Why Option Care Health Stock Skyrocketed on Tuesday
Key Points
Option Care is being bought out by McKesson and private equity firm Clayton Dubilier & Rice.
The deal values Option Care at $32.05 per share or about $5.8 billion.
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Shares of Option Care Health (NASDAQ:OPCH) rocketed higher on Tuesday, climbing as much as 33.1%. As of 1:46 p.m. ET, the stock was still up 33%.
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The catalyst that sent the specialty healthcare provider higher was news of its acquisition.
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$5 billion takeout
In a press release that dropped Tuesday morning, Option Care -- the nation's largest independent provider of home and alternate-site infusion services -- announced it had agreed to be acquired by McKesson (NYSE:MCK) and private equity firm Clayton, Dubilier & Rice (CD&R).
The pair will pay $32.05 per share for Option Care, a deal that values the company at about $5.8 billion. That represents a roughly 37% premium compared to Monday's closing price. The deal is expected to close in the first half of calendar 2027, assuming it is approved by Option Care shareholders and receives the necessary regulatory approvals.
Once the transaction is complete, CD&R will hold a 51% share of the company, while McKesson retains a 49% share. Moreover, the deal establishes a framework that will allow McKesson to acquire CD&R's stake at some point in the future, subject to meeting certain conditions and regulatory approvals. The companies also revealed that Option Care Health will remain a separate company led by its existing management team. The company plans to release its Q3 results as scheduled on Nov. 4, but will forego the usual live earnings conference call.
McKesson CEO Brian Tyler said the transaction was in keeping with the company's strategic objectives: The alternate infusion therapies market represents an attractive long-term growth opportunity, while also providing "accessible and affordable high-quality care to patients."
The stock was recently trading for more than $31 per share (as of this writing), or roughly 3% below the offering price. This suggests investors are confident the deal will go through.
The payout will likely come as little consolation to long-term Option Health investors. The stock plunged 24% following a weak first-quarter report, and even after today’s price spike, it remains 15% below its high reached earlier this year.
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Danny Vena, CPA has no position in any of the stocks mentioned. The Motley Fool recommends McKesson. The Motley Fool has a disclosure policy.
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