Q2 2025 Option Care Health Inc Earnings Call

Good day, and thank you for standing by. Welcome to the Option Care Health Second Quarter 2025 Earnings Conference Call. 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 on your telephone. You will then hear an automated message. Advising. Your hand is raised to a draw. Your question. Please, press star 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. Nicole Mio, senior, Vice President of Finance. 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

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. We encourage you to review the information in today's press release as well. As, in our form 10K filed, with the SEC, regarding the specific risks and uncertainties.

Would you do not undertake any duty to update any forward-looking statements except as required by law?

During this 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 and this morning's press release posted on the investor relations portion of our website and with that, I will turn the call over to John ramaker president and chief executive officer

Thanks, Nicole and good morning everyone. As you will see in our second quarter results, the option Care Health, Team delivered, another strong quarter with balanced growth across the portfolio.

As a result, we are, increasing our guidance range for the year across Revenue, adjusted IBA and adjusted eps.

Option Care Health operates in an industry with growing demand and we believe we are well positioned as a leading independent provider of home and alternate site infusion services with significant scale, a diverse portfolio, and a resilient operating model.

During the quarter, our team continued to capitalize on shifting competitive dynamics and deepen partnerships with payers and pharmaceutical manufacturers.

We also capitalize on our national scale with local responsiveness, which we believe remains a differentiator.

And we continue to see positive impacts on the resilient and nimble operating model we have created, which enables us to deliver consistent results in any operating environment.

Indeed over my nearly 10 years leading, this organization, option Care Health has thrived through regulatory change biosimilar events changing competitive, dynamics, therapy, Administration, shifts and labor and supply shortages.

Forward.

Michael go deeper into the financials in a few minutes.

but to highlight some key takeaways,

Revenue, momentum continued in the second quarter with balanced performance across the portfolio.

Building on first quarter results. We delivered Revenue. Growth of 15% over the second quarter of last year.

Acute therapy growth was in the mid-teens, and the team executed well to capitalize on shifting industry dynamics and to leverage our continued investments in capabilities to be locally responsive to serve the specific needs of patients on these therapies.

Our chronic therapies also performed well with growth in the mid- teams.

We continue to see solid performance in our rare and orphan and limited distribution therapies a testament to our national scale and ability to reach smaller, cohorts of patients, as we continue to partner with Pharma to develop and deliver Innovative programs customized to their Therapies.

The strength of the Topline performance, across the broad side of therapies, along with discipline spending drove 5%. Adjusted ebit, dog growth on a year-over-year basis. Despite the previously, articulated, headwinds that we face,

During the quarter, we continue to focus on our relationships with health plans, as we believe our value proposition provides a meaningful opportunity to reduce the total cost of care for their members and help them better manage their medical loss. Ratios.

Providing high quality Care at an appropriate cost in a setting in which their members want to receive. It makes us an important part of the solution to the pressures there facing of an aging population and increased disease prevalence in utilization of healthcare services.

Our Market access team, continue to work closely, with national payers and health plans across the country to develop meaningful programs to broaden access and provide better, more cost-effective care for their members.

We also continue to deepen our relationships with our Pharma partners by leveraging, our clinical capabilities, Pharmacy infrastructure and Broad Geographic coverage to help enable tailored programs and services to Patient populations with complex needs.

Our network of nearly 90 locations, coupled with our clinical centers of excellence and extensive nursing network of over 3,000 nurses, including Navin Health.

Provides a strong platform and unparalleled capabilities.

We continue to expand our portfolio of therapies, including Hugo and Zuri.

As well as a number of other limited distribution and rare and orphan drugs.

Demonstrating our capabilities to serve the needs of patients with these complex situations.

Shifting gears 1 of the Hallmarks of our business has been our focus on operating Effectiveness and cash generation.

As a result, we have a strong balance sheet and flexibility to deploy Capital to increase value to our shareholders.

