<PAGE>
SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
OPTION CARE, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
-------------------------------
NOTICE OF ANNUAL SHAREHOLDERS' MEETING
TO BE HELD MAY 13, 1998
--------------------------------
TO THE SHAREHOLDERS OF OPTION CARE, INC.:
NOTICE IS HEREBY GIVEN that the Annual Shareholders' Meeting of Option
Care, Inc., a Delaware corporation (the "Company"), will be held at The Northern
Trust Company, 959 South Waukegan Road, Lake Forest, Illinois 60045, on
Wednesday, May 13, 1998, at 10:00 a.m. Central Daylight Time for the purpose of
considering and acting upon:
(1) The election of one director for a term expiring in 2001; and
(2) Such other business as may properly come before the meeting or any
adjournments thereof.
Shareholders of record on March 30, 1998, are the only persons entitled to
notice of and to vote at the meeting.
Your attention is directed to the attached Proxy Statement. Even if you
expect to be present at the meeting, please sign, date and mail the enclosed
Proxy as promptly as possible in order to save the Company further solicitation
expense. You may revoke your proxy by attending the meeting and voting in
person. There is enclosed with the Proxy an addressed envelope for which no
postage is required if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
CATHY BELLEHUMEUR
Senior Vice President, General Counsel and Secretary
April 09, 1998
2
<PAGE>
OPTION CARE, INC.
100 Corporate North, Suite 212
Bannockburn, Illinois 60015
PROXY STATEMENT
---------------
ANNUAL SHAREHOLDERS' MEETING
TO BE HELD MAY 13, 1998
The enclosed Proxy is solicited by the Board of Directors of Option Care,
Inc. (the "Company") in connection with the Annual Shareholders' Meeting of the
Company to be held on May 13, 1998, and at any and all adjournments thereof (the
"Annual Meeting"). The costs of solicitation, including the cost of preparing
and mailing the Notice of Annual Shareholders' Meeting and this Proxy Statement,
are being paid by the Company. In addition, the Company will, upon the request
of brokers, dealers, banks, voting trustees and their nominees who are holders
of record of shares of the Company's Common Stock on the record date specified
below, bear their reasonable expenses for mailing copies of this material to the
beneficial owners of such shares. Officers and other regular employees of the
Company who will receive no extra compensation for their services may solicit
Proxies in person or by telephone or facsimile. The Proxy Statement and
accompanying form of Proxy will be first mailed to shareholders on or about
April 18, 1998.
The Proxy may be revoked at any time prior to its exercise by giving
written notice of revocation to an officer of the Company, by executing a proxy
bearing a later date or by attending the meeting and voting in person. Unless
so revoked, properly executed Proxies will be voted in accordance with the
shareholders' specifications marked thereon. If no specifications are marked
thereon with respect to one or more proposals, proxies will be voted as to such
proposals in accordance with the recommendations of the Board of Directors set
forth in this Proxy Statement. Except for the election of directors, which
shall be by plurality vote, the affirmative vote of the holders of a majority of
the shares present or represented by proxy at the meeting and entitled to vote
on the matter is required for approval of any matter which may properly come
before the meeting, except as otherwise provided by law or the Company's
Certificate of Incorporation or By-laws. Abstentions and shares which are not
voted by a broker or other nominee on a particular matter (broker non-votes)
have the same effect as votes cast against a particular proposal.
Shareholders of record on March 30, 1998, are the only persons entitled to
vote at the Annual Meeting of Shareholders. This meeting will be held on May
13, 1998 at the Northern Trust Company, 959 South Waukegan Road, Lake Forest,
Illinois 60045. As of that date, there were issued and outstanding 10,822,068
shares of Common Stock, the only voting securities of the Company. Each
shareholder is entitled to one vote for each share held.
3
<PAGE>
ELECTION OF DIRECTORS
The Company's By-laws authorize the Board of Directors to fix the number of
directors. Currently, the number is fixed at five. The members of the Board of
Directors are divided into three classes with the term of one class expiring
each year. There is one director to be elected for a term expiring at the
Company's Annual Meeting of Shareholders in 2001 or until his successor has been
elected and qualified. It is intended that the name of Jerome F. Sheldon, a
current director, be placed in nomination and that those persons named in the
Proxy will vote for his election. The nominee has indicated his willingness to
serve as a member of the Board of Directors if elected; however, in case the
nominee shall become unavailable for election to the Board of Directors for any
reason not presently known or contemplated, the Proxy holders will have
discretionary authority in that instance to vote the Proxy for a substitute
nominee designated by the Board of Directors.
