OPCH WACC - Weighted Average Cost of Capital
The WACC of Option Care Health Inc (OPCH) is 7.4%.
| Range | Selected | |
| Cost of equity | 6.8% - 9.5% | 8.15% |
| Tax rate | 25.5% - 26.1% | 25.8% |
| Cost of debt | 5.1% - 5.9% | 5.5% |
| WACC | 6.2% - 8.5% | 7.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.64 | 0.82 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.8% | 9.5% |
| Tax rate | 25.5% | 26.1% |
| Debt/Equity ratio | 0.23 | 0.23 |
| Cost of debt | 5.1% | 5.9% |
| After-tax WACC | 6.2% | 8.5% |
| Selected WACC | 7.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| OPCH | Option Care Health Inc | 0.23 | 0.44 | 0.37 |
| ADUS | Addus Homecare Corp | 0.11 | 0.29 | 0.27 |
| AKU.TO | Akumin Inc | 1.94 | 0.95 | 0.39 |
| AMED | Amedisys Inc | 0.12 | 0.16 | 0.15 |
| AMEH | Apollo Medical Holdings Inc | 0.11 | 1.21 | 1.12 |
| LHCG | LHC Group Inc | 0.13 | 0.44 | 0.41 |
| MD | MEDNAX Inc | 0.55 | 0.64 | 0.45 |
| ONEM | 1Life Healthcare Inc | 0.09 | 0.98 | 0.92 |
| RDNT | RadNet Inc | 0.24 | 1.06 | 0.9 |
| SGFY | Signify Health Inc | 0.05 | 1.03 | 1 |
| Low | High | |
| Unlevered beta | 0.4 | 0.63 |
| Relevered beta | 0.46 | 0.73 |
| Adjusted relevered beta | 0.64 | 0.82 |
OPCH's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for OPCH:
cost_of_equity (8.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.64) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.