Good afternoon. My name is John Stancil. I'm on the Healthcare Services team here at J.P. Morgan, and today I'm joined by the team from Option Care. So we have John Rademacher and Mike Shapiro. They're going to do a presentation, and then we'll dive right into Q&A after that. Thank you, guys.
Great. Thanks, John. We're excited to be participating in the 2025 J.P. Morgan Healthcare Conference and to provide insights into the strength of our organization and the direction that we're heading. Before I begin, there are some housekeeping items that I would like to address. In today's presentation, we will be making forward-looking statements that are subject to risks and uncertainties. For a detailed discussion of these items and risk factors that could affect our actual results, please refer to our reports filed with the SEC and posted on our Investor Relations section of our website. We will also be using non-GAAP measures and unaudited financial data within this presentation, which is subject to our year-end close procedures and further financial review. Please refer to our disclaimers in this presentation and the Investor Relations section of our website for more information.
As we disclose this morning in our press release in Form 8-K, the fourth quarter was a very dynamic and productive period for Option Care Health. Before we get into the details of these activities, I would like to establish our position in a growing and competitive marketplace. I believe that Option Care Health has created a very unique and leading national platform that allows us to capture growing market demand and deliver exceptional results to our stakeholders. We are licensed and serve patients in all 50 states. We have over 5,000 clinicians serving over 285,000 unique patients in their home or one of our 170 locations across the country. We have broad market access, being in-network with all 10 of the top 10 payers, a diverse portfolio of products, including over 50 limited distribution drugs, and the demonstrated ability to combine our national scale with localized responsiveness.
I believe our consistent performance and proven track record has allowed us to deliver strong cash flow generation and strengthen our balance sheet while we have continued to invest in our business to enhance technology, expand our footprint, and recruit and retain top talent. Our attractive capital structure allows us flexibility to deploy capital in meaningful ways to enhance value to our shareholders. We believe demand in home and alternate site infusion services continues to grow, and our investments to create a leading national platform with localized responsiveness places us in a strong position to better capture this demand. The diversity of our portfolio of acute and chronic therapies, our broad market access through payer relationships, and our continued investments in clinical capabilities that support complex patient needs allows us to increase the number of patients and communities that we can serve with diversity in our payer mix.
Given today's lack of access for Medicare Fee-For-Service beneficiaries, our exposure to direct government reimbursement is currently limited. Our technology-enabled platform allows us to provide significant value across key stakeholders, which allows us to provide a compelling value proposition to our employees and shareholders. For health systems, we provide consistent and reliable services to help them safely transition patients, free up beds, and manage their costs. We also provide comprehensive solutions to those hospitals participating in 340B programs that allows them to capture qualified savings. For payers, we help them manage the total cost of care, provide consistent clinical services across the country for their members, and support them in developing innovative programs to improve clinical outcomes and improve member satisfaction.
For patients, we provide high-quality care at an affordable cost in a setting in which they wish to receive it, being in their home or one of our over 700 infusion chairs. Our clinical team provides 24/7, 365 support to patients and their families and provides the peace of mind necessary for them to recover from an acute episode of care or live their best life with a chronic condition. And for pharma partners, we provide expert clinical capabilities, a comprehensive pharmacy network, and sophisticated logistics and supply chain services to support their go-to-market strategies, helping to provide broader access to patients seeking these therapies. As we reported today in our Q4 preliminary earnings, we have continued to deliver consistent and accelerated performance, achieving 20 straight quarters of either meeting or exceeding our financial commitments.
Since 2020, we have delivered leveraged growth by growing net revenues 13% over the four-year CAGR and Adjusted EBITDA by 19% over the same period, all while strengthening our balance sheet through strong cash conversion. And even at the low end of our 2025 guidance range, we will have effectively doubled the profit generation of this platform in five years. This has allowed us to continue to delever and deploy capital to invest in our technology, facilities, infrastructure, and M&A activities while repurchasing over $500 million of shares since mid-2023. As we announced earlier this morning, Q4 was a very dynamic period for Option Care Health, culminating in a very productive year. I'm very proud of the way our team has performed and the resilience they have demonstrated to deliver these results despite the Change Healthcare cybersecurity event, two major hurricanes, IV supply chain disruptions, and other issues.
