UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 26, 2010

BioScrip, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware (State or Other Jurisdiction of Incorporation)		0-28740 (Commission File Number)		05-0489664 (IRS Employer Identification No.)

100 Clearbrook Road, Elmsford, New York (Address of Principal Executive Offices)		10523 (Zip Code)

Registrant’s telephone number, including area code (914) 460-1600

 

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)).

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

 

 

NEWS RELEASE

Contact:

Stanley G. Rosenbaum
Executive Vice President and Chief Financial Officer
Tel: 952-979-3768
srosenbaum@bioscrip.com

Lisa M. Wilson
In-Site Communications
Tel: (917) 543-9932
lwilson@insitecony.com

FOR IMMEDIATE RELEASE

BioScrip Reports 2009 Fourth Quarter and Year-End Financial Results
—Acquisition of Critical Homecare Solutions On Target—

ELMSFORD, N.Y.—(BUSINESS WIRE)—February 26, 2010—BioScrip, Inc. (Nasdaq: BIOS) today announced fourth quarter revenues of $341.6 million and net income of $40.7 million, or $0.99 per diluted share, which includes the reversal of the Company’s deferred tax valuation allowance of $41.1 million, expenses of $1.8 million associated with BioScrip’s pending acquisition of Critical Homecare Solutions, Inc. (“CHS”) and $4.3 million of incentive compensation expense relating to the Company’s employee compensation program. These results compare to revenues of $366.6 million and a net loss of $76.6 million, or $1.98 per diluted share, for the fourth quarter of 2008, which includes a goodwill impairment charge and intangible asset write off of $93.9 million. EBITDAO in the fourth quarter of 2009 was $1.8 million compared to $6.6 million in the prior year. Excluding the CHS expenses and incentive compensation discussed above, adjusted EBITDAO in the fourth quarter of 2009 would have been $7.8 million.

For the year ended December 31, 2009, the Company reported revenues of $1.3 billion and net income of $54.1 million, or $1.36 per diluted share, which includes the reversal of the Company’s deferred tax valuation allowance. This compares to revenues of $1.4 billion and a net loss of $74.0 million, or $1.93 diluted per share, and includes the $93.9 million impairment charge. EBITDAO for 2009 was $23.9 million compared to $20.5

million in 2008. Excluding the CHS acquisition expenses discussed above, adjusted EBITDAO would have been $25.7 million for 2009, an increase of 25%.

The deferred tax valuation allowance reversal was the result of BioScrip’s continued operational improvement over the last three years and the Company’s belief that it will realize the benefit of the deferred tax assets through taxable income in future periods.

Richard H. Friedman, BioScrip’s Chairman and Chief Executive Officer, stated, “Our 2009 results reflect the continued success of our strategy — to be the industry’s clinical leader in infusion, oral and injectable technologies and care management programs. The pending acquisition of CHS will enhance our position as the largest independent specialty pharmacy and leading provider of home health care services. Our expanded platform will broaden our national reach and depth of service at a local level. We remain confident in our strategy.”

Results of Operations

Revenues for the fourth quarter of 2009 totaled $341.6 million, compared to $366.6 million for the same period a year ago. Revenue declines in lower margin business were expected due to the previously announced elimination of the Medicare Competitive Acquisition Program (“CAP”) and the termination of the United Health Group (“UHG”) organ transplant and HIV/AIDS contracts, the impact of the industry-wide AWP settlement, partially offset by increased sales of higher margin infusion therapies and other specialty sales. Excluding the effect of the CAP and UHG contracts, 2009 fourth quarter revenues were 7.9% higher than the 2008 comparable period.

Gross profit for the fourth quarter of 2009 was $41.9 million, or 12.3%, compared to $38.0 million, or 10.4%, for the fourth quarter of 2008. Excluding CAP and UHG, gross margins for the fourth quarter of 2008 would have been 11.4%. This increase was primarily the result of improved product mix due to the continued focus on higher margin therapies as well as improved supply chain programs, partially offset by the impact of the

AWP settlement. Adjusted EBITDAO for the fourth quarter of 2009 was $7.8 million compared to $6.6 million in the prior year.

Revenues decreased to $1.3 billion for the year ended December 31, 2009 from $1.4 billion in 2008 as expected, due to revenue declines in lower margin business resulting from the previously announced elimination of the CAP and UHG contracts, partially offset by revenue generated under new contracts and drug inflation. Excluding CAP and UHG, revenues for 2009 would have increased $91.7 million or 7.6%.

Gross profit for 2009 was $157.8 million, or 11.9%, compared to $142.1 million, or 10.1%, for 2008. Excluding CAP and UHG, gross margins for 2008 would have been 11.2%. The increase was primarily the result of improved product mix due to the continued focus on higher margin therapies as well as improved supply chain programs. Adjusted EBITDAO for 2009 would have been $25.7 million compared to $21.3 million in the prior year.

Liquidity

In 2009, BioScrip generated $22.7 million of cash flow from operations. Cash was primarily generated by increases in net income and improved working capital management. Cash generated from operations was primarily used to pay down the Company’s revolving credit facility. Outstanding borrowings under the Company’s credit facility were $30.4 million at the end of 2009 as compared to $50.4 million at the end of 2008. Average borrowings during the fourth quarter were approximately $24.5 million, an improvement of more than $4.5 million over the third quarter of 2009 and $16.5 million compared to the fourth quarter of 2008.

