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BioScrip Reports Second Quarter 2017 Financial Results

– Net revenue of $218.1 million, including core product mix of 73.1% compared to 60.3% in the prior year
– Net loss from continuing operations of $28.7 million, compared to $8.3 million in the prior year, reflecting increased non-cash expenses and interest
– Adjusted EBITDA of $10.0 million, nearly doubling from the first quarter of 2017
– Operating Cash Flow of $6.5 million, reflecting $23 million of operational and working capital improvements over the prior year
– Liquidity of $50.5 million, including $40.5 million of cash, compared to $16.0 million at March 31, 2017
– Restructuring expenses of $3.9 million, primarily costs related to the ongoing optimization of the Company’s workforce
– The Company reaffirms EBITDA guidance and updates revenue guidance

DENVER, Aug. 08, 2017 (GLOBE NEWSWIRE) -- BioScrip, Inc. (NASDAQ:BIOS) ("BioScrip" or the "Company"), the largest independent national provider of infusion and home care management solutions, today announced its second quarter 2017 financial results. For the second quarter, the Company reported revenue from continuing operations of $218.1 million, net loss from continuing operations of $28.7 million, and adjusted EBITDA of $10.0 million.   
                               
“The second quarter of 2017 marks an important milestone for the Company, as our teammates delivered $10 million of adjusted EBITDA, and a year over year operating cash flow improvement of $23 million, driven by core revenue growth and cost and working capital improvements, positioning us to achieve our financial objectives for 2017,” said Daniel E. Greenleaf, President and Chief Executive Officer. “The improvements in EBITDA and operating cash flow, despite Cures Act reimbursement pressures, underscore the progress our team has made on the turnaround to date, and it is only the beginning of the transformation of this organization.”

2017 Guidance

The Company is reiterating its prior guidance of adjusted EBITDA in the range of $45.0 million to $55.0 million for full-year 2017.  The Company is updating its revenue outlook for the year to a range of $815.0 million to $835.0 million, including the impact of the revised UnitedHealthcare contract. Additionally, the Company expects to incur restructuring expenses in a range of $11.0 million to $12.0 million, reflecting the ongoing restructuring activity that took place in the second quarter of 2017, and further expenses anticipated in the second half of 2017 primarily related to the impact of the revised UnitedHealthcare contract.

Conference Call and Presentation

BioScrip will host a conference call and live webcast, August 8, 2017, at 9:00 a.m. Eastern Time, to discuss its second quarter 2017 financial results. Interested parties may participate by dialing 888-372-9592 (US) or by accessing a link on the Company's website at www.bioscrip.com.  

A replay of the conference call will be available for two weeks after the call's completion by dialing 855-859-2056 (US) and entering conference call ID number 51901836.  An audio webcast and archive will also be available for 30 days under the "Investor Relations" section of the Company's website.

About BioScrip, Inc.

BioScrip, Inc. is the largest independent national provider of infusion and home care management solutions, with approximately 2,500 teammates and nearly 80 service locations across the U.S. BioScrip partners with physicians, hospital systems, payors, pharmaceutical manufacturers and skilled nursing facilities 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 clinical excellence, customer service, and values that promote positive outcomes and an enhanced quality of life for those it serves.

Forward-Looking Statements – Safe Harbor

This press release includes statements that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the statements regarding 2017 guidance, projections of certain measures of the Company's results of operations, projections of future levels of certain charges and expenses, expectations of Home Solutions cost synergies and incremental cost structure improvements and other statements regarding the Company's financial improvement plan and strategy and anticipated effects of the Cures Act and the UnitedHealthcare contract. 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," "outlook," "aim," "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 actual results to differ materially from those in the forward-looking statement include but are not limited to risks associated with: the Company’s ability to successfully integrate the Home Solutions business into its existing businesses; the Company’s ability to grow its core Infusion revenues; the Company's ability to continue to execute its financial improvement plan to reduce operating costs and focus its business on its Infusion Services segment; the Company’s ability to evaluate opportunities for improvement and implement solutions as part of its strategic review process; the Company’s ability to comply with the covenants in its debt agreements or obtain amendments to such covenants; the UnitedHealthcare contract termination, including potential accounting charges and impacts on other contract provisions and their associated revenue; the success of the Company’s initiatives to mitigate the impact of the Cures Act on its business; 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. 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.

