to get your hands around naturally. The one thing I would say is look growth's going to be a little more muted in the first half just given the fact that we did have some of those makena and <unk> revenue in the first half of the year. So.

Speaker Change: Our next question comes from Peter <unk> with Deutsche Bank lines now.

Peter: Good morning, guys and thanks for taking my questions looking at the midpoint of 24 guidance, if we exclude that say at $34 million procurement benefit.

Peter Chickering: Um, looking at the midpoint of 24 guidance, if we exclude, let's say, a $34 million procurement benefit, EBITDA guidance is about 11.8% growth. Are there any one-timers in next year that we should be thinking about as we think about 2025? Does the procurement benefit really stop on January 1st? And on the chronic side, what are the new ligamentation therapies you just referenced? And are there any therapies that we should be aware of on the negative side?

But overall.

Peter: EBIT guidance is 20.

I think it's just a much it's a much cleaner story.

Peter: 20 per cent growth are there any one timers and next year that we should be thinking of taking bad as we think about 2025 does he procure benefit this really stop on January 1st another chronic side what are the new therapies.

Going forward. So the short answer is no.

No Big box cars on the tracks that you guys have to try to model with and without so yes.

Peter: P. As a reference and are there any therapy that we should be aware of or aren't on the negative side and on the chronic side yourselves pretty strong and patient you know like relations in 2020.

On the <unk>.

On the chronic side and some of the therapies that we outlined we continue to see.

Michael H. Shapiro: And on the chronic side, we saw pretty strong inpatient, you know, ligamentation in 2023. Thanks, Peto. Wow, one question in 15 parts. I appreciate it.

A strong progress from our commercial team.

Focus around reach and frequency and making certain that we are developing those relationships and deepening them with our referral sources continues to be a high priority and an execution path or the team.

Peter: Twenty-three.

Peter: To use them that continues into 24 hours.

Michael H. Shapiro: Hey, listen, look, at the midpoint, the good thing, and I think you've heard this in some of our public comments, the good thing going into 2024, we don't have, you know, the prior year comp challenges, the exit respiratory therapy assets, the exited therapies. So, I think the growth algorithm and the stories are a lot cleaner and a lot more digestible for all of you to get your hands on. Naturally, the one thing I would say is, look, growth is going to be a little more muted in the first half, just given the fact that we did have some of those McKenna and Rod Cava revenues in the first half of the year. So, but, but overall, I think it's just a much cleaner story, you know, going forward. So, the short answer is, you know, no, no big boxcars on the tracks that you guys have to try to model with and without.

Speaker Change: Thanks, Peter one question and 15 parts I appreciate that hey, listen <unk>.

Speaker Change: The mid point, the good thing and I think you've heard this and some of our public comment is a good thing going into 2024, we don't have.

We continue to see a.

Our focus by the payers around thinking about site of care makes.

Speaker Change: The prior year comp challenges the exit respiratory therapy assets. The exited therapy. So I think that the the growth algorithm and the stories a lot cleaner and a lot more digestible for all of you to to get your hands on naturally the one thing I would say is growth is going to be a little more muted and the first.

Making certain that they are maximizing wherever they can achieve high quality care at an appropriate cost been a setting in which patients want to receive it. So we think that the market dynamics will remain.

No.

Strong for us on that and we're going to continue our execution path of being that partner of choice and being able to onboard those patients in.

Speaker Change: Have.

Speaker Change: Just given the fact that we did have some of those mckean and Rod Carver revenue in the first half of the year, so but but overall.

<unk> continued to provide them them care and Peter the only thing I'd add is looked at specific on your question around any any positives negatives books. There is always going to be some incremental therapies that we're looking at I wouldn't say, there's anything in the hopper that I would say is <unk> is a major needle mover in the first year and on the negative side look and we've had this conversation with folks repeated.

Speaker Change: I think it's just a mutt is a much cleaner story.

Speaker Change: Going forward. So the short answer is no.

Speaker Change: No Big box cars on the track that you guys have to try to model with and without <unk>.

John C. Rademacher: So, yeah, you know, on the chronic side and some of the therapies that we outlined, we continue to see, you know, strong progress from our commercial team. Our focus around reaching frequency and making certain that we are developing those relationships and deepening them with our referral sources continues to be a high priority and an execution path for the team. You know, we continue to see a focus by payers around thinking about the site of care and making certain that they're maximizing wherever they can achieve high quality care and appropriate costs in a setting in which patients want to receive it. So, you know, we think that the market dynamics will remain strong for us because of that.

Speaker Change: On on the on the chronic side and some of the therapies that we outlined we continue to see.

Really there is this is a dynamic marketplace and theres always therapies that will be going subcutaneous that will have different delivery methodologies and that's all something that.

Speaker Change: Strong progress from our commercial team.

Speaker Change: Our focus around reach and frequency and making certain that we are developing those relationships and deepening them with a referral sources continues to be a high priority and and execution path or the team.

We're never surprised by that and that's fully accommodated in our guidance range.

Okay, Great and then sort of Ian Jon.

A follow up to the <unk>.

Commentary.

Speaker Change: We continue to see a a focus by the payors around thinking about <unk> I'm, making certain that they're maximizing wherever they can achieve high quality care at an appropriate cost in a setting in which patients want to receive it. So we think that the market dynamics will remain.

Are you seeing any different behavior from the payers that one infusion companies. So Cvs Aetna, obviously, United at Al <unk> with their season have you seen any changes of how those referrals are changing now that theyre stadiums.

How does have their own their own options as well. Thanks, so much yes.

Yes.

We always.

Speaker Change: Strong for us on that and we're going to continue our execution path of being that partner of choice than being able to onboard those patients and and continue to provide them them care and Peter the only thing I would add is looked at specific on your question around any any positives negatives books, there is always going to be some incremental.

John C. Rademacher: And we're gonna continue our execution path of being that partner of choice and being able to onboard those patients and continue to provide them care. And Peter, the only thing I'd add is look specifically at your question around any, any positives, negatives. Look, there's always gonna be some incremental therapies that we're looking at. But I wouldn't say there's anything in the hopper that I would say is a major needle mover in the first year. And on the negative side, look, and we've had this conversation with folks repeatedly. There it is.

Theyre vigorous competitors and so we take all of that.

Into.

Full full full view as we're approaching the marketplace in.

One of the things that we bring to all of the payer community is that consistency of care, we've talked before about our ability on a national basis leverage our platform to provide that high consistency and high quality care, whether you are a patient in Portland, Oregon, or Portland, Maine, and so that ability that we have to provide.

Speaker Change: Therapies that we're looking at I wouldn't say, there's anything in the hopper that I would say as a as a major needle mover in the first year in on the negative side looking we've had this conversation with folks repeatedly. There is this is a dynamic marketplace and there's always therapy, there will be going subcutaneous it'll have different delivery methodologies and that's all.

