Q4 2024 Option Care Health Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the OptionCare Health 4th Quarter 2024 Earnings Conference Call.
Speaker Change: At this time, all participants are in a listen-only mode. 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 1 1 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: 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 first speaker today, Nicole Maggio Senior Vice President and Corporate Controller, please go ahead
Speaker Change: Good morning. Please note that today's discussion will include certain forward-looking statements that reflect our current assumptions and expectations.
Speaker Change: 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 to differ materially from our expectations.
Speaker Change: We encourage you to review the information in today's press release as well as in our Form 10-K and latest Form 10-Q filed with the SEC regarding the specific risks and uncertainties.
Speaker Change: do not undertake any duty to update any forward-looking statement except as required by law.
Speaker Change: During this call, we will use non-GAAP financial measures when talking about the company's performance and financial condition. 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 will turn the call over to John Rademacher, President and Chief Executive Officer.
John Rademacher: Thanks, Nicole, and good morning, everyone. We appreciate you joining us for this morning's call to review the progress the OptionCare Health team made in 2024 and discuss our outlook for 2025.
John Rademacher: As you'll recall, in early January, we pre-announced our preliminary expected results for the fourth quarter and full year 2024, and as we reported this morning, our results were in line with the preliminary results as communicated.
John Rademacher: We will go into greater detail as well as provide more insights into the expectations for the current year later in the call.
John Rademacher: As we shared previously, the fourth quarter was very productive for the option care health team.
John Rademacher: And we made significant progress on our efforts to create a sustainable growth enterprise.
John Rademacher: and the fourth quarter marks the 20th consecutive quarter that we have delivered on the financial commitments we've communicated to the investor community.
John Rademacher: We delivered high teen revenue growth, which was comprised of a balanced performance across the portfolio, with considerable contribution from our rare and orphan and limited distribution portfolio of therapies.
John Rademacher: As the quarter progressed, we saw a notable improvement with respect to some of the supply chain challenges we outlined on our third quarter call.
John Rademacher: Specifically, the IV solution supply dynamics improved significantly throughout the quarter and is no longer a constraint with respect to onboarding new patients.
John Rademacher: We also invested in enhancing local responsiveness by opening two new state-of-the-art compounding pharmacies in New York City and Tampa.
John Rademacher: As I've stated on multiple occasions, we intend to continue to invest in our national integrated network of compounding pharmacies and infusion suites to help ensure high quality and responsive care for our patients and referral sources.
John Rademacher: I would also like to highlight the incredible execution by our team to work around and overcome the devastating impacts of the various natural disasters and weather events that happened at the end of the third quarter and carried into the fourth.
John Rademacher: The strength and resilience of our team and the platform was certainly tested, but through strong teamwork and collaboration with key partners across the value chain, we were able to continue to support our patients and deliver our key operational and financial results.
John Rademacher: I believe that our organic growth, along with the strength of our free cash flow, uniquely positions us to continue to deploy capital towards value creation for our shareholders.
John Rademacher: In demonstration of this, I'm pleased to share that we closed on our acquisition of IntraMed Plus in late January.
John Rademacher: As discussed earlier, Intramed Plus is a highly regarded infusion provider in the southeastern United States with multiple locations and a long-standing and exceptional reputation of providing high-quality care.
John Rademacher: We are thrilled to welcome the Intramed Plus team to the Option Care Health family and our integration efforts are well underway.
John Rademacher: This transaction is yet another example of how we believe we can bring our national-scale leading technology and integrated pharmacy platform to local areas through acquisitions to further expand access to care.
John Rademacher: Our revised guidance, as communicated this morning, now includes the impact of the acquisition.
John Rademacher: One of the attractive aspects of the Intramed Plus acquisition is the expansion of our Advanced Practitioner model.
John Rademacher: which we initiated with our Wasatch Infusion Acquisition a few years ago.
John Rademacher: As of today, we have established a footprint of more than 175 infusion locations, including 15 sites with advanced practitioner capabilities.
John Rademacher: We believe the Advanced Practitioner Clinical Model is highly complementary to our network of compounding pharmacies, and we intend to continue enhancing and expanding our infusion site network to incorporate broader clinical capabilities.
John Rademacher: And the expansion of our advanced practitioner model remains a priority in 2025 and beyond as we look to provide the most comprehensive set of infusion care solutions to our key stakeholders.
