IVCA Profile: Private Equity Portfolio Company of the Year at the upcoming  2021 IVCA Awards Dinner is Option Care Health

November 24, 2021

It’s that time of year, to reflect back upon the many successes and honor those who have worked toward that success. Kirkland & Ellis LLP will present the annual IVCA Awards Dinner, taking place on Monday, December 6th, 2021, starting at 5:30pm at the Four Seasons in Chicago. The honors conferred will include the Venture Capital Portfolio Company of the Year, the Fellows Award, the Richard J. Daley Award and the Private Equity Portfolio Company of the Year.
The Private Equity Portfolio Company of the Year is Option Care Health, and the honor will be presented to the company’s President and CEO, John Rademacher, by Elizabeth Betten, the Managing Director in Health Care of the company’s Private Equity funder Madison Dearborn Partners (MDP).
Option Care Health is primarily an infusion therapy clinic, and was pursued by Madison Dearborn beginning in 2012. MDP recently exited the investment, but Ms. Betten and her colleague Timothy Sullivan remain on the Board of Directors.
The IVCA recently interviewed both Elizabeth Betten and John Rademacher on the mechanism of the investment and evolution of Option Care Health.
IVCA: What was behind the decision-making process for Madison Dearborn in acquiring Option Care Health in 2015? r
Elizabeth Betten: This is a business we had been pursuing since 2012, when we originally approached Walgreens about considering a corporate carveout in which they would sell MDP a majority stake and create an independent company, focused on home and alternate site infusion. We’ve had a long history in investing and pursuing investments in home and community-based healthcare, where high quality clinical care services can be provided at a lower cost and in a patient preferred setting. The home infusion industry is a very good fit in that investment thesis, as the industry provides complex care in a patient-preferred and low cost setting, in home and alternate sites, rather than traditional facility-based settings.
Option Care was a leader within in this large and rapidly growing home infusion market, and we felt we that as an independent company could more fully realize the advantages of its market leadership and scale . And so we approached Walgreens as early as 2012 to see if there was an opportunity to create an independent company, while Walgreens could still retain a significant minority stake.
As an independent company with Madison Dearborn Partners owning the majority, we could focus on recruiting best in class executive talent who were entirely focused on home infusion and how to best grow that business. In addition, we could ensure the business had access to resources to focus on people, process and technology. We invested resources to set the bar in clinical quality and also upgrade outdated IT systems. With the right level of focus, as well as alignment of incentives and investments, we felt that Option Care had an opportunity to take advantage of its scale within the large and fragmented home infusion market.
IVCA: You came aboard around the time that Madison Dearborn Partners acquired the majority of Option Care. How did you interact with the Partners to create the path of the company going forward?
John Rademacher: Madison Dearborn actually recruited me in late 2015 when they were bringing in new management to achieve the investment thesis that Elizabeth just outlined. I was intrigued by the trapped value they saw in the business and by the opportunity to help create an industry-leading platform that would improve the way care is delivered in the home and alternate site settings.
The early stages of our interaction was focused on untangling a spaghetti bowl of shared services as we began to create a stand-alone company that we were carving out of Walgreens. This focus quickly turned to develop a strategic plan that allowed us to invest in people, process, technology and our facilities to create industry-leading quality standards and establish a competitive advantage through our scale and expertise.
We worked closely with Elizabeth and the Madison Dearborn team as they brought financial and operational expertise that allowed us to invest in the foundation of quality and a transformation program that allowed us to being to realize our vision. The business possessed many strong attributes that put patient care at the center of its focus and these investments helped to develop, enhance and capitalize on a shifting healthcare environment and the need to offer high quality care at an appropriate cost.
IVCA: Elizabeth, Madison Dearborn has invested in a variety of different types of businesses. How is the healthcare industry a different and distinct challenge versus all the other types of commerce?
