Good day, and thank you for standing by. Welcome to the Option Care Health Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone, and you will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Nicole Maggio, Senior Vice President of Finance. Please go ahead. Good morning. Please note that today's discussion will include certain forward-looking statements that reflect our current assumptions and expectations, including those related to our future financial performance and industry and market conditions. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. We encourage you to review the information in today's press release, as well as in our Form 10-K and latest Form 10-Q, filed with the SEC regarding the specific risks and uncertainties. We do not undertake any duty to update any forward-looking statements except as required by law. During this call, we will use non-GAAP financial measures when talking about the company's performance and financial condition. You can find additional information on these non-GAAP measures in this morning's press release posted on the investor relations portion of our website. With that, I will turn the call over to John Rademacher, Chief Executive Officer. Thanks, Nicole, and good morning, everyone. The second quarter was another productive quarter for the Option Care Health team, despite a number of challenging dynamics. On our last call, we were in the midst of one of the most disruptive cyberattacks on the healthcare ecosystem in history and managing through a number of supply chain disruptions that were putting pressure on our business. As we sit here today, I am pleased to report that the team has made significant progress in managing through and recovering from these challenges. Building upon the momentum exiting the first quarter, the top line continues to perform well as the team delivered year-over-year growth of 14.8%. Growth was balanced across the portfolio and consistent with the first quarter, we saw especially robust growth from our newer limited distribution and rare orphan therapies within our chronic portfolio. Throughout the challenges in the first half, the Option Care Health team's ability to collaborate with referral sources to onboard new and service existing patients was never disrupted. In the face of adversity, the team more than rose to the challenge and developed innovative workarounds and modified processes. Mike will provide more granular perspective on the financials as always, but the revenue mix, as well as the lingering supply chain and remediation efforts related to the Change Healthcare incident, did impact gross profit in the second quarter. However, we did generate approximately $10 million of incremental gross margin in the second quarter relative to the first quarter and continue to fight for every basis point. Given our expense leverage and efficiency mindset, we dropped the $10 million to the Adjusted EBITDA line. On our first quarter call, we identified two significant challenges that were affecting the enterprise, including disruptions in sourcing key therapeutic inputs and the operational impact of the Change Healthcare cyberattack. I'm pleased to report that, consistent with our previous comments, we resolved the sourcing challenges later in the second quarter with alternative procurement strategies. Regarding the Change Healthcare situation, we have effectively reestablished connectivity with their key applications or established relationships with alternative service providers for various critical applications and tools we utilize across our operations in support of patient administration and revenue cycle management. With these primary tools largely back online earlier in the second quarter, we have made strong progress in our recovery efforts. Some of the advanced functionality around the revenue cycle continues to be remediated, and operationally, we have substantially recovered. Having said that, we still have some receivables to be posted, and patient pay collections have been delayed. This continues to be an area of focus, and we expect there to be some modest inefficiencies in the third quarter as we complete our recovery. But as you'll see from our cash flow statement, we have made tremendous progress in reducing our accounts receivable and monetizing revenue in the quarter. As Mike will expand upon, given the progress around cash flow generation and the building strength of the balance sheet, we reengaged on capital deployment efforts and repurchased approximately $78 million of stock in the quarter. Our ability to respond quickly and adeptly to dynamics such as the Change Healthcare cyberattack or the procurement challenges is a direct result of our internal efforts to maintain robust enterprise risk management process, which regularly tests our ability to identify, assess, and mitigate key risks to the organization and develop well-coordinated multifunctional responses. The emergence of these risks in the first half, as well as our strong response, reaffirms the critical need to continue to manage effectively and invest in our information technology and risk management functions.... During the second quarter, we maintained our active effort to engage with the investment community through a myriad of investor conferences and other venues. Feedback and interaction with our shareholder base is invaluable, and I believe better enables us to manage the enterprise. One of the key areas of interest has been around our growth profile in the face of therapeutic advancements. I thought I would take a few minutes to reiterate how we view the growth profile of this enterprise. I believe we operate in an attractive area of the broader healthcare ecosystem, given that we provide clinically advanced, high-quality care at an appropriate cost in a setting where patients want to receive their care. Our revenue base is comprised of dozens of therapeutic categories and hundreds of drugs, some growing north of 20% and some in decline. We believe our diversified therapeutic base, which ranges from mature, slower growing therapies, such as intravenous antibiotics, to rapidly growing new rare therapies, such as Vyjuvek, is one of our key strengths. The breadth enables us to better collaborate with referral sources and payers across a much broader spectrum of patients, and also helps mitigate our exposure to declines in individual therapies or categories. From the merger with BioScrip in 2019 through the first quarter of this year, we have delivered, on average, more than 11% top line growth. This is despite several significant headwinds and shifts in prescribing patterns. For