John Rademacher: Also in the fourth quarter, we exhausted our prior share repurchase authorization, having repurchased $90 million of shares in the quarter.
John Rademacher: In early January, our Board of Directors approved a new $500 million dollar authorization going forward.
John Rademacher: As we have discussed previously, given the strength of our balance sheet and cash flow generation, we have various options to deploy capital available to us.
John Rademacher: We believe deploying capital through both accretive acquisitions and share repurchase will create value over the longer term for our shareholders.
Speaker Change: Before I turn the call over to Mike, I wanted to share a few thoughts on our expectations for 2025.
Speaker Change: Despite a meaningful gross profit reset due to less favorable economics for Scalara, which we estimate at 60 to 70 million dollars for the year,
Mike: We expect to deliver overall earnings growth from 2024 through our balanced portfolio and focus on delivering value to referral sources to drive top-line growth.
Mike: While the Stellara impact is unfortunate, managing through therapy portfolio dynamics is nothing new for this team.
Mike: And we believe the clinical program we established to treat complex scolara patients is a testament to the clinical capabilities and power of this national platform.
Mike: In 2025, we intend to continue to invest in our pharmacy and infusion suite network, technology and clinical capabilities to help strengthen our position as a national provider with local responsiveness.
Mike: further solidifying our confidence in the growth profile of this enterprise.
Mike: I would like to remind you of our addition of adjusted earnings per share as a part of the metrics we provide for guidance as we believe this provides investors with a better reflection of our business performance and capital deployment activities.
Mike: With that, I'll hand the call over to Mike to provide additional details.
Thanks, John, and good morning, everyone.
Speaker Change: Revenue growth was quite strong in the fourth quarter at 19.7% growth over Q4 2023. As John mentioned, we saw balanced growth across the portfolio with considerable contribution from rare and orphan and limited distribution therapies.
Speaker Change: The team navigated the IV solution supply chain disruption quite effectively, which directly impacted our ability to take on new patients within our acute therapy portfolio earlier in the quarter.
Speaker Change: Despite the challenges and with meaningful supply chain improvements over the course of the quarter, we were able to deliver high single-digit acute therapy growth, which as all of you know carries a higher gross margin profile than chronic therapy.
Speaker Change: With respect to gross profit we drove 8.6% growth over the prior year fourth quarter on balanced top-line growth.
Speaker Change: Gross profit dollar growth is a key metric we manage and I believe the team did a phenomenal job in driving gross profit growth in the quarter.
Speaker Change: SG&A's percentage of revenue continues to drop and represented 12.2 percent of revenue in the quarter. For the year, spending growth was under 4 percent despite continued investments in suite capacity and other growth initiatives.
Q4 adjusted EBITDA of $121.6 million, grew almost 9%.
Speaker Change: And recall that the fourth quarter of 2023 included approximately $8 million in non-recurring procurement benefits.
Speaker Change: and adjusted earnings per share in the quarter of 44 cents represented 15.8% growth over the prior year.
Speaker Change: adjusted earnings per share for the full year of $1.58 represented more than 10% growth year-over-year and again that's inclusive of approximately 33 to 35 million dollars in 2023 procurement benefit that didn't continue into 2024.
Speaker Change: And we are quite pleased with the cash flow generation performance in 2024.
Speaker Change: For the full year, we generated $323 million in cash flow and invested more than $35 million back into our infrastructure and repurchased $250 million of stock.
Speaker Change: Finally, for the full year 2025, we now expect to deliver a revenue of $5.3 billion to $5.5 billion.
adjusted EBITDA of $450 million to $470 million.
Speaker Change: and adjusted earnings per share of $1.59 to $1.69 a share.
Speaker Change: Net interest expense is projected to be $55 million to $60 million, and the effective tax rate is expected to be 25 to 27 percent.
Speaker Change: Finally, we expect to generate at least $320 million in cash flow from operations.
Speaker Change: Note that our revisions to the preliminary guidance communicated in January primarily represent inclusion of the impact of the Intramed Plus acquisition which closed in late January.
Speaker Change: So as you can see, despite a 60 to 70 million dollar headwind from Stellara Dynamics, we expect to deliver another year of growth.
And with that, we'll open the call for questions. Operator?