Still delivering above the midpoint of our original 2024 guidance and 20 straight quarters of strong results. We also announced this morning that we signed a definitive agreement to acquire Intramed Plus, a leading provider of home and alternate site infusion services in South Carolina that we believe will complement our national platform and deepens our support to referral sources and patients across the state. We expect this to close later this quarter, and we intend to share more details after close. We were active in deploying capital to the benefit of our shareholders in Q4, opening state-of-the-art pharmacy in New York City and Tampa, Florida, while also repurchasing approximately $90 million of shares, exhausting our prior share repurchase authorization. We also announced this morning that our board of directors has approved a new authorization of $500 million of share repurchases.
As we outlined in our preliminary financial expectations for 2025, we expect to continue our track record of strong growth. One of the key areas of interest over the past few months has been the impact of Stelara, which we highlighted during our third quarter call. I'm pleased to share that we have firmed up our path forward with Janssen, and we now estimate an adverse impact of approximately $60-$70 million in gross profit in 2025. Even with this impact, we are still anticipating solid growth in the base business, which we expect will more than offset these headwinds. We have spoken before about the strength and diversity of our revenue base, but I believe that it bears repeating. Excluding Stelara, no single therapy represents more than 5% of consolidated revenue, and our mix between acute and chronic therapies remains roughly 25% acute, 75% chronic.
Each therapy group has unique characteristics, as our acute therapies are shorter in duration and have higher product margins, but also have significantly higher cost of service when factoring in medical supplies, clinical resources, and administration. Our chronic therapies have lower product margins due to the higher price of these drugs, but patients are normally on service for months and sometimes years, which generally leads to lower cost of service when measuring over that longer time horizon. Given the changing market dynamics and the value we provide to health systems and payers across the breadth of our portfolio, I believe our commitment to offer both acute and chronic therapies is an advantage and positions us well as a partner of choice, and we will continue to serve acute patients across the country.
Going a bit deeper, moving forward, when we look at the composition of our revenue and product margin across the different categories within product lifecycle during 2024, although over 50% of our revenue comes from branded pharmaceuticals, less than 25% of our product margin comes from these products when accounting for the expected impact of Stelara pricing adjustments. Products that have reached generic or biosimilar status contribute over 75% of our product margin, and most of these therapies are either multi-sourced or have the ability to be alternatively sourced if necessary to improve economics and/or reduce product margin volatility.
As we explained in our third quarter call, while we believe that Stelara represented a unique opportunity for us and that the manufacturer's pricing actions with respect to the therapy were without precedent, we believe the rest of the portfolio is balanced and that branded therapies currently in our portfolio are likely to follow historical patterns when biosimilars or generics are introduced. As we continue to invest in our business and create a robust national platform, we are expanding clinical capabilities to become much more comprehensive. We continue to invest in our pharmacy infrastructure to create state-of-the-art facilities that ensure broad access to a broad spectrum of infused and injectable therapies and allow for high integrity, whether through aseptic compounding or drug and pharmacy clinical oversight.
We also continue to invest in our infusion suite and infusion clinic capabilities to broaden access to patients, expand our market access, and help to enable greater clinical oversight for patients' cohorts that have complex needs. This allows us to serve patients in their home, in one of our infusion suites, or in one of our infusion clinics where they are overseen by one of our nurse practitioners. We believe this broadens our set of capabilities and helps us better align our clinical resources to the needs of our stakeholders. Finally, we are excited about the possibilities and expectations for the road ahead. We will continue to invest in our capabilities that leverage our national platform and local responsiveness to deepen our collaboration with referral sources and make a bigger impact on the communities that we serve.
We will continue to make efforts to strengthen our partnerships with payers to improve the care delivered to their members and to help them manage the total cost of care. We expect to expand our portfolio of products, including medicines in emerging areas of neurology, oncology, and rare and orphan diseases. We will continue to grow our nurse practitioner-led infusion clinic footprint to help us serve a larger patient population and better support emerging therapies and complex clinical needs. We intend to leverage our clinical expertise and broad geographic footprint to position ourselves as a partner of choice for pharma, who require robust pharmacy network, supply chain solutions, and clinical oversights for patients who require their therapies.