John C. Rademacher: This is a dynamic marketplace, and there are always therapies that will be going subcutaneous that will have different delivery methodologies. And that's all something that, you know, we're never surprised by. And that's fully accommodated in our guidance range. Okay, great. And then, John, a follow-up to the pair commentary, are you seeing any different behavior from the pairs that own infusion companies, so CVS, Satin Hour, obviously United, and now Elevance with their infusions? Have you seen any changes in how those referrals are changing now that there's maybe..., have their own options as well? Thanks so much.

<unk> high quality care across the country is something that they seek.

Our ability to be in network with those payers is something that we work very hard to make certain that we achieved that were focusing around key areas of delivering high quality care of providing access to their members of driving high member satisfaction or patient satisfaction, when we have the opportunity to <unk>.

Speaker Change: Something that.

Speaker Change: We're never surprised by that and Thats fully accommodated in our guidance ranges.

Speaker Change: Okay, Great and then serving you John.

John C. Rademacher: Follow up to the pair commentary.

John C. Rademacher: Are you seeing any different behavior for repairs that one infusion company. So Cvs at an hour obviously, United at Al <unk> have you seen any changes of how.

Serve their members and so.

We will never discount.

The competitive dynamics that we operate within.

John C. Rademacher: Those are <unk> are changing now that there maybe.

On the other side of that we provide a very valuable service, especially when you look at the breadth of the product that we can provide on both the acute and the chronic portfolio and we will continue to foster those relationships can be.

Speaker Change: Have have their own their own options as well thanks, so much.

John C. Rademacher: Yeah, you know, we always, you know, we're vigorous competitors. And so we take all of that into full, full, full view as we're approaching the marketplace. And, you know, one of the things that we bring to all of the payer community is consistency of care. We've talked before about our ability on a national basis to leverage our platform to provide that high level of consistency and high quality care, whether you're a patient in Portland, Oregon or Portland, Maine.

John C. Rademacher: Yeah.

John C. Rademacher: We always.

John C. Rademacher: Their vigorous competitors and so we take all of that.

Our partner of choice for the plans as they are trying to find place for their members to receive high quality care.

John C. Rademacher: Into.

John C. Rademacher: Full full full view as we're approaching the marketplace.

Great. Thanks, so much.

John C. Rademacher: One of the things that we bring to all of the Payor community is that consistency of care, we talked before about our ability on a national basis leverage our platform to provide that high consistency and high quality care, whether you are a patient in Portland, Oregon, Portland, Maine, and so that ability that we have to provide <unk>.

Peter Thank you Peter.

Thank you one moment for our next question.

Yes.

Our next question comes from Brian <unk>.

With Jefferies. Your line is now open.

Hey, good morning, guys.

Yes, My first question maybe.

John C. Rademacher: And so the ability that we have to provide consistent, high-quality care across the country is something that they seek. Our ability to be in network with those payers is something that we work very hard to make certain that we achieve, that we're focusing around, you know, key areas of delivering high-quality care, of providing access to their members, of driving high member satisfaction or patient satisfaction when we have the opportunity to serve their members. And so we will never discount, you know, the competitive dynamics that we operate within.

Sort of a followup Peter's question as we think about like the.

John C. Rademacher: <unk> and high quality care across the country is something that they see.

Kelly the normalized growth rate going forward, obviously, there are a few moving parts for 2024.

John C. Rademacher: Our ability to be in network with those payers is something that we worked very hard.

How are you thinking about how investors should be modeling or thinking about.

John C. Rademacher: To make certain that we achieve that we're focusing around key areas of delivering high quality care of providing access to their members of driving high member satisfaction or patient satisfaction. When we have the opportunity to serve their members and so.

Growth going forward and what were.

What are those drivers should be.

Yes, Brian Thanks for the the <unk>.

Question look the way we've consistently articulated what we view as a reasonable way to think about the growth horsepower of this platform as we see this as a high single digit top line enterprise.

John C. Rademacher: We will never discount.

John C. Rademacher: The competitive dynamics that we operate within.

John C. Rademacher: But on the other side of that, we provide a very valuable service, especially when you look at the breadth of the product that we can provide in both the acute and the chronic portfolio. And we will continue to, you know, foster those relationships and be a partner of choice for the plans as they're trying to find a place for their members to receive high-quality care. Great, thanks so much.

That's on a broader market growth and I know you had 15 people what they think the infusion markets growing youll get 20 answers, but as we look at the therapies in the areas.

John C. Rademacher: On the other side of that we provide a very valuable service, especially when you look at the breadth of the product that we can provide on both the acute and chronic portfolio and we will continue to foster those relationships and b.

Focus we see this industry growing in the mid single digits call. It the 5% to 7%, we think with our unique platform and and competitive strengths. We think folks should expect us to consistently deliver in the high single digits on the top line given the scalability of the platform and the investments. We've made we think we can consistently deliver leverage.

John C. Rademacher: Partner of choice for the plans as they are trying to find places for their members to receive high quality care.

Speaker Change: Alright, thanks, so much.

Peter Chickering: Thanks, Peter. Thanks, Peter. Thank you.

Speaker Change: Thanks for Ya.

Speaker Change: Thank you one moment for our next question.

Operator: One moment for our next question. Our next question comes from Brian Tanquilut on Jeopardy's Reliance Nova. Hey, good morning, guys.

And on an organic basis that should manifest in low double digit earnings growth.

Speaker Change: Our next question comes from Brian <unk> with Jeopardy answer your lines now.

As kind of a.

Our medium term growth outlook.

Brian: Hi, Good morning, guys. Yes, My first question sort of a follow up question.

Got it and then.

Brian Gil Tanquilut: I guess my first question, maybe sort of a follow-up to Peter's question, as we think about Mike, the kind of like the normalized growth rate going forward, obviously, there are a few moving parts for 2024. How are you thinking about how investors should be modeling or thinking about your growth going forward and what those drivers should be? Yeah, Brian, thanks for the question.

During the quarter, it's clear that the G&A line was was very well managed so as we think about that rate I think some of that is probably the.

Brian: Think about like the.

Brian: More of a light growth rate go for it I was either a few moving parts for 2024.

The benefits from your infusion suite strategy so how.

Brian: How are you thinking about.

Should we be thinking about the remaining opportunity to open an infusion suite.

Speaker Change: That there should be modeling or thinking about your growth going forward and what the weather's.

Offset.

Speaker Change: For those drivers should be.

The gross margin compression from just the growth in chronic.

Speaker Change: Yeah, Brian Thanks for the the the question the way we've consistently articulated what we view as a reasonable way to think about the growth horsepower of this platform is we see this as a high single digit topline enterprise.

Yes look I'll start and let John jump in look we fight for every dollar and we always have and we always will.