Betten: Yes, we invest across five different industry groups, with healthcare being one of them. I think the most distinct characteristic of our healthcare practice, which is relevant to Option Care as well, is that we can differentiate based on clinical quality. We focus on making the right investments to really set the standard in best-in-class clinical care. To John’s point, we put in a tremendous amount of time, effort and financial resources ensuring that Option Care is setting the standard.
And whether that is increasing capacity in our centers with state-of-art-facilities and technology, or superior training and compliance programs. The best competitive advantage is best-in-class care, and that is the philosophy that Madison Dearborn has taken in regards to healthcare services, and as a market leader, Option Care has an obligation to set that standard.
IVCA: John, the type of healthcare services you offer are slightly different in the landscape than what most health consumers realize. How are the therapies of Option Care Health permeating both the consumer and their medical providers?
Rademacher: I want to emphasize that we have a balanced portfolio of products that serves the needs of patients with short-term and long-term infusion therapy needs. For example, many of our patients are being discharged from hospitals and need to continue their infusion therapy for antibiotics or nutrition support. We can help to shorten the patient’s length of stay in the hospital and transition them safely and effectively to the home, saving money and reducing risk. Our focus from a commercial mindset is to establish deep relationships with the persons responsible for hospital discharges and the prescribing physician.
However, another part of our business is serving patients with chronic conditions -- people who need infusion therapy for months, years or even a lifetime. Our ability to provide this high quality care is based on developing relationships with those patients and their caregivers to ensure we provide a disciplined and consistent care plan.  For these patients we can provide infusion services either in their home or one of our infusion suites, which again, improves quality, reduces cost and increases patient satisfaction. We work closely with Specialists and their Specialty practices to identify these patients and bring them on to service with Option Care Health.
IVCA: Elizabeth, what is the current status on the investment that Madison Dearborn Partners made regarding Option Care Health?
Betten: Based on all the investments we made in people, progress and technology, we had the platform and capability to do a transformational merger with a competitor called BioScript , a publicly traded company. In 2019, we completed a reverse merger into BioScript to ultimately take Option Care Health public. And within the last year, through a series of secondary sales and block trades, Madison Dearborn Partners exited our position in Option Care Health.
Timothy Sullivan and myself maintain a position on the Board of Directors, and continue to be a resource to John and his management team on their growth initiatives. The team has done an incredible job bringing BioScrip and Option Care together in the last two years. The senior leadership team includes key members from both companies and throughout the organization, John and his team have taken a best-of-both approach which has been hugely beneficial to all shareholders, including the legacy BioScrip shareholders.
Now Option Care Health is the independent market leader, and a very successful publicly traded company, and we will continue to support that success.
IVCA: John, what is your current strategy based on the merger, and the future of Option Care Health?
Rademacher: Building on what Elizabeth said, we are now an independent, publicly traded company, and we will forever appreciate the support and partnership we had with Madison Dearborn throughout our journey.  We continue to work with our Board of Directors, including Tim and Elizabeth, to refine and evolve our strategy and make certain we drive growth and expand the relevance we have in the healthcare ecosystem.
We are excited about the position we are in, and take pride in the strength of our balance sheet, earnings power and cash flow we can generate. This provides a strong foundation from which to grow along with the ability to continue to invest in our people, process and technology but also allows us to look at inorganic sources of value creation.
IVCA: Finally John, as the 2021 recipient of the Private Equity Portfolio Company of the Year, what does it mean to you personally to be recognized by the IVCA and the Private Equity industry?
Rademacher: I know firsthand how much passion, commitment, hard work the Option Care Health team has put into creating a business that is making a difference by providing extraordinary care that changes lives – gaining independent recognition by the IVCA is extremely rewarding, and something that helps to validate the incredible work by the team.
Kirkand & Ellis LLP presents The 2021 IVCA Awards Dinner on Monday, December 6th, 2021, beginning at 5:30pm, at The Four Seasons, 120 East Delaware, Chicago. For more information, including tickets, click here.