$23.06
$40.75
bear $23.06
base $34.95
bull $40.75
margin of safety $22.50
market price* $31.20
Option Care Health is the largest independent provider of home and alternate-site infusion therapy in the United States. Patients receive IV antibiotics and other short-course ("acute") infusions, and long-term ("chronic") therapies such as immunoglobulin, nutrition (TPN) and specialty biologic drugs, at home or in the company's ambulatory infusion suites rather than in a hospital. The attraction is structural: infusion outside the hospital is much cheaper for insurers and preferred by patients, and a national network with broad payer contracts and manufacturer relationships is hard for regional competitors to match. The current company was formed in August 2019 when BioScrip combined with the original Option Care; the filings present Option Care's history as the company's history, and we measure the business from 2020, its first full combined year. How we measure earning power. We start from cash from operations, strip out working-capital timing swings, charge stock compensation as the real cost it is, and deduct the capital spending needed to maintain (not grow) the network. On that basis the business has produced, after interest, $0.42, $0.94, $1.17, $1.65, $1.51 and $1.63 per share in 2020 through 2025. Because we value the business before its lenders and then subtract what it owes, we add back the cash interest paid, net of the interest the company earned on its cash pile in 2023-2025 (roughly $23M, $27M and $14M, estimated from the gap between cash interest paid and reported net interest expense). That gives cash generated for all capital providers of about $173M (2020), $232M, $264M, $345M, $305M and $317M (2025). We anchor on the median of 2023-2025, about $317M a year, because revenue grew more than 40% between 2020 and 2023 (and 86% through 2025), so the earlier years describe a much smaller business; 2019 (five months of combined operations plus merger costs) is excluded as distorted. Two accounting judgements matter. First, we count rent on the company's leased pharmacies and suites as a real cash cost; our earlier figures had inadvertently added back roughly $17-24M a year of lease payments along with some other long-term operating payments, and correcting this lowers each year's earnings by about $0.10-0.20 per share. Second, amortization of acquired intangibles (about $37M in 2025, mostly referral-source and payer relationships from the 2019 merger) is added back as a non-cash charge. We did not charge extra decay for it because those relationships are maintained by sales and clinical spending already deducted in the numbers, and the business grew its cash earnings about 13% a year from 2020 to 2025 while those assets were being amortized, so there is no evidence of a wasting asset; erosion of the franchise is carried in the bear case instead. What is happening now. 2025 revenue rose 13% to $5.65 billion, helped by mid-teens acute growth that the company attributes to shifts in the competitive landscape, but gross margin fell from 20.3% to 19.3% on a shift toward higher-cost rare and orphan therapies and biosimilar adoption. In 2026 the company expects chronic inflammatory disease therapies (including Stelara, now under biosimilar competition) to reduce gross profit by about $55 million; revenue grew only about 1-2% year over year in the first half of 2026, yet net income for the half was $99.3M versus $97.3M a year earlier, so other growth is so far absorbing the hit. Cash earnings before interest grew 3.9% in 2025; our base case assumes 0% for the coming year, below that trailing rate, because of the disclosed 2026 headwind. What the company owes. At June 30, 2026 the company had $1,173M of debt: $500M of 4.375% senior notes due October 31, 2029 and about $673M of first-lien term loan at SOFR plus 1.75% (5.67% at year-end 2025) maturing September 22, 2032, with an undrawn $400M revolver maturing in 2030. It held $194M of cash, of which we treat about $119M as surplus to operating needs. Because the notes carry a fixed coupon well below our 6% benchmark for three more years, that cheap funding is worth about $26M to shareholders, so we count net debt at about $1,028M in the base and bull cases. In the bear case we assume the 2029 notes are refinanced at a higher rate and count net debt at about $1,066M. We divide by about 151.1 million diluted shares, reflecting 149.8 million shares outstanding in late July 2026 after heavy buybacks ($310M in 2025 and $170M in the first half of 2026). Bear case ($23.06 per share). The 2025 acute-volume gains from competitor disruption fade, the chronic therapy mix and biosimilar pressure persist beyond 2026, and Medicare price negotiation, which under current law extends to physician-administered drugs from 2028, compresses the spread on some infused drugs. Cash earnings before interest hold flat for the coming year, then fall 7%, 6% and 3% to about $268M and stay there. The business is worth about $4.55 billion; it owes about $1.07 billion; shareholders are left with about $3.48 billion. Even here, cash earnings cover the roughly $60M interest bill more than four times, so we see no refinancing crisis at the 2029 note maturity. Base case ($34.95 per share). Flat for the coming year, then 3% a year for five years and 2% for four years, reaching about $397M in year ten, then held flat indefinitely. The growth we credit comes from the company's proven, self-funded habit of adding ambulatory infusion suites (five more opened in the second quarter of 2026) and making small tuck-in acquisitions (a $12M purchase in 2023 and South Carolina-based Intramed Plus for $117M in January 2025), at well under the 13% a year its cash earnings actually grew from 2020 to 2025. We did not credit growth in the overall infusion market, new drugs or margin recovery, because those have not happened yet. Beyond year ten we hold earnings flat rather than growing: patients on chronic therapies need them indefinitely and the national network and payer contracts keep earning, but we assume no further gain. The business is worth about $6.31 billion; it owes about $1.03 billion; shareholders are left with about $5.28 billion. Bull case ($40.75 per share). The first-half 2026 pattern of absorbing the chronic-therapy headwind continues (2% growth in the coming year), then suite additions, tuck-ins and the continued volume gained in 2025 support 5% a year for five years and 3% for four more, reaching about $464M, then flat. The business is worth about $7.19 billion; it owes about $1.03 billion; shareholders are left with about $6.16 billion. Change since our previous estimate. Our previous figures of about $19, $33 and $43 valued the company's after-interest earnings as though today's debt would roll over forever and never subtracted the roughly $1.17 billion it owes, discussing the debt only as a risk. We now value the whole business first and then deduct the debt, which lowers each case by about $6.80-7.06 per share. Offsetting that, the earlier estimate averaged in the much smaller 2020-2021 business, while we now anchor on 2023-2025, and the share count has shrunk from about 180 million in 2023 to about 151 million, so each share owns more of the business. We also corrected the lease-rent treatment described above. The net result is a higher bear case, a slightly higher base case and a lower bull case. What would make this estimate wrong: a larger or longer loss of chronic-therapy patients than the company has disclosed, payers or vertically integrated competitors steering volume away from independent providers, or reimbursement cuts beyond those already announced. The margin-of-safety price sits well below the base case, near our bear-case value, because reimbursement and drug-mix swings can move this business's modest margins quickly. Cash interest income in 2023-2025 is not reported separately, so our estimate of it is approximate; this changes the anchor by only a few percent.