In the second quarter, we generated over 90 million dollars in cash flow from operations and we are well on our way to delivering more than 320 million of cash flow from operations in the full year.

Our multifaceted approach to capital deployment allows us to thoughtfully assess opportunities to utilize our cash through M&A, internal investments, or share repurchases.

We remain active in both m&a and internal investment opportunities, as we look to strengthen our platform and add to our solution set and clinical capabilities.

Share repurchase continues to be an attractive way to create value for our shareholders as evidence in our adjusted ETFs, performance and underscores. The confidence we have in the business and its long-term potential

to that end. We executed on $50 million of share repurchases during the quarter,

We also continue to invest in our people process, technology and Facilities.

For example, the Investments we made in artificial intelligence Advanced analytics and our partnership with Talent here to support our commitment, to improving operating, efficiency and have been critical to our leverage growth.

On the clinical resource efficiency front, approximately 35% of our nursing visits occurred in 1 of our Suites, this quarter and they even helped conducted almost 54,000, nursing businesses in the quarter.

Both of these remain key enablers of our ability to of effectively take on new patients.

Through expanding our competencies as well as providing access to new patient, cohorts.

This clinical model provides a platform to serve higher Acuity patients under the care of a nurse practitioner.

As well as to leverage therapies already in our portfolio to support patients who, otherwise may not have been able to be served profitably.

Our investments in intramed plus and elsewhere across the country have provided valuable insights into our successful execution of this model which we believe are critical to expanding across our national network.

Given the strength of the first half of this year, we have increased our full year revenue, adjusted the beta, and adjusted EPS guidance range, which reflects our confidence in the momentum underway and the continued resilience of our platform and execution of our team.

With that, I'll hand the call over to Mike to provide additional details.

Thanks, John, and good morning, everyone. As John mentioned, the second quarter was quite strong as we built up solid momentum from the first quarter.

Revenue growth of 15.4% was balanced with mid-teens growth within both our acute and chronic portfolios of therapy.

The acute therapy growth. We delivered in the quarter was notably higher than we believe the overall Market to be growing. And as John conveyed, the team executed well across the country

Gross profit of $269 million grew almost 8% versus the second quarter last year.

This reflects the benefit from therapy, mixed with outsized acute growth as well as the performance of The Chronic Therapies.

Gross margin rate was negatively impacted by some of the lower margin limited distribution and rare and orphan therapies, but we continue to be encouraged by their gross profit dollar contribution.

Sgna was in line with our expectations.

And we expect continued strong, spending leverage for the year. As we see the benefits from the Investments. We have made in our infrastructure,

adjusted evid of 114 million through 5.2% over the prior year and represented 8.1% in net revenue.

And adjusted earnings per share of 41 cents through 10.8% over the prior year.

As John mentioned, we were active in deploying capital. In the second quarter repurchasing, 50 million dollars in stock.

We will continue to thoughtfully consider the balanced across m&a, internal Investments, and share repurchase.

And we maintain a strong balance sheet and capital structure with the capacity to continue executing. Our multifaceted strategy.

Finally, I want to provide a quick update on our expectations for the full year.

Given the strong momentum in the first half.

For the full year 2025. We now expect to generate revenue of 5.5 billion to 5.65 billion dollars and adjusted ebida of 465 million to 475 million.

Which we believe will translate into adjusted earnings per share of a $1.65 to $1.72.

Additionally, we continue to expect to generate more than 320 million in cash flow from operations.

Consistent with our previous comments, our guidance considers our current expectations on the impact of potential tariffs. Mfn pricing, and similar policy changes, which we believe will not have a material Financial impact in 2025

Overall, we are excited about the strong first half of 2025 and we expect it will be another year of growth for our option, Care Health.

And with that, we will open the call for questions.

Operator.

Thank you as a reminder to ask a question. Please press star. When 1 of your telephone and wait for your name to be announced.

To withdraw your question, please press star 11 again.

Our first question comes from the line of David McDonald with truist. Your line is now open.