The nominee is as follows:
Name Age Position
---- --- --------
Jerome F. Sheldon (1) (2) (3) (4) 62 Director
The present directors of the Company whose terms will expire after 1998 are
as follows:
Term Expiring in 1999
James G. Andress (1) (2) (3) (4) 59 Director
Erick E. Hanson 51 President, Chief Executive
Officer and Director
Term Expiring in 2000
John N. Kapoor 54 Chairman of the Board
and Director
Roger W. Stone (1) (2) (3) (4) 63 Director
- ----------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Stock Incentive Plan Committee.
(4) Member of the Corporate Compliance Committee.
Dr. John N. Kapoor is currently Chairman of the Board. He has been
Chairman of the Board of Directors since October 1990 and served as CEO from
August 1993 to April 1996. He previously served as President from August 1993
through October 1993 and from January, 1995 through February, 1996. Dr. Kapoor
also served as Chief Executive Officer and President from March 1991 to May
1991. In addition, Dr. Kapoor is President of E. J.
4
<PAGE>
Financial Enterprises, Inc., located in Lake Forest, Illinois, a position he has
held since April 1990. From June 1982 to April 1990, Dr. Kapoor held several
positions with Lyphomed, Inc., in Rosemont, Illinois, including Chairman, Chief
Executive Officer and President. Dr. Kapoor is also a director of Lunar
Corporation, a medical equipment pharmaceutical development company, and
director and Chief Executive Officer of Akorn, Inc., an ophthalmic
pharmaceutical company, and is Chairman and Chief Executive Officer of UniMed,
Inc., a pharmaceutical company. Dr. Kapoor holds a doctorate in medicinal
chemistry.
Roger W. Stone has been a member of the Board of Directors since November
1991. Mr. Stone has been Chairman of the Board of Directors, President and Chief
Executive Officer of Stone Container Corporation, a paper products company,
since 1983. Mr. Stone is also a director of Morton International, Inc.,
McDonald's Corporation and Stone-Consolidated Corporation.
Jerome F. Sheldon has been a member of the Board of Directors since
November 1991. Mr. Sheldon is Chairman and CEO of Lamar Snowboards, Inc.,
located in San Diego, California. Previously, Mr. Sheldon was President and
Chief Executive Officer of Medicine Shoppe International, Inc., a franchisor of
retail pharmacies, from March 1989 to June 1990, a director of such company from
March 1980 to February 1991 and a consultant to such company from July 1990 to
June 1991. Mr. Sheldon was a director of the International Franchise
Association and a trustee of the St. Louis College of Pharmacy for approximately
10 years.
James G. Andress has been a member of the Board of Directors since November
1991. Mr. Andress has been President and Chief Executive Officer of Warner-
Chilcott PLC, a pharmaceutical company, since November 1996. From 1989 until
November 1995, Mr. Andress served as President, Chief Executive Officer and
Chief Operating Officer of Information Resources, Inc., a software and
information services company. He currently serves as a Director of the
following companies: Information Resources, Inc.; Allstate Corporation;
Genelabs Technologies, Inc.; Genetics Institute, Inc.; The Liposome Company,
Inc.; Sepracor, Inc.; Walsh International, Inc.; Xoma Corporation; Neorx
Corporation, and Favorite Brands International.
Erick E. Hanson is currently President, Chief Executive Officer and
Director. He has been President and Director since March 1996, and Chief
Executive Officer since April 1996. Mr. Hanson joined the Company as Senior Vice
President in April 1995 and was appointed Executive Vice President and Chief
Operating Officer in August 1995. From November 1991 to April 1995, Mr. Hanson
held executive positions, including that of Vice President Corporate Sales and
Marketing, at Caremark, Inc. in Northbrook, Illinois. From April 1989 to
November 1991 Mr. Hanson served as President and Chief Operating Officer of
Clinical Partners, Inc. in Boston, Massachusetts.
5
<PAGE>
Board Meetings
The Company's Board of Directors met four times during 1997. Each director
attended all Board and Committee meetings during 1997.
Committees of the Board of Directors
The Company has standing Audit, Compensation, Stock Option and Corporate
Compliance Committees of the Board of Directors. The members of these
Committees have been identified above. The Company does not have a nominating
committee.
The Audit Committee recommends the selection of independent public
accountants to the Board of Directors, reviews the scope of the audits performed
by the independent public accountants, together with their audit reports and any
recommendations made by them, and the results of the audit for the prior fiscal
year, with the independent public accountants. The Audit Committee also reviews
the Company's financial disclosure documents, material litigation and regulatory
proceedings and other issues relating to potentially significant corporate
liability. The Audit Committee met twice in 1997.
