Why is Option Care Health stock surging today?

Option Care Health's stock experienced a significant surge of 20.8% in after-hours trading following a Financial Times report unveiling advanced discussions between McKesson and Clayton Dubilier & Rice (CD&R) to acquire the infusion services provider in a transaction exceeding $5 billion, including debt. While negotiations are still ongoing and could fall through, an agreement could be announced as early as Tuesday.

In the proposed arrangement, CD&R would acquire a 51% controlling stake, while McKesson would retain the remaining 49%, with a clause enabling McKesson to purchase the private equity firm's share at a later date. Michael Cherny, an analyst from Leerink Partners, highlighted the strategic significance of the deal, as it would expand McKesson's influence beyond physician offices and into home and alternate-site infusion care, an area experiencing rapid growth.

Despite the broader market showing minimal performance on the day, with the S&P 500 up by only 0.05%, the Dow Jones up by 0.07%, and the Nasdaq up by 0.04%, the stock's rise was entirely attributed to the acquisition report. Prior to the after-hours rally, Option Care shares had been struggling, trading near multi-month lows and below their 52-week high of $36.80.

The combination of a credible strategic acquirer, the attractive premium implied by the reported valuation, and the involvement of a prominent private equity firm provided investors compelling reasons to reevaluate the stock sharply higher. However, the gap between the current after-hours price and the announced deal value demonstrates that the market acknowledges the transaction is not yet finalized, as a binding agreement has not been signed.