BioScrip Reports Second Quarter 2019 Financial Results
Second Quarter 2019 BioScrip Highlights
- Net revenue of
$191.5 million , up 8.9% compared to$175.8 million in the second quarter of 2018. - Gross revenue1 of
$196.8 million , up 13.1% compared to$174.0 million in the prior year quarter. - Net loss from continuing operations of
$14.2 million , compared to$15.1 million in the prior year quarter. - Adjusted EBITDA of
$15.5 million , up 35.4% compared to$11.4 million in the prior year quarter. - ASC 606 adjustment (bad debt) as a percent of gross revenue improved to 4.6%, compared to 5.3% in the first quarter of 2019; cash collections increased
$29.1 million or 17.7% compared to the prior year quarter. - Net cash provided by operating activities of
$2.7 million , reflecting$7.9 million of operational cash flow and$5.2 million of interest payments. - Liquidity of
$14.4 million atJune 30, 2019 , consisting of cash and cash equivalents. - BioScrip’s pending combination with Option Care is expected to close in early
August 2019 , creating the preeminent home infusion company.
1Revenue prior to ASC 606 adjustment (bad debt) and contractual adjustments.
Second Quarter 2019 Option Care Highlights
- Net revenue of
$512.6 million , up 3.2% compared to$496.9 million in the second quarter of 2018.2 - Net loss of
$13.6 million , compared to$4.3 million in the prior year quarter. - Adjusted EBITDA of
$23.7 million , up 10.2% compared to$21.5 million in the prior year quarter. - Net cash provided by operating activities of
$13.3 million , reflecting$22.1 million of operational cash flow and$8.8 million of interest payments. - Cash and cash equivalents of
$46.9 million atJune 30, 2019 .
2Net revenue does not reflect the impact of the implementation of ASC 606, which Option Care anticipates will result in the recognition of amounts historically reported in the provision for doubtful accounts as a reduction to revenue.
Financial Guidance and Conference Call
Given the pending combination with Option Care, the Company will not be providing
ADDITIONAL INFORMATION AND WHERE TO FIND IT
On
PARTICIPANTS IN THE SOLICITATION
The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from stockholders in connection with the matters discussed above. Information about the Company’s directors and executive officers is set forth in the proxy statement filed on
About
Investor Contacts
Stephen Deitsch
Chief Financial Officer & Treasurer
T: (720) 697-5200
stephen.deitsch@bioscrip.com
The
T: (212) 836-9614
kahl@equityny.com
Forward-Looking Statements – Safe Harbor
This communication, in addition to historical information, contains “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995) regarding, among other things, future events or the future financial performance of
Many of these risks, uncertainties and assumptions are beyond BioScrip’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the information currently available to the parties on the date they are made, and neither
Note Regarding Use of BioScrip Non-GAAP Financial Measures
In addition to reporting financial information in accordance with generally accepted accounting principles (GAAP), the Company is also reporting Adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is not a measurement 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 the Company’s liquidity. In addition, the Company's definition of Adjusted EBITDA may not be comparable to similarly titled non-GAAP financial measures reported by other companies. Adjusted EBITDA, as defined by the Company, represents net income before net interest expense, income tax expense, depreciation and amortization, impairment of goodwill, stock-based compensation expense, and restructuring, integration, pre-merger and other expenses. 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. Management believes that Adjusted EBITDA provides useful supplemental information regarding the performance of BioScrip’s business operations and facilitates comparisons to the Company’s historical operating results. For a full reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, please see the attachment to this earnings release.
Option Care Non-GAAP Measures
The following tables reconcile Option Care’s GAAP loss, net of income taxes to Consolidated Adjusted EBITDA. Consolidated Adjusted EBITDA is calculated as net loss, net of income taxes, adjusted for interest expense, unusual losses, income tax benefit (expense), depreciation and amortization expense, and stock-based incentive compensation expense. Consolidated Adjusted EBITDA also excludes management fees and restructuring, acquisition, and integration expenses, including associated non-recurring costs such as employee severance costs, certain legal and professional fees, debt financing fees, and other costs associated with system implementations or closed locations. Consolidated Adjusted EBITDA is a supplemental indicator of recurring cash flow, and is used by Option Care management in strategic planning decisions and the annual budgeting process. Consolidated Adjusted EBITDA is also the primary measure used for the management bonus program and is utilized to calculate debt coverage ratios. Consolidated Adjusted EBITDA is included to provide investors insight into how management and other external stakeholders assess the performance of Option Care.
