Hello, and welcome to the Option Care Health First Quarter 2021 Earnings Conference Call. My name is Michelle, and I will be the operator for today's conference. [Operator Instructions] I will now turn the call over to Mike Shapiro, Chief Financial Officer. Sir, you may begin.

Good morning, and thank you for joining us for the Option Care Health's first quarter earnings call. Before we begin, please note that during this call, we will make certain forward-looking statements that reflect our current views related to our future financial performance, future events and industry and market conditions. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our comments. We encourage you to review the information in the reports we file with the SEC regarding the specific risks and uncertainties. You should also review the section entitled Forward-looking Statements in this morning's press release. During the call, we will use non-GAAP financial measures when talking about the company's performance and financial condition. You can find additional information on these non-GAAP measures in this morning's press release posted on the Investor Relations portion of our website. With that, I'll turn the call over to John Rademacher, Chief Executive Officer.

Thanks, Mike, and good morning, everyone. The first quarter was yet another very productive quarter for the Option Care Health team. We continued to navigate a challenging environment to ensure the patients entrusting their well-being to us receive exceptional care. Despite continued hurdles related to the pandemic, the Option Care health team has consistently supported our payer partners, referring physicians and most importantly, our patients. And we haven't turned away one referral due to supply chain or clinical labor disruption. We have solidified our position as a dependable national partner in delivering extraordinary care. I'm very proud of the team's performance in the first quarter on many fronts. In addition to our relentless focus on patient care, we delivered strong financial results in line with our expectations and continued to achieve integration milestones, most of which are behind us at this point. We also continue to lay the foundation for sustained growth going forward, which I'll touch on in a moment. In the first quarter, we generated revenue growth of more than 7% and through our scalable model, delivered EBITDA growth of 30%. We are seeing referral patterns generally approaching pre-COVID levels. And in terms of our chronic portfolio, we are seeing referrals in many therapies ahead of pre-COVID level. And while our product portfolio continues to grow at a strong pace, we also drove modest year-over-year volume growth in our acute therapies as well. Mike will unpack the financial results in a few minutes. But as you know, we are relentlessly focused on cash flow generation, and the first quarter was yet another strong quarter on that front. We have increased our cash balances every quarter since the merger. And in Q1, we increased our cash balances $10 million and drove our leverage ratio to 4.5 times, well on…

Thanks, John. And good morning, everyone. The first quarter financial results are quite encouraging, and as John mentioned, position us well to deliver strong results for the full-year. Revenue in the first quarter of $759 million grew 7.6% year-over-year, driven by low double-digit chronic therapy growth and relatively flat acute revenue growth after the impact of ASP declines in certain therapies. Overall referral patterns are returning to normal. And for many of our chronic therapies, we are seeing solid year-over-year growth, including therapies for MS, myasthenia gravis and certain chronic inflammatory conditions. As I mentioned on the Q4 call, we are seeing some ASP headwinds in a handful of categories, including antibiotics, which impacted us by a little under a full point of growth in the quarter. That was incorporated into our guidance, and we anticipate that impact to sustain for the balance of the year. Nonetheless, we are clearly pleased with the overall revenue results for the quarter. Gross profit represented 21.8% of revenue and grew 4.7% year-over-year. Gross margin was affected by therapy mix, with chronic driving the top line growth in the quarter. And spending of $120 million was down 7% versus prior year and dropped to 15.8% of revenue, down from over 18% in the first quarter of 2020. Note that last year we were still ramping up efforts to harvest spending synergies, so the improvement reflects our progress in driving SG&A savings post-merger as well as spending actions in response to the pandemic. Adjusted EBITDA of $52.2 million in the quarter represented 6.9% of revenue and up 30% year-over-year. And the EBITDA margin of 6.9% expanded 118 basis points over Q1 of 2020. Again, the spending comp from prior year helped with the margin expansion, but nonetheless we continue to drive leveraged growth on our…

[Operator Instructions] And the first question in the queue comes from David MacDonald. Please proceed.