Yeah, good morning, guys. Um, a couple of questions here. Um, first of all, can you guys just talk a little bit about just conversations with payers? I mean, it's obviously been a bit of a challenge.

Um at the payer level and just you know, anything incremental or accelerating in terms of just conversations around site of service redirection around, you know candidly them looking more aggressively at things to help offset some of the cost pressures that they're seeing.

An appropriate cost, um, in a setting in which patients want to receive it. So, uh, that continues to move forward interested in site of care initiatives. Um, continues to increase, um, and we're seeing volumes, um, starting to pick up in those areas, uh, where, uh, some of the pairs are taking a more. Um, I I guess a more, uh, aggressive approach to help uh, provide their members with alternatives to some of the higher cost setting.

Um, a couple of other guys, just first on the annual attorney Fusion Suites. Are you continuing to see chronic run pretty meaningfully ahead of acute? And, you know, this year, with some of the business that you've picked up, you know, maybe that shift gets muted a little bit. But is there any reason we shouldn't expect that number to continue to drift higher?

Just as in a quote normalized year, your chronic business is growing more quickly than the acute business.

Yeah, I I I think that's I think that's that's fair again. As we mentioned, you know we're up to 35%. We basically doubled. The penetration since we check since we initiated our our our Center strategy a couple of years ago. And again you know the the majority of the utilization of the infusion Suites are those chronic patients with recurring, scheduled, um, interactions with us. The fact that we were able to increase the penetration in a quarter, where we still delivered mid teens growth in the acute just speak to to your point, which is, you know, the penetration on The Chronic side continues to be very, very encouraging.

Okay. Uh, last two guys, um, John, during your prepared remarks, you talked about the, um, Advanced Practitioner model and, you know, some patients in your portfolio that, you know, maybe you're able to service. Now, I would assume that, you know, that's something reimbursement-related, maybe Medicare or whatever. But I was wondering if you could just drill down on that. And then I just had one quick follow-up.

Yeah. So as you as, you know, we we don't have a broad uh, access for a Medicare fee for service beneficiaries. This allows us to expand our, um, the the portfolio of patients that we can serve utilizing that advanced practitioner, uh, model as well as you know, it, it also, in my prepared remarks. I mean, we're we're also utilizing it for more complex patients, that that may have some additional needs that a nurse, practitioner can provide, uh, you know, better oversight or or deeper oversight as well as help manage that care plan. So we're encouraged by the progress that we're making on this and we think that it will continue to be a vector of growth for us as we're moving ahead.

And then guys, just last question, you know, a recent proposed rule seemed to, you know, acknowledge the cost differential. Um, in terms of, you know, different sites of care around infusion. I'm just curious any, you know, high-level thoughts or any updates just in terms of

The hill and conversations down there, and you know, just the acknowledgment of kind of, you know, what you guys do and how much money you save.

Yeah, there's been a couple, uh, you know, positive moves on that. Um, you know, certainly there's recognition of, uh, you know, the the reduced cost of utilizing services in home and Alternate sites. Um, there is continued efforts uh both as an industry, as well as us individually to continue to uh, to advance that wherever we can, you know, if site neutrality or other things, um, continue to pick up, uh, momentum, uh, as ways that they're going to, uh, you know, mitigate some of the cost Trends. Uh, over time, we feel like we're really well positioned. Um, given the cost structure that we operate with, as well as the reimbursement. Um, comparables to some of the other sites, uh, that are chosen. So, you know, we're we're going to continue to have the conversations, um, you know, on the hill and uh, with key legislators, uh, to try to advance, uh, on behalf of the industry. Uh, but feel as if, uh, you know, we're on the right side of most of those conversations, where coffee

Cost and quality are being measured.

Okay. Thanks guys. Appreciate it.

Thanks babe.

Our next question comes from the line of Maya McPherson with William Blair. Your line is now open.

Maya, your line is open. Please check your mute button.

Our next question comes from the line of Constantine Davidas with Citizens. Your line is now open.