Michael H. Shapiro: Look, the way we've consistently articulated what we view is a reasonable way to think about the growth horsepower of this platform is, you know, we see this as a high single-digit top line enterprise that's on a broader market growth. And I know if you ask 15 people what they think the infusion market's growing, you'll get 20 answers. But as we look at the therapies in the areas of focus, we see this industry growing in the mid single digits, called the five to 7%. We think with our unique platform and competitive strengths, we think folks should expect us to consistently deliver in the high single digits on the top line. Given the scalability of the platform and the investments we've made, we think we can consistently deliver leverage growth on an organic basis that should manifest in low double-digit earnings growth as kind of a medium-term growth outlook.

With the with the spending actually coming down versus the prior year admittedly, we did move some of the investments.

Speaker Change: On a broader market growth and I know, yes, 15 people what they think the infusion market's grown you'll get 20 answers, but as we look at the therapies in the areas of focus we see this industry growing in the mid single digits call at a 5% to 7%, we think with our unique platform and and competitive strengths, we think folks should expect us to.

Some of the more discretionary investments on new programs.

Earlier in the year as we knew that we had some some margin favorability of note in the fourth quarter that does have some year over year.

Burden from the 20 or so infusion suites that we opened during the year and again from a P&L geography that cost of those facilities resides in SG&A, the rent utilities insurance, etc. The benefit through the the nursing leverage actually is in the gross margin line. So with the SG&A as we reported it has the gross increase.

Speaker Change: Consistently deliver in the high single digits on the top line given the scale ability of the platform and the investments. We've made we think we can consistently deliver leverage growth and an organic basis that should manifest in low double digit earnings growth.

Speaker Change: Is is kind of a a medium term growth outlook.

From the infusion suite.

Investment, but the benefit is actually north up in the.

Michael H. Shapiro: And then, you know, during the quarter, it's clear that the GNA line was very well managed. So as we think about that, right, I think some of that is probably the benefits of your infusion suite strategy. So how should we be thinking about the remaining opportunity to open the infusion suite and to offset expected gross margin compression from, you know, just the growth in chronic Yeah, look, I'll start and let John jump in. Look, we fight for every dollar, and we always have, and we always will, you know, with the spending actually coming down versus the prior year.

Speaker Change: Got it and then.

Speaker Change: During the quarter. It it's clear that the G&A line was was very well managed so.

The gross profit line. So look we're going to continue to drive leverage growth at the SG&A line and a lot of the results in the fourth quarter beyond some of the intra year timing or the the efficiencies and as John mentioned the investments in.

Speaker Change: Think about that right I think so that is probably the the benefits from your efficiency strategy. So how should we be thinking about the remaining opportunity to open its agents we tend to offset.

In technology, and automation, which which has manifested in much more efficient spending.

Speaker Change: Gross margin compression from just the growth and chronic.

Yes, the only other thing I would add Brian is on the infusion suite side.

Speaker Change: Yeah look I'll start and let John jump in.

Continued really great progress by the team.

Speaker Change: We fight for every dollar and we always have and we always will.

Opening the new facility.

Speaker Change:

As we've talked before.

Speaker Change: With the with the spending actually coming down versus the prior year admittedly, we did move some of the investments.

We do a thorough analysis when we're looking at the market. We look at density maps of patient populations and we're really selective in the way that we're looking at where we place them in how to utilize them.

Michael H. Shapiro: Admittedly, we did move some of the investments, some of the, you know, more discretionary investments, new programs, earlier in the year, as we knew that we had some margin favorability. Of note, in the fourth quarter, that does have some year-over-year burden from the, you know, 20 or so infusion suites that we opened during the year. And again, from a P&L geography perspective, the cost of those facilities resides in SG&A, the rent, utilities, insurance, etc.

Speaker Change: Some of the more discretionary investments new programs.

John C. Rademacher: Earlier in the year as we knew that we had some some margin favor ability of note in the fourth quarter that does have some year over year.

In the quarter or about 30% of our nursing interventions were done in.

In one of our infusion suites with that growing.

John C. Rademacher: Burden from the 20 or so infusion suites, we open during the year and again from a piano geography, the cost of those facilities resides in SG&A, the rent and utilities insurance, etc. The benefit through the the nursing leverage actually is in the gross margin lines. So with the SG&A as we reported it has the gross incur.

Population of chronic patients as well as our ability to serve some of the the acute patients that may need.

Addressing change or a lab draw or those types of things, we're going to continue to maximize that as we move forward. So.

John C. Rademacher: The benefit through the nursing leverage is actually in the gross margin line. So, with the SG&A, as we reported, it has the gross increase from the infusion suite investment, but the benefit is actually higher in the gross profit line. So, look, we're going to continue to drive leverage growth at the SG&A line, and a lot of the results in the fourth quarter, beyond some of the intra-year timing, are the, you know, the efficiencies, and, as John mentioned, the investments in, you know, technology and automation, which has manifested in much more efficient spending. Yeah, and the only other thing I did, Brian, on the InfusionSuite side And, you know, as we talked before, we do a thorough analysis when we're looking at the market; we look at density maps of, you know, patient populations, and we're really selective in the way that we look at where we place them and how we utilize them.

As we built out the network.

John C. Rademacher: Greece from the infusion sweet.

Getting closer and closer to.

John C. Rademacher: Investment, but the benefit is actually north up in the up in gross profit line. So we're going to continue to drive leverage growth at the SG&A line and a lot of the results in the fourth quarter beyond some of the inter year timing or the the efficiencies and as John mentioned the investments and.

Having the fulsome niche that we that we want there will continue to make investments on that but I would.

Set the stage that that may start to slow as we have been utilizing and optimizing the infrastructure that we have we added over our almost 100 chairs.

Over the year and so now the trick for the team is really <unk>.

John C. Rademacher: In technology, and automation, which which has manifested in much more efficient spending.

Focus around the execution of utilizing the capacity that we have there as we continue to build out.

Speaker Change: Yeah, and the only other thing I think Brian is on the infusion sweet side <unk>.

Probably a bit slower pace than what you've seen over 22 and 'twenty three.

John C. Rademacher: Continued really great progress by the team of opening the new facility.

Awesome. Thank you.

John C. Rademacher: And as we've talked to before.

Thanks, Brian.

John C. Rademacher: We do a thorough analysis when we're looking at the market. We look at density maps of patient populations were really selective in the way that we're looking at where we placed them in how to utilize them in.

Thank you one moment for our next question.

Our next question comes from Matt Larew with William Blair. Your line is now open.

Good morning.

Wanted to ask.

