UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 6, 2013
BIOSCRIP, INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 000-28740 | 05-0489664 | ||
| (State of Incorporation) | (Commission File Number) |
(I.R.S. Employer Identification No.) |
| 100 Clearbrook Road, Elmsford, New York | 10523 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (914) 460-1600
N/A
(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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 – Financial Information
Item 2.02 Results of Operations and Financial Condition.
On November 6, 2013, BioScrip, Inc. (the “Company”) issued a press release reporting its 2013 third quarter financial results. A copy of the press release is furnished with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
Section 8 – Other Events
Item 8.01. Other Events.
As previously announced, the Company will host a conference call to discuss its 2013 third quarter financial results on November 7, 2013 at 8:30 a.m. Eastern Time. Interested parties may participate in the conference call by dialing 800-679-2940 (U.S.) or 303-223-2689 (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 (U.S.) or 402-977-9140 (International) and entering conference call ID number 21682095. An audio webcast and archive will also be available for 30 days under the “Investor Relations” section of the Company’s website at www.bioscrip.com.
The press release includes certain non-GAAP financial measures as described therein. As required by Regulation G, reconciliation between any non-GAAP financial measures presented and the most directly comparable GAAP financial measures is also provided.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. See the Exhibit Index which is hereby incorporated by reference.
As provided in General Instruction B.2 to Form 8-K, the information furnished in Item 2.02 and in Exhibit 99.1 hereto as it relates to the Company’s financial results for the quarter and nine months ended September 30, 2013, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed incorporated by reference into any filing of the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly provided by specific reference in such filing.
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 hereunto duly authorized.
| BIOSCRIP, INC. | ||||
| Date: November 6, 2013 | /s/ Kimberlee C. Seah | |||
| By: | Kimberlee C. Seah | |||
|
Senior Vice President and General Counsel
| ||||
Exhibit Index
| Exhibit No. | Description | |
| 99.1 | BioScrip, Inc. press release dated November 6, 2013 |
FOR IMMEDIATE RELEASE
BioScrip reports THIRD QUARTER 2013 financial results
Elmsford, NY – November 6, 2013 – BioScrip®, Inc. (NASDAQ: BIOS) today announced 2013 third quarter financial results. Third quarter revenue from continuing operations was $208.9 million and the net loss from continuing operations was $22.4 million, or a loss of $0.35 per diluted share. Consolidated Adjusted EBITDA for the third quarter was $12.1 million, and consolidated adjusted earnings per diluted share for the third quarter was $0.00 per diluted share.
As a result of the sale of the Company’s traditional and specialty pharmacy mail operations and community retail pharmacy stores on May 4, 2012 (the “Pharmacy Services Asset Sale”), the Company’s financial statements reflect the discontinued operations’ results for the three and nine months ended September 30, 2013 and 2012, separate from the continuing operations of the business. The remaining assets and liabilities of the divested business that were not transferred as a part of the Pharmacy Services Asset Sale are included in continuing operations.
Third Quarter Highlights
| · | Revenue from continuing operations increased by $38.5 million, or 22.6%, as compared to the prior year. Revenue from the Infusion Services segment increased by $48.9 million, or 38.8%, as compared to the prior year. Organic revenue growth for the Infusion Services segment remained in the double digits year-over-year; |
| · | Gross profit from continuing operations was $68.7 million, or 32.9% of revenue, as compared to $58.0 million, or 34.0% of revenue, in the prior year period. Gross profit margin from the Infusion Services segment increased by 110 basis points from the prior year; |
| · | Adjusted EBITDA from continuing operations was $12.1 million, an increase of $0.4 million over the prior year. Adjusted EBITDA from the Infusion Services segment increased by $4.8 million, or 48.0% as compared to the prior year, offset by continued weakness in the non-core PBM Services and Home Health Services segments; and |
| · | The Company has begun executing a profit improvement plan that is expected to yield more than $10 million of annualized savings and reductions in operating expenses. These cost reductions began at the end of the third quarter in conjunction with the acquisition of CarePoint Partners and will mostly be implemented throughout the fourth quarter of 2013. |
“Our core infusion business continued to deliver strong margins and double-digit organic revenue growth in the third quarter,” said Rick Smith, President and Chief Executive Officer of BioScrip. “We closed the CarePoint acquisition during the quarter and our acquisitions are on track to achieve their targeted range of 12 to 14 percent long-term EBITDA margins, once fully integrated. These underlying results demonstrate our success in implementing our plan to deliver growth across a national infusion footprint.
