United States
Securities and Exchange Commission

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

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

For the quarterly period ended June 30, 2007

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

For the transition period from                     to                     

BioScrip, Inc.

(Exact name of registrant as specified in its charter)

Delaware		05-0489664
(State or Other Jurisdiction		(I.R.S. Employer Identification No.)
of Incorporation or Organization)
100 Clearbrook Road, Elmsford, NY		10523
(Address of Principal Executive Offices)		(Zip Code)

(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check one):

o Large accelerated filer   þ Accelerated filer   o Non-accelerated filer

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     On July 31, 2007, there were outstanding 38,636,336 shares of the registrant’s common stock, $.0001 par value per share.

 

 

INDEX

		Page Number
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 2007 (unaudited) and December 31, 2006			1
Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2007 and 2006			2
Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006			3
Notes to the Unaudited Consolidated Financial Statements			4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			9
Item 3. Quantitative and Qualitative Disclosure About Market Risk			13
Item 4. Controls and Procedures			13
PART II OTHER INFORMATION
Item 1. Legal Proceedings			15
Item 4. Submission of Matters to a Vote of Security Holders			15
Item 6. Exhibits and Reports on Form 8-K			16
SIGNATURES			17
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements

BIOSCRIP, INC.

(in thousands, except share amounts)

		June 30,				December 31,
		2007				2006
		(unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	—			$	—
Receivables, less allowance for doubtful accounts of $13,056 and $13,774 at June 30, 2007 and December 31, 2006, respectively			130,638				135,139
Inventory			34,800				33,471
Prepaid expenses and other current assets			1,324				2,090
Total current assets			166,762				170,700
Property and equipment, net			9,761				10,409
Other assets			464				681
Goodwill			114,824				114,991
Intangible assets, net			6,744				8,675
Total assets		$	298,555			$	305,456
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Line of credit		$	41,865			$	52,895
Accounts payable			56,032				51,724
Claims payable			7,301				9,548
Amounts due to Plan Sponsors			9,362				10,280
Accrued expenses and other current liabilities			8,948				9,230
Total current liabilities			123,508				133,677
Unrecognized tax benefits			4,187				—
Deferred taxes, net			11,380				9,946
Total liabilities			139,075				143,623
Stockholders’ equity
Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued or outstanding			—				—
Common stock, $.0001 par value; 75,000,000 shares authorized; shares issued: 40,921,186 and 40,680,233, respectively; shares outstanding: 37,531,367 and 37,488,257, respectively			4				4
Treasury stock, 2,263,500 and 2,247,150 shares, respectively, at cost			(8,073	)			(8,002	)
Additional paid-in capital			240,318				239,315
Accumulated deficit			(72,769	)			(69,484	)
Total stockholders’ equity			159,480				161,833
Total liabilities and stockholders’ equity		$	298,555			$	305,456

See accompanying Notes to the Unaudited Consolidated Financial Statements.

BIOSCRIP, INC.

(in thousands, except per share amounts)

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
Revenue		$	295,004			$	279,585			$	591,345			$	579,303
Cost of revenue			261,683				250,791				525,077				520,178
Gross profit			33,321				28,794				66,268				59,125
Selling, general and administrative expenses			29,290				31,100				57,660				59,003
Bad debt expense			1,044				4,355				4,039				6,654
Amortization of intangibles			484				1,639				1,931				3,261
Merger related expenses			—				—				—				114
Income (loss) from operations			2,503				(8,300	)			2,638				(9,907	)
Interest expense, net			(856	)			(731	)			(1,940	)			(1,182	)
Income (loss) before benefit from income taxes			1,647				(9,031	)			698				(11,089	)
Tax provision (benefit)			1,165				(3,321	)			1,563				(4,223	)
Net income (loss)		$	482			$	(5,710	)		$	(865	)		$	(6,866	)
Basic income (loss) per share		$	0.01			$	(0.15	)		$	(0.02	)		$	(0.18	)
Diluted income (loss) per share		$	0.01			$	(0.15	)		$	(0.02	)		$	(0.18	)
Weighted average shares used in computing basic loss per share			37,499				37,222				37,495				37,212
Weighted average shares used in computing diluted loss per share			37,824				37,222				37,495				37,212

See accompanying Notes to the Unaudited Consolidated Financial Statements.

BIOSCRIP, INC.

