• Stock in Option Care Health has soared nearly 40% year-to-date amid market volatility and economic uncertainty.
• The company, a leader in home healthcare, is capitalizing on demand for home infusion services and specialty pharmaceuticals.
• With a conservative valuation and a P/S ratio below the sector median, it presents an attractive investment opportunity.

Stock in Option Care Health (OPCH), a leader in home-based healthcare, has skyrocketed 40% year-to-date and serves as a prime example of how disruption can create opportunity. But investors face a crucial question: Has the company’s growth potential already been priced into its shares, or is there more room for upside? Let’s examine how its valuation, backed by strong earnings and robust prospects for growth, makes its equities a compelling investment.

Leading the shift to home-based care

Option Care Health, or OPCH for short, is at the forefront of a shift in healthcare—home-based care.As the largest independent provider of home and alternative site infusion services in the United States, the company is revolutionizing the delivery of complex medical treatment. It specializes in administering critical therapies—such as chemotherapy and nutrition support, along with treatment for heart failure, bleeding disorders and chronic conditions—directly to patients’ homes or outpatient settings. In essence, OPCH is transforming how healthcare is delivered, providing patients with convenient, cost-effective alternatives to traditional inpatient care.

In a changing industry, OPCH is benefiting from two trends: The growing preference for convenient healthcare services and the rapid expansion of specialty pharmaceuticals. The company’s business model, centered on predictable and recurring revenue streams from long-term contracts (with both private insurers and government payers), provides a strong foundation for growth. Additionally, Option Care Health’s large-scale network, which spans across 170 locations nationwide, has enabled the company to scale quickly, and become a leader in a previously fragmented market.

OPCH’s growth has been driven, in part, by its proactive and strategic approach to mergers and acquisitions (M&A). In the last couple of years, the company acquired both Revitalized Specialty Infusion Services and Rochester Home Infusion, cementing its leadership in the home infusion market. This expansion, combined with a focus on cost efficiency and growing demand for home-based care, has positioned the company at the forefront of this rapidly evolving sector. Additionally, favorable shifts in Medicare policies—encouraging insurers and patients to embrace more affordable home care options—have given the company’s strategy a boost.

Moreover, OPCH is leveraging artificial intelligence to enhance operational efficiency, positioning itself for long-term advantage. Last year, the company engaged Palantir (PLTR) to lead an ”enterprise-wide digital transformation,” underscoring its forward-thinking approach. Cutting-edge technology, combined with a solid operating model and a savvy M&A strategy, suggests the company’s growth story is still in its early stages, with plenty of room to run. 

Strong Q4 earnings inspire confidence

OPCH has navigated a year of challenges with remarkable resilience, delivering standout fourth-quarter results that reinforce its dominance as the nation’s largest independent provider of home and alternative site infusion services. The company posted robust 19.7% year-over-year growth in revenue, reaching $1.35 billion—easily surpassing analyst expectations. This impressive performance was fueled by the expansion of its core services and strategic acquisitions, particularly in-home and specialty infusion therapies.

Net income for the quarter also saw a solid increase of 5%, rising to $60 million, while adjusted earnings per share (EPS) surged about 16% year-over-year to $0.44—a clear beat over consensus estimates. Adjusted EBITDA came in at $122 million, representing a 9% year-on-year increase and reflecting the company’s strong operational efficiency. Despite some cost pressures, including an uptick in SG&A expenses, the company’s ability to scale efficiently and control operational costs has enabled it to remain highly profitable.

One area of concern has been the recent dip in gross margins, which declined to around 20% from 22%. This drop can be attributed to an evolving product mix and rising pricing, particularly in its chronic inflammatory therapies. Stelara, a key drug in its portfolio, being a primary factor. In response, the company has taken proactive steps to navigate these challenges, focusing on cost efficiency and ramping up investments in technology and infrastructure to offset the negative effect of these headwinds. 

Looking ahead, the company’s guidance for 2025 is also robust. It expects to deliver net revenue between $5.3 billion and $5.5 billion, which represents solid 8% year-over-year growth. Adjusted EPS guidance for 2025 is expected to be between $1.59 and $1.69, while adjusted EBITDA is forecasted to come in between $450 million and $470 million. These figures demonstrate that OPCH is positioned for continued growth, albeit at a slightly slower pace than in 2024.

Valuation remains compelling, even after the 40% rally

OPCH’s current valuation presents a strong case for upside potential, particularly in light of its latest earnings report. The company’s GAAP P/E ratio of 27.2 is slightly above the sector median of 26.0, indicating investors are willing to pay a modest premium for its strong growth prospects. This is a positive sign because it indicates confidence in the company’s ability to deliver steady growth in earnings. 

Moreover, OPCH’s price-to-sales (P/S) ratio of 1.2, compared to the sector median of 2.9, reveals the company is priced conservatively relative to the revenue it generates. This makes it an attractive value play in a sector typically dominated by higher multiples. Additionally, the company’s price-to-book (P/B) ratio of 3.9, while above the sector median of 2.2, reflects its scalable, asset-light business model, positioning it well for sustainable growth while maintaining high returns on invested capital.

Analysts are optimistic about the company’s trajectory. Of the 11 covering OPCH, eight have rated it as “buy” or “overweight,” a clear indication the market has faith in its ability to surpass expectations. The average price target of $38 per share represents a modest but tangible upside from its current price of about $33 share, suggesting this stock has more room to run. With its undervalued P/S ratio, strong analyst backing and a history of exceeding earnings expectations, the company continues to shine as an investment with both immediate potential and long-term growth.

Takeaways

Option Care Health has positioned itself as a standout in the rapidly evolving healthcare landscape, with a business model that combines stability, innovation and steady growth. Its focus on home-based care and specialty pharmaceuticals provides a rare mix of predictable cash flows and scalability, setting it apart in an industry struggling with volatility. With a conservative valuation—evidenced by its low P/S ratio compared to peers—the company offers investors an attractive opportunity, especially when factoring in the company’s solid operational model, strategic acquisitions and favorable industry trends.

As demand for home-based healthcare continues to rise, OPCH’s growth trajectory should keep accelerating along with it. Backed by strong earnings, an optimistic analyst outlook and a proven ability to navigate challenges, the company is positioned to outperform market expectations. While short-term concerns like margin pressures remain, the company’s long-term potential and undervalued stock make it an appealing pick for investors seeking both stability and growth in the healthcare sector. The stock’s bullish potential is reinforced by its remarkable resilience during recent market turbulence, which barely affected shares of Option Care Health. 

Andrew Prochnow, Luckbox analyst-at-large, has more than 15 years of experience trading the global financial markets, including 10 years as a professional options trader.

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