BioScrip Reports First Quarter 2014 Financial Results

            BioScrip Reports First Quarter 2014 Financial Results

PR Newswire

ELMSFORD, N.Y., May 8, 2014

ELMSFORD, N.Y., May 8, 2014 /PRNewswire/ --BioScrip, Inc. (NASDAQ: BIOS)
today announced 2014 first quarter financial results. First quarter revenue
from continuing operations was $239.6 million and the net loss from continuing
operations was $25.4 million, or $0.37 per basic and diluted share. Non-GAAP
adjusted loss from continuing operations perbasic anddiluted share was
$0.13.

As a result of the completed sale of BioScrip's Home Health business on March
31, 2014, the Company's prior periodfinancial statementshave been
reclassified to include theHome Health business as "discontinued operations"
in the Consolidated Financial Statements.

First Quarter Highlights

  oRevenue from continuing operations increased by $58.5 million, or 32.3%,
    as compared to the prior year period. Revenue from the Infusion Services
    segment increased by $67.0 million, or 43.4%, as compared to the prior
    year period. Organic revenue growth for the Infusion Services segment
    remained in the double digits year-over-year.
  oGross profit from continuing operations was $65.1 million, or 27.2% of
    revenue, as compared to $56.0 million, or 30.9% of revenue, in the prior
    year period. The decline in gross profit margin percentage was driven
    primarily by the decline in the higher-margin PBM Services segment.
  oAdjusted EBITDA from continuing operations was $9.1 million, a decrease of
    $1.1 million over the prior year period. Adjusted EBITDA from the Infusion
    Services segment increased by $2.9 million, or 24.7%, as compared to the
    prior year and corporate overhead decreased by $0.4 million, or 5.6%,
    offset by a $4.5 million, or 73.0%, decrease in the PBM Services segment.
    Adjusted EBITDA also included a $2.2 million favorable adjustment to the
    fair value of contingent consideration relating to the Company's Infusion
    acquisitions, offset by a $2.0 million increase in the bad debt provision
    relating to acquisition integration disruption. Additionally, Adjusted
    EBITDA included $1.4 million of increased investment in reimbursement
    resources in the form of overtime, temporary labor, collection incentives
    and third-party professional fees.
  oAs a result of the focus on cash collections, BioScrip has made meaningful
    progress with monthly average collections growing from $55.7 million in
    the third quarter of 2013 to $70.0 million in the first quarter of 2014.
    Consolidated collections grew from $53.0 million in September of 2013 to
    $79.8 million in April of 2014.
  oOn March 31 BioScrip completed its previously announced sale of
    substantially all of its Home Health business to LHC Group, Inc. for a
    total purchase price of approximately $60 million. BioScrip used the net
    proceeds to pay down a portion of its outstanding debt.

"Our first-quarter results reflect our success in achieving our two strategic
priorities of building a leadership position in the home infusion industry and
generating strong cash collections. We are pleased to deliver double-digit
organic growth in Infusion Services, and expect to continue driving growth
through our enhanced scale and expanded physician and payor relationships
across our operating footprint. We also completed the integration of all of
our Infusion locations onto a single operating platform. As one team, one
company, we are already realizing greater efficiencies in our business and
optimizing our productivity. At the same time, our cash collection efforts are
yielding positive results and providing us with greater financial flexibility
to execute our long-term plans," said Rick Smith, President and Chief
Executive Officer of BioScrip.

"We remain focused on advancing each of our initiatives to drive organic
growth in our core business, while continuing to provide outstanding clinical
care to patients across our network. Our team members across the organization
are highly focused on our continued success, and we look forward to continuing
our momentum to drive results and create value for our shareholders,"
concluded Smith.

Results of Operations

First Quarter 2014 versus First Quarter 2013
Revenue from continuing operations for the first quarter of 2014 totaled
$239.6 million, compared to $181.1 million for the same period a year ago, an
increase of $58.5 million or 32.3%. Infusion Services segment revenue was
$221.4 million in the first quarter as compared to $154.4 million for the same
period in 2013. The 43.4% increase was driven primarily by the acquisitions of
HomeChoice and CarePoint, as well as continued strong double-digit organic
growth.