(in thousands)

		Six Months Ended
		June 30,
		2007				2006
Cash flows from operating activities:
Net loss		$	(865	)		$	(6,866	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation			2,051				2,073
Amortization			1,931				3,261
Change in deferred income tax			1,434				(1,455	)
Tax benefit relating to employee stock compensation			—				107
Excess tax benefits relating to employee stock compensation			—				(19	)
Stock based compensation			1,135				1,146
Provision for losses on receivables			4,039				6,654
Changes in assets and liabilities, net of acquired assets:
Receivables			462				(4,921	)
Inventory			(1,329	)			(3,299	)
Prepaid expenses and other current assets			985				(1,686	)
Accounts payable			4,308				12,103
Claims payable			(2,247	)			(21,036	)
Amounts due to Plan Sponsors			(918	)			533
Accrued expenses and other current and non-current liabilities			1,493				1,247
Net cash provided by (used in) operating activities			12,479				(12,158	)
Cash flows from investing activities:
Purchases of property and equipment, net of disposals			(1,404	)			(3,711	)
Cost of acquisitions, net of cash acquired			—				(13,082	)
Net cash used in investing activities			(1,404	)			(16,793	)
Cash flows from financing activities:
(Repayments) borrowings on line of credit, net			(11,030	)			30,742
Purchase of treasury stock			(71	)			—
Proceeds from exercise of stock options			32				752
Excess tax benefits relating to employee stock compensation			—				19
Principal payments on capital lease obligations			(6	)			(8	)
Net cash (used in) provided by financing activities			(11,075	)			31,505
Net increase in cash and cash equivalents			—				2,554
Cash and cash equivalents-beginning of period			—				1,521
Cash and cash equivalents-end of period		$	—			$	4,075
DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest		$	2,027			$	998
Cash paid during the period for income taxes		$	691			$	2,089

See accompanying Notes to the Unaudited Consolidated Financial Statements.

BIOSCRIP, INC.

NOTE 1 – BASIS OF PRESENTATION

     These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, and other information included in the Annual Report on Form 10-K of BioScrip, Inc. (the “Company”) for the year ended December 31, 2006 (the “Form 10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2007. The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

     In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the unaudited consolidated financial position, results of operations and cash flows for the periods presented have been included. Operating results for the three and six month periods ended June 30, 2007 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2007. The accounting policies followed for interim financial reporting are similar to those disclosed in Note 2 of Notes to Consolidated Financial Statements included in the Form 10-K.

     Certain prior period amounts have been reclassified to conform to the current year presentation. Such reclassifications had no material effect on the Company’s previously reported consolidated financial position, results of operations or cash flow.

NOTE 2 – EARNINGS PER SHARE

     The following table sets forth the computation of basic and diluted income (loss) per common share (in thousands, except per share amounts):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
Numerator:
Net income (loss)		$	482			$	(5,710	)		$	(865	)		$	(6,866	)
Denominator – Basic:
Weighted average number of common shares outstanding			37,499				37,222				37,495				37,212
Basic income (loss) per common share		$	0.01			$	(0.15	)		$	(0.02	)		$	(0.18	)
Denominator – Diluted:
Weighted average number of common shares outstanding			37,499				37,222				37,495				37,212
Common share equivalents of outstanding stock options and restricted stock awards			325				—				—				—
Total diluted shares outstanding			37,824				37,222				37,495				37,212
Diluted income (loss) per common share		$	0.01			$	(0.15	)		$	(0.02	)		$	(0.18	)

     The net loss per common share for the three month period ended June 30, 2006 and the six month periods ended June 30, 2007 and 2006, excludes the effect of common stock equivalents, as their inclusion would be anti-dilutive.

NOTE 3 – STOCK-BASED COMPENSATION PLANS

     Under the Company’s stock-based compensation plans (the “Plans”), it may issue, among other things, stock options, restricted stock and performance share awards. Options granted under the Plans typically vest over a three-year period and,

in certain instances, fully vest upon a change in control of the Company. In addition, such options are generally exercisable for 10 years after the date of grant, subject to earlier termination in certain circumstances, most notably, upon termination of employment. The exercise price of such options is equal to the fair market value on the date of grant. The exercise price of ISO’s granted under the Plans will not be less than 100% of the fair market value on the date of grant (110% for ISO’s granted to a person who owns more than 10% of the outstanding stock of the Company).

Stock Options

     The Company recognized stock option related compensation expense of $0.3 million and $0.5 million for the three months ended June 30, 2007 and 2006, respectively. The Company recognized stock option related compensation expense of $0.7 million and $1.1 million for the six months ended June 30, 2007 and 2006, respectively.

     The fair value of each stock option award on the date of the grant was calculated by using a binomial option-pricing model and is amortized to expense on a straight line basis over the vesting period with the following weighted average assumptions:

		Three Months Ended June 30,										Six Months Ended June 30,
		2007				2006				2007				2006
Expected volatility			54.2	%			52.0	%			54.8	%			52.0	%
Risk-free interest rate			4.80	%			5.07	%			4.77	%			4.50	%
Expected life of options		4.6 years				4.4 years				5.0 years				4.5 years
Dividend rate			-0-				-0-				-0-				-0-
Fair value of options		$	1.91			$	2.62			$	1.80			$	3.45

     At June 30, 2007, there was $2.4 million of unrecognized compensation expense related to non-vested share-based compensation arrangements. That expense is expected to be recognized over a weighted-average period of 2.2 years.

     Since the Company records compensation expense for options over the vesting period, the weighted average period over which the expense will be recognized may change. Also, future stock-based compensation expense may be greater as additional options are granted.