The Compensation Committee determines the annual salary, bonus and other
benefits of selected senior officers of the Company and establishes and reviews,
as appropriate, performance standards under compensation programs for senior
officers. The Compensation Committee met once in 1997.
The Stock Incentive Plan Committee grants stock options under the Company's
1991 Stock Incentive Plan, as amended. The Stock Incentive Plan Committee met
four times in 1997.
The Corporate Compliance Committee monitors the Company's adherence to
general corporate policies. The Corporate Compliance Committee met four times
in 1997.
Director Compensation
Directors are reimbursed for out-of-pocket expenses incurred in connection
with attendance at Board of Directors and Committee meetings. Upon becoming
directors, each of Messrs. Andress, Sheldon and Stone also received an option to
purchase 24,000 shares of Common Stock of the Company at an exercise price of
$3.75 per share pursuant to the Company's 1991 Stock Incentive Plan. An
additional grant of an option to purchase 20,000 shares at an exercise price of
$4.38 was made to each Director in November 1995. In March, 1996, the annual
granting of an option to purchase 7,500 shares per Director was approved, and
the options were granted at an exercise price of $4.25 per share in March, 1996
and $3.75 per share in December, 1997.
6
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
The Securities Exchange Act of 1934 requires all executive officers,
directors and beneficial owners of more than 10% of the Company's Common Stock
to report any changes in the ownership of common stock of the Company to the
Securities and Exchange Commission and the Company.
Based solely upon a review of these reports and written representations
that no additional reports were required to be filed in fiscal 1997, the Company
believes that all reports were filed on a timely basis.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the record date of March 30, 1998,
certain information with respect to the beneficial ownership of the Common Stock
of the Company, by (i) each director of the Company, (ii) each executive officer
of the Company named in the Summary Compensation Table, (iii) all directors and
executive officers of the Company as a group, and (iv) each person known by the
Company to be the beneficial owner of more than 5% of the Common Stock of the
Company. The information shown assumes the exercise by each person (or all
directors and executive officers as a group) of stock options owned by such
person which are currently exercisable or are exercisable within 60 days after
the date of this Proxy Statement and the exercise by no other person of stock
options or exchange rights. Except as otherwise noted, the indicated owners have
sole voting and investment power with respect to all shares shown to be
beneficially owned by them.
7
<PAGE>
Number
of Shares Percent
Name of Beneficial Owner Beneficially Owned of Class
- ------------------------ ------------------ --------
James G. Andress (1) 37,750 *
Cathy Bellehumeur (1) 22,500 *
Erick E. Hanson (2) 164,600 1.5
James A. Hodges, Jr. 0 *
Dr. John N. Kapoor (3) 6,221,195 57.5
Jerome F. Sheldon (1) 37,750 *
Roger W. Stone (4) 57,750 *
All directors and executive officers
as a group (7 persons) (5) 6,541,545 60.4
* Less than one percent of class
- ------------------------------------
(1) Represents shares issuable pursuant to options which are exercisable
currently or within 60 days after the March 30, 1998 record date.
(2) Represents 162,500 shares issuable pursuant to options which are
exercisable currently or within 60 days after the March 30, 1998 record
date.
(3) Represents 3,154,528 shares owned by the John N. Kapoor Trust dated
September 20, 1989 (the "Kapoor Trust") of which Dr. Kapoor is the sole
trustee and sole current beneficiary, 1,200,000 shares owned by the EJ
Financial Investments II Limited Partnership, of which Dr. Kapoor is the
sole general partner, and 1,866,667 shares owned by the Kapoor Family
Partnership, L.P., of which Dr. Kapoor is the sole general partner.
(4) This amount includes 37,750 shares issuable pursuant to options which are
exercisable currently or within 60 days after the March 30, 1998 record
date.
(5) This amount includes 298,250 shares subject to options exercisable
currently or within 60 days after the March 30, 1998 record date.