John C. Rademacher: You know, in the quarter, about thirty percent of our nursing interventions were done in one of our InfusionSuites with that growing population of chronic patients as well as our ability to serve some of the acute patients that may need, you know, a dressing change or a lab draw or those types of things. We're going to continue to maximize that as we move forward. So, you know, as we build out the network, we're getting closer and closer to, you know, having the fulsomeness that we want there. We'll continue to make investments in that, but I would, you know, set the stage that that may start to slow as we utilize and optimize the infrastructure that we have. We added almost a hundred chairs, you know, over the year.

The other piece of the gross profit line beyond procurement.

John C. Rademacher: In the quarter about 30% of our nursing interventions worked on in.

Could be labor costs, and maybe a sense for what your expectations are in <unk>.

John C. Rademacher: In one of our infusion sweets with bat growing poppy.

John C. Rademacher: Population of chronic patients as well as our ability to serve some of the the acute patients that may need.

2024, and sort of within that question, maybe an update on how Nathan health.

John C. Rademacher: A dressing change or a lab draw or those types of things, we're going to continue to maximize that as we move forward. So.

The new better manage their labor needs.

Hey, good morning, Matt look as we've tried to be as transparent as possible and again this isn't binary.

John C. Rademacher: As we built out of network, we're getting closer and closer to having the wholesomeness that we that we want there will continue to make investments on that but I would.

In the fourth quarter as expected we saw that transitory situation that we tried to be as <unk>.

Open as we could from a competitive perspective, it pretty much dissipated down to nothing by the end of the fourth quarter and so look that.

John C. Rademacher: Set the stage that that may start to slow as we're event utilizing and optimizing the infrastructure that we have we added over or almost 100 chairs.

It was real it was a great.

It was a great milestone for our procurement team, who we think are the best in the business and look part of it is our direct relationship with manufacturers and biopharm that John talked about in the prepared remarks going forward.

John C. Rademacher: Over the year and so now the trick for the team is really focused.

John C. Rademacher: And so, you know, now the trick for the team is really to focus on the execution of utilizing the capacity that we have there as we continue to build out, probably at a bit slower pace than what you've seen over, you know, twenty two and twenty three. Thank you. Yep. Thanks, Brian. Thank you. Please take a moment for our next question. Our next question comes from Matt LaRue, who is called William Blur. Your line is now open.

John C. Rademacher: Focus around the execution of utilizing the capacity that we have there as we continue to build out.

We're always looking for coins in the sofa cushions in the procurement team is constantly looking at as we've said, there's always procurement puts and takes it typically nets in a typical year to a modest tailwind well below the numbers, we talked about in 2023, and I think thats kind of how we're expecting.

John C. Rademacher: Probably at a at a bit slower pace than what you've seen over 22 in 2003.

Speaker Change: Awesome. Thank you.

Speaker Change: Thanks, Thanks, Brian.

Speaker Change: Thank you one moment for our next question.

2024 to shape up so I mean, it was great while it lasted.

Speaker Change: Our next question comes from Matt <unk>, who is William Blair in your lines now opened.

It manifests and real earnings and cash in the bank.

Operator: Good morning. I wanted to ask about kind of the other piece of the gross profit line beyond procurement, which would be labor. Thank you. What your expectations are for 2024 and sort of within that, maybe an update on how Maven Health is going. Hey, good morning, Matt.

Matt: Good morning.

The team gets off does soften and looks for those next opportunities.

Matt: Wanted to ask.

Matt: [noise] about kind of the other people and gross profit line beyond procurement, which could be labor costs.

Yes, Matt it's John.

On the uneven standpoint, again continued really great progress.

Matt: What your expectations are in 2024 and sort of open that question, maybe an update on how.

That platform standpoint, we've made investments into the technology that continues into 2024, we're really excited about some of the efficiencies and effectiveness that that can help too.

Matt: And health.

Matt: Better manage their labor needs.

Michael H. Shapiro: Look, as we've tried to be as transparent as possible, and again, this isn't binary, you know, in the fourth quarter, as expected, we saw that transitory situation that we tried to be as open as we could, from a competitive perspective, it pretty much dissipated down to, you know, nothing by the end of the fourth quarter. And so, look, you know, that it was real, it was a great, you know, it was a great milestone for our procurement team, who we think are the best in the business. And, look, you know, part of it is our direct relationship with manufacturers and BioPharm that John talked about in his prepared remarks. Going forward, you know, we're always looking for coins in the sofa cushions, and the procurement team is constantly looking. And as we've said, there are always procurement puts and takes; it typically nets in a typical year to a modest tailwind, well below the numbers we talked about in 2023. And I think that's kind of how we're expecting, you know, 2024 to shape up. So I mean, it was great while it lasted.

<unk> the capacity and the utilization of that chart.

Speaker Change: Hey, good morning, Matt look as we tried to be as transparent as possible and again this isn't binary.

That workforce to support not only option care health, but other market participants.

Matt: The fourth quarter as expected we saw that transitory situation that we tried to be as <unk>.

And from that platform.

That has been part of our overall growth story.

Matt: Open as we could from a competitive perspective, it pretty much dissipated down to nothing by the end of the fourth quarter and so lucky.

The ability to have access to highly qualified nurses to be able to oversee the infusions and oversee the care for our patients is something that.

Matt: That it was real it was a great.

Matt: It was a great milestone for our procurement team, who we incur the best in the business and look you know part of it is our direct relationship with manufacturers and Biopharma that John talked about in the prepared remarks going forward.

It enables us to continue to grow so a lot of <unk>.

<unk> not only internally on option care health around recruiting our team members every day of recruiting and creating a great place to work.

Also the investments that we're making in Nathan will allow us to have that additional capacity and that additional.

Matt: We're always looking for coins in the sofa cushions in the procurement team is is constantly looking and as we've said there's always procurement puts and takes it typically nets in a typical year to a modest tailwind well below the numbers, we talked about in 2023, and I think that's kind of how we're expecting.

Growth driver for us as we move ahead.

A question that has been asked before.

From a turnover and.

And from that standpoint, just across the board.

Matt: 2024 to shape up so I mean it was.

<unk> seen significant improvement really from 'twenty two.

Matt: It was great while it lasted.

Michael H. Shapiro: It manifested itself in real earnings and cash in the bank. And, you know, the team dusts itself off and looks for those next opportunities. Yeah, Matt, it's John.

Matt: It manifests in real earnings and cash in the bank and.

As we exited 23 around.

Our retention rates.

Matt: The team gets off dust off and looks for those next opportunities.

And reducing of overall turnover, we do a lot of work to focus around.

Matt: Yes, it's.

John C. Rademacher: On the NAVEN standpoint, again, really great progress. From that platform standpoint, we've made investments in the technology that continue into 2024. We're really excited about some of the efficiencies and effectiveness that can help to maximize the capacity and the utilization of that workforce to support not only Option Care Health but other market participants from that platform. You know, that has been part of our overall growth story. The ability to have access to highly qualified nurses to be able to oversee the infusions and oversee the care for our patients is something that, you know, enables us to continue to grow. So a lot of focus not only internally at Option Care Health around recruiting our team members every day and creating a great place to work, but also the investments that we're making in NAVEN will allow us to have that additional capacity and that additional growth driver for us as we move ahead.