Restricted Stock

     The Company recognized compensation expense related to restricted stock awards of $0.2 million and less than $0.1 million for the three months ended June 30, 2007 and 2006, respectively. The Company recognized compensation expense related to restricted stock awards of $0.2 million and less than $0.1 million for the six months ended June 30, 2007 and 2006, respectively.

     As of June 30, 2007, there was $1.0 million of unrecognized compensation expense related to non-vested share-based compensation arrangements. That expense is expected to be recognized over a weighted-average period of 1.9 years.

     Since the Company records compensation expense for restricted stock awards over the vesting requirements, which include time elapsed and a factor related to stock price, the weighted average period over which the expense will be recognized may change. Also, future stock-based compensation expense may be greater if additional restricted stock awards are made.

Performance Units

     Under the Plans, the Company’s Compensation Committee may grant performance units to key employees. The Compensation Committee establishes the terms and conditions of the performance units including the performance goals, the performance period and the value for each performance unit. If the performance goals are satisfied, the Company shall pay the key employee an amount in cash equal to the value of each performance unit at the time of payment. In no event shall a key employee receive an amount in excess of $1.0 million in respect of performance units for any given year. As of June 30, 2007 there have been no performance units granted.

NOTE 4 – OPERATING SEGMENTS

     The Company operates in two reportable segments: (1) Specialty Services, which is comprised of specialty pharmacy distribution and clinical management services; and (2) PBM Services, which is comprised of fully integrated pharmacy benefit management and traditional mail services. Corporate overhead is allocated between the two segments based on revenue adjusted for management’s assessment of utilization of overhead by each segment.

Segment Reporting Information
(in thousands)

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
Results of Operations:
Revenue:
Specialty Services		$	238,079			$	210,471			$	472,975			$	414,109
PBM Services			56,925				69,114				118,370				165,194
Total		$	295,004			$	279,585			$	591,345			$	579,303
Income (loss) from operations:
Specialty Services		$	(606	)		$	(6,972	)		$	(2,855	)		$	(9,657	)
PBM Services			3,109				(1,328	)			5,493				(136	)
			2,503				(8,300	)			2,638				(9,793	)
Merger and integration			—				—				—				114
Income (loss) from operations			2,503				(8,300	)			2,638				(9,907	)
Interest expense, net			856				731				1,940				1,182
Income tax provision (benefit)			1,165				(3,321	)			1,563				(4,223	)
Net income (loss):		$	482			$	(5,710	)		$	(865	)		$	(6,866	)
Additional information:
Capital expenditures:
Specialty Services		$	526			$	1,674			$	1,210			$	2,864
PBM Services			83				831				194				847
Total		$	609			$	2,505			$	1,404			$	3,711
Depreciation Expense:
Specialty Services		$	889			$	853			$	1,807			$	1,679
PBM Services			118				178				244				394
Total		$	1,007			$	1,031			$	2,051			$	2,073
Total assets:
Specialty Services										$	231,368			$	244,570
PBM Services											67,187				66,248
Total										$	298,555			$	310,818

     The following table outlines, by segment, contracts with the Plan Sponsor having revenues that exceeded 10% of the Company’s total revenues (in thousands):

		For the three months								For the six months
		ended June 30,								ended June 30,
		2007				2006				2007				2006
PBM Services:
Revenue		$	29,218			$	21,918			$	58,233			$	60,835
% of Total Revenue			10	%			8	%			10	%			11	%
Specialty Services:
Revenue		$	9,296			$	5,514			$	18,674			$	13,083
% of Total Revenue			3	%			2	%			3	%			2	%

NOTE 5 – ACQUISITIONS

Intravenous Therapy Services, Inc. Acquisition

     On March 1, 2006, the Company acquired all of the issued and outstanding capital stock of Intravenous Therapy Services, Inc. (“Burbank”), now known as BioScrip Infusion Services, Inc., a specialty home infusion company located in Burbank, California, for approximately $13.1 million in cash, which resulted in approximately $10.7 million of goodwill, plus a potential earn-out payment contingent on Burbank achieving certain future financial performance benchmarks. Had this acquisition taken place on January 1, 2006, the Company’s consolidated sales and income would not have been significantly different from the reported amounts at June 30, 2006.

NOTE 6 – CONCENTRATION OF CREDIT RISK

     The Company provides credit in the normal course of business to its customers. One customer accounted for approximately 18% and 19% of accounts receivable at June 30, 2007 and 2006, respectively, and 13% of revenues during each of the six month periods ended June 30, 2007 and 2006, respectively.

NOTE 7 – RECENT ACCOUNTING PRONOUNCEMENTS

     In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115 (“SFAS 159”), which becomes effective for fiscal years beginning after November 15, 2007. SFAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value on a per instrument basis, with changes in fair value recognized in earnings each reporting period. This will enable some companies to reduce volatility in reported earnings caused by measuring related assets and liabilities differently. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The Company is currently evaluating the impact, if any, that adopting SFAS 159 will have on its results of operations and its financial condition.

