Shares of Option Care Health (OPCH -15.48%) fell more than 15% on Wednesday even after the home and alternate site infusion services company announced better-than-expected quarterly results and raised its full-year outlook. That outlook, however, wasn’t quite optimistic enough to appease Wall Street’s already high expectations.
A solid quarter for Option Care Health
Option Care Health’s third-quarter 2023 revenue grew 7.1% year over year to $1.093 billion, translating to a 45% increase in net income to $56.3 million, or $0.31 per share. Analysts, on average, were modeling lower earnings of $0.28 per share on revenue of $1.09 billion.
Option Care Health CEO John Rademacher credited the company’s relative outperformance to its focus on “outstanding clinical outcomes and extraordinary patient care.” He added that he looks forward to seeing the impact his teams can make as they expand to the post-acute and ambulatory setting going forward.
Why Option Care’s raised guidance just wasn’t enough
Looking ahead to the rest of the year, Option Care Health raised its outlook to call for full-year 2023 revenue of $4.23 billion to $4.28 billion — up from previous guidance of $4.20 billion to $4.30 billion. The company also called for 2023 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be in the range of $420 million to $425 million, an increase of $5 million from both ends of its prior outlook range.
So why did the stock fall today? For one, it had a high bar to jump heading into this report. With shares of this leading healthcare stock up more than 20% since the beginning of June, most analysts were already modeling full-year 2023 revenue near the upper end of Option Care Health’s new guidance range. It appears, then, that this drop was more a function of the market tempering its exuberance for an otherwise solid business.
Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