Thanks. Um, couple quick Financial questions. Just Mike wondering if you can update us on the solar expectations for the year, I know it's around.

5 million in the first quarter. Just wondering how you're thinking about the impact across the balance. Excuse me, 2025, thanks.

Reporter was right around 20 million dollars. It was actually probably a nudge above but, you know, for the for the full year, um, and I think that a decent proxy for the, the subsequent 2 quarters. So, you know, I think we're probably thinking for the year, our initial impact range was 60 to 70 million. I think we're probably in the higher end of that range, um, and that's been fully contemplated in the guidance. Which again is John mentioned, given the strength of the business we we've been able to more than mitigate

and then just

follow up on the therapeutic. Mix is, is it? Is it? Alright to think that, I mean you've had so much acute. Momentum in recent quarters are the operating margins on The Chronic. I mean, acute portfolio. Are they still pretty comparable at this point?

In terms of what we've previously said, yeah, um, you know, very consistent, what we've said, um, Constantine is that, you know, the acute portfolio. You know, the, the product margins are north of 50%. Uh, you know, the, uh, the The Chronic portfolio presents, you know, anywhere from 5 to 30%, uh, margin profiles. Again, a couple of moving Dynamics, especially when you look at the margin rate year-over-year. Obviously, um, the Stellar headline had had a pretty pretty meaningful impact on that. Um, but obviously we we we love the, the trajectory of the acute, uh, portfolio as well. And, you know, with the rare and orphan. Um,

Momentum, we've seen that those those therapies tend to be in the in the lower end of that 5 to 30% range, so a lot, a lot of moving pieces. Again, the way as, you know, we're really looking at the product or the uh, the the gross profit dollars which um

Which we're thrilled with the performance in the quarter.

Great. And then just last John, um, I think you alluded to sort of m&a opportunities, and, and still seems like there's a decent amount of infusion activity occurring in the market. Is it still right to sort of classify, your interest is focused on the core? Or are you seeing an opportunities and some adjacent areas that you look to explore?

Yeah, we we we continue to be very focused around looking for opportunities, uh, you know, on the core. And and looking to expand, uh, capability that, you know, I think as we've said, um, you know, we we've also, uh, you know, continue to think about, uh, areas that are enablement, um, whether it's in, uh, in nursing and other, uh, capabilities that, that, that help us continue to advance to grow and, and increase some of the clinical capabilities. So, uh, you know, it's it's a pretty active Market. Um, you know, our commitment to shareholders has always been that, uh, it'll be both strategic and economic, uh, when we're evaluating, uh, where where we deploy, uh, your, your Capital, uh, you know, in in

Those types of activities, and therefore, you know, I think you'll see us in a very disciplined way continue to look for opportunities to utilize, um, you know, the strength of the balance sheet in ways that will enhance, um, you know, value for our shareholders.

Thank you.

our next question comes from the line of PTO churring with Deutsche Bank, your line is now open,

Hey, good morning guys. Uh, thanks for taking my question. I guess looking at sort of the second quarter gross profit dollars. You know, if I adjust the first quarter, the million dollar headwind from Stelara

And the second quarter or the 2000 head 1 from Stelara, it grows profit dollar. Growth accelerated, pretty nice, uh, year-over-year from 1 key to 2q with the acute growth being similar, I think you said mid teens and 1 q and mid teens and 2 QQQ. So it Bridges where the gross profit growth dollars are coming from if we exclude the solar impact. Thank you.

Yeah, I mean that, that that that's a lot of moving pieces, you know, I mean, look at the end of the day, you you stole our Thunder. The way we manage this business, is we look to maximize the growth profit dollar growth when you normalize for the impact year-over-year? And again, we don't spend a lot of time, you know, looking at the world with and without but you know our growth margins actually work consistent and expanded year-over-year.

um,

Side of the house which again has been very productive for us. Um thus far this year um as well as just solid execution both within those lower gross margin rate.