NOTE 8 – INCOME TAXES

     The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (“FIN 48”) effective January 1, 2007. As a result of the adoption of FIN 48, the Company recorded a $2.4 million increase in the liability for unrecognized tax benefits, which was recorded as an adjustment to the opening balance of accumulated deficit on January 1, 2007. As of the adoption date, the Company had gross tax effected unrecognized tax benefits of approximately $4.8 million of which $4.5 million, if recognized, would impact its effective tax rate. Interest and penalties related to unrecognized tax benefits are recorded as income tax expense. As of January 1, 2007, the Company had $0.6 million of accrued interest included in the $4.8 million of unrecognized tax benefits.

     The Company believes it is reasonably possible that certain controversies (totaling $0.4 million) with taxing authorities will be resolved through administrative proceedings within the next 12 months. It is not yet possible to predict the result of these proceedings.

     The Company files income tax returns, including returns for its subsidiaries, with federal, state and local jurisdictions. The Company’s uncertain tax positions are related to tax years that remain subject to examination. As of the date of the Company’s adoption of FIN 48, U.S. tax returns for 2003, 2005 and 2006 remain subject to examination by federal tax authorities. Tax returns for the years 2002 through 2006 remain subject to examination by state and local tax authorities for a majority of the Company’s state and local filings.

     Income tax expense of $1.2 million was recorded on pre-tax income of $1.6 million for the three months ended June 30, 2007. For the six months ended June 30, 2007, income tax expense of $1.6 million was recorded on pre-tax income of $0.7 million. The year-to-date 2007 tax provision in excess of pre-tax income is the result of the amortization of certain indefinite-lived intangible assets. Accordingly, the valuation allowance against the Company’s deferred tax assets was increased with a charge to income tax expense.

     At June 30, 2007 the Company had federal net operating loss carry forwards (“NOLs”) of approximately $22.6 million, of which $11.3 million is subject to an annual limitation, all of which will begin expiring in 2017 and later. If the NOLs are not utilized in the year they are available they may be utilized in a future year to the extent they have not expired. The

Company has state NOLs remaining of approximately $20.1 million, the majority of which will begin expiring in 2017 and later.

NOTE 9 – LONG-TERM CONTRACTS

     During the quarter the Company amended its agreement with its primary drug wholesaler to, among other things, provide more favorable pricing and payments terms and extend the term of the agreement until April 2010.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion should be read in conjunction with the audited consolidated financial statements, including the notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (the “Form 10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”), as well as our unaudited consolidated interim financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007 (this “Report”).

     This Report contains statements not purely historical and which may be considered forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements regarding our expectations, hopes, beliefs, intentions or strategies regarding the future. These forward looking statements may include statements relating to our business development activities, sales and marketing efforts, the status of material contractual arrangements, including the negotiation or re-negotiation of such arrangements, future capital expenditures, the effects of regulation and competition on our business, future operating performance and the results, benefits and risks associated with the integration of acquired companies. Investors are cautioned that any such forward-looking statements are not guarantees of future performance, involve risks and uncertainties and that actual results may differ materially from those possible results discussed in the forward-looking statements as a result of various factors. These factors include, among other things, risks associated with risk-based or “capitated” contracts, increased government regulation related to the health care and insurance industries in general and more specifically, pharmacy benefit management and specialty pharmaceutical distribution organizations, the existence of complex laws and regulations relating to our business, changes in reimbursement rates from government and private payors, and increased competition from our competitors, including competitors with greater financial, technical, marketing and other resources. This Report contains information regarding important factors that could cause such differences.

     You should not place undue reliance on such forward-looking statements as they speak only as of the date they are made. Except as required by law, we assume no obligation to publicly update or revise any forward-looking statement even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

Business Overview

     We are 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.

     Our specialty pharmaceutical services (“Specialty Services”) include the comprehensive support, management, dispensing, distribution and data reporting for medications used to treat patients living with chronic health conditions including potentially life threatening or debilitating diseases or genetic disorders and are provided in various capacities to patients, physicians, payors and pharmaceutical manufacturers. Our pharmacy benefit management (“PBM”) services include pharmacy network management, claims processing, benefit design, drug utilization review, formulary management and traditional mail order pharmacy fulfillment. These services are reported under two operating segments: (i) Specialty Services; and (ii) PBM and traditional mail services (collectively, “PBM Services”).

     Specialty Services and PBM Services revenues are derived from our relationships with a variety of third party payors, including managed care organizations, third party administrators (“TPAs”), self-funded employer groups and government programs (collectively “Plan Sponsors”) as well as patients, physicians and pharmaceutical manufacturers.

     Our Specialty Services are marketed and sold to patients, physicians, pharmaceutical manufacturers and Plan Sponsors and are focused on chronic health conditions including potentially life threatening or debilitating diseases or genetic disorders which are treated with specialty medications. These services include the distribution of biotech and other high cost injectable, oral and infusible prescription medications and the provision of therapy management services.

     We strive to maximize therapy outcomes through strict adherence to clinical guidelines or protocols for particular prescription therapies while at the same time managing the costs of such therapies on behalf of a Plan Sponsor or patient.

