BioScrip Reports 2011 Fourth Quarter and Year-End Financial Results

ELMSFORD, N.Y.--()--BioScrip, Inc. (Nasdaq: BIOS) today announced 2011 fourth quarter and year-end financial results. Fourth quarter revenue was $483.3 million and net income was $6.7 million, or $0.12 per share. Adjusted EBITDA for the fourth quarter was $19.8 million. For the year ended December 31, 2011, revenue was $1.8 billion and net income was $7.9 million, or $0.14 per share. Adjusted EBITDA for the year ended December 31, 2011 was $73.5 million.

Fourth Quarter Highlights

  • Revenue increased $32.9 million or 7.3% compared to prior year;
  • Gross profit was $81.8 million or 16.9% of revenue, compared to $72.6 million or 16.1% of revenue in the prior year;
  • Adjusted EBITDA generated by the segments before allocation of corporate expenses was $27.2 million, compared to $21.4 million last year;
  • Adjusted EBITDA was $19.8 million, compared to $10.0 million in the prior year;
  • Net income was $6.7 million or $0.12 per diluted share, compared to prior year net loss of $67.1 million or $1.25 per share.

“We are pleased with our fourth quarter results driven by solid organic growth and significant momentum in our key businesses. Infusion revenue was strong on both a sequential and year-over-year basis driven by the depth of our managed care contracts, growing patient census, and the focused and productive efforts of our sales team and regional management who continue to focus on our targeted therapies,” said Rick Smith, President and Chief Executive Officer of BioScrip.

“With the pending sale of our community specialty pharmacies and centralized specialty and mail service pharmacy businesses, we are positioning BioScrip as a leaner company focused on those areas where we have key strengths, in-market awareness and offer distinct competitive advantages. This includes leveraging our geographic reach, building upon our reputation for clinical excellence, deepening our relationships with national and local managed care customers and strategically expanding our national infusion service footprint both organically and through tuck-in acquisitions. As we move through 2012, we will continue to take action to further rationalize corporate overhead, improve operating performance and profitability, and maximize overall operating cash flow generation,” concluded Smith.

Results of Operations

Fourth Quarter 2011 versus Fourth Quarter 2010

Revenue for the fourth quarter of 2011 totaled $483.3 million, compared to $450.4 million for the same period a year ago, an increase of $32.9 million or 7.3%. Infusion/Home Health Services revenue for the fourth quarter of 2011 was $121.6 million compared to $112.6 million in the prior year, an increase of $9.1 million or 8.0%. Pharmacy Services revenue for the fourth quarter of 2011 was $361.7 million, compared to $337.8 million for the prior year period, an increase of $23.9 million or 7.1%.

Consolidated gross profit for the fourth quarter of 2011 was $81.8 million, or 16.9% of revenue, compared to $72.6 million, or 16.1% of revenue, for the fourth quarter of 2010.

Fourth quarter 2011 operating income was $14.6 million, compared to an operating loss of $3.6 million for the fourth quarter of 2010.

During the fourth quarter of 2011, BioScrip generated $27.2 million of segment Adjusted EBITDA, or 5.6% of total revenue, compared to $21.4 million, or 4.7% of total revenue in the prior year. The Infusion/Home Health segment generated $12.3 million of Adjusted EBITDA, or 10.1% of segment revenue. This compares to $11.8 million, or 10.4% of segment revenue in the prior year. The Pharmacy Services segment generated $14.9 million of segment Adjusted EBITDA, or 4.1% of segment revenue. This compares to $9.6 million, or 2.8% of segment revenue in the prior year.

On a consolidated basis, BioScrip reported $19.8 million of Adjusted EBITDA during the fourth quarter of 2011, or 4.1% of total revenue, compared to $10.0 million, or 2.2% of total revenue, in the prior year.

Interest expense in the fourth quarter of 2011 was $6.8 million, compared to $8.1 million in the prior year.

Net income for the fourth quarter of 2011 was $6.7 million, or $0.12 per share, compared to a net loss of $67.1 million, or $1.25 per share, in the prior year.

