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): November 4, 2008

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

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)).

 

 

Item 2.02		Results of Operations and Financial Condition.

     On November 4, 2008, BioScrip, Inc. issued a press release reporting its financial results for the three and nine months ended September 30, 2008. A copy of that press release is furnished with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

     The press release includes certain non-GAAP financial measures as described therein. As required by Regulation G, a reconciliation between any non-GAAP financial measures presented and the most directly comparable GAAP financial measures is also provided.

     As provided in General Instruction B.2 to Form 8-K, the information furnished in this Item 2.02 and in Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing with the Securities and Exchange Commission, except as shall be expressly provided by specific reference in such filing.

Item 9.01		Financial Statements and Exhibits.

(c) Exhibits. The following information is furnished as an exhibit to this Current Report:

Exhibit No.				Description of Exhibit
	99.1			Press Release dated November 4, 2008.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.

Exhibit 99.1

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

BIOSCRIP, INC. REPORTS 2008 THIRD QUARTER EARNINGS

—REVENUE OF $359.4 MILLION; EPS OF $0.04 INCLUDING $0.02 ONE-TIME
CHARGE; SPECIALTY SERVICES UP 25.6%—

FOR IMMEDIATE RELEASE

ELMSFORD, N.Y.—(BUSINESS WIRE)—November 4, 2008—BioScrip, Inc. (Nasdaq: BIOS) today reported net income for the quarter ended September 30, 2008 of $1.4 million, or $0.04 per diluted share, on revenue of $359.4 million, compared to $1.7 million, or $0.04 per diluted share, on revenue of $297.6 million in the third quarter of 2007. BioScrip’s 2008 results include a one-time charge of $795,000, or $0.02 per share as a result of a civil settlement with the U.S. Office of The Inspector General (“OIG”) related to conduct beginning in 2003 and ending when the Company self-reported in late 2006.

Third Quarter Highlights

•

Consolidated revenue of $359.4 million, a 20.8% increase over the same period last year; excluding United Healthcare Group (“UHG”) and Medicare’s

			Competitive Acquisition Program (“CAP”), revenue grew 11.4%.
	•		Specialty Services revenue of $307.1 million, an increase of 25.6% over the prior year; excluding UHG and CAP, Specialty Services revenue increased 14.4% over the same period last year.
	•		Gross profit of $36.1 million, or 10.0% of total revenue, compared to $35.4 million, or 11.9% of total revenue, for the same period of 2007. Excluding UHG and CAP, gross margin as a percentage of revenue was 10.9%.
	•		Operating expense as a percentage of revenue decreased to 9.3% from 10.8% over the same period a year ago.*
	•		Operating profit of $2.8 million, a decrease of 10.9% over the prior year.*
	•		EBITDAO (earnings before interest, taxes, depreciation, amortization and option expense) of $5.3 million.*

Richard H. Friedman, BioScrip’s Chairman and Chief Executive Officer, stated, “Our third quarter results demonstrate the success of our Specialty Services sales strategy — excluding the CAP and UHG contracts, Specialty Services sales growth increased 14.4% year-over-year. Looking forward, without CAP and UHG we expect to see further sales growth and reduced operating expenses, resulting in improved operating income.

We have identified those operating expenses directly related to both CAP and United that will be eliminated. We continue to examine our cost structure to find additional ways to improve operating performance and have begun testing our upgraded integrated pharmacy system. This system is expected be fully functional in the second half of 2009.

We believe the full implementation will permit us to reduce further operating expenses while growing our core business; the Company anticipates that all the above will result in improved operating profits in 2009,” concluded Friedman.

The Company previously reported that it was notified by Aetna that its network participation agreements, representing approximately $27 million of revenues, would be terminated in the fourth quarter of 2008. The Company has since renegotiated new contracts with Aetna to participate in its retail and specialty networks on a limited basis. The Company anticipates retaining approximately two-thirds of its revenues and associated profitability.