We expect to deliver value to our shareholders by fighting for every basis point, releasing trapped value from administrative inefficiencies through improved technology and potential use of artificial intelligence, investing in our people, processes, and facilities to help generate strong cash flow, and strategically deploy capital primarily through share repurchase and M&A activities. I am very proud of the way the team has responded to very dynamic market conditions and continue to place the patient at the center of everything that we do. The resilience and agility of this platform was certainly tested, and the team continued to rise to every occasion. I believe that we have created a solid foundation with our core business, and we continue to invest in ways to expand our capabilities and drive operating efficiencies, ultimately serving more patients. With that, Lisa, I will turn to you for any questions you may have.
Is this on? No. Is this one on? Are any of the mics on? There we go. Okay. So nice to see you. Good to see you.
Nice interview of Jamie.
Yes.
From Jamie to us.
Yes, from Jamie to you. And go Notre Dame. Let me start with a question for Mike to let you catch your breath and take a sip of water. If I look at the, thank you so much for putting out the guidance today, Mike. I know I was bugging you and really asking for you to put some numbers around that. Let's start with cash flow. The deal that you announced, the share repurchase, $500 million. How should I think about how you are looking at this going forward? Right? You bought back about $200 million worth of stock in 2024. Is this the way you're going to deploy capital going forward?
Yeah, of course. Is this not on? I'm not sure if any of these are on. Look, first and foremost, I think we're thrilled about the results that we reported today. The Option Care team remains on the move, and as many of you know, and as you know, Lisa, we're relentless around converting revenue to cash. Revenue doesn't count unless it ends up in cash in the balance sheet, and so as we exited the third quarter, we are one and a half times levered, and so we're thrilled about the cash generation and the capital structure of this business. Our confidence in the cash generation capabilities going forward remains very strong.
On the reaffirmation of at least $300 million of cash flow from operations in 2024, we think that translates roughly into $250 million of free cash flow. Last year, we deployed all of that towards share repurchase, and we repurchased $250 million of stock last year. So one of the exciting things about the value proposition is going forward, we have a high degree of confidence in the cash generation and acceleration going forward. I think as we announced today, we're thrilled about the ability to not only announce the signing of Intramed Plus, and this is a very respected regional provider in South Carolina that we're extremely excited about, but at the same time, our board of directors reaffirmed their confidence in the cash generation by affording us an additional $500 million of authorization going forward.
And so I think the expectation shareholders should have is deleveraging further from one and a half times is not really a strategic direction we're planning to go. And so I think a base expectation should be that our free cash generation at least will be deployed for shareholders. And a safe way to think about that is assume it will be deployed towards share repurchase unless there is an accretive acquisition, which we think would yield a better return. And so I think that's the way we think about it. Again, it's not our cash, it's our shareholders' cash, and how we deploy that is something we take very seriously.
On the acquisition, anything that you would call out specifically, would you expect it to get to kind of corporate margins? Anything different when you think about the makeup of their revenue versus your overall book of business?
Yeah, look, one of the things we love is one of the leaders in the home infusion space. This isn't that big of a neighborhood. We know most of the folks living on the street, so to speak. We have respected the Intramed Plus team for years. This is a very focused, locally recognized leader in the South Carolina market, which is a very attractive market for us. The way we think about it is anything that we announce is of both strategic and economic value. That's easy to say, but the first question that John and I ask is, how does this strategically enhance our ability to compete and win in a local market? There's a lot of assets that may check that box, but unless we can articulate that on a post-synergy basis, it's accretive to shareholders, it dies on the edit room floor.
We have a high degree of confidence. Once we close, we'll provide a little more granularity and color around the acquisition. We think bringing our national scale, our procurement relationships, our pharma relationships, and our universal access to payers, bringing that to a locally successful and powerful platform, we're really, really excited.
