UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Form 10-Q

(Mark One)
þ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20172023
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from     to             

Commission file number: 001-11993

OPCH_Logo.jpg
logowithregisteredtm07.jpg
BioScrip, Inc.OPTION CARE HEALTH, INC.
(Exact name of registrant as specified in its charter)
Delaware05-0489664
(State of incorporation)(I.R.S. Employer Identification No.)
1600 Broadway, 3000 Lakeside Dr.Suite 700, Denver, Colorado300N,80202 Bannockburn, IL60015
(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code:
720-697-5200312-940-2443

Securities registered pursuant to Section 12(b) of the Act:
Title of each ClassTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par value per shareOPCHNasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ☑     No o☐


Indicate by check mark whether the registrant has submitted electronically and posted to its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ☑ No o☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o☑     Accelerated filer þ☐     Non-accelerated filer o☐      Smaller reporting company o ☐ Emerging growth company o☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o☐     No þ☑


On October 30, 2017,July 25, 2023, there were 127,515,573179,876,706 shares of the registrant’s Common Stock outstanding.








1


TABLE OF CONTENTS
Page
Number
PART I
Number4
PART I
Item 1.
Condensed Consolidated Balance Sheets at September 30, 2017 (unaudited) and December 31, 2016
35
46
57
8
69
1922
3133
3133
PART II
3234
3234
3234
34
3335
3335

2


Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q (this “Form 10-Q”) to "Option Care Health," the “Company,” “we,” “us” and “our” refer to Option Care Health, Inc. and its consolidated subsidiaries.
Forward-Looking Statements
This Form 10-Q includes forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including, without limitation, statements concerning our expectations regarding industry and macroeconomic trends and our operating performance. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “believe,” “project,” “estimate,” “expect,” “may,” “should,” “will” and similar references to future periods.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. If any of these risks materialize, or if any of our assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, those set forth in Item 1A, “Risk Factors,” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2022 (our “Form 10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”). Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. We caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this Form 10-Q. Any forward-looking statement made by us in this Form 10-Q speaks only as of the date hereof. We undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
3
Table of Contents
PART I
FINANCIAL INFORMATION
Item 1.Financial Statements
Item 1.Financial Statements
BIOSCRIP,
4
Table of Contents
OPTION CARE HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)
June 30, 2023December 31, 2022
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$441,166 $294,186 
Accounts receivable, net396,501 377,542 
Inventories262,924 224,281 
Prepaid expenses and other current assets97,629 98,330 
Total current assets1,198,220 994,339 
 
NONCURRENT ASSETS:
Property and equipment, net106,777 108,321 
Operating lease right-of-use asset79,781 72,424 
Intangible assets, net21,645 22,371 
Referral sources, net330,948 341,744 
Goodwill1,540,567 1,533,424 
Other noncurrent assets42,960 40,313 
Total noncurrent assets2,122,678 2,118,597 
TOTAL ASSETS$3,320,898 $3,112,936 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
CURRENT LIABILITIES:  
Accounts payable$467,666 $378,763 
Accrued compensation and employee benefits73,013 76,906 
Accrued expenses and other current liabilities103,038 84,302 
Current portion of operating lease liability18,750 19,380 
Current portion of long-term debt6,000 6,000 
Total current liabilities668,467 565,351 
 
NONCURRENT LIABILITIES:
Long-term debt, net of discount, deferred financing costs and current portion1,057,391 1,058,204 
Operating lease liability, net of current portion81,137 71,441 
Deferred income taxes35,431 22,154 
Other noncurrent liabilities3,089 9,683 
Total noncurrent liabilities1,177,048 1,161,482 
Total liabilities1,845,515 1,726,833 
 
STOCKHOLDERS’ EQUITY:
Preferred stock; $0.0001 par value; 12,500,000 shares authorized, no shares outstanding as of June 30, 2023 and December 31, 2022— — 
Common stock; $0.0001 par value: 250,000,000 shares authorized, 182,729,537 shares issued and 179,870,650 shares outstanding as of June 30, 2023; 182,341,420 shares issued and 181,957,698 shares outstanding as of December 31, 202218 18 
Treasury stock; 2,858,887 and 383,722 shares outstanding, at cost, as of June 30, 2023 and December 31, 2022, respectively(78,106)(2,403)
Paid-in capital1,188,430 1,176,906 
Retained earnings344,034 190,423 
Accumulated other comprehensive income21,007 21,159 
Total stockholders’ equity1,475,383 1,386,103 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$3,320,898 $3,112,936 

The notes to unaudited condensed consolidated financial statements are an integral part of these statements.
5
 September 30,
2017		 December 31,
2016
 (unaudited)  
ASSETS   
Current assets   
Cash and cash equivalents$33,013
 $9,569
Restricted cash4,950

—
Receivables, less allowance for doubtful accounts of $46,820 and $44,730 as of September 30, 2017 and December 31, 2016, respectively89,215
 111,811
Inventory27,775
 36,165
Prepaid expenses and other current assets15,222
 18,507
Total current assets170,175
 176,052
Property and equipment, net28,726
 32,535
Goodwill367,198
 365,947
Intangible assets, net21,734
 31,043
Other non-current assets2,415
 2,163
Total assets$590,248
 $607,740
LIABILITIES AND STOCKHOLDERS’ DEFICIT 
  
Current liabilities 
  
Current portion of long-term debt$1,828
 $18,521
Accounts payable42,691
 59,134
Amounts due to plan sponsors4,890
 3,799
Accrued interest3,198
 6,705
Accrued expenses and other current liabilities36,419
 42,191
Total current liabilities89,026
 130,350
Long-term debt, net of current portion476,753
 433,413
Deferred taxes4,150
 2,281
Other non-current liabilities18,879
 1,257
Total liabilities588,808
 567,301
Series A convertible preferred stock, $.0001 par value; 825,000 shares authorized; 21,645 shares issued and outstanding as of September 30, 2017 and December 31, 2016; and $2,833 and $2,603 liquidation preference as of September 30, 2017 and December 31, 2016, respectively2,732
 2,462
Series C convertible preferred stock, $.0001 par value; 625,000 shares authorized; 614,177 shares issued and outstanding as of September 30, 2017 and December 31, 2016; and $82,173 and $75,491 liquidation preference as of September 30, 2017 and December 31, 2016, respectively76,706
 69,540
Stockholders’ deficit 
  
Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively—
 —
Common stock, $.0001 par value; 250,000,000 shares authorized; 127,520,628 and 117,682,543 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
13
 12
Treasury stock, 5,106 and no shares outstanding, at cost, as of September 30, 2017 and December 31, 2016(16) —
Additional paid-in capital626,567
 611,844
Accumulated deficit(704,562) (643,419)
Total stockholders’ deficit(77,998) (31,563)
Total liabilities and stockholders’ deficit$590,248
 $607,740
Table of Contents

See accompanying Notes to Unaudited Consolidated Financial Statements.

BIOSCRIP,OPTION CARE HEALTH, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSCOMPREHENSIVE INCOME
(in thousands, except per share amounts)IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
NET REVENUE$1,069,072 $980,820 $2,084,920 $1,896,604 
COST OF REVENUE818,243 763,920 1,605,086 1,478,768 
GROSS PROFIT250,829 216,900 479,834 417,836 
OPERATING COSTS AND EXPENSES:
Selling, general and administrative expenses153,564 141,787 301,430 275,756 
Depreciation and amortization expense14,898 16,037 29,412 30,759 
Total operating expenses168,462 157,824 330,842 306,515 
OPERATING INCOME82,367 59,076 148,992 111,321 
 
OTHER INCOME (EXPENSE):
Interest expense, net(13,196)(12,765)(27,030)(25,011)
Equity in earnings of joint ventures1,397 1,326 2,834 2,593 
Other, net84,935 1 84,936 3 
Total other income (expense)73,136 (11,438)60,740 (22,415)
 
INCOME BEFORE INCOME TAXES155,503 47,638 209,732 88,906 
INCOME TAX EXPENSE41,100 13,709 56,121 24,702 
NET INCOME$114,403 $33,929 $153,611 $64,204 
 
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Change in unrealized gain (loss) on cash flow hedges, net of income tax (expense) benefit of $(1,103), $(756), $49 and $(4,519), respectively$3,291 $4,637 $(152)$15,707 
OTHER COMPREHENSIVE INCOME (LOSS)3,291 4,637 (152)15,707 
NET COMPREHENSIVE INCOME$117,694 $38,566 $153,459 $79,911 
 
EARNINGS PER COMMON SHARE:
Earnings per share, basic$0.64 $0.19 $0.85 $0.36 
Earnings per share, diluted$0.63 $0.19 $0.84 $0.35 
 
Weighted average common shares outstanding, basic179,807 180,621 180,531 180,293 
Weighted average common shares outstanding, diluted181,241 181,618 181,931 181,176 

The notes to unaudited condensed consolidated financial statements are an integral part of these statements.
6
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Net revenue$198,692
 $224,542
 $634,608
 $695,466
Cost of revenue (excluding depreciation expense)131,516
 161,957
 433,538
 504,485
Gross profit67,176
 62,585
 201,070
 190,981
        
Other operating expenses38,325
 42,729
 125,169
 123,006
Bad debt expense6,600
 7,727
 19,987
 19,598
General and administrative expenses9,784
 9,948
 29,287
 30,413
Restructuring, acquisition, integration, and other expenses, net4,037
 2,368
 11,171
 9,326
Change in fair value of equity linked liabilities1,080
 —
 1,080
 —
Depreciation and amortization expense6,552
 4,166
 20,329
 12,956
Interest expense13,175
 9,331
 38,635
 28,212
Loss on extinguishment of debt—
 —
 13,453
 —
(Gain) loss on dispositions(33) (3,015) 652
 (3,954)
Loss from continuing operations, before income taxes(12,344) (10,669) (58,693) (28,576)
Income tax expense60
 421
 1,397
 593
Loss from continuing operations, net of income taxes(12,404) (11,090) (60,090) (29,169)
(Loss) income from discontinued operations, net of income taxes(113) (174) (1,053) 134
Net loss$(12,517) $(11,264) $(61,143) $(29,035)
Accrued dividends on preferred stock(2,394) (2,138) (6,911) (6,192)
Deemed dividends on preferred stock(175) (173) (525) (518)
Loss attributable to common stockholders$(15,086) $(13,575) $(68,579) $(35,745)
        
Loss per common share:       
Loss from continuing operations, basic and diluted$(0.12) $(0.12) $(0.55) $(0.42)
Loss from discontinued operations, basic and diluted—
 —
 (0.01) —
Loss per common share, basic and diluted$(0.12) $(0.12) $(0.56) $(0.42)
        
Weighted average common shares outstanding, basic and diluted127,488
 114,826
 122,519
 85,701
Table of Contents

See accompanying Notes to Unaudited Consolidated Financial Statements.

BIOSCRIP,OPTION CARE HEALTH, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)IN THOUSANDS)
Six Months Ended June 30,
 20232022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$153,611 $64,204 
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization expense30,801 33,249 
Non-cash operating lease costs9,334 9,988 
Deferred income taxes - net13,277 24,777 
Amortization of deferred financing costs2,187 2,117 
Equity in earnings of joint ventures(2,834)(2,593)
Stock-based incentive compensation expense13,673 8,576 
Capital distribution from equity method investments2,500 1,000 
Other adjustments361 506 
Changes in operating assets and liabilities:
Accounts receivable, net(18,619)(22,950)
Inventories(38,643)(48,671)
Prepaid expenses and other current assets654 (5,235)
Accounts payable88,896 100,924 
Accrued compensation and employee benefits(3,949)(26,384)
Accrued expenses and other current liabilities24,805 18,900 
Operating lease liabilities(7,754)(11,032)
Other noncurrent assets and liabilities(9,012)(10,422)
Net cash provided by operating activities259,288 136,954 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment(13,554)(10,055)
Business acquisitions, net of cash acquired(12,855)(59,897)
Net cash used in investing activities(26,409)(69,952)
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options, vesting of restricted stock, and related tax withholdings(2,149)523 
Proceeds from warrant exercises— 20,098 
Repayments of debt principal(3,000)(3,000)
Purchase of company stock(75,000)— 
Other financing activities(5,750)— 
Net cash (used in) provided by financing activities(85,899)17,621 
NET INCREASE IN CASH AND CASH EQUIVALENTS146,980 84,623 
Cash and cash equivalents - beginning of the period294,186 119,423 
CASH AND CASH EQUIVALENTS - END OF PERIOD$441,166 $204,046 
 
Supplemental disclosure of cash flow information:
Cash paid for interest$33,991 $21,793 
Cash paid for income taxes$21,786 $4,966 
Cash paid for operating leases$13,231 $12,435 

The notes to unaudited condensed consolidated financial statements are an integral part of these statements.
7
 Nine Months Ended 
 September 30,
 2017 2016
Cash flows from operating activities:   
Net loss$(61,143) $(29,035)
Less: (Loss) income from discontinued operations, net of income taxes(1,053) 134
Loss from continuing operations, net of income taxes(60,090) (29,169)
Adjustments to reconcile net loss from continuing operations, net of income taxes to net cash used in operating activities:   
Depreciation and amortization20,329
 12,956
Amortization of deferred financing costs and debt discount4,612
 3,005
Change in fair value of contingent consideration—
 (4,597)
Change in fair value of equity linked liabilities1,080
 —
Change in deferred income tax1,869
 536
Compensation under stock-based compensation plans1,573
 3,347
Loss (gain) on dispositions652
 (3,954)
Loss on extinguishment of debt13,453
 —
Changes in assets and liabilities:   
Receivables, net of bad debt expense22,596
 6,720
Inventory6,997
 12,802
Prepaid expenses and other assets3,033
 9,161
Accounts payable(17,292) (31,248)
Amounts due to plan sponsors1,091
 461
Accrued interest(3,507) (4,629)
Accrued expenses and other liabilities(739) (7,841)
Net cash used in operating activities from continuing operations(4,343) (32,450)
Net cash used in operating activities from discontinued operations(6,553) (6,088)
Net cash used in operating activities(10,896) (38,538)
Cash flows from investing activities:   
Cash consideration paid for acquisition, net of cash acquired—
 (67,516)
Purchases of property and equipment(5,045) (8,044)
Proceeds from dispositions—
 4,177
Investment in restricted cash(4,950) —
Net cash used in investing activities(9,995) (71,383)
Cash flows from financing activities:   
Proceeds from priming credit agreement, net of expenses23,060
 —
Capitalized fees attributable to extinguishment of debt(980) —
Net proceeds from issuance of equity, net of issuance costs20,776
 83,267
Borrowings on long-term debt, net of expenses294,446
 —
Borrowings on revolving credit facility563
 84,000
Repayments on revolving credit facility(55,863) (60,000)
Principal payments of long-term debt(236,770) (9,411)
Repayments of capital leases(792) (525)
Other(105) (152)
Net cash provided by financing activities44,335
 97,179
Net change in cash and cash equivalents23,444
 (12,742)
Cash and cash equivalents - beginning of period9,569
 15,577
Cash and cash equivalents - end of period$33,013
 $2,835
DISCLOSURE OF CASH FLOW INFORMATION:   
Cash paid during the period for interest$38,454
 $30,128
Cash paid during the period for income taxes$327
 $260
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:   
Capital lease obligations incurred to acquire property and equipment$1,825
 $—
Issuance of 3,750,000 shares in connection with Home Solutions acquisition—
 9,938
Table of Contents

OPTION CARE HEALTH, INC.
See accompanying NotesUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(IN THOUSANDS)
Preferred StockCommon StockTreasury StockPaid-in CapitalRetained EarningsAccumulated Other Comprehensive
Income (Loss)		Total Stockholders’ Equity
Balance - December 31, 2021$— $18 $(2,403)$1,138,855 $39,867 $(451)$1,175,886 
Exercise of stock options, vesting of restricted stock, and related tax withholdings— — — 355 — — 355 
Stock-based incentive compensation— — — 4,178 — — 4,178 
Net income— — — — 30,275 — 30,275 
Other comprehensive income— — — — — 11,070 11,070 
Balance - March 31, 2022$— $18 $(2,403)$1,143,388 $70,142 $10,619 $1,221,764 
Exercise of stock options, vesting of restricted stock, and related tax withholdings— — — 168 — — 168 
Exercise of warrants— — — 20,098 — — 20,098 
Stock-based incentive compensation— — — 4,398 — — 4,398 
Net income— — — — 33,929 — 33,929 
Other comprehensive income— — — — — 4,637 4,637 
Balance - June 30, 2022$— $18 $(2,403)$1,168,052 $104,071 $15,256 $1,284,994 
 
Balance - December 31, 2022$— $18 $(2,403)$1,176,906 $190,423 $21,159 $1,386,103 
Exercise of stock options, vesting of restricted stock, and related tax withholdings— — — (1,902)— — (1,902)
Stock-based incentive compensation— — — 5,988 — — 5,988 
Purchase of company stock— — (75,735)— — — (75,735)
Net income— — — — 39,208 — 39,208 
Other comprehensive loss— — — — — (3,443)(3,443)
Balance - March 31, 2023$— $18 $(78,138)$1,180,992 $229,631 $17,716 $1,350,219 
Exercise of stock options, vesting of restricted stock, and related tax withholdings— — — (247)— — (247)
Stock-based incentive compensation— — — 7,685 — — 7,685 
Purchase of company stock, and related tax effects— — 32 — — — 32 
Net income— — — — 114,403 — 114,403 
Other comprehensive income— — — — — 3,291 3,291 
Balance - June 30, 2023$— $18 $(78,106)$1,188,430 $344,034 $21,007 $1,475,383 

The notes to Unaudited Consolidated Financial Statements.unaudited condensed consolidated financial statements are an integral part of these statements.

8
BIOSCRIP,
Table of Contents
OPTION CARE HEALTH, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 1. NATURE OF OPERATIONS AND PRESENTATION OF FINANCIAL STATEMENTS
Corporate Organization and Business — BASIS OF PRESENTATIONHC Group Holdings II, Inc. (“HC II”) was incorporated under the laws of the State of Delaware on January 7, 2015, with its sole shareholder being HC Group Holdings I, LLC. (“HC I”). On April 7, 2015, HC I and HC II collectively acquired Walgreens Infusion Services, Inc. and its subsidiaries from Walgreen Co., and the business was rebranded as Option Care, Inc. (“Option Care”).
These Unaudited Consolidated Financial Statements should be read in conjunctionOn March 14, 2019, HC I and HC II entered into a definitive agreement (the “Merger Agreement”) to merge with the Audited Consolidated Financial Statements, including the notes thereto, and other information included in the Annual Report on Form 10-Kinto a wholly-owned subsidiary of BioScrip, Inc. (“BioScrip”) (the “Merger”), a national provider of infusion and home care management solutions, which was completed on August 6, 2019 (the “Merger Date”). Following the close of the transaction, BioScrip was rebranded as Option Care Health. The combined Company’s stock is listed on the Nasdaq Global Select Market as of June 30, 2023. During the three and six months ended June 30, 2023, HC I completed sales of 10,771,926 and 23,771,926 shares of common stock, respectively. All remaining shares held by HC I were sold during the three months ended June 30, 2023. In addition, the Company repurchased 2,475,166 shares from HC I on March 3, 2023 under the Company’s share repurchase program. See Note 15, Stockholders’ Equity, for further discussion of the Company’s share repurchase program. As of June 30, 2023, HC I no longer holds shares of the Company’s common stock.
Option Care Health, and its wholly-owned subsidiaries, (the “Company”)provides infusion therapy and other ancillary health care services through a national network of 94 full service pharmacies and 76 stand-alone ambulatory infusion suites. The Company contracts with managed care organizations, third-party payers, hospitals, physicians, and other referral sources to provide pharmaceuticals and complex compounded solutions to patients for intravenous delivery in the year ended December 31, 2016 (the “Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”). These Unaudited Consolidated Financial Statementspatients’ homes or other nonhospital settings. The Company operates in one segment, infusion services.
Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordanceconformity with U.S. generally accepted accounting principles (“GAAP”) in the United States and contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for interim financial information, andreporting. The results of operations for the instructions to Form 10-Q and Article 10interim periods presented are not necessarily indicative of Regulation S-X promulgated under the Securities Exchange Actresults of 1934, as amended (the “Exchange Act”). Accordingly, theyoperations for the entire year. These unaudited condensed consolidated financial statements do not include all of the information and footnotesnotes to the financial statements required by GAAP for complete financial statements.
The information furnishedstatements and should be read in these Unaudited Consolidated Financial Statements reflects all adjustments, including normal recurring adjustments, which are, inconjunction with the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Operating results for the three months and nine months ended September 30, 2017 require management to make estimates and assumptions that affect the amounts reported in the2022 audited consolidated financial statements, and accompanyingincluding the notes and are not necessarily indicativethereto, as presented in our Form 10-K.
Principles of the results that may be expected for the full year ending December 31, 2017.
Consolidation — The Unaudited Consolidated Financial StatementsCompany’s unaudited condensed consolidated financial statements include the accounts of the CompanyOption Care Health, Inc. and its wholly-owned subsidiaries. All significant intercompany accountstransactions and transactions have beenbalances are eliminated in consolidation.
ReclassificationsThe Company has investments in companies that are 50% owned and are accounted for as equity-method investments. The Company’s share of earnings from equity-method investments is included in the line entitled “Equity in earnings of joint ventures” in the unaudited condensed consolidated statements of comprehensive income. See Equity-Method Investments within Note 2, Summary of Significant Accounting Policies, for further discussion of the Company’s equity-method investments.