Matt: An uneven standpoint, again continued really great progress.

Employee value proposition and we have.

Really great dedicated team of HR professionals that are thinking about what are the total rewards and what are the type of programs to not only invest in our people to help them develop and grow in their roles and responsibilities, but also the culture in those aspects that make it a great place to work so.

Matt: From that platform standpoint, we've made investments into the technology that continues into 2024, we're really excited about some of the efficiencies and effectiveness that that can help too <unk>.

Matt: Maximize the capacity and the utilization of that that workforce to support not only option care health, but other market participants.

As I announced in my prepared remarks really excited about.

Matt: From that platform.

Some of the designations that that we were awarded in 2023, and we know that as much and we invest into our technology.

Matt: That has been part of our overall growth story is the ability to have access to highly qualified nurses to be able to oversee the infusions and oversee the care for our patients is is something that.

We're a people business, we need highly skilled clinicians.

We need highly skilled professionals across our organization and that will continue to be a top priority for me and the leadership team to make certain we're doing everything we can to be an employer of choice.

Matt: Enables us to continue to grow so a lot of.

Matt: Focus not only internally an option care health around recruiting our team members everyday of recruiting and creating a great place to work, but then.

Okay. Thank you.

Follow up is on <unk>.

Matt: So.

Obviously down nearly $10 million sequentially in the fourth quarter and down year over year.

Matt: Investments that we're making in Nathan will allow us to have that additional capacity and that additional.

Matt: Growth driver for us as we move ahead.

Just want to make sure we have the right sort of jumping off point. If there are any onetime benefits in that quarter. If there's anything from the fourth quarter, the first quarter with respect to incentive comp reset or other dynamics.

John C. Rademacher: You know, a question that has been asked before is, you know, from a turnover standpoint and from that standpoint, just across the board, we have seen, you know, a significant improvement really from 22 as we exited 23 around, you know, our retention rates and and the reduction of overall turnover. We do a lot of work to focus on the employee value proposition, and you know, we have a really great dedicated team of HR professionals that are thinking about what the total rewards are and what the type of programs are to not only invest in our people to help them develop and grow in their roles and responsibilities, but also the culture and those aspects that make it a great place to work.

Matt: A question that has been asked before it.

John C. Rademacher: From a turnover and and from that standpoint, just across the board we have seen significant improvement really from 22 as.

We've kind of that's the procurement piece on the gross margin line, but anything to think about as we model out.

Matt: As we exited twenty-three around.

G&A for the year.

John C. Rademacher: Our retention rates and and reducing of overall turnover, we do a lot of work to focus around.

Yes, not so much Matt. It's a good question you know some of it has to do more with the fourth quarter of 'twenty to remember we had our respiratory therapy business that did have some SG&A burden.

John C. Rademacher: Employee value proposition and we have a really great dedicated team of HR professionals that are thinking about what are the total rewards and what are the type of programs to not only invest in our people to help them developing grow in their roles and responsibilities, but also the culture and those aspects that make it a <unk>.

That obviously went away as we rightsize from that we scaled a little bit and shifted some dollars. After we exited a couple of therapies, but for the most part I think is a pretty clean jump off.

Okay. Thank you.

Thanks, Matt.

John C. Rademacher: So, you know, as I announced in my prepared remark, I'm really excited about some of the designations that we were awarded in 2023, and we know that as much as we invest in our technology, we are a people business. We need highly skilled clinicians, and we need highly skilled professionals across our organization. And that will continue to be a top priority for me and the leadership team to make certain we're doing everything we can to be an employer of choice.

John C. Rademacher: Right place to work so.

Thank you one moment for our next question.

John C. Rademacher: And announced the my prepared remarks really excited about.

John C. Rademacher: Some of the designations that we were awarded in 2023, and we know that as much as we invest into our technology. We are a people business, we need a highly skilled clinicians and we need highly skilled professionals across our our organization and that will continue to be a top priority for me and.

Okay.

Our next question comes from David Macdonald with Truth Your line's now open.

Hey, guys good morning.

I apologize.

Today.

From that but.

Just quick questions wanted to ask about <unk>.

John C. Rademacher: The leadership team to make certain we're doing everything we can to be an employer of choice.

The durability of profitability improvement given kind of the ongoing.

John C. Rademacher: Okay, thank you. And then the follow-up is on G&A, obviously down nearly 10 million sequentially in the fourth quarter and down year over year. I just want to make sure we have the right sort of jumping off point if there were any one-time benefits in that quarter, or if there's anything from the fourth quarter to the first quarter with respect to, you know, incentive comp reset or other dynamics. We've kind of given us the procurement piece on the gross margin line, but anything to think about as we model out. Thank you. ??? ??? ??? ??? ??? ??? ? Yeah, not so much, Matt.

Speaker Change: Okay. Thank you.

John C. Rademacher: Follow up.

G: G O.

Growth in chronic relative to <unk>. It sounds like you guys on expecting anything meaningful in terms of percentage growth.

John C. Rademacher:

John C. Rademacher: $10.

John C. Rademacher: Sequentially in the fourth quarter.

Speaker Change: Every year.

<unk>.

John C. Rademacher: I just want to make sure we get the right sort of jumping off point. If there were any one time benefit from that quarter. If there's anything from the fourth quarter of the first quarter with respect to incentive cop reset or other dynamics.

Acute and chronic 'twenty 'twenty four I was wondering if you can talk about the <unk>.

<unk> users sweep footprint and outside insurers is your labor productivity.

Speaker Change: Kenneth given us the procurement piece on the gross margin lines or anything just to think about as the model I'll Janet funnier.

Increased utilization of existing clients.

Its the maturation.

You guys have kind of talked about a roughly 10% lift historically.

Speaker Change: Not so much mad it's a good question you know some of it has to do more with the fourth quarter of 2000 to remember we had a respiratory therapy business that did have some SG&A burden.

Michael H. Shapiro: It's a good question. You know, some of it has to do more with the fourth quarter of 22. Remember, we had a respiratory therapy business that did have some SG&A burden that obviously went away as we right-sized from that. We scaled a little bit and shifted some dollars after we exited a couple of therapies. But for the most part, I think it's a pretty clean jump off.

I'll be a little bit.

Just wondering if you could comment on that.

Yes, Dave good morning.

Michael H. Shapiro: You know that obviously went away as we right sized from that we scaled a little bit and shifted some dollars. After we exited a couple of therapies, but for the most part I think it's a pretty clean jump up.

Sure.

Listen as we've talked about and we always get challenged a little bit around hey, 10% labor productivity for these investment themes.