Consolidated gross profit for the first quarter of 2014 was $65.1 million, or
27.2% of revenue, compared to $55.9 million, or 30.9% of revenue, for the
first quarter of 2013. The increase in gross profit was the result of the
acquisitions of HomeChoice and CarePoint and organic growth, offset by the
decline in the PBM Services segment. The decline in gross profit margin
percentage was driven primarily by the decline in the higher-margin PBM
Services segment.

During the first quarter of 2014, Infusion Services segment Adjusted EBITDA
was $14.9 million, or 6.7% of segment revenue, compared to $11.9 million, or
7.7% of segment revenue, in the prior year quarter. The 24.7% improvement in
Adjusted EBITDA in the Infusion Services segment resulted primarily from
organic revenue growth and the HomeChoice and CarePoint acquisitions. Infusion
Services segment Adjusted EBITDA also included a $2.2 million favorable
adjustment to the fair value of contingent consideration relating to our
infusion acquisitions, offset by a $2.0 million increase in the bad debt
provision relating to acquisition integration disruption.

PBM Services segment revenue was $18.2 million for the first quarter of 2014,
compared to $26.8 million for the prior year period. The decline was related
to the termination of a large but low-margin client during the first quarter
of 2013, and declines in discount card revenue. PBM Services segment Adjusted
EBITDA was $1.7 million, or 9.2% of segment revenue, for the first quarter of
2014 compared to $6.2 million, or 23.2% of segment revenue, in the prior year
quarter.

On a consolidated basis, BioScrip reported $9.1 million of Adjusted EBITDA
during the first quarter of 2014, or 3.8% of total revenue, compared to $10.2
million, or 5.6% of total revenue, in the same period last year. Adjusted
EBITDA included $1.4 million of increased investment in reimbursement
resources in the form of overtime, temporary labor, collection incentives and
third-party professional fees.

Interest expense in the first quarter of 2014 was $10.5 million compared to
$6.5 million in the prior year period.

Income tax expense for continuing operations in the first quarter of 2014 was
$3.5 million compared to an income tax benefit of $0.2 million in the prior
year period.

The loss from continuing operations, net of taxes, for the first quarter of
2014 was $25.4 million, or a loss of $0.37 per basic and diluted share,
compared to a net loss of $8.4 million, or $0.15 per basic and diluted share,
in the prior year period.

Liquidity and Capital Resources

For the three months ended March 31, 2014, BioScrip used $24.5 million in net
cash from continuing operating activities, compared to cash used of $14.1
million during the first quarter of 2013. The increase in cash used in
operating activities was primarily due to increase in working capital to
support the growth of the business and an increase in accounts receivable
primarily due to the integration of the Infusion acquisitions. As of March 31,
2014, the Company's cash balance was $9.3 million, and it had $418.7 million
of outstanding debt and an undrawn $75 million revolving credit facility. On
March 31, 2014, the Company completed its previously announced sale of
substantially all of its Home Health business to LHC Group, Inc. for a total
purchase price of approximately $60 million. The Company used the net proceeds
to pay down a portion of its outstanding debt. Capital expenditures for the
first quarter of 2014 were $3.1 million.

Outlook

The Company believes its 2014 revenue will be in a range of $940.0 million to
$980.0 million and believes its 2014 Adjusted EBITDA will be in a range of
$55.0 million to $60.0 million. This reflects the Company's current assessment
of the business and assumes:

  oInfusion Services segment is expected to continue to deliver double-digit
    organic revenue growth;
  oInfusion Services segment Adjusted EBITDA margin percentage is expected to
    trend toward a 10% target by the fourth quarter of 2014; and
  oContinued stability is expected in our PBM Services segment from an
    adjusted EBITDA perspective consistent with first-quarter performance.