Good morning, guys. A couple of quick questions. First of all, John you mentioned referral patterns approaching pre-pandemic levels. I know you guys have seen a nice expansion of the referral base. Is that off of a larger number of referrals, I guess, one? And then secondly, just on the revenue growth for the quarter, you guys talked about roughly a 1% growth headwind from ASP. But I was wondering, was there also, if I remember correctly, some pull forward in the first quarter of 2020 as COVID hit? Just any additional detail there?

Yes. Dave, good morning, it's John. On the first question on referral patterns, again, we continue to see as the marketplaces began to open, our teams were getting broader access. And patients were beginning to return to see their physicians in the specialty area. That upticked. So, we continue to monitor on a territory-by-territory basis. We continue to activate our teams to get out into the marketplace as many of them are now vaccinated and the market begins to open. And we feel good that we're starting to see those referral patterns again continue to increase. I will caution that it is market dependent. Some areas are opening faster than others. And where we see spikes, there certainly are implications from that perspective. But overall, we feel good that we're starting to see those trends and those volumes moving in the right direction. And we invested a lot into our commercial team, both in getting the right resources as we went through the realignment and training and education of them, and feel like we're in a really good position to capture the increased demand.

Yes good morning Dave, its Mike. And good memory, on the comments from our call a year ago. Yes, and as I mentioned on our call a couple of months ago wrapping up the fourth quarter of 2020, I mentioned that going forward, look, the comps for revenue are going to be a little bumpy throughout the year just given some of the COVID impact. But you're absolutely right. I mean one of the things we're encouraged by, as I mentioned in the prepared remarks, is we're encouraged by the Q1 results, including acute volume growth as well as very robust chronic growth. Even though at the end of the first quarter of last year, we did see a little bit of a hockey stick with referrals coming in, again remember in the second half of March was really when the hospitals and a lot of the outpatient clinics really started to clear out the census. So, the revenue growth on what was a very, very strong finish to the first quarter of 2020 is very encouraging from our perspective.

I guess just two other quick ones, guys. As we kind of get to the back side hopefully here of COVID and everyone examines what went well and what didn't, are you seeing any acceleration in terms of conversations with payers around things like narrow networks? And just incremental conversations that likely result in more volume being driven to you guys over time?

We continue to have strong conversations across all of the payer network. Our market access team continues to cultivate those. We are seeing that alignment of the network management, the narrowing of them and deepening of the relationships. I think, as we said in the prepared comments, I think the performance of the team, our ability to quickly respond to the market conditions and being a stable and consistent provider has gained us high marks with the referral sources as well as the payer community. So, we expect that to continue to move forward. We do expect to see continued now focus on right siting of care, so site of care initiatives to -- that may have been a little bit delayed due to some of the COVID response and the needs there, to begin to ramp back up as we get back to the new normal.

Okay. And then, just one last question just on BioCure, just taking a quick peek. It looks like they're in Houston and just outside Orlando. A, is that correct? And then any additional products? Or is this kind of a nice geographic tuck-in and access to a nice referrals stream?

Yes. I would say it's probably the latter. So, it's yes, southeast-based, let's call it that from a geography area. I mean there was a little smattering into other states. But really a good, strong chronic book focusing in the areas of IG, but gives us an opportunity to continue to deepen our patient census and utilize the platform to its fullest. So, excited about the opportunity that it creates. And again, it's nice to start flexing the muscles again on the ability to use the knowledge and the ability of the team to start to think about M&A activity again and the work behind that on integration.

Yes. And the only thing I'd add, Dave, is I think one of the attractive aspects of this transaction, again while limited in size, we're taking a team that have limited payer access and expanding the breadth of payers. But not only that, but as John mentioned, we've recently launched two more neuromuscular limited distribution therapies for emerging patient populations to which this enterprise didn't have access. So, it's really putting more products in the bag and accessing more payers. So, we're excited about it.

Okay. Thanks, very much

And the next question in the queue comes from Matt Larew. Your line is open please proceed.

