OPTION CARE HEALTH, INC. (OPCH): what the price requires

At today's price, OPTION CARE HEALTH, INC. (OPCH) is priced for -4.9% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/OPCH

Headline

FieldValue
TickerOPCH
CompanyOPTION CARE HEALTH, INC.
Current price$21.73/sh
CompositionInfusion services net revenue 98% / Other revenue 2%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed1.9%
Operating margin today5.8%
Margin compression implied-3.9pp
Implied growth-4.9%
Multiple paid14x operating income

The operating-margin requirement is derived from the framework's value band at year 8, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 7.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.4pp.

Reconcile: at the x-ray's 9.3% required return this reads ~5.5%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.40σ
cohort percentile (of 112 peers)20
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.39x5expensive
Earnings1.77x5expensive
Relative0.94x5justifies
Growth0.77x3justifies

Families that justify the price: Relative, Growth Families that call it expensive: Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.0%); the inversion above states its own rate.

Per-Model Detail (n=18)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$47.570.46xyesFCF base $0.2B, growth 9% (input: historical growth), terminal g 4.0%, WACC 7.0%, 6yr projection
DCF Exit MultipleGrowth$28.190.77xyesExit EV/EBITDA: 9.4x / 11.4x / 13.4x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$24.490.89xyesP/E 18x (static sector reference · 2026-04), scenarios: 15.0x / 18.0x / 21.0x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$14.091.54xyesBV/sh $8.54, ROE (TTM) 15.3%, ke 9.3%
Two-Stage Excess ReturnAsset$17.881.22xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$18.291.19xyesRev $5.7B, growth 9% (input: historical growth; tapered), Terminal P/S: 0.5x / 0.6x / 0.7x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$15.361.41xyesEPS $1.28, growth 3% (input: historical EPS growth), PEG=4.94 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$12.261.77xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.29B × (1−26%) / WACC 7.0% → EPV (no growth)
Residual IncomeAsset$18.301.19xyesBV $8.54 + 5yr PV of (ROE (TTM) 15.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$15.681.39xyes√(22.5 × EPS $1.28 × BVPS $8.54) — Graham's conservative floor
EV/EBITDA RelativeRelative$23.230.94xyesEBITDA $0.40B × sector EV/EBITDA 12.0x
FCF YieldEarnings$7.572.87xyesFCF $212.6M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$4.754.57xyesSBC-adj FCF $0.17B (FCF $0.21B − SBC $0.04B) capitalized at Kₑ
Ben Graham FormulaEarnings$16.361.33xyesEPS $1.28 × (8.5 + 2×3.4%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$2.708.05xyesBV $8.54 × (ROIC 2.2% / WACC 7.0%)
P/Sales SectorRelative$89.550.24xyesRevenue $5.67B × sector P/S 2.5x
PEG Fair ValueRelative$6.483.35xyesEPS $1.28 × (PEG 1.5 × growth 3.4% (input: historical EPS growth)) → PE 5.1x
Earnings YieldEarnings$13.841.57xyesEPS $1.28 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$982.5m
Net debt / NOPAT (after-tax)4.14x
Net debt / operating income (pre-tax)3.08x
Interest coverage5.8x
Share count CAGR (buyback)-3.4%
Burning cashno

Bullet Takeaways

Option Care is a mature, scaled home-infusion provider, and read through that lens the stock is cheap. The methods land near a $51 base against a $21.99 price, and the implied-expectations read actually backs out a slight decline, about minus 4.3% growth, to justify the price. The market is pricing contraction into a business that is still growing.

The depressing factor is identifiable and management calls it temporary. A Stelara biosimilar transition created roughly a 600 basis point revenue drag in Q1 2026 and a gross-profit headwind, and management framed the quarter as the reset with no carryover into 2027.

The balance sheet is manageable. Net debt near $982 million against trailing operating income of $331 million is roughly 3x leverage, with interest coverage above 6x, and operating cash flow guided above $340 million. The thesis is whether the reset is one-time, as management says, or the start of a reimbursement-driven margin grind.

Bull Case

Frame Option Care by its stage, because the trailing numbers read very differently once you do. This is a mature, national home-and-alternate-site infusion provider, the scaled leader in a business that moves expensive drug therapies out of the hospital and into the home and infusion suites. It is not a growth story to be valued on a runway, nor a turnaround; it is a steady, cash-generative platform. And on that basis the stock is inexpensive. The methods center near a $51 base against a $21.99 price (June 27, 2026), and the implied-expectations read requires only that the business avoid a roughly 4% annual decline to justify the price. The market is pricing in shrinkage; the company is not shrinking.

The scale advantage is the durable edge. Option Care's 10-K describes a position that, through "the purchasing power of its national platform," lets the company "negotiate favorable terms and economics, including volume purchase rebates," and notes that its presence "at national, regional and local levels places it in a strong position against existing and potential competitors" (FY2025 10-K, accession 0001014739-26-000008). In a business where drug cost is the largest input, a national buyer with rebate leverage and a coast-to-coast clinical footprint is hard to replicate. That scale is why the company can serve both high-acuity acute therapies and chronic ones across a fragmented payor landscape.