Speaker Change: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Matt LaRue with William Blair. Your line is now open.
Matt LaRue: Good morning. One of us on the acute side, obviously you reference the.
supply chain alleviation of those challenges. Obviously, there were some
Speaker Change: larger competitors that were departing. So you're at high single digits in the quarter. Just in terms of what you're seeing vis-a-vis competition as well as supply chain and other dynamics, what's your expectation for how that trend throughout this year?
John Rademacher: Hey Matt, it's John. Yeah, thanks for the question. You know, as said in the prepared remarks, you know, throughout the quarter it continued to improve the supply chain dynamics.
John Rademacher: and you know we worked across the value chain to make certain that we were doing a few things. Number one is conserving the product that we did have and making certain that we were being very efficient in the way that we're utilizing it and then finding additional supply lines in order to do that as Baxter continued to improve their production.
John Rademacher: I would tell you as we exited the quarter, we were back to being in a really strong position. We are not hindered today by being able to take on new patients. So we are back to, I'd say, normal, if you want to think of it that way.
John Rademacher: In the comments or question around the competitive environment, certainly there were shifts in the competitive dynamics in the third and fourth quarter with, you know, some folks exiting and kind of resetting their portfolio products.
John Rademacher: As we've said multiple times, there isn't a market in which we don't have, you know, multiple competitors in that. There's over 800 home infusion providers that are part of the marketplace.
John Rademacher: We feel we're well positioned to capture market demand, our focus around reach and frequency and our commercial team.
John Rademacher: is one in which we want to be that partner of choice. The ability for us to show consistent, high-quality care and be reliable as a resource to help with that transition of those patients out of the hospital setting to their homes, we think, earns us goodwill and earns us, you know, credit and credibility with those referral sources.
John Rademacher: So our focus as we go through the year is going to be to continue to execute at that local level to make certain that we are a partner of choice and that our team is out there hustling with reach and frequency to work with those referral sources to bring those patients on. But I feel really good about the supply chain conditions, and I feel as if the national
John Rademacher: A platform with the local responsiveness is one that is resonating well within those marketplaces.
John Rademacher: Okay, and then, Mike, you've added adjusted ETS as a metric you're guiding to, and historically you've...
John Rademacher: framed sort of the long-term algorithm with revenue and adjusted EBITDA.
John Rademacher: Could you update us on your view of those metrics, but now with maybe a longer-term view of adjusted EPS growth as well? That's kind of part one and then the second part would be out of the
Speaker Change: You know between the last two calls we've sort of round-tripped this to Lara Saga and now we have an idea of
John Rademacher: the impact in 25. As we think about getting back to this long-term algorithm, are there any other sort of things you guys have your eye on in terms of one-offs over the course of 25 or 26 that could prevent the return to the long-term growth algorithm in 26?
Speaker Change: Yeah, let me unpack that a little bit, Matt. First and foremost, really appreciate the question on adjusted EPS. Look, we've consistently been steadfast in articulating that we view this as a high single-digit, top-line, low double-digit.
Speaker Change: enterprise over the longer term. I think one of the things that we
Speaker Change: are now injecting is that, look, through to John's point around the confidence and the cash flow generation and the strength of the balance sheet, look, over the last two years, we've deployed a half a billion dollars towards share repurchase, while also actively pursuing
M&A and I think
You know as we
Speaker Change: should result in adjusted EPS growing at a pace faster than adjusted EBITDA. You know, to what extent that obviously is going to...
of Capital Deployment, but...
Speaker Change: As we said a couple of weeks ago, I think given where we are, we're at 1.6 times levered at the end of the year, I think the shareholders should expect that we would at least deploy our free cash flow generation, that the common denominator would be share repurchase.
Speaker Change: other than M&A activities, that one could presume that that would represent a more accretive opportunity for us than share or purchase, which I think will continue to be.
the measuring stick.
Speaker Change: As it relates to the portfolios, as John said, look, this team is used to managing through dynamics in the portfolio. I think a misconception is that it is a static portfolio of therapies that we oversee. And we knew that Stellara was going to eventually subside in terms of the margin contribution as we articulated a couple weeks ago.
Speaker Change: 75% of our product profit comes from generics and biosimilars which are relatively stable and so there will always be
you know, therapies that evolve.
