Option Care Health Stock is Making a Healthy Pullback

Infusion therapy services provider Option Care Health NASDAQ: OPCH stock has been relatively strong during the market turmoil as it continues to trade near its 52-week highs. Infusion therapy administers medication and fluids through an IV (needle or catheter) as an alternative to an oral application. This can include anything from antibiotics to chemotherapy. Option Care is nation’s largest independent healthcare provider of home and alternate-site infusion services. The Company entered fiscal 2022 with a COVID resurgence with the Omicron variant making it difficult for teams in the field. However, the recovery momentum was so strong that it prompted the Company to raise forward guidance for fiscal 2022. As Omicron subsided, the return to normal operations was swift by the end of Q1 2022. Unprecedented inflation pressures plagued the start of the year and labor costs had to be adjusted upwards to remain competitive, which hasn’t been fully reflected in the first quarter. Cost increases are present in a broad range of categories including transportation, supplies, and business services.

Q1 Fiscal 2022 Earnings Release

On April 28, 2022, Option Care reported its fiscal Q1 2022 earnings report for the quarter ended March  2022. The Company reported an earnings-per-share (EPS) profit of $0.17 excluding non-recurring items versus consensus analyst estimates for a profit of $0.13, a $0.04 beat. Revenues grew 20.6% year-over-year (YoY) to $915.78 million beating analyst estimates for $839.45 million. The Company generated $32.7 million cash flow from operations compared to $18.4 million in prior year-ago period and ended the quarter with $145.6 million in cash. Option Care Health CEO John Rademacher commented, “Despite a dynamic start to the year and ongoing pandemic disruption, the Option Care Health team executed exceptionally to ensure high-quality patient care and solid financial results. Overall we expect 2022 to be a productive year as we continue to navigate a challenging environment and invest for future growth.”

Raised Guidance

Option Care raised its full-year fiscal 2022 revenues to come in between $3.75 billion to $3.90 billion versus $3.74 billion consensus analyst estimates and up from its $3.65 billion to $3.85 billion prior guidance. Adjusted EBITDA is expected between $320 million to $355 million from $310 million to $330 million prior to guidance.

Conference Call Takeaways

CEO Rademacher pointed out that the year started off sluggish due to Omicron but proved to be a very productive first quarter. Prior year comparable period was soft due to the advent of vaccination distribution in second quarter. The Company had great momentum coming out of its first-quarter warranting raised guidance for the year. Referral volumes lagged in certain geographies, but a gradual reopening of referral sources took place. Chronic revenue was notably strong driven by chronic inflammatory therapies in addition to newer therapies for muscular dystrophy, myasthenia gravis, and multiple sclerosis. Growth occurred in thyroid eye disease therapy. The Company recently closed on its Specialty Pharmacy Nursing Networks (SPNN) acquisition. Together with its Infinity Infusion Nursing acquisition, they are creating a national alternate nursing platform. He commented, “We continue to believe this clinical platform will not only differentiate our nursing capabilities in the marketplace, but will also help enable future growth, especially amongst our chronic therapies. Regarding the SPNN acquisition, this is a unique team that has created a very robust clinical model to serve a broad array of customers including infusion pharmacies, specialty pharmacies, clinics, and biopharmaceutical manufacturers. The Option Care Health team had a pre-existing and very constructive collaboration with SPNN, and it was a natural progression for us to seek a stronger integration of our capability.“

OPCH Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames enables a precision view of the price playing field for OPCH. The weekly rifle chart peaked around the $30.70 Fibonacci (fib) level. The weekly rifle chart uptrend stalled with the flat 5-period moving average (MA) at $28.87 and rising 15-period MA at $27.07. The weekly upper Bollinger Bands (BBs) sit at $32.49 with lower BBs at $20.30. The weekly 50-period MA is rising at $25.03. The weekly stochastic crossed down as it nears an 80-band test. The weekly market structure low (MSL) buy triggered on the breakout through $23.98. The daily rifle chart downtrend stalled with a flat 5-period MA at $27.34, 50-period MA support at $27.80 and flat 15-period MA at $28.30. The daily 200-period MA support is slowly rising at $25.78. The daily upper BBs sit near the $31.49 fib and lower BBs at $25.48. The daily stochastic stalled it decent just above the 20-band to either cross back up or mini inverse pup down through the 20-band. Prudent investors can watch for opportunistic pullback levels at the $27.52 fib, $26.29 fib, $25.30 fib, $24.19 fib, $23.41 fib, $22.14 fib, $20.87 fib, $19.89 fib, $18.09 fib, and the $16.76 fib level. Upside trajectories range from the $34.17 fib level up towards the $41.19 fib level.