9
Prior period financial statement amounts have been reclassified to conform to current period presentation.
Table of Contents
NOTE 2 —2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents and Restricted Cash

Highly— The Company considers all highly liquid investments with a maturityoriginal maturities of three months or less when purchasedto be cash equivalents. As of June 30, 2023, cash equivalents consisted of money market funds.
Prepaid Expenses and Other Current Assets — Included in prepaid expenses and other current assets are classifiedrebates receivable from pharmaceutical and medical supply manufacturers of $58.2 million and $53.4 million as of June 30, 2023 and December 31, 2022, respectively.
Equity-Method Investments — The Company’s investments in certain unconsolidated entities are accounted for under the equity method. The balance of these investments is included in other noncurrent assets in the accompanying condensed consolidated balance sheets. As of June 30, 2023 and December 31, 2022, the balance of the investments was $19.7 million and $19.4 million, respectively. The balance of these investments is increased to reflect the Company’s capital contributions and equity in earnings of the investees. The balance of these investments is decreased to reflect the Company’s equity in losses of the investees and for distributions received that are not in excess of the carrying amount of the investments. The Company’s proportionate share of earnings or losses of the investees is recorded in equity in earnings of joint ventures in the accompanying unaudited condensed consolidated statements of comprehensive income. The Company’s proportionate share of earnings was $1.4 million and $2.8 million for the three and six months ended June 30, 2023, respectively. The Company’s proportionate share of earnings was $1.3 million and $2.6 million for the three and six months ended June 30, 2022, respectively. Distributions from the investees are treated as cash equivalents. Restricted cash consistsinflows from operating activities in the unaudited condensed consolidated statements of cash balances heldflows. During the three months ended June 30, 2023, the Company did not receive any distributions from the investees. During the six months ended June 30, 2023, the Company received distributions from the investees of $2.5 million. During the three and six months ended June 30, 2022, the Company received a distribution of $1.0 million from the investees. See Note 16, Related-Party Transactions, for discussion of related-party transactions with these investees.
Concentrations of Business Risk — The Company generates revenue from managed care contracts and other agreements with commercial third-party payers. Revenue related to the Company’s largest payer was approximately 14% for the three and six months ended June 30, 2023. Revenue related to the Company’s largest payer was approximately 15% for the three and six months ended June 30, 2022. There were no other managed care contracts that represent greater than 10% of revenue for the periods presented.
For the three and six months ended June 30, 2023, approximately 12% of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid. For the three and six months ended June 30, 2022, approximately 12% of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid. As of June 30, 2023 and December 31, 2022, approximately 13% of the Company’s accounts receivable was related to these programs. Governmental programs pay for services based on fee schedules and rates that are determined by financial institutions asthe related governmental agency. Laws and regulations pertaining to government programs are complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change in the near term.
The Company does not require its patients or other payers to carry collateral for lettersany amounts owed for goods or services provided. Other than as discussed above, concentration of credit. These balancescredit risk relating to trade accounts receivable is limited due to the Company’s diversity of patients and payers. Further, the Company generally does not provide charity care; however, Option Care Health offers a financial assistance program for patients that meet certain defined hardship criteria.
For the three and six months ended June 30, 2023, approximately 74% and 73%, respectively, of the Company’s pharmaceutical and medical supply purchases were from four vendors. For the three and six months ended June 30, 2022, approximately 72% and 73%, respectively, of the Company’s pharmaceutical and medical supply purchases were from four vendors. Although there are reclassifieda limited number of suppliers, the Company believes that other vendors could provide similar products on comparable terms. However, a change in suppliers could cause delays in service delivery and possible losses in revenue, which could adversely affect the Company’s financial condition or operating results.

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Table of Contents
3. BUSINESS COMBINATIONS
Amedisys, Inc. — On May 3, 2023, the Company entered into a definitive merger agreement (the “Merger Agreement”) with Amedisys, Inc. (“Amedisys”), a leading provider of healthcare in home health and hospice settings. Under the terms of the merger agreement, the Company would issue new shares of its common stock to Amedisys’s stockholders, which would result in the Company’s stockholders holding approximately 64.5% of the combined company.
On June 26, 2023, the Company entered into an agreement to terminate the Merger Agreement (the “Mutual Termination Agreement”). Under the terms of the Mutual Termination Agreement, the Company received a payment of $106.0 million in cash on behalf of Amedisys (“Termination Fee”). The Termination Fee is included in Other, net in the unaudited condensed consolidated statements of comprehensive income and in Net cash equivalents whenprovided by operating activities in the underlying obligation is satisfied, orunaudited condensed consolidated statements of cash flows.
During the three months ended June 30, 2023, the Company incurred $21.1 million in merger-related expenses, which are included in Other, net in the unaudited condensed consolidated statements of comprehensive income and in Net cash provided by operating activities in the unaudited condensed consolidated statements of cash flows.
Revitalized, LLC — In May 2023, pursuant to the equity purchase agreement dated May 1, 2023, the Company completed the acquisition of 100% of the membership interests in Revitalized, LLC (“Revitalized”) for a purchase price, net of cash acquired, of $12.9 million primarily consisting of $7.0 million of goodwill and $5.5 million of intangible assets.
Rochester Home Infusion, Inc. — In August 2022, pursuant to the stock purchase agreement dated June 10, 2022, the Company completed the acquisition of 100% of the equity interests in Rochester Home Infusion, Inc. (“RHI”) for a purchase price, net of cash acquired, of $27.4 million.
The allocation of the purchase price of RHI was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations, with the governing agreement. Restrictedtotal purchase price being allocated to the assets and liabilities acquired based on the relative fair value of each asset and liability. The following is a final allocation of the consideration transferred to acquired identifiable assets and assumed liabilities, net of cash balances expectedacquired (in thousands):
Amount
Accounts receivable$686 
Intangible assets5,449 
Other assets394 
Accounts payable and other liabilities(434)
Fair value identifiable assets and liabilities6,095 
Goodwill (1)21,323 
Cash acquired201 
Purchase price27,619 
Less: cash acquired(201)
Purchase price, net of cash acquired$27,418 
(1) Goodwill is attributable to become unrestricted during the next twelve months are recorded as current assets. Ascost synergies from procurement and operational efficiencies and elimination of September 30, 2017, the Company had a restricted cash balance, in a money market account,duplicative administrative costs.
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Table of approximately $5.0 million to cash collateralize outstanding letters of credit.Contents

Collectability of Accounts Receivable

4. REVENUE
The following table sets forth the agingnet revenue earned by category of our net accounts receivable (net of allowancepayer for contractual adjustments, and prior to allowance for doubtful accounts), aged based on date of service and categorized based on the three primary overall types of accounts receivable characteristicsand six months ended June 30, 2023 and 2022 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Commercial payers$934,001 $851,915 $1,807,912 $1,638,192 
Government payers123,737 119,385 246,526 234,590 
Patients11,334 9,520 30,482 23,822 
Net revenue$1,069,072 $980,820 $2,084,920 $1,896,604 
5. INCOME TAXES
  September 30, 2017 December 31, 2016
  0 - 180 days Over 180 days Total 0 - 180 days Over 180 days Total
Government $18,566
 $7,897
 $26,463
 $19,891
 $8,278
 $28,169
Commercial 72,744
 22,603
 95,347
 97,744
 19,848
 117,592
Patient 3,440
 10,785
 14,225
 3,955
 6,825
 10,780
Gross accounts receivable $94,750
 $41,285
 136,035
 $121,590
 $34,951
 156,541
Allowance for doubtful accounts     (46,820)     (44,730)
Net accounts receivable     $89,215
     $111,811

Recent Accounting Pronouncements
In July 2017,During the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-11—Earnings Per Share (Topic 260), Distinguishing Liabilities From Equity (Topic 480),three and Derivativessix months ended June 30, 2023, the Company recorded tax expense of $41.1 million and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement$56.1 million, respectively, which includes $22.1 million of tax expense related to the Termination Fee payment received on behalf of Amedisys, under the terms of the Indefinite DeferralMutual Termination Agreement, net of merger-related expenses. The tax expense for the three and six months ended June 30, 2023 represents an effective tax rate of 26.4% and 26.8%, respectively. The variance in the Company’s effective tax rate of 26.4% and 26.8% for the three and six months ended June 30, 2023, respectively, compared to the federal statutory rate of 21%, is primarily attributable to the difference between federal and state tax rates, as well as various non-deductible expenses. During the three and six months ended June 30, 2022, the Company recorded tax expense of $13.7 million and $24.7 million, respectively, which represents an effective tax rate of 28.8% and 27.8%, respectively. The variance in the Company’s effective tax rate of 28.8% and 27.8% for the three and six months ended June 30, 2022, compared to the federal statutory rate of 21%, is primarily attributable to current and deferred state taxes as well as various non-deductible expenses.

Mandatorily Redeemable Financial InstrumentsThe Company maintains a valuation allowance of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 eliminates$13.1 million against certain state net operating losses. In assessing the requirementrealizability of deferred tax assets, the Company considers whether it is more likely than not that a down round feature precludes equity classification when assessing whether an instrument is indexed to an entity’s own stock. A freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability at fair value as a resultsome or all of the existencedeferred tax assets will not be realized. The ultimate realization of a down round feature. The effective date for ASU 2017-11 is for annual or any interim periods beginning after December 15, 2018. Early adoption is permitted. The adoption of this standard is not expected to have a material impactdeferred tax assets depends on the Company’s consolidated financial statements.
generation of future taxable income during the periods in which those temporary differences are deductible. In May 2017,making this assessment, the FASB issued ASU 2017-09—Compensation–Stock Compensation (Topic 718): ScopeCompany considers the scheduled reversal of Modification Accounting. ASU 2017-09 modifies whendeferred tax liabilities, including the effect in available carryback and carryforward periods, projected taxable income, and tax-planning strategies. On a change toquarterly basis, the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accountingCompany evaluates all positive and negative evidence in determining if the fair value, vesting condition or the classification of the awardvaluation allowance is not the same immediately before and after a change to the terms and conditions of the award. fairly stated.
The effective date for ASU 2017-09 is for annual or any interim periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04—Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 modifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The effective date for ASU 2017-04 is for annual or any interim periods beginning after December 15, 2019. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18—Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The effective date for ASU 2016-18 is for annual or any interim periods beginning after December 15, 2017. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance for eight specific cash flow issues with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. The effective date for ASU 2016-15 is for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02—Leases (Topic 842), requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. The effective date of the new standard for public companies is for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the effect that the updated standard will have on its consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09—Revenue from Contracts with Customers (Topic 606). The guidance requires an entity to recognize the amount of revenue to which it expects to be entitledtax expense for the transferthree and six months ended June 30, 2023 of promised goods or services$41.1 million and $56.1 million, respectively, consists of quarterly federal and state tax liabilities as well as recognized deferred federal and state tax expense. The Company’s tax expense for the three and six months ended June 30, 2022 of $13.7 million and $24.7 million, respectively, consists of quarterly tax liabilities attributed to customers. The FASB delayed the effective date to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted onlyspecific state taxing authorities as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In addition, in Marchwell as recognized deferred federal and April 2016, the FASB issued new guidance intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. Both amendments permit the use of either a full or modified retrospective transition method and are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early application permitted. state tax expense.
The Company has not elected early adoption and will apply the modified retrospective approach upon adoption which would apply the new guidance only to contractsaccumulated federal net operating loss carryovers that are not completed atsubject to one or more Section 382 limitations. This may limit the adoption date and would not adjust prior reporting periods. The Company continuesCompany’s ability to evaluate and refineutilize its estimatefederal net operating losses.

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Table of the impact of the adoption of the new revenue standard on its consolidated financial statements, with emphasis on evaluation of the nature of multi-parties involved in health care services transactions, variable consideration arising from third party payer settlements, implicit rate concessions, customer acquisition costs, the impact of new disclosures required by the standard, and finalization of appropriate processes and procedures.Contents

NOTE 3 — LOSS6. EARNINGS PER SHARE
The Company presents basic and diluted lossearnings per share for its common stock, par value $0.0001 per share (“Common Stock”).stock. Basic lossearnings per share is calculated by dividing the net loss attributable to common stockholdersincome of the Company by the weighted average number of shares of Common Stockcommon stock outstanding during the period. Diluted lossearnings per share is determined by adjusting the profit or loss attributable to stockholders and the weighted average number of shares of Common Stockcommon stock outstanding adjusted for the effects of all potentially dilutive potential common shares comprised of options granted, unvested restricted stocks, stock appreciation rights, warrants and Series A and Series C Preferred Stock (as defined below). Potential Common Stock equivalents that have been issued by the Company related to outstanding stock options, unvested restricted stock and warrants are determined using the treasury stock method, while potential common shares related to Series A and Series C Preferred Stock are determined using the “if converted” method.securities.
The Company's Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), and Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock” and, together with the Series A Preferred Stock, the “Preferred Stock”), is considered a participating security, which means the security may participate in undistributed earnings with Common Stock. The holders of the Preferred Stock would be entitled to share in dividends, on an as-converted basis, if the holders of Common Stock were to receive dividends. The Company is required to use the two-class method when computing loss per share when it has a security that qualifies as a participating security. The two-class method is an earnings allocation formula that determines loss per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. In determining the amount of net earnings to allocate to common stockholders, earnings are allocated to both common and participating securities based on their respective weighted-average shares outstanding during the period. Diluted loss per share for the Company’s Common Stock is computed using the more dilutive of the two-class method or the if-converted method.
The following table sets forth the computation of basic and diluted loss per common share (in thousands, except for per share amounts):
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Numerator:       
Loss from continuing operations, net of income taxes$(12,404) $(11,090) $(60,090) $(29,169)
Income (loss) from discontinued operations, net of income taxes(113) (174) (1,053) 134
Net loss$(12,517) $(11,264) $(61,143) $(29,035)
Accrued dividends on preferred stock(2,394) (2,138) (6,911) (6,192)
Deemed dividend on preferred stock(175) (173) (525) (518)
Loss attributable to common stockholders$(15,086) $(13,575) $(68,579) $(35,745)
        
Denominator - Basic and Diluted: 
  
  
  
Weighted average common shares outstanding127,488
 114,826
 122,519
 85,701
        
Loss per Common Share:       
Loss from continuing operations, basic and diluted$(0.12) $(0.12) $(0.55) $(0.42)
Loss from discontinued operations, basic and diluted—
 —
 (0.01) —
Loss per common share, basic and diluted$(0.12) $(0.12) $(0.56) $(0.42)
The loss attributable to common stockholders is used as the basis of determining whether the inclusion of common stock equivalents would be anti-dilutive. Accordingly, theThe computation of diluted shares for the three and six months ended SeptemberJune 30, 20172023 and 2016 excludes2022 includes the effect of 12.5 million and 14.0 million shares respectively, and the computation of the diluted shares for the nine months ended September 30, 2017 and 2016 excludes the effect of 16.2 million and 15.5 million shares, respectively,that would be issued in connection with the PIPE Transaction and the Rights Offering, as well as the 2017 Warrants (see Note 4 - Stockholders’ Deficit),warrants, stock options, and restricted stock awards and performance stock unit awards, as their inclusionthese common stock equivalents are dilutive to the earnings per share recorded in those periods.
The following table presents the Company’s common stock equivalents that were excluded from the calculation of earnings per share as they would be anti-dilutiveanti-dilutive:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Stock option awards1,345,914900,3781,111,271836,957
Restricted stock awards48,690136,568591,176389,831
Performance stock unit awards— — 152,189— 
The following table presents the Company’s basic earnings per share and shares outstanding (in thousands, except per share data):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Numerator:
Net income (1)$114,403 $33,929 $153,611 $64,204 
Denominator:
Weighted average number of common shares outstanding179,807 180,621 180,531 180,293 
Earnings per common share:
Earnings per common share, basic$0.64 $0.19 $0.85 $0.36 
(1) Net income for the three and six months ended June 30, 2023 includes $62.8 million related to loss attributable to common stockholders.

NOTE 4 — STOCKHOLDERS’ DEFICIT
Carrying Valuethe termination payment received on behalf of Series A Preferred Stock
As of September 30, 2017, the following values were accreted pursuant toAmedisys, under the terms of the ExchangeMutual Termination Agreement, dated asnet of June 10, 2016, among the Companymerger-related expenses and the signatories thereto and recorded as a reduction of additional paid in capital in Stockholders’ Deficit and a deemed dividend on the Unaudited Consolidated Statements of Operations. In addition, dividends were accrued at 11.5% from the date of issuance to September 30, 2017. taxes. See Note 3, Business Combinations, for further discussion.
The following table sets forthpresents the activity recorded duringCompany’s diluted earnings per share and shares outstanding (in thousands, except per share data):
Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Numerator:
Net income (1)$114,403 $33,929 $153,611 $64,204 
Denominator:
Weighted average number of common shares outstanding179,807 180,621 180,531 180,293 
Effect of dilutive securities1,434 997 1,400 883 
Weighted average number of common shares outstanding, diluted181,241 181,618 181,931 181,176 
Earnings per common share:
Earnings per common share, diluted$0.63 $0.19 $0.84 $0.35 
(1) Net income for the ninethree and six months ended SeptemberJune 30, 20172023 includes $62.8 million related to the Series A Preferred Stock (in thousands):
Series A Preferred Stock carrying value at December 31, 2016$2,462
Accretion of discount related to issuance costs40
Dividends recorded through September 30, 2017 1
230
Series A Preferred Stock carrying value September 30, 2017$2,732
1 Dividends recorded reflect the increase in the Liquidation Preference associated with unpaid dividends.
Carrying Valuetermination payment received on behalf of Series C Preferred Stock
As of September 30, 2017, the following values were accreted pursuant toAmedisys, under the terms of the ExchangeMutual Termination Agreement, datednet of merger-related expenses and taxes. See Note 3, Business Combinations, for further discussion.
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Table of Contents
7. LEASES
During the three and six months ended June 30, 2023, the Company incurred operating lease expenses of $7.3 million and $14.5 million, respectively, including short-term lease expenses, which were included as a component of selling, general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income. During the three and six months ended June 30, 2022, the Company incurred operating lease expenses of $7.4 million and $14.8 million, respectively, including short-term lease expenses, which were included as a component of selling, general and administrative expenses in the unaudited condensed consolidated statements of comprehensive income. As of June 16, 2016, among30, 2023, the Companyweighted-average remaining lease term was 6.8 years and the signatories thereto and recordedweighted-average discount rate was 5.80%.
Operating leases mature as a reduction of additional paid in capital in Stockholders’ Deficit and a deemed dividend on the Unaudited Consolidated Statements of Operations. In addition, dividends were accrued at 11.5% from the date of issuance to September 30, 2017. The following table sets forth the activity recorded during the nine months ended September 30, 2017 related to the Series C Preferred Stockfollows (in thousands):
Fiscal Year Ended December 31,Minimum Payments
2023$15,611 
202421,744 
202519,350 
202616,562 
202713,500 
Thereafter38,205 
Total lease payments124,972 
Less: interest(25,085)
Present value of lease liabilities$99,887 
Series C Preferred Stock carrying value at December 31, 2016$69,540
Accretion of discount related to issuance costs485
Dividends recorded through September 30, 2017 1
6,681
Series C Preferred Stock carrying value September 30, 2017$76,706

1 Dividends recorded reflectDuring the increasesix months ended June 30, 2023, the Company commenced new leases, extensions and amendments, resulting in non-cash operating activities in the Liquidation Preference associated with unpaid dividends.
unaudited condensed consolidated statements of cash flow of $16.8 million related to increases in the operating lease right-of-use assets and operating lease liabilities. During the six months ended June 30, 2022, the Company commenced new leases, extensions and amendments, resulting in non-cash operating activities in the unaudited condensed consolidated statements of cash flow of $8.4 million related to increases in the operating lease right-of-use assets and operating lease liabilities. As of SeptemberJune 30, 2017, the Liquidation Preference of the Series A Preferred Stock and Series C Preferred Stock was $2.8 million and $82.2 million, respectively.
First Quarter 2017 Private Placement
On March 1, 2017, the Company entered into a Stock Purchase Agreement (the “First Quarter Stock Purchase Agreement”) with Venor Capital Master Fund Ltd., Map 139 Segregated Portfolio of LMA SPC, Venor Special Situations Fund II LP and Trevithick LP (the “First Quarter Stockholders”). Pursuant to the First Quarter Stock Purchase Agreement, the Company sold an aggregate of 3.3 million shares of its common stock (the “First Quarter Shares”) for aggregate gross proceeds of approximately $5.1 million in a private placement transaction (the “First Quarter 2017 Private Placement”). The purchase price for each Share was $1.5366, which was negotiated between the Company and the First Quarter Stockholders based on the volume-weighted average price of the Company's common stock on the NASDAQ Global Market on March 1, 2017.
In connection with the First Quarter 2017 Private Placement, the Company entered into a Registration Rights Agreement (the “First Quarter 2017 Registration Rights Agreement”) with the First Quarter Stockholders. Pursuant to the First Quarter 2017 Registration Rights Agreement, the Company agreed to prepare and file a registration statement with the SEC within ten days of the date it files its annual report on Form 10-K for the fiscal year ended December 31, 2016, for purposes of registering the resale of the First Quarter Shares and any shares of common stock issued as a dividend or other distribution with respect to the First Quarter Shares.
As provided under the First Quarter 2017 Registration Rights Agreement, the Company, on March 13, 2017, filed a shelf registration statement on Form S-3 under the Securities Act to register the First Quarter Shares and it was declared effective April 18, 2017.
Proceeds from the First Quarter 2017 Private Placement were used for working capital and general corporate purposes.