Note Regarding Use of Non-GAAP Financial Measures

In addition to reporting financial information in accordance with generally accepted accounting principles (GAAP), the Company is also reporting Adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be used in isolation or as a substitute or alternative to net income, operating income or any other performance measure derived in accordance with GAAP, or as a substitute or alternative to cash flow from operating activities or a measure of the Company’s liquidity. In addition, the Company's definition of Adjusted EBITDA may not be comparable to similarly titled non-GAAP financial measures reported by other companies. Adjusted EBITDA, as defined by the Company, represents net income before net interest expense, income tax expense, depreciation and amortization, impairment of goodwill, stock-based compensation expense, and restructuring, integration and other expenses. As part of restructuring, the Company may incur significant charges such as the write down of certain long−lived assets, temporary redundant expenses, retraining expenses, potential cash bonus payments and potential accelerated payments or terminated costs for certain of its contractual obligations. Management believes that Adjusted EBITDA provides useful supplemental information regarding the performance of BioScrip’s business operations and facilitates comparisons to the Company’s historical operating results. For a full reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, please see the attachment to this earnings release. 



Schedule 1
BIOSCRIP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)
       
  June 30, 2017   December 31, 2016
       
ASSETS      
Current assets      
Cash and cash equivalents $   40,533     $   9,569  
Restricted cash     5,055         -   
Receivables, less allowance for doubtful accounts of $45,651 and $44,730      
as of June 30, 2017 and December 31, 2016, respectively     103,089         111,811  
Inventory     28,822         36,165  
Prepaid expenses and other current assets     12,998         18,507  
Total current assets     190,497         176,052  
Property and equipment, net     30,063         32,535  
Goodwill     365,947         365,947  
Intangible assets, net     24,672         31,043  
Other non-current assets     2,204         2,163  
Total assets $    613,383     $    607,740  
LIABILITIES AND STOCKHOLDERS' DEFICIT      
Current liabilities      
Current portion of long-term debt $   1,731     $   18,521  
Accounts payable     46,381         59,134  
Amounts due to plan sponsors     4,825         3,799  
Accrued interest     6,736         6,705  
Accrued expenses and other current liabilities     43,209         42,191  
Total current liabilities     102,882         130,350  
Long-term debt, net of current portion     475,674         433,413  
Deferred taxes     3,504         2,281  
Other non-current liabilities     17,942         1,257  
Total liabilities     600,002         567,301  
       
Series A convertible preferred stock, $.0001 par value; 825,000 shares authorized;      
21,645 shares issued and outstanding as of June 30, 2017 and December 31, 2016;      
and $2,754 and $2,603 liquidation preference as of June 30, 2017 and      
December 31, 2016, respectively     2,639         2,462  
Series C convertible preferred stock, $.0001 par value; 625,000 shares authorized;       
614,177 shares issued and outstanding as of June 30, 2017 and December 31, 2016;       
and $79,858 and $75,491 liquidation preference as of June 30, 2017 and       
December 31, 2016, respectively     74,229         69,540  
Stockholders' (deficit) equity      
Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued and      
outstanding as of June 30, 2017 and December 31, 2016, respectively     -         -  
Common stock, $.0001 par value; 250,000,000 shares authorized; 127,441,893 and      
117,682,543 shares issued and outstanding as of June 30, 2017 and      
December 31, 2016, respectively     13         12  
Additional paid-in capital     628,545         611,844  
Accumulated deficit     (692,045 )       (643,419 )
Total stockholders' deficit     (63,487 )       (31,563 )
Total liabilities and stockholders' deficit $    613,383     $    607,740  
       

 


Schedule 2  
BIOSCRIP, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS   
(in thousands, except per share amounts)  
                     
    Three Months Ended June 30,   Six Months Ending June 30,   
        2017       2016       2017       2016    
                     
Net revenue     $    218,106     $    232,462     $    435,916     $    470,924    
Cost of revenue (excluding depreciation expense)         149,796         168,298         302,022         342,528    
Gross profit         68,310         64,164         133,894         128,396    
  % of revenues       31.3 %     27.6 %     30.7 %     27.3 %  
                     