     We were named the sole vendor for the Centers for Medicare and Medicaid Services’ Competitive Acquisition Program (“CAP”) and as part of our Specialty Services offering began dispensing Medicare Part B drugs and biologics to CAP

enrolled physicians as of July 1, 2006. As a result of the physician election period which occurred from May 1 through June 15, 2007 for enrollments effective August 1, 2007, we have increased the total eligible participant base. Final election results have not yet been completed, although initial figures indicate an increase of approximately 35% in physician enrollment.

     We were awarded an agreement to serve as one of two national specialty pharmacy providers of HIV/AIDS and Solid Organ Transplant drugs and services to patients insured by United Healthcare and its participating affiliates. This agreement became effective on August 1, 2007, with the initial term of the agreement running through December 31, 2008.

     We plan to grow our infused product sales by marketing a broader product offering in our current geographic service area. This includes adding new therapies to our current focus on immunological blood products, including our most recent focus on patients with hemophilia. We will work with physicians who utilize our services to support their in-office infusion activities and we expect to establish ambulatory infusion centers.

     Our PBM Services are offered to Plan Sponsors and are designed to promote a broad range of cost-effective, clinically appropriate pharmacy benefit management services through our network of retail pharmacies and our traditional mail service distribution facilities. Over the past several years we have focused on building our Specialty Services for strategic growth and have lost a significant amount of PBM Services business, including the loss of our contracts with Centene and excelleRx, which has and will continue to negatively impact 2007 revenue. Consequently, as of June 30, 2007 Specialty Services revenues represented approximately 80% of our total revenue.

     As part of our PBM Services, we also administer numerous cash card or discount card programs on behalf of program sponsors or TPAs. These are 100% copay programs that provide savings to customers who present a discount card at one of our participating network pharmacies or who order medications through one of our mail order pharmacies. Under such programs we derive revenue on a per claim basis from the dispensing network pharmacy.

     During the quarter we amended our agreement with our primary drug wholesaler to, among other things, provide more favorable pricing and payments terms and extend the term of the agreement until April 2010.

Critical Accounting Estimates

     Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates, and different assumptions or conditions may yield different estimates. The accounting estimates followed for interim financial reporting are similar to those disclosed in Note 2 of Notes to Consolidated Financial Statements included in the Form 10-K. Material updates to estimates disclosed in the Form 10-K are discussed below.

     On January 1, 2007, we adopted the provisions of FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN 48 establishes a single model to address accounting for uncertain tax positions. FIN 48 clarifies the accounting for income taxes by prescribing a recognition threshold and measurement attribute that a tax position is required to meet before being recognized in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. We file income tax returns, including returns for our subsidiaries, as prescribed by federal tax laws and the tax laws of the state and local jurisdictions in which we operate. Our uncertain tax positions are related to tax years that remain subject to examination. Interest and penalties related to unrecognized tax benefits are recorded as income tax expense. See Note 8 — Income Taxes of the Notes to the Unaudited Consolidated Financial Statements for discussion of the effects of our adoption of FIN 48.

Results of Operations

     In the following Management’s Discussion and Analysis we provide a discussion of reported results for the three and six month periods ended June 30, 2007 as compared to the same periods a year earlier.

     Revenue. Revenue for the second quarter of 2007 was $295.0 million compared to $279.6 million in the second quarter of 2006. Specialty Services revenue for the second quarter of 2007 was $238.1 million, an increase of $27.6 million, or 13.1%, compared to $210.5 million for the same period a year ago, primarily due to revenues associated with preferred distribution arrangements for newly approved drugs, increased sales under the CAP program and growth in infused products. PBM Services revenue for the second quarter of 2007 was $56.9 million, a decrease of $12.2 million, or 17.6%, from the same period a year ago, primarily attributable to the termination or expiration of certain PBM contracts.

     Revenue for the six months ended June 30, 2007 was $591.3 million compared to $579.3 million for the same period in 2006. Specialty Services revenue for the six months ended June 30, 2007 was $473.0 million, an increase of $58.9 million, or 14.2%, compared to $414.1 million for the same period a year ago, primarily due to revenues associated with preferred distribution arrangements for newly approved drugs, increased sales under the CAP program and growth in infused products. PBM Services revenue for the six months ended June 30, 2007 was $118.3 million, a decrease of $46.9 million, or 28.4%, from the same period a year ago attributable to the termination or expiration of certain PBM contracts.

     Cost of Revenue and Gross Profit. Cost of revenue for the second quarter of 2007 was $261.7 million compared to $250.8 million for the same period in 2006. Gross margin as a percentage of revenue increased from 10.3% in the second quarter of 2006 to 11.3% in the second quarter of 2007. The increase in gross margin rate was primarily due to our termination of contracts with certain lower gross profit customers and revenue growth from higher margin customers.