Speaker Change: to an oral or a sub-cue. And that's something that doesn't catch us by surprise. But on the other side of the ledger, Matt, we're excited through our business development efforts.
Speaker Change: looking at the number of rare and orphan limited distribution and product evolutions that are that are emerging as well as that John talked about with the advanced practitioner model that opens up
Speaker Change: the aperture, so to speak, on therapies that we could administer as well. So, I think our conviction, as John said, is that the growth algorithm remains firmly intact.
Okay, thank you.
Thanks, Matt. Thanks, Matt. Thank you.
Speaker Change: Our next question comes from the line of Brian Tenkillett with Jeffreys. Your line is now open.
Brian Tenkillett: Hey, good morning, guys, and congrats on the quarter. Maybe, Mike, as I think about the guidance here, appreciate all the detail. If I think about typical seasonality and all the moving pieces, any call-outs that we need to consider, even qualitatively, for Q1?
Speaker Change: Not necessarily. Again, I think you've been following this. You're old enough to have been following this industry for a while, Brian. Look, there's always a little bit of early Q1 disruption where you typically see a Q4 to Q1 step down.
Speaker Change: As benefits get re-verified, plan designs and new contract terms are entered. Folks typically are a little slow to go to the dock as deductibles and co-pays reset.
Speaker Change: Look, as we pivoted more towards chronic therapies, we were around 75% of our revenue was chronic in the quarter. That's a more stable...
Speaker Change: So, again, on the acute side, a little bit of an atypical year is, yes, you would typically see some of that seasonal step down. But as John said, we saw considerable momentum coming out of the fourth quarter with the supply chain dynamics and competitive environments. So, you know, I think there would be.
Speaker Change: a modest amount of what you would have historically seen from a Q1 seasonality.
Speaker Change: Got it. And then maybe as I think about the Stellara Impact again, so I appreciate the gross profit dollar impact disclosure. I know you've you spent a decent bit of
Speaker Change: money on supporting those patients on the GNA side. How should we be thinking about what you're doing there as a way to adjust or adapt to the changes in the economics for that specific tribe?
Speaker Change: Yeah, look, I mean, A, as John said, I think first and foremost, I think it's a testament to the ability for us to devise and develop targeted clinical programs for highly complex patient cohorts.
I think LORC is...
Speaker Change: As Scalara evolves as a therapy, it's still a therapy that, you know, is attractive for us. Maybe not as attractive as it was in the past, but we're going to continue to put the patient first and maintain...
you know, the clinical support for those complex patients.
Speaker Change: How behind the scenes we reallocate and redeploy scarce spending resources to support the growth initiatives is something that has been a hallmark of this platform that we've done for
Speaker Change: for years. And so, look, you know, we were confident in the, you know, low single digit growth profile of spending and behind the curtain, so to speak, there's a lot of
Speaker Change: redeployment, reallocation, but our commitment is that given the complexity of these patients, we will continue to support them, you know, as we have in the past.
Awesome. Thanks, Mike.
Thanks Brian.
Speaker Change: Thank you. Our next question comes from the line of Lisa Gill with JP Morgan. Your line is now open.
Lisa Gill: Great. Thanks so much. And good morning. Just have a couple of questions. So, first, Mike, I have a number of questions. You talked about raising revenue by $100 million, EBITDA by $5 million, and said primarily that's Intramed. How should I think about the margins at Intramed? I mean, that would assume that there's roughly a 5% EBITDA margin on that business.
Lisa Gill: based on your comments. Is there an opportunity to get that, you know, towards the low double-digit overall, or I'm sorry, high single-digit, you know, EBITDA that you have on the business overall? Or is there something that we should think about within that line of business, would be my first question.
John Rademacher: Yeah, I think Lisa, as we think about the intramed, as John said, we're really excited about, you know, the expansion and the local presence that they have in South Carolina, which is an important market, and it was really unmatched.
John Rademacher: Look, this has been an algorithm that we've focused as we think about accretive M&A.
John Rademacher: is looking at folks that might not have the same procurement leverage.
