Baron Funds, an investment management company, has released its Baron Health Care Fund Q4 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund gained 9.08% (institutional stocks), compared with an 11.54% gain for the Russell 3000 Health Care Index and a 7.56% gain for the S&P 500. The fund fell 16.90% in 2022, compared to a 6.10% decline for the Russell 3000 Health Care Index and an 18.11% decline for the S&P 500. Factors such as cash market exposures, adverse stock selection and differences in subsector exposures led to the fund underperforming its benchmark in the quarter. Also, please check the fund’s top five holdings to know its top picks in 2022.
Baron Funds highlighted stocks like Option Care Health, Inc. (NASDAQ:OPCH) in its Q4 2022 Investor Letter Headquartered in Bannockburn, IL, Option Care Health, Inc. (NASDAQ: OPCH) provides home infusion services. On January 30, 2023, the stock of Option Care Health, Inc. (NASDAQ:OPCH) closed at $28.27 per share. Option Care Health, Inc.’s one-month return (NASDAQ:OPCH) was -6.05% and its stock has gained 20.97% of its value over the past 52 weeks. Option Care Health, Inc. (NASDAQ: OPCH ) has a market cap of $5.142 billion.
Baron Funds made the following comment regarding Option Care Health, Inc. (NASDAQ:OPCH) in its Q4 2022 investor letter:
“We initiated a position in Option Care Health, Inc. (NASDAQ:OPCH), the largest independent player in the $15 billion U.S. home infusion and alternative site market. We believe Option Care is well positioned to take advantage of the ongoing shift to less expensive care locations and the proliferation of new specialty drug treatments. Home infusions cost 40% to 70% less than hospital infusions. Option Care’s footprint of over 150 locations enables it to serve approximately 96% of the US population in a market that is growing 5% to 7% annually. The company has a well-diversified portfolio of therapies and provider relationships with no customer concentration, enjoys in-network status with all major payers, and has low risk of direct government reimbursement because Medicare does not currently cover home infusion. We think the market will double if this happens in the future. Given its geographic coverage and therapeutic expertise, the company is assured a seat at the table to discuss new innovative episodic or fully capitalized models with payers. It also has strong relationships with relevant drug manufacturers, facilitating early access to newly approved drugs and preferred delivery arrangements, while its size and scale ensure buying power. Management believes the company can continue to generate high single-digit organic revenue growth and mid-teens EBITDA growth. There is also the opportunity to increase growth through mergers and acquisitions. The company has an excellent track record in acquiring and integrating acquisitions, and with 45% of its market still comprised of regional and local suppliers, there is a significant opportunity for consolidation.”
Option Care Health, Inc. (NASDAQ: OPCH ) is not on our list of the 30 most popular stocks among hedge funds. According to our database, 36 hedge fund portfolios hold Option Care Health, Inc. (NASDAQ: OPCH ) at the end of the third quarter, which was 32 in the previous quarter.
We discussed Option Care Health, Inc. (NASDAQ: OPCH ) in another article and shared Stanley Druckenmiller’s list of healthcare stocks to invest in. In addition, please see our Q4 2022 Hedge Fund Investor Letters page for more letters from hedge funds and other leading investors.
Disclosure: None. This article was originally published on Insider Monkey.