“We believe our infusion strategy is delivering results and we are entering our next phase of strategic execution. Going forward, we will be focused on driving profitability by enhancing our operational efficiency, streamlining our cost structure and optimizing the value of our de novo and legacy assets. We have already taken steps to achieve significant cost savings as we enter 2014, and we remain confident in the fundamentals of our infusion services and transitional care models to drive continued growth,” concluded Smith.
Results of Operations
Third Quarter 2013 versus Third Quarter 2012
Revenue from continuing operations for the third quarter of 2013 totaled $208.9 million, compared to $170.4 million in the prior year period, an increase of $38.5 million, or 22.6%. Infusion Services segment revenue was $174.8 million in the third quarter of 2013, as compared to $125.9 million in the prior year period. The 38.8% increase was driven primarily by organic volume growth and additional revenue related to acquisitions. Home Health Services segment revenue was $18.1 million for the third quarter of 2013, as compared to $17.3 million in the prior year period. The 4.5% increase was primarily the result of growth in the volume of private duty nursing activity, offset by a reduction in reimbursement rates. PBM Services segment revenue was $16.0 million for the third quarter of 2013, compared to $27.1 million for the prior year period. The decrease was largely due to decreases in the funded PBM and prescription discount card businesses, primarily from the termination of a contract with a large, low-margin, funded PBM client, as well as a decrease in volume in the prescription discount card business.
Consolidated gross profit for the third quarter of 2013 was $68.7 million, or 32.9% of revenue, compared to $58.0 million, or 34.0% of revenue, in the prior year period. The increase in gross profit was the result of growth in the volume of revenue in the Infusion Services segment partially offset by lower PBM Services gross profit. Consolidated gross profit margin percentage was impacted by lower revenue in PBM Services that generally has a higher gross profit percentage.
During the third quarter of 2013, Infusion Services Segment Adjusted EBITDA was $14.7 million, or 8.4% of segment revenue, compared to $9.9 million, or 7.9% of segment revenue, in the prior year period. The 48.0% improvement in Adjusted EBITDA in the Infusion Services segment resulted primarily from organic revenue growth and acquisitions. The 50-basis-point improvement in Adjusted EBITDA margin percentage was primarily due to improved mix and gross profit margin as well as increased operating leverage.
The Home Health Services Segment Adjusted EBITDA in the third quarter of 2013 was $0.6 million, or 3.1% of segment revenue, compared to $1.4 million, or 8.1% of segment revenue, in the comparable prior year period. The decrease in Adjusted EBITDA margin percentage in the Home Health Services segment was primarily due to increased volume of lower-margin private duty nursing as well as a reduction in reimbursement rates.
The PBM Services Segment Adjusted EBITDA was $4.3 million, or 26.7% of segment revenue, for the third quarter of 2013 compared to $6.9 million, or 25.5% of segment revenue, in the prior year period. The increase in Adjusted EBITDA margin percentage in the PBM Services segment was primarily due to the termination of a contract with a large, low-margin, funded PBM client.
On a consolidated basis, BioScrip reported $12.1 million of Adjusted EBITDA during the third quarter of 2013, or 5.8% of total revenue, compared to $11.6 million, or 6.8% of total revenue, in the prior year period. The performance in the quarter reflects continued growth and progress in the core Infusion Services segment, offset by continued weakness in the non-core PBM Services and Home Health Services segments.