Seems a little conservative.

Just a quick reminder, we've really only started our hour.

Michael H. Shapiro: Okay, thank you. Thanks, Matt. Thank you.

Speaker Change: Okay. Thank you.

Our infusion suite aggressive expansion strategy, we've been added for just over just a hair over two years and so.

Speaker Change: Thanks, Matt.

Speaker Change: Thank you one moment for our next question.

Operator: One moment for our next question. Our next question comes from David MacDonald with Truce. Your line is now open. Hey, guys, good morning. Paul has a phone, but I called from it.

We're seeing in some of those more mature centers labor protocol nickel labor productivity of 20% or more again, we're not paying for windshield time with many therapies we can.

Operator: Okay.

David MacDonald: Our next question comes from David Mcdonald with Truth your lines now hopes.

David MacDonald: Hey, guys good morning.

Infused concurrently.

David MacDonald: Paul <unk>.

So those later tranches or the earlier tranches, which are really only around two years, we're still ascending to cruising altitude and we still have capacity in those centers remarkably and so.

Operator: Yesterday.

David MacDonald: But just a quick question to ask about the durability of profitability improvement given the ongoing growth in chronic relative to acute. It sounds like you guys aren't expecting anything meaningful in terms of percentage growth and in terms of chronic care in 2024. I was wondering if you can talk about the Ambulatory Infusion Suite footprint and, as that matures... Is your labor productivity further improving from your increased utilization of existing equipment? That's the maturation. I know you guys have tried to talk about a roughly 10% lift historically, but it might be a little bit better than that. Just wondering if you could comment on that. Yeah Dave, good morning.

David MacDonald: From that but just.

David MacDonald: Just a quick questions to ask about.

David MacDonald: Just the durability of profitability improvement.

David MacDonald: The ongoing.

David MacDonald: Both in chronic relative.

The ultimate target for how we think about those from unlocking labor productivity, which not only helps our margins. It also obviously it's like.

David MacDonald: It sounds like you guys not expecting anything meaningful in terms of percentage.

David MacDonald: Between.

Creating 10% to 20% more nursing labor units.

David MacDonald: And Christ 2024, I was wondering if you can talk about.

David MacDonald: The ambulatory infusion sweet.

That's why you hear us talking so much about.

David MacDonald: Outsat insurers is your labor productivity.

About the strategy and I would just finish look not only does it help us from an economies of scale, but it helps us from an economies of scope because as we think about other therapies like infusible that require healthcare professional oversight utilizing those as a strategic platform to think about therapies that frankly, you wouldn't send.

David MacDonald: Things either increase utilization existing orange.

Speaker Change: The maturation locations I know you guys talk about a roughly 10% lift historically.

Speaker Change: Just wondering if you could comment on that.

A nurse four hours in the car to to administer all of a sudden clinically and economically are viable in the sweets and thats something thats helped us from a portfolio management perspective, yes. The only other thing I'd add to that Dave is certainly along the questions that you asked for the infused.

Dave: Yes, Dave Good Morehead head.

Michael H. Shapiro: Listen, you know, as we've talked about, and we always get challenged a little bit around, hey, 10% labor productivity for these investments seems, you know, seems a little conservative. Just a quick reminder, you know, we've really only started our aggressive infusion suite expansion strategy; we've been at it for just a hair over two years. And so, you know, we're seeing in some of those more mature centers labor, clinical labor productivity of 20% or more. Again, we're not paying for windshield time; with many therapies, we can, you know, infuse concurrently. And so, you know, those later tranches or the earlier tranches, which are really only around two years old, you know, we're still ascending to cruising altitude, and we still have capacity in those centers remarkably.

David MacDonald: Listen as we've talked about and we always get challenged a little bit around hey, 10% labor productivity for these investments seems it.

Michael H. Shapiro: It seems a little conservative just just a quick reminder, we've really only started our our infusion sweet aggressive expansion strategy. We've been added for just a just a hair over two years and so.

The infusion suite and utilization and helping to drive that we also focused a lot around just the productivity of our entire labor force right. So we're always.

Michael H. Shapiro: We're seeing in some of those more mature centers labour Proto clinical labor productivity of 20% or more again, we're not paying for windshield time with many therapies we can.

Working through and looking for our ability to drive that productivity and efficiency across the platform and we talked before about some of the deployment of the technology both in the prepared remarks, but in previous.

Michael H. Shapiro: Infused can currently.

Comments around repetitive process automation.

Michael H. Shapiro: So those later tranches or the earlier charges, which are really only around two years old we're still ascending to cruising altitude and we still have capacity in those centers remarkably and so.

And efficiencies to really help our teams take some of the more routine and wrote aspects out and and drive higher productivity and efficiency across the platform and we will continue to focus on that in 'twenty four.

Michael H. Shapiro: And so, you know, the ultimate target for how we think about these is unlocking labor productivity, which not only helps our margins, but it also obviously, you know, it's like creating 10 to 20% more nursing labor units. That's why you hear us talking so much about the strategy. And I would just finish, look, not only does it help us from an economic scale, but it helps us from an economic scope.

Michael H. Shapiro: The ultimate target for how we think about those from unlocking labor productivity, which not only helps our margins. It also obviously, it's like creating 10% to 20% more nursing labor units.

We believe there's still opportunities for us to drive those operating efficiencies and with every deployment of technology or the releases that our technology team is putting into the environment.

Michael H. Shapiro: That's why you hear us talking so much about.

Michael H. Shapiro: About the strategy and I would just finished.

We're looking for ways to maximize.

Michael H. Shapiro: Not only does it help us from and economies of scale, but it helps us from and economies of scope.

The licensure of our workforce of the capabilities and capacity of the workforce and we will continue to do that.

Unrelenting, because we know there's opportunities to take cost and waste out of the process.

And then I guess just.

Okay and to follow up on the.

Ambulatory infusion suites is there a specific time point.

12 months 18 months, where you start to see that.

10% lift to.

To drift higher towards the 20, and then it sounds like obviously meaningfully expanded the footprint over the last couple of years as it sounds like if that slows a touch and you guys got it get more fees is there any reason to think that the overall book just because you'll have fewer.

New starts so to speak.

She'll continue to lift higher in terms of nursing productivity.

Yes, I mean look we have a very disciplined model with expectations on utilization and adoption. That's one of the reasons why we don't just go out and opened 600 of these overnight because as we're being rather surgical and methodical in local ops and commercial leadership are held accountable to fill the centers and so what we've said is typically.

By the first anniversary on average these are breaking even so the nurse productivity covers the cost of rent insurance utilities, and just operating costs and typically by that 18 to 24 months there theyre generating a net 10% profit we've had some that have moved faster, but we.

We make sure. They are they are following the expected trajectory and so I'd say conservatively somewhere after the second anniversary and again, it's not a.