Thank you so much for the comments today around Stelara when we saw them this morning. I know that I've been bugging both of you since November, so I really appreciate that. When I look at the guide and you talk about $65 million to $70 million of gross profit dollars from Stelara as the headwind, and I think, John, you and I have talked in the past that maybe there are some incremental costs associated with some of those patients versus kind of your traditional. How do I think about what that translates to from an EBITDA headwind?
Yeah, first, as I said in my prepared remarks, we've had a very constructive relationship with Janssen. We continue to have a very constructive relationship there. As we had kind of entered into this, we were working in good faith, both parties, to try to find a path forward and pleased to say that we affirmed that up as we move forward. That 60-70 is really the gross profit impact. I mean, we're going to still service Stelara patients. They're still profitable to us today. They're just less profitable. So some of that infrastructure that we have in support of those patients will remain. We're always looking for ways to drive efficiencies across our platform, redeploy resources where necessary, leverage that platform for other therapeutics through that process.
So I think you'll see us continue to be focused around making certain that we're getting the value out of every dollar we spend in SG&A and cost of service, but it may take different forms through that process. And I'm pleased at kind of the path we went forward. The worst-case scenario was a lot worse than the 60-70. The best-case scenario was they didn't take any pricing action. We landed somewhere in between on that. But I do want to say it's been a very constructive conversation with Janssen. And again, they've got a portfolio of products that fit well within our capability set, not only in what has been approved today, but what they have in their pipeline. And we're going to continue to work closely with them around being a partner of choice to help to bring those products to market.
I understand that opportunity, but I also look at Option Care as always a good procurer of drugs and the fact that you're going to have biosimilars coming to the market. Is there an opportunity in Stelara in biosimilars, or does this relationship you've signed prohibit you from?
There's no prohibition. There's nothing that's prohibited in that. There's still a lot of unknowns. As you know, as the biosimilars get introduced, part of it's going to be around the payers and how they align around those different products. Today, we are in active conversations with the manufacturers of the biosimilars to make certain that we have them as part of our formulary because we don't know if payer A is going to choose biosim Z and payer B is going to choose X. We have to kind of be neutral on that as we're thinking about those opportunities. But there's always opportunities for us to think about that broadly and how do we enhance and use our national scale and local responsiveness in order to extract what we believe is fair value.
Do you think we'll ever get to a point where we have true interchangeability on biosimilars? Because obviously that would put you in a better position from a negotiation standpoint, right?
That's hard to hazard a guess. I mean, we get a lot of questions right now around some of the changes in administration and some of the changes that may be coming forward with that. That's a big step to move towards total replacement on that, on those biosims. I think that'll take years for that to move forward. But again, we've demonstrated the ability within the generic portfolio where appropriate to be able to interchange. And we've been able to demonstrate having that broad access to those biosimilars puts us in a really good position to support the needs of clinically the patients first, but then also the way that formularies are designed at the PBM or at the payer level.
There were a variety of discrete headwinds in 2024, including the impact from Change Healthcare and the cyber attack there, as well as the IV bagging issue that we saw in the third quarter. How should I think about the impact in totality to the core business as we lap those going into 2025? Will those be a tailwind from an anniversary perspective?
Yeah. Yeah, look, I think one of the things that I would highlight is when you think about where we entered 2024, our initial guidance was $425 to $450 million. As smart as we are, we weren't anticipating two catastrophic hurricanes, a once-in-a-generation, hopefully, cyber event, and an IV bag shortage. So as we updated our guidance this morning, revising it to 441 to 444, I think it speaks to the resiliency of this platform in that we're guiding to well ahead of the midpoint of our initial guidance range despite quite a few curveballs throughout the year.
I think it speaks to the resiliency. The way I would answer it is, yes, we clearly feel good about the momentum going into 2025, Lisa, not so much around, and again, we're thrilled that we've got the cyber event with Change Healthcare behind us and some of the supply chain dynamics. The team operates on its toes and is ready for those unanticipated items. While each of those individually were relatively immaterial, I think the thing that we're more excited about is, especially if you look at the fourth quarter, we're really starting to see an acceleration in the base business, which gives us the confidence that when you normalize for the $60 million to $70 million of margin headwind from Stelara, which is real, that implies that the base business is going to deliver on 20% earnings growth.