Non-GAAP financial measures have inherent limitations and calculations may differ from similarly titled measures reported by other Companies. Consolidated Adjusted EBITDA should be reviewed in conjunction with the consolidated financial statements prepared and presented in accordance with GAAP, as well as with the detailed reconciliations below.
Schedule 1
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 2019 | December 31, 2018 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 14,390 | $ | 14,539 | |||
Restricted cash | 4,322 | 4,321 | |||||
Accounts receivable, net | 118,081 | 114,864 | |||||
Inventory | 27,801 | 26,689 | |||||
Prepaid expenses and other current assets | 13,046 | 14,292 | |||||
Total current assets | 177,640 | 174,705 | |||||
Property and equipment, net of accumulated depreciation of $76,282 and $100,851 as of June 30, 2019 and December 31, 2018, respectively | 27,103 | 28,788 | |||||
Goodwill | 367,198 | 367,198 | |||||
Deferred taxes | 995 | 1,032 | |||||
Intangible assets, net of accumulated amortization of $50,640 and $49,080 as of June 30, 2019 and December 31, 2018, respectively | 7,351 | 10,470 | |||||
Operating lease right-of-use assets | 18,611 | — | |||||
Other non-current assets | 1,679 | 1,745 | |||||
Total assets | $ | 600,577 | $ | 583,938 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 5,879 | $ | 3,179 | |||
Current portion of operating lease liabilities | 5,335 | — | |||||
Accounts payable | 73,367 | 67,025 | |||||
Amounts due to plan sponsors | 573 | 956 | |||||
Accrued interest | 6,659 | 6,706 | |||||
Accrued expenses and other current liabilities | 24,352 | 29,450 | |||||
Total current liabilities | 116,165 | 107,316 | |||||
Long-term debt, net of current portion | 519,384 | 501,495 | |||||
Operating lease liabilities, net of current portion | 19,231 | — | |||||
Other non-current liabilities | 21,009 | 25,842 | |||||
Total liabilities | 675,789 | 634,653 | |||||
Series A convertible preferred stock, $.0001 par value | 3,442 | 3,231 | |||||
Series C convertible preferred stock, $.0001 par value | 95,872 | 90,058 | |||||
Stockholders’ deficit | |||||||
Preferred stock, $.0001 par value | — | — | |||||
Common stock, $.0001 par value | 13 | 13 | |||||
Treasury stock, shares at cost | (1,722 | ) | (950 | ) | |||
Additional paid-in capital | 614,335 | 618,137 | |||||
Accumulated deficit | (787,152 | ) | (761,204 | ) | |||
Total stockholders’ deficit | (174,526 | ) | (144,004 | ) | |||
Total liabilities and stockholders’ deficit | $ | 600,577 | $ | 583,938 |
Schedule 2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net revenue | $ | 191,517 | $ | 175,789 | $ | 370,473 | $ | 344,373 | |||||||
Cost of revenue (excluding depreciation expense) | 126,864 | 115,832 | 248,156 | 229,368 | |||||||||||
Gross profit | 64,653 | 59,957 | 122,317 | 115,005 | |||||||||||
Percentage of net revenue | 33.8 | % | 34.1 | % | 33.0 | % | 33.4 | % | |||||||
Operating expenses: | |||||||||||||||
Service location operating expenses | 38,428 | 38,861 | 78,615 | 78,160 | |||||||||||
General and administrative expenses | 11,796 | 10,931 | 23,290 | 21,600 | |||||||||||
Depreciation and amortization expense | 4,665 | 6,366 | 9,738 | 12,852 | |||||||||||
Restructuring, acquisition, integration, and other expenses | 2,871 | 2,024 | 8,892 | 3,906 | |||||||||||