It's not an exact science.

Those are going to be.

Close to that 20% productivity uplift the great thing is.

As John highlighted we opened 20, new centers in 2023, we still have a tremendous amount of capacity within the.

Roughly 170 centers, we have across the country and so it's not as our ability to drive leverage and value from these isn't necessarily corresponding to how many are we opening every single quarter to now that we have a truly national network of 170 centers across the country. How do we also continue to.

Drive utilization within the existing footprint and so I think that.

At some point, we will hit a point, where we feel good but we're not capital constrained and if we see an opportunity to local market will be very quick to open an additional center.

And then guys. Just last question you mentioned earlier, just kind of conversations with players.

I'm curious if those conversations are you seeing a willingness by the payers to put.

A little bit more teeth around site of service redirection, whether thats plan design or whatever.

And then with regards to inventory infusion suites.

Is there an opportunity I mean, you talked about other services upside of confusion.

Is there an opportunity in an appetite for potential non in Houston relative to maybe some injectables, where there is interesting components.

Just any color there would be helpful.

Yes, David.

So the conversations that we've had and continue to have with the payer community around site of care.

I would say, there's a broad range of those conversations we are seeing certain circumstances, where.

Some of the payers are directing with a little bit more heavy hand, the utilization of these lower sites are lower cost.

Sites of care and putting that into the way that they're managing their membership I wouldnt say thats widespread across the entire industry, but we are starting to see that uptake in.

Local pockets or some of the more regional players on that so we're trying to stay ahead of that we are in active conversations and we believe that with some of the focus around medical loss ratios, especially in some of the capital programs that.

The payers are dealing with we offer a really valuable solution to them.

The offering that high quality care at a more appropriate cost than some of the other settings in which the patients could receive it. So we expect that that will be.

Be an impetus for us to have those conversations and we're going to continue to talk about the values and the virtue that we can bring to them through that process.

Second part of your question, we are doing that today, Dave where again, we take a look at the portfolio within the infusion suite itself, where there are either.

Products that would be not be infused, but they may be injectables that require a health care professional oversight.

We are doing those in in the infusion suite one of the product site called out that <unk> is a product that really fits within that that category that requires that HCP to to provide that oversight and we'll continue to look for those opportunities and continue to partner upstream with biopharma as being a channel partner for those type of <unk>.

<unk> as well as continue to discuss the.

<unk>.

Cost value of.

Being able to provide.

To their members to the payers and why they should help to choose that as a site of care as theyre moving forward.

Yes, John the better way to ask that would've been just in terms of the growth around that.

The non infused products are you seeing any kind of meaningful.

Acceleration increased acknowledgment of the services that you guys provided increased appetite from manufacturers et cetera.

Yes.

Is incorporated in the guidance that we provided I mean.

There are some positive aspects of that.

Nothing that I would say is a is a major needle mover.

That are disproportionate, but we're going to continue to look for every opportunity we can to as Mike said build the chairs and utilize the capacity that we have in an efficient and effective way.

Okay. Thanks very much.

Thanks, Ed.

Okay.

Thank you one moment for our next question.

Our next question comes from Joanna tissue.

Bank of America. Your line is now open.

Hey, good morning, Thanks, so much for taking the questions. So I guess first.

The follow up just to clarify.

So you said the <unk> benefit.

8 million, so that sounds like maybe a little bit less than what you were expecting so I guess.

Is that right and then.

And also can you remind us what was it for the full year and also with that do you still assume that.

Zero.

Benefit in January.

Good morning, Joanna Yes, it's Mike Yes. So we in my prepared remarks, I mentioned that we estimate and again this isn't an exact science because you know you have moving patient census at multiple codes across a number of different payors. Some that our asps from that our AWP, but to the best of our estimation, we estimate that we had approximately 8 million.

A benefit in the quarter and so.

Our best estimate is when you look in the $4 25.

We reported there is roughly.

$33 million to $35 million of total benefit again, it doesn't show up the first day of a quarter. It doesn't go away the last day of the quarter and so it really dissipated throughout Q4, as we had expected and so again I think as we talked about on our third quarter call I think our commentary that you're using.

Roughly a $3 90 jump off point normalizing for those transition hurry benefits is a logical.

Baseline there.

There are no benefits going into.

Specific to this situation. There is there are no benefits going into 2024 so.

It will be a clean break.

Great. Thank you for that.

<unk>.

I guess somewhat related because you mentioned.

24, it's more of a normalized year, you don't have any major headwinds and a tailwind that you had in 2018, because on one hand, you exit that business and there was some tariff is going away. But then you had this benefit from procurement at 24, maybe not.

But I guess.

Yes.

Couple of things that gets going.

Going around the market.

It's similar I guess for one of their infusion that sadly.

Coming to the market. So I guess, how meaningful this could be and maybe thats just a wash because maybe there is no tariff is coming in and I guess in <unk>.

Cleveland plant.

Does.

The makeup of those Texas Silicon <unk> formulations, maybe don't Theyre not coming when you fill in maybe later, but I guess as it is.

It's two subcutaneous kind of when do you expect that lunches.

Actually happen and how would this impact your business.

To that point, that's when you will make you Ron suite and using dose injectable.

Is this something that.

That you would have to Antigua sample to continue.

Formulations.

In terms of location. Thank you.

Yes, Joanne I look the one thing that we tried to underscore as we engage with investors is this is a very dynamic marketplace. It is not a static portfolio of therapies and if you look at what we will infuse and inject into our patients in 2024, it's markedly different than it was five years ago, and it's probably markedly different than.

But it'll be five years from now.

Our business development team again, we have very direct lines into manufacturers nothing comes to market No New administration method no filing.

Is hitting that is of a major surprise to us and so.

As we look.

Whether its two months or 20 months out we're constantly trying to anticipate the dynamics in the marketplace and so.

A lot of the manufacturers you talked.

Wood products you quoted we have regular dialogues with them and we fully anticipate and have incorporated into our guidance.

Therapies that will go subcutaneous.

Or that will eventually have biosimilar entrants and so.

Thats something that we stay well ahead of.

When something and again just to remind disciplined when something goes subcutaneous to John's point, you need to read the labels because sometimes something go subcutaneous it still requires health care professional oversight and so.

And even if it doesn't require an HCP oversight.

That still remains within our clinical model admittedly, maybe with some different economics and so all of those are developments that we're constantly anticipating and incorporating into our commercial and operational strategies.

Thank you and if I may add a last follow up I guess on the commentary around.

Very strong cash flow you still expect for 'twenty four right on a year over year headwind of that termination fee that you got in 2003, that's not going to repeat but when it comes to acquisitions.

And your latest updates in terms of things that will be of interest.

How far away are you willing to VF.

Home infusion business any considerations for airport.

It may be expanding that.

