Key Takeaways
- Option Care Health shares jumped 33% after CD&R and McKesson agreed to buy the company for $32.05 per share in cash, about $5.8 billion including debt.
- With the stock just a couple percentage points below the offer, buyers today have little upside left and carry the risk that the deal falls through.
- The deal is expected to close in the first half of 2027, once shareholders vote for it and regulators approve it.
Shares of Option Care Health (OPCH) soared about 33% on Tuesday after the home infusion provider agreed to be bought by private equity firm CD&R and McKesson (MCK) for $32.05 per share in cash.
The deal, announced before Tuesday’s open, values Option Care at about $5.8 billion including debt. That’s a roughly 37% premium to Monday’s close.
What exactly happened
CD&R will own about 51% of Option Care, and McKesson will invest about $1.4 billion for the other 49%. The deal also sets up a path for McKesson to buy CD&R’s stake later, if certain conditions are met and regulators approve.
CEO John C. Rademacher called it “a great outcome for Option Care Health and our stockholders.”
For anyone who owned the stock prior to today, it’s hard to argue.
The deal sets the price now
From here, Option Care’s stock price follows the deal. The stock sits [about 3%] below the $32.05 offer, and the deal is expected to close in the first half of 2027. That’s thin pay for waiting up to nine months, and it says the market sees little regulatory trouble ahead.
Before the news, the stock was cheap compared with its own history. On Monday it traded at 9.1 times forward EBITDA (earnings before interest, taxes, depreciation and amortization). That was near its five-year low of 8.5x in May and well below its 14.5x average…
Even after today’s jump, it’s at about [12x], still under that average.
Analysts expect revenue growth of about 2% this year, then about 7% in 2027 and 8% in 2028, reaching $6.6 billion…
McKesson Chair and CEO Brian Tyler said the company wants to invest where it can help care move “in lower-cost community settings, at or closer to home.”
What’s next
Shareholders still have to vote, and regulators still have to approve the deal. Option Care has withdrawn its guidance and won’t hold a call with its third-quarter results on Nov. 4.
Holders got a solid exit. For anyone buying today, though, the [about 3%] that’s left is a small reward for the risk that the deal falls apart and the stock slides back toward Monday’s level.
Of course, a slower regulatory review would make that small return even thinner.
So what is McKesson actually worth now?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what McKesson could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