Yes. Good morning, guys. Mike, I wanted to just follow up on gross margins. You mentioned on fourth quarter call that you expected expansion on a year-over-year basis. And in the first quarter, it was down a bit year-over-year. So, was there anything onetime in nature about the product mix shift, or anything going on internally? And then are you still expecting year-over-year expansion? Maybe just kind of help us bridge the first quarter to the rest of the year there.

Sure Matt, you bet. Yes. And again just to clarify, we don't give specific guidance on gross margin. What we've said in the past is that, look, given the fact that we have two distinct product portfolios, with chronic growth consistently outpacing acute, we would expect some gross margin headwinds over time; and that while we expect the mix challenges, we're still very confident in our ability to expand the EBITDA margins, really leveraging the spending leverage. So, as we go forward, again when we separated, we were at a 60/40 chronic acute split. Right now, we're approaching 70/30, and that's just the transit of property of the portfolios with different growth profiles. So, again, the gross margin came in very, very close to kind of how we were modeling it out. Again, that we fight for every basis point at the gross margin line. But really the way we think about it is again, how are we growing those gross margin dollars, and are we leveraging the infrastructure below. So, overall, we're not going to make -- we're not going to stake the claim that we're going to maintain or increase gross margin for the year, but again coming back to what we see as the real vital metric, which is the EBITDA margin expansion. Thanks.

Okay. And then just a follow-up on referral sources, you mentioned obviously at the end of March that you did quite well in terms of hospitals looking to clear out census. Just curious this quarter and then maybe even into April, as hospitals have been coming back online, how those relationships have gone, what you've seen in terms of potentially hospitals trying to pull volume back, or potentially realizing that working with someone like Option Care maybe was the right call for that patient population.

Yes Matt, it's John. I think that what we've seen thus far is, as we kind of reported, is we're seeing that increase in the referral volume. So, we have not felt a significant amount of pullback of the opportunities back into the hospitals. As we highlighted, again a little bit muted because of some of the ASP headwinds, we are seeing modest growth in acute volumes, which again is good and I think is indicative of the hospitals opening up and starting to get back to more routine aspects of their care delivery and which we certainly participate in. And then on the chronic side, again we just continue to see robust growth, but we also think that there's continued additional opportunity as we're deepening our relationships, either with payers with site of care initiatives, as well as continue to partner with hospitals and specialists in meeting the needs of their patient population. So, haven't seen much of a pullback. But look, we monitor it and really try to partner and demonstrate the value of the consistent high-quality care that those patients have received throughout the pandemic.

Alright, thank you.

The next question in queue comes from Peter Chickering. Your line is open please proceed.

Hi, there. This is Kieran Ryan on for Peter. If I could start off here, could you just maybe refresh us on what assumptions you have around the acute recovery embedded within guidance? And how or if volumes there going back to flat in 1Q changes your view on that cadence?

Sure, Kieran its Mike. Yes look, we've been very open around our expectations over the longer-term is that the acute portfolio, which is a relatively mature portfolio of therapies, is really a low single-digit volume growth portfolio of therapies. I'd say in the first quarter, the volumes were very consistent with how we think about it and what our expectations are. And I think that that's a reasonable expectation for the balance of the year. The one thing I would caveat is, as I mentioned in my prepared remarks, the volume is definitely consistent. And also as we had accurately predicted, there are some ASP headwinds with a couple of the generic antibiotics, which had about a 1% impact. So, a little bit of an increase in volume offset by ASP, so relatively flat reported revenue growth. But again, that was very consistent with our expectations.

Okay, cool. And then so as a quick follow-up, looking at the SG&A leverage this quarter, obviously very strong. Just as we think about what you're able to generate through the rest of the year, were there any COVID-type costs or other one-offs that you'd want to call out that are in that line?

No. I actually think the first quarter spending is a relatively clean metric. Again, last year in the comp, we have a little bit of an easy comp because we were still in in SG&A synergy harvest mode. And so and obviously going into the second quarter, like every other enterprise, we tightened the belt on things like travel and other controllables, given the uncertainty of the COVID situation. We've learned a lot during the pandemic challenges around opportunities to drive additional efficiencies. And as we've talked about, when you look at our SG&A base, it's roughly 80% fixed. And so our confidence in continuing to drive SG&A leverage going forward off with a relatively clean Q1 metric is very high.