During the third quarter, the Company incurred a one-time charge of $795,000 or $0.02 per share, as a result of entering into a civil settlement with the OIG. The circumstances surrounding the settlement were self-reported by the Company through its corporate compliance program, and related to conduct between 2003 and 2006.

Results of Operations

Total revenue for the third quarter 2008 was $359.4 million compared to $297.6 million for the same period a year ago.

Third quarter 2008 Specialty Services revenue were $307.1 million, an increase of $62.6 million, or 25.6% over the prior year, due to revenue associated with preferred

distribution arrangements with manufacturers, UHG, CAP, and other organic growth.

PBM Services revenue remains essentially unchanged at $52.3 million for the second quarter.

Gross profit for the third quarter 2008 was $36.1 million, or 10.0% of total revenue, compared to $35.4 million, or 11.9% of total revenue, for the same period of 2007. The gross margin decreased primarily due to the higher revenue but lower margin UHG and CAP business. Third quarter 2007 gross profit included a one-time favorable adjustment with the Company’s primary drug distributor. On a sequential basis, the Company reported 0.3% lower gross profit margins primarily due to reduced reimbursement rates in the New York State Medicaid program and a temporary decline in Medi-Cal reimbursement (which was reversed by mid-August). Third quarter 2008 operating expenses as a percentage of revenue declined to 9.3% from 10.8% over the prior year. Included in the third quarter 2008 operating expenses is the one-time civil settlement with the OIG. The reduction in operating expenses as a percentage of total revenue is due to the Company’s ability to leverage its overhead structure.

Nine-Month Period Reported Results

For the nine-months ended September 30, 2008, net income was $2.6 million, or $0.07 per share compared to a net income of $0.8 million, or $0.02 per diluted share for the same period a year ago. As discussed above, the Company incurred a one-time charge of $795,000 or $0.02 per share, as discussed above. Revenue increased to $1.0 billion for the nine-month period ended September 30, 2008 from $888.5 million reported in the

same period of last year.

Guidance

Looking forward, without CAP and UHG, the Company expects to see further sales growth and gross profit margins to normalize in the range of 10.5% to 11%. The Company has identified those operating expenses directly related to both CAP and UHG that will be eliminated. Management continues to examine its cost structure to find additional ways to improve operating performance. Furthermore, as a result of anticipated profits and exiting the CAP agreement, the Company will see an improvement in its liquidity and cash flow.

Conference Call Information

BioScrip will host a conference call to discuss third quarter 2008 financial results on Thursday, November 4, at 10:30 a.m. ET. Interested parties may participate in the conference call by dialing 800-954-1053 (US), or 212-231-1901 (International), 5-10 minutes prior to the start of the call. A replay of the conference call will be available from 12:00 p.m. ET on November 4, through 12:00 p.m. ET on November 11, by dialing 800-633-8284 (US), or 402-977-9140 (International), and entering reservation #21397034. An audio webcast and archive of the conference call will also be available under the investor relations section of the BioScrip website, www.bioscrip.com.

About BioScrip, Inc.

BioScrip, Inc. (www.bioscrip.com) (Nasdaq: BIOS) is a specialty pharmaceutical health

care organization that partners with patients, physicians, health care payors and pharmaceutical manufacturers to provide access to medications and management solutions to optimize outcomes for chronic and other complex health care conditions.

Forward Looking Statements

This press release may contain statements which constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding, among other things, the intent, belief or current expectations of the Company, its directors, or its officers with respect to the future operating performance, the profitability or lack of profitability of certain customers, the impact on profitability on changes in payer and product mix and the achievement of cost savings initiatives of the Company. 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 such differences are described in the Company’s periodic filings with the Securities and Exchange Commission.

Earnings before interest, taxes, depreciation, amortization, and option expense (“EBITDAO”) and pro forma net income are 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 2 a reconciliation of this measure to the most comparable GAAP financial measure. The non-GAAP measure presented provides important insight into the ongoing operations and a meaningful benchmark to

evidence the Company’s trend towards a return to profitability.