2017 Warrants
In connection with the Second Lien Note Facility (as defined below), the Company issued warrants (the “2017 Warrants”) to the purchasers of the Second Lien Notes (as defined below) pursuant to a Warrant Purchase Agreement dated as of June 29, 2017 (the “Warrant Purchase Agreement”). The 2017 Warrants entitle the purchasers of the Warrants to purchase shares of Common Stock, representing at the time of any exercise of the 2017 Warrants an equivalent number of shares equal to 4.99% of the Common Stock of the Company on a fully diluted basis, subject to the terms of the Warrant Agreement governing the 2017 Warrants, dated as of June 29, 2017 (the “Warrant Agreement”); provided, however, the 2017 Warrants may not be converted to the extent that, after giving effect to such conversion, the holders of the 2017 Warrants would beneficially own, in the aggregate, in excess of (i) 19.99% of the shares of Common Stock outstanding as of June 29, 2017 (the “Closing Date”) minus (ii) the shares of Common Stock that were sold pursuant to the Second Quarter 2017 Private Placement (as defined below) (the “Conversion Cap”). The Conversion Cap will not apply to the 2017 Warrants if the Company obtains the approval of its stockholders for the removal of the Conversion Cap, which the Company is required to take certain steps to attempt to obtain, subject to the terms of the Warrant Agreement.
The 2017 Warrants have a 10 year term and an initial exercise price of $2.00 per share, and may be exercised by payment of the exercise price in cash or surrender of shares of Common Stock into which the 2017 Warrants are being converted in an aggregate amount sufficient to pay the exercise price.  The exercise price and the number of shares that may be acquired upon exercise of the 2017 Warrants is subject to adjustment in certain situations, including price based anti-dilution protection whereby, subject to certain exceptions, if the Company later issues Common Stock or certain Common Stock Equivalents (as defined in the Warrant Agreement) at a price less than either the then-current market price per share or exercise price of the 2017 Warrants, then the exercise price will be decreased and the percentage of shares of Common Stock issuable upon exercise of the 2017 Warrants will remain the same, giving effect to such issuance. Additionally, the 2017 Warrants have standard anti-dilution protections if the Company effects a stock split, subdivision, reclassification or combination of its Common Stock or fixes a record date for the making of a dividend or distribution to stockholders of cash or certain assets. Upon the occurrence of certain business combinations the 2017 Warrants will be converted into the right to acquire shares of stock or other securities or property (including cash) of the successor entity. The 2017 Warrants are reflected as a liability in other non-current liabilities on the balance sheet and are adjusted to fair value at the end of each reporting period through an adjustment to earnings. The fair value of the 2017 Warrants, subsequent to a remeasurement adjustment of $1.1 million, is $18.0 million at September 30, 2017.
Second Quarter 2017 Private Placement
On June 29, 2017, the Company entered into a Stock Purchase Agreement (the “Second Quarter Stock Purchase Agreement”) with a fund managed by Ares Management L.P. (“Ares” or the “Second Quarter Stock Purchaser”). Pursuant to the terms of the Second Quarter Stock Purchase Agreement, the Company issued and sold to the Second Quarter Stock Purchaser in a private placement (the “Second Quarter 2017 Private Placement”) 6,359,350 shares of Common Stock (the “Second Quarter Shares”) at a price of $2.50 per share, for proceeds of approximately $15.9 million, net of $0.2 million in associated costs.
Second Quarter Registration Rights Agreement
In connection with the 2017 Warrants and the Second Quarter 2017 Private Placement, the Company entered into a Registration Rights Agreement (the “Second Quarter 2017 Registration Rights Agreement”) with the holders of the 2017 Warrants and the Second Quarter Stock Purchaser. Pursuant to the Second Quarter 2017 Registration Rights Agreement, subject to certain exceptions, the Company is required, upon the request of the Second Quarter Stock Purchaser and holders of the 2017 Warrants, to register the resale of the Second Quarter Shares and the shares of Common Stock issuable upon exercise of the 2017 Warrants. Pursuant to the terms of the Second Quarter 2017 Registration Rights Agreement, these registration rights will not become effective until twelve months after the Closing Date, and the costs incurred in connection with such registrations will be borne by the Company.
NOTE 5 — ACQUISITIONS
On September 9, 2016, the Company completed the acquisition of substantially all of the assets and assumed certain liabilities of HS Infusion Holdings, Inc. (“Home Solutions”) and its subsidiaries (the “Home Solutions Transaction”) pursuant to an Asset Purchase Agreement dated June 11, 2016 (as amended, the “Home Solutions Agreement”), by and among Home Solutions, a Delaware corporation, certain subsidiaries of Home Solutions, the Company and HomeChoice Partners, Inc., a Delaware corporation. The aggregate consideration paid by the Company in the transaction was equal to (i) $67.5 million in cash; plus (ii) (a) 3,750,000 shares of Company common stock and (b) the right to receive contingent equity securities of the Company, in the form of restricted shares of Company common stock (the “RSUs”), issuable in two tranches, Tranche A and Tranche B, with different vesting conditions. The number of shares of Company common stock in Tranche A is 3.1 million and the number of shares of Company common stock in Tranche B is 4.0 million, each subject to vesting conditions. Upon close of the transaction, the RSUs had no intrinsic value, but are reported in our consolidated financial statements at their estimated fair value at the date

of issuance. Upon approval of the Charter Amendment, as defined below, on November 30, 2016, the date at which sufficient shares were available should the RSUs vest and become issuable, the liability was remeasured to its then-current fair value and reclassified to equity.
The following table sets forth the consideration transferred in connection with the acquisition of Home Solutions as of September 9, 2016 (in thousands):
Cash$67,516
Equity issued at closing9,938
Capital lease obligation assumed301
Fair value of contingent consideration15,400
Total consideration$93,155
The following table sets forth the fair value of the assets acquired and liabilities assumed upon acquisition of Home Solutions (in thousands):
Accounts receivable$11,956
Inventories3,199
Prepaids and other assets852
Total current assets$16,007
Property and equipment4,350
Goodwill58,468
Managed care contracts24,600
Licenses5,400
Trade name1,800
Non-compete agreements200
Other non-current assets891
Total assets$111,716
Accounts payable14,575
Accrued liabilities3,986
Current liabilities$18,561
Total fair value of cash and contingent consideration$93,155
The excess of the purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed in the acquisition was allocated to goodwill. The value of the goodwill represents the value the Company expects to be created by combining the operations of the companies, including the ability to cross-sell its services on a national basis with an expanded footprint in home infusion and the opportunity to focus on higher margin therapies.
In accordance with ASC Topic 805 Business Combinations (“ASC 805”), the allocation of the purchase price is subject to adjustment during the measurement period after the closing date (September 9, 2016) when additional information on assets and liability valuations becomes available. The Company has finalized its valuation of certain assets and liabilities recorded pursuant to the acquisition including intangible assets and contingent consideration.
Under the Home Solutions Agreement,2023, the Company did not purchase, among other things,have any accounts receivable associated with governmental payors. However, the Home Solutions Agreement stipulatessignificant operating or financing leases that collectionshad not yet commenced.

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Table of government receivables,Contents
8. PROPERTY AND EQUIPMENT
Property and equipment was as follows as of June 30, 2023 and December 31, 2022 (in thousands):
June 30, 2023December 31, 2022
Infusion pumps$37,049 $34,942 
Equipment, furniture and other35,919 31,929 
Leasehold improvements99,979 99,085 
Computer software, purchased and internally developed46,464 34,922 
Assets under development21,677 29,411 
241,088 230,289 
Less: accumulated depreciation(134,311)(121,968)
Property and equipment, net$106,777 $108,321 
Depreciation expense is recorded within cost of revenue and operating expenses within the first anniversaryunaudited condensed consolidated statements of comprehensive income, depending on the nature of the closing date,underlying fixed assets. The depreciation expense included in an amount less thancost of revenue relates to revenue-generating assets, such as infusion pumps. The depreciation expense included in operating expenses is related to infrastructure items, such as furniture, computer and office equipment, and leasehold improvements. The following table presents the amount estimated as government receivablesof depreciation expense recorded in the Closing Certificate (such difference, the “Shortfall Amount”), must be paid to the seller. On October 4, 2017, the Companycost of revenue and Home Solutions agreed to defer the measurement of the Shortfall Amount from the first anniversary of the closing date to December 31, 2017 in exchange for a payment by the Company of $500,000, which would be credited toward any amount ultimately owed to Home Solutions. The Company continues to evaluate the collectability of the government receivables and, as of September 30, 2017, has recognized a liability of $0.9 million, reflected in current liabilities and allocated in the purchase price, in anticipation of a shortfall in actual collections.

NOTE 6 — RESTRUCTURING, ACQUISITION, INTEGRATION, AND OTHER EXPENSES, NET
Restructuring, acquisition, integration and otheroperating expenses include non-operating costs associated with restructuring, acquisition, and integration initiatives such as employee severance costs, certain legal and professional fees, training costs, redundant wage costs, impacts recorded from the change in contingent consideration obligations, and other costs related to contract terminations and closed branches/offices.
Restructuring, acquisition, integration, and other expenses, net in the Unaudited Consolidated Statements of Operations for the three months and ninesix months ended SeptemberJune 30, 20172023 and 2016 consisted2022 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Depreciation expense in cost of revenue$680 $1,233 $1,390 $2,491 
Depreciation expense in operating expenses6,288 7,371 12,300 14,559 
Total depreciation expense$6,968 $8,604 $13,690 $17,050 

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9. GOODWILL AND OTHER INTANGIBLE ASSETS
Changes in the carrying amount of goodwill consist of the following activity for the three and six months ended June 30, 2023 (in thousands):
Balance at December 31, 2022$1,533,424 
Purchase accounting adjustments145 
Balance at March 31, 2023$1,533,569 
Acquisitions6,998 
Balance at June 30, 2023$1,540,567 
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Restructuring and other expenses$3,791
 $2,372
 $10,643
 $6,304
Acquisition and integration expense246
 4,695
 528
 7,619
Change in fair value of contingent consideration—
 (4,699) —
 (4,597)
Total restructuring, acquisition, integration, and other expense, net$4,037
 $2,368
 $11,171
 $9,326
NOTE 7 — DEBT
AsThe carrying amount and accumulated amortization of Septemberintangible assets consist of the following as of June 30, 20172023 and December 31, 2016,2022 (in thousands):
June 30, 2023December 31, 2022
Gross intangible assets:
Referral sources$514,388 $509,646 
Trademarks/names39,136 38,508 
Other amortizable intangible assets1,003 912 
Total gross intangible assets554,527 549,066 
Accumulated amortization:
Referral sources(183,440)(167,902)
Trademarks/names(18,247)(16,901)
Other amortizable intangible assets(247)(148)
Total accumulated amortization(201,934)(184,951)
Total intangible assets, net$352,593 $364,115 
Amortization expense for intangible assets was $8.5 million and $17.0 million for the Company’sthree and six months ended June 30, 2023, respectively. Amortization expense for intangible assets was $8.7 million and $16.2 million for the three and six months ended June 30, 2022, respectively.

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10. INDEBTEDNESS
Long-term debt consisted of the following as of June 30, 2023 (in thousands):
Principal AmountDiscountDebt Issuance CostsNet Balance
Asset-based-lending (“ABL”) Facility$— $— $— $— 
First Lien Term Loan591,000 (7,650)(10,618)572,732 
Senior Notes500,000 — (9,341)490,659 
$1,091,000 $(7,650)$(19,959)1,063,391 
Less: current portion(6,000)
Total long-term debt$1,057,391 
 September 30,
2017		 December 31,
2016
Senior Credit Facilities$—
 $265,507
First Lien Note Facility, net of unamortized discount198,163
 —
Second Lien Note Facility, net of unamortized discount84,129
 —
2021 Notes, net of unamortized discount197,184
 196,670
Capital leases3,242
 2,209
Less: Deferred financing costs(4,137) (12,452)
Total Debt478,581
 451,934
Less: Current portion(1,828) (18,521)
Long-term debt, net of current portion$476,753
 $433,413
Long-term debt consisted of the following as of December 31, 2022 (in thousands):
Debt Facilities
Principal AmountDiscountDebt Issuance CostsNet Balance
ABL Facility$— $— $— $— 
First Lien Term Loan594,000 (8,307)(11,529)574,164 
Senior Notes500,000 — (9,960)490,040 
$1,094,000 $(8,307)$(21,489)1,064,204 
Less: current portion(6,000)
Total long-term debt$1,058,204 
The Company was previously obligated under (i) a senior secured first-lien revolving credit facility in an aggregate principal amount of $75.0 million (the “Revolving Credit Facility”), (ii) a senior secured first-lien term loan B in an aggregate principal amount of $250.0 million (the “Term Loan B Facility”) and (iii) a senior secured first-lien delayed draw term loan B in an aggregate principal amount of $150.0 million (the “Delayed Draw Term Loan Facility” and, together with the Revolving Credit Facility and the Term Loan B Facility, the “Senior Credit Facilities”) with SunTrust Bank (“SunTrust”), Jefferies Finance LLC and Morgan Stanley Senior Funding, Inc., originally entered on July 31, 2013 and amended from time to time.
On January 6, 2017,Effective June 30, 2023, the Company entered into a creditan agreement, (the “Priming Credit Agreement” and, together withdated as of June 8, 2023, to amend the Senior Credit Facilities, the “Prior Credit Agreements”) with certain existing lenders under the Senior Credit Facilities and SunTrust, as administrative agent for itself and the lenders. The Priming Credit Agreement provided an aggregate borrowing commitment of $25.0 million, which was fully drawn at closing.
On June 29, 2017 (the “Closing Date”), the Company entered into (i) a first lien note purchase agreementFirst Lien Term Loan (the “First Lien Note Facility”Credit Agreement Amendment”), among the Company, which is the issuer under the agreement, the financial institutions and note purchasers from time solely to time party to the agreement (the “First Lien Note Purchasers”), and Wells Fargo Bank, National Association, in its capacity as collateral agent for itself and the First Lien Note Purchasers (the “First Lien Collateral Agent”), pursuant to which the Company issued first lien senior secured notes in an aggregate principal amount of $200.0 million (the “First Lien Notes”); and (ii) a second lien note purchase agreement (the “Second Lien Note Facility” and, together with the First Lien Note Facility, the “Notes Facilities”) among the Company, which is the issuer under the agreement, the financial institutions and note purchasers from time to time party to the agreement (the “Second Lien Note Purchasers”), and Wells Fargo Bank, National Association, in its capacity as

collateral agent for itself and the Second Lien Note Purchasers (the “Second Lien Collateral Agent” and, together with the First Lien Collateral Agent, the “Collateral Agent”), pursuant to which the Company (a) issued second lien senior secured notes in an aggregate initial principal amount of $100.0 million (the “Initial Second Lien Notes”) and (b) has the ability to draw upon the Second Lien Note Facility and issue second lien delayed draw senior secured notes in an aggregate initial principal amount of $10.0 million for a period of 18 months after the Closing Date, subject to certain terms and conditions (the “Second Lien Delayed Draw Notes” and, together with the Initial Second Lien Notes, the “Second Lien Notes”; the Second Lien Notes, together with the First Lien Notes, the “Notes”). Funds managed by Ares are acting as lead purchasers for the Notes Facilities.
The Company used the proceeds of the sale of the First Lien Notes and the Initial Second Lien Notes to repay in full all amounts outstanding under the Prior Credit Agreements and extinguished the liability. Each of the Prior Credit Agreements was terminated following such repayment. The Company used the remaining proceeds of $15.9 million, net of $0.2 million in issuance costs, from the Notes Facilities and the Second Quarter 2017 Private Placement for working capital and general corporate purposes.
The First Lien Notes accrue interest, payable monthly in arrears, at a floating rate or rates equal to, at the option of the Company, (i) the base rate (defined as the highest of the Federal Funds Rate plus 0.5% per annum, the Prime Rate as published by The Wall Street Journal and the one-monthreplace London Interbank Offered Rate (“LIBOR”) (subjectand related definitions and provisions with Secured Overnight Financing Rate (“SOFR”) as the new reference rate. The Company elected an optional expedient allowed under ASC Topic 848 such that we will account for the modification as a continuation of the existing contract.
The interest rate on the First Lien Term Loan was 7.90% and 6.82% as of June 30, 2023 and December 31, 2022, respectively. The weighted average interest rate incurred on the First Lien Term Loan was 7.76% and 7.52% for the three and six months ended June 30, 2023, respectively. The weighted average interest rate incurred on the First Lien Term Loan was 3.52% and 3.39% for the three and six months ended June 30, 2022, respectively. The interest rate on the Senior Notes was 4.375% as of June 30, 2023 and December 31, 2022. The weighted average interest rate incurred on the Senior Notes was 4.375% for the three and six months ended June 30, 2023, respectively. The weighted average interest rate incurred on the Senior Notes was 4.375% for the three and six months ended June 30, 2022, respectively.
Long-term debt matures as follows (in thousands):
Fiscal Year Ended December 31,Minimum Payments
2023$3,000 
20246,000 
20256,000 
20266,000 
20276,000 
Thereafter1,064,000 
Total$1,091,000 
During the three and six months ended June 30, 2023 and 2022, the Company engaged in hedging activities to limit its exposure to changes in interest rates. See Note 11, Derivative Instruments, for further discussion.
The following table presents the estimated fair values of the Company’s debt obligations as of June 30, 2023 (in thousands):
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Financial InstrumentCarrying Value as of June 30, 2023Markets for Identical Item (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
First Lien Term Loan$572,732 $— $590,261 $— 
Senior Notes490,659 — 437,500 — 
Total debt instruments$1,063,391 $— $1,027,761 $— 
See Note 12, Fair Value Measurements, for further discussion.
Effective January 13, 2023, the Company entered into an agreement to amend the ABL Facility, to among other things, increase the amount of borrowing availability by $50.0 million to $225.0 million total borrowing availability and to replace LIBOR with SOFR as the new reference rate.
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11. DERIVATIVE INSTRUMENTS
The Company uses derivative financial instruments for hedging and non-trading purposes to limit the Company’s exposure to increases in interest rates related to its variable interest rate debt. Use of derivative financial instruments in hedging programs subjects the Company to certain risks, such as market and credit risks. Market risk represents the possibility that the value of the derivative financial instrument will change. In a hedging relationship, the change in the value of the derivative financial instrument is offset to a 1.0% floor) plus 1.0%), or (ii)great extent by the one-month LIBOR rate (subjectchange in the value of the underlying hedged item. Credit risk related to a 1.0% floor), plusderivative financial instrument represents the possibility that the counterparty will not fulfill the terms of the contract. The notional, or contractual, amount of the Company’s derivative financial instruments is used to measure interest to be paid or received and does not represent the Company’s exposure due to credit risk. Credit risk is monitored through established approval procedures, including reviewing credit ratings when appropriate.
In October 2021, the Company entered into an interest rate cap hedge with a marginnotional amount of 6.0% if$300 million for a 5-year term beginning November 30, 2021. The hedge partially offsets risk associated with the base rate is selected or 7.0% if the LIBOR Option is selected. The First Lien Notes mature on August 15, 2020, provided that ifTerm Loan’s variable interest rate. The interest rate cap instrument perfectly offsets the Company’s existing 8.875% Senior Notes due 2021 (the “2021 Notes”) are refinanced prior to August 15, 2020, thenterms of the scheduled maturity dateinterest rates associated with the variable interest rate of the First Lien Notes shall be June 30, 2022.Term Loan. As a result of the First Lien Credit Agreement Amendment, the Company elected an optional expedient allowed under ASC Topic 848 such that we will continue the hedging relationship for the interest rate cap hedge.
The First Lien Notes will amortize in equal quarterly installments equal to 0.625% offollowing table summarizes the aggregate principal amount of the First Lien Note Facility, commencing on September 30, 2019, and on the last day of each third month thereafter, with the balance payable at maturity. The First Lien Notes are pre-payable at the Company’s option at specified premiums to the principal amount that will decline over the term of the First Lien Note Facility. If the First Lien Notes are prepaid prior to the second anniversary of the Closing Date, the Company will be required to pay a make-whole premium based on the present value (using a discount rate based on the specified treasury rate plus 50 basis points) of all remaining interest payments on the First Lien Notes being prepaid prior to the second anniversary of the Closing Date, plus 4.0% of the principal amount of First Lien Notes being prepaid. On or after the second anniversary of the Closing Date, the prepayment premium is 4.0%, which declines to 2.0% on or after the third anniversary of the Closing Date, and declines to 0.0% on or after the fourth anniversary of the Closing Date. At any time, the Company may pre-pay up to $50.0 million in aggregate principal amount of the First Lien Notes from internally generated cash without incurring any make-whole or prepayment premium. The occurrence of certain events of default may increase the applicable rate of interest by 2.0% and could result in the accelerationlocation of the Company’s obligations underderivative instruments in the First Lien Note Facility prior to stated maturity and an obligation of the Company to pay the full amount of its obligations under the First Lien Note Facility.condensed consolidated balance sheets (in thousands):
Fair Value - Derivatives in Asset Position
DerivativeBalance Sheet CaptionJune 30, 2023December 31, 2022
Interest rate cap designated as cash flow hedgePrepaid expenses and other current assets$8,740 $10,926 
Interest rate cap designated as cash flow hedgeOther noncurrent assets19,327 17,342 
Total derivative assets$28,067 $28,268 
The First Lien Note Facility contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material indebtedness and events constituting a change of control. In addition, the obligations under the First Lien Note Facility will be guaranteed by joint and several guarantees from the Company’s subsidiaries.
In connectiongain (loss) associated with the First Lien Note Facility, the Company, its subsidiaries and the First Lien Collateral Agent entered into a First Lien Guaranty and Security Agreement, dated as of June 29, 2017 (the “First Lien Guaranty and Security Agreement”). Pursuant to the First Lien Guaranty and Security Agreement, the obligations under the First Lien Notes will be secured by first priority liens on, and security interestschange in substantially all of the assets of the Company and its subsidiaries.
The Second Lien Notes accrue interest, payable monthly in arrears, at a floating rate or rates equal to, at the option of the Company, (i) one-month LIBOR (subject to a 1.25% floor) plus 9.25% per annum in cash, (ii) one-month LIBOR (subject to a 1.25% floor) plus 11.25% per annum, which amount will be capitalized on each interest payment date, or (iii) one-month LIBOR (subject to a 1.25% floor) plus 10.25% per annum, of which one-half LIBOR plus 4.625% per annum will be payable in cash and one-half LIBOR plus 5.625% per annum will be capitalized on each interest payment date, provided that, in each case, if any permitted refinancing indebtedness with which the 2021 Notes are refinanced requires or permits the payment of cash interest, all of the interest on the Second Lien Notes shall be paid in cash. The Second Lien Notes mature on August 15, 2020, provided that if the 2021 Notes are refinanced prior to August 15, 2020, then the scheduled maturity date of the Second Lien Notes shall be June 30, 2022.
In connection with the Second Lien Note Facility, the Company also issued the 2017 Warrants to the purchasers of the Second Lien Notes pursuant to the Warrant Purchase Agreement. The 2017 Warrants entitle the purchasers of the 2017 Warrants to purchase shares of Common Stock, representing at the time of any exercise of the 2017 Warrants an equivalent number of shares equal to 4.99% of the Common Stock of the Company on a fully diluted basis, subject to the terms of the Warrant Agreement. The 2017