     Cost of revenue for the six month period ended June 30, 2007 increased $4.9 million to $525.1 million from $520.2 million for the same period in 2006. Gross profit for the six months ended June 30, 2007 was $66.3 million, an increase of $7.2 million, or 12.1%, from $59.1 million for the six months ended June 30, 2006. Gross margin as a percentage of revenue for the six months ended June 30, 2007 increased to 11.2% compared to gross margin of 10.2% for the same period last year, primarily as a result of our termination of contracts with certain lower gross profit customers and revenue growth from higher margin customers throughout the second half of 2006 and the first half of 2007.

     Selling, General and Administrative Expenses. Selling, general and administrative expenses (“SG&A”) for the second quarter of 2007 decreased to $29.3 million, or 9.9% of total revenue, from $31.1 million, or 11.1% of total revenue, for the second quarter of 2006. The decrease in SG&A primarily is due to approximately $1.4 million in severance obligations that were recognized in the second quarter of 2006 related to the departure of former members of senior management as well as a reduction of approximately $0.4 million in telecommunication expenses.

     SG&A expenses for the six months ended June 30, 2007 were $57.7 million, or 9.8% of total revenue, compared to $59.0 million, or 10.2% of total revenue for the same period in 2006. The decrease in SG&A primarily is due to approximately $1.8 million in severance obligations that were recognized in the first six months of 2006 related to the departure of former members of senior management.

     Bad Debt Expense. For the second quarter of 2007 bad debt expense was $1.0 million, or 0.4% of revenue, as compared to $4.4 million, or 1.6% of revenue, in the second quarter of 2006. The decrease in bad debt expense is primarily the result of improved cash collections and cash posting as well as the favorable settlement of previously reserved doubtful accounts. Our overall methodology used for determining our provision for bad debt remains unchanged.

     For the six months ended June 30, 2007, bad debt expense decreased 40.3% to $4.0 million compared to $6.7 million for the same period a year ago. Bad debt expense has decreased due to the continued improvements in our collection efforts as compared to the same period last year and for the reasons stated above.

     Amortization of Intangibles. For the second quarter of 2007 we recorded amortization of intangibles of $0.5 million compared to $1.6 million for the same period in 2006. The decrease in 2007 was primarily the result of certain intangible assets becoming fully amortized in the first quarter of 2007.

     The amortization of intangibles for the six months ended June 30, 2007 was $1.9 million compared to $3.3 million for the same period a year ago. The decrease in 2007 was primarily the result of certain intangible assets becoming fully amortized in the first quarter of 2007.

     Merger Related Expenses. There were no merger related expenses in the six month period ended June 30, 2007. Merger related expenses of $0.1 million for the six month period ended June 30, 2006, included expenses incurred to consolidate the acquisition of Chronimed.

     Net Interest Expense. Net interest expense was $0.9 million for the second quarter of 2007 compared to $0.7 million for the same period a year ago. Interest expense associated with our line of credit was higher in 2007 as our average borrowing level was higher than last year. The increased borrowing level was principally the result of increased general working capital requirements.

     Net interest expense was $1.9 million for the six months ended June 30, 2007 compared to $1.2 million for the six months ended June 30, 2006. The increase in interest expense associated with our line of credit is a result of a delay in receipt of CAP claims payments in the first quarter of 2007 and increased general working capital requirements.

     Provision for Income Taxes. Income tax expense of $1.2 million was recorded for the second quarter of 2007 on pre-tax net income of $1.6 million. This compares to a $3.3 million tax benefit on a pre-tax net loss of $9.0 million for the same period a year ago.

     Income tax expense of $1.6 million was recorded for the six months ended June 30, 2007, on pre-tax income of $0.7 million. This compares to an income tax benefit of $4.2 million on pre-tax loss of $11.1 million for the six months ended June 30, 2006. The year-to-date 2007 tax provision in excess of pre-tax income is the result of the amortization of certain indefinite-lived assets. Accordingly, the valuation allowance against the Company’s deferred tax assets was increased with a charge to income tax expense.

     Net Income (Loss) and Income (Loss) Per Share. Net income for the second quarter of 2007 was $0.5 million, or $0.01 per share, compared to a net loss of $5.7 million, or $0.15 per share, for the same period last year. The increase in net income is due to items previously discussed in our Results of Operations.

     Net loss for the six months ended June 30, 2007 was $0.9 million, or $0.02 per share. This compares to net loss of $6.9 million, or $0.18 per share, for the six months ended June 30, 2006.

Liquidity and Capital Resources

     Cash provided by operating activities was $12.5 million for the first six months of 2007, as compared to $12.2 million used in operating activities during the first six months of 2006. The cash provided by operating activities was largely due to the reduction in net operating losses, an increase in accounts payable coupled with decreases in accounts receivable and prepaid expenses partially offset by decreases in claims payable and amounts payable to Plan Sponsors and an increase in inventory.

     Net cash used in investing activities during the six months ended June 30, 2007 was $1.4 million, primarily due to the purchases of property and equipment. This compares to net cash of $16.7 million used in investing activities in the same period in 2006, primarily for the acquisition of Burbank.