Uh, LVDS and rare and orphan therapies, but also in kind of what I'll call the more established chronic therapies for, you know, the influx of ABs and immune globulins and MS therapies, etc.

Okay and then the follow-up here is, you know, as you've taken the acute market, share from the excess of Corona Optimum, uh, on the acute side. Have you seen any market share growth? Uh, on on The Chronic side? And then the second question there is, as you renegotiate with payers

About the, uh, acute and chronic with the market access. Does this give you guys more leverage, uh, to get better better? Negotiating rates on The Chronic side uh and acute side in 2026? Thanks.

Yeah, from a market. I'll start. And I'll, I'll pass to to, to John to answer the second part of your question. Peter, you know, as we've talked, broadly, and again, these are estimates, um, you know, the acute therapy portfolio. Those are very mature, uh, therapies that we administer, we, we estimate that those market dynamics, suggest a low single digit market growth. So um, I'll let you project market share. But you know, we're very encouraged delivering mid teens growth and what we think is a very mature uh, therapeutic category, you know, the chronic side is a very Broad.

Uh, portfolio of therapies. We've estimated that collectively, those chronic therapies are growing in the low double digits, given all the Dynamics with new therapy, introductions and things going subq or oral Etc. Um, so again in a quarter where we're delivering mid teens growth um across both of those portfolios,

We're feeling very good about the execution of the team across the board.

And on the the payer side. Um again uh continued strong progress in uh, deepening our relationships there. Um, as you point out the the the strength of our portfolio and our the balance that we have across both the acute and chronic. Um, therapeutic categories is 1 that we use to, um, you know, to reinforce the the value that we bring as you would expect at this point in time given some of the medical loss ratio challenges. Um, things like bed Day Management. Um, and uh, and the total cost of care our front and mind, um, that ability for us to, uh, be in meaningful partner in network, uh, to provide uh, products across the the, the portfolio that we have is something that we reinforce, uh, as we are articulating to them the value of our partnership. So we're always going to, you know, make certain that we are being paid fairly for the value that we deliver. And, uh, you know, that that is part of the the conversation, but the national scale

That we have, but the local responsiveness and then the breadth of the portfolio we think is a differentiator and something that we're going to continue to invest in and continue to capitalize on in this Marketplace uh, today and into the future.

Great. Thanks so much and nice job, guys.

Thank you.

Our next question comes from the line of Joanna gagic with Bank of America. Your line is now open.

Hey, good morning. Thanks so much for taking that question. So a couple I guess um follow up um, to other uh, comments that were made on the advanced practitioner model. Um, so that's very interesting. Um, you know what you're doing there. So can you tell us a little bit more?

In terms of, um, you know, the progress that they're using, this model, you know, how many chairs are in this model? And also, are you starting to take more oncology patients or Alzheimer patients? Any additional quality you might have on that.

Uh, yeah, Joanna. Um, you know, we we have as we've called out before, you know, we operate 170 facilities across the us and we have over 750 shares, uh, that that we operate. Um, we are in the process of, you know, looking at how do we utilize them for both, uh, you know, a, a alternate site to the home as well as this Advanced practitioner model and continue to evolve our our model through that process. So we really like, uh, that progress is you would expect, um, given, um, corporate practice of Medicine.

Um, that is a, you know, a part of that uh, care model and and things that we can look at, um, as we're looking to expand their, you know, there are other products that are in our portfolio that don't make as much sense to be able to do in the home. Just because of the, um, utilization of of a nursing resource and drive time, and things of that nature. So to be able to have, um, a, a alternative to the home. Um, with the center-based uh, capabilities. We think it's just enhances our capabilities and uh, broadens the uh, the population of patients in which we can serve. So we're going to continue to, uh, move that forward, uh, again, encouraging signs, um, for, you know, those vectors of growth in in Alzheimer's and in oncology, you know, at this point in time, um, you know it's ticking up. Um, it's it's not a meaningful part of the overall portfolio, but we think, um, it just positions us. Well as we're thinking about where growth will come into the future.