8
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation of certain
of the Company's executive officers and former executive officers who were
employed by the Company during the year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
-------------
Compensation
-------------
Annual Compensation Securities
Fiscal ------------------- Underlying All Other
Name & Principal Position Year Salary ($) Bonus ($) Options/SARs (#) Compensation ($)(1)
- ------------------------- ------ ---------- --------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Erick E. Hanson (2) 1997 $ 242,934 $ 69,300 50,000 $ 7,125
Director, President and 1996 $ 220,269 $ 45,000 125,000 $ 7,958
Chief Executive Officer 1995 $ 124,000 $ 0 125,000 $ 1,918
Cathy Bellehumeur 1997 $ 149,060 $ 21,094 55,000 $ 3,003
Vice President and 1996 $ 129,767 $ 17,500 5,000 $ 5,993
General Counsel 1995 $ 125,009 $ 10,000 15,000 $ 1,836
Paul Jurewicz (3) 1997 $ 167,257 $ 0 100,000 $ 0
Vice President and 1996 $ 0 $ 0 0 $ 0
Chief Financial Officer 1995 $ 0 $ 0 0 $ 0
Jim Duncan (4) 1997 $ 133,605 $ 0 100,000 $ 57,750
President, Option 1996 $ 0 $ 0 0 $ 0
Care Enterprises 1995 $ 0 $ 0 0 $ 0
</TABLE>
(1) Amounts shown in this column for 1995, 1996 and 1997 represent Company
contributions to the Company's 401(k) plan and severance paid to Mr. Duncan
in 1997.
(2) Mr. Hanson's 1995 salary reflects compensation for a partial year of
employment.
(3) Mr. Jurewicz resigned as Chief Financial Officer and his employment
terminated on December 24, 1997.
(4) Mr. Duncan resigned as President of Option Care Enterprises on August 31,
1997 and his employment terminated on January 23, 1998.
9
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1997 AND FISCAL YEAR END
OPTION VALUES
The following table sets forth certain information concerning the
value of stock option exercises during the year ended December 31, 1997 and
of stock options held as of December 31, 1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options Held at Fiscal Year End (#) Fiscal Year End($)1)
---------------------------------- -----------------------------
Shares Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Erick E. Hanson 0 0 162,500 137,500 0 0
Cathy Bellehumeur 8,750 19,297 22,500 53,750 2,500 3,125
</TABLE>
(1) Based upon the closing price of the Company's common stock of $2.75 per
share on December 31, 1997, as reported by the Nasdaq National Market.
GRANTS OF STOCK OPTIONS
The following table sets forth certain information with respect to
individual grants of stock options to the Company's executive officers named in
the Summary Compensation Table during the year ended December 31, 1997. No SARs
were granted during 1997.
OPTION GRANTS DURING LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
Number of % of Total at Assumed Annual Rates of
Securities Options Options Granted Exercise Stock Price appreciation for
Underlying Options to Employees or Base Expiration Option Term (2)
Name Granted (#)(1) in Fiscal Year Price($/sh) Date 5% ($) 10% ($)
---- ------------------ -------------- --------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Erick E. Hanson 50,000 9.5% 6.00 02/21/07 188,688 478,123
Cathy Bellehumeur 55,000 10.4% 6.00 02/21/07 207,535 525,935
Paul Jurewicz(3) 100,000 19.0% 6.00 NA NA NA
Jim Duncan(3) 100,000 19.0% 6.00 NA NA NA
</TABLE>
(1) All options were granted under the Company's 1991 Stock Incentive Plan.
These options are non-qualified and vest 25% each year on the first four
anniversaries of the grant date.
(2) The dollar amounts under these columns are the result of calculations at
the 5% and 10% assumed annual growth rates mandated by the Securities and
Exchange Commission and, therefore, are not intended to forecast possible
future appreciation, if any, in the Company's stock price. The calculations
were based on the exercise prices and the 10-year term of the options. No
gain to the optionee is possible without an increase in stock price, which
will benefit all shareholders proportionately.
(3) All options granted to Paul Jurewicz and Jim Duncan are no longer
outstanding and were forfeited on December 24, 1997 and August 31, 1997,
respectively.
10
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was comprised during
fiscal 1997 of James G. Andress, Jerry Sheldon and Roger W. Stone. All Committee
members are non-employee directors of the Company. All decisions by the
Compensation Committee relating to the compensation of the Company's executive
officers are reviewed by the full Board. In accordance with Commission rules
designed to enhance disclosure of companies' policies toward executive
compensation, the following is a report submitted by the above-listed committee
members in their capacity as the Board's Compensation Committee, addressing the
Company's compensation policy as it related to the named executive officers for
fiscal 1997.
This report by the Compensation Committee and the Performance Graph and the
Ten-Year Option/SAR Repricings Table contained in this Proxy Statement shall not
be deemed to be incorporated by reference by any general statement which
incorporates by reference this Proxy Statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, and they shall
not otherwise be deemed filed under such Acts.