example, over that time horizon, a number of biosimilars were launched for Remicade, and we saw reference prices for that therapy drop more than 80%. Cubicin, which was one of the last branded antibiotics and a significant drug within our antibiotic portfolio, went generic as daptomycin, and reference prices declined more than 90%. As we shared last year, Radicava, which was a novel infused therapy for ALS, went oral, and our revenue base for that therapy declined rapidly beginning in late 2022. Yet despite all of these and other therapeutic developments, we've demonstrated the strength of our platform and continue to deliver attractive top line growth. Our team never rests in their efforts to refine our therapeutic portfolio, and we constantly monitor and prepare for new product introductions or additional forms of administration. We all know that therapies will see new biosimilar entrants, subcutaneous formulations of infused therapies will be introduced, and existing products may receive broader indications. As these developments are identified, they are incorporated into our perspective regarding our top line trajectory over the medium term. As we look at the drug pipeline, we see opportunities as well as risks, and we remain steadfast in our conviction regarding the growth opportunities for this enterprise. We believe we have a unique platform that provides extraordinary value to pharma manufacturers, payers, prescribers, and patients, and we will continue to capitalize on the strength of our position to drive growth, capture market demand, and serve more patients. As we look forward, we see a number of therapeutic dynamics on the horizon, and unfortunately, there is no standard script or certainty for how they will impact our enterprise, positively or negatively. Every therapeutic introduction, every biosimilar or generic evolution, every label change is unique, and many of the variables, including pharma pricing and rebating strategies, pharma channel prioritization, and payer and provider adoption strategies, are frankly out of our control. But as we have demonstrated in the past, we have a resilient team and a strong platform to respond to these market dynamics, and we will do our best to respond to the developments as they unfold. So as we sit here today, midway through 2024, I could not be prouder of the Option Care Health team and the level of patient care we provided despite challenges in the first half. The enterprise is well positioned headed into the second half of the year, and based on the revised guidance provided this morning, we expect to deliver on our commitments for another strong year of growth. With that, I'll hand the call over to Mike. Mike? Thanks, John. Good morning, everyone. Revenue growth in the second quarter of 14.8% versus prior year Q2 accelerated off the first quarter momentum. We drove solid growth in our more mature therapies across the acute and chronic portfolios and continued to see considerable contribution from new limited distribution and rare and orphan therapies that we have launched over the last year or two. Gross profit of just under $250 million grew approximately 3% when normalizing for the $8 million-$10 million of transitory procurement benefits included in the prior year's second quarter results. As discussed on the first quarter call, and as we expected, gross profit in the second quarter continued to be impacted by supply chain challenges for certain drugs and inputs, as well as the Change Healthcare situation, which affected our pharmacy operation and led to considerable inefficiencies in the quarter. Consistent with the expectations articulated on the first quarter call, we believe we have effectively resolved the supply chain challenges late in the second quarter, and as John mentioned in his comments, we have made significant progress in recovering from the Change Healthcare situation. SG&A was flat in the quarter as we continued to drive efficiencies through investments in technology and operational excellence. SG&A as a percent of revenue dropped to 12.5%, our lowest ratio on record. Adjusted EBITDA of $108.4 million was up $10 million sequentially over the first quarter and represented 8.8% of revenue. Earnings per share is another great story in the quarter. We earned 30 cents per share in the second quarter, which benefited from our share repurchase efforts that I'll touch upon in a minute. Cash flow rebounded in the quarter, and we are quite pleased with the recovery efforts. We generated almost $196 million in cash flow from operations in the quarter and reduced outstanding accounts receivable by more than $100 million, which spiked at the end of the first quarter due to the Change Healthcare situation. As we sit here today, our cash flow position has effectively recovered from the situation, and working capital is back in line with where we would expect it to be in the ordinary course. At the end of the second quarter, we are comfortably back under 2x net debt levered. As we articulated on the first quarter call and reaffirmed at various investor events and engagements over the past few months, as our cash flows recovered from the Change Healthcare situation, we would reengage on strategic capital deployment efforts. To that end, we remain focused on M&A efforts and continue to assess acquisition opportunities. We have also reengaged on share repurchase activities and repurchased approximately $78 million of stock in the second quarter. Our efforts ramped up as our cash flows improved in the quarter, and year to date, we have repurchased more than $118 million of stock. And given the momentum in cash flow generation, we intend to remain focused on deploying capital through M&A and share repurchase strategies. Finally, based on the first half results and our revised expectations, we are increasing our revenue expectations for the year to $4.75 billion-$4.85 billion. We have raised the bottom end of our Adjusted EBITDA expectations and now expect to generate $435 million-$450 million for the year, and we continue to expect to generate more than $300 million in cash flow from operations. And with that, we'll open the call for questions. Operator? Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask your question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we'll compile the Q&A roster. Our first question comes from the line of Lisa Gill of JP Morgan. Your line is now open. Good morning, and thanks for all the detail. First, Mike, can I start with just the mix in the quarter? Can you talk about what was chronic versus acute? And then secondly, I just want to better understand, you know, John's comments as we think about the shifting therapeutic environment and think about biosimilars. As we think about generics traditionally being a much better margin for Option Care, how do I think about biosimilars, and why would they not have a similar impact when we think about margins? Yeah, Lisa, I'll start with some of the mechanics and hand it over for John if he wants to address your second question. Mix in the second quarter was right around three quarters of our revenue was comprised of the chronic portfolio, so roughly right around 75-25, which makes sense because as we've talked about, you know, that cohort of therapies continues to outpace growth on the acute side. Yeah, and Lisa, you know, to my comments, yeah, a little bit hard to you know, predict exactly how things are going to move. A lot of it depends on how many biosimilars enter into the marketplace. You know, as we called out in the prepared remarks, as we saw with Remicade, it took time for that to kind of move forward as more products entered into the marketplace on the biosimilar. We normally see, as we've talked about, you know, publicly, the biosimilar events normally are more of a revenue event than a margin dollar event on that. We do everything we can to make certain that we're better positioned when there's competition in the marketplace to look at cost of goods, and be able to negotiate with manufacturers a better acquisition cost for those products. So that's, you know, what we've been able to do with, with some of the biosimilars on a historical basis, and looking for that opportunity to look at margin expansion, as a percentage, and, and trying to hold on to the, dollars of the margin, as we're negotiating better acquisition costs for the product. But, you know, there's a lot of variables in that, as you know, and, that's why, you know, there is that level of uncertainty that tried to call out within the, within the prepared remarks. And then, John, just as a follow-up to your prepared remarks, you, you talked about uses of cash, you talked about, you know, the, the stock that you bought back year to date, but you also mentioned, you know, the M&A environment. Can you maybe just touch on that a little bit as to how you're thinking about share repurchase versus M&A? And, you know, what, what are you seeing in the market right now from a target perspective? Yeah, look, Lisa, maybe I'll jump in on the capital allocation. Look, as we talked about, we're thrilled that starting in early 2023, we added a different arrow in the quiver, so to speak, in terms of our ability to deploy capital for- ... for shareholder value creation. Look, and as we've said, you know, we're gonna continue to focus on M&A activities. I think there are a number of assets that we find intriguing that we think represent both strategic and economic value. As we like to say, this is a small neighborhood. We know everybody that lives on the street, and we're not waiting, you know, for a process. We're very proactive in having those corporate development discussions. Given the strength of the balance sheet, now that we're well under 2x levered and continuing to improve our leverage profile, look, we've got a very supportive balance sheet, and we think that we can continue to pursue both activities. So I think the expectation should be that while we'll obviously continue to look forward and try to anticipate capital needs for M&A investments, I think that, you know, you should expect to see us also continuing to deploy capital through share repurchase as well. Okay, great. Well, congrats on the quarter, and thanks for the questions. Yeah. Thanks, Lisa. Thank you. Our next question will come from the line of Constantine Davides of Citizens JMP. Your line is now open. Thanks. Good morning. Just wondering on the change front, can you maybe just expand a little bit on where you guys are on efforts to neutralize the impact there, some of the steps from a technology standpoint you're taking to implement new processes? And if it's possible, Mike, can you just put a box around maybe what kind of drag that's been on cost of revenue or SG&A or maybe in terms of consolidated margins? Thanks. Yeah, Constantine, thanks for the question. It's John. I'll start with kind of the broader picture, and then certainly turn it to Mike to try to box that. So, I just need to really call out the great work our team did in the quarter, not only to reestablish our ability to submit those claims and, more importantly, to collect the cash on that. A lot of work was done behind the scenes, not only to validate and to certify the system was ready to go back online, but also, as called out in the prepared remarks, move forward with alternative solutions where necessary in order to augment that patient registration through revenue cycle management process. We still have some work to do. As we had called out, really in the first quarter earnings call, we talked about by the end of the year, we would be done. We're probably ahead of that, by every measure that we have. But there are gonna be some, you know, some lingering effects into the third quarter as we're focusing around posting cash in some aspects that we have to do on the back end, as well as now we'll turn a lot of focus towards patient pay collections. As you would expect, that's gonna lag, because we had to submit the claims to the payers first and get that adjudicated to really understand what was the amount of deductible that was owed by the patient. So as that kind of moves forward, we'll feel some of that linger into the third quarter, but it is well behind us, the bolus of activity that we have, and really tremendous progress in the quarter and continued momentum as we're in the third quarter now. Hey, Constantine, it's Mike. Yeah, in terms of the impact, look, we haven't put a specific number on the impact, largely because, you know, despite some of those challenges, we're actually in a position to increase our expectations for the year. And so we typically will call out these types of items with a specific dollar amount if it's causing us to deviate out of our guidance range. But having said that, look, the larger impact was on our SG&A and on our indirect spend. As we've talked about, you know, our ability to onboard and have a highly efficient revenue cycle and patient registration efforts was hampered considerably in the quarter with a lot of the automated tools that we utilize to onboard patients quickly, as well as to process and drop claims efficiently were offline. There was an impact within our cost of service, which is in gross margin as