Interest expense in the third quarter of 2013 was $7.2 million compared to $6.5 million in the prior year period.
Income tax benefit for continuing operations in the third quarter was $0.6 million compared to an income tax benefit of $2.5 million in the prior year period.
Net loss from continuing operations for the third quarter of 2013 was $22.4 million, or a loss of $0.35 per diluted share, compared to a net loss of $0.6 million, or $0.01 per diluted share, in the prior year period. The net loss from continuing operations was impacted by a loss on early extinguishment of debt of $15.9 million recognized in order to retire the 10.25% senior notes, as well as acquisition and integration expenses of $4.9 million in the third quarter.
Finally, as previously disclosed in the Company’s current report on Form 8-K filed on September 23, 2013, BioScrip is responding to a civil investigation regarding certain operations of its legacy specialty pharmacy division. In accordance with accounting rules, the Company is required to provide an estimate of a potential loss. Accordingly, BioScrip has accrued $15 million in discontinued operations, which represents the Company’s estimate at this time. The actual outcome is uncertain and actual loss could be higher.
Nine Months Ended September 30, 2013 versus Nine Months Ended September 30, 2012
Revenue from continuing operations for the nine months ended September 30, 2013 totaled $598.7 million, compared to $481.9 million in the prior year period, a 24.2% increase. Infusion Services segment revenue was $485.3 million for the nine months ended September 30, 2013, compared to $346.0 million in the prior year period. The 40.3% increase was driven primarily by organic volume growth and additional revenue related to acquisitions. Home Health Services segment revenue for the nine months ended September 30, 2013 was $54.2 million compared to $50.9 million in the prior year period. The 6.6% increase was primarily the result of growth in the volume of private duty nursing activity, offset by a reduction in reimbursement rates. PBM Services segment revenue for the nine months ended September 30, 2013 was $59.1 million, compared to $85.1 million in the prior year period. The 30.5% decrease was due primarily to decreases in funded PBM revenue and prescription discount card revenue.
Consolidated gross profit for the nine months ended September 30, 2013 was $196.9 million, or 32.9% of revenue, compared to $164.6 million, or 34.1% of revenue, in the prior year period. The increase in gross profit dollars was the result of growth in the volume of revenue in the Infusion Services segment partially offset by lower PBM Services gross profit. Consolidated gross profit margin percentage was impacted by growth of lower-margin Infusion Services revenues as a percent of total revenue versus the higher-margin Home Health segment and PBM segment revenue.
During the nine months ended September 30, 2013, the Infusion Services Segment Adjusted EBITDA was $41.2 million, or 8.5% of segment revenue, compared to $25.7 million, or 7.4% of segment revenue, in the prior year period.
The Home Health Services Segment Adjusted EBITDA for the nine months ended September 30, 2013 was $2.5 million, or 4.7% of segment revenue, compared to $3.6 million, or 7.0% of segment revenue, in the prior year period.
The PBM Services Segment Adjusted EBITDA was $15.4 million, or 26.0% of segment revenue, for the nine months ended September 30, 2013, compared to $19.4 million, or 22.8% of segment revenue, in the prior year period.
On a consolidated basis, BioScrip reported $35.6 million of Adjusted EBITDA for the nine months ended September 30, 2013, or 5.9% of total revenue, compared to $29.0 million, or 6.0% of total revenue, in the prior year period.
Interest expense for the nine months ended September 30, 2013 was $20.2 million, compared to $19.7 million in the prior year period.
Income tax benefit for continuing operations for the nine months ended September 30, 2013 was $31 thousand compared to an income tax benefit of $2.6 million in the prior year period.
Net loss from continuing operations for the nine months ended September 30, 2013 was $38.2 million, or $0.61 per diluted share, compared to a net loss of $6.9 million, or $0.12 per diluted share, in the prior year period.