Total operating expenses | 57,760 | 58,182 | 120,535 | 116,518 | |||||||||||
Operating income (loss) | 6,893 | 1,775 | 1,782 | (1,513 | ) | ||||||||||
Other expense: | |||||||||||||||
Interest expense, net | 15,638 | 13,805 | 30,869 | 27,200 | |||||||||||
Change in fair value of equity linked liabilities | 5,216 | 3,064 | (4,784 | ) | (375 | ) | |||||||||
Loss (gain) on dispositions | 51 | (13 | ) | (25 | ) | (318 | ) | ||||||||
Total other expense | 20,905 | 16,856 | 26,060 | 26,507 | |||||||||||
Loss from continuing operations before income taxes | (14,012 | ) | (15,081 | ) | (24,278 | ) | (28,020 | ) | |||||||
Income tax expense | (154 | ) | (43 | ) | (170 | ) | (91 | ) | |||||||
Loss from continuing operations | (14,166 | ) | (15,124 | ) | (24,448 | ) | (28,111 | ) | |||||||
Loss from discontinued operations, net of income taxes | (1,500 | ) | (15 | ) | (1,500 | ) | (45 | ) | |||||||
Net loss | (15,666 | ) | (15,139 | ) | (25,948 | ) | (28,156 | ) | |||||||
Accrued dividends on preferred stock | (3,068 | ) | (2,756 | ) | (6,025 | ) | (5,413 | ) | |||||||
Loss attributable to common stockholders | $ | (18,734 | ) | $ | (17,895 | ) | $ | (31,973 | ) | $ | (33,569 | ) | |||
Basic loss per share: | |||||||||||||||
Loss from continuing operations | $ | (0.13 | ) | $ | (0.14 | ) | $ | (0.24 | ) | $ | (0.26 | ) | |||
Loss from discontinued operations | (0.01 | ) | — | (0.01 | ) | — | |||||||||
Basis loss per share | $ | (0.14 | ) | $ | (0.14 | ) | $ | (0.25 | ) | $ | (0.26 | ) | |||
Diluted loss per share: | |||||||||||||||
Loss from continuing operations | $ | (0.13 | ) | $ | (0.14 | ) | $ | (0.27 | ) | $ | (0.26 | ) | |||
Loss from discontinued operations | (0.01 | ) | — | (0.01 | ) | — | |||||||||
Diluted loss per share | $ | (0.14 | ) | $ | (0.14 | ) | $ | (0.28 | ) | $ | (0.26 | ) | |||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic | 128,779 | 128,038 | 128,446 | 127,906 | |||||||||||
Diluted | 128,779 | 128,038 | 130,499 | 130,158 |
Schedule 3
QUARTERLY RECONCILIATION BETWEEN GAAP AND NON-GAAP MEASURES
(in thousands)
(unaudited)
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Loss from continuing operations | $ | (14,166 | ) | $ | (15,124 | ) | $ | (24,448 | ) | $ | (28,111 | ) | |||
Interest expense, net | (15,638 | ) | (13,805 | ) | (30,869 | ) | (27,200 | ) | |||||||
Gain on dispositions | (51 | ) | 13 | 25 | 318 | ||||||||||
Income tax expense | (154 | ) | (43 | ) | (170 | ) | (91 | ) | |||||||
Depreciation and amortization expense | (4,665 | ) | (6,366 | ) | (9,738 | ) | (12,852 | ) | |||||||
Stock-based compensation | (1,065 | ) | (1,253 | ) | (2,160 | ) | (1,808 | ) | |||||||
Change in fair value of equity linked liabilities | (5,216 | ) | (3,064 | ) | 4,784 | 375 | |||||||||
Restructuring, acquisition, integration, and other expenses (1) | (2,871 | ) | (2,024 | ) | (8,892 | ) | (3,906 | ) | |||||||
Adjusted EBITDA | $ | 15,494 | $ | 11,418 | $ | 22,572 | $ | 17,053 |
(1) Restructuring, acquisition, integration, and other expenses include non-recurring costs associated with restructuring, acquisition, and integration initiatives such as employee severance costs, certain legal and professional fees, training costs, redundant wage costs, and other costs related to contract terminations and closed branches/offices.