John Rademacher: technology tools and capabilities that we have and so I think you know the algorithm that we think about this is naturally this was somewhere in the mid teens from a multiple again it's not a perfect apples-to-apples comparison
John Rademacher: But the strength and conviction we have in pursuing some of these smaller assets is
John Rademacher: bringing the leverage in the tools and capabilities that we have and we'd be confident that this would be in you know low low double-digit multiple before too long and as John mentioned integration efforts are
John Rademacher: are well underway. You think about the obvious things around some of the limited distribution therapies that we have that frankly they did not. The leverage from a procurement perspective as well as just a lot of the efficiencies.
John Rademacher: and RevCycle and other automation tools that we've developed over the last couple of years.
Speaker Change: And then just if we think about the comment that John made around, you know, 800 home infusion providers out in the marketplace. And as I think about your acquisition strategy, right, you're 1.6 times leveraged right now. So obviously a lot of opportunity to make those.
Speaker Change: Huckin type of acquisitions. How should I think about, you know, what you're targeting, what you think you could do in a given year?
Speaker Change: Any parameters around, hey, we only want to do X number of transactions, or, you know, I think you brought up both limited distribution, advanced practitioner, is it?
Speaker Change: specific types of practices that you're looking for, and then just, you know, bringing that back to the number side, you talked about what you pay for for Intramed, right, a mid-teens kind of multiple. How would you say the current environment is from a pricing perspective when we think about capital deployment?
Speaker Change: Yeah, a lot to unpack. Look, from our perspective, I'll start and let John jump in. Look, it's a pretty simple lens, and first and foremost, we do not feel capital constrained. We are very active.
John Rademacher: in the M&A area, we see pretty much every book come into market. And frankly, it's not that big of a neighborhood. We know everybody living on the street. The challenge for us, Lisa, is as we think about going after core infusion providers.
John Rademacher: Again, we have 93 compounding pharmacies across the United States. There isn't a major metropolitan area that we don't have a presence in. So, you know, the first question John and I always ask is, what's the strategic value that's sustainable for this opportunity?
John Rademacher: And the economics are relatively straightforward in terms of the equation that we bring around procurement, leverage, and other sources of synergies. But candidly,
John Rademacher: we have an expansive brick and mortar footprint. So the challenge really becomes what's that strategic value? I think Intramet is a perfect example of where we've known and we've.
John Rademacher: We've been envious of years of the presence that they've had in this local market and they definitely are solidifying our competitive position.
John Rademacher: So from a, and we have a very solid integration playbook. So we are not constrained from, you know, the number of transactions we can pursue a year. Moreover, it's really more around making sure that
John Rademacher: we can articulate to shareholders the sustainable strategic value of pursuing these assets.
Speaker Change: Yeah, and the only other thing I'd add, Lisa, is, you know, as we have talked about, that ability for us to identify these organizations that have some unique capabilities and or density in a market. You take a look at Intermed Plus,
Speaker Change: and the model that they were operating, both a blended advanced practitioner as well as the pharmacy infrastructure. There's just some unique capabilities that they had there that we were really excited about, you know, through that process.
Speaker Change: But as Mike said, you know, with the footprint that we have today, we'll be very disciplined in the way that we'll look to deploy that capital. There are organizations that kind of are in alignment with the...
Speaker Change: multiple ways in which we can deploy capital in our strategy. We don't feel as if we have to do M&A because we have a share buyback program that we think can deliver value to our shareholders or in turn if we find the right type of assets in the right locations with the right characteristics we can deploy the capital in a creative way.
Great. Thanks so much and congratulations on the good numbers.
Thanks, Lisa.
Thank you.
Speaker Change: Our next question comes from the line of Kido Chickering with Deutsche Bank. Your line is now open.
Speaker Change: Hey, good morning guys. Looking at your guidance, do you guys assume any impact of biosimilars for Celera and as you sign contracts with the biosimilar manufacturers, because many of those are interchangeable at the pharmacy level, would those be accretive to your guidance assumptions?
Speaker Change: Yeah, Peter. I mean, the STELLARA impact that we called out is really just a change in dynamics from our procurement. Again, it's going to continue to evolve. I know a couple of biosimilars have already been approved.
Speaker Change: The way I would characterize it is, you know, we have handicapped behind the curtain how we think that, you know, the biosimilars will evolve, but I wouldn't characterize it as any material impact in the current year from the biosimilar impact.
Speaker Change: Okay, fair enough. And then on the acute side of the business, normally when you see large exits...