Compensation Policy
The goal of the Company's executive compensation policy is to ensure that
an appropriate relationship exists between executive pay and the creation of
shareholder value, while at the same time motivating and retaining key
employees. To achieve this goal, the Company's executive compensation policies
integrate annual base compensation with cash bonuses based upon corporate
performance and individual initiatives and performance and stock options granted
under the Company's 1991 Stock Incentive Plan, as amended. Measurement of
corporate performance is primarily based on Company goals and industry
performance levels. Accordingly, in years in which performance goals and
industry levels are achieved or exceeded, executive compensation would be higher
than in years in which performance is below expectations. Annual cash
compensation is designed to attract and retain qualified executives. All
executive officers, and management in general, are also eligible for and
participate in an incentive compensation plan that consists of cash bonuses and
stock options.
CEO Compensation
At the February 21, 1997 meeting of the Compensation Committee, Mr.
Hanson's base salary was reviewed. The Compensation Committee also reviewed the
attainment of corporate and individual performance goals, Mr. Hanson's base
salary relative to other peer executives of comparable companies and the
Company's anticipated financial results for 1997. Based upon such
considerations, the Compensation Committee recommended, and the Board of
Directors unanimously approved (with Mr. Hanson abstaining), an increase in Mr.
Hanson's base salary to $240,000, which increase became effective March 1, 1997.
Mr. Hanson also received a $69,300 bonus in 1997 which was partially based upon
the 17% growth rate in revenues but offset by the write off of certain
intangible assets in 1996.
11
<PAGE>
Mr. Hanson received a stock option grant to purchase 50,000 shares of
common stock of the Company at an exercise price of $6.00 per share, a price in
excess of the fair market value of the common stock on the date of the grant.
The Compensation Committee considered the amount of options already held by Mr.
Hanson in making such an award. The Compensation Committee believes that Mr.
Hanson's stock option grant continues to align his compensation more directly
with the interests of the Company's shareholders.
Performance Measures
In evaluating annual bonuses, the Committee examines earnings per share and
sales growth as well as subjective factors relating to performance of management
objectives. No specific weight is assigned to any of these factors. The earnings
factors are compared with designated Company performance goals, prior years'
performance and performance of other companies in the industry. Accordingly, the
Company believes it is important that its performance be compared to that of
other home healthcare companies in order to demonstrate the impact of
management's objectives and performance. Therefore, the Company compares its
performance against the Nasdaq Healthcare Index. Such peer industry group is the
same group included as the peer group in the performance graph included
elsewhere in this Proxy Statement. The Company considers itself primarily an
infusion therapy company, and approximately 19% of its revenues during 1997 came
from franchising pharmaceutical therapy and 81% came from direct pharmaceutical
therapy and related health care services.
Fiscal 1997 Compensation
For fiscal 1997, the Company's executive compensation program consisted of
base salary, adjusted from the prior year, a bonus pool based upon the
performance measurements described above, and stock options which are granted
from time to time to members of management. Options are granted based primarily
on each such person's potential contribution to the Company's growth and
profitability. The Committee believes that options and other stock-based
performance compensation arrangements are an effective incentive for managers to
create value for shareholders since the value of an option bears a direct
relationship to the Company's stock price.
Base salary, maximum annual bonus, and annual stock option grants for the
Chief Executive Officer and all other executive officers were established by a
combination of objective and subjective factors. Actual bonus payout is
determined by a combination of objective factors, relating to the Company's
performance relative to targets and comparative companies, and subjective
factors, relating to the completion of specific management objectives.
12
<PAGE>
The Company's objective is to obtain a financial performance that achieves
several goals over time including sales volume and earnings-per-share growth. In
fiscal 1997, the Company achieved a 42% growth rate in revenues while reporting
net income of $2,579,000 before a write-off of certain assets and other charges.
As a result, 1997 bonuses reflect reduced payments for the Company
performance-related component.
Base salaries are believed to be within the range of those persons holding
comparably responsible positions at other companies, both regionally and
nationally. In addition, other factors are taken into consideration, such as
cost of living increases, competitors' performance, as well as the individual's
past performance and potential with the Company. Bonus compensation is
discretionary, taking into account, performance goals and other factors.
The Committee believes that linking executive compensation to corporate
performance results in a better alignment of compensation with corporate goals
and shareholder interest. If performance goals are met or exceeded, resulting in
increased value to shareholders, executives are rewarded commensurately. The
Committee believes that compensation levels during fiscal 1997 adequately
reflect the Company's compensation goals and policies.