The cash generation is the proof the franchise is healthy beneath the headline. Q1 2026 revenue grew just over 1% to $1.35 billion, held back by a known biosimilar reset rather than by demand weakness, with acute therapy strong. Management guided full-year adjusted EBITDA to $480 to $500 million and operating cash flow above $340 million, the latter representing at least 30% growth in 2026. A scaled provider converting revenue to cash at that rate, with the share count shrinking about 3% a year, is returning value while the market prices a decline that is really a one-time portfolio reset. If acute strength continues and the Stelara drag rolls off as management expects, the earnings power supports a value well above the current price, which is exactly what the methods say.

Bear Case

The bear case is about the external variable with the most leverage on Option Care: reimbursement and drug-pricing policy. The company's revenue is the spread between what it is paid for therapies and what the drugs and care cost, and a large share of that payment comes from government and commercial payors whose rules it does not set. The 10-K notes the business is paid through "government healthcare programs, such as Medicare and Medicaid" and that "pricing benchmarks in the pharmacy industry are periodically published by third parties" and govern reimbursement (FY2025 10-K, accession 0001014739-26-000008). A change in those benchmarks, a Medicare or Medicaid rate cut, or a shift in how high-cost drugs are reimbursed could compress the margin directly, and the current price does not appear to discount a hostile policy turn.

The Stelara episode shows how fast a single drug dynamic can move the numbers, and why the price is skeptical of management's reassurance. The Stelara biosimilar transition created roughly a 600 basis point revenue drag in Q1 2026 and pushed the expected full-year gross-profit headwind to about $55 million. Management called Q1 the reset with no carryover, but the market has heard before that a one-time headwind is contained. The chronic-therapy portfolio is exposed to exactly this kind of drug-mix and biosimilar churn, and the next branded-to-biosimilar transition could create a similar drag the price is not assuming.

The leverage turns these policy and mix risks into equity risk. Net debt sits near $982 million against trailing operating income of $331 million, roughly 3x leverage, with interest coverage above 6x. That is manageable in good times, but a business that loses several points of margin to a reimbursement change or another biosimilar reset would see its coverage and free cash flow compress while it still has to service the debt. The methods say the stock is cheap on normalized earnings, but normalized assumes the reset is one-time and reimbursement holds. If instead the chronic portfolio faces recurring drug-mix headwinds or a policy-driven rate cut, the apparent cheapness is the market correctly pricing a margin grind, not a mispricing. That is the classic shape that keeps a value name cheap.

Valuation

Option Care screens cheap, with the methods clustered above the price. The base estimate is near $51 against a $21.99 price, and the price is justified by the relative-multiple and growth-DCF families, while the earnings-power family calls it expensive. The individual reads spread accordingly: a DCF perpetual growth near $47, relative valuation near $24, and EV/EBITDA relative near $23 sit above or near the price, while the earnings-power and FCF-yield methods land lower, reflecting that on a strict normalized-earnings basis the current depressed margin does not support a high value. The blended picture is a price below most of the methods.

The inversion is the most telling part. With current operating margin around 5.8%, backing out the price requires only an implied operating margin near 0.9% and an implied growth rate of about minus 4.3%. In other words, the price is consistent with the business slowly declining and barely staying profitable. That is a low bar for a scaled, cash-generative infusion leader still posting positive revenue growth and guiding to higher EBITDA and operating cash flow. The reliability flag is ok and the rarity check is within range, so the methods are not flagging the cheapness as an artifact; they are saying the market is pricing pessimism.

The balance sheet sets the risk frame without changing the central estimate. Net debt near $982 million, roughly 3x trailing operating income, with interest coverage above 6x and operating cash flow guided above $340 million, is a manageable load for a steady cash generator but is the channel through which a reimbursement shock would hit equity. The valuation is attractive on normalized numbers, and the reliability of that read depends on the Stelara reset being one-time, as management asserts, and on reimbursement staying stable. Paid at this price, an investor is underwriting that the depressed margin is a temporary trough rather than a new, policy-driven baseline, which is precisely the disagreement the price reflects.

Catalysts

Option Care reported Q1 2026 revenue of $1.35 billion, up just over 1% year over year but about 3.3% below expectations, with acute therapy strength offset by a chronic-therapy reset tied to the Stelara biosimilar transition (Globe and Mail). The Stelara dynamic created roughly a 600 basis point revenue drag and a full-year gross-profit headwind, which management characterized as the reset with no carryover into 2027 (Yahoo Finance).

The catalysts ahead are the roll-off of that headwind and the durability of acute growth. Management lowered full-year 2026 net revenue guidance to $5.675 to $5.775 billion, just over 1% growth at the midpoint, while guiding adjusted EBITDA to $480 to $500 million and operating cash flow above $340 million, at least 30% growth (Motley Fool transcript). Watch three things over the coming quarters: whether revenue growth reaccelerates as the Stelara drag annualizes out, whether acute-therapy momentum continues to offset chronic-mix pressure, and whether operating cash flow tracks toward the 30%-plus growth guide. Confirmation that the reset was one-time, with reaccelerating growth and strong cash conversion, would validate the value case, since the methods sit well above the price. A second biosimilar or reimbursement headwind would confirm the market's pessimism and keep the stock cheap.

Peer Cohorts (Per Segment, With Filing Citations)

Option Care Health (consolidated) (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive OPCH report on boothcheck