The drags that you deliver I say I mean, we talk about the injectables.

To be more of that oncology track, so any color on kind of looking at.

But the here thank you.

Yes, Joanne I look I mean, we're constantly focused on how do we grow and we think that driving topline and bottomline growth is as a surefire way to create value for our shareholders, whether it's organic and utilizing our suites and infrastructure to add therapies to the bag, so to speak or deploying capital through an M&A strategy.

<unk> I think look I think we've tried to alleviate concerns and reinforce our strategy on the corporate development front, which is to say look.

Simply by generating more cash that doesn't lower the bar and John has preached that things have to be both a strategic and economic value that we can articulate to our shareholders.

We're very active on that front.

We're going to be very very disciplined there is a lot that we could do that strategic that that doesn't represent an economic proposition and vice versa. So.

We see a number of opportunities I think frankly without laying out our playbook, we're going be disciplined and patient. The great thing is the the base business. We expect based on our guidance to perform very well this year and so there isn't the anxiety or pressure to.

Do a deal just for the sake of doing a deal in.

Given given our capital structure I think we're in a very advantageous position.

As John also highlighted we also have the pressure valve of share repurchase authorization.

As another channel through which we can deploy capital for our shareholders.

Thank you thanks for the question.

<unk>.

Thank you Brian Thank you Joanna.

Thank you one moment for our next question.

Our next question comes from Jami Rubin Goldman Sachs. Your line is now open.

Hey, Thanks, Good morning, John you you rattled off a number of therapies that are dragging chronic growth at the moment can you spend a little more time on a few of those.

The faster growing our largest category.

Where do you think they are in their own lifecycle, what visibility that gives you for chronic growth over the next.

A couple of years.

And just your sense of innovation upstream with Biopharma and feasible drugs.

Yes so.

Prepared remarks, I called out some of the products.

We had lunch we had talked about.

<unk> in previous earnings calls biopsy.

If guard as well as <unk> I wouldn't say these are outsized growth proportion on it we feel.

Privilege to have the partnerships that we do with an organization like crystal and helping to be a channel partner to serve.

Their patients are.

There are patients that require their gene therapy.

Across the entire fleet.

The chronic side again, we continue to have a very diverse and a broad portfolio of products there.

As Mike just called out there they don't move in tandem.

We have things that are moving up we have things that are moving down.

It's a dynamic environment there what we really appreciate them, but we continue to hear and work with the Biopharma partners.

Around the platform that we're able to provide that high quality clinical knowledge and know how the logistics and the.

<unk> national platform in which we can serve patients and that ability now to have an expanded capability set to not only sort of patients in the home, but in one of the infusion suites all puts us in a really.

Strong position to continue to work with Biopharma to be channel partner and to be able to continue to expand our list of limited distribution drugs or expand the list of products that we have within our portfolio. So the focus of our business development team is around those relationships of continued.

The focus around.

Maximizing the value of our platform and we will continue to look for those opportunities with new and emerging products.

Second part of your question, we're actively managing and monitoring what is that pipeline of new products what of those products have the characteristics that fit well within our platform and are active in conversations with those biopharma partners around the role that we can play.

In helping to support the launch of those products the support of existing products and the.

The ability to serve the patients in one of the settings that our clinical team is well equipped.

Sure.

Okay, Great and then.

<unk>.

One follow up on the procurement benefits I know you guys are hesitant to talk about this two month, while you're in the midst of getting those benefits, but at this point or are you able to.

<unk>.

Benefits came from a branded drug our biosimilar.

On a question I know you guys have been asked many times over the years just the the impact on gross margin from biosimilar or generic events.

This experience over the last six months.

Taking on on how those.

Vance might impact your profitability.

Yes, Jamie look I mean, obviously for competitive purposes, we're going to be reluctant all I'll say is.

It wasn't one drug it was one code.

It was a little bit of a confluence of a limited number of therapies that have gone away and again I always say, we always have some puts and takes there's also some areas last year, where we had some some procurement headwind on some of the nutritional therapies that we support.

And the team tries to do their best to to mitigate look.

And on the Biosimilar front again.

No two biosimilar events are exactly the same it typically isn't bad development from our perspective.

We we provide therapy and we bill payers based on a an ASP awper WAC spread so as as a category becomes more competitive typically there is ASP AWP pressure over time, it's not overnight.

Which typically has headwind on our on our revenue. However, when you have multiple manufacturers and providers that typically tips. The scale from a procurement leverage and we can typically drive our gross margin rate expansion.

How that manifests in dollars all I'll say is look it's very much more of a revenue event for us and it is a gross profit dollar event and it from a supply chain risk management.

Typically de risks.

Our supply chain and given our direct relationships with virtually all of the manufacturers. We can we can be very responsive as payers want to actively manage.

Formularies and can pretty much turn on a dime.

Okay, Great I'll leave it there thank you.

Thanks, Jamie Thanks, Jamie.

Thank you one moment for our next question.

Our next question comes from Michael participate.

<unk> Research your line is now open.

Good morning.

Sorry that you were.

Maybe I'm tired of answering procure my question for me, let me ask one more real quick.

The.

The 33 to 35, obviously you guys have been talking about this issue throughout it feels like most of 'twenty three.

But you did say I think Mike that typically you do get sort of in a more normalized year some bit of a tailwind because of your scale.

Contract all the rest of it can you just talk about what historically I mean that number has been in terms of like $5 million $10 million.

What's the typical procurement tailwind for you guys.

Normalized here.

It's probably in the ZIP code, Mike <unk> again.

There's puts and takes every year.

On the scale that we have it's somewhere in the ZIP code of what you articulated okay, great and then just.

One more quick one just in terms of.

Sort of gave the history since 2019.

And obviously, a great history of high high levels of execution has anything in terms of 24 guidance.

Your methodology for providing it gotten more and more.

Aggressive or essentially the methodology that you've historically used to get to your initial guidance for a given year has that remained the same.

Okay. Thanks, Mike look I think it's not lost on us that we.

We built a reputation of laying out expectations that we have a high degree of confidence going into the year that we can deliver in.

Our track record is one that we're proud of.

We have a very robust process looking at a number of dynamics that.

As we get bigger there is a little bit of a bigger range from a from a plus minus perspective, but the fundamental approach of how we.

We approach communicating expectations for the year has not changed.

Thanks, guys congrats on a great year.

Yes, Thanks, Mike Thanks, Mike.

Thank you.

I am showing no further questions at this time I would now like to turn it back to management for closing remarks.

Thank you all for joining us this morning and participating on our call.

Outlined 2023 was a very productive year in our team continued to execute at a very high level, we understand the important role that.

That we play in delivering care to our patients and their families and we look forward to serving even more patients in 2024 take care and have a great day. Thank you.

This concludes today's conference call. Thank you.

You for participating you may now disconnect.