And I guess if I met on, just, I guess at the broader, um, sweet portfolio, right? Uh, so I understand, uh, uh, 7 750 charts you have their, you know, can you talk about the, the utilization of those? Um, I mean, you did say, 35%, uh, of the nursing business you deliver were in the settings, but the reverse question as in like, how much, I guess more you can do without the need to grow. And then to that end week since you mentioned, um,

How you can leverage better, the the nurse and, you know, reduce the drive time and such, can you help us to understand the the margin contribution when you have, um, these settings being utilized more and more?

Yeah, Joanna look, I mean, the way we think about these centers and as you've been following us in 21st strategy of aggressive Suite expansion, you know, we've been very thoughtful and methodical, um, to make sure that as we open these, the utilization was following, um, you know, we're very encouraged, we've gone from around 17% of our nurse visits occurring, in 1 of our chairs to 35% plus. And so, um, you know, first and foremost, I think, as you've heard us, say, in the past utilization, or, or capacity isn't something we necessarily worry about most of our centers aren't operating 7 days a week or 8 hours a day. And so, as we think about the theoretical capacity, um, we, we have plenty and we'll continue to to add brick and mortar as, as the local market dynamics. Dictate the great thing is, they don't have to be running a capacity to create tremendous value for us and we haven't said, you know what the

Dollar figure is in terms of, you know, the the drop. But there's really 2 key benefits. First and foremost for those mature centers, we're seeing more than 20% nurse productivity, uplift said. Another way that nursing labor component for a typical infusion is 20% more efficient, because we're not paying for windshield time. They can, they can oversee multiple patients at the same time. It's just a more efficient scheduling but it's but we're also creating 20% more nursing capacity, which is a finite clinical resource for us which gives us the confidence to continue to aggressively, you know, expand our, our therapeutic portfolio. So um this this is a key enabler as John said to our growth, it drops, it drops value to the bottom line, but it continues to to fuel our our confidence around clinical labor capabilities.

Thank you. And if I may add a different, um, follow-up, uh, in your preferred remarks at the end, you said that you don't expect the the tire center and to be any um, or, uh, material, uh, in this year at this time, we hear and write about tariffs on, um, uh, products from Europe. And I guess that includes, um, drugs in there too. So there's debate about the 15% or just 1%. But can you, um, talk about, you know, are you doing anything in in preparation for that? Do you need to build like an inventory because maybe you knowing things are happening. And, and I guess how to think about the specific exposure to, um,

To Europe. Thank you.

We haven't been shy as you've seen in the past around using our balance sheet where necessary. And there's a lot of of strategies that we can deploy behind the scenes, you know, really to um, you know, to proactively address what we anticipate. Our our changes in the, in the drug costs. So you know, as we've modeled countless scenarios, we don't see a scenario this year, um, what, you know, and our our, our our guidance ranges incorporate, what we think would be the the impact which again, is we collectively assesses, just not Material.

Great, thank you so much.

Thanks Carolina.

Our next question.

Comes from the line of AJ rice with UBS your line is now open.

Uh hi everybody maybe just to follow up on that last train of thought first. Um

I think your inventories are up about 35 million sequentially. Um, obviously there's sort of is some ongoing chatter about the tariffs, the mfn ETC. Are, are you doing anything now or that's a tool in the tool box that you have? I wouldn't seem like a 35 million in sequential. Quarterly step up was that much in inventory is um and and anticipation of tariffs or anything like that. But uh just trying to think about how quick you can move uh to take advantage of of that uh an offset of the impact from tariffs.