###

TABLES FOLLOW

BIOSCRIP, INC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
SCHEDULE 1
(in thousands, except for share amounts)

		September 30,				December 31,
		2008				2007
		(unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	—			$	—
Receivables, less allowance for doubtful accounts of $13,547 and $12,083 at September 30, 2008 and December 31, 2007 respectively			163,534				128,969
Inventory			36,155				33,598
Prepaid expenses and other current assets			3,364				1,434
Total current assets			203,053				164,001
Property and equipment, net			14,381				11,742
Other assets			664				478
Goodwill			114,538				114,824
Intangible assets, net			4,327				5,777
Total assets		$	336,963			$	296,822
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Line of credit		$	55,024			$	33,778
Accounts payable			71,171				57,342
Claims payable			6,043				5,164
Amounts due to plan sponsors			5,805				4,568
Accrued expenses and other current liabilities			9,714				13,936
Total current liabilities			147,757				114,788
Deferred taxes			14,194				12,754
Income taxes payable			3,384				3,077
Total liabilities			165,335				130,619
Stockholders’ equity
Common stock, $.0001 par value; 75,000,000 shares authorized, 41,356,448 shares issued and 38,403,357 outstanding at September 30, 2008; 41,331,346 shares issued and 38,250,633 outstanding at December 31, 2007			4				4
Treasury stock, 2,475,856 and 2,436,642 shares at cost			(9,662	)			(9,399	)
Additional paid-in capital			247,322				244,186
Accumulated deficit			(66,036	)			(68,588	)
Total stockholders’ equity			171,628				166,203
Total liabilities and stockholders’ equity		$	336,963			$	296,822

Schedule 2

BIOSCRIP, INC AND SUBSIDIARIES
Reconciliation between GAAP and Non-GAAP Measures
(in thousands)
(unaudited)

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2008				2007				2008				2007
Net Income		$	1,410			$	1,666			$	2,552			$	801
Add back items:
Amortization of intangibles			484				484				1,451				2,414
Depreciation			1,136				1,060				3,234				3,111
Net interest			669				728				1,931				2,668
Taxes			730				760				1,879				2,323
Shared-based compensation expense			864				764				2,859				1,848
Earnings before interest, taxes, depreciation, amortization and share- based compensation expense (EBITDAO)		$	5,293			$	5,462			$	13,906			$	13,165
Net Income		$	1,410			$	1,666			$	2,552			$	801
Add back items:
OIG Settlement			795				0				795				0
Pro forma Net Income		$	2,205			$	1,666			$	3,347			$	801
Basic weighted average shares			38,403				37,603				38,359				37,532
Diluted weighted average shares			38,934				38,480				39,187				37,957
Basic pro forma net income per share		$	0.06			$	0.04			$	0.09			$	0.02
Diluted pro forma net income per share		$	0.06			$	0.04			$	0.09			$	0.02

Schedule 3

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

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2008				2007				2008				2007
Revenue		$	359,427			$	297,580			$	1,035,338			$	888,535
Cost of revenue			323,346				262,211				931,159				787,701
Gross profit			36,081				35,369				104,179				100,834
% of Revenue			10.0	%			11.9	%			10.1	%			11.3	%
Operating expenses
Selling, general and administrative expenses			31,375				30,965				93,580				87,823
Bad debt expense			1,413				766				2,786				4,805
Amortization of intangibles			484				484				1,451				2,414
Total operating expenses			33,272				32,215				97,817				95,042
% of Revenue			9.3	%			10.8	%			9.4	%			10.7	%
Income from operations			2,809				3,154				6,362				5,792
Interest expense, net			(669	)			(728	)			(1,931	)			(2,668	)
Income before income taxes			2,140				2,426				4,431				3,124
Provision for income taxes			730				760				1,879				2,323
Net income		$	1,410			$	1,666			$	2,552			$	801
Basic weighted average shares			38,403				37,603				38,359				37,532
Diluted weighted average shares			38,934				38,480				39,187				37,957
Basic net income per share		$	0.04			$	0.04			$	0.07			$	0.02
Diluted net income per share		$	0.04			$	0.04			$	0.07			$	0.02