Speaker Change: You guys scaled labor pretty quickly, and that pressure is your labor costs in the near term. Can you sort of talk about your labor, what you guys saw in the fourth quarter, sort of did that pressure you guys into that fade in 2025, and how should we think about the acute growth in 2025 sort of from these market exits?
Speaker Change: Hey, Peter. Look, from a labor standpoint, we feel we're in a pretty strong position.
Speaker Change: know, our team from our search and staffing and recruiting teams were active early. We learned through a couple other incidents in the marketplace where there were shifting dynamics.
Speaker Change: what works in that process. We have a pretty strong playbook that we executed around that. And I think that, you know, that ability to recruit the talent that was necessary to start to take on some additional volumes. We feel like we're well-positioned in those markets and have the capacity to take on additional patients.
Speaker Change: as the IV bag shortage started to diminish and the referral sources were looking for alternatives in those marketplaces.
Speaker Change: Okay, last one here for me. With the exits of those payers who also, you know, do, you know, you know, acute home infusion, does that change any of the negotiations as it relates to the chronic side of the business with those payers, because they need you more on the acute side and have less capabilities there? Thanks.
Speaker Change: You know, we certainly use the balance of our portfolio as being part of the value proposition that we're offering to the payer community, the ability to take on...
Speaker Change: Dialogue around the total cost of care of how we can help support their members by providing that high quality care at an appropriate cost in a setting in which their members want to receive it and help them with the high level of patient satisfaction that we're able to deliver, we think is a very compelling value proposition and one that we will look to make certain we're extracting fair value for.
Great. Thanks, guys.
Thank you.
Thank you.
Speaker Change: Our next question comes from the line of Konstantin Davids with Citizens. Your line is now open.
Speaker Change: Thanks. John, in your prepared remarks, you mentioned those two new
Konstantin Davids: state-of-the-art pharmacies that opened in the fourth quarter. Can you just maybe expand a little bit about how those might differ from a typical pharmacy and is there an opportunity to further rationalize your legacy footprint or is this just really capacity that you need to needed to add to support future growth?
Konstantin Davids: Yeah, we continue to evolve our thinking and certainly advance from both the technology as well as the build of those facilities based on, you know, best practices and learnings over the years of putting shovels in the ground and building pharmacies.
Konstantin Davids: Most of the advancements that we see is certainly in the clean room structure, whether we have different redundancies within the clean rooms, as well as how we manage them to remain aseptic in the structure, but also the workflow of being able to be more efficient in bringing product in and product out of those those clean room facilities.
Konstantin Davids: and we're going to be talking about the new york metro area on that. Florida is a really important market for us. And, again, similar to what we did in New York, we took that state of the art concept of having redundancy within the infrastructure and really an opportunity to build out a bigger, more regional type of focused facility in campa that
Konstantin Davids: to have a stronger footprint and an ability to reach across the entire state, which is a really important geography for us. Again, gave us that strength and stability within the infrastructure, but also capacity to continue to grow.
Konstantin Davids: So, you know, we continue to always look at the network design. We like the resilience that we have. We have the ability to move product and doses around if necessary due to natural disasters, due to workflow management and load balancing that at times is necessary within this business.
Konstantin Davids: But we're always going to look to make certain that we have an optimal network design. And as, you know, we continue to say, use this national scale, but be able to be very responsive at a local level.
Speaker Change: Thanks for the call around that and then I guess just lastly I don't know if I missed this but can you just give us an update on the in-suite utilization and...
Speaker Change: To what extent is the calendar turned to 2025? Any payer partners are increasingly looking at maybe mandating certain types of service this year and beyond.
Speaker Change: Yeah, it's been a great story Constantine. I mean, today we're well over a third of our nursing visits are occurring in one of our infusion suites and just to re-
played the tape, you know, we really started our aggressive.
Speaker Change: infusion suite expansion in the latter part of 2021 when we were about 16, 17 percent of our nurse events were occurring in one of our suites. So not only has the pie grown
substantially over the last...
has effectively doubled.
Speaker Change: That obviously provides us with a more efficient clinical labor deployment equation. You know, we're seeing well over 20% nurse productivity uplift.
Speaker Change: from those suites. And again, I think it's important to underscore, and we always do, that we don't force patients into a suite. We make them aware of conveniently located suites.
This admittedly is a little more applicable for those.