Critical Homecare Solutions Acquisition Update

On January 25, 2010, the Company announced the signing of a definitive agreement to acquire CHS for an aggregate purchase price of $343.2 million in cash and stock. The acquisition is expected to close on or before April 1, 2010.

Rick Smith, BioScrip’s President and Chief Operating Officer, stated, “We continue to work diligently to close this exciting deal. CHS is a leading provider of home infusion and home health services to patients suffering from chronic and acute medical conditions. Together with BioScrip’s specialty pharmacy and home infusion platform, we will be a formidable industry leader with the capabilities to support local, regional and national health insurers and their members in all 50 states through our more than 120 points of service, a dedicated sales force of over 140 representatives and 1,000 managed care relationships.”

Financial Guidance

We are reaffirming our 2010 guidance. Assuming a closing date of March 31, BioScrip’s 2010 financial results would include 9 months of CHS’s operations. The combined companies are expected to generate revenues in 2010 of approximately $1.67 to $1.73 billion, gross profit of $267.0 to $277.0 million, or approximately 16% of sales, and adjusted EBITDAO of $67.0 to $71.0 million. The increased volume, access to high margin therapies and operating synergies available to the combined companies are expected to provide significant increases in revenue, an estimated 600 basis point improvement in gross margins and an estimated 200 basis point improvements in EBITDAO. The transaction is expected to be modestly accretive to earnings per share on a cash basis and slightly dilutive on a GAAP basis in 2010. Cash and GAAP earnings per share accretion is expected in 2011 and beyond.

Conference Call Information

BioScrip will host a conference call to discuss fourth quarter and year-end 2009 financial results on Friday, February 26, 2010 at 8:30 a.m. ET (Eastern Time). Interested parties may participate in the conference call by dialing 800-908-1236 (US), or 212-231-2906 (International), 5-10 minutes prior to the start of the call. A replay of the conference call will be available shortly after the filing of the transcript with the U.S. Securities and Exchange Commission under Rule 14a-12 of the Securities Exchange Act of 1934, as amended, until 11:59 p.m. ET on Friday, March 12, by dialing 800-633-8284 (US), or

402-977-9140 (International), and entering reservation #21459141. An audio web cast and archive of the conference call will also be available under the “Investor Relations” section of the BioScrip website at www.bioscrip.com following its filing with the U.S. Securities and Exchange Commission under Rule 14a-12 of the Securities Exchange Act of 1934, as amended.

About BioScrip, Inc.

BioScrip, Inc. (www.bioscrip.com) (Nasdaq: BIOS) is a specialty pharmaceutical healthcare organization that partners with patients, physicians, healthcare payors and pharmaceutical manufacturers to provide access to medications and management solutions to optimize outcomes for chronic and other complex health care conditions.

Financial Measures

Earnings before interest, taxes, depreciation, amortization, and option expense (“EBITDAO”) is a non-GAAP financial measure as defined under U.S. Securities and Exchange Commission Regulation G. As required by Regulation G, BioScrip has provided on Schedule 3 a reconciliation of this measure to the most comparable GAAP financial measure. The non-GAAP measure presented provides management with important insight into the ongoing operations and a meaningful benchmark to evidence the Company’s continuing profitability trend.

Additional Information and Where to Find it

BioScrip, Inc. has filed a proxy statement regarding the issuance of stock in connection with the proposed transaction with the U.S. Securities and Exchange Commission (the “SEC”). INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT, AND ANY OTHER RELEVANT MATERIALS FILED BY BIOSCRIP, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT BIOSCRIP AND THE PROPOSED TRANSACTION. All documents filed by BioScrip with the SEC may be obtained for free at the SEC’s web site at www.sec.gov. In addition, the documents filed by BioScrip with the SEC may be obtained free of charge

by contacting BioScrip, Inc., Investor Relations, 100 Clearbrook Road, Elmsford, NY 10523 or contacting BioScrip, Inc. Corporate Secretary at 914-460-1600.

Participants in the Solicitation

BioScrip and its officers and directors may be deemed to be participants in the solicitation of proxies from BioScrip’s stockholders with respect to the issuance of stock in connection with the proposed transaction. Information about BioScrip’s executive officers and directors and their ownership of BioScrip’s stock is set forth in the proxy statement for BioScrip’s 2009 Annual Meeting of Stockholders, which was filed with the SEC on March 27, 2009 and in the proxy statement for BioScrip’s special meeting of stockholders regarding the issuance of stock in connection with the proposed transaction which was filed with the SEC on February 24, 2010. Investors and stockholders may obtain more detailed information regarding the direct and indirect interests of BioScrip and its respective executive officers and directors in the proposed transaction by reading the proxy statement regarding the issuance of stock in connection with the proposed transaction that BioScrip filed with the SEC.