well, primarily attributed to the fact that, look, going into, you know, onboarding patients, we have a disciplined process to make sure we're responsive to referral sources. That runway to onboard verified benefits and get compounded therapies out the door was considerably shorter. So there were some pharmacy and operational inefficiencies that, again, as John reiterated, we think we're pretty much out of the work on that, and so we would expect a cleaner expense base going into the third quarter. And just one quick follow-up. Any sort of benefit, maybe longer term or intermediate term, around your ability to take share, just standing with referral sources as other competitors might have stumbled through that? Yeah, Constantine, both, you know, through these type of events, as well as, just our overall focus of, being a partner of choice for referral sources, continues to strengthen, when we're able to respond to these type of events. So, you know, we always focus around reach and frequency of our commercial team, of developing those relationships, and, trying to, be that reliable source. And, you know, I will call out that this is a hustle business. I mean, we've got to earn those referrals and, and bring those patients on board every single day. But our teams are really well positioned-... I think the consistency of our service model, as well as the consistency of our message in being able to take patients on through any of that disruption, I think, created goodwill with our referral base. Thank you. Yep. Thanks, Constantine. All right. Thank you. Our next question comes from the line of Matt Larew of William Blair. Your line is now open. Hi, good morning. Thanks for taking the question. Maybe to stick on the cost side quickly. So despite the disruptions you identified and had to deal with in the quarter, SG&A was down sequentially and basically flat year-over-year, despite, you know, 15% revenue growth. You're just moving into the back half of the year. I guess, as we just think about gross profit growth relative to the 10% revenue growth implied in guidance and, you know, any sort of benefits you're getting from recent cost actions or other incoming costs to think about. And maybe just help us think about more of the cost side of the equation, given John's comments on more of the top line side of the equation. Yeah, Matt, I think, look, obviously, you know, one of the things we preach is the scalability and the leverageability of this platform. And, you know, the culture is we're always looking for coins in the sofa cushions. Having said that, we continue to invest in growth initiatives and invest in our commercial capabilities every single quarter. The great thing is, behind the scenes, we have a very disciplined process to prioritize and ensure that not only are we investing for the growth of this platform, but also harvesting efficiencies as we deploy automation, technology, and other means. I think going into the back half of the year, I think the second quarter is very illustrative to John's comments around... And look, we generate $10 million of incremental gross margin. We were able to drop that almost dollar for dollar to the bottom line. And that's why, like I said, behind the curtains, you know, we're continuing to invest. We have a high degree of confidence that that thesis will continue. And so I think going into the back half, while we don't give individual line guidance, I think the second quarter is a decent proxy for how we view our spending levels. I mean, as we grow the level, again, at 12.5%, you know, that's key to the algorithm of this enterprise, is continuing to drive that spending leverage as a percent of revenue. Okay, thanks. And, you know, then maybe I'll circle back to John's comments on the growth profile. You know, there, I think, been a record number of biologics approved year to date, and that's going to continue in the back half of the year. I think some kind of reading tea leaves from payers, some maybe re-engagement about care in the home or preference in the home. If I add John's comments up, I mean, typically you guide more to the high single digits, but as you alluded to, you've delivered double-digit growth in your time as a public company. I mean, do you have a view that sort of the market forces post-COVID are making this a sustainably higher, you know, underlying market growth? Is it competitive—your competitive position shifted so that you should take more of that market? I mean, what are we really to make of John's comments? Because I guess my take would be that we should be modeling higher in the future. Yeah, Matt. So a couple things. You know, from the best insights that we have, you know, from industry, you know, studies, et cetera, we expect that home infusion is going to be growing in that mid-single digit range. As it's, as I said, you know, we've got dozens of therapeutic categories, and we've got hundreds of drugs that are part of the overall portfolio, and they're not all moving in the same direction. We certainly try to look for every opportunity we have to capitalize on the position, the investments that we've made. And, you know, our focus around limited distribution drugs and the ability to use our platform of not only clinical competencies, but the ability to reach consistently, you know, 96% of the U.S. population as being a part of that value proposition that we bring into the marketplace. We expect that there, you know, there's going to be these puts and takes that are going to move forward. There are a lot of unknowns around, you know, practice patterns of the prescribing physicians. And, you know, we've heard loud and clear from some of our prescribing physicians that if a patient is responding well to the therapy they're on, they're not inclined to move them onto a new indication. So, you know, as this kind of moves and develops, as it moves forward, we're going to try to take every advantage that we have, continue to build on the momentum of the organization. And, you know, our expectations of our commercial team is that we're out hustling the competition, and that we're going to continue to be a partner of choice for referral sources, for payers, et cetera. So all those things, I think, kind of fit into our expectations that we should be beating that, the market, on that, given, you know, that focus around, you know, our ability to execute. But I would probably put it into that band that we've normally set, which is, we expect the marketplace to be growing in that, you know, mid-single digits, and we expect that we would be, you know, to be able to beat that in the high single digits