And that's because we're starting to see some traction on the acute portfolio, even with some of the ongoing supply chain dynamics, which we expect to wrap up in the first quarter. And so, look, the way we operate this model is we know there's always going to be some curveballs that come our way. We're just thrilled that, as John mentioned, the fourth quarter is going to be the 20th quarter in a row where we've delivered exactly on what we said we would do.
When you think about that strong underlying business, and I'm glad to hear you say we came up with roughly the same number of about 20% growth. When I think about Coram, who's exiting a number of markets, maybe can you just talk about, are you seeing market share that you're taking some market share there? Do you see opportunities to buy any of those assets? How do I think about Coram, number one? And then secondly, you obviously just announced an acquisition. Kind of the overall state of the industry.
Yeah. So, what we saw in the fourth quarter, and we called it out on the third quarter call, a constraining factor of really realizing that change in market dynamics was the IV bag shortage. It continually improves through the process. I think Baxter is talking about really by the end of the first quarter of getting back that capacity that was lost, so we're pleased with the progress that was made there, but that was a constraint, but we liked what we saw. Referral pace was certainly higher than what it had been historically, especially as those market dynamics change. We think we're well positioned. We've invested into the facilities to be able to have state-of-the-art compounding facilities to really meet the needs of those local markets in the acute space, and so we think we're well positioned there.
We've invested in the commercial resources for reach and frequency to make certain that we're in those hospital systems to help with those transitions of care to be able to move those patients on to service with us. So we feel good. It's a competitive marketplace. There is not one market where it was just Coram and ourselves. There are local hospitals and other local providers that compete vigorously for that market demand. But we think the consistency that we've been able to provide our access to product and really some great work by our team in putting in conservation efforts and changing forms of administration to stretch the supply that we did have, I think just put us in a really strong position to be a partner for those hospital systems that are looking to discharge their patients. So I think we've talked about this many times.
That is a high turnover business in the sense of most of those patients are on service for two to 12 weeks on the antibiotics. So every three months, we're replenishing kind of our patient census on that. So you must be present to win. You've got to be. It's a hustle business. But I think we've done everything we can to put ourselves in a really great position to capture that.
And as I said in my comments, the diversity of our portfolio of having both the acute and chronic, we think is an advantage. And when you're looking at helping hospitals save money, getting patients to be discharged, especially those that are on DRG, that is a big benefit. It also frees up bed days for them to be able to utilize those beds more effectively. And we can support their 340B savings programs on some of the products.
So we're going to continue to focus from that standpoint and that go-to-market. On the payer side, if you're trying to focus around your medical loss ratio, you're looking at the total cost of care. A bed day is a lot more expensive than a transition of a patient to their home infusion services. So again, we think that from those two key stakeholders, the value proposition of that acute and chronic portfolio is one that really resonates well. And we're going to continue to leverage that as being part of the way that we go to market and that we maintain that we are in network with all of those payers.
The only thing I'd add, Lisa, is, look, as we think about the acute market, look, we're the only ones with a national footprint of compounding pharmacies. We have 92 compounding facilities across the United States. There's not one market where one of our competitors is retreating from that we don't have local resources and capabilities, and so it's that local responsiveness. The discharge planning team at NYU, they don't care how many dots on a map we have in Texas.
They care about when they call our pharmacy in Queens, do we pick up on the second ring and can we get them an answer in 30 minutes, but our ability to be locally responsive across the country with that existing footprint relies upon, as John said, our national payer relationships, our procurement strategies, which allows us to bring that national scale to be much more efficient at the local level, and given the fact that we've seen some of these market retreats a couple of years ago, we've developed a very robust playbook so that we can be responsive.
And it appears for Coram specifically, the market retreat is more on the acute side than on the chronic side. Acute has a better margin percentage for you, right? And you clearly demonstrated that today when we talked about generics as well as biosimilars. But when we look at the last couple of years, you've seen more growth on the chronic side. When we think going forward because of some of these market changes, could we potentially see a shift in growth of acute versus chronic in 2025 because of the dynamic of Coram exiting the markets?