Schedule 4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June 30, |
|||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (10,282 | ) | $ | (28,156 | ) | |
Less: Loss from discontinued operations, net of income taxes | (1,500 | ) | (45 | ) | |||
Loss from continuing operations | (24,448 | ) | (28,111 | ) | |||
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: | |||||||
Depreciation and amortization | 9,738 | 12,852 | |||||
Amortization of operating lease right-of-use assets | 2,456 | — | |||||
Amortization of deferred financing costs and debt discount | 4,064 | 4,071 | |||||
Change in fair value of equity linked liabilities | 4,784 | (375 | ) | ||||
Change in deferred income taxes | 36 | 56 | |||||
Stock-based compensation | 2,160 | 1,809 | |||||
Paid-in-kind interest capitalized as principal on Second Lien Note Facility | 8,383 | — | |||||
Gain on dispositions | (25 | ) | (318 | ) | |||
Changes in assets and liabilities | |||||||
Accounts receivable | (3,217 | ) | (11,397 | ) | |||
Inventory | (1,112 | ) | 12,759 | ||||
Prepaid expenses and other assets | 1,401 | 10,054 | |||||
Operating lease liabilities | (2,817 | ) | — | ||||
Accounts payable | 6,342 | (16,702 | ) | ||||
Amounts due to plan sponsors | (384 | ) | (2,437 | ) | |||
Accrued interest | (46 | ) | 23 | ||||
Accrued expenses and other liabilities | (11,238 | ) | (2,566 | ) | |||
Net cash used in operating activities from continuing operations | (3,923 | ) | (20,282 | ) | |||
Net cash used in operating activities from discontinued operations | — | (45 | ) | ||||
Net cash used in operating activities | (3,923 | ) | (20,327 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of property and equipment, net | (3,246 | ) | (6,946 | ) | |||
Net cash used in investing activities | (3,246 | ) | (6,946 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings on long-term debt, net of expenses | 8,000 | 10,000 | |||||
Repayments of finance leases | (460 | ) | (1,185 | ) | |||
Net activity from exercises of employee stock awards | (519 | ) | (179 | ) | |||
Net cash provided by financing activities | 7,021 | 8,636 | |||||
Net change in cash, cash equivalents and restricted cash | (148 | ) | (18,637 | ) | |||
Cash, cash equivalents and restricted cash - beginning of period | 18,860 | 44,407 | |||||
Cash, cash equivalents and restricted cash - end of period | $ | 18,712 | $ | 25,770 |
Schedule 5
OPTION
QUARTERLY RECONCILIATION BETWEEN GAAP AND NON-GAAP MEASURES
(in thousands)
(unaudited)
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Net Loss | $ | (13,603 | ) | $ | (4,309 | ) | $ | (17,315 | ) | $ | (11,160 | ) | |||
Interest expense, net | 11,563 | 12,007 | 22,608 | 23,288 | |||||||||||
Income tax (benefit) | (5,423 | ) | (820 | ) | (6,845 | ) | (2,120 | ) | |||||||
Depreciation and amortization expense | 10,842 | 10,272 | 21,591 | 20,144 | |||||||||||
Accounting principle changes and non-cash charges | 2,721 | — | 4,256 | — | |||||||||||
Stock-based incentive compensation | 569 | 668 | 1,153 | 1,106 | |||||||||||
Loss on debt and interest rate cap terminations | 105 | 72 | 105 | 72 | |||||||||||
Restructuring, acquisition, integration and other | 16,886 | 3,581 | 17,463 | 6,293 | |||||||||||
Consolidated Adjusted EBITDA | $ | 23,660 | $ | 21,471 | $ | 43,016 | $ | 37,623 |
Source: BioScrip, Inc.