is kind of where we would focus our energy. All right. Thank you. Thanks, Matt. Thank you. Our next question comes from the line of David MacDonald of Truist. Your line is now open. Hey, good morning, guys. A couple of quick questions. Mike, just want to make sure I got the timing right. I think you said that the supply chain drag wasn't resolved until the end of the quarter. Is that correct? So you guys absorbed that through the entire quarter. Is that correct on timing? ... Yeah, later innings. There was absolutely an impact in the second quarter for the most part. Okay. And then, Mike, can you just help us a little bit with the top line and pull it apart just a little bit? When we think about the strength of the top-line growth, you know, was the acute kind of growing, you know, that low single digit that we expect, and then I guess, the kind of installed chronic, maybe low double digit, and then the LDD, you know, really what kind of pushed that higher, if we kind of do the math backwards into that? I just any additional detail there. Yeah, I think you're within hand grenade range, Dave. I think, look, you know, the, the more, the more established therapies were more in line with, with the, the growth profiles that we've generally, you know, come to expect. I think, you know, and if you think back to our initial guidance range, we were really guiding folks to that high single digit, low double digit top line for the year. I think the delta between, between that range and where we're delivering today is generally due to some of those newer novel, as, as John mentioned, you know, the LDDs and, and the rare and orphans, where, frankly, going into the year, you know, we were still, you know, commercializing some of those, so we were more conservative with, with expectations. That obviously has an impact on the margin rate, as you've heard us preach time and time again, because upfront, a lot of that, what I'll call that, that revenue overperformance comes at mid-single digit gross margin rates, which again, the rate is depressed, but it's on a much higher revenue event, and so the dollars are still attractive, but it does have that impact on the margin rate. And then I guess just last couple, you know, when we think about the patient characteristics of chronic and how much more quickly that's growing, is there any reason to not think about this business as a high single digit SG&A business, 3-5 years down the road? A high single digit SG&A? Oh, as a percent of revenue? Yeah. I mean, look- Correct. I think that we're gonna absolutely continue to drive that leverage. How fast? You know, it's gonna be, you know, the toggle. You know, as a percent of revenue, the denominator, to some extent, is out of our control because there's ASPs of drugs. But I would absolutely expect that, you know, SG&A leverage will continue to drift southward. Okay. And then guys, just last one, just wanted to quickly ask on the infusion suites. You know, it feels like you guys are pretty close to steady state in terms of, you know, how many you've got out there. I was just wondering what kind of nursing efficiency lift you are now seeing in some of your most mature or highest utilizing suites. Yeah, look, this continues to be a great lever for us to drive operational efficiency. You know, in the quarter, we're approaching 32% of all of our nursing events are occurring in one of our suites. And again, we don't force patients into them. We make them aware of conveniently located suites, and frankly, we found that the patient experience is quite favorable in those. As you remember, we really started our infusion suite expansion strategy, and now we're right about 700 chairs coast to coast. For those earlier tranches, we're seeing north of 20% nurse productivity, which, you know, the savings that we are able to drive from avoiding windshield time and concurrent infusion efficiencies, more than pays for the rent, the utilities, and drops about a 20% improvement in that, you know, clinical cost per nursing event. And so, you know, A, it obviously helps margins, but B, we think of it as it's creating almost 20% more nurse capacity, which is vital to fuel our continued growth. Okay. Thanks very much, guys. Appreciate it. Yep, Dave. Thanks, Dave. Thank you. Our next question comes from the line of Pito Chickering of Deutsche Bank. Your line is now open. Hey, good morning, guys. Hey, Pito. Looking at the implied guidance, can you give us any color on how you're modeling gross profit dollar growth in the back half of the year versus what we saw in the first half of the year? And if we're modeling for high single-digit growth, excluding any procurement benefits, is there anything wrong with that? Hey, Pito, it's Mike. Obviously, we don't provide specific guidance on individual P&L lines, and you can go a little cross-eyed with kind of normalizing with some of the moving pieces relative to the base. Back to my comment a couple minutes ago, I think, you know, the second quarter proxy, where you saw us generating $10 million of incremental gross margin over the first quarter, not saying the number in Q3 is +10, but I think that's the kind of leverage and sequential improvement as we think about the back half, that frankly isn't dissimilar to normalized previous years, and I think that's kind of how we're thinking. Look, for us to deliver on the second half of the year, in which we have a high degree of confidence, obviously that comes through incremental gross margin dollars. Again, the way we've talked, Pito, is, you know, we're maximizing the gross margin dollar performance of the platform. You know, what is growing versus the prior year, again, we've got a couple of tough comps coming up with the procurement benefits, which creates a little bit of a tougher comp. Right. But, you know, you know, like, if we're thinking about gross profit dollars or high single digit, excluding procurement, that's maybe in the ballpark? There's nothing wrong with that, intellectually? I think it's generally in the ballpark. All right, perfect. So, you know, for BioScrip, you know, like you talked a lot about, you know, obviously the impact of biosimilars, you know, and there's a lot of concern around the impact for 2025 coming from this.... If you look at the class of all the drugs you've had the last couple of years move from brand into biosimilars, is there any sort of color that you can give us on what is the gross profit per script and how this changes? You know, if I think, you think about that as we're down 5%-10%, you know, where we are today versus what is under brand, is that in the ballpark? I