Yeah, hey, Jamie look, we're constantly managing that that's less than 2 days impact. You know, we typically operate with about a month of inventory across the board. Um, you know, we're constantly looking at it as John mentioned, you know, there's, there's some new therapies that are are launching obviously with, you know, with with, you know, mid-teens growth, we want to make sure given what has been robust growth thus far this year that we have adequate supplies and, and inventory and, and the local markets to be responsive. So, um, I would say that, you know, the, the inventory increase has been deliberate and methodical. Um, but something that we're very comfortable with, again, given the the, the strength of the balance sheet and capital structure

Okay, and I know there's no other drug in your portfolio that you can wear clothes to. Um but I just I was wondering is you have your discussions with manufacturers? Um, and obviously they're going through a tremendous change as um,

Uh, now is even though it wouldn't be necessarily that meaningful to you, are you seeing?

Uh, any movement on their part to try to change the way they contract with you, um, in light of what happened with Stellar or just because of the pressures they're feeling themselves? Uh, is there anything happening on that end of it? It's worth calling out.

Uh, it's done. Um, you know, the conversations that we've had have been, um, probably more, uh, aligned towards the clinical capabilities and the ability that we have to help, uh, ensure adherence, um, you know, of their products. Um, you know, as you called out, uh, you know, our relationship with Janssen, and specifically on that product, um, is just was unique. And, um, so the board, um, you know, the rest of the manufacturers that we have relationships with, um, you know, I think they're all trying to understand, you know, what the future will hold with some of the actions being announced around pricing, etc. But we have not yet seen that, uh, be a material aspect of the way that they're contracting with us.

Okay. And then, uh, just the last question on, uh, Opex growth, uh, embedded in your second half, guidance. I know generally your annual, uh, increases I think on, uh, on that area or in the 3 to 5% range, is there. Anything unusual about what you're seeing in the back half that would either step that up or or make that rate of increase, uh, somewhat more modest.

Um, yeah, look, I mean the great news is with the leverage ability of our infrastructure. You know, we drove 50 bips, you know, Opex was up. I think High single digits are in the 10% range in the quarter. Um we still drove 50 basis points of Leverage as a percent of Revenue. Um, a couple of things that at at play their first and foremost, you know, we closed on the intramed uh, acquisition which, you know, we absorbed their, their burn. Um, so so on a quote unquote year-over-year basis. We have the, the indirect spend of

the intermed Enterprise that that's now being reported and frankly, is is, is John, mentioned, you know, we're investing in a number of areas whether it's

The the agility to to pull forward, some of those Investments. And frankly given the strength of the quarter, you know we're managing you know for the near term and the longer term and we're making some Investments for future growth initiatives. So you know I think it'll be a little bit above that in in the back half relative to our historical range uh but there's nothing fundamental or structural. It's just the opportunistic ability for us to invest for future growth in a period where we're seeing really really encouraging Topline.

Okay, great. Thanks so much.

That's amazing.

Our next question comes from the line of Brian. Tink willit with Jeffries, you'll let us know. Okay.

Hey, good morning. Um, Mike, maybe just as I think about kind of like AJ's question, how should I be thinking about your MFN exposure? I mean, just the mechanics around how that would flow through to you guys.

Um, well, Brian again.

Based on what we've seen in in there hasn't been a lot of updates. Since the original executive order again, there's some conceptual things in there around mfn that frankly. It it's hard to understand exactly how, how that's going to going to play out. Um, you know, determining what the reference prices are and what things would would, ultimately, you know, impact us. It's just way too early to tell and we haven't seen anything at least for the balance of 25.

Where that's going to to impact us. Um you know we'll continue to to keep an eye on it. But structurally how there's going to be these these International reference prices, how things would be adjusted how the government May step into start administering and operating pharmacies um as we've read the executive order, it's hard for us really to put our hands around again. I I don't know that there's going to be anything implemented to impact 25 but how it would logistically you know be executed in

Even the, you know, the near term.

Got it. Okay. I totally understand um I mean shifting to Stellar biosimilars. Are you seeing any ramp there with new patients? Go that direction for uh still are for those patients that were it would have been on. Still are like just curious what you're seeing in terms of the ramp and bios.

