UNH - Option Care Health: A Deep Dive Into Its Market Dominance
2024-05-31 11:50:36 ET
Summary
- Option Care Health, the largest alternative infusion provider, is poised to benefit from the shift to home-based health and the growing specialty pharmaceuticals market.
- Despite the 13% drop YTD, OPCH's fundamentals have only improved and has continued beating quarterly revenue and EBITDA estimates for the past 13 earnings.
- I believe the new Medicare home infusion policies and continued site-of-care initiatives by insurers are likely to further enhance OPCH's financials and competitive advantage.
It's been half a year since I published a buy rating on Option Care Health, Inc. ( OPCH ). Since then, the stock has dropped ~13% while its fundamentals have only improved. In my previous article, I outlined several potential catalysts for OPCH and explained why I believe the company has a strong competitive moat. My opinion on these points remains unchanged. If you haven't read my previous article, I recommend doing so before continuing with this one. In this article, I reiterate my buy rating and $37.5 price tag while digging deeper into the market OPCH operates and providing an overview of its background and business model.
Industry Overview and Investment Appeal
Home Infusion Market Background
The US home infusion market is a smaller part of the overall $100bn infusion market and is projected to grow by 5-7% annually. OPCH and other groups estimate the total infusion market at around $100bn, covering inpatient, physician outpatient offices, skilled nursing facilities (SNFs), and home infusion. Specifically, OPCH estimates the home infusion market at $17-$18bn, with management believing they hold a 23-25% market share, which translates to ~4% of the total infusion market....
Option Care Health: A Deep Dive Into Its Market Dominance