again, the only thing I would say, Pito, and I'll hand it over to John. There is no script. You know, we've had quite a few generic and biosimilar events. A lot of it, as John mentioned in some of his comments, a lot of it around, you know, channel adoption, how the manufacturers are pricing and approaching the channel is completely out of our control. And so I know that folks are, you know, and we try to provide some prepared remarks because this has been a constant question over the last couple of months. There just isn't any prescribed, you know, pathway where, you know, the ASP is going to compress X percent after the third biosimilar and margin dollars will be plus or minus X dollar. It really depends, and it's, you know, pursuant to a number of variables that, frankly, are out of our control. Yeah. The only other thing I'd add, Peter, is, you know, what we do see is with the introduction. Let's even move from the biosimilars. But when we see some introduction of new branded products that are entering into the marketplace and some of the awareness campaigns that come with that, we see, you know, a lift of some of the existing products that we have within the portfolio, as well as those new products that are entering in. So, you know, there's a lot of, you know, advertisement dollars and awareness campaigns that happen with that. And, you know, that kind of benefits the existing products that are in the portfolio as well as that opportunity to bring the new products into our formulary and be able to dispense those as well. So, you know, some moving pieces there. And, you know, as we tried to at least put some contextualize around, we've seen these before, they've all operated a little bit differently, but the organization has been able to respond very efficiently and effectively to either offset some of the revenue decline or make certain that we are trying to preserve every basis point of profit that we can through the way that we negotiate with the manufacturers. All right. So, yeah, a quick sort of follow-up on the, on the segue. You know, what are your thoughts around Lilly's new Alzheimer's drug and the impact that could potentially have on your sort of future pipeline? Thank you. Yeah, and first and foremost, again, continue to be, you know, very thrilled that new products are entering for this therapeutic category. Anyone that has a loved one that is afflicted with Alzheimer's, you know, the fact that we're starting to have some products that are starting to address cognitive impairment, again, is pretty amazing. We're still, you know, very conservative in our view, until we have better you know, understanding around what's the path to payment and the medical policies that will be adhered to. As you know, a vast majority of this is for the elderly population that's really going to fall under the Medicare banner, both for fee-for-service or Medicare Advantage. We're in active conversations with the payers, and the sponsors for the MA plans to try to understand how they're looking at bringing these products forward. And I think as we start to see, you know, the prescription patterns, and the adoption of the product, we think we're well positioned with our infusion suites and with our capabilities to be a partner of choice for Lilly or for Biogen or anyone that has a infused or HCP overseen injectable associated with that. And so we're going to continue to have, you know, constructive conversations there. But it's really hard to tell at this point in time how that's going to have impact until we get better certainty around path to payment and medical policy. Great. Thanks so much. Thanks, Peter. Thank you. Our next question comes from the line of Brian Tanquilut of Jefferies. Your line is now open. Hey, good morning, guys. Mike, maybe as I think about, you know, just all the moving pieces that you've talked about this morning, and as I look out to 2025, is it right to think that next year should be a normalized year without a lot of noise? As I think about, you know, relative to the medium growth targets that you've set out. Hey, Brian, it's Mike. Obviously, I'm going to give you the answer that's going to be unfulfilling, but at this point, we're just not in a position to provide any granularity or thoughts on 2025. We're just starting to kick off our efforts around developing our 2025 expectations, which, you know, we'll share on our call in February. No, I understand. And then maybe just on the biosimilar discussion, and maybe putting your PBM hat back on. As we think about, you know, obviously, ASPs will come down when a biosimilar is introduced, but from a payer perspective, is it right to think that, you know, they understand your economics and the value that you bring to the table, and the gross profit dollar that you're making on a drug should not really change much? I mean, is that a good way to think about that dynamic? Hey, Brian, it's Don. I'll start, and then Mike can add color. We always are trying to reinforce the value that we bring to the payers in helping to reduce the total cost of care. When they're looking at the alternative as to where care could be delivered, we are on the right side of the cost quality equation, in that. And so, you know, we think that there are some constructive conversations. We've had, you know, we've talked about the fact that there's three legs to our stool on reimbursement, being the cost of the drug and the margin associated with that, our clinical per diems, and then the nursing rate. And we're always looking for getting balance within that as to the contribution on that. We don't break it out. We don't provide that level of detail, but there's always that focus for us as an organization. And I think in the conversations that we have with our payer partners, through that, I think they have a recognition of that value and how we can help bend the trend of the total cost of care in that equation. But it's competitive, and, you know, no one's calling us and asking to give us more money, as you would expect. And so we're gonna have to continue to, you know, fight for every basis point, as we always have, and we're gonna negotiate strongly. But we like the breadth of our portfolio. We like the fact that we have both acute and chronic, within that, our ability to serve consistently in all 50 states. All those things, Brian, are part of our comprehensive go-to-market strategy and the way that we position ourselves to preserve as much value and be paid fairly for the value that we deliver to the overall ecosystem. Awesome. Thank you. Yeah. Thanks, Brian. Thanks, Brian. Thank you. Our next question comes