Warrants, considered a derivative and subject to remeasurement at each reporting period, are reflected in other non-current liabilities in the unaudited consolidated balance sheet. The 2017 Warrants, subsequent to a remeasurement adjustment of $1.1 million, are carried at a fair value of $18.0 million at September 30, 2017.
The Second Lien Notes are not subject to scheduled amortization installments. The Second Lien Notes are pre-payable at the Company’s option at specified premiums to the principal amount that will decline over the term of the Second Lien Note Facility. If the Second Lien Notes are prepaid prior to the third anniversary of the Closing Date, the Company will need to pay a make-whole premium based on the present value (using a discount rate based on the specified treasury rate plus 50 basis points) of all remaining interest payments on the Second Lien Notes being prepaid prior to the third anniversary of the Closing Date, plus 4.0% of the principal amount of Second Lien Notes being prepaid. On or after the third anniversary of the Closing Date, the prepayment premium is 4.0%, which declines to 2.0% on or after the fourth anniversary of the Closing Date, and declines to 0.0% on or after the fifth anniversary of the Closing Date. The occurrence of certain events of default may increase the applicable rate of interest by 2.0% and could result in the acceleration of the Company’s obligations under the Second Lien Note Facility prior to stated maturity and an obligation of the Company to pay the full amount of its obligations under the Second Lien Note Facility.
The Second Lien Note Facility contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material indebtedness and events constituting a change of control. In addition, the obligations under the Second Lien Note Facility will be guaranteed by joint and several guarantees from the Company’s subsidiaries.
In connection with the Second Lien Note Facility, the Company, its subsidiaries and the Second Lien Collateral Agent entered into a Second Lien Guaranty and Security Agreement, dated as of June 29, 2017 (the “Second Lien Guaranty and Security Agreement”). Pursuant to the Second Lien Guaranty and Security Agreement, the obligations under the Second Lien Notes will be secured by second priority liens on, and security interests in, substantially all of the assets of the Company and its subsidies.
In connection with the First Lien Note Facility and the Second Lien Note Facility, the Company, the First Lien Collateral Agent and the Second Lien Collateral Agent, entered into an intercreditor agreement containing customary provisions to, among other things, subordinate the lien priority of the liens granted under the Second Lien Note Facility to the liens granted under the First Lien Note Facility.
2021 Notes
On February 11, 2014, the Company issued $200.0 million aggregate principal amount of the 2021 Notes. The 2021 Notes are senior unsecured obligations of the Company and are fully and unconditionally guaranteed by all existing and future subsidiaries of the Company.
Interest on the 2021 Notes accrues at a fixed rate of 8.875% per annum and is payable in cash semi-annually on February 15 and August 15 of each year. The debt discount of $5.0 million at issuance is being amortized as interest expense through maturity which will result in the accretion over time of the outstanding debt balance to the principal amount. The 2021 Notes are the Company’s senior unsecured obligations and rank equally in right of payment with all of its other existing and future senior unsecured indebtedness and senior in right of payment to all of its existing and future subordinated indebtedness.
The 2021 Notes are guaranteed on a full, joint and several basis by each of the Company’s existing and future domestic restricted subsidiaries that is a borrower under any of the Company’s credit facilities or that guarantees any of the Company’s debt or that of any of its restricted subsidiaries, in each case incurred under the Company’s credit facilities. As of September 30, 2017, the Company does not have any independent assets or operations, and as a result, its direct and indirect subsidiaries (other than minor subsidiaries), each being 100% owned by the Company, are fully and unconditionally, jointly and severally, providing guarantees on a senior unsecured basis to the 2021 Notes.

Fair Value of Financial Instruments
The following details the carrying value and the fair value of our financialthe effective portion of the hedging instrument is recorded in other comprehensive income (loss). The following table presents the pre-tax gain (loss) from derivative instruments recognized in other comprehensive income (loss) in the Company’s unaudited condensed consolidated statements of comprehensive income (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
Derivative2023202220232022
Interest rate cap designated as cash flow hedge$4,394 $5,393 $(201)$20,226 
The following table presents the amount and location of pre-tax income recognized in the Company’s unaudited condensed consolidated statements of comprehensive income related to the Company’s derivative instruments (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
DerivativeIncome Statement Caption2023202220232022
Interest rate cap designated as cash flow hedgeInterest expense, net$2,719 $491 $5,071 $1,184 

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Financial Instrument Carrying Value as of September 30, 2017 Markets for Identical Item (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
First Lien Note Facility $198,163
 $—
 $—
 $199,122
Second Lien Note Facility 84,129
 —
 —
 $100,187
2017 Warrants 17,988
 —
 17,988
 —
2021 Notes 197,184
 —
 184,138
 —
Total $497,464
 $—
 $202,126
 $299,309
12. FAIR VALUE MEASUREMENTS
The fair value hierarchy for disclosure of fairFair value measurements is as follows:
Level 1:  Quotedare determined by maximizing the use of observable inputs and minimizing the use of unobservable inputs. The hierarchy places the highest priority on unadjusted quoted market prices (unadjusted) in active markets for identical assets or liabilities.liabilities (Level 1 measurements) and gives the lowest priority to unobservable inputs (Level 3 measurements). The categories within the valuation hierarchy are described as follows:
•Level 1 — Inputs to the fair value measurement are quoted prices in active markets for identical assets or liabilities.
•Level 2:  Quoted — Inputs to the fair value measurement include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices included in Level 1, whichthat are observable for the assetsasset or liabilities,liability, either directly or indirectly.
•Level 3: — Inputs thatto the fair value measurement are unobservable forinputs or valuation techniques.
While the assetsCompany believes its valuation methods are appropriate and consistent with other market participants, the use ofdifferent methodologies or liabilities.
Financial assets with carrying values approximatingassumptions to determine the fair value includeof certain financial instruments could result in a different fair value measurement at the reporting date.
First Lien Term Loan: The fair value of the First Lien Term Loan is derived from a broker quote on the loans in the syndication (Level 2 inputs). See Note 10, Indebtedness, for further discussion of the carrying amount and fair value of the First Lien Term Loan.
Senior Notes: The fair value of the Senior Notes is derived from a broker quote (Level 2 inputs). See Note 10, Indebtedness, for further discussion of the carrying amount and fair value of the Senior Notes.
Interest Rate Cap: The fair value of the interest rate cap is derived from the interest rates prevalent in the market and future expectations of those interest rates (Level 2 inputs). The Company determines the fair value of the investments based on quoted prices from third-party brokers. See Note 11, Derivative Instruments, for further discussion of the fair value of the interest rate cap.
Money Market Funds: The fair value of the money market funds is derived from the closing price reported by the fund sponsor and classified as cash and cash equivalents and accounts receivable. Financialon the Company’s condensed consolidated balance sheets (Level 1 inputs).
There were no other assets or liabilities with carrying values approximatingmeasured at fair value include accounts payable,at June 30, 2023 and capital leases. The carrying value of these financial assets and liabilities approximates fair value due to their short maturities.December 31, 2022.
NOTE 8 —13. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
Breach of Contract Litigation in the Delaware Court of Chancery
On November 3, 2015, Walgreen Co. and various affiliates (“Walgreens”) filed a lawsuit in the Delaware Court of Chancery against the Company and certain of its subsidiaries (collectively, the “Defendants”). The complaint alleges that the Company breached certain non-compete provisions contained in the Community Pharmacy and Mail Business Purchase Agreement dated as of February 1, 2012, by and among Walgreens and certain subsidiaries and the Company and certain subsidiaries. The complaint seeks both money damages and injunctive relief. On December 7, 2015, the Defendants filed a motion to dismiss the case. Walgreens filed an answering brief on January 11, 2016, and the Defendants filed a reply on January 25, 2016. On March 11, 2016, the Court held oral argument on the Company’s motion to dismiss and granted the motion, holding that Walgreens’ breach of contract claims for money damages must be resolved in accordance with the 2012 Purchase Agreement’s alternative dispute resolution procedure. On March 15, 2016, Walgreens informed the Court that it would not be pursuing any claims for injunctive relief in the Court at that time, but instead would engage in the required alternative dispute resolution procedure. Walgreens requested that the Court keep the case open pending the results of that process. On March 16, 2016, the Court stayed the lawsuit and removed the trial from its calendar, but did not grant Walgreens any other relief or enjoin the Company from taking any action. On December 8, 2016, the parties submitted the dispute to an arbitrator. On December 28, 2016, the arbitrator rendered its decision, finding that the Company had not violated the non-compete, except for certain limited sales of oral oncology, HIV and transplant pharmaceuticals, constituting approximately 3 percent of the total sales that Walgreens claimed were made in violation of the agreement. The arbitrator also concluded that Walgreens was not entitled to recover its lost profits or lost revenues as a result of any such sales. Despite that ruling, the arbitrator awarded Walgreens $5.8 million in damages, or approximately 20 percent of the total amount requested. On January 13, 2017, the Company filed a motion to vacate the arbitration award. On February 10, 2017, Walgreens opposed the Company’s motion and filed a motion to confirm the arbitration award and for other relief. On July 19, 2017, the Court confirmed the arbitration award and denied Walgreens’ request for injunctive relief. Following that decision, the parties entered into a global settlement of all disputes related to the non-compete provisions and the lawsuit was dismissed. The Company paid the settlement amount in August.
Derivative Lawsuit in the Delaware Court of Chancery
On May 7, 2015, a derivative complaint was filed in the Delaware Court of Chancery (the “Derivative Complaint”) by the Park Employees’ & Retirement Board Employees’ Annuity & Benefit Fund of Chicago (the “Derivative Plaintiff”). The Derivative Complaint names as defendants certain current and former directors of the Company, consisting of Richard M. Smith, Myron Holubiak, Charlotte Collins, Samuel Frieder, David Hubers, Richard Robbins, Stuart Samuels and Gordon Woodward (collectively,

the “Director Defendants”), certain current and former officers of the Company, consisting of Kimberlee Seah, Hai Tran and Patricia Bogusz (collectively the “Officer Defendants”), Kohlberg & Co., L.L.C., Kohlberg Management V, L.L.C., Kohlberg Investors V, L.P., Kohlberg Partners V, L.P., Kohlberg TE Investors V, L.P., KOCO Investors V, L.P., and Jefferies LLC. The Company is involved in legal proceedings and is subject to investigations, inspections, audits, inquiries, and similar actions by governmental authorities, arising in the normal course of the Company’s business. Some of these suits may purport or may be determined to be class actions and/or involve parties seeking large and/or indeterminate amounts, including punitive or exemplary damages, and may remain unresolved for several years. From time to time, the Company may also namedbe involved in legal proceedings as a nominal defendant in the Derivative Complaint. plaintiff involving antitrust, tax, contract, intellectual property, and other matters. Gain contingencies, if any, are recognized when they are realized.
The Derivative Complaint was filed in the Delaware Courtresults of Chancery as Park Employeeslegal proceedings are often uncertain and Retirement Board Employees’ Annuity and Benefit Fund of Chicago v. Richard M. Smith, Myron Z. Holubiak, Charlotte W. Collins, Samuel P. Frieder, David R. Huber, Richard L. Robbins, Stuart A. Samuels, Gordon H. Woodward, Kimberlee C. Seah, Hai V.Tran, Patricia Bogusz, Kohlberg & Co., L.L.C., Kohlberg Management V, L.L.C., Kohlberg Investors V, L.P., Kohlberg Partners V, L.P., Kohlberg TE Investors V, L.P., KOCO Investors V, L.P., Jefferies LLC and BioScrip, Inc., C.A. No. 11000-VCG (Del. Ch. Ct., May 7, 2015).
The Derivative Complaint alleges generally that certain defendants breached their fiduciary duties with respectdifficult to the Company’s public disclosures, oversight of Company operations, secondary stock offerings and stock sales. The Derivative Complaint also contends that certain defendants aided and abetted those alleged breaches. The damages sought are not quantified but include, among other things, claims for money damages, restitution, disgorgement, equitable relief, reasonable attorneys’ fees, costs and expenses, and interest. The Derivative Complaint incorporates the same factual allegations from In re BioScrip, Inc., Securities Litigation (described below). On June 16, 2015, all defendants moved to dismiss the case. Briefing for the motion to dismiss was completed on November 30, 2015,predict, and the court heard oral argument on the motion to dismiss on January 12, 2016. During the hearing, the court requested additional briefing, which was completed on February 12, 2016. On May 31, 2016, the court determined that the Derivative Plaintiff’s claims could not proceed as pled but granted the Derivative Plaintiff thirty dayscosts incurred in which to make a motion to amend the Derivative Complaint. The court reserved decision on the motion to dismiss and on June 29, 2016, the Derivative Plaintiff filed a motion for leave to file an amended complaint. On October 10, 2016, all defendants moved to dismiss the amended complaint and the Court heard oral argument on January 19, 2017. On April 18, 2017, the Court granted the defendants’ motion to dismiss. Plaintiffs filed a notice of appeal on May 12, 2017 and the matter was fully briefed as of August 24, 2017.
The Company, Director Defendants and the Officer Defendants deny any allegations of wrongdoing in this lawsuit. The Company and those persons believe alllitigation can be substantial, regardless of the claims in this lawsuit are without merit and intend to vigorously defend against these claims. However, there is no assurance that the defense will be successful or that insurance will be available or adequate to fund any settlement, judgment or litigation costs associated with this action. Certain of the defendants have sought indemnification from the Company pursuant to certain indemnification agreements, for which there may be no insurance coverage. Additional similar lawsuits may be filed.outcome. The Company is unable to predict the outcome or reasonably estimate a range of possible loss at this time. While no assurance can be given as to the ultimate outcome of this matter, the Company believes that the final resolutionits defenses and assertions in pending legal proceedings have merit and does not believe that any of this action is not likelythese pending matters, after consideration of applicable reserves and rights to indemnification, will have a material adverse effect on results of operations, financial position, liquidity or capital resources.
Government Regulation
Various federal and state laws and regulations affecting the healthcare industry do or may impact the Company’s currentcondensed consolidated balance sheets.
However, substantial unanticipated verdicts, fines, and planned operations, including, without limitation, federal and state laws prohibiting kickbacks in government health programs, federal and state antitrust and drug distribution laws, andrulings may occur. As a wide variety of consumer protection, insurance and other state laws and regulations. While management believesresult, the Company is in substantial compliance with all existing laws and regulations material to the operation of its business, such laws and regulations are often uncertain in their application to our business practices as they evolve and are subject to rapid change. As controversies continue to arise in the healthcare industry, federal and state regulation and enforcement priorities in this area can be expected to increase, the impact of which cannot be predicted.
Frommay from time to time the Company responds to investigatory subpoenas and requests for information from governmental agencies and private parties. The Company cannot predict with certainty whatincur judgments, enter into settlements, or revise expectations regarding the outcome of any of the foregoing might be. While the Company believes it is in substantial compliance with all laws, rulescertain matters, and regulations that affects its business and operations, there can be no assurance that the Company will not be subject to scrutiny or challenge under one or more existing laws or that any such challenge would not be successful. Any such challenge, whether or not successful,developments could have a material effect upon the Company’s Consolidated Financial Statements. A violation of the Federal anti-kickback statute, for example, may result in substantial criminal penalties, as well as suspension or exclusion from the Medicare and Medicaid programs. Moreover, the costs and expenses associated with defending these actions, even where successful, can be significant.Further, there can be no assurance the Company will be able to obtain or maintain any of the regulatory approvals that may be required to operate its business, and the failure to do so could have a materialadverse effect on the Company’s Consolidated Financial Statements.

NOTE 9 — CONCENTRATION OF RISK
Customer and Credit Concentration Risk
The Company provides trade credit to its customersresults of operations in the normal course of business. One commercial payor, United Healthcare, accounted for approximately 18.1% and 24.1% of revenue duringperiod in which the three months ended September 30, 2017 and 2016, respectively, and approximately 21.0% and 24.8% of revenue during the nine months ended September 30, 2017 and 2016, respectively. This contract, exclusive of certain provisions, terminated effective September 30, 2017. In addition, Medicare accounted for approximately 9.9% and 7.6% of revenue during the three months ended September 30, 2017 and 2016, respectively, and 7.9% and 7.7% of revenue during the nine months ended September 30, 2017 and 2016.
Therapy Revenue Concentration Risk
The Company sells products related to the Immune Globulin therapy, which represented 21.3% and 19.1% of revenue for the three months ended September 30, 2017 and 2016, respectively, and 21.5% and 17.8% of revenue for the nine months ended September 30, 2017 and 2016.
NOTE 10 — INCOME TAXES
The Company’s federal and state income tax provision from continuing operations for the three months and nine months ended September 30, 2017 and 2016 is summarizedamounts are accrued and/or its cash flows in the following table (in thousands):period in which the amounts are paid.

