Option Care Health, Inc. · NASDAQ:OPCH
Option Care Health — BioScrip — Debt Investor Presentation (May 2019)
38 slides from Option Care Health's debt investor presentation, May 7, 2019
Slide 1: Lender Presentation May 7, 2019
LENDER PRESENTATION MAY 7, 2019
Slide 2: Disclaimer
DISCLAIMER 2 This communication, in addition to historical information, contains “forward - looking statements” (as defined in the Private Securities Litigation Reform Act of 1995 ) regarding, among other things, future events or the future financial performance of BioScrip and Option Care . All sta
Slide 3: Presenters
PRESENTERS John Rademacher Chief Executive Officer Mike Shapiro Chief Financial Officer • Nearly two decades of experience in the healthcare industry, successfully deploying technology solutions and expanding professional services capabilities • Joined Option Care in 2015 as COO and was appointed CE
Slide 4: Agenda
AGENDA 4 Section I. Transaction Overview II. Combination Overview III. Key Investment Highlights IV. Financial Summary V. Syndication Overview Appendix I. Supplementary Information
Slide 5: I. Transaction Overview
I. TRANSACTION OVERVIEW
Slide 6: Executive Summary
EXECUTIVE SUMMARY On March 14 th , Option Care, Inc. (“Option Care”) entered into a definitive merger agreement with BioScrip, Inc. (“BioScrip”) (NasdaqGS:BIOS) creating a leading independent provider of home and alternate site infusion therapy services – Transformational combination of two best -
Slide 7: Significant Progress on Investment Thesis Has Laid Foundation for Combination
SIGNIFICANT PROGRESS ON INVESTMENT THESIS HAS LAID FOUNDATION FOR COMBINATION 7 • Since spin - off from Walgreens in 2015, Option Care has recruited an experienced leadership team • 7 of the 10 top management team members recruited under MDP ownership including CEO and CFO • In the past three years,
Slide 8: II. Option Care + BioScrip Combination Overview
II. OPTION CARE + BIOSCRIP COMBINATION OVERVIEW
Slide 9: The Leading Home Infusion Company
OPTION CARE + BIOSCRIP: THE LEADING HOME INFUSION COMPANY • Creates the #1 provider of home and alternate site infusion therapy services (1) • 96% of U.S. population covered by 600+ frontline selling resources in 46 states • Powerful value creation potential, with cost synergies alone exceeding $60
Slide 10: Combination at a Glance
OPTION CARE + BIOSCRIP: COMBINATION AT A GLANCE Headquar te r s: Bannockburn , Illinois Headquar te r s: Denver , Colorado Significant Scale TTM 3/31 Metrics Expansive and Complementary Footprints Therapeutic Solutions • 52 full service pharmacies • 66 ambulatory infusion suites • Locations in 27 st
Slide 11: #1 Position in a Large and Growing Market
OPTION CARE + BIOSCRIP: #1 POSITION IN A LARGE AND GROWING MARKET 11 $100 B $12 B $ 2.7 B Option Care / BioScrip Largest independent provider and only publicly - traded “pure play” U.S. Home Infusion Market Lowest - cost setting; growing penetration of overall market U.S. Infusion Market Incudes: ho
Slide 12: U.S. Infusion Market Overview
U.S. INFUSION MARKET OVERVIEW 12 1% 6% 10% 17% 21% 45% U.S. Infusion Market (1) U.S. Competitive Landscape – Home (1) 12% 20% 28% 40% $100B Hospital Physician Office Outpatient Skilled Nursing Facility Home / $12B Top 5 providers account for approximately half of the U.S. market Highly fragmente
Slide 13: III. Key Investment Highlights
III. KEY INVESTMENT HIGHLIGHTS
Slide 14: Key Investment Highlights
Leading Home Infusion Platform with National Reach and Scale Largest Independent Home Infusion Provider Creating Value Across the Healthcare Ecosystem Right Side of Healthcare – Low Cost Care Setting and Patient Centric Diversified Portfolio of Therapies with Attractive Pipeline of Growth Opportunit