Liquidity and Capital Resources
For the nine months ended September 30, 2013, BioScrip used $25.4 million in net cash from continuing operating activities compared to $56.9 million generated from operating activities during the nine months ended September 30, 2012. Cash flow from operations during this period was primarily impacted by the acquisition of CarePoint Partners.
Outlook
The Company believes its 2013 revenue will be in the range of $830.0 million to $850.0 million and believes its 2013 Adjusted EBITDA will be in the range of $50.0 million to $52.0 million. This reflects the Company’s current assessment of the net impact of accelerating growth and profit improvement opportunities in the Infusion business and continued weakness in the non-core PBM and Home Health Services segments. The performance of the Infusion business is expected to be driven by continued initiatives to: (i) deliver double-digit organic growth; (ii) drive improved therapy mix and expand margins; (iii) improve operating leverage while scaling the enterprise; and (iv) achieve expected synergies from the infusion acquisitions.
Conference Call
BioScrip will host a conference call to discuss its third quarter 2013 financial results on November 7, 2013 at 8:30 a.m. Eastern Time.
Interested parties may participate in the conference call by dialing 800-679-2940 (US), or 303-223-2689 (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 21682095. 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, healthcare payors, government agencies, hospital systems 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 108 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; the Company’s ability to grow
its Infusion segment organically or through acquisitions and obtain financing in connection therewith; its ability to effectively
integrate other acquisitions; 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, 2012 and its quarterly report on Form 10-Q for the
quarter ended June 30, 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, 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 diluted share, excluding the same elements in calculating Adjusted EBITDA (restructuring and other related costs, investments in start-up operations, acquisition and integration expenses, stock-based compensation expense) 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.
Contacts:
Hai Tran
BioScrip, Inc.
952-979-3768
Lisa Wilson
In-Site Communications, Inc.
212-759-3929
(Financial Tables Follow)
Schedule 1
BIOSCRIP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)
| September 30, 2013 | December 31, 2012 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | - | $ | 62,101 | ||||
| Receivables, less allowance for doubtful accounts of $14,217 and $22,212 at September 30, 2013 and December 31, 2012, respectively | 178,484 | 129,103 | ||||||
| Inventory | 30,326 | 34,034 | ||||||
| Prepaid expenses and other current assets | 13,308 | 10,189 | ||||||
| Total current assets | 222,118 | 235,427 | ||||||
| Property and equipment, net | 41,050 | 23,721 | ||||||
| Goodwill | 605,663 | 350,810 | ||||||
| Intangible assets, net | 34,094 | 17,446 | ||||||
| Deferred financing costs | 18,888 | 2,877 | ||||||
| Investments in and advances to unconsolidated affiliate | — | 10,042 | ||||||
| Other non-current assets | 4,487 | 2,053 | ||||||
| Total assets | $ | 926,300 | $ | 642,376 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Current portion of long-term debt | $ | 35,275 | 953 | |||||
| Accounts payable | 50,281 | 34,438 | ||||||
| Claims payable | 2,136 | 7,411 | ||||||
| Amounts due to plan sponsors | 7,802 | 18,173 | ||||||