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 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Current       
Federal$(925) $—
 $(925) $—
State378
 118
 528
 143
Total current(547) 118
 (397) 143
Deferred 
  
  
  
Federal515
 268
 1,523
 393
State92
 35
 271
 57
Total deferred607
 303
 1,794
 450
Total income tax expense$60
 $421
 $1,397
 $593
The income tax expense recognized for the three months and nine months ended September 30, 2017 is a result of an increase in the deferred tax liability, partially offset by a receivable recognized upon the acceleration of an existing Alternative Minimum Tax credit.
The Company’s reconciliation of the statutory rate from continuing operations to the effective income tax rate for the three months and nine months ended September 30, 2017 and 2016 is summarized as follows (in thousands):
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Tax benefit at statutory rate$(4,307) $(3,730) $(20,543) $(10,002)
State tax expense, net of federal taxes378
 131
 528
 134
Alternative minimum tax receivable(925) —
 (925) —
Valuation allowance changes affecting income tax provision4,876
 4,967
 22,194
 10,282
Non-deductible transaction costs and other38
 (947) 143
 179
Income tax expense$60
 $421
 $1,397
 $593
At September 30, 2017, the Company had Federal net operating loss (“NOL”) carry forwards of approximately $389.1 million, of which $13.6 million is subject to an annual limitation, which will begin expiring in 2026 and later. The Company has post-apportioned state NOL carry forwards of approximately $432.8 million, the majority of which will begin expiring in 2017 and later.

NOTE 11 —14. STOCK-BASED INCENTIVE COMPENSATION
BioScrip Equity Incentive Plans
— Under the Company’s Amended and Restated 20082018 Equity Incentive Plan (the “2008“2018 Plan”), approved at the annual meeting by the BioScrip stockholders on May 3, 2018 and amended and restated on May 19, 2021, the Company may issue, among other things, incentive stock options, non-qualified stock options, stock appreciation rights, (“SARs”), restricted stock grants, restricted stock units, performance sharesstock grants, and performance units to key employees and directors. While SARs aredirectors, resulting in a total of 9,101,734 shares of common stock authorized under the 2008 Plan, they may also be issued outside of the plan.for issuance. The 20082018 Plan is administered by the Company’s Management Development and Compensation Committee, (the “Compensation Committee”), a standing committee of the Company’s Board of Directors. The Company had stock options, restricted stock units and performance stock units outstanding related to the 2018 Plan as of June 30, 2023 and 2022. During the three and six months ended June 30, 2023, total stock-based incentive compensation expense recognized by the Company related to the 2018 Plan was $7.7 million and $13.7 million, respectively. During the three and six months ended June 30, 2022, total stock-based incentive compensation expense recognized by the Company related to the 2018 Plan was $4.4 million and $8.6 million, respectively.
15. STOCKHOLDERS’ EQUITY
2017 Warrants — During the three and six months ended June 30, 2023, warrant holders did not elect to exercise any warrants to purchase shares of common stock. During the three and six months ended June 30, 2022, warrant holders elected to exercise 1,130,089 warrants to purchase shares of common stock. As of June 30, 2023 and December 31, 2022, the remaining warrant holders are entitled to purchase 240,188 shares of common stock.
2015 Warrants — During the three and six months ended June 30, 2023, warrant holders exercised an immaterial number of warrants to purchase shares of common stock. During the three and six months ended June 30, 2022, warrant holders elected to exercise 868,304 warrants to purchase shares of common stock. As of June 30, 2023 and December 31, 2022, the remaining warrant holders are entitled to purchase 14,044 and 15,231 shares of common stock, respectively.
Share Repurchase Program — On February 20, 2023, the Company’s Board of Directors approved a share repurchase program of up to an aggregate $250.0 million of common stock of the Company. Under the share repurchase program, repurchases may occur in any number of methods depending on timing, market conditions, regulatory requirements, and other corporate considerations. The share repurchase program has no specified expiration date.
On November 30, 2016, at a special meeting,March 3, 2023, the stockholders approved (i) an amendment to the Company’s Second Amended and Restated Certificate of Incorporation to increase the number ofCompany purchased 2,475,166 shares of Common Stock thatcommon stock under the share repurchase program for an average share price of $30.30, totaling $75.0 million, which repurchased shares became treasury stock. As of June 30, 2023, the Company is authorized to issue from 125repurchase up to an aggregate $175.0 million sharesof common stock of the Company.
16. RELATED-PARTY TRANSACTIONS
Transactions with Equity-Method Investees — The Company provides management services to 250its joint ventures such as accounting, invoicing and collections in addition to day-to-day managerial support of the operations of the businesses. The Company recorded management fee income of $1.3 million shares (the “Charter Amendment”); (ii) an amendment toand $2.6 million for the 2008 Plan to (a) increasethree and six months ended June 30, 2023, respectively. The Company recorded management fee income of $0.9 million and $1.8 million for the number of shares of Common Stockthree and six months ended June 30, 2022, respectively. Management fees are recorded in net revenues in the aggregate that may be subject to awards by 5,250,000 shares, from 9,355,000 to 14,605,000 shares and (b) increase the annual grant caps under the Company’s 2008 Plan from 500,000 Options, 500,000 Stock Appreciation Rights and 350,000 Stock Grants and Restricted Stock Units that are intended to comply with the requirementsaccompanying unaudited condensed consolidated statements of Section 162(m) of the Code to a cap of no more than a total of 3,000,000 Options, Stock Appreciation Rights, Stock Grants and Restricted Stock Units that are intended to comply with the requirements of Section 162(m) of the Code combined; and (iii) if necessary, an adjournment of the Stockholders’ Meeting if there were insufficient votes in favor of the Charter Amendment.
As of September 30, 2017, 4,524,890 shares remain available for grant under the 2008 Plan.
Stock Options
The Company recognized compensation expense related to stock options of $0.1 million and $1.0 million duringcomprehensive income. During the three months ended SeptemberJune 30, 2017 and 2016, respectively, and $0.8 million and $2.7 million during2023, the nineCompany did not receive any distributions from the investees. During the six months ended SeptemberJune 30, 20172023, the Company received distributions from the investees of $2.5 million. During the three and 2016, respectively.
Restricted Stocksix months ended June 30, 2022, the Company received $1.0 million in distributions from the investees.
The Company recognized $0.4had an amount due from its joint ventures of $0.2 million as of June 30, 2023. These receivables were included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets. The Company also had amounts due to its joint ventures of $1.5 million as of December 31, 2022. These payables were included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets. These balances primarily relate to cash collections received by the Company on behalf of the joint ventures, offset by certain pharmaceutical inventories and other expenses paid for by the Company on behalf of the joint ventures.
Share Repurchase Agreement — On February 28, 2023, we entered into a Share Repurchase Agreement (the “Share Repurchase Agreement”) with HC I, pursuant to which we agreed to repurchase, subject to the terms and conditions contained therein, up to $75.0 million of compensation expenseour common stock then held by HC I at the same purchase price per share as the underwriter in a concurrent underwritten public offering of our common stock held by HC I. On March 3, 2023, the transactions contemplated by the Share Repurchase Agreement closed, and we repurchased directly from HC I 2,475,166 shares of our common stock.
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Item 2.    Management’s Discussion and Analysis of Financial Condition andResults of Operations
Unless the context requires otherwise, references in this report to "Option Care Health," the “Company,” “we,” “us” and “our” refer to Option Care Health, Inc. and its consolidated subsidiaries. Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to assist the reader in understanding and assessing significant changes and trends related to restricted stock awards during the three months ended September 30, 2017our results of operations and 2016 and $0.6 million and $0.4 million of compensation expense during the nine months ended September 30, 2017 and 2016, respectively.
Stock Appreciation Rights and Market Based Cash Awards
The Company recognized nominal amounts of compensation expense related to stock appreciation rights during the three months ended September 30, 2017 and 2016, and nominal and $0.1 million of compensation expense during the nine months ended September 30, 2017 and 2016, respectively.
The Company recognized nominal compensation expense related to market based cash awards during the three months ended September 30, 2017 and 2016 and $0.1 million of compensation expense during nine months ended September 30, 2017 and 2016.
Employee Stock Purchase Plan
On May 7, 2013, the Company’s stockholders approved the BioScrip, Inc. Employee Stock Purchase Plan (the “ESPP”). The ESPP is administered by the Compensation Committee. The ESPP provides all eligible employees, as defined under the ESPP, the opportunity to purchase up to a maximum number of shares of Common Stock of the Company as determined by the Compensation Committee. Participants in the ESPP may acquire the Common Stock at a cost of 85% of the lower of the fair market value on the first or last day of the quarterly offering period. The Company filed a Registration Statement on Form S-8 to register 750,000 shares of Common Stock, par value $0.0001 per share, for issuance under the ESPP.
As of September 30, 2017, 101,969 shares remained available for grant under the ESPP. Since inception, the ESPP’s third-party service provider has purchased 648,031 shares on the open market and delivered these shares to the Company’s employees pursuant to the ESPP. The Company incurred nominal expense during the three months ended September 30, 2017 and 2016, and just over $0.1 million during the nine months ended September 30, 2017 and 2016, related to the ESPP.

Item 2.
Management’s Discussion and Analysis of Financial Condition andResults of Operations
financial condition. The following discussion and analysis should be read in conjunction with the Audited Consolidated Financial Statements, includingCompany’s unaudited condensed consolidated financial statements and the related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 1 of Part I of this Quarterly Report on Form 10-Q (this “Form 10-Q”). Certain statements in this Item 2 of Part I of this Form 10-Q, and in Item 1A, “Risk Factors” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2016 (the “Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”2022 (our “Form 10-K”), as well asmay cause our Unaudited Consolidated Financial Statements and the related notes thereto included elsewhere in this report.
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains statements not purely historical and which may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements regarding our expectations, beliefs, future plans and strategies, anticipated events or trends concerning matters that are not historical facts or that necessarily depend upon future events. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” and similar expressions. Specifically, this Quarterly Report contains, among others, forward-looking statements about:
our ability to successfully integrate the HS Infusion Holdings, Inc. (“Home Solutions”) business into our existing businesses;
our ability to make principal and interest payments on our debt and satisfy the other covenants contained in our debt agreements;
our high level of indebtedness;
our expectations regarding financial condition or results of operations in future periods;
our future sources of, and needs for, liquidity and capital resources;
our expectations regarding economic and business conditions;
our expectations regarding potential legislative and regulatory changes impacting the level of reimbursement received from the Medicare and state Medicaid programs;
periodic reviews and billing audits from governmental and private payors;
our expectations regarding the size and growth of the market for our products and services;
our business strategies and our ability to grow our business;
the implementation or interpretation of current or future regulations and legislation, particularly governmental oversight of our business;
our expectations regarding the outcome of litigation;
our ability to maintain contracts and relationships with our customers;
our ability to avoid delays in payment from our customers;
sales and marketing efforts;
status of material contractual arrangements, including the negotiation or re-negotiation of such arrangements;
future capital expenditures;
our ability to hire and retain key employees;
our ability to execute our acquisition and growth strategy; and
our ability to successfully integrate other businesses we may acquire.
Investors are cautioned that any such forward-looking statements are not guarantees of future performance, involve risks and uncertainties and that actual results, mayfinancial position, and cash and cash equivalents generated from operations to differ materially from those possible results discussed in thethese forward-looking statements as a result of various factors. Important factors that could cause such differences include, among other things:statements.
risks associated with increased government regulation related to the health care and insurance industries in general, and more specifically, home infusion providers;
our ability to comply with debt covenants in our Notes Facility (as defined below) and unsecured notes indenture;
risks associated with our issuance of Preferred Stock and warrants to Coliseum Capital Partners L.P., Coliseum Capital Partners II, L.P., and Blackwell Partners, LLC;
risks associated with the exchanges of our Preferred Stock;
risks associated with our issuance of the 2017 Warrants (as defined below);
risks associated with the First Quarter 2017 Private Placement and the Second Quarter 2017 Private Placement (each as defined below);
risks associated with the Notes Facilities (as defined below);
risks associated with our issuance of common stock in the 2016 Equity Offering (as defined below);
risks associated with the retention or transition of executive officers and key employees
our expectation regarding the interim and ultimate outcome of commercial disputes, including litigation;
unfavorable economic and market conditions;

disruptions in supplies and services resulting from force majeure events such as war, strike, riot, crime, or “acts of God” such as hurricanes, flooding, blizzards or earthquakes;
reductions in federal and state reimbursement for our products and services;
delays or suspensions of Federal and state payments for services provided;
efforts to reduce healthcare costs and alter health care financing;
effects of the 21st Century Cures Act (the “Cures Act”), the Patient Protection and Affordable Care Act (“PPACA”), any repeal or amendment thereof, and the Health Care and Education Reconciliation Act of 2010, which amended PPACA, and the related accountable care organizations;
existence of complex laws and regulations relating to our business;
availability of financing sources;
declines and other changes in revenue due to the expiration of short-term contracts;
network lockouts and decisions to in-source by health insurers including lockouts with respect to acquired entities;
unforeseen contract terminations;
difficulties in the implementation and ongoing evolution of our operating systems;
difficulties with the implementation of our growth strategy and integrating businesses we have acquired or will acquire;
increases or other changes in our acquisition cost for our products;
increased competition from competitors having greater financial, technical, reimbursement, marketing and other resources could have the effect of reducing prices and margins;
disruptions in our relationship with our primary supplier of prescription products;
the level of our indebtedness and its effect on our ability to execute our business strategy and increased risk of default under our debt obligations;
the UnitedHealthcare contract termination, including potential accounting charges and impacts on other contract provisions and their associated revenue;
introduction of new drugs, which can cause prescribers to adopt therapies for existing patients that are less profitable to us;
changes in industry pricing benchmarks, which could have the effect of reducing prices and margins; and
other risks and uncertainties described from time to time in our filings with the SEC.
You should not place undue reliance on such forward-looking statements as they speak only as of the date they are made. Except as required by law, we assume no obligation to publicly update or revise any forward-looking statement even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
Business Overview
We areOption Care Health, and its wholly-owned subsidiaries, provides infusion therapy and other ancillary health care services through a national providernetwork of infusion solutions. We partner170 locations around the United States. The Company contracts with managed care organizations, third-party payers, hospitals, physicians, hospital systems, skilled nursing facilities, and healthcare payorsother referral sources to provide pharmaceuticals and complex compounded solutions to patients access to post-acute care services. We operate with a commitment to bring customer-focused healthcare infusion therapy services intofor intravenous delivery in the homepatients’ homes or alternate site setting. By collaborating with the full spectrum of healthcare professionals and the patient, we aim to provide cost-effective care that is driven by clinical excellence, customer service and values that promote positive outcomes and an enhanced quality of life for those whom we serve. As of the filing of this Quarterly Report, we have a total of 66 service locations in 27 states.
other nonhospital settings. Our platform provides nationwide service capabilities and the ability to deliver clinical management services that offer patients a high-touch, community-based and home-based care environment. Our core services are provided in coordination with, and under the direction of, the patient’s physician. Our multidisciplinary team of clinicians, including pharmacists, nurses, dietitians and respiratory therapists,dietitians work with the physician to develop a plan of care suited to oureach patient’s specific needs. Whether in theWe provide home physician office, ambulatory infusion center, skilled nursing facility orservices consisting of anti-infectives, nutrition support, bleeding disorder therapies, immunoglobulin therapy, and other alternate sites of care, we provide products, servicestherapies for chronic and condition-specific clinical management programs tailored to improve the care of individuals with complex health conditions such as gastrointestinal abnormalities, infectious diseases, cancer, multiple sclerosis, organacute conditions.
On April 7, 2015, HC I and blood cell transplants, bleeding disorders, immune deficiencies and heart failure.
We operate in one segment,HC II collectively acquired Walgreens Infusion Services, and accordingly, we do not present disaggregated segment information.
Strategic Assessment and Transactions
We regularly examine our business operations, assess our market strengths, and compare our position to that of our competitors. As a result, we have focused our growth on investments in the Infusion Services business, which remains the primary driver of our growth strategy. Transactions executed to further strengthen our position in the Infusion Services business include:
On August 27, 2015, we completed the sale of substantially all of our pharmacy benefit management services segment (the “PBM Business”) pursuant to an Asset Purchase Agreement dated as of August 9, 2015 (the “PBM Asset Purchase

Agreement”), by and among the Company, BioScrip PBM Services, LLC and ProCare Pharmacy Benefit Manager Inc. (the “PBM Buyer”). Under the PBM Asset Purchase Agreement, the PBM Buyer agreed to acquire substantially all of the assets used solely in connection with the PBM Business and to assume certain PBM Business liabilities (the “PBM Sale”). On the closing date, pursuant to the terms of the PBM Asset Purchase Agreement, we received total cash consideration of approximately $24.6 million, including an adjustment for estimated closing date net working capital. On October 20, 2015, we finalized working capital adjustment negotiations in relation to the PBM Sale whereby we agreed to repay approximately $1.0 million to the PBM Buyer. We used the net proceeds from the PBM Sale to pay down a portion of our outstanding debt.
On September 9, 2016, we acquired substantially all of the assets and assumed certain liabilities of Home Solutions and its subsidiaries (the “Home Solutions Transaction”) pursuantfrom Walgreen Co., and the business was rebranded as Option Care.
On March 14, 2019, HC I and HC II entered into the Merger Agreement to an Asset Purchase Agreement dated June 11, 2016 (as amended, the “Home Solutions Agreement”), bymerge with and among Home Solutions,into a Delaware corporation, certain subsidiarieswholly-owned subsidiary of Home Solutions, the Company and HomeChoice Partners, Inc.,BioScrip, a Delaware corporation. Home Solutions, a privately held company, provides homenational provider of infusion and home nursing productscare management solutions, which was completed on August 6, 2019. Following the close of the transaction, BioScrip was rebranded as Option Care Health.
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Update on the Impact of the COVID-19 Pandemic
On May 11, 2023 the Department of Health and Human Services declared the COVID-19 pandemic is no longer a public health emergency. The Company anticipates that new variants could affect its operations for an extended period; however, at this time we cannot confidently forecast the duration or the ultimate financial impact on our operations.
See Item 1A. “Risk Factors” under the caption “The COVID-19 pandemic and other potential pandemic events could adversely impact our business, results of operations, cash flows and financial position” included in our Form 10-K for further discussion of risks.

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Composition of Results of Operations
The following results of operations include the accounts of Option Care Health and our subsidiaries for the three and six months ended June 30, 2023 and 2022.
Gross Profit
Gross profit represents our net revenue less cost of revenue.
Net Revenue.Infusion and related health care services revenue is reported at the estimated net realizable amounts from third-party payers and patients for goods sold and services rendered. When pharmaceuticals are provided to patients sufferinga patient, revenue is recognized upon delivery of the goods. When nursing services are provided, revenue is recognized when the services are rendered.
Due to the nature of the health care industry and the reimbursement environment in which the Company operates, certain estimates are required to record revenue and accounts receivable at their net realizable values at the time goods or services are provided. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from chronic and acute medical conditions.certain payers may result in adjustments to amounts originally recorded.
Regulatory Matters Update
Approximately 19.2% and 14.0%Cost of Revenue.Cost of revenue consists of the actual cost of pharmaceuticals and other medical supplies dispensed to patients. In addition to product costs, cost of revenue includes warehousing costs, purchasing costs, depreciation expense relating to revenue-generating assets, such as infusion pumps, shipping and handling costs, and wages and related costs for the pharmacists, nurses, and all other employees and contracted workers directly involved in providing service to the patient.
The Company receives volume-based rebates and prompt payment discounts from some of its pharmaceutical and medical supplies vendors. These payments are recorded as a reduction of inventory and are accounted for as a reduction of cost of revenue when the related inventory is sold.
Operating Costs and Expenses
Selling, General and Administrative Expenses. Selling, general and administrative expenses consist principally of salaries for administrative employees that directly and indirectly support the operations, occupancy costs, marketing expenditures, insurance, and professional fees.
Depreciation and Amortization Expense. Depreciation within this caption relates to fixed assets and amortization relates to intangibles. Depreciation of revenue-generating assets, such as infusion pumps, is included in cost of revenue.
Other Income (Expense)
Interest Expense, Net. Interest expense consists principally of interest payments on the Company’s outstanding borrowings under the ABL Facility, First Lien Term Loan, Senior Notes, amortization of discount and deferred financing fees, payments associated with the interest rate cap, and interest income earned on cash and cash equivalents. Refer to the “Liquidity and Capital Resources” section below for further discussion of these outstanding borrowings.
Equity in Earnings of Joint Ventures. Equity in earnings of joint ventures consists of our proportionate share of equity earnings or losses from equity investments in two infusion joint ventures with health systems.
Other, Net. Other income (expense) primarily includes activity related to non-operating income and expenses.
Income Tax Expense. The Company is subject to taxation in the United States and various states. The Company’s income tax expense is reflective of the current federal and state tax rates.
Change in Unrealized Gains (Losses) on Cash Flow Hedges, Net of Income Tax (Expense) Benefit. Change in unrealized gains (losses) on cash flow hedges, net of income tax expense consists of the gains and losses associated with the changes in the fair value of derivatives designated as hedging instruments related to the interest rate cap hedge, net of income taxes.