Other operating expenses         42,486         40,619         86,844         80,277    
Bad debt expense         6,223         4,279         13,387         11,871    
General and administrative expenses         10,025         9,414         19,504         20,465    
Restructuring, acquisition, integration, and other expenses, net         3,911         4,291         7,134         6,958    
Depreciation and amortization expense         6,789         4,252         13,777         8,790    
Interest expense         12,715         9,469         25,459         18,881    
Loss on extinguishment of debt         13,453         -          13,453         -     
Loss (gain) on dispositions         685         -          685         (939 )  
Loss from continuing operations,  before income taxes         (27,977 )       (8,160 )       (46,349 )       (17,907 )  
Income tax expense         718         149         1,337         172    
Loss from continuing operations, net of income taxes         (28,695 )       (8,309 )       (47,686 )       (18,079 )  
(Loss) income from discontinued operations, net of income taxes         (503 )       75         (940 )       308    
Net loss     $    (29,198 )   $    (8,234 )   $    (48,626 )   $    (17,771 )  
Accrued dividends on preferred stock         (2,303 )       (2,056 )       (4,517 )       (4,054 )  
Deemed dividend on preferred stock         (175 )       (173 )       (349 )       (345 )  
Loss attributable to common stockholders     $    (31,676 )   $    (10,463 )   $    (53,492 )   $    (22,170 )  
                     
 Denominator - Basic and Diluted:                     
 Weighted average number of common shares outstanding          121,189         73,186         119,993         70,978    
                     
Loss from continuing operations, basic and diluted     $   (0.26 )   $   (0.14 )   $   (0.44 )   $   (0.32 )  
Income from discontinued operations, basic and diluted         -          -          (0.01 )       -     
Loss per common share, basic and diluted     $   (0.26 )   $   (0.14 )   $   (0.45 )   $   (0.32 )  
                     

 


Schedule 3
BIOSCRIP, INC. AND SUBSIDIARIES
 QUARTERLY RECONCILIATION BETWEEN GAAP AND NON-GAAP MEASURES
(in thousands)
                 
    Three Months Ended
  Six Months Ended
    6/30/2017   6/30/2016   6/30/2017   6/30/2016
Adjusted EBITDA by Segment:                
Infusion Services Adjusted EBITDA   $   19,601     $   19,266     $   33,663     $   36,248  
  Adjusted EBITDA margin %     9.0 %     8.3 %     7.7 %     7.7 %
Corporate Overhead Adjusted EBITDA       (9,592 )       (8,895 )       (18,477 )       (18,472 )
  Adjusted EBITDA margin %     (4.4 %)     (3.8 %)     (4.2 %)     (3.9 %)
                 
Consolidated Adjusted EBITDA       10,009         10,371         15,186         17,776  
  Adjusted EBITDA margin %     4.6 %     4.5 %     3.5 %     3.8 %
                 
Interest expense       (12,715 )       (9,469 )       (25,459 )       (18,881 )
(Loss) gain on dispositions        (685 )       -          (685 )       939  
Loss on extinguishment of debt       (13,453 )       -          (13,453 )       -   
Income tax expense       (718 )       (149 )       (1,337 )       (172 )
Depreciation and amortization expense       (6,789 )       (4,252 )       (13,777 )       (8,790 )
Stock-based compensation expense       (433 )       (519 )       (1,027 )       (1,993 )
Restructuring, acquisition, integration, and other expenses, net (1)       (3,911 )       (4,291 )       (7,134 )       (6,958 )
Loss from continuing operations, net of income taxes   $    (28,695 )   $    (8,309 )   $    (47,686 )   $    (18,079 )
                 
                 
General and Administrative Expenses on Face of Income Statement:                
Corporate overhead adjusted EBITDA   $   (9,592 )   $   (8,895 )   $   (18,477 )   $   (18,472 )
Stock-based compensation (expense)       (433 )       (519 )       (1,027 )       (1,993 )
  General and administrative expenses   $   (10,025 )   $   (9,414 )   $   (19,504 )   $   (20,465 )
                 
(1) Restructuring, acquisition, integration and other expenses, net include costs associated with restructuring, acquisition, and integration initiatives such as employee severance costs, certain legal and professional fees, redundant wage costs, impacts recorded from the change in contingent consideration obligations, and other costs related to contract terminations and closed locations.
                 