James G. Andress
Roger W. Stone
Jerry Sheldon
13
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph set forth below compares the cumulative
total shareholder return on the Common Stock of the Company for the period from
December 31, 1992 to December 31, 1997, with the cumulative total return on the
Nasdaq National Market Composite Index and the Nasdaq Healthcare Index over the
same period assuming the investment of $100 in each on December 31, 1992. All
data assumes that all dividends are reinvested on the respective dividend date.
(GRAPH)
<TABLE>
<CAPTION>
Dec 31, 1992 Dec 31, 1993 Dec 31, 1994 Dec 31, 1995 Dec 31, 1996 Dec 31, 1997
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Option Care, Inc. 100.00 40.54 22.97 36.54 70.27 29.73
Nasdaq Composite 100.00 114.80 112.21 158.70 194.73 239.53
Nasdaq Healthcare 100.00 115.38 123.79 157.24 157.32 160.35
</TABLE>
(1) The peer group index consists of the Nasdaq Healthcare Index. The peer group
index formerly consisted of Rotech Medical Corporation. Rotech merged with
Integrated Health Services, Inc. in 1997.
14
<PAGE>
CERTAIN TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
The Company and EJ Financial Enterprises, Inc., which is 100% owned by Dr.
Kapoor, have entered into a consulting agreement dated as of January 1, 1991
pursuant to which EJ Financial provides independent consulting services to the
Company. EJ Financial receives an annual fee of $100,000 for ongoing consulting
services. The agreement may be terminated by either party on any January 1. EJ
Financial will provide consulting principally on strategic corporate objectives
and operations, including sales and marketing strategies, growth strategies, and
acquisition opportunities of the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected KPMG Peat Marwick, LLP to serve as the
Company's independent public accountants in 1998. Representatives of that firm
are expected to be present at the Annual Meeting with the opportunity to make a
statement if they so desire and to be available to respond to appropriate
questions.
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the year ended December
31, 1997 has been mailed simultaneously to the shareholders of the Company.
Additional copies of such report, as filed with the Securities and Exchange
Commission (excluding exhibits), may be obtained by any shareholder, without
charge, upon written request to James A Hodges, Jr., Option Care, Inc., 100
Corporate North, Suite 212, Bannockburn, Illinois 60015.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1999 Annual
Meeting must be received by December 19, 1998 to be considered for inclusion in
the Company's Proxy Statement and Form of Proxy relating to that meeting. Such
proposals should be addressed to Option Care, Inc., 100 Corporate North, Suite
212, Bannockburn, Illinois 60015, Attn.: Secretary.
15
<PAGE>
DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the 1998 Annual Meeting
any matters other than those specified in the notice of the meeting, and it does
not know of any business which persons other than the management intend to
present at the meeting. Should any other matter requiring a vote of the
shareholders properly come before the meeting, the persons named in the
accompanying Proxy intend to vote the shares represented by them in accordance
with their best judgment.
By Order of the Board of Directors
Cathy Bellehumeur
Senior Vice President, General Counsel
and Secretary
April 09, 1998
16
<PAGE>
OPTION CARE, INC.
100 CORPORATE NORTH
SUITE 212
BANNOCKBURN, ILLINOIS 60015
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints James A. Hodges, Jr. as Proxy,
each with the power to appoint a substitute, and hereby authorizes him, to
represent and vote, as designated below, all of the shares of Common Stock of
Option Care, Inc. (the "Company") held of record by the undersigned, or over
which the undersigned had voting power, at the close of business on March 30,
1998 at the Annual Meeting of Shareholders to be held on May 13, 1998 or any
adjournment or adjournments thereof.
This Proxy when properly executed will be voted in the manner
directed herein by the undersigned. If no direction is made, this Proxy will be
voted for Proposals 1 and 2 and in favor of any proposals to adjourn the meeting
in order to allow the Company additional time to obtain sufficient Proxies with
regard thereto.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. Election of Directors.
[_] FOR the nominees listed below (except [_] WITHHOLD AUTHORITY to vote
marked to the contrary below). for the nominees below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike such nominee's name from the list below.)
Jerome F. Sheldon
(continued on reverse side)
2. In their discretion, the Proxy is authorized to vote upon such other
business as may properly come before the meeting.
Dated: , 1998
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Signature
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Signature, if held jointly
Please sign exactly as name appears on
stock certificate. When shares are held
by joint tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by the President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE SIGN, DATE AND MAIL PROMPTLY
17