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Results of Operations
The following table presents Option Care Health’s consolidated results of operations for the three and six months ended June 30, 2023 and 2022 (in thousands, except for percentages):
Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Amount% of RevenueAmount% of RevenueAmount% of RevenueAmount% of Revenue
NET REVENUE$1,069,072 100.0 %$980,820 100.0 %$2,084,920 100.0 %$1,896,604 100.0 %
COST OF REVENUE818,243 76.5 %763,920 77.9 %1,605,086 77.0 %1,478,768 78.0 %
GROSS PROFIT250,829 23.5 %216,900 22.1 %479,834 23.0 %417,836 22.0 %
 
OPERATING COSTS AND EXPENSES:
Selling, general and administrative expenses153,564 14.4 %141,787 14.5 %301,430 14.5 %275,756 14.5 %
Depreciation and amortization expense14,898 1.4 %16,037 1.6 %29,412 1.4 %30,759 1.6 %
Total operating expenses168,462 15.8 %157,824 16.1 %330,842 15.9 %306,515 16.2 %
OPERATING INCOME82,367 7.7 %59,076 6.0 %148,992 7.1 %111,321 5.9 %
 
OTHER INCOME (EXPENSE):
Interest expense, net(13,196)(1.2)%(12,765)(1.3)%(27,030)(1.3)%(25,011)(1.3)%
Equity in earnings of joint ventures1,397 0.1 %1,326 0.1 %2,834 0.1 %2,593 0.1 %
Other, net84,935 7.9 %1 — %84,936 4.1 %3 — %
Total other income (expense)73,136 6.8 %(11,438)(1.2)%60,740 2.9 %(22,415)(1.2)%
 
INCOME BEFORE INCOME TAXES155,503 14.5 %47,638 4.9 %209,732 10.1 %88,906 4.7 %
INCOME TAX EXPENSE41,100 3.8 %13,709 1.4 %56,121 2.7 %24,702 1.3 %
NET INCOME$114,403 10.7 %$33,929 3.5 %$153,611 7.4 %$64,204 3.4 %
 
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Change in unrealized gain (loss) on cash flow hedges, net of income tax (expense) benefit of $(1,103), $(756), $49, and $(4,519), respectively3,291 0.3 %4,637 0.5 %(152)— %15,707 0.8 %
OTHER COMPREHENSIVE INCOME (LOSS)3,291 0.3 %4,637 0.5 %(152)— %15,707 0.8 %
NET COMPREHENSIVE INCOME$117,694 11.0 %$38,566 3.9 %$153,459 7.4 %$79,911 4.2 %

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Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022
The following tables present selected consolidated comparative results of operations from Option Care Health’s unaudited condensed consolidated financial statements for the three months ended SeptemberJune 30, 20172023 and 2016, respectively,2022.
Gross Profit
 Three Months Ended June 30,
20232022Variance
(in thousands, except for percentages)
Net revenue$1,069,072 $980,820 $88,252 9.0 %
Cost of revenue818,243 763,920 54,323 7.1 %
Gross profit$250,829 $216,900 $33,929 15.6 %
Gross profit margin23.5 %22.1 %
The increase in net revenue was primarily driven by organic growth in the Company’s portfolio of therapies, consisting of acute revenue that had mid-single-digit growth relative to the prior year while chronic revenue grew in the low-double-digits. The increase in net revenue was partially offset by the divestiture of respiratory therapy assets as well as therapies related to the treatment of ALS and approximately 17.1% and 16.1%pre-term labor. The increase in cost of revenue forand gross profit was primarily driven by the ninegrowth in revenue. Revenue growth outpaced the increase in cost of revenue primarily due to our disciplined procurement strategies, certain favorable therapy pricing dynamics, and efficient utilization of our infusion suite network. Additionally, with inflationary pressures steadily trending downward during the three months ended SeptemberJune 30, 20172023, gross profit margins have normalized compared to the three months ended June 30, 2022 when inflationary pressures were aggressively trending on an upward trajectory which resulted in decreased gross profit margins.
Operating Expenses
 Three Months Ended June 30,
 20232022Variance
(in thousands, except for percentages)
Selling, general and administrative expenses$153,564 $141,787 $11,777 8.3 %
Depreciation and amortization expense14,898 16,037 (1,139)(7.1)%
Total operating expenses$168,462 $157,824 $10,638 6.7 %
The increase in selling, general and 2016 was derived directly from Medicare, state Medicaid programs and other government payors. We also provide servicesadministrative expenses is primarily due to beneficiaries of Medicare, Medicaid and other government-sponsored healthcare programs indirectly through managed care entities. Medicare Part D, for example, is administered through managed care entities. In the normal course of business, we and our customers are subject to legislative and regulatory changes impacting the level of reimbursement received from the Medicare and state Medicaid programs.
State Medicaid Programs
Over the last several years, increased Medicaid spending, combined with slow state revenue growth, led many states to institute measures aimed at controlling spending growth. Spending cuts have taken many forms including reducing eligibilityan increase in salaries and benefits eliminating certain typesas a result of services, and provider reimbursement reductions. In addition, some states have been moving beneficiariesexpansion of team members to managed care programs in an effortadjust to reduce costs.
Each individual state Medicaid program represents less than 5%current volumes, but has decreased as a percentage of our consolidated revenue to 14.4% for the three months and nineended June 30, 2023 as compared to 14.5% for the three months ended SeptemberJune 30, 2017,2022, because our revenue has grown at a faster pace than our selling, general and administrative expenses.
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Other Income (Expense)
 Three Months Ended June 30,
 20232022Variance
(in thousands, except for percentages)
Interest expense, net$(13,196)$(12,765)$(431)3.4 %
Equity in earnings of joint ventures1,397 1,326 71 5.4 %
Other, net84,935 1 84,934 8,493,400 %
Total other income (expense)$73,136 $(11,438)$84,574 (739.4)%
The increase in interest expense, net during the three months ended June 30, 2023 was primarily attributable to increases in the First Lien Term Loan’s variable interest rate as compared to three months ended June 30, 2022, partially offset by interest income generated from our cash and cash equivalents. See Note 10, Indebtedness, of the consolidated financial statements for further information.
The increase in equity in earnings of joint ventures was primarily attributable to the performance of the joint ventures.
The increase in Other, net during the three months ended June 30, 2023 is due to the $106.0 million payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses. There was no individualcomparable activity during the three months ended June 30, 2022. See Note 3, Business Combinations, for further discussion.
Income Tax Expense
 Three Months Ended June 30,
 20232022Variance
(in thousands, except for percentages)
Income tax expense$41,100 $13,709 $27,391 199.8 %
The Company recorded income tax expense of $41.1 million and $13.7 million for the three months ended June 30, 2023 and 2022, respectively. The income tax expense for the three months ended June 30, 2023 includes $22.1 million of tax expense related to the Termination Fee payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses. The tax expense for the three months ended June 30, 2023 and 2022 represents an effective tax rate of 26.4% and 28.8%, respectively. The variance in the Company’s effective tax rate of 26.4% for the three months ended June 30, 2023, compared to the federal statutory rate of 21%, is primarily attributable to the difference between federal and state Medicaid reimbursement reductiontax rates, as well as various non-deductible expenses. The variance in the Company’s effective tax rate of 28.8% for the three months ended June 30, 2022, compared to the federal statutory rate of 21%, is expectedprimarily attributable to havecurrent and deferred state taxes as well as various non-deductible expenses.
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Net Income and Other Comprehensive Income
 Three Months Ended June 30,
 20232022Variance
(in thousands, except for percentages)
Net income$114,403 $33,929 $80,474 237.2 %
Other comprehensive income, net of tax:
Changes in unrealized gain on cash flow hedges, net of income taxes3,291 4,637 (1,346)(29.0)%
Other comprehensive income3,291 4,637 (1,346)(29.0)%
Net comprehensive income$117,694 $38,566 $79,128 205.2 %
The change in net income was attributable to organic growth from additional revenue related to the factors described in the above sections and the $106.0 million payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses. There was no comparable activity during the three months ended June 30, 2022.
For the three months ended June 30, 2023 and 2022, the change in unrealized gain on cash flow hedges, net of income taxes was related to the change in fair market value of the $300.0 million interest rate cap hedge executed in October 2021.
Net comprehensive income increased to $117.7 million for the three months ended June 30, 2023, compared to net comprehensive income of $38.6 million for the three months ended June 30, 2022, primarily as a material effect on our Consolidated Financial Statements. We are continually assessingresult of the changes in net income discussed above and partially offset by the impact of the state Medicaid reimbursement cuts as states propose, finalize and implement various cost-saving measures.fair value of the interest rate cap hedge.
Given the reimbursement pressures, we continue
Six Months Ended June 30, 2023 Compared to improve operational efficiencies and reduce costs to mitigate the impact onSix Months Ended June 30, 2022
The following tables present selected consolidated comparative results of operations where possible. In some cases, reimbursement rate reductions may resultfrom Option Care Health’s unaudited condensed consolidated financial statements for the six months ended June 30, 2023 and 2022.
Gross Profit
 Six Months Ended June 30,
 20232022Variance
(in thousands, except for percentages)
Net revenue$2,084,920 $1,896,604 $188,316 9.9 %
Cost of revenue1,605,086 1,478,768 126,318 8.5 %
Gross profit$479,834 $417,836 $61,998 14.8 %
Gross profit margin23.0 %22.0 %
The increase in negative operating results,net revenue was primarily driven by organic growth in the Company’s portfolio of therapies, consisting of acute revenue that had mid-single-digit growth relative to the prior year while chronic revenue grew in the low-double-digits. The increase in net revenue was partially offset by the divestiture of respiratory therapy assets as well as therapies related to the treatment of ALS and we would likely exit some or all services where rate reductions resultpre-term labor. The increase in unacceptable returnscost of revenue and gross profit was primarily driven by the growth in revenue. Revenue growth outpaced the increase in cost of revenue primarily due to our stockholders.disciplined procurement strategies, certain favorable therapy pricing dynamics, and efficient utilization of our infusion suite network. Additionally, with inflationary pressures steadily trending downward during the six months ended June 30, 2023, gross profit margins have normalized compared to the six months ended June 30, 2022 when inflationary pressures were aggressively trending on an upward trajectory which resulted in decreased gross profit margins.
States are also
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Operating Expenses
 Six Months Ended June 30,
 20232022Variance
(in thousands, except for percentages)
Selling, general and administrative expenses$301,430 $275,756 $25,674 9.3 %
Depreciation and amortization expense29,412 30,759 (1,347)(4.4)%
Total operating expenses$330,842 $306,515 $24,327 7.9 %
The increase in selling, general and administrative expenses is primarily due to salaries and benefits as a result of expansion of team members to adjust to current volumes, however, these expenses have remained consistent as a percentage of revenue at 14.5% for the six months ended June 30, 2023 and 2022 due to the Company’s focus on controlling spending leverage.
Other Income (Expense)
 Six Months Ended June 30,
 20232022Variance
(in thousands, except for percentages)
Interest expense, net$(27,030)$(25,011)$(2,019)8.1 %
Equity in earnings of joint ventures2,834 2,593 241 9.3 %
Other, net84,936 3 84,933 2,831,100 %
Total other income (expense)$60,740 $(22,415)$83,155 (371.0)%
The increase in interest expense, net during the six months ended June 30, 2023 was primarily attributable to increases in the processFirst Lien Term Loan’s variable interest rate as compared to the six months ended June 30, 2022, partially offset by interest income generated from our cash and cash equivalents. See Note 10, Indebtedness, of determining whetherthe consolidated financial statements for further information.
The increase in equity in earnings of joint ventures was primarily attributable to expand their Medicaid programsthe performance of the joint ventures.
The increase in Other, net during the six months ended June 30, 2023 is due to the $106.0 million payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses. There was no comparable activity during the six months ended June 30, 2022. See Note 3, Business Combinations, for further discussion.
Income Tax Expense
 Six Months Ended June 30,
 20232022Variance
(in thousands, except for percentages)
Income tax expense$56,121 $24,702 $31,419 127.2 %
The Company recorded income tax expense of $56.1 million and $24.7 million for the six months ended June 30, 2023 and 2022, respectively. The income tax expense for the six months ended June 30, 2023 includes $22.1 million of tax expense related to the Termination Fee payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses. The tax expense for the six months ended June 30, 2023 and 2022 represents an effective tax rate of 26.8% and 27.8%, respectively. The variance in the Company’s effective tax rate of 26.8% for the six months ended June 30, 2023, compared to the federal statutory rate of 21%, is primarily attributable to the difference between federal and state tax rates, as permittedwell as various non-deductible expenses. The variance in the Company’s effective tax rate of 27.8% for the six months ended June 30, 2022, compared to the federal statutory rate of 21%, is primarily attributable to current and deferred state taxes as well as various non-deductible expenses.

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Net Income and Other Comprehensive (Loss) Income
 Six Months Ended June 30,
 20232022Variance
(in thousands, except for percentages)
Net income$153,611 $64,204 $89,407 139.3 %
Other comprehensive (loss) income, net of tax:
Changes in unrealized (loss) gain on cash flow hedges, net of income taxes(152)15,707 (15,859)(101.0)%
Other comprehensive (loss) income(152)15,707 (15,859)(101.0)%
Net comprehensive income$153,459 $79,911 $73,548 92.0 %
The change in net income was attributable to organic growth from additional revenue related to the factors described in the above sections. Additionally, the change in net income was attributable to the $106.0 million payment received on behalf of Amedisys, under the terms of the Mutual Termination Agreement, net of merger-related expenses. There was no comparable activity during the six months ended June 30, 2022.
For the six months ended June 30, 2023, the change in unrealized (loss) gain on cash flow hedges, net of income taxes was related to the increase in fair market value of the $300.0 million interest rate cap hedge executed in October 2021.
Net comprehensive income increased to $153.5 million for the six months ended June 30, 2023, compared to net comprehensive income of $79.9 million for the six months ended June 30, 2022, primarily as a result of the changes in net income discussed above and partially offset by the Patient Protection and Affordable Care Act, or PPACA. We cannot predict the impact of these decisions, but they may havethe fair value of the interest rate cap hedge.
Liquidity and Capital Resources
For the six months ended June 30, 2023 and the twelve months ended December 31, 2022, the Company’s primary sources of liquidity were cash and cash equivalents of $441.2 million and $294.2 million, respectively. As of June 30, 2023, the Company had $219.5 million of borrowings available under its credit facilities (net of $5.5 million undrawn letters of credit issued and outstanding). As of December 31, 2022, the Company had $168.3 million of borrowings available under its credit facilities (net of $6.7 million undrawn letters of credit issued and outstanding). During the six months ended June 30, 2023 and the twelve months ended December 31, 2022, the Company’s positive cash flows from operations enabled investments in pharmacy and information technology infrastructure to support growth and create additional capacity in the future, as well as to pursue acquisitions and share repurchases.
The Company’s primary uses of cash and cash equivalents include supporting our ongoing business activities, investment in capital expenditures in both facilities and technology, the pursuit of acquisitions, and share repurchases. Ongoing operating cash outflows are associated with procuring and dispensing drugs, personnel and other costs associated with servicing patients, as well as paying cash interest on outstanding debt. Ongoing investing cash flows are primarily associated with capital projects related to business acquisitions, the improvement and maintenance of our pharmacy facilities and investment in our information technology systems. Ongoing financing cash flows are primarily associated with the quarterly principal payments on our outstanding debt, along with potential future share repurchases.
Our business strategy includes the deployment of capital to pursue acquisitions that complement our existing operations. We continue to evaluate acquisition opportunities and view acquisitions as a material impact on net revenues or income from continuing operations.
Medicare
There have been recent federal efforts to reduce Medicare spending. Congress passed the PPACA, followed by the Health Care and Education Reconciliation Act of 2010, which amended PPACA. In August 2011, Congress passed a deficit reduction agreement that created a committee tasked with proposing legislation to reduce the federal deficit by November 23, 2011. Because the committee did not act, automatic Medicare cuts were scheduled to go into effect January 1, 2013. However, Congress passed legislation extending the time for such cuts by three months. Thus, Medicare reimbursement to providers was reduced overall by 2% (askey part of sequestration) beginning April 1, 2013. In addition,our growth strategy. The Company historically has funded its acquisitions with cash and cash equivalents with the Medicare Prescription Drug, Improvement,exception of the Merger. The Company may require additional capital in excess of current availability in order to complete future acquisitions. It is impossible to predict the amount of capital that may be required for acquisitions, and Modernization Actthere is no assurance that sufficient financing for these activities will be available on acceptable terms.
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Table of 2003 establishedContents
Short-Term and Long-Term Liquidity Requirements
The Company’s ability to make principal and interest payments on any borrowings under our credit facilities and our ability to fund planned capital expenditures will depend on our ability to generate cash and cash equivalents in the future, which to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. Based on our current level of operations and planned capital expenditures, we believe that our existing cash and cash equivalents balances and expected cash flows generated from operations will be sufficient to meet our operating requirements over the next 12 months and beyond. We may require additional borrowings under our credit facilities and alternative forms of financings or investments to achieve our longer-term strategic plans.
Credit Facilities
Effective January 13, 2023, the Company entered into an agreement to amend the ABL Facility, to among other things, increase the amount of borrowing availability by $50.0 million to $225.0 million total borrowing availability and to replace LIBOR with SOFR as the new reference rate. The ABL Facility provides for borrowings up to $225.0 million and matures on October 27, 2026. The ABL Facility bears interest at a competitive bidding program for determining Medicare reimbursement rates for certain itemsrate equal to, at the Company’s election, either (i) a base rate determined in accordance with the ABL Credit Agreement plus an applicable margin, which is equal to between 0.25% and 0.75% based on the historical excess availability as a percentage of durable medical equipment, prosthetics, orthoticsthe Line Cap (as such term is defined in the ABL Credit Agreement) and supplies (“DMEPOS”), including enteral nutrients, supplies(ii) SOFR (or a comparable successor rate, with a floor of 0.00% per annum) plus an applicable margin, which is equal to between 1.25% and equipment, certain respiratory therapy1.75% based on the historical excess availability as a percentage of the Line Cap. The Company had $5.5 million of undrawn letters of credit issued and home medical equipment products and external infusion pumps and supplies.
We are contract suppliersoutstanding, resulting in net borrowing availability under the Round 1 Recompete, which included nine competitive bidding areas (“CBAs”) and six product categories, including external infusion pumps, and expired on December 31, 2016, and Round 2ABL Facility of competitive bidding, which was conducted in 100 additional CBAs for eight product categories, including enteral nutrition, and expired on$219.5 million as of June 30, 2023.