Safe Harbor Statement

This press release includes forward-looking statements regarding the proposed acquisition and related transactions that are not historical or current facts and deal with potential future circumstances and developments, in particular information regarding growth opportunities, expected synergies from the acquisition, and whether and when the transactions contemplated by the merger agreement will be consummated. Forward-looking statements are qualified by the inherent risk and uncertainties surrounding future expectations generally and may materially differ from actual future experience. Risks and uncertainties that could affect forward-looking statements include the risks that are described from time to time in BioScrip’s reports filed with the Securities and Exchange Commission (SEC), including BioScrip’s annual report on Form 10-K for the year ended December 31, 2008 and quarterly report on Form 10-Q for the quarter ended September

30, 2009, as amended. This press release speaks only as of its date, and BioScrip disclaims any duty to update the information herein.

###

TABLES TO FOLLOW

SCHEDULE 1

BIOSCRIP, INC
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)

		December 31,				December 31,
		2009				2008
ASSETS
Current assets
Cash and cash equivalents		$	—			$	—
Receivables, less allowance for doubtful accounts of $11,504 and $11,629 at December 31, 2009 and 2008, respectively			151,113				158,649
Inventory			51,256				45,227
Short term deferred taxes			12,913				—
Prepaid expenses and other current assets			3,999				2,766
Total current assets			219,281				206,642
Property and equipment, net			15,454				14,748
Long term deferred taxes			26,793				—
Goodwill			24,498				24,498
Other non-current assets			1,194				1,069
Total assets		$	287,220			$	246,957
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Line of credit		$	30,389			$	50,411
Accounts payable			74,535				76,936
Claims payable			4,068				5,230
Amounts due to plan sponsors			4,938				5,646
Accrued expenses and other current liabilities			14,273				9,575
Total current liabilities			128,203				147,798
Deferred taxes			—				533
Income taxes payable			2,437				2,764
Other non-current liabilities			787				325
Total liabilities			131,427				151,420
Stockholders’ equity
Common stock, $.0001 par value; 75,000,000 shares authorized; shares issued:
42,766,478, and 41,622,629, respectively; shares outstanding; 39,675,865 and 38,691,356, respectively			4				4
Treasury stock, shares at cost: 2,647,613 and 2,624,186, respectively			(10,367	)			(10,288	)
Additional paid-in capital			254,677				248,441
Accumulated deficit			(88,521	)			(142,620	)
Total stockholders’ equity			155,793				95,537
Total liabilities and stockholders’ equity		$	287,220			$	246,957

Schedule 2

BIOSCRIP, INC
CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in thousands, except per share amounts)

		(unaudited)
		Three Months Ended								Twelve Months Ended
		Ended December 31,								Ended December 31,
		2009				2008				2009				2008
Revenue		$	341,551			$	366,573			$	1,329,525			$	1,401,911
Cost of revenue			299,603				328,582				1,171,703				1,259,741
Gross profit			41,948				37,991				157,822				142,170
% of Revenue			12.3	%			10.4	%			11.9	%			10.1	%
Operating expenses
Selling, general and administrative expenses			39,385				32,107				133,720				127,138
Bad debt expense			3,226				1,881				8,636				4,667
Goodwill and intangible impairment			—				93,882				—				93,882
Total operating expense			42,611				127,870				142,356				225,687
% of Revenue			12.5	%			34.9	%			10.7	%			16.1	%
(Loss) income from operations			(663	)			(89,879	)			15,466				(83,517	)
Interest expense, net			449				780				1,920				2,711
(Loss) income before income taxes			(1,112	)			(90,659	)			13,546				(86,228	)
Tax benefit			41,802				14,075				40,553				12,196
Net income (loss)		$	40,690			$	(76,584	)		$	54,099			$	(74,032	)
Basic weighted average shares			39,513				38,589				38,985				38,417
Diluted weighted average shares			41,132				38,589				39,737				38,417
Basic net income (loss) per share		$	1.03			$	(1.98	)		$	1.39			$	(1.93	)
Diluted net income (loss) per share		$	0.99			$	(1.98	)		$	1.36			$	(1.93	)

Schedule 3

BIOSCRIP, INC
Reconciliation between GAAP and Non-GAAP Measures
(in thousands, except per share amounts)

						(unaudited)
						Three Months								Twelve Months
						December 31,								December 31,
						2009				2008				2009				2008
Net Income (loss)						$	40,690			$	(76,584	)		$	54,099			$	(74,032	)
Add back items:
Depreciation and amortization							1,437				1,707				5,033				6,393
Interest expense, net							449				780				1,920				2,711
Tax benefit							(41,802	)			(14,075	)			(40,553	)			(12,196	)
Stock-based compensation expense							1,034				931				3,419				3,790
Goodwill and intangible impairment							—				93,882				—				93,882
Earnings before interest, taxes, depreciation, amortization and share-based compensation expense (EBITDAO)						$	1,808			$	6,641			$	23,918			$	20,548
EBITDAO						$	1,808			$	6,641			$	23,918			$	20,548
Add back unusual or infrequent items:
Acquisition related costs			a				1,774								1,774
Incentive compensation expense			b				4,266
OIG settlement			c																795
Adjusted EBITDAO						$	7,848			$	6,641			$	25,692			$	21,343