Yeah, I mean, I think underlying, we've been very open about this over the years. The acute portfolio, while it's definitely a more favorable margin profile, it is a higher turnover. It is a higher intensity support, intense patient cohort. Intravenous antibiotics and some of the nutrition support, these are therapies that are growing naturally in the low single digits. The chronic therapies are the ones that you see advertised on every commercial break and, as a result, because they're treating previously undertreated conditions.
That's typically where you see high single-digit, low double-digit growth. Inherently, the chronic portfolio is growing faster. However, we would expect to outperform on the acute side, just given our position. And look, we're going to fight for every dollar of revenue, whether it's on the chronic side or the acute. But I do think that we have an opportunity to see higher growth on the acute side relative to that underlying market growth of low single digits.
I think this is the first time you put in a chart biosimilars and talked a little bit about the profitability of biosimilars. Just generally speaking, can you help us to think about a branded drug going to a biosimilar, what the incremental margin opportunity is?
Yeah, I think as we tried to characterize, Stelara was different than most of our branded pharmaceuticals because of the support that we were receiving from the manufacturer for that product, given the complexity of the cohort of patients that we were serving. The traditional way is that when you're an innovator and you're bringing a novel new product into the marketplace, your margin, and we had called out on our chronic, is it's between 5 and 30, and we said Stelara was on the top end of that range. Most of the branded pharmaceuticals are kind of in that lower.
When you look at what you see in the biosimilar, it kind of follows the form of the generic, a longer glide path down on the pricing, but the opportunity to improve the economics because you have competitive dynamics in which you can acquire the drug at a lower cost through that process. So our expectations are that you're going to continue to see biosimilars be a meaningful portion of our gross profit, that you have an opportunity to look for ways to expand those as time moves on, and that you would expect that most of the branded pharmaceuticals that go biosimilar or generic are going to be more of a revenue event than a gross profit event on the dollar aspect because of that opportunity to negotiate better costing of the product moving forward.
So the way to think about it, the revenue is going to come down, but the operating profit dollars could remain roughly the same?
Could remain roughly the same if we're able to negotiate. And sometimes you see compression, sometimes you see expansion, but we're always trying to negotiate around that, Lisa, so that you're trying to maintain that profit dollar as that moves ahead. Go ahead. No, I was just going to say, and I think as we tried to expand some of our disclosures to assuage some of the concerns around some of the branded, I think it's an important point to reiterate that, look, branded therapies represent about half of our revenue. About half of that are rare and orphan and limited distribution therapies.
But when you look at where the product profit is being generated, three quarters of the product profit is generated from generics and biosimilars, which are much more stable and don't have the volatility and variability in some of the reference prices. And so it's really that inverse where some of those events you talk about, Lisa, really is more of a revenue event than where we think about where we're going to generate that next dollar of product profit.
As we said at our conference, there's always a lot of talk about innovation, talk about new drugs coming to the marketplace. Specialty drugs is always an area where people are really focused. When we think about new drugs coming to market, can you maybe talk about some of the classes that you're focused on and where you see big opportunities? I know a couple of years ago we talked about Alzheimer's, did not really come out, or it hasn't thus far been the drug we anticipated. But how do we think about those? And how do you think about that when you think about putting together your guidance for any given year?
So I'll start with kind of at the macro level. Mike can talk about how we factor that in. Part of our play, certainly to expand our infusion suites and then, more importantly, the infusion clinics expands that capability in order to broaden the portfolio. Some of that is a product like Cabernuva that requires a healthcare professional oversight, but it's an injectable. Sending a nurse to the home, economics don't make a lot of sense.
So the ability for us to leverage the 700 infusion chairs and really run more product through there, we think creates more opportunities for us to operate. We think that with the nurse practitioner model, it does open up some opportunities and expansion of market access for some of the products like Alzheimer's. And we also think in some of the areas of oncology, the PD-1 products that are monoclonal, that kind of have the same characteristics of a lot of the chronic inflammatory disease drugs that we administer today.
We don't think that's an overnight shift, but we think that with payers focusing around site-neutral initiatives, offering more choice to their members, looking for ways to bend some of those cost trends, our ability to be able to expand and to serve those either under a nurse practitioner model or within our infusion suites, we think creates a broader access point for some of the oncology and the neurology drugs as we move forward.