| Accrued interest | 1,971 | 5,803 | ||||||
| Accrued expenses and other current liabilities | 36,073 | 41,491 | ||||||
| Total current liabilities | 133,538 | 108,269 | ||||||
| Long-term debt, net of current portion | 380,332 | 225,426 | ||||||
| Deferred taxes | 11,693 | 10,291 | ||||||
| Other non-current liabilities | 30,402 | 4,981 | ||||||
| Total liabilities | 555,965 | 348,967 | ||||||
| Stockholders' equity | ||||||||
| Preferred stock, $.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: 70,570,520 and 59,600,713, respectively; shares outstanding: 67,988,000 and 57,026,957, respectively | 7 | 6 | ||||||
| Treasury stock, shares at cost: 2,582,520 and 2,582,520, respectively | (10,311 | ) | (10,311 | ) | ||||
| Additional paid-in capital | 516,818 | 388,798 | ||||||
| Accumulated deficit | (136,179 | ) | (85,084 | ) | ||||
| Total stockholders' equity | 370,335 | 293,409 | ||||||
| Total liabilities and stockholders' equity | $ | 926,300 | $ | 642,376 | ||||
Schedule 2
BIOSCRIP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Product revenue | $ | 169,011 | $ | 123,361 | $ | 469,594 | $ | 338,721 | ||||||||
| Service revenue | 39,868 | 47,004 | 129,089 | 143,178 | ||||||||||||
| Total revenue | 208,879 | 170,365 | 598,683 | 481,899 | ||||||||||||
| Cost of product revenue | 115,565 | 85,611 | 323,823 | 233,057 | ||||||||||||
| Cost of service revenue | 24,632 | 26,750 | 77,929 | 84,275 | ||||||||||||
| Total cost of revenue | 140,197 | 112,361 | 401,752 | 317,332 | ||||||||||||
| Gross profit | 68,682 | 58,004 | 196,931 | 164,567 | ||||||||||||
| % of revenues | 32.9 | % | 34.0 | % | 32.9 | % | 34.1 | % | ||||||||
| Selling, general and administrative expenses | 57,999 | 46,772 | 166,761 | 135,404 | ||||||||||||
| Bad debt expense | 3,947 | 3,440 | 11,028 | 10,677 | ||||||||||||
| Acquisition and integration expenses | 4,890 | 998 | 13,025 | 1,806 | ||||||||||||
| Restructuring and other expenses | 786 | 2,321 | 3,510 | 3,696 | ||||||||||||
| Amortization of intangibles | 1,009 | 1,087 | 4,801 | 2,844 | ||||||||||||
| Income (loss) from continuing operations | 51 | 3,386 | (2,194 | ) | 10,140 | |||||||||||
| Interest expense, net | 7,182 | 6,497 | 20,168 | 19,705 | ||||||||||||
| Loss on extinguishment of debt | 15,898 | - | 15,898 | - | ||||||||||||
| Income (loss) from continuing operations, before income taxes | (23,029 | ) | (3,111 | ) | (38,260 | ) | (9,565 | ) | ||||||||
| Income tax expense (benefit) | (587 | ) | (2,506 | ) | (31 | ) | (2,644 | ) | ||||||||
| Income (loss) from continuing operations, net of income taxes | (22,442 | ) | (605 | ) | (38,229 | ) | (6,921 | ) | ||||||||
| Income (loss) from discontinued operations, net of income taxes | (11,645 | ) | (10,931 | ) | (12,866 | ) | 64,448 | |||||||||
| Net income (loss) | $ | (34,087 | ) | $ | (11,536 | ) | $ | (51,095 | ) | $ | 57,527 | |||||
| Basic weighted average shares | 67,912 | 56,640 | 63,368 | 56,019 | ||||||||||||
| Diluted weighted average shares | 67,912 | 56,640 | 63,368 | 56,019 | ||||||||||||
| Income (loss) per common share: | ||||||||||||||||
| Basic loss from continuing operations | $ | (0.35 | ) | $ | (0.01 | ) | $ | (0.61 | ) | $ | (0.12 | ) | ||||
| Basic income (loss) from discontinued operations | (0.18 | ) | (0.19 | ) | (0.20 | ) | 1.15 | |||||||||
| Basic income (loss) | $ | (0.53 | ) | $ | (0.20 | ) | $ | (0.81 | ) | $ | 1.03 | |||||
| Diluted loss from continuing operations | $ | (0.35 | ) | $ | (0.01 | ) | $ | (0.61 | ) | $ | (0.12 | ) | ||||
| Diluted income (loss) from discontinued operations | (0.18 | ) | (0.19 | ) | (0.20 | ) | 1.15 | |||||||||