Full Year 2011 versus Full Year 2010

Revenue for the year ended December 31, 2011, was $1.8 billion compared to $1.6 billion for the comparable prior year period. Infusion/Home Health Services segment revenue for the year ended December 31, 2011, was $451.0 million, compared to $377.2 million for the prior year, an increase of $73.8 million, or 19.6%. This increase was largely a result of incremental revenue from the Critical Homecare Solutions, Inc. (“CHS”) business, which was acquired March 25, 2010. Excluding the incremental first quarter revenue associated with the acquired CHS business, BioScrip’s Infusion/Home Health Services segment revenue increased $10.5 million, or 2.8% over the prior year as a result of overall volume growth.

Pharmacy Services segment revenue for the year ended December 31, 2011, was $1.4 billion compared to revenue of $1.3 billion for the prior year period, an increase of $105.6 million, or 8.4%. Pharmacy Services revenue increased due to volume from new managed care contracts, growth in the oncology, rheumatoid arthritis and multiple sclerosis therapies, industry-wide drug inflation and an increase in discount cash card programs sales.

Consolidated gross profit for the year ended December 31, 2011, was $312.3 million compared to $260.4 million for the same period a year ago, an increase of $51.9 million, or 19.9%. Consolidated gross profit as a percentage of revenue for the year ended December 31, 2011 increased to 17.2%, compared to 15.9% for the same period in 2010. The increase in gross profit and in gross profit as a percentage from 2010 to 2011 was primarily the result of the acquisition of CHS, which favorably impacted gross margin rates, and growth in discount cash card program volumes.

For the year ended December 31, 2011, BioScrip generated $103.4 million of segment Adjusted EBITDA, or 5.7% of total revenue, compared to $84.2 million, or 5.1% of total revenue, for the prior year period. The Infusion/Home Health segment generated $45.4 million of segment Adjusted EBITDA, or 10.1% of segment revenue, compared to $43.5 million, or 11.5% of segment revenue, in the prior year. The Pharmacy Services segment generated $58.0 million of segment Adjusted EBITDA, or 4.2% of segment revenue, compared to $40.7 million, or 3.2% of segment revenue, in the prior period.

On a consolidated basis, BioScrip reported $73.5 million of Adjusted EBITDA for the year ended December 31, 2011, or 4.0% of total revenue, compared to $49.2 million, or 3.0% of total revenue, in the prior year.

Interest expense for the year ended December 31, 2011, was $28.3 million, compared to $27.6 million for the same period in 2010. The increase in interest expense was related to a full year of interest on the debt instruments primarily used to finance the CHS acquisition.

Income tax expense for the year ended December 31, 2011, was $1.3 million on a pre-tax net income of $9.2 million and consisted primarily of state income taxes and a deferred tax provision associated with tax deductible goodwill. Our income tax expense was $47.7 million for the year ended December 31, 2010, on a pre-tax net loss of $21.4 million. Income tax expense in 2010 includes the establishment of a $54.0 million valuation allowance recorded against deferred tax assets.

Net income for the year ended December 31, 2011, was $7.9 million, or $0.14 per share. This compares to a net loss of $69.1 million, or $1.37 per share for the same period in 2010.

Liquidity and Capital Resources

For the year ended December 31, 2011, BioScrip generated $27.0 million in net cash from operating activities compared to $21.4 million used in operating activities during the year ended December 31, 2010, an increase of $48.4 million. This was due to a decrease in working capital requirements of $23.1 million and an increase of $25.3 million in net income adjusted for non-cash items, primarily such as depreciation and amortization, deferred income taxes and in 2010 the loss on early extinguishment of debt.

Conference Call

BioScrip will host a conference call to discuss its fourth quarter 2011 financial results on March 9, 2012 at 8:30 a.m. Eastern Time. Interested parties may participate in the conference call by dialing 800-707-7427 (US), or 303-223-2680 (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 21579469. An audio webcast and archive will also be available under the “Investor Relations” section of the BioScrip website at www.bioscrip.com.

About BioScrip, Inc.

BioScrip, Inc. (www.bioscrip.com) (Nasdaq: BIOS) is a national provider of specialty pharmacy and home health services that partners with patients, physicians, hospitals, healthcare payors and pharmaceutical manufacturers to provide clinical management solutions and delivery of cost-effective access to prescription medications and home health services. Our services are designed to improve clinical outcomes with chronic and acute healthcare conditions while controlling overall healthcare costs.

Forward Looking Statements – Safe Harbor

This press release may contain statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the intent, belief or current expectations of the Company, its directors, or its officers with respect to the future operating performance of the Company, Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. Important factors that could cause such differences are described in the Company's periodic filings with the Securities and Exchange Commission.