Conference Call

BioScrip will host a conference call to discuss its first quarter 2014
financial results on May 9, 2014 at 8:30 a.m. Eastern Time. Interested parties
may participate in the conference call by dialing 800-896-0105 (US), or
212-231-2922 (International), 5-10 minutes prior to the start of the call. A
replay of the conference call will be available for two weeks after the call's
completion by dialing 800-633-8284 (US) or 402-977-9140 (International) and
entering conference call ID number 21715187. An audio webcast and archive will
also be available for 30 days under the "Investor Relations" section of the
BioScrip website at www.bioscrip.com.

About BioScrip, Inc.

BioScrip, Inc. is a leading national provider of infusion and home care
solutions. BioScrip partners with physicians, hospital systems, healthcare
payors, and pharmaceutical manufacturers to provide patients access to
post-acute care services. BioScrip operates with a commitment to bring
customer-focused pharmacy and related healthcare infusion therapy services
into the home or alternate- site setting. By collaborating with the full
spectrum of healthcare professionals and the patient, BioScrip provides
cost-effective care that is driven by quality, customer service, and values
that promote positive outcomes and an enhanced quality of life for those it
serves. BioScrip provides its infusion and home care services from over 80
locations across 29 states.

Forward-Looking Statements – Safe Harbor

This press release includes statements that may constitute "forward-looking
statements," including projections of certain measures of the Company's
results of operations, projections of certain charges and expenses, and other
statements regarding the Company's goals, regulatory approvals and strategy.
These statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. You can identify these
statements by the fact that they do not relate strictly to historical or
current facts. In some cases, forward-looking statements can be identified by
words such as "may," "should," "could," "anticipate," "estimate," "expect,"
"project," "intend," "plan," "believe," "predict," "potential," "continue" or
comparable terms. Because such statements inherently involve risks and
uncertainties, actual future results may differ materially from those
expressed or implied by such forward-looking statements. Investors are
cautioned that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and that actual
results may differ materially from those in the forward-looking statements as
a result of various factors. Important factors that could cause or contribute
to such differences include but are not limited to risks associated with: the
Company's ability to integrate the CarePoint business and other acquisitions;
the Company's ability to grow its Infusion Services segment organically or
through acquisitions and obtain financing in connection therewith; its ability
to reduce operating costs while sustaining growth; reductions in federal,
state and commercial reimbursement for the Company's products and services;
increased government regulation related to the health care and insurance
industries; as well as the risks described in the Company's periodic filings
with the Securities and Exchange Commission, including the Company's annual
report on Form 10-K for the year ended December 31, 2013. The Company does not
undertake any duty to update these forward-looking statements after the date
hereof, even though the Company's situation may change in the future. All of
the forward-looking statements herein are qualified by these cautionary
statements.

Reconciliation to Non-GAAP Financial Measures

In addition to reporting all financial information required in accordance with
generally accepted accounting principles (GAAP), the Company is also reporting
EBITDA, Adjusted EBITDA, and Adjusted EPS, which are non-GAAP financial
measures. EBITDA, Adjusted EBITDA and Adjusted EPS are not measurements of
financial performance under GAAP and should not be used in isolation or as a
substitute or alternative to net income, operating income or any other
performance measure derived in accordance with GAAP, or as a substitute or
alternative to cash flow from operating activities or a measure of our
liquidity. In addition, the Company's definitions of EBITDA, Adjusted EBITDA
and Adjusted EPS may not be comparable to similarly titled non-GAAP financial
measures reported by other companies. EBITDA represents net income before net
interest expense, income tax expense, depreciation and amortization. Adjusted
EBITDA, as defined by the Company, represents net income before net interest
expense, loss on extinguishment of debt, income tax expense, depreciation and
amortization, stock-based compensation expense, acquisition and integration
expenses, restructuring-related expenses and investments in start-up
operations. As part of restructuring, the Company may incur significant
charges such as the write down of certain long−lived assets, temporary
redundant expenses, retraining expenses, potential cash bonus payments and
potential accelerated payments or terminated costs for certain of its
contractual obligations. Adjusted EPS, as defined by the Company, represents
earnings per basic and diluted share, excluding the same elements in
calculating Adjusted EBITDA as well as the impact of acquisition-related
intangible amortization. Management believes that these non-GAAP financial
measures provide useful supplemental information regarding the performance of
our business operations and facilitates comparisons to our historical
operating results. For a full reconciliation of EBITDA, Adjusted EBITDA and
Adjusted EPS to the most comparable GAAP financial measures, please see the
attachments to this earnings release.