[Indiscernible]

And the next question in the queue comes from Brooks O'Neil. Your line is open.

Good morning guys you talked a little bit about the BioCure acquisition. Could you just give us a little more color in terms of the type of focus for your M&A activities, in terms of additional geographic expansion capabilities set, and maybe a little bit more on the size of the kind of targets you see out there in the marketplace now?

Yes. Brooks, its John. I think as we've outlined before, I'll start with saying, look, we're going to be very discerning and disciplined in our approach. When you look at our current reach, given our footprint and the fact that we can cover 96% of the U.S. population, it gives us the ability to be very thoughtful in the way that we're looking at those opportunities. We also, with the technology platform that we have, really have a scalable model that we know we can put more volume across those rails to continue to drive a real value by squeezing out the synergies, but also with the cost efficiencies that comes with that based on our fixed versus variable costs structure. So, we're going to continue to look. There certainly are in-kind tuck-ins that we'll look for, that may bring us patient populations and census for the chronic side. There are capabilities that we'll continue to take a look for. And where we have capacity, if we can do a transaction that would help to drive that operating efficiency, we'll continue to look there. So, I think we are committed to our focus around deleveraging. We're focused around our ability to leverage the infrastructure. And we think that there will be plenty of opportunities for us to go through, to look for the ability to achieve those goals to serve more patients to drive more value and to really maximize the infrastructure that we have today.

Brooks, its Mike. The only thing I'd add is look, as you know and as we've talked about, we're not looking for additional ZIP code with our national coverage. But I think BioCure is a good example of where you can take a successful commercial engine that admittedly was fighting above their weight class, without the commercial payer relationships and without a broad bag of neuromuscular therapies. And so taking that successful commercial engine, throwing it in with what was already a very effective commercial chronic field team at Option Care, and it really is a one plus one equals three.

Right. You guys called out the opening of the care management center in Chicago. Is that a one-off investment? Or do you expect to open more such centers around the U.S.?

Yes, Brooks. Look, we are really excited about the investment that we made into the Chicago marketplace. That facility is really twofold. It is a regional compounding center, care managed center as we like to say, which really focuses around the ability to serve the market and effectively manage as a clean room operations, et cetera. And we also have one of our specialty centers of excellence within that facility as well, so the ability for us to really leverage and utilize that scale. So, this is -- Chicago is a big market for us. And needless to say with the patient population that we serve and can continue to grow, we're really excited about that facility. And it kind of reaches beyond just the Chicago land market from that standpoint. Look, we've got a pretty disciplined process as we're looking at where we're going to use capital for capital expenditure on that. And we also made an investment in the northern Ohio market with a new facility in Hudson, Ohio as well. So, as we continue to take a look at the fleet of our network, we continue to evaluate what are the needs on the market. We will continue to make smart investments where either we need to build out additional capacity and/or where we need to update, upgrade facilities. That's just part of a normal course of business. So, every opportunity that we have to do that, it just allows us to reevaluate our needs and the market needs and make those investments. But look, we're going to live within the guidelines that we put out around the way that we're going to be deploying cash. And this fits within that investment piece that's deploying of CapEx. And we're really excited about the capability sets that it brings for not only the region here, but also as one of the national centers of excellence.

Great, just one more. With the change of administration and kind of a new environment, do you see any changes at all, either administratively or from a legal or regulatory perspective, in the opportunity to get full and fair reimbursement from your friends at CMS for Medicare patients?