| Diluted income (loss) | $ | (0.53 | ) | $ | (0.20 | ) | $ | (0.81 | ) | $ | 1.03 | |||||
Schedule 3
BIOSCRIP, INC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Nine Months Ended September 30, | ||||||||
| 2013 | 2012 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | (51,095 | ) | $ | 57,527 | |||
| Less: Income (loss) from discontinued operations, net of income taxes | (12,866 | ) | 64,448 | |||||
| Loss from continuing operations, net of income taxes | (38,229 | ) | (6,921 | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | 8,298 | 6,115 | ||||||
| Amortization of intangibles | 4,801 | 2,844 | ||||||
| Amortization of deferred financing costs | 1,410 | 662 | ||||||
| Change in deferred income tax | 1,402 | 2,164 | ||||||
| Compensation under stock-based compensation plans | 7,260 | 4,398 | ||||||
| Loss on extinguishment of debt | 15,898 | - | ||||||
| Equity in net loss of unconsolidated affiliate | 661 | - | ||||||
| Changes in assets and liabilities, net of acquired business: | ||||||||
| Receivables, net of bad debt expense | (20,021 | ) | 88,227 | |||||
| Inventory | 8,875 | (17,873 | ) | |||||
| Prepaid expenses and other assets | 838 | 4,822 | ||||||
| Accounts payable | 8,102 | (34,425 | ) | |||||
| Claims payable | (5,275 | ) | (1,099 | ) | ||||
| Amounts due to plan sponsors | (10,372 | ) | (3,415 | ) | ||||
| Accrued interest | (3,832 | ) | 5,737 | |||||
| Accrued expenses and other liabilities | (5,212 | ) | 5,615 | |||||
| Net cash provided by (used in) operating activities from continuing operations | (25,396 | ) | 56,851 | |||||
| Net cash provided by (used in) operating activities from discontinued operations | (12,866 | ) | (31,599 | ) | ||||
| Net cash provided by (used in) operating activities | (38,262 | ) | 25,252 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment, net | (19,929 | ) | (5,777 | ) | ||||
| Cash consideration paid for acquisitions, net of cash acquired | (285,039 | ) | (41,746 | ) | ||||
| Net cash proceeds from sale of unconsolidated affiliate | 8,509 | - | ||||||
| Cash advances to unconsolidated affiliate | (2,348 | ) | - | |||||
| Cash consideration paid to DS Pharmacy | - | (2,935 | ) | |||||
| Cash consideration paid for unconsolidated affiliate, net of cash acquired | - | (7,827 | ) | |||||
| Net cash provided by (used in) investing activities from continuing operations | (298,807 | ) | (58,285 | ) | ||||
| Net cash provided by (used in) investing activities from discontinued operations | - | 161,499 | ||||||
| Net cash (used in) provided by investing activities | (298,807 | ) | 103,214 | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from public stock offering | 118,570 | - | ||||||
| Proceeds from new senior credit facility, net of fees paid to lenders | 377,283 | - | ||||||
| Repayment of 10 1/4% senior unsecured notes | (237,397 | ) | - | |||||
| Borrowings on line of credit | 379,896 | 1,041,440 | ||||||
| Repayments on line of credit | (364,859 | ) | (1,105,262 | ) | ||||
| Repayments of capital leases | (809 | ) | (3,210 | ) | ||||
| Net proceeds from exercise of common stock purchase warrants | 399 | - | ||||||
| Net proceeds from exercise of employee stock compensation plans | 1,885 | 5,922 | ||||||
| Surrender of stock to satisfy minimum tax withholding | - | (174 | ) | |||||
| Net cash provided by (used in) financing activities from continuing operations | 274,968 | (61,284 | ) | |||||
| Net change in cash and cash equivalents | (62,101 | ) | 67,182 | |||||
| Cash and cash equivalents - beginning of period | 62,101 | - | ||||||