(Financial Tables Follow)

Schedule 1
BIOSCRIP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)
                                        March 31,
                                                           December31, 2013
                                        2014
                                        (unaudited)
ASSETS
Current assets
Cash and cash equivalents               $           $       1,001
                                        9,253
Receivables, less allowance for
doubtful accounts of $23,660 and        195,090            172,187
$17,836 at March 31, 2014 and December
31, 2013, respectively
Inventory                               34,754             34,341
 Prepaid expenses and other current   12,252             14,110
assets
 Current assets of discontinued       -                  15,316
operations
Total current assets                    251,349            236,955
Property and equipment, net             39,953             41,182
Goodwill                                571,830            571,337
Intangible assets, net                  15,121             16,824
Deferred financing costs                18,247             17,184
Other non-current assets                3,576              3,733
Non-current assets of discontinued      -                  49,643
operations
Total assets                            $    900,076   $    936,858
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt       $          60,257
                                        431
Accounts payable                        68,288             63,575
Claims payable                          7,913              2,547
Amounts due to plan sponsors            5,963              4,826
Accrued interest                        2,307              2,173
Accrued expenses and other current      42,663             34,352
liabilities
Current liabilities of discontinued     -                  6,576
operations
Total current liabilities               127,565            174,306
Long-term debt, net of current portion  418,238            375,322
Deferred taxes                          12,677             8,954
Other non-current liabilities           8,940              17,540
Other non-current liabilities of        -                  6,153
discontinued operations
Total liabilities                       567,420            582,275
Stockholders' equity
Preferredstock, $.0001 par value;
5,000,000 shares authorized; no shares  —                  —
issued or outstanding
Common stock, $.0001 par value;
125,000,000 shares authorized; shares
issued: 70,784,560 and 70,711,439,      8                  7
respectively; shares outstanding:
68,202,040 and 68,128,919, respectively
Treasury stock, shares at cost:         (10,311)           (10,311)
2,582,520 and 2,582,520, respectively
Additional paid-in capital              523,011            519,625
Accumulated deficit                     (180,052)          (154,738)
Total stockholders' equity              332,656            354,583
Total liabilities and stockholders'     $    900,076   $    936,858
equity



Schedule 2
BIOSCRIP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
                                          Three Months Ended
                                          March 31,
                                          2014               2013
Product revenue                           $   215,900     $   150,024
Service revenue                           23,743             31,105
Total revenue                             239,643            181,129
Cost of product revenue                   151,764            105,533
Cost of service revenue                   22,737             19,615
Total cost of revenue                     174,501            125,148
Gross profit                              65,142             55,981
% of revenues                             27.2%              30.9%
Selling, general and administrative       59,384             47,005
expenses
Change in fair value of contingent        (2,209)            -
consideration
Bad debt expense                          6,605              3,180
Acquisition and integration expenses      6,499              4,623
Restructuring and other expenses          4,592              1,278
Amortization of intangibles               1,703              2,082
Loss from continuing operations           (11,432)           (2,187)
Interest expense, net                     10,499             6,478
Loss from continuing operations,         (21,931)           (8,665)
before income taxes
Income tax expense (benefit)              3,491              (224)
Loss from continuing operations, net      (25,422)           (8,441)
of income taxes
Income from discontinued operations,      108                313
net of income taxes
Net loss                                  $  (25,314)      $    (8,128)
Loss per common share:
Loss from continuing operations,          $     (0.37)  $     (0.15)
basic and diluted
Income (loss) from discontinued           0.00               0.01
operations, basic and diluted
Net loss, basic and diluted               $     (0.37)   $     (0.14)
Weighted average shares outstanding,      68,171             57,047
basic and diluted