Speaker Change: longer-haul maintenance chronic patients that are on service, but interestingly we actually see quite a few of our acute patients utilizing the suites as well and so
Speaker Change: The payers understand this is part of to your first question about our multi-year sustained capital investment to provide the highest quality of care and that's going to continue and I think
Speaker Change: This is an area we'll continue to invest in, especially as we can enhance that footprint of over 175 infusion locations to incorporate our advanced practitioner capabilities, which expands the scope and not just the scale of the suite capacity.
Speaker Change: And then the last part of your question, Konstantin, you know, we have seen an uptick in activity around site-of-care initiatives at the payer level, certainly a higher level of interest.
Speaker Change: And I think as we've been in dialogue with the payer partners.
that are looking at this.
high-quality settings of care.
Great. Thanks for taking the questions, guys.
Thanks, Kathleen.
Thank you.
Speaker Change: Our next question comes from the line of Joanna Gudjuk with Bank of America. Your line is now open.
Joanna Gudjuk: Hi, good morning. Thanks so much. I guess several follow-ups. First, very quick on the guidance rate versus January, so the hundred million revenue and five million EBITDA versus prior range. That's only the deal, correct?
Joanna Gudjuk: I'd say it's generally Joanna. There's been a little bit of a revision on the revenue side but yeah the profitability is really just the inclusion of Intramed for the most part.
Joanna Gudjuk: model. So is this something you're including in your seats or just this completely separate clinic because I was under the impression that this is separate clinic.
Joanna Gudjuk: and also can you give us a sense of you know how many of these you have and you know utilization because I guess when you give us the stats of you know one-third of your nursing visits in Sweetsack does that include this new model or is there something separate and also can you expand you know um
Speaker Change: on the benefit, it sounds like you can do, you know, more or different therapies. So what specifically, I guess, those clinics are used for? Is it more oncology, timers, or anything, you know, for a picture in terms of the reasonings for having a different model?
Speaker Change: Yeah, Juliana, so with the advanced practitioner model, we had acquired Wasatch Infusion a few years back that operated this model. So, you know, we have been in
Speaker Change: a stage of certainly understanding and learning how to operate the advanced practitioner clinics through that process.
Speaker Change: the 175 locations that we have today as we call out.
Speaker Change: are primarily infusion suites, not these infusion centers with advanced practitioner. But our ability to convert them over to an advanced practitioner model is the things that we're looking at and pursuing. Today we have about 15 sites that operate with this advanced practitioner model. You know, our expectations are that's gonna grow over time. And what that allows us to do is really three things. One is,
Speaker Change: Having the advanced practitioner allows us to offer a more comprehensive clinical services for patients that have more complex needs and or therapies that are more complex in the administration and oversight that's required.
especially in areas for Medicare fee-for-service.
Speaker Change: in which there is not a broad access for home infusion for those patients. So it broadens that market access to be able to do that. The third thing it does is from that clinical complexity standpoint, it does allow us to be a deeper partner with Pharma who may have some very unique products that they're bringing forward in that rare and orphan space and or that have, again, higher levels of complex.
Speaker Change: need given the opportunity that the nurse practitioner and that advanced practitioner model had to manage the patient more holistically.
Speaker Change: So, we believe this is an interesting adjacency for us to continue to invest in and grow. One of the, you know, real positive things that we found with the Intramed Plus
Speaker Change: acquisition was they're operating both the pharmacy as well as the advanced practitioner model. Within South Carolina there's really good learnings that we can take in and utilize across our platform that we are gaining through that acquisition and as we look at the integration.
Speaker Change: And over time, we expect that'll expand the number of products that we have available as well as broaden the market access.
given that we can offer
Speaker Change: solutions to patients in the home, through the pharmacy in one of our infusion suites, or with this advanced practitioner model, we think we will have the most comprehensive solution set to be able to provide infusion services to to patients in the marketplace.
Speaker Change: Now, this is great, wonderful. And if I may just, please, if I were your last one, also follow up on the discussion around your payers, but I guess specifically on the Medicare Advantage, because I guess...
Speaker Change: Those guys are seeing pressure on the cost trend and reimbursement and such. It sounds like you're seeing actually the increased push when it comes to the shift.
Speaker Change: right, into the lower-cost settings, right? So is that what's happening, like, despite the fact that they are getting pressured?