2016. We haveEffective June 30, 2023, the Company entered into strategic relationshipsan agreement, dated as of June 8, 2023, to amend the First Lien Term Loan to replace LIBOR and related definitions and provisions with SOFR as the new reference rate. The principal balance of the First Lien Term Loan is repayable in quarterly installments of $1.5 million plus interest, with a final payment of all remaining outstanding principal due on October 27, 2028. The quarterly principal payments commenced in March 2022. Under the First Lien Credit Agreement Amendment, interest on the First Lien Term Loan is payable monthly on either (i) SOFR (with a floor of 0.50% per annum) plus an applicable margin of 2.75% for Term SOFR Loans (as such term is defined in the CBAsFirst Lien Credit Agreement Amendment); and (ii) a base rate determined in which we were not awarded contractsaccordance with the First Lien Credit Agreement Amendment, plus 1.75% for Base Rate Loans (as such periods. We were not awarded any contracts in Round 2 Recompete, which went into effect July 1, 2016 and includes 117 CBAs, comprising the same geographic area as the second round of competitive bidding, and seven product categories, including enteral nutrition. Our revenue may decrease unless and until we are able to provide Medicare beneficiaries with competitively bid itemsterm is defined in the applicable CBAs but any negative impact has been immaterial.First Lien Credit Agreement Amendment).
Medicare currently covers home infusion therapy forThe Senior Notes bear interest at a rate of 4.375% per annum and are payable semi-annually in arrears on October 31 and April 30 of each year, which began on April 30, 2022. The Senior Notes mature on October 31, 2029.
Interest payments over the course of long-term debt obligations total an estimated $386.1 million based on final maturity dates of the Company’s credit facilities. Interest payments are calculated based on current rates as of June 30, 2023. Actual payments are based on changes in SOFR and exclude the interest rate cap derivative instrument.
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Cash Flows
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
The following table presents selected therapiesdata from Option Care Health’s unaudited condensed consolidated statements of cash flows:
 Six Months Ended June 30,
 20232022Variance
(in thousands)
Net cash provided by operating activities$259,288 $136,954 $122,334 
Net cash used in investing activities(26,409)(69,952)43,543 
Net cash (used in) provided by financing activities(85,899)17,621 (103,520)
Net increase in cash and cash equivalents146,980 84,623 62,357 
Cash and cash equivalents - beginning of period294,186 119,423 174,763 
Cash and cash equivalents - end of period$441,166 $204,046 $237,120 
Cash Flows from Operating Activities
The increase in cash provided by operating activities is primarily throughdue to higher net income, the durable medical equipment benefit. Termination Fee received on behalf of Amedisys as a result of the Mutual Termination Agreement, net of merger-related expenses and taxes, changes in accrued compensation and employee benefits, changes in inventory, partially offset by prepaid expenses and other current assets, and certain accruals and timing of vendor payments during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.
Cash Flows from Investing Activities
The Cures Act, enacted by Congressdecrease in Decembercash used in investing activities during the six months ended June 30, 2023 is primarily due a decrease in acquisition activity as compared to the six months ended June 30, 2022. During the six months ended June 30, 2023, the Company completed the acquisition of 2016, creates a new payment system for certain home infusion therapy services paid under Medicare Part B. The Cures Act significantly reducesRevitalized in the amount paid by Medicare forof $12.9 million, as compared to the drug costs, and also provides for the implementation of a clinical services payment. That services payment does not take effect until 2021.
Approximately 9.9% and 7.9% of revenue for the three months and ninesix months ended SeptemberJune 30, 2017 was derived2022, where the Company acquired SPNN in the amount of $59.9 million.
Cash Flows from Medicare, respectively.Financing Activities
The cash used in financing activities is primarily related to the Company’s repurchase of common stock during the six months ended June 30, 2023, whereas the six months ended June 30, 2022 activity primarily related to the proceeds of warrant exercises.
Critical Accounting Policies and Estimates
Our Unaudited Consolidated Financial Statements have been preparedThe Company prepares its unaudited condensed consolidated financial statements in accordance with United States generally accepted accounting principles (“GAAP”). In preparing our financial statements, we are requiredGAAP, which requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. As a result, actual results could differ from these estimates.
We evaluate ourassumptions. The Company evaluates its estimates and judgmentsassumptions on an ongoing basis. We base our estimatesEstimates and judgmentsassumptions are based on historical experience and on various other factors that we believeare believed to be reasonable under the circumstances, the results of which form the basis for making judgmentsassumptions about the carrying values of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period presented. OurThe Company’s actual results may differ from these estimates, and different assumptions or conditions may yield different estimates.
There have been no material changes to critical accounting estimates in the nine months ended September 30, 2017. For a full description of our accounting policies please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report.
Collectability of Accounts Receivable
The following table sets forth the aging of our net accounts receivable (net of allowance for contractual adjustments, and prior to allowance for doubtful accounts), aged based on date of service and categorized based on the three primary overall types of accounts receivable characteristics (in thousands):
  September 30, 2017 December 31, 2016
  0 - 180 days Over 180 days Total 0 - 180 days Over 180 days Total
Government $18,566
 $7,897
 $26,463
 $19,891
 $8,278
 $28,169
Commercial 72,744
 22,603
 95,347
 97,744
 19,848
 117,592
Patient 3,440
 10,785
 14,225
 3,955
 6,825
 10,780
Gross accounts receivable $94,750
 $41,285
 136,035
 $121,590
 $34,951
 156,541
Allowance for doubtful accounts     (46,820)     (44,730)
Net accounts receivable     $89,215
     $111,811

Results of Operations
The following consolidated statements have been derived from our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q. The discussion set forth below compares our results of operations for the three months and nine months ended September 30, 2017 with the results of operations for the corresponding periods in 2016.
Three months ended September 30, 2017 compared to three months ended September 30, 2016
 Three Months Ended September 30, As a Percentage of Revenue
 (in thousands)    
 2017 2016 2017 2016
Net revenue$198,692
 $224,542
 100.0 % 100.0 %
Gross profit, excluding depreciation expense67,176
 62,585
 33.8 % 27.9 %
Other operating expenses38,325
 42,729
 19.3 % 19.0 %
Bad debt expense6,600
 7,727
 3.3 % 3.4 %
General and administrative expenses9,784
 9,948
 4.9 % 4.4 %
Restructuring, acquisition, integration, and other expenses, net4,037
 2,368
 2.0 % 1.1 %
Depreciation and amortization expense6,552
 4,166
 3.3 % 1.9 %
Interest expense13,175
 9,331
 6.6 % 4.2 %
Change in fair value of equity linked liabilities1,080
 —
 0.5 % — %
Gain on dispositions(33) (3,015) — % (1.3)%
Loss from continuing operations, before income taxes(12,344) (10,669) (6.2)% (4.8)%
Income tax expense60
 421
 — % 0.2 %
Loss from continuing operations, net of income taxes(12,404) (11,090) (6.2)% (4.9)%
(Loss) income from discontinued operations, net of income taxes(113) (174) (0.1)% (0.1)%
Net loss$(12,517) $(11,264) (6.3)% (5.0)%
Net Revenue. Net revenue for the three months ended September 30, 2017 decreased $25.9 million, or 11.5%, to $198.7 million, compared to net revenue of $224.5 million for the same period in 2016. The decrease in net revenue primarily reflects the Company’s shift in strategy to focus on growing its core revenue mix, the impact of the Cures Act, and the impact of the UnitedHealthcare contract transition.
Gross Profit, Excluding Depreciation Expense. Gross profit consists of revenue less cost of revenue. The cost of revenue primarily includes the costs of prescription medications, supplies, nursing services, shipping and other direct and indirect costs. The increase in gross profit of $4.6 million or 7.3% for the three months ended September 30, 2017 as compared to the same period in 2016 was primarily driven by an improved mix of higher margin core therapy revenues versus lower margin non-core therapy revenues, including the impact of the United Healthcare transition, coupled with decreased cost of prescription medicines as a result of improved supply chain management. Gross profit as a percentage of revenue improved by 5.9% for the three months ended September 30, 2017 as compared to the same period in 2016.
Other Operating Expenses. Other operating expenses consist primarily of wages and benefits, travel expenses, professional service and field office expenses for our healthcare professionals engaged in providing infusion services to our patients. Other operating expenses for the three months ended September 30, 2017 decreased $4.4 million or 10.3% compared to the same period in 2016 as a result of decreased wage, benefit, and other employee costs associated with operational restructuring and workforce optimization.
Bad Debt Expense. The $1.1 million decrease in bad expense during the three months ended September 30, 2017 as compared to the same period in 2016 is the result of lower revenue during the current period. Bad debt expense as a percentage of revenue was 3.3% for the three months ended September 30, 2017 as compared to 3.4% during the same period in 2016.
General and Administrative Expenses. General and administrative expenses consist of wages and benefits for corporate overhead personnel, and certain corporate level professional service fees, including legal, accounting, and IT fees. The decrease of $0.2 million or 1.6% in general and administrative expenses during the three months ended September 30, 2017 as compared to the same period in 2016, resulted from decreases in variable compensation expenses and professional service fees.

Restructuring, Acquisition, Integration, and Other Expenses, Net. The restructuring, acquisition, integration, and other expenses, net, excluding the impact of the reversal of the contingent consideration liability during the three months ended September 30, 2016 of $4.7 million, decreased by $3.0 million or 42.9% during the three months ended September 30, 2017 as the acquisition of Home Solutions during the three months ended September 30, 2016 resulted in significantly higher acquisition costs. The restructuring, acquisition, integration, and other expenses consist primarily of employee severance and other benefit-related costs, third-party consulting costs, redundant facility and personnel-related costs and certain other costs associated with our restructuring, acquisition, and integration activities including actions addressing the UnitedHealthcare contract transition which was completed during the three months ended September 30, 2017.
Depreciation and Amortization Expense. Depreciation and amortization expense includes the depreciation of property and equipment and the amortization of intangible assets such as customer relationships, trademarks, and non-compete agreements with estimable lives. During the three months ended September 30, 2017 and 2016, we recorded depreciation expense of $3.7 million and $3.4 million, respectively, and amortization expense of intangibles of $2.8 million and $0.7 million, respectively. The increase in depreciation expense in the three months ended September 30, 2017 as compared to the same period in 2016 is the result of the acquisition Home Solutions’ property and equipment. The increase in amortization expense is attributable to the corresponding increase in intangible assets associated with the acquisition of Home Solutions in the third quarter of 2016.
Interest Expense. Interest expense consists of interest expense and deferred financing costs net of interest income. During the three months ended September 30, 2017 and 2016, we recorded interest expense of $13.2 million and $9.3 million, respectively, including $1.7 million and $1.0 million of amortization of deferred financing costs, respectively. The increase in interest expense during the three months ended September 30, 2017 as compared to the same period in 2016 is the result of the changes in debt structure attributable to the now extinguished Sixth Amendment to the Senior Credit Facilities (see Note 7 - Debt).
Loss (Gain) on Dispositions. Gain on dispositions is nominal during the three months ended September 30, 2017. Gain on dispositions during the three months ended September 30, 2016 includes $3.0 million related to the sale of our Hepatitis C business.
Change in Fair Value of Equity Linked Liabilities. The change in the fair value of equity linked liabilities of $1.1 million during the three months ended September 30, 2017 represents the mark to market adjustment associated with the issuance of the 2017 Warrants in connection with the Second Lien Note Facility (see Note 7 - Debt).
Income Tax Expense. The 2017 income tax expense includes a federal tax benefit of $4.3 million and a $0.9 million receivable recognized upon the acceleration of an existing Alternative Minimum Tax credit, partially offset by a $4.9 million adjustment related to deferred tax asset valuation allowances, inclusive of a deferred tax liability for an indefinite-lived asset of $0.7 million, and state tax expense of $0.4 million. The income tax benefit of $0.4 million for the three months ended September 30, 2016 includes a federal tax benefit of $3.7 million, partially offset by other permanent items of $0.9 million, a $5.0 million adjustment to deferred tax asset valuation allowances and insignificant state tax expense.

Nine months ended September 30, 2017 compared to nine months ended September 30, 2016
 Nine Months Ended September 30, As a Percentage of Revenue
 (in thousands)    
 2017 2016 2017 2016
Net revenue$634,608
 $695,466
 100.0 % 100.0 %
Gross profit, excluding depreciation expense201,070
 190,981
 31.7 % 27.5 %
Other operating expenses125,169
 123,006
 19.7 % 17.7 %
Bad debt expense19,987
 19,598
 3.1 % 2.8 %
General and administrative expenses29,287
 30,413
 4.6 % 4.4 %
Restructuring, acquisition, integration, and other expenses, net11,171
 9,326
 1.8 % 1.3 %
Depreciation and amortization expense20,329
 12,956
 3.2 % 1.9 %
Interest expense38,635
 28,212
 6.1 % 4.1 %
Change in fair value of equity linked liabilities1,080
 —
 0.2 % — %
Loss on extinguishment of debt13,453
 —
 2.1 % — %
(Gain) loss on dispositions652
 (3,954) 0.1 % (0.6)%
Loss from continuing operations, before income taxes(58,693) (28,576) (9.2)% (4.1)%
Income tax expense1,397
 593
 0.2 % 0.1 %
Loss from continuing operations, net of income taxes(60,090) (29,169) (9.5)% (4.2)%
(Loss) income from discontinued operations, net of income taxes(1,053) 134
 (0.2)% — %
Net loss$(61,143) $(29,035) (9.6)% (4.2)%
Net Revenue. Net revenue for the nine months ended September 30, 2017 decreased $60.9 million, or 8.8%, to $634.6 million, compared to net revenue of $695.5 million for the same period in 2016. The decrease in net revenue primarily reflects the Company’s shift in strategy to focus on growing its core revenue mix, the impact of the Cures Act, and the impact of the UnitedHealthcare contract transition.
Gross Profit, Excluding Depreciation Expense. Gross profit consists of revenue less cost of revenue. The cost of revenue primarily includes the costs of prescription medications, supplies, nursing services, shipping and other direct and indirect costs. The increase in gross profit of $10.1 million or 5.3% for the nine months ended September 30, 2017 as compared to the same period in 2016 was primarily driven by an improved mix of higher margin core therapy revenues versus lower margin non-core therapy revenues, including the impact of the United Healthcare transition, coupled with decreased cost of prescription medicines as a result of improved supply chain management. Gross profit as a percentage of revenue improved by 4.2% for the nine months ended September 30, 2017 as compared to the same period in 2016.
Other Operating Expenses. Other operating expenses consist primarily of wages and benefits, travel expenses, professional service and field office expenses for our healthcare professionals engaged in providing infusion services to our patients. Other operating expenses for the nine months ended September 30, 2017 increased $2.2 million or 1.8% compared to the same period in 2016 due to increased wage, benefit, and other employee costs associated with the Home Solutions Transaction on September 9, 2016, partially offset by decreased wage, benefit, and other employee costs as a result of integration, restructuring, and other workforce optimization efforts.
Bad Debt Expense. Bad debt expense increase $0.4 million during the nine months ended September 30, 2017 as compared to the same period in 2016, despite a revenue decrease during the current period. The increase was the result of a change in estimate for the allowance for doubtful accounts during the nine months ended September 30, 2016 due to improved collection experience. Bad debt expense as a percentage of revenue was 3.1% for the nine months ended September 30, 2017 as compared to 2.8% during the same period in 2016.
General and Administrative Expenses. General and administrative expenses consist of wages and benefits for corporate overhead personnel and certain corporate level professional service fees, including legal, accounting, and IT fees. The decrease in general and administrative expenses of $1.1 million or 3.7% resulted from reductions in the number of corporate personnel and their associated wage and benefits costs, as well as decreases in professional service fees.

Restructuring, Acquisition, Integration, and Other Expenses, Net. The restructuring, acquisition, integration, and other expenses, net, excluding the impact of reversal of the contingent consideration liability during the nine months ended September 30, 2016 of $4.6 million, decreased by $2.8 million or 19.8% during the nine months ended September 30, 2017 as the acquisition of Home Solutions during the nine months ended September 30, 2016 resulted in significantly higher acquisition costs. The restructuring, acquisition, integration, and other expenses consist primarily of employee severance and other benefit-related costs, third-party consulting costs, redundant facility and personnel-related costs and certain other costs associated with our restructuring, acquisition, and integration activities, including actions addressing the UnitedHealthcare contract transition which was completed during the nine months ended September 30, 2017.
Depreciation and Amortization Expense. Depreciation and amortization expense includes the depreciation of property and equipment and the amortization of intangible assets such as customer relationships, trademarks, and non-compete agreements with estimable lives. During the nine months ended September 30, 2017 and 2016, we recorded depreciation expense of $11.1 million and $10.6 million, respectively, and amortization expense of intangibles of $9.2 million and $2.3 million, respectively. The increase in depreciation expense during the nine months ended September 30, 2017 as compared to the same period in 2016 is attributable to increases in property and equipment associated with the Home Solutions Transaction. The increase in amortization expense is attributable to the corresponding increase in intangible assets associated with the acquisition of Home Solutions in the third quarter of 2016.
Interest Expense. Interest expense consists of interest expense and amortization of deferred financing costs, net of interest income. During the nine months ended September 30, 2017 and 2016, we recorded interest expense of $38.6 million and $28.2 million, respectively, including $4.6 million and $2.9 million of amortization of deferred financing costs, respectively. The increase in interest expense during the nine months ended September 30, 2017 as compared to the same period in 2016 is the result of the changes in debt structure attributable to the now extinguished Sixth Amendment to the Senior Credit Facilities (see Note 7 - Debt).
Change in Fair Value of Equity Linked Liabilities. The change in the fair value of equity linked liabilities of $1.1 million during the nine months ended September 30, 2017 represents the mark to market adjustment associated with the issuance of the 2017 Warrants in connection with the Second Lien Note Facility (see Note 7 - Debt).
Loss on Extinguishment of Debt. The loss on extinguishment of debt of $13.5 million during the nine months ended September 30, 2017 is attributable to the Company’s entry into the Notes Facilitiescritical accounting policies and the associated extinguishment of the Senior Credit Facilities and the Prior Credit Agreements (see Note 7 - Debt).
Loss (Gain) on Dispositions. Loss on dispositions of $0.7 million during the nine months ended September 30, 2017 is the result of the Company’s write-off of certain assets associated with a software system no longer used in operations. Gain on dispositions during the nine months ended September 30, 2016 consists of $3.0 million related to the sale of our Hepatitis C business and $0.9 million related to the sale of the Infusion Services center in Pittsburgh, Pennsylvania in the first quarter of 2016.
Income Tax Expense (Benefit). The 2017 income tax expense of $1.4 million includes a federal tax benefit of $20.5 million and a $0.9 million receivable recognized upon the acceleration of an existing Alternative Minimum Tax credit, offset by $0.5 million state tax expense, a $22.2 million adjustment related to deferred tax asset valuation allowances, inclusive of a deferred tax liability for an indefinite-lived asset of $1.8 million, and other permanent items of $0.1 million. The nominal income tax expense for the nine months ended September 30, 2016 includes a federal tax benefit of $10.0 million and an insignificant state tax benefit, partially offset by a $10.3 million adjustment to deferred tax asset valuation allowances and transaction costs of $0.2 million.

Non-GAAP Measures
The following table reconciles GAAP loss from continuing operations, net of income taxes to consolidated Adjusted EBITDA. Adjusted EBITDA is net income (loss) adjusted for interest expense, changes in the fair value of equity linked liabilities, gain (loss) on dispositions, income tax expense (benefit), depreciation and amortization, loss on extinguishment of debt, and stock-based compensation expense. Adjusted EBITDA also excludes restructuring, acquisition, integration and other expenses including non-operating costs associated with restructuring, acquisition and integration initiatives such as employee severance costs, certain legal and professional fees, training costs, redundant wage costs, impacts recorded from the change in contingent consideration obligations, and other costs related to contract terminations and closed branches/offices.
Consolidated Adjusted EBITDA is a measure of earnings that management monitors as an important indicator of financial performance, particularly future earnings potential and recurring cash flow. Adjusted EBITDA is also a primary objective of the management bonus plan. Inclusion of Adjusted EBITDA is intended to provide investors insight into the manner in which management views the performance of the Company.
Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Our calculation of Non-GAAP Adjusted EBITDA,estimates as presented may differ from similarly titled measures reported by other companies. We encourage investors to review these reconciliations and we qualify our use of non-GAAP financial measures with cautionary statements as to their limitations.
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
 (in thousands) (in thousands)
Loss from continuing operations, net of income taxes(12,404) (11,090) (60,090) (29,169)
        
Interest expense(13,175) (9,331) (38,635) (28,212)
Change in fair value of equity linked liabilities(1,080) —
 (1,080) —
Gain (loss) on dispositions33
 3,015
 (652) 3,954
Loss on extinguishment of debt—
 —
 (13,453) —
Income tax expense(60) (421) (1,397) (593)
Depreciation and amortization expense(6,552) (4,166) (20,329) (12,956)
Stock-based compensation expense(545) (1,358) (1,573) (3,347)
Restructuring, acquisition, integration, and other expenses, net(4,037) (2,368) (11,171) (9,326)
        