Brooks, look we're always working hard on that. I mean it's a little bit early to tell. We're waiting to see some of the appointments get made into some of those key positions. But we're working right now, both independently and with the National Home Infusion Association, to continue to move that agenda forward. We're looking to reintroduce some legislation into the upcoming what are they calling Family Infrastructure bill or the way that they're looking from that standpoint. And so look, we've had bipartisan support. We believe we're on the right side of the cost quality equation. And we're going to continue to fight vigorously or communicate vigorously and yell from every mountaintop possible to get fair reimbursement on that. So, look, we're cautiously optimistic. Certainly, healthcare is a big part of at least what the administration has talked about as the safety net, both for Medicare beneficiaries as well as looking for an expansion of Obamacare within that approach. And we think we have a real solution that can help drive better outcomes at a lower cost, and we're going to continue to articulate that clearly and effectively until we get better reimbursement rates.

Yes, absolutely. Thanks a lot, taking my question.

And the next question in the queue comes from Kevin Fishback. Your line is open, please proceed.

This is actually Adam on for Kevin. To that point on reimbursement, have you looked at all at the direct contracting opportunity? Because from what it seems like is that they'd be able to include preferred providers into their network and pay them above fee-for-service rates. So, would that be kind of like a backdoor into adequate reimbursement on the fee-for-service population?

Look, we're looking at every angle we can from that. There are things that we can do with CMMI with the innovation center that potentially could be demonstration projects. There are additional ways that we can look to continue to demonstrate our capabilities set and the value that it would bring to beneficiaries. So, we're going across all of those dimensions. We believe we created goodwill in our work with Operation Warp Speed, with our work with CMS in looking at the monoclonal antibodies as being a therapy for patients that have COVID. So, we're continuing to do all we can to help to influence a better decision path there. And again, we're going across multiple dimensions, multiple directions and trying to find the right path forward to get better reimbursement from the government.

Okay. And then, digging into the guidance a little further for the quarter, it seems like you beat at least our estimate by two million, raised by a little bit more than that for the year. And then it seems like the deal, if you use the high single-digit multiple that you talked about on EBITDA and then add it for three quarters, it adds around two million. And then the extension of sequestration on our estimates adds another five million. So, it just seems like the guidance was a little bit conservative. Is that just conservatism? And how did the quarter come in versus your expectation?

Sure Adam, its Mike. Again as I mentioned, the quarter came in relatively close. And we don't give quarterly guidance, but I think we had a little bit more of a level year than maybe folks were thinking about it externally. But the way we think about it is we outlined a range about 60 days ago. We've tightened, we've added a couple of million for the impact of BioCureRx for the partial year. And again, I think we'll continue to tighten throughout the year. But the first quarter for us, which again as I mentioned is typically the lightest in terms of dollar generation, came in at or slightly ahead of where we were expecting the first quarter to come in, so very good wind in our sails going into the back half. And again, we'll continue to assess that throughout the year. And I think as we try to articulate right after the merger, John and my intention is to maintain the team's credibility by putting numbers out that we have a very, very high degree of confidence in. And if anything, that gives us confidence within the range that we've articulated this morning.

Okay, fair enough. Not to beat a dead horse on the deal, but it kind of seems like following the story for us since you guys went public, you were kind of talking down the opportunity of acquiring existing execution suites that overlap in your geographies? Because you mentioned not wanting to acquire assets, just to close down the facilities and, I guess, onboard the patients, but I guess it's a good, quickly accretive. But does that mean that, that mine's shifted and that's now something that you are focused on? Or am I misinterpreting how you previously communicated it?

No. I think it's a very good question, a good pushback, Adam. I think it's very consistent with how we've thought about it. Look, we're not looking just to add bricks and mortar to roll up local folks. And it's not for a lack of books that hit our inbox for opportunities. One of the things again that really was intriguing about this one was as we really peeled back the onion, the effectiveness of their commercial engine, again they were a nimble small group, which had highly effective referral relationships, primarily in the neuro space, but admittedly they were again fighting above their weight class without those commercial payer relationships and without the broader therapy portfolio, things like MS, MAG, NMOSD, where we've really broadened and created an extremely unique portfolio of neuromuscular therapies. And so this was what I would consider a unique opportunity where we could quickly integrate highly effective commercial resources, and again have them complement our existing team in the field. So, again, I think it's very consistent for every deal like this one that we say, yes, we respectfully pass on ones where again. The first question that John and I and the team always ask is what's unique or special about this asset? And is it both economic and strategic in our long-term pursuits?