| Cash and cash equivalents - end of period | $ | - | $ | 67,182 | ||||
| DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for interest | $ | 22,598 | $ | 13,961 | ||||
| Cash paid during the period for income taxes | $ | 242 | $ | 1,628 | ||||
| DISCLOSURE OF NON-CASH TRANSACTIONS: | ||||||||
| Capital lease obligations incurred to acquire property and equipment | $ | - | $ | 20 | ||||
Schedule 4
BIOSCRIP, INC
Reconciliation between GAAP and Non-GAAP Measures
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Results of Operations: | ||||||||||||||||
| Revenue: | ||||||||||||||||
| Infusion Services - product revenue | $ | 169,011 | $ | 123,361 | $ | 469,594 | $ | 338,721 | ||||||||
| Infusion Services - service revenue | 5,791 | 2,575 | 15,750 | 7,242 | ||||||||||||
| Total Infusion Services revenue | 174,802 | 125,936 | 485,344 | 345,963 | ||||||||||||
| Home Health Services - service revenue | 18,071 | 17,299 | 54,240 | 50,870 | ||||||||||||
| PBM Services - service revenue | 16,006 | 27,130 | 59,099 | 85,066 | ||||||||||||
| Total revenue | $ | 208,879 | $ | 170,365 | $ | 598,683 | $ | 481,899 | ||||||||
| Adjusted EBITDA by Segment before corporate overhead: | ||||||||||||||||
| Infusion Services | $ | 14,693 | $ | 9,931 | $ | 41,201 | $ | 25,740 | ||||||||
| Home Health Services | 567 | 1,402 | 2,547 | 3,557 | ||||||||||||
| PBM Services | 4,278 | 6,905 | 15,397 | 19,367 | ||||||||||||
| Total Segment Adjusted EBITDA | 19,538 | 18,238 | 59,145 | 48,664 | ||||||||||||
| Corporate overhead | (7,483 | ) | (6,625 | ) | (23,531 | ) | (19,665 | ) | ||||||||
| Consolidated Adjusted EBITDA | 12,055 | 11,613 | 35,614 | 28,999 | ||||||||||||
| Interest expense, net | (7,182 | ) | (6,497 | ) | (20,168 | ) | (19,705 | ) | ||||||||
| Loss on extinguishment of debt | (15,898 | ) | - | (15,898 | ) | - | ||||||||||
| Income tax (expense) benefit | 587 | 2,506 | 31 | 2,644 | ||||||||||||
| Depreciation | (3,269 | ) | (2,134 | ) | (8,298 | ) | (6,115 | ) | ||||||||
| Amortization of intangibles | (1,009 | ) | (1,087 | ) | (4,801 | ) | (2,844 | ) | ||||||||
| Stock-based compensation expense | (1,427 | ) | (1,687 | ) | (7,260 | ) | (4,398 | ) | ||||||||
| Acquisition and integration expenses | (4,890 | ) | (998 | ) | (13,025 | ) | (1,806 | ) | ||||||||
| Restructuring and other expenses and investments (1) | (1,409 | ) | (2,321 | ) | (4,424 | ) | (3,696 | ) | ||||||||
| Loss from continuing operations, net of income taxes | $ | (22,442 | ) | $ | (605 | ) | $ | (38,229 | ) | $ | (6,921 | ) | ||||
| Supplemental Operating Data | September 30, | December 31, | ||||||
| 2013 | 2012 | |||||||
| Total Assets | ||||||||
| Infusion Services | $ | 776,878 | $ | 438,623 | ||||
| Home Health Services | 63,402 | 62,403 | ||||||
| PBM Services | 32,363 | 36,354 | ||||||
| Corporate unallocated | 53,641 | 95,813 | ||||||
| Assets associated with discontinued operations, not sold | 16 | 9,183 | ||||||
| Total | $ | 926,300 | $ | 642,376 | ||||
(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 | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 1,3 | 2012 2,4 | 2013 1,3 | 2012 2,4 | |||||||||||||
| Net income from continuing operations, net of income taxes | $ | (22,442 | ) | $ | (605 | ) | $ | (38,229 | ) | $ | (6,921 | ) | ||||
| Non-GAAP adjustments, net of income tax: | ||||||||||||||||
| Restructuring and other expenses and investments (5) | 1,409 | 1,069 | 4,424 | 2,699 | ||||||||||||
| Loss on extinguishment of debt | 15,898 | - | 15,898 | - | ||||||||||||
| Acquisition and integration expenses | 4,890 | 459 | 13,025 | 1,319 | ||||||||||||
| Amortization of intangibles | 1,009 | 500 | 4,801 | 2,077 | ||||||||||||