from the line of Joanna Gajuk of Bank of America. Your line is now open. Hey, good morning. Thanks for taking the question here. So I guess if I may, follow up a couple of things here. So first, on these new therapies, right, and clearly, you said, you know, these are the headwind to gross margin percentages, but additive to, to the dollar, obviously. But, is there, you know, any commentary from you that we can have in terms of the trajectory? So as of now, you know, you have maybe, you know, two quarters or three quarters, especially one of these therapies, you know, that you've been distributing. So kinda are you on track on these, you know, gross margin percentages improving, and when would you expect to kind of, you know, get those closer to, to kind of more normalized, percent margin on gross margin? Yeah, Joanna, I think. Look, as John kind of articulated, there isn't a roadmap, there isn't a standard tracker for, you know, how the margin evolves. Again, the way we approach it, naturally, as something has biosimilars that are introduced, the expectation, especially using some of the proxies that John outlined in his prepared remarks, the expectation should be that those reference prices over time will decline. At what rate and over how many quarters is completely out of our control, 'cause a lot of it has to do with pricing strategies by pharma, how competitive, how many biosimilars are introduced, at what pace. From our perspective, with things going biosimilar from a procurement strategy, as John articulated, it helps de-risk our procurement strategies because you're not beholden to one manufacturer, but you have a multi-source procurement strategy that you can pursue. So typically, over time, and again, if you're looking for a specific timeline, we unfortunately don't have one to provide, you see that revenue per patient event erode, but the percent of that lower revenue that we retain as gross margin, that typically expands from a rate perspective. Your question's gonna be, well, where are the dollars shaking out? And we don't have an answer. Sometimes the dollars are lower, sometimes the dollars are higher. But I think it's important to underscore what John just talked about, which is, look, regardless of what the ASPs for therapies do over time, we have a value proposition to providers and to payers, where we're providing that service wrap, which still drives efficiency. So having said that, if a drug is being, you know, administered in an HOPD or in an acute care setting, we can articulate that the net cost to the payer is considerably lower in a setting where the patients want to receive it. And so that gives us confidence that even as our portfolio, which frankly, today, the majority of our dollars of revenue are either comprised of biosimilar or generic drugs today, we'll continue to be able to generate decent margins because of that value proposition. Right. I think actually, I was asking the opposite, as in the new therapies like Vyjuvek, that, you know, you've been ramping up, and, you know, the prior discussion was around how initially they compressed the gross margins percentages, but I guess with time, the margins improved. So I was actually asking like, you know, where you are in the trajectory of some of these therapies without, you know, calling out specifics. And then, you know, should we expect, you know, this year to kind of, you know, have some contribution as these revenues and the gross margin, you know, percentage improve on these new therapies, or is it more like 2025 event? Yeah, my mistake. Appreciate the clarity, Joanna. Look, we have a very proven track record of commercializing new rare orphan and LDD therapies. Again, these are typically very high cost per patient event because you have very costly new- to- world therapies. The margin rate is typically single digits, and you know, the dollars are still attractive. We don't launch therapies at a loss. We have internal hurdles that we wanna make sure that we're covering. And out of the gate, they're typically lower because, you know, we're building that patient cohort and that clinical service model. And over time, and this is years, not quarters, you know, you can gradually improve those margins as you build a patient cohort. You can reengage with the manufacturer around advanced services and capabilities and things we can bring to the table clinically. You can, you know, typically drive those margin rates up into the high single digits, and going back to patient one, that may still be on service because these are typically lifelong chronic conditions. That's a way that we can create value over time. And I would just say the launch of the more recent ones, I'd say, are on track or ahead of track, from a revenue basis perspective. And again, I think that's gonna be definitely part of the story going forward. Right, exactly. Thank you. And if I may, another follow-up. So we're talking about subcutaneous formulations, and you mentioned, you know, it all depends, I guess, on the channel and, and I guess the referral sources, their preference, and, you know, if something works for a patient, that not necessarily means that they're gonna try a different formulation. But I guess the new Entyvio subcutaneous launched, so any kind of, I guess, early read to how this, you know, is impacting your existing patient base, if at all, and kind of what your expectation is for penetration for this particular one? And then I guess, in particular, yeah, like what response, I guess, in the market you're seeing from, you know, either the insurers or prescribers, or, you know, even pharmaceutical companies. Are they actively, you know, trying to kind of, you know, move that drug from the infusion to the subcutaneous? Yeah, Joanna, it's John. I'll respond to that. So, you know, at this point in time, we haven't seen a significant shift in our patient census of moving towards the subcutaneous. There are, as we've been trying to call out... I mean, there's just a lot of dimensions in that. In some instances, the subcutaneous formulation is more expensive. So, Mm-hmm. ... therefore, the payers aren't necessarily looking to move, patients onto that service, or onto that product, given that it's a higher price on that. So, you know, there, those types of things, kind of factor in. At this point in time, our census, and our patient bases remain pretty stable. We haven't seen a significant shift, of moving from the IV to the subcutaneous. In many instances, though, we will retain that patient on the subQ, given that it's part of our formulary, for many of these products. So, you know, early