Speaker Change: the contract negotiations are not getting, you know, to tackle. Can you kind of talk about, you know, where you are on, you know, maybe the years you're negotiating now when it comes to those negotiations with MA Plan? Thank you.
Yeah
Speaker Change: Number one, I mean, we have over 800 pair of relationships over, you know, 1,200, 1,300 contracts. So, you know, not everyone operates the same way on that, Joanna, but I can tell you...
Speaker Change: want to receive it. And so that ability to partner with them to help be a solution in improving that medical loss ratio, we have very constructive conversations and those are things that we will continue to be in deep conversations across a wide number of payers in that.
Speaker Change: You know, our expectations as we move forward is we've always believed that we play a very valuable role in helping them manage that when they're thinking about.
Speaker Change: member satisfaction when they're thinking about the quality of care and when they're thinking about that total cost.
We're well aligned.
Speaker Change: with them, and we've got mutual, you know, targets in which we're trying to drive to. So, you know, I'm always cautiously optimistic that we're on the right side of the, and on the same side of the table with them as we're moving those forward, and, you know, we're going to make certain that we extract fair value for the value that we're delivering, but we think that it's one in which they benefit as well.
Thank you so much.
Thank you, Joanna.
Speaker Change: Our next question comes from the line of Jamie Purce of Goldman Sachs. Your line is now open.
Speaker Change: Hi, this is Sarah Conrad on for Jamie. Your SG&A dollars and growth stepped up in 4Q. Can you discuss what investments you're making in the operational or commercial infrastructure? And then is this also a good run rate to consider for 2025?
Speaker Change: Good morning. Yeah, look, I mean, I think as we as we talked, John talked a little bit about with some of the acute opportunities, I think we, you know,
Speaker Change: invested commensurate with what we saw were some of the market opportunities. There are some indirect investments around patient registration, rev cycle.
some of the indirect support efforts.
Speaker Change: to make sure that we could be responsive to some of the acute local market opportunities, additional commercial resources, etc., to make sure we're being responsive to
Speaker Change: to our referral sources. And I think that's a reasonable expectation. I think, you know, the great news is...
Speaker Change: indirect spending as a percent of revenue continues to drop. It was twelve point two percent of revenue in the fourth quarter and you know I think that's back to the earlier question around the growth algorithm that's central to our thesis and I think that remains
Speaker Change: We remain confident in that. So I think it's to the latter part of your question, I think it's a reasonable baseline as you think about 25.
Speaker Change: Helpful, thank you. And then on the Juvik, can you provide an update on the traction in that product and have unit economics changed at all since launch or do you expect those to change going forward either from a gross profit or an operating profit perspective?
Speaker Change: Yeah, look, I mean, we don't provide specific economics on specific therapies for obvious competitive reasons. I think Vyjuvic is one of several LDD and rare and orphan therapies that
Speaker Change: you know, I think is a clinical success story as we partnered with Crystal Biotech to commercialize what was a new.
Speaker Change: revolutionary treatment for DEB and look I think we've also been very candid that you know as we launch these rare and orphans and LDDs these are typically mid-single-digit gross margin profile therapies because the therapy cost is
is considerable relative to other therapies in our portfolio.
But yet...
Speaker Change: At the dollar gross profit line, you know, it's still an attractive therapy for us to collaborate on with innovative biotech enterprises.
Speaker Change: No fundamental change in that again, I think, as we've tried to articulate these, you know, over time as we build patient cohorts, we can, you know, drive relatively modest improvements and in the margin, but that's over a course of years. So the short answer is.
Speaker Change: You know, while we remain really excited about our collaboration with Crystal and others, you know, no fundamental way we're thinking about the economics on these therapies.
Thank you.
Thanks, Eric.
Thank you.
Speaker Change: This concludes the question and answer session. I would now like to turn it back to management for closing remarks.
Speaker Change: Thank you all for joining us this morning and participating on our call. As we outlined, 2024 was a very productive year and our team continues to execute at a very high level. We understand the important role that we play in delivering care to our patients and their families. And we look forward to serving even more patients and delivering value to our shareholders in 2025.
Take care and have a great day. Thank you.
Speaker Change: Thank you for participation in today's conference. This does conclude the program. You may now disconnect.