Consolidated Adjusted EBITDA$13,012
 $3,539
 $28,200
 $21,311
Consolidated Adjusted EBITDA increased during the three months and nine months ended September 30, 2017 compared to the same period of the prior year primarily due to increased gross profit resulting from improved gross profit margins driven by increased core revenue mix and supply chain management, as well as restructuring efforts which optimized operations.
Liquidity and Capital Resources
Sources and Uses of Funds
Net cash used in operating activities from continuing operations totaled $4.3 million during the nine months ended September 30, 2017 compared to $32.5 million during the nine months ended September 30, 2016, a $28.1 million improvement. Excluding interest payments, which increased by $8.3 million, operational cash flow improved by $36.4 million as a result of improved operating performance and working capital management.
Net cash used in investing activities from continuing operations during the nine months ended September 30, 2017 was $10.0 million compared to $71.4 million in cash used during the same period in 2016. The decrease occurred as the nine months ended September 30, 2016 saw the acquisition of Home Solutions, while the nine months ended September 30, 2017 saw restrictions on cash required to collateralize letters of credit issued under the Senior Credit Facilities totaling $5.0 million.
Net cash provided by financing activities from continuing operations during the nine months ended September 30, 2017 was $44.3 million compared to $97.2 million in cash provided by financing activities during the same period in 2016. The cash provided

by financing activities during the nine months ended September 30, 2017, includes the net proceeds of approximately $20.8 million from the First Quarter 2017 Private Placement and Second Quarter 2017 Private Placement (each defined below), $23.1 million from the Priming Credit Agreement, $294.4 million from the Notes Facilities, and advances on the Revolving Credit Facility (as defined below) of $0.6 million, offset by repayments of $55.9 million on our Revolving Credit Facility and by $236.8 million of principal payments made on the Term Loan Facility and the Priming Credit Agreement.
At September 30, 2017, we had working capital of $81.1 million, including $33.0 million of cash on hand, compared to working capital of $45.7 million at December 31, 2016. The $35.4 million increase in working capital results primarily from the increase in our cash and cash equivalents and restricted cashForm 10-K, which are hereby incorporated by reference.
32
Table of $28.4 million attributable to operating cash flow improvements, the net proceeds received from the Notes Facilities, the First Quarter 2017 Private Placement and the Second Quarter 2017 Private Placement. Additional liquidity of $10.0 million is provided by the delayed draw capacity in our Second Lien Note Facility described below. At September 30, 2017, we had outstanding letters of credit totaling $4.8 million, collateralized by restricted cash of $5.0 million.Contents
Debt Facilities
The Company was previously obligated under (i) a senior secured first-lien revolving credit facility in an aggregate principal amount of $75.0 million (the “Revolving Credit Facility”), (ii) a senior secured first-lien term loan B in an aggregate principal amount of $250.0 million (the “Term Loan B Facility”) and (iii) a senior secured first-lien delayed draw term loan B in an aggregate principal amount of $150.0 million (the “Delayed Draw Term Loan Facility” and, together with the Revolving Credit Facility and the Term Loan B Facility, the “Senior Credit Facilities”) with SunTrust Bank, Jefferies Finance LLC and Morgan Stanley Senior Funding, Inc., originally entered on July 31, 2013 and amended from time to time.
On January 6, 2017, the Company entered into a credit agreement (the “Priming Credit Agreement” and, together with the Senior Credit Facilities, the “Prior Credit Agreements”) with certain existing lenders under the Senior Credit Facilities and SunTrust, as administrative agent for itself and the lenders. The Priming Credit Agreement provides an aggregate borrowing commitment of $25.0 million, which was fully drawn at closing.
On June 29, 2017, the Company entered into (i) a first lien note purchase agreement (the “First Lien Note Facility”), among the Company, which is the issuer under the agreement, the financial institutions and note purchasers from time to time party to the agreement (the “First Lien Note Purchasers”), and Wells Fargo Bank, National Association, in its capacity as collateral agent for itself and the First Lien Note Purchasers (the “First Lien Collateral Agent”), pursuant to which the Company issued first lien senior secured notes in an aggregate principal amount of $200.0 million (the “First Lien Notes”); and (ii) a second lien note purchase agreement (the “Second Lien Note Facility” and, together with the First Lien Note Facility, the “Notes Facilities”) among the Company, which is the issuer under the agreement, the financial institutions and note purchasers from time to time party to the agreement (the “Second Lien Note Purchasers”), and Wells Fargo Bank, National Association, in its capacity as collateral agent for itself and the Second Lien Note Purchasers (the “Second Lien Collateral Agent” and, together with the First Lien Collateral Agent, the “Collateral Agent”), pursuant to which the Company (a) issued second lien senior secured notes in an aggregate initial principal amount of $100.0 million (the “Initial Second Lien Notes”) and (b) has the ability to draw upon the Second Lien Note Facility and issue second lien delayed draw senior secured notes in an aggregate initial principal amount of $10.0 million for a period of 18 months after the Closing Date, subject to certain terms and conditions (the “Second Lien Delayed Draw Notes” and, together with the Initial Second Lien Notes, the “Second Lien Notes”; the Second Lien Notes, together with the First Lien Notes, the “Notes”). Funds managed by Ares are acting as lead purchasers for the Notes Facilities.
The Company used the proceeds of the sale of the First Lien Notes and the Initial Second Lien Notes pursuant to the Note Facilities to repay in full all amounts outstanding under the Prior Credit Agreements. Each of the Prior Credit Agreements was terminated following such repayment. The Company used the remaining proceeds of $15.9 million of the Notes Facilities, net of $0.2 million in associated costs, and the Second Quarter 2017 Private Placement for working capital and general corporate purposes.
The First Lien Notes accrue interest, payable monthly in arrears, at a floating rate or rates equal to, at the option of the Company, (i) the base rate (defined as the highest of the Federal Funds Rate plus 0.5% per annum, the Prime Rate as published by The Wall Street Journal and the one-month London Interbank Offered Rate (“LIBOR”) (subject to a 1.0% floor) plus 1.0%), or (ii) the one-month LIBOR rate (subject to a 1.0% floor), plus a margin of 6.0% if the base rate is selected or 7.0% if the LIBOR Option is selected. The First Lien Notes mature on August 15, 2020, provided that if the Company’s existing 8.875% Senior Notes due 2021 (the “2021 Notes”) are refinanced prior to August 15, 2020, then the scheduled maturity date of the First Lien Notes shall be June 30, 2022.
The First Lien Notes will amortize in equal quarterly installments equal to 0.625% of the aggregate principal amount of the First Lien Note Facility, commencing on September 30, 2019, and on the last day of each third month thereafter, with the balance payable at maturity. The First Lien Notes are pre-payable at the Company’s option at specified premiums to the principal amount

that will decline over the term of the First Lien Note Facility. If the First Lien Notes are prepaid prior to the second anniversary of the Closing Date, the Company will be required to pay a make-whole premium based on the present value (using a discount rate based on the specified treasury rate plus 50 basis points) of all remaining interest payments on the First Lien Notes being prepaid prior to the second anniversary of the Closing Date, plus 4.0% of the principal amount of First Lien Notes being prepaid. On or after the second anniversary of the Closing Date, the prepayment premium is 4.0%, which declines to 2.0% on or after the third anniversary of the Closing Date, and declines to 0.0% on or after the fourth anniversary of the Closing Date. At any time, the Company may pre-pay up to $50.0 million in aggregate principal amount of the First Lien Notes from internally generated cash without incurring any make-whole or prepayment premium. The occurrence of certain events of default may increase the applicable rate of interest by 2.0% and could result in the acceleration of the Company’s obligations under the First Lien Note Facility prior to stated maturity and an obligation of the Company to pay the full amount of its obligations under the First Lien Note Facility.
The First Lien Note Facility contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material indebtedness and events constituting a change of control. In addition, the obligations under the First Lien Note Facility will be guaranteed by joint and several guarantees from the Company’s subsidiaries.
In connection with the First Lien Note Facility, the Company, its subsidiaries and the First Lien Collateral Agent entered into a First Lien Guaranty and Security Agreement, dated as of June 29, 2017 (the “First Lien Guaranty and Security Agreement”). Pursuant to the First Lien Guaranty and Security Agreement, the obligations under the First Lien Notes will be secured by first priority liens on, and security interests in, substantially all of the assets of the Company and its subsidiaries.
The Second Lien Notes accrue interest, payable monthly in arrears, at a floating rate or rates equal to, at the option of the Company, (i) one-month LIBOR (subject to a 1.25% floor) plus 9.25% per annum in cash, (ii) one-month LIBOR (subject to a 1.25% floor) plus 11.25% per annum, which amount will be capitalized on each interest payment date, or (iii) one-month LIBOR (subject to a 1.25% floor) plus 10.25% per annum, of which one-half LIBOR plus 4.625% per annum will be payable in cash and one-half LIBOR plus 5.625% per annum will be capitalized on each interest payment date, provided that, in each case, if any permitted refinancing indebtedness with which the 2021 Notes are refinanced requires or permits the payment of cash interest, all of the interest on the Second Lien Notes shall be paid in cash. The Second Lien Notes mature on August 15, 2020, provided that if the 2021 Notes are refinanced prior to August 15, 2020, then the scheduled maturity date of the Second Lien Notes shall be June 30, 2022.
The Second Lien Notes are not subject to scheduled amortization installments. The Second Lien Notes are pre-payable at the Company’s option at specified premiums to the principal amount that will decline over the term of the Second Lien Note Facility. If the Second Lien Notes are prepaid prior to the third anniversary of the Closing Date, the Company will need to pay a make-whole premium based on the present value (using a discount rate based on the specified treasury rate plus 50 basis points) of all remaining interest payments on the Second Lien Notes being prepaid prior to the third anniversary of the Closing Date, plus 4.0% of the principal amount of Second Lien Notes being prepaid. On or after the third anniversary of the Closing Date, the prepayment premium is 4.0%, which declines to 2.0% on or after the fourth anniversary of the Closing Date, and declines to 0.0% on or after the fifth anniversary of the Closing Date. The occurrence of certain events of default may increase the applicable rate of interest by 2.0% and could result in the acceleration of the Company’s obligations under the Second Lien Note Facility prior to stated maturity and an obligation of the Company to pay the full amount of its obligations under the Second Lien Note Facility.
The Second Lien Note Facility contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material indebtedness and events constituting a change of control. In addition, the obligations under the Second Lien Note Facility will be guaranteed by joint and several guarantees from the Company’s subsidiaries.
In connection with the Second Lien Note Facility, the Company, its subsidiaries and the Second Lien Collateral Agent entered into a Second Lien Guaranty and Security Agreement, dated as of June 29, 2017 (the “Second Lien Guaranty and Security Agreement”). Pursuant to the Second Lien Guaranty and Security Agreement, the obligations under the Second Lien Notes will be secured by second priority liens on, and security interests in, substantially all of the assets of the Company and its subsidies.
In connection with the First Lien Note Facility and the Second Lien Note Facility, the Company, the First Lien Collateral Agent and the Second Lien Collateral Agent, entered into an intercreditor agreement containing customary provisions to, among other things, subordinate the lien priority of the liens granted under the Second Lien Note Facility to the liens granted under the First Lien Note Facility.


First Quarter 2017 Private Placement
On March 1, 2017, the Company entered into a Stock Purchase Agreement (the “First Quarter Stock Purchase Agreement”) with Venor Capital Master Fund Ltd., Map 139 Segregated Portfolio of LMA SPC, Venor Special Situations Fund II LP and Trevithick LP (the “First Quarter Stockholders”). Pursuant to the First Quarter Stock Purchase Agreement, the Company sold an aggregate of 3.3 million shares of its common stock (the “First Quarter Shares”) for aggregate gross proceeds of approximately $5.1 million in a private placement transaction (the “First Quarter 2017 Private Placement”). The purchase price for each Share was $1.5366, which was negotiated between the Company and the Stockholders based on the volume-weighted average price of the Company’s common stock on the NASDAQ Global Market on March 1, 2017. Proceeds from the First Quarter 2017 Private Placement will be used for working capital and general corporate purposes.
2017 Warrants
In connection with the Second Lien Note Facility (as defined below), the Company will also issue warrants (the “2017 Warrants”) to the purchasers of the Second Lien Notes (as defined below) pursuant to a Warrant Purchase Agreement dated as of June 29, 2017 (the “2017 Warrant Purchase Agreement”). The 2017 Warrants entitle the purchasers of the 2017 Warrants to purchase shares of Common Stock, representing at the time of any exercise of the 2017 Warrants an equivalent number of shares equal to 4.99% of the Common Stock of the Company on a fully diluted basis, subject to the terms of the Warrant Agreement governing the 2017 Warrants, dated as of June 29, 2017 (the “2017 Warrant Agreement”); provided, however, the 2017 Warrants may not be converted to the extent that, after giving effect to such conversion, the holders of the 2017 Warrants would beneficially own, in the aggregate, in excess of (i) 19.99% of the shares of Common Stock outstanding as of June 29, 2017 (the “Closing Date”) minus (ii) the shares of Common Stock that were sold pursuant to the Second Quarter 2017 Private Placement (as defined below) (the “Conversion Cap”). The Conversion Cap will not apply to the 2017 Warrants if the Company obtains the approval of its stockholders for the removal of the Conversion Cap, which the Company is required to take certain steps to attempt to obtain, subject to the terms of the Warrant Agreement.
The 2017 Warrants have a 10-year term and an initial exercise price of $2.00 per share, and may be exercised by payment of the exercise price in cash or surrender of shares of Common Stock into which the 2017 Warrants are being converted in an aggregate amount sufficient to pay the exercise price.  The exercise price and the number of shares that may be acquired upon exercise of the 2017 Warrants is subject to adjustments in certain situations, including price based anti-dilution protection whereby, subject to certain exceptions, if the Company later issues Common Stock or certain Common Stock Equivalents (as defined in the Warrant Agreement) at a price less than either the then-current market price per share or exercise price of the 2017 Warrant, then the exercise price will be decreased and the percentage of shares of Common Stock issuable upon exercise of the 2017 Warrants will remain the same, giving effect to such issuance. Additionally, the 2017 Warrants have standard anti-dilution protections if the Company effects a stock split, subdivision, reclassification or combination of its Common Stock or fixes a record date for the making of a dividend or distribution to stockholders of cash or certain assets. Upon the occurrence of certain business combinations the 2017 Warrants will be converted into the right to acquire shares of stock or other securities or property (including cash) of the successor entity. The 2017 Warrants are reflected as a liability in other non-current liabilities on the unaudited consolidated balance sheet and are adjusted to fair value at the end of each reporting period through an adjustment to earnings. The fair value of the 2017 Warrants, subsequent to a remeasurement adjustment of $1.1 million, is $18.0 million at September 30, 2017.
Second Quarter 2017 Private Placement
On June 29, 2017, the Company entered into a Stock Purchase Agreement (the “Second Quarter Stock Purchase Agreement”) with a fund managed by Ares Management L.P. (“Ares” or the “Second Quarter Stock Purchaser”). Pursuant to the terms of the Second Quarter Stock Purchase Agreement, the Company issued and sold to the Second Quarter Stock Purchaser in a private placement (the “Second Quarter 2017 Private Placement”) 6,359,350 shares of Common Stock (the “Second Quarter Shares”) at a price of $2.50 per share, for proceeds of approximately $15.9 million, net of $0.2 million in associated costs.
Second Quarter Registration Rights Agreement
In connection with the 2017 Warrants and the Second Quarter 2017 Private Placement, the Company entered into a Registration Rights Agreement (the “Second Quarter 2017 Registration Rights Agreement”) with the holders of the 2017 Warrants and the Second Quarter Stock Purchaser. Pursuant to the Second Quarter 2017 Registration Rights Agreement, subject to certain exceptions, the Company is required, upon the request of the Second Quarter Stock Purchaser and holders of the 2017 Warrants, to register the resale of the Second Quarter Shares and the shares of Common Stock issuable upon exercise of the 2017 Warrants. Pursuant to the terms of the Second Quarter 2017 Registration Rights Agreement, these registration rights will not become effective until twelve months after the Closing Date, and the costs incurred in connection with such registrations will be borne by the Company.

Income Taxes
At September 30, 2017, we had Federal net operating loss (“NOL”) carry forwards of approximately $389.1 million, of which $13.6 million is subject to an annual limitation, which will begin expiring in 2026 and later. We have post-apportioned state NOL carry forwards of approximately $432.8 million, the majority of which will begin expiring in 2017 and later.
Future Cash Requirements
Net cash used in operating activities from continuing operations totaled $4.3 million during the nine months ended September 30, 2017. Our working capital increased $35.4 million as of September 30, 2017 compared to December 31, 2016, primarily as a result of an increase in our cash and cash equivalents of $23.4 million attributable to the net proceeds received from the 2017 Private Placement and the Priming Credit Agreement. At September 30, 2017, we had $33.0 million of unrestricted cash on hand and, until December 2018, $10.0 million of delayed draw capacity under the Second Lien Notes Facility to supplement our working capital needs.
If we cannot successfully execute our strategic plans we will likely require additional or alternative sources of liquidity, including additional borrowings.
On June 29, 2017, we entered into the Notes Facilities pursuant to which we issued new senior secured notes and refinanced our existing senior secured credit facilities. Please refer to “Debt Facilities” in this section.
We regularly evaluate market conditions and financing options to improve our current liquidity profile and enhance our financial flexibility. These options may include opportunities to raise additional funds through the issuance of various forms of equity and/or debt securities or other instruments, the sale of assets or refinancing all or a portion of our indebtedness. However, there is no assurance that, if necessary, we would be able to raise capital to provide required liquidity.
Additionally, we will pursue our operational and strategic plan and will also review a range of strategic alternatives, which could include, among other things, transitioning chronic therapies to alliance partners, a potential sale or merger of our company, or continuing to pursue our operational and strategic plan. Additionally, we may pursue joint venture arrangements, additional business acquisitions and other transactions designed to expand our business.
As of the filing of this Quarterly Report, we expect that our cash on hand and cash from operations will be sufficient to fund our anticipated working capital, scheduled interest repayments and other cash needs for at least the next 12 months. Principal payments on the Notes Facilities are not required until September 30, 2019.
The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates realization of assets and satisfaction of liabilities in the ordinary course of business. As such, they do not include any adjustments to the recoverability and reclassification of recorded amounts that might be necessary should we be unable to continue as a going concern.
Item 3.Quantitative and Qualitative Disclosures About Market Risks
Item 3.Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes to our exposure to market risk since the Annual Report.from those included in our Form 10-K, which is hereby incorporated by reference.
Item 4.Controls and Procedures
Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures (as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act) that are designed to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, management evaluated the effectiveness of the Company’s disclosure controls and procedures as of SeptemberJune 30, 2017.2023. Based on that evaluation, the Company’s Chief Executive Officer and its Chief Financial Officer concluded that the Company’sour disclosure controls and procedures were effective as of SeptemberJune 30, 2017.

2023.
Changes in Internal Control OverControls over Financial Reporting
There have beenwere no changes in our internal control over financial reporting that occurred during the three months ended SeptemberJune 30, 20172023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Table of Contents
PART II
OTHER INFORMATION
Item 1.Legal Proceedings
Item 1.Legal Proceedings
For a summary of legal proceedings, please refer to Note 7 within13, Commitments and Contingencies, of the unaudited condensed consolidated financial statements sectionincluded in Item 1 of this document.Form 10-Q.
Item 1A. Risk Factors
There have been no material changes to the risk factors affecting our business, financial condition or results of operations from those set forth in Part I, Item 1A. “Risk Factors” in our Form 10-K. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
On February 20, 2023, the Company’s Board of Directors approved a share repurchase program of up to an aggregate $250.0 million of common stock of the Company.
The following table provides certain information with respect to the Company’s repurchases of common stock from April 1, 2023 through June 30, 2023:
Item 1A.PeriodRisk FactorsTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
April 1, 2023 - April 30, 2023— $— — $174,999,995 
May 1, 2023 - May 31, 2023— — — 174,999,995 
June 1, 2023 - June 30, 2023— — — 174,999,995 
— $— — $174,999,995 
The risk factors disclosed in “Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2016 are hereby incorporated by reference.
Item 5.
Item 5. Other Information
None.

Adoption, Modification and Termination of Rule 10b5-1 Plans and Certain Other Trading Arrangements
No director or officer of the Company has adopted, modified or terminated a Rule 10b5-1 plan or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023.
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Table of Contents
Item 6.Exhibits
(a) Exhibits.
Item 6.Exhibit Number Exhibits
(a) Exhibits.
Description
Exhibit Number Description
2.1+10.1
2.210.2
2.3
Second Amendment, dated September 2, 2016, to the Home Solutions Agreement (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on September 7, 2016, SEC File Number 001-11993).
2.4
Third Amendment, dated September 9, 2016, to the Home Solutions Agreement (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on September 12, 2016, SEC File Number 001-11993).
3.1
Second Amended and Restated CertificateFirst Lien Credit Agreement, dated as of IncorporationJune 8, 2023, is entered into by Bank of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-4 (File No. 333-119098) declared effective on January 26, 2005).America, N.A., as administrative agent.
3.231.1
3.3
Certificate of Designations for Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 10, 2015, SEC File Number 000-28740).
3.4
Certificate of Designations for Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 13, 2016, SEC File Number 000-28740).
3.5
Certificate of Designations for Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 14, 2016, SEC File Number 000-28740).
3.6
Certificate of Designations, Preferences, and Rights for Series D Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on August 12, 2016, SEC File Number 000-28740).
3.7
Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on April 28, 2011, SEC File Number 000-28740).
31.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
32.1
32.2
101 *101.INS
The following financial information from BioScrip, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016, (ii) Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (iii) Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (iv) Notes to Unaudited Consolidated Financial Statements.
Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Labels Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104XBRL Formatted Cover Page
*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.
+Certain schedules attached to the Home Solutions Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish the omitted schedules to the Securities and Exchange Commission upon request by the Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 2, 2017.



authorized.
                                                          BIOSCRIP OPTION CARE HEALTH, INC.
Date: July 27, 2023
/s/ Stephen DeitschMichael Shapiro
                                                          Stephen DeitschMichael Shapiro
Senior Vice President, Chief Financial Officer and Treasurer
(PrincipalSenior Vice President (Principal Financial Officer and AccountingDuly Authorized Officer)


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