This patch was developed in-house.
It is submitted upstream at https://github.com/apple/cups/issues/4813

--- systemv/lp.c	Wed Mar 23 11:59:25 2016
+++ systemv/lp.c	Fri Mar 25 22:52:26 2016
@@ -39,7 +39,87 @@
 int	set_job_attrs(const char *command, int job_id, int num_options,
 	              cups_option_t *options);
 
+/*
+ * Transform combined arguments into separate list so that the option
+ * handling in main() can handle those properly.
+ * For example:
+ *	lp -U user -csdprinter file1
+ * would be converted to
+ *	lp -U user -c -s -dprinter file
+ *
+ * The logic used to determine the end of option is same as in main(),
+ * so that option handling in main() wouldn't upset.
+ */
+static int
+parseargs(int *acp, char **avp[])
+{
+	int	c, i, j;
+	int	argc, ac, eos;
+	char	**argv, **av;
+	int	end_options = 0;
 
+	argc = *acp;
+	argv = *avp;
+
+	j = argc + 1;
+	for (i = 1; i < argc; i++) {
+    		if (argv[i][0] == '-')
+			j += strlen(argv[i]);
+	}
+	if ((av = malloc(sizeof (char *) * j)) == NULL)
+		return (1);
+
+	av[0] = argv[0];
+	ac = 1;
+	for (i = 1; i < argc; i++) {
+    		if (end_options || argv[i][0] != '-' || argv[i][1] == '\0') {
+			av[ac++] = argv[i];
+			continue;
+		}
+		eos = 0;
+		for (j = 1; (c = argv[i][j]) != '\0'; j++) {
+			switch (c) {
+			case 'U': case 'd': case 'f': case 'h':
+			case 'i': case 'n': case 'o': case 'p':
+			case 'q': case 't': case 'y': case 'H':
+			case 'P': case 'S': case 'T':
+				/* take option argument */
+				(void) asprintf(&av[ac], "-%s", &argv[i][j]);
+				ac++;
+				/* option argument may be on the next */
+				if (argv[i][j + 1] == '\0') {
+					/* copy only if it's available */
+					if ((i + 1) < argc)
+						av[ac++] = argv[++i];
+				}
+				eos = 1;
+				break;
+			case '-':
+				av[ac++] = argv[i];
+				end_options = 1;
+				eos = 1;
+				break;	
+			default:
+				(void) asprintf(&av[ac], "-%c", c);
+				ac++;
+				break;
+			}
+			if (eos)
+				break;
+		}
+	}
+	av[ac] = NULL;
+	for (i = 1; i < ac; i++) {
+		/* asprintf might have failed with ENOMEM */
+		if (av[i] == NULL)
+			return (1);
+	}
+
+	*acp = ac;
+	*avp = av;
+	return (0);
+}
+
 /*
  * 'main()' - Parse options and send files for printing.
  */
@@ -65,6 +145,10 @@
   int		silent;			/* Silent or verbose output? */
   char		buffer[8192];		/* Copy buffer */
 
+  if (parseargs(&argc, &argv)) {
+    _cupsLangPrintf(stderr, _("Unable to allocate memory!"));
+    return (1);
+  }
 
 #ifdef __sun
  /*