Yeah, Brian, uh, it's done. Uh, you know, I I'd say it was a, a slow start. Um, but we're starting to see that ramp up as we exited the quarter. Um, you know, some of the premiums are, uh, you know, starting to make that a, uh, a little bit more of a, uh, a uh, Initiative for them, uh, as they move out. That that ahead again, our our Focus has been around making certain that we have access to the products, and, you know, expanding them into our portfolio as, uh, as we move forward. Um, there certainly is other opportunities where, um, you know, there's transition of some of those patients on to uh, let's call it. The next

Generation, uh, chronic inflammatory disease products. Um, you know that are are part of our portfolio as well. So, um, you know, I think the, uh, the patient census is trending in alignment with our expectations, and, and kind of how we had thought, uh, things were going to move. So, uh, nothing out of, um, out of our expectation range. But, um, you know, as we as we exit, uh, you know, the second quarter and go into the back half of the year, uh, our expectations are that we'll continue to see increase utilization of the biosimilars, um, that, you know, at this point in time, our, our being deemed to be interchangeable, um, and therefore, uh, you know, the utilization we think will start to ramp up

Got it. Thank you.

Thanks Brian.

Our next question comes from the line of Jamie purse with Goldman Sachs, your line is now open.

Hi, good morning. This is Sarah Conrad on for Jamie.

You've continued to see strong mid-teens acute growth following the competitor exits. But can you help us understand how we should think about acute growth progression for the balance of the year ending in 2026 as you annualize these competitive exits?

Hey, Sarah. It's Mike. Um, so a couple of things: 1. I wouldn't characterize the mid-teen growth just the result of...

You know, just the the competitive Dynamics in certain markets. Again, we're seeing very solid execution, even in markets, where, you know, the competitive Dynamics remain, you know, consistent with how they bent. I think that also is attributed to some of John's comments around the fact that look, you know, as we engage with with scaled health plans and payers, they see the utility and value of a consistent Dependable National clinical model, which I think is

Served as some wind in our sails across the country.

In certain markets, there were some competitive changes late, Q3 early Q4. So you know, the, the prior year comps and we saw this in mid 22 as well, you know, the the year-over-year comp is, is going to be tougher in the fourth quarter. So on a reported basis while we're, while we're confident, we'll maintain the revenue base, the, the reported growth, we would expect to, you know, to, um,

Um to decrease a little bit in the, in the uh in the fourth quarter. And as a relates to um,

2026, you know, again, unfortunately. At this point we're just not in a position to provide, you know, forward, guidance Beyond, uh, beyond the, uh, the guidance for 2025.

AJ's Opex growth question. Um, can you help us understand?

That 10% sg&a growth that we saw in the first half and where are you prioritizing Investments going forward?

Yeah, I think to break it down high level. There's 2 to 3 points of, you know, sgna impacts from the acquisition. So deal expenses as well as the fact that we're, you know, now reporting the intramed burn, um, and there's a couple of points of growth of what I will call acceleration of of growth initiatives. So, you know, just overly simplify, you know, the, the the, the same store sales spending is still growing in that mid single digits. But, you know, as as we always have, we've been able to

To, you know, accelerate, um, some of the initiatives, again, back to my earlier comment, this is around, you know, expanding some of our clinical capabilities in the suite. Um, you know, investing in new therapy, launches Etc. So, Sarah the high level. I break it down is, you know, Opex which again decreases the percent of Revenue by 50 bucks, a year over a year. Um, that's despite to your point, you know, 10% growth, half of which is really the impact of Acquisitions and opportunistic growth initiatives.

Thank you. This concludes the question and answer session, I would know like to turn the call back over to John rademaker for closing remarks.

Yeah, thank you all for joining us this morning and participating in our call. Our team continued to execute on all levels and we're excited to continue to expand patient access and provide extraordinary care to more patients and their families which is delivered delivering value for our shareholders.

Thank you everyone for joining us and have a great day.

This conference call. Thank you for your participation. You may now disconnect