Schedule 3
BIOSCRIP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                        Three Months Ended March 31,
                                        2014                 2013
Cash flows from operating activities:
Net loss                                $              $       
                                        (25,314)             (8,128)
Less: Income from discontinued          108                  313
operations, net of income taxes
Loss from continuing operations, net of (25,422)             (8,441)
income taxes
Adjustments to reconcile (loss) from
continuing operations, net of income
taxes to net cash provided by (used in)
operating activities:
Depreciation                            3,836                2,418
Amortization of intangibles             1,703                2,082
Amortization of deferred financing      1,943                356
costs and debt discount
Change in fair value of contingent      (2,209)              -
consideration
Change in deferred income tax           2,708                457
Compensation under stock-based          2,886                1,973
compensation plans
Loss on disposal of fixed assets        -                    13
Changes in assets and liabilities, net
of acquired business:
Receivables, net of bad debt expense    (22,903)             (17,554)
Inventory                               (413)                13,199
Prepaid expenses and other assets       1,475                2,501
Accounts payable                        4,644                (2,777)
Claims payable                          5,365                187
Amounts due to plan sponsors            1,138                (4,152)
Accrued interest                        134                  5,772
Accrued expenses and other liabilities  634                  (10,173)
Net cash provided by (used in)
operating activities from continuing    (24,481)             (14,139)
operations
Net cash provided by (used in)
operating activities from discontinued  (1,505)              1,291
operations
Net cash provided by (used in)          (25,986)             (12,848)
operating activities
Cash flows from investing activities:
Purchases of property and equipment,    (3,060)              (3,623)
net
Cash consideration paid for             -                    (72,325)
acquisitions, net of cash acquired
Cash consideration paid for
unconsolidated affiliate, net of cash   -                    (900)
acquired
Net cash provided by (used in)
investing activities from continuing    (3,060)              (76,848)
operations
Net cash provided by (used in)
investing activities from discontinued  56,616               (32)
operations
Net cash provided by (used in)          53,556               (76,880)
investing activities
Cash flows from financing activities:
Proceeds from new senior notes due      193,810              -
2021, net of fees paid to lenders
Deferred and other financing costs      (1,211)              -
Borrowings on line of credit            64,600               214,145
Repayments on line of credit            (104,603)            (187,092)
Principal payments on long-term debt    (172,243)            -
Repayments of capital leases            (98)                 (68)
Net proceeds from exercise of employee  427                  642
stock compensation plans
Net cash provided by (used in)
financing activities from continuing    (19,318)             27,627
operations
Net change in cash and cash equivalents 8,252                (62,101)
Cash and cash equivalents - beginning   1,001                62,101
of period
Cash and cash equivalents - end of      $             $        
period                                  9,253                  -
DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for         $            $        
interest                                8,476                 322
Cash paid during the period for income  $            $        
taxes                                   (314)                 (6)
DISCLOSURE OF NON-CASH TRANSACTIONS:
Capital lease obligations incurred to   $           $        
acquire property and equipment            -                   -



