Option Care is in advanced talks after a joint bid from McKesson and private equity firm Clayton Dubilier & Rice, FT reported.

  • A deal could be reached as soon as Tuesday, though nothing is signed and the talks could still collapse, FT added. 
  • Under the terms being discussed, CD&R would own 51% through a joint venture and McKesson 49%, with McKesson holding a right to buy the buyout firm’s stake later, the paper said.
  • The bid lands after a soft stretch for Option Care: in late July, the company narrowed full-year guidance to $5.675 billion to $5.775 billion of revenue and adjusted earnings of $1.85 to $1.92 a share.

Option Care Health (OPCH) shares jumped about 22% in after-hours trading on Monday after a report that McKesson (MCK) and private equity firm Clayton Dubilier & Rice are closing in on a buyout worth more than $5 billion, including debt.

OPCH shares closed up 3% on Monday, giving the company a market capitalization of about $3.5 billion. Including debt, the company has an enterprise value of $4.7 billion.

Healthcare firm McKesson, in comparison, has a market value of about $107 billion.

OPCH-MCK Talks Not Yet Signed

Option Care, the largest independent U.S. provider of medical infusion services, is in advanced talks after a joint bid, people familiar with the matter told the Financial Times. A deal could be reached as soon as Tuesday, though nothing is signed and the talks could still collapse, it added.

Under the terms being discussed, CD&R would own 51% through a joint venture and McKesson 49%, with McKesson holding a right to buy the buyout firm’s stake later, the paper said.

A Fit With Oncology And Home Care

Option Care last year treated more than 315,000 patients who need specialty drugs by infusion for cancer, autoimmune disease and serious infections, either at home or at 184 centers. Hospital infusion is expensive, and more complex biologic drugs can only be given that way, which has supported the business.

For McKesson, the network would sit alongside its drug-distribution core and its chemotherapy and cancer-care clinics, one of the faster-growing parts of a company with about $403 billion in annual revenue. In August, McKesson agreed to buy Precision Medicine Group for about $2.25 billion to deepen clinical research and commercialization services.

The bid lands after a soft stretch for Option Care. In late July, the company reported second-quarter revenue of $1.44 billion, up 1.9% from a year earlier, and narrowed full-year guidance to $5.675 billion to $5.775 billion of revenue and adjusted earnings of $1.85 to $1.92 a share. Management said one long-running therapy weighed on results, even as short-term infusions and some rare-disease treatments held steady.

How Did OPCH, MCK Retail Traders React?

On Stocktwits, retail sentiment around OPCH stock jumped from ‘neutral’ to ‘bullish’ territory over the past 24 hours, while message volume increased from ‘normal’ to ‘high’ levels.

Meanwhile, sentiment around MCK stayed within ‘neutral’ levels.

While OPCH has lost 27% year-to-date, MCK has gained 12%. 

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