Slide 15: National Reach and Comprehensive Solutions
Option Care locations OPTION CARE + BIOSCRIP: NATIONAL REACH AND COMPREHENSIVE SOLUTIONS $ 2.7bn combined TTM 3/31/19 revenue 46 states 96% of U.S. population covered 2,900+ skilled clinicians (1) Top 10 payors all in network BioScrip locations 600+ frontline selling resources 15 National Reach Make
Slide 16: The Only Scaled and National Independent Provider
OPTION CARE + BIOSCRIP: THE ONLY SCALED AND NATIONAL INDEPENDENT PROVIDER Logical preferred partner for non - vertically integrated payors Productive, in - network relationships with Aetna and UnitedHealthcare — Compelling network choice given unparalleled service area (96% of U.S. population) a
Slide 17: On the Right Side of Healthcare Trends
OPTION CARE + BIOSCRIP: ON THE RIGHT SIDE OF HEALTHCARE TRENDS 3 17 …to the Home • Lowest cost site of care • Safest site of care; lower risk of infection • Patient preference, empowerment, quality of life • Healthcare reform moving from fee - for - service to fee - for - outcomes • The home is beco
Slide 18: Complementary, Synergistic Portfolios
Acute ~ 40% Chronic ~ 60% OPTION CARE + BIOSCRIP: COMPLEMENTARY, SYNERGISTIC PORTFOLIOS 4 18 • Balanced Across Acute and Chronic Therapies ‒ Acute: key therapies include anti - infectives, total parental nutrition and enteral nutrition ‒ Chronic: key therapies include immunoglobulin, factor, and Rem
Slide 19: Pipeline for LDD Opportunities Continues to Expand
0 5 10 15 20 2019 2020 2021 OPTION CARE + BIOSCRIP: PIPELINE FOR LDD OPPORTUNITIES CONTINUES TO EXPAND 4 19 Increasing complexity of pharmaceuticals is leading to an increase in the number of drugs that require healthcare professional oversight Combined company will possess specialized capabilit
Slide 20: Payor Diversity and Low Pen-Stroke Risk
OPTION CARE + BIOSCRIP: PAYOR DIVERSITY AND LOW PEN - STROKE RISK 5 20 14% 86% Pro Forma Revenue By Payor Type (1) Commercial (1) Government No Single Payor Relationship Accounts for >15% of Pro Forma Sales (1) Commercial includes Medicare Advantage, Managed Medicaid, and self - pay patients
Slide 21: Significant Synergy Opportunity
OPTION CARE + BIOSCRIP: SIGNIFICANT SYNERGY OPPORTUNITY Identifiable and achievable cost synergies with meaningful additional upside 6 21 Streamline corporate and administrative functions including labor and non - labor costs SG&A $35 - 40mm (gross) Optimize assets where applicable to best serve
Slide 22: Potential Additional Value Creation
OPTION CARE + BIOSCRIP: POTENTIAL ADDITIONAL VALUE CREATION 6 22 • Revenue opportunities excluded from $60mm cost synergies estimate • Potential upside through: ‒ 600 member sales force with optimized coverage by location; ‒ Cross - selling solution sets, such as Option Care’s broader portfolio sold
Slide 23: Investing for Integration Success
OPTION CARE + BIOSCRIP: INVESTING FOR INTEGRATION SUCCESS 23 Pre - Signing Sign to Close Post - Close Deep due diligence and granular quantification of savings • Engaged multiple experienced third party advisors to conduct a series of clean room - based analyses • Quantified savings through bottoms
Slide 24: Proven, Experienced Leadership
OPTION CARE + BIOSCRIP: PROVEN, EXPERIENCED LEADERSHIP John Rademacher Chief Executive Officer Mike Shapiro Chief Financial Officer • Nearly two decades of experience in the healthcare industry, successfully deploying technology solutions and expanding professional services capabilities • Joined Opt
Slide 25: IV. Financial Summary
IV. FINANCIAL SUMMARY
Slide 26: Combining Two Strong Businesses