 


                      Schedule 4  
BIOSCRIP, INC AND SUBSIDIARIES  
CONSOLIDATED CONDENSED CASH FLOWS  
(in thousands)  
                         
  Three Months Ended   Six Months Ended   Three Months Ended   Six Months Ended  
  3/31/2017   6/30/2017   6/30/2017   3/31/2016   6/30/2016   6/30/2016  
Cash flows from operating activities:                        
Net loss from continuing operations $    (18,991 )   $    (28,695 )   $    (47,686 )   $    (9,770 )   $    (8,309 )   $    (18,079 )  
Receivables, net of bad debt expense     2,333         6,388         8,721         (4,417 )       3,136         (1,281 )  
Inventory     5,616         1,727         7,343         13,867         (3,330 )       10,537    
Prepaid expenses and other assets     3,601         1,868         5,469         7,897         (7,575 )       322    
Accounts payable     (11,688 )       (1,065 )       (12,753 )       (11,995 )       (4,195 )       (16,190 )  
Accrued interest     (1,157 )       1,188         31         (4,630 )       4,438         (192 )  
Accrued expenses and other liabilities     244         1,497         1,741         (2,227 )       (851 )       (3,078 )  
Non-Cash Adjustments:                        
Depreciation and amortization     6,988         6,789         13,777         4,538         4,252         8,790    
Loss on extinguishment of debt     -          13,453         13,453         -          -          -     
Deferred taxes     619         604         1,223         174         178         352    
Other Non-Cash     1,839         2,748         4,587         1,589         1,554         3,143    
Operating Cash Flow (Use)     (10,596 )       6,502         (4,094 )       (4,974 )       (10,702 )       (15,676 )  
Discontinued operations     (437 )       (503 )       (940 )       (5,989 )       76         (5,913 )  
Capital expenditures     (1,684 )       (2,608 )       (4,292 )       (2,429 )       (3,037 )       (5,466 )  
Investment in restricted cash     (5,132 )       77         (5,055 )       -          27         27    
Proceeds from dispositions     -          -          -          1,105         -          1,105    
Proceeds from equity offering, net     -          -          -          -          83,267         83,267    
Proceeds from priming credit agreement, net of expenses     23,060         -          23,060         -          -          -     
Fees attributable to extinguishment of debt     -          (311 )       (311 )       -          -          -     
Net proceeds from equity issuance, net of issuance costs     5,052         15,724         20,776         -          -          -     
Proceeds from borrowing on long-term debt     563         293,883         294,446         -          -          -     
Principal payments of long-term debt     (3,137 )       (233,633 )       (236,770 )       (3,137 )       (3,137 )       (6,274 )  
Revolver borrowings (repayments)     (1,000 )       (54,300 )       (55,300 )       8,000         (23,000 )       (15,000 )  
Other      (289 )       (267 )       (556 )       (104 )       (118 )       (222 )  
Total All Cash Flow $    6,400     $    24,564     $    30,964     $    (7,528 )   $    43,376     $    35,848    
                         

 


 Schedule 5 
       
BIOSCRIP, INC AND SUBSIDIARIES
 FULL YEAR 2017 GUIDANCE 
(dollars in millions, except EPS)
   Low End     High End 
   of Range     of Range 
       
 Revenues  $   815.0     $   835.0  
       
 Adjusted EBITDA      45.0         55.0  
  adjusted ebitda margin    4.9 %     5.8 %
       
 Stock Compensation      3.0         2.5  
 Depreciation & Amortization      27.0         25.0  
 Interest Expense, net      52.0         49.0  
 Restructuring Costs      12.0         11.0  
 Income Tax Expense      3.0         2.0  
 Preferred Stock Dividends      9.4         9.4  
  Net Loss - Continuing Ops  $   (61.4 )   $   (43.9 )
       
 Diluted Loss Per Common Share  $    (0.51 )   $    (0.36 )
       
 weighted-average diluted shares      121,000         121,000  

 


Schedule 6
BIOSCRIP, INC. AND SUBSIDIARIES
QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
     
    Three Months Ended Six Months Ended
    3/31/2017   6/30/2017   6/30/2017
             
Net revenue   $    217,810     $    218,106     $    435,916  
Cost of revenue (excluding depreciation expense)       152,226         149,796         302,022  
Gross profit       65,584         68,310         133,894  
  % of revenues     30.1 %     31.3 %     30.7 %
             