     For the six months ended June 30, 2007 net cash used in financing activities was $11.1 million compared to net cash provided by financing activities of $31.5 million for the same period in 2006, due to repayments on the line of credit during the first half of 2007.

     At June 30, 2007 there were $41.9 million of bank borrowings outstanding under our revolving credit facility (the “Facility”) with HFG Healthco-4 LLC, an affiliate of Healthcare Finance Group, Inc. (“HFG”), as compared to $38.2 million at June 30, 2006. Outstanding borrowings increased primarily due to increased general working capital requirements. Recent legislation regarding CAP authorizing payment of claims on a bi-weekly basis has improved cash flow throughout the second quarter of 2007.

     The Facility was increased in July 2006 to provide for borrowings of up to $75.0 million at the London Inter-Bank Offered Rate (LIBOR) plus the applicable margin. Effective September 30, 2006, the Facility was extended for four years through November 1, 2010. The Facility permits us to request an increase in the amount available for borrowing up to $100.0 million. The borrowing base utilizes receivables balances and other related collateral as security under the Facility.

     The weighted average interest rate on the Facility was 7.3% during the second quarter of 2007 compared to 7.4% for the same period a year ago. At July 31, 2007 we had $39.3 million of credit available under the Facility.

     The Facility contains various covenants that, among other things, require us to maintain certain financial ratios, as defined in the agreements governing the Facility. We were in compliance with all covenants as of June 30, 2007.

     At June 30, 2007 we had working capital of $43.3 million compared to $37.0 million at December 31, 2006. As we continue to grow, we anticipate that our working capital needs will also continue to increase. We believe the cash expected to be generated from operating activities and the funds available under our current Facility will be sufficient to fund our anticipated working capital, IT systems investments and other cash needs for the next twelve months as our business is currently configured. Growth in National HIV/AIDS and Solid Organ Transplant programs may require an increase in our line of credit to fund additional working capital requirements.

     As discussed above, during the quarter we amended our agreement with our primary drug wholesaler, which includes more favorable payment terms which will allow for future growth with limited new investment in working capital.

     We also may pursue joint venture arrangements, business acquisitions and other transactions designed to expand our business, which we would expect to fund from borrowings under the Facility, other future indebtedness or, if appropriate, the private and/or public sale or exchange of our debt or equity securities.

     At June 30, 2007 we had Federal net operating loss carry forwards (“NOLs”) of approximately $22.6 million, of which $11.3 million is subject to an annual limitation, all of which will begin expiring in 2017 and later. If the NOLs are not utilized in the year they are available they may be utilized in a future year to the extent they have not expired. We have state NOLs remaining of approximately $20.1 million, the majority of which will begin expiring in 2017 and later.

Other Matters

     We make available through our website, www.bioscrip.com, access to our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, any amendments to those reports (when applicable), and other reports filed with the SEC. Such access is free of charge and is available as soon as reasonably practicable after such information is filed with the SEC. This information may also be accessed through the SEC website at www.sec.gov.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

     Exposure to market risk for changes in interest rates relates to our outstanding debt. At June 30, 2007 we did not have any long-term debt. We are exposed to interest rate risk primarily through our borrowing activities under the Facility as discussed in Item 2 of this report. Based upon our average daily borrowings, a 1.0% increase in interest rates would have increased our interest expense for the six month period ended June 30, 2007 by 12.7%. Interest rate risk on our investments is immaterial due to our level of investment dollars. We do not use financial instruments for trading or other speculative purposes and are not a party to any derivative financial instruments.

     At June 30, 2007, the carrying values of cash and cash equivalents, accounts receivable, accounts payable, claims payable, payables to plan sponsors and others and line of credit approximate fair value due to their short-term nature.

     Because management does not believe that our exposure to interest rate market risk is material at this time, we have not developed or implemented a strategy to manage this market risk through the use of derivative financial instruments or otherwise. We will assess the significance of interest rate market risk from time to time and will develop and implement strategies to manage that market risk as appropriate.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

     We maintain disclosure controls and procedures that are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) as appropriate, to allow for timely decisions regarding required disclosures.

     In connection with the preparation of our 2006 Form 10-K, an evaluation was performed under the supervision and with the participation of management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13d-15(e) and 15d-15(e)). Based on that evaluation, management concluded that our disclosure controls as of December 31, 2006 were not effective as a result of a material weakness in internal control over financial reporting related to information technology. The material weakness was disclosed in Item 9A of the Form 10-K.

     Based on its evaluation of the effectiveness of the design and operation of our internal control over financial reporting as of June 30, 2007, management has identified no new material weaknesses other than that previously described in the Form 10-K. Although progress has been made to address the material weakness, management has concluded that the material weakness related to information technology disclosed in the Form 10-K continues to exist as of the quarter ended June 30, 2007, and therefore, has also concluded that our disclosure controls and procedures were not effective as of June 30, 2007 for the same reason disclosed in the Form 10-K.