$1,647 $1,782 $1,942 2016 2017 2018 Adjusted EBITDA (in mm) 1 $72 $84 $95 2016 2017 2018 Over last three years, Option Care generated $150mm in cash flow from operations, invested $90mm in technology and facilities, and improved leverage profile by 1x EBITDA Option Care: Net Revenue (in mm) 1 OPTION
Slide 27: Q1 2019 Financial Highlights
Adjusted EBITDA (in mm) Option Care: Net Revenue (in mm) $460.6 $478.0 1Q'18 1Q'19 $16.2 $19.4 1Q'18 1Q'19 OPTION CARE + BIOSCRIP: Q1 2019 FINANCIAL HIGHLIGHTS 27 • On day - rate basis, Option Care and BioScrip revenue growth of 5% and 8%, respectively • Both companies on track to deliver on full ye
Slide 28: Pro Forma Adjusted EBITDA Reconciliation
PRO FORMA ADJUSTED EBITDA RECONCILIATION 28 Pro Forma EBITDA - LTM 3/31/2019 ($ in millions) Option Notes Care BioScrip Combined Loss from continuing operations ($3.9) ($48.9) ($52.8) Interest 45.6 59.3 104.9 Depreciation & amortization 41.9 22.2 64.1 Tax expense (benefit) (1.8) 0.5 (1.3) Reported E
Slide 29: V. Syndication Overview
V. SYNDICATION OVERVIEW
Slide 30: Sources & Uses and Pro Forma Capitalization
Sources & Uses Pro Forma Capitalization ($ in millions) ($ in millions) Sources of Funds Amount Amount ABL Revolver ($150) $-- Cash and Equivalents (1) $35 Term Loan B 925 ABL Revolver ($150) -- Senior Secured Notes 400 Term Loan B 925 Balance Sheet Cash (1) 8 Senior Secured Notes 400 Total Sources
Slide 31: Summary of Terms: New First Lien Term Loan B
SUMMARY OF TERMS NEW FIRST LIEN TERM LOAN B Borrower HC Group Holdings II, LLC (the “Initial Borrower”) and following the Debt Assumption, Bioscrip, Inc. (the “Company”) (such re lev ant entity, the “Borrower”); and certain other domestic subsidiaries Guarantors Each existing and subsequently acquir
Slide 32: Transaction Timeline
TRANSACTION TIMELINE Date: Key Event: Tuesday, May 7 th • Hold Lender Meeting in NYC Tuesday, May 21 st • Commitments Due from Lenders • Expected Completion of Shareholder Vote • Close Transaction and Financing (1) Q3 2019 (1) May 2019 June 2019 July 2019 Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed
Slide 33: Organizational Structure
ORGANIZATIONAL STRUCTURE New $150mm ABL Revolver New $925mm Term Loan B New $400mm Senior Secured Notes ~80 % Common Stock Bioscrip Subsidiaries (Various) Public Bioscrip, Inc. (Delaware) HC Group Holdings II, LLC (Delaware) HC Group Holdings III, Inc. (Delaware) Option Care Infusion Services, Inc.
Slide 34: Appendix
APPENDIX
Slide 35: Summary of Terms: ABL Revolver
Borrower BioScrip, Inc.; HC Group Holdings II, LLC; and certain other domestic subsidiaries Guarantors Each existing and subsequently acquired or organized direct or indirect wholly - owned U.S. subsidiary of the Company, subject to certain exceptions Facility $150 million Asset - Based Revolver (“A
Slide 36: Summary of Terms: New Senior Secured Notes
SUMMARY OF TERMS NEW SENIOR SECURED NOTES Issuer HC Group Holdings II, LLC (the “Initial Issuer”) and following the Debt Assumption, Bioscrip, Inc. (the “Company”) (such rele van t entity, the “Issuer”) Guarantors Each existing and subsequently acquired or organized direct or indirect wholly - owned
Slide 37: Strong Position to Capitalize on Therapy Trends
OPTION CARE + BIOSCRIP: STRONG POSITION TO CAPITALIZE ON THERAPY TRENDS Key therapies include anti - infectives, total parental nutrition and enteral nutrition Shorter duration therapy regiments Higher gross margins Requires significant sales & marketing and clinical expertise Key therapie
Slide 38: Overview of Home Infusion Care
OVERVIEW OF HOME INFUSION CARE 38 Why Home Infusion? How is it Administered? Benefits Infusion therapy involves administering medication through a catheter or needle – typically prescribed when conditions are too severe for oral medications Infusion therapy can treat a wide range of acute and ch