The only thing I'd add is specific to your question, Lisa, around guidance. Look, the thing we're excited about is we've shared our preliminary 2025 guidance this morning. Our expectations for this year is it's going to be a very productive year for the Option Care Health team, and that's a result of balanced growth across the portfolio. There are no flea flickers or Hail Marys in the guidance. It's around executing on the acute therapies, on those established therapies. I think the pie chart around where we generate our product profit holds true going into 2025 around those more established therapy categories. Some of them that John talked about with Cabenuva, with Leqembi, look, those are opportunities for us to generate value on the margin, but that's not where the majority of our financial results are expected to be derived from this year.
Turning to the new administration, there has been talk for some time now around site neutrality and reimbursement on a site neutrality basis. Do you think there's a chance that this finally gets done in this administration? And then secondly, what do you think could be the impact to your business?
Yeah, I think a couple of things. Number one is we are working right now to be part of the big and beautiful bill that's coming forward at some point in time. Big and beautiful bill. I mean, we've been working to try to get expansion for Medicare beneficiaries for a while, really since the 21st Century Cures Act. And so we're going to continue to work around bipartisan support to expand access to Medicare fee-for-service beneficiaries to help provide better care to them in the home or in one of our infusion suites and continue to expand there. A lot of the focus on the site neutrality has really been around the surgery centers and those components of it.
I guess the way we've always looked at this, Lisa, is if you offer high-quality care at an appropriate cost in a setting in which patients want to receive, normally you're on the right side of those conversations, and that's a winning formula. We think that we have an opportunity to help bend that cost curve moving forward. We think that if site neutrality moves, we would like HOPD rates if they want to give those to us. If it moves down to the rates that we actually utilize today in home infusion, we're very comfortable at what we can do on that. And if that creates more market demand to come our way and others to kind of review whether or not they're going to continue to support patients in the settings at a reduced reimbursement rate, that may create more opportunity for us over time.
So in this big, beautiful bill, by the way, I think Trump is probably going to like that name. When we think about it, so really the biggest opportunity is not site neutrality, but rather under Medicare Part B to expand the services that can be done from a home infusion perspective.
Correct. Yeah, we have had bipartisan support of legislation that really fixes the calendar day aspect of that and makes certain that we get paid fairly for all of the services that we wrap around the patient, not just the moment that the nurse is there and an ASP plus four and five-eighths for the drug, but actually for all of the clinical per diem that we normally get in a commercial or a Medicare Advantage program. So that's the first fix.
We think that the offsets for that are right now those patients are receiving that care in higher cost settings, whether it be in the hospital or in a step-down facility, in a skilled nursing facility or an LTAC. That ability for us to find those offsets, again, with all of the pressures that you expect and with DOGE and other things associated with that, you've got to either have a neutral or saving in order to be part of that process moving forward. We think that depending on how CBO scores that bill, there's an opportunity for us to be a part of a meaningful solution.
In 2025, under the Inflation Reduction Act, there'll be changes for Medicare Part D, which is a payer to you, where the out-of-pocket cost will be roughly $2,000. Previously, right, last year it was $3,650, and before that, close to $5,000. Do you think that that will be a driver of incremental volume to your business in 2025 as well?
I think it will help us in two ways. Number one is patient pay is always a difficult collection aspect. And even as we have gotten as efficient as possible in our revenue cycle management, one of the things that lags there is that ability to collect from patients. So anything that reduces the patient out of pocket in some ways will help us on that, as well as the patient assistance programs that sit behind that. If patients are making that decision and $3,300 was too much in 2020, they want to receive that care in the home, it could have some benefits, but it's really hard to kind of factor that in.
I think in the near term, it's going to be really more that out-of-pocket max and our ability to then have a lower amount of patient pay that we have to try to chase in those types of scenarios.
Mike, what's your bad debt rate?
It's under 2%, considerably under 2%.
Okay, great. We're out of time, but thank you so much for today. I really appreciate it. And thank you, everybody, for joining us.
Thank you, Lisa.
Thanks, Lisa. Thanks, everyone.
Sorry about that. I could not wait for my way to.