Schedule 4
BIOSCRIP, INC.
Reconciliation between GAAP and Non-GAAP Measures
(in thousands)
                                           Three Months Ended
                                           March 31,
                                           2014               2013
Results of Operations:
Revenue:
Infusion Services -                        $              $     
product revenue                            215,900            150,024
Infusion Services -                        5,519              4,353
service revenue
Total Infusion Services                    221,419            154,377
revenue
PBM Services - service                     18,224             26,752
revenue
Total revenue                              $   239,643     $    181,129
Adjusted EBITDA by Segment
before corporate overhead:
Infusion Services                          $             $      
                                           14,853             11,909
PBM Services                               1,675              6,195
Total Segment Adjusted                     16,528             18,104
EBITDA
Corporate overhead                         (7,476)            (7,916)
Consolidated Adjusted                      9,052              10,188
EBITDA
Interest expense, net                      (10,499)           (6,478)
Income tax (expense)                       (3,491)            224
benefit
Depreciation                               (3,836)            (2,418)
Amortization of                            (1,703)            (2,082)
intangibles
Stock-based compensation                   (2,886)            (1,973)
expense
Acquisition and                            (6,499)            (4,623)
integration expenses
Restructuring and other
expenses and investments                   (5,560)            (1,279)
^(1)
Loss from continuing                       $               $     
operations, net of income                  (25,422)           (8,441)
taxes
Supplemental Operating                     March 31,          December 31,
Data
                                           2014               2013
Total Assets:
Infusion Services                          $              $     
                                           808,871            794,006
PBM Services                               31,475             25,239
Corporate unallocated                      59,714             52,632
Assets from discontinued                   -                  64,965
operations
 Assets associated with
discontinued operations,                   16                 16
not sold
Total Assets                               $   900,076     $    936,858
^(1)Restructuring and other expenses and investments include costs associated
with restructuring such as employee severance, third party consulting costs
and facility closure costs; training and transitional costs as well as
redundant salaries; and, losses in the short-term investment of the
unconsolidated affiliate and investment in start-up branch locations.



Schedule 5
BIOSCRIP, INC.
Reconciliation between GAAP and Non-GAAP Earnings Per Share
(in thousands)
                                                  Three Months Ended
                                                  March 31,
                                                  2014 ^1          2013 ^2
Net income from continuing operations, net of     $   (25,422)  $   
income taxes                                                       (8,441)
   Non-GAAP adjustments, net of income tax:
          Restructuring and other expenses        5,472            1,242
          and investments ^3
          Acquisition and integration             6,396            4,492
          expenses
          Amortization of intangibles             1,676            2,023
          Compensation under stock-based          2,840            1,917
          compensation plans
Non-GAAP net income from continuing               $             $    
operations                                        (9,038)         1,233
Earnings per share from continuing                $            $    
operations, basic and diluted                     (0.37)          (0.15)
   Non-GAAP adjustments, net of income tax:
          Restructuring and other expenses        0.08             0.02
          and investments^3
          Acquisition and integration             0.10             0.08
          expenses
          Amortization of intangibles             0.02             0.04
          Compensation under stock-based          0.04             0.03
          compensation plans
Non-GAAP earnings per share from continuing       $            $     
operations, basic and diluted                     (0.13)          0.02
Weighted average shares outstanding, basic        68,171           57,047
and diluted

  For the three months ended March 31, 2014, non-GAAP net loss from continuing
  operations adjustments are net of tax, calculated using the year to date
  effective tax rate method. The tax benefit expense netted against
1 restructuring and other expenses and investments, acquisition and
  integration expenses, amortization of intangibles, and stock-based
  compensation expense for the three months ended March 31, 2014 was $88,
  $103, $27 and $46.The taxeffect of these adjustments on a per share basis
  is not meaningful. 
  For the three months ended March 31, 2013, non-GAAP net loss from continuing
  operations adjustments are net of tax, calculated using the year to date
  effective tax rate method. The tax benefit netted against restructuring and
2 other expenses and investments, acquisition and integration expenses,
  amortization of intangibles, and stock-based compensation expense for the
  three months ended March 31, 2013 was $36, $131, $59 and $56, respectively.
  The tax effect of these adjustments on a per share basis is not meaningful.
  Restructuring and other expenses and investments include costs associated
  with restructuring such as employee severance, third party consulting costs
3 and facility closure costs; training and transitional costs as well as
  redundant salaries; losses in the short-term investment in the
  unconsolidated affiliate; and investments in start-up branch locations.



Contact:
Hai Tran, Chief Financial Officer
BioScrip
952-979-3768

or

Lisa Wilson
In-Site Communications, Inc.
212-759-3929

SOURCE BioScrip, Inc.

Website: http://www.bioscrip.com
 
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