| Compensation under stock-based compensation plans | 1,427 | 777 | 7,260 | 3,212 | ||||||||||||
| Non-GAAP net income from continuing operations | $ | 2,191 | $ | 2,200 | $ | 7,179 | $ | 2,386 | ||||||||
| Earnings per share from continuing operations, basic and diluted | $ | (0.35 | ) | $ | (0.01 | ) | $ | (0.61 | ) | $ | (0.12 | ) | ||||
| Non-GAAP adjustments, net of income tax: | ||||||||||||||||
| Restructuring and other expenses and investments (5) | 0.02 | 0.02 | 0.07 | 0.05 | ||||||||||||
| Loss on extinguishment of debt | 0.23 | - | 0.25 | - | ||||||||||||
| Acquisition and integration expenses | 0.07 | 0.01 | 0.21 | 0.02 | ||||||||||||
| Amortization of intangibles | 0.01 | 0.01 | 0.08 | 0.04 | ||||||||||||
| Compensation under stock-based compensation plans | 0.02 | 0.01 | 0.11 | 0.06 | ||||||||||||
| Non-GAAP earnings per share from continuing operations, basic and diluted | $ | 0.00 | $ | 0.04 | $ | 0.11 | $ | 0.05 | ||||||||
| Weighted average shares outstanding, basic | 67,912 | 56,640 | 63,368 | 56,019 | ||||||||||||
| Weighted average shares outstanding, diluted | 67,912 | 56,640 | 63,368 | 56,019 | ||||||||||||
| 1 | For the three months and nine months ended September 30, 2013 non-GAAP net loss from continuing operations adjustments are net of tax, calculated using an annual effective tax rate offset by the effect of our net operating loss carryforwards. Because of our net operating loss carryforwards, there is no tax effect related to the non-GAAP adjustments above for the three months and nine months ended September 30, 2013. |
| 2 | For the three months and nine months ended September 30, 2012, non-GAAP net income from continuing operations adjustments are net of tax, calculated using an annual effective tax rate offset by the effect of our net operating loss carryforwards. The tax expense netted against restructuring and other expenses and investments, acquisition and integration expenses, amortization of intangibles, and stock-based compensation expense for the three months ended September 30, 2012 was $1,252, $539, $587 and $910, respectively. For the nine months ended September 30, 2012, the tax expense netted against restructuring and other expenses and investments, acquisition and integration expenses, amortization of intangibles, and stock-based compensation expense was $997, $487, $767 and $1,186, respectively. |
| 3 | For the three months and nine months ended September 30, 2013, non-GAAP Adjusted EPS per basic and diluted share from continuing operations adjustments are net of tax, calculated using an annual effective tax rate method offset by the effect of our net operating loss carryforwards. Because of our net operating loss carryforwards, there is no tax effect related to the non-GAAP adjustments above for the three months and nine months ended Septermber 30, 2013. |
| 4 | For the three months and nine months ended September 30, 2012, non-GAAP Adjusted EPS per basic and diluted share from continuing operations adjustments are net of tax, calculated using an annual effective tax rate offset by the effect of our net operating loss carryforwards. The tax benefit per basic and diluted share netted against restructuring and other expenses and investments, acquisition and integration expenses, amortization of intangibles, and stock-based compensation expense was zero for the three months and nine months ended September 30, 2012. |
| 5 | 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; losses in the short-term investment in the unconsolidated affiliate; and investments in start-up branch locations. |