Okay. That makes sense to operate. Thanks.

The next question in the queue comes from Mike Petusky. Your line is open please proceed.

Yes. Good morning, guys. I may have missed that you may have said. What was the CapEx for the quarter?

CapEx was just a little over $3 million. Let me get the exact number for you. $3.1 million, yes. It's in the disclosures this morning.

Okay. Have you all and again this may have been something I missed, but have you did you all change either your cash flow from ops guidance or your CapEx guidance for the full-year in light of the fact that you're moving up EBITDA guidance?

No. We've maintained our cash flow guidance, which we've said our guidance was at least $140 million of cash flow from ops. I would reiterate the "at least." Again, it's early in the year. We've also as you've seen, we've also made some strategic inventory investments to make sure for some more tenuous supply chain situations, we have the confidence of levels. But nonetheless we feel very confident in the cash flow generation, especially going into the second quarter.

Okay. And CapEx still around 30 is the guidance?

Correct, yes. Yes, a little bit, a little slow to the start to the year. That's typically the case. But we would expect some of the key projects to heat up going into the second quarter.

Okay. And then on the acute revenue in the quarter, what's -- I know you said relatively flat. I couldn't quite -- was it down slightly? What was the actual revenue comp in acute?

Yes. So, acute revenue was effectively flat year-over-year relative to the first quarter of last year. And again just unpacking it, and again walking a fine line, Mike, because we don't report separate segments. The volumes were actually favorable to prior year. We just had a little bit of an ASP headwind, which we had anticipated going into the year and that we highlighted on the fourth quarter call.

Okay. So, when I hear relative, I mean plus or minus 1%, something like that?

Yes, you got it.

Alright. Thank you guys, appreciated.

Thanks, Mike. And I do have one more question in the queue from Jamie Perse. Your line is open, say it again.

Yes, John and Mike. Good morning. I wanted to go to the supply chain. You made some comments about that and how that's been solid for you guys, accepted all patients in the quarter. What are you seeing with your suppliers now? Has the risk of disruption related to ID been reduced? And related to that potentially, I saw inventory step-up of 15 million or so in the quarter. Have you built inventory to kind of de-risk yourself from that or was that unrelated?

Yes. No, it's a great question, Jamie. Look, we've been very open around the fact we're in strong [indiscernible] over the IG therapy category, given the fact that plasma collections still continue to trend below pre-COVID levels. Obviously, human plasma is the key raw material for IG, both subcu and intravenous. Again, as John mentioned in the prepared remarks, we haven't turned away one referral. And I think given our unique position where we source all of our IG therapies direct from manufacturers, that gives us an advantageous supply chain position. Our inventory is up for one reason, and that's because we are consciously maintaining more strategic levels. We're relentless around working capital efficiency. And given the health of our working capital that gives us the ability to scale up in times like this. So, I would say we're cautiously optimistic, and we were able to grow our IG enterprise in the quarter. You can only expand your patient census if you have the confidence in supply to serve your existing patients, which again most of these folks are on for a very extended period of time. And again, I think while the broader IG market continues to be one that a lot of folks are keeping an eye on, we're increasingly confident going into the second quarter in our ability to support that therapy class. So, very comfortable, and again I would expect inventory to level or decline from here as we watch it on a weekly basis on a therapy-by-therapy basis.

Okay. That's great color. And just on the pipeline, it sounds like you launched some new products in the quarter. First, can you just comment on how those contribute to the year in terms of revenue and EBITDA growth? Maybe talk us through a typical new drug launch for you, how quickly that ramps. And then more broadly, just talk about the opportunities you see from new products in 2021 and 2022.