to tell on some of the, on some of that. We're always looking to understand what are the migration, you know, trends that we may see on it. But at this point in time, the patient census and the prescribing patterns have remained consistent with our expectations and consistent with the IV therapy as being, you know, still front and center within the way that they're prescribing the doses. Let me add to that, Joanna, as well. I mean, obviously, subQ evolution is a great development for certain patients, but frankly, we have not seen where a subcutaneous administration introduction becomes the standard of care quickly. Use the example of immune globulin. SubQ IG has been around for more than a decade, yet 75% of all IG patients still receive their therapies intravenously because it's more efficient, it's better for higher doses, and frankly, some patients prefer it, or given clinical circumstances, it still requires and suggests healthcare professional oversight. So obviously, we get a lot of questions on... Again, for some patients, it's a great development, but I- we have not seen where the subQ version becomes the standard of care over an abbreviated short timeframe. If I may just follow up on the comment around that, you know, in many instances, the patient stays with you because of the formulary. So, if that was to happen, what kind of impact that is to you for, you know, on the gross margin, I guess, dollars and percentages? So I guess, you know, you're still gonna bill for that and collect for the cost of the drug, but then maybe there's no nursing component, but still maybe there's per diem. So help us understand, like, you know, what happens if that was to be happening in terms of these patients still staying with you, but instead, you know, switching to the subq versus infusion. Yeah, it really depends on the therapy and the payer situation. I think, Joanna, as you know, as we've always tried to outline for folks, typically, when we provide infusion therapy, we bill for the drug, we bill for the nursing if the nursing is present, and we bill for a clinical per diem, which is. It's a charge per day of therapy to cover all the pharmacy infrastructure and other care model assets that we bring to the table. Naturally, the economics for a subcutaneous therapy is different. It's a higher reference price in most instances, to John's point. There's obviously a spread we're making on that. There's not a nurse present in most cases, so it changes. It's a different revenue event, but also that preserves that nursing capacity for other infused patients. It's just different. You know, we underwrite accordingly as we approach payers. That's about all the color we can provide on that perspective. Great. Thank you. If I may, the last follow-up, sorry, on the question around that new suites. Can you give us a sense of how many did you add this quarter and kind of plans for this year? Thank you. Yeah, we've added 3 in the quarter, so I think we're up to around 7 new sites in the quarter. And again, we feel very good about, you know, the 700 chairs that we have coast to coast. Great, thanks. Thanks, Joanna. Thank you. Our next question comes from the line of Michael Petusky of Barrington Research. Your line is now open. Good morning. Hey, Mike, I understand that you reaffirmed the cash flow guidance. I'm just curious, has the cadence of the cash flow recovery related to Change, has that come in about as you expected, is better or worse? I mean, can you just sort of characterize sort of the cadence of what you've seen so far, obviously being 90 or so days smarter than you were when you last talked about it? Yeah, Mike, look, I mean, relative to where I, I'm feeling a whole lot better than I was 90 days ago. I, I think candidly, and, and hats off to the, the rev cycle team. I, I think, the pace of recovery and the collaboration with payers to be responsive, given the circumstances, I think, you know, it's probably a bit ahead of, of where we expect it to be, and, and, and just really, really pleased with where we exited the, the quarter from a cap structure perspective. And then, on the nursing, I want to make sure, you said seven for the quarter, and then you-- I'm sorry, you said three for the quarter, and then you said seven. Was it seven for the first half? Is that what the seven was? You got it. Okay. And in terms of just as you think about that, I guess, initiative longer term, I mean, does 32%, I mean, what's success if you look out 3 to 5 years? I mean, can that move to 40%? Can you, can you just talk about what success would look like 3 to 5 years out on that piece? Yeah, I think, not to give you a non-answer, I think success looks like, you know, considerably more than 32%. You know, when we first initiated this, the question was, could this be 30% of all nursing events? And I think we've answered that, obviously. Look, the way we think about it is we're going to continue to invest and add to our network of infusion suites. The great thing is we have tremendous capacity in the chairs that we've expanded, so we can accommodate significantly more patient events in our existing footprint. So as we said, entering the year, don't equate us slowing pace of opening these with a lack of confidence in the strategy. We just added a considerable amount of capacity, which is already generating significant value for the enterprise, and we think there's a long runway. So I think, you know, success down the road is considerably, you know, higher utilization than where we are today. But the great thing is, you know, it doesn't have to be 40%-50% to drop considerable economic value to the enterprise. Okay, great. And then, just, I want to try to dial this in slightly. You sort of commented earlier around chronic and acute, but I'm just curious, did acute therapy revenue grow year-over-year in the quarter or not? Yes. It did. Okay. Yeah. Terrific. Thank you. Thanks, Mike. Thanks, Mike. All right, thank you. I am showing no further questions at this time. I would now like to turn it back to management for closing remarks. Yeah. Thank you all for joining us this morning and participating in our call. As we outlined, the second quarter was very productive, and our team continued to execute at a very high level, even with significant disruptions in the marketplace. We understand the important role that we play in delivering care to our patients and their families, and this remains the light that guides us as we continue to serve more patients in 2024. Thank you everyone for your attendance. Take care and have a great day. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.