Other operating expenses       44,358         42,486         86,844  
Bad debt expense       7,164         6,223         13,387  
General and administrative expenses       9,479         10,025         19,504  
Restructuring, acquisition, integration, and other expenses, net       3,223         3,911         7,134  
Depreciation and amortization expense       6,988         6,789         13,777  
Interest expense, net       12,744         12,715         25,459  
Loss on extinguishment of debt       -          13,453         13,453  
Loss on dispositions       -          685         685  
Loss from continuing operations,  before income taxes       (18,372 )       (27,977 )       (46,349 )
Income tax expense       619         718         1,337  
Loss from continuing operations, net of income taxes       (18,991 )       (28,695 )       (47,686 )
Loss from discontinued operations, net of income taxes       (437 )       (503 )       (940 )
Net loss   $    (19,428 )   $    (29,198 )   $    (48,626 )
Accrued dividends on preferred stock       (2,214 )       (2,303 )       (4,517 )
Deemed dividends on preferred stock       (174 )       (175 )       (349 )
Loss attributable to common stockholders   $    (21,816 )   $    (31,676 )   $    (53,492 )
             
Loss per common share:            
 Denominator - Basic and Diluted:             
 Weighted average number of common shares outstanding        118,783         121,189         119,993  
             
Loss from continuing operations, basic and diluted   $   (0.18 )   $   (0.26 )   $   (0.44 )
Income from discontinued operations, basic and diluted       -          -          (0.01 )
Net loss per common share, basic and diluted   $   (0.18 )   $   (0.26 )   $   (0.45 )
             

 


Schedule 7
BIOSCRIP, INC. AND SUBSIDIARIES
QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
             
    Three Months Ended   Twelve Months Ended
    3/31/2016   6/30/2016   9/30/2016   12/31/2016   12/31/2016
                     
Net revenue   $    238,462     $    232,462     $    224,542     $    240,123     $    935,589  
Cost of revenue (excluding depreciation expense)       174,230         168,298         161,957         165,473         669,958  
Gross profit       64,232         64,164         62,585         74,650         265,631  
  % of revenues     26.9 %     27.6 %     27.9 %     31.1 %     28.4 %
                     
Other operating expenses       39,658         40,619         42,729         47,712         170,718  
Bad debt expense       7,592         4,279         7,727         7,201         26,799  
General and administrative expenses       11,051         9,414         9,948         8,812         39,225  
Change in fair value of equity linked liabilities       -          -          -          (10,450 )       (10,450 )
Restructuring, acquisition, integration, and other expenses, net       2,667         4,291         2,368         6,533         15,859  
Depreciation and amortization expense       4,538         4,252         4,166         8,595         21,551  
Interest expense, net       9,412         9,469         9,331         10,023         38,235  
(Gain) on dispositions       (939 )       -          (3,015 )       -          (3,954 )
Loss from continuing operations,  before income taxes       (9,747 )       (8,160 )       (10,669 )       (3,776 )       (32,352 )
Income tax expense       23         149         421         1,422         2,015  
Loss from continuing operations, net of income taxes       (9,770 )       (8,309 )       (11,090 )       (5,198 )       (34,367 )
Income (loss) from discontinued operations, net of income taxes       233         75         (174 )       (7,273 )       (7,139 )
Net loss   $    (9,537 )   $    (8,234 )   $    (11,264 )   $    (12,471 )   $    (41,506 )
Accrued dividends on preferred stock       (1,998 )       (2,056 )       (2,138 )       (2,200 )       (8,392 )
Deemed dividends on preferred stock       (172 )       (173 )       (173 )       (174 )       (692 )
Loss attributable to common stockholders   $    (11,707 )   $    (10,463 )   $    (13,575 )   $    (14,845 )   $    (50,590 )
                     
Loss per common share:                    
 Denominator - Basic and Diluted:                     
 Weighted average number of common shares outstanding        68,771         73,186         114,826         117,683         93,740  
                     
Loss from continuing operations, basic and diluted   $   (0.17 )   $   (0.14 )   $   (0.12 )   $   (0.06 )   $   (0.46 )
Income from discontinued operations, basic and diluted       -          -          -          (0.06 )       (0.08 )
Net loss per common share, basic and diluted   $   (0.17 )   $   (0.14 )   $   (0.12 )   $   (0.12 )   $   (0.54 )
                     
Investor Contacts:

Stephen Deitsch  
Chief Financial Officer & Treasurer 
T:  (720) 697-5200
stephen.deitsch@bioscrip.com

David Clair
ICR, Inc.
T:  (646) 277-1266
david.clair@icrinc.com

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