Yes. Thanks for the question, and this is an area we love to focus on. Look, we have a team that is better than anybody at collaborating with biopharmaceutical manufacturers. And our track record of quickly and consistently launching with clinical protocols coast to coast is second to none. One of the things that we love about these therapies, Sarepta has been an exceptional partner, and we've been in the foxholes with them since they launched Exons, which was their first muscular dystrophy therapy. No surprise, we're in a very limited distribution with them for their third and DMD therapy. The value to these to us is really building out that portfolio. There's truly nobody that has the limited distribution therapy portfolio that we have, and especially when we think about neuromuscular space. So, like NMOSD, this is an emerging therapy where frankly there were no therapies three, four years ago, now there are a couple. Both of which are within our limited distribution network, which means when we approach neuromuscular practices, whether it's MS, muscular dystrophy, ALS, autoimmune conditions and most, we're the only one that can provide them with a broader therapy. From a financial impact, Jamie, these out of the gate, these are complementary. They're not going to move the needle year one out of the gate, but over time it's a lot of drops in the bucket. The bucket starts to fill, and that's what really gets us excited. And I can tell you that our conversations with biopharm continue to be very robust.

Okay. And then just on market share, I was wondering if you could give us a sense for how you think you guys did in the quarter, or even a longer period of time, last 12-months, something like that versus the market. Just to give a sense of how much market share you guys think you're taking? And any color on how sustainable that is?

Yes Jamie, its John. I guess we continue to try to get listening post in the marketplace around what the growth is. And as we've talked about before, a little bit hard for this industry to have clear line of sight, but our estimates still are in alignment. We think that home infusion continue down the pace of, let's say, the 6% to 7% range. So, therefore we believe we took share based on the quarterly results. And we've worked really hard. Our team, from the commercial standpoint, has been really focused around reach and frequency. I think we've highlighted before the work that we've been doing on segmentation and targeting. Our disciplined approach to that, based on the information that we get from third parties, allows our teams to be very efficient on that of identifying where demand is in the marketplace and making certain that we can capture more than our fair share of that demand. So, look, we're -- we've got -- we're always going to be working harder, and we think that there's always opportunity to continue to improve as we're looking at that efficiency and effectiveness of our team. But we feel as if that momentum is building. And I think we, our expectations are that we would be leading the market from a growth standpoint as we look forward based on the investment that we have as well as the reach and frequency of our commercial team.

Okay, great. One last one for me if I could, just going back to the ASP decline that you saw in the quarter. First, was this expected or a surprise, and how much impact on gross margin? And then if you could just talk about your exposure to generics -- branded going to generics this year? I know that's a very regular part of your business. You've got visibility there. But any color on what's in the pipeline for this year there.

Jamie, its Mike. Yes, we were not surprised by this one. Look, I mean we bill thousands of ASPs on a daily basis. And we have teams that watch. So, we anticipated that there was going to be a bit of a headwind from an ASP this year, we were open about it. And again, ASP is very -- we don't typically call them out unless they have a notable impact. So, while it had an impact on the top line, again we don't describe it as a perfect hedge, but there's a high correlation between ASP moves and our procurement cost. And so there is a more muted impact on the gross margin line than on the topline. Which again we incorporated and we were able to continue to post very robust earnings growth despite that, and we'll continue to watch that. Overall on the acute side, there's not a lot of additional generic events that we would anticipate. Again, that portfolio for the most part are generics today. On the chronic side, we're constantly watching biosimilar emergence which are not truly a generic event. But anytime you have a more competitive class with biosimilars that typically is where we can really add more value around formulary preferred therapy preference by payers and where we can offer a broader range. So, modestly helpful from a financial results perspective when we see the emergence of biosimilars.

[Indiscernible].

And we have no further questions, sir. Do you have any final remarks?

Yes. Thanks, Michelle. Look, in closing, we're very pleased with the strong start to the first quarter of the year. And we look forward to the continued momentum as we look forward. We will continue to keep you apprised with the progress that we're making. And again as an organization, I couldn't be more thrilled with the way our team has responded to every challenge that has come our way, and more importantly our ability to really capitalize on what we think is a positive shift in the market of utilizing the home as the center of care. So with that, thank you for joining us this morning. Stay safe, and we look forward to talking to you soon. Take care.

Thank you ladies and gentlemen this will conclude today’s teleconference. Thank you for participating. You may now disconnect.