Internal Control Over Financial Reporting

     In light of the material weakness in internal control over financial reporting which continued to exist as of June 30, 2007, management performed additional analysis and procedures to ensure the consolidated financial statements were prepared in accordance with GAAP. Accordingly, management believes that the consolidated financial statements and schedules included in this Form 10-Q fairly present in all material respects our financial position, results of operations and cash flows for the periods presented.

     Management, with oversight from the Audit Committee, is working to remediate the remaining material weakness in internal control over financial reporting disclosed in the Form 10-K. No additional changes in our internal controls over financial reporting were identified during the quarter ended June 30, 2007 that materially affected, or are reasonably likely to materially affect, such internal control over financial reporting other than those remedial actions previously disclosed in Form 10-K.

PART II
OTHER INFORMATION

Item 1. Legal Proceedings

     In May 2007, the Company was served with a complaint by the two private plaintiff relators who had filed a qui tam action (entitled United States of America, ex rel Christine Driscoll, et al. v. Serono Inc.) on behalf of the federal government and certain state governments in the federal district court in Boston after the governmental entities declined to intervene in the lawsuit following an investigation reported by the Company in earlier filings. The complaint purports to allege claims against the Company and other, unrelated “pharmacy providers” under the federal and certain state false claims acts, allegedly on the ground that the defendants received and did not disclose discounts on their purchases of a product, Serostim, manufactured and distributed by a Serono, Inc., which previously settled with the government with respect to other allegations. The Company has filed a motion to strike certain allegations from the complaint and to dismiss the remaining allegations and claims. The Company denies all of plaintiff’s allegations and intends to defend against the lawsuit vigorously.

     On July 9, 2007, the former owners of JDP, Inc. filed a lawsuit (entitled JPD, Inc., et al. v. Chronimed Holdings, Inc.) in the federal court in Columbus, Ohio, alleging that they are entitled to an additional purchase price payment under an “earn out” provision of the stock purchase agreement. The complaint alleges claims for breach of contract, estoppel, and unfair competition and seeks compensatory damages of at least $5.64 million, an equitable accounting, punitive damages, a release of the principal seller from his post-employment non-compete agreement, and other relief. The Company has asked the court to stay the lawsuit and direct arbitration of the dispute over the additional purchase price as required under the terms of the stock purchase agreement, which the Company does not believe it owes the sellers, as provided in the stock purchase agreement. The Company does not believe that the plaintiffs are entitled to any relief under their action and intends to defend against the lawsuit vigorously.

Item 4. Submission of Matters to a Vote of Security Holders

(a)		On May 22, 2007, we held our Annual Meeting of Stockholders (the “Annual Meeting”).
(b)		At the Annual Meeting, our stockholders elected Richard H. Friedman, Charlotte W. Collins, Louis T. DiFazio, Myron Z. Holubiak, David R. Hubers, Michael Kooper, Richard L. Robbins, Stuart A. Samuels and Steven K. Schelhammer as directors to serve until our next annual meeting.
(c)		At the Annual Meeting, our stockholders also ratified the appointment of Ernst & Young LLP as our independent auditors for the year ending December 31, 2007.

Set forth below are the final results of the votes cast for those matters submitted to stockholders:

(i)

Election of Directors:

		For				Withheld
Charlotte W. Collins			31,135,821				687,389
Louis T. DiFazio			31,133,173				690,037
Richard H. Friedman			30,830,359				992,851
Myron Z. Holubiak			31,175,495				647,715
David R. Hubers			31,177,771				645,439
Michael Kooper			30,629,598				1,193,612
Richard L. Robbins			31,128,447				694,763
Stuart A. Samuels			31,174,485				648,725
Steven K. Schelhammer			31,187,695				635,515

(ii)

Ratification of the appointment of Ernst & Young LLP as our independent auditors for the year ending December 31, 2007:

For		Against				Abstain
30,950,308			866,867				6,034

Item 6. Exhibits

(a)

Exhibits.

		Exhibit 3.1		Second Amended and Restated Certificate of Incorporation of BioScrip, Inc. (Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-4 (File No. 333-119098), as amended, which became effective on January 26, 2005)
		Exhibit 3.2		Amended and Restated By-Laws of BioScrip, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 16, 2007, accession No. 0000950123-07-007569)
		Exhibit 31.1		Certification of Richard H. Friedman pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
		Exhibit 31.2		Certification of Stanley G. Rosenbaum pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
		Exhibit 32.1		Certification of Richard H. Friedman pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
		Exhibit 32.2		Certification of Stanley G. Rosenbaum pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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, thereunto duly authorized.

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard H. Friedman, certify that:

1.		I have reviewed this Quarterly Report on Form 10-Q of BioScrip, Inc.;
2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2007

/s/ Richard H. Friedman

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stanley G. Rosenbaum, certify that:

1.		I have reviewed this Quarterly Report on Form 10-Q of BioScrip, Inc.;
2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2007

/s/ Stanley G. Rosenbaum

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of BioScrip, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard H. Friedman, Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 6, 2007

/s/ Richard H. Friedman

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of BioScrip, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanley Rosenbaum, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 6, 2007

/s/ Stanley G. Rosenbaum