Reconciliation to Non-GAAP Financial Measures

EBITDA or earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA, which excludes loss on extinguishment of debt, stock-based compensation expense, acquisition, integration, severance and other employee costs, bad debt relating to CAP contract termination and legal settlement costs, are non-GAAP financial measures as defined under U.S. Securities and Exchange Commission Regulation G. As required by Regulation G, BioScrip has provided on Schedule 4 a reconciliation of this measure to the most comparable GAAP financial measure. The non-GAAP measure presented provides important insight into the ongoing operations and a meaningful benchmark to evidence the Company's continuing profitability trend.

 
 
Schedule 1
BIOSCRIP, INC
             
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)
 
December 31, December 31,
2011 2010
ASSETS
Current assets
Cash and cash equivalents $ - $ -

Receivables, less allowance for doubtful accounts of $22,728 and $16,421
 at December 31, 2011 and December 31, 2010, respectively

225,412 193,722
Inventory 56,745 66,509
Prepaid expenses and other current assets   10,312     16,696  
Total current assets   292,469     276,927  
Property and equipment, net 29,444 23,919
Goodwill 324,141 324,141
Intangible assets, net 25,226 30,096
Deferred financing costs 3,992 5,062
Other non-current assets   1,830     3,841  
Total assets $ 677,102   $ 663,986  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 66,161 $ 81,352
Accounts payable 79,155 80,814
Claims payable 11,766 3,037
Amounts due to plan sponsors 25,219 19,781
Accrued interest 5,825 5,766
Accrued expenses and other current liabilities   32,648     36,040  
Total current liabilities   220,774     226,790  
Long-term debt, net of current portion 227,298 225,117
Deferred taxes 10,295 9,140
Other non-current liabilities   3,456     2,838  
Total liabilities   461,823     463,885  
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:
 57,800,791 and 57,042,803, respectively; shares outstanding: 55,109,038 and
 54,118,501, respectively

6 6
Treasury stock, shares at cost: 2,638,421 and 2,642,398, respectively (10,461 ) (10,496 )
Additional paid-in capital 375,525 368,254
Accumulated deficit   (149,791 )   (157,663 )
Total stockholders' equity   215,279     200,101  
Total liabilities and stockholders' equity $ 677,102   $ 663,986  
 
 
Schedule 2
BIOSCRIP, INC
                     
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2011 2010 2011 2010
Product revenue $ 422,942 $ 411,402 $ 1,622,949 $ 1,507,995
Service revenue   60,360     38,970     195,077     130,628  
Total revenue 483,302 450,372 1,818,026 1,638,623
 
Cost of product revenue 366,194 356,019 1,400,947 1,303,643
Cost of service revenue   35,353     21,761     104,776     74,563  
Total cost of revenue   401,547     377,780     1,505,723     1,378,206  
Gross profit 81,755 72,592 312,303 260,417
% of revenue 16.9 % 16.1 % 17.2 % 15.9 %
Operating expenses
Selling, general and administrative expenses 60,430 60,029 237,274 207,007
Bad debt expense 5,275 6,801 18,654 19,337
Acquisition and integration expenses - 424 - 7,118
Restructuring expense 241 3,495 8,885 3,495
Amortization of intangibles 1,185 1,577 5,189 3,773
Legal settlement   -     3,893     4,800     3,893  
Total operating expense 67,131 76,219 274,802 244,623
% of revenue 13.9 % 16.9 % 15.1 % 14.9 %
Income (loss) from operations 14,624 (3,627 ) 37,501 15,794
Interest expense, net 6,803 8,132 28,306 27,647
Loss on extinguishment of debt   -     9,561     -     9,561  
Income (loss) before income taxes 7,821 (21,320 ) 9,195 (21,414 )
Income tax expense   1,112     45,747     1,323     47,728  
Net income (loss) $ 6,709   $ (67,067 ) $ 7,872   $ (69,142 )
 
Basic weighted average shares   54,972     53,764     54,505     50,374  
Diluted weighted average shares   55,608     53,764     55,150     50,374  
 
Basic net income (loss) per share $ 0.12 $ (1.25 ) $ 0.14 $ (1.37 )
Diluted net income (loss) per share $ 0.12 $ (1.25 ) $ 0.14 $ (1.37 )
   
 
Schedule 3
BIOSCRIP, INC              
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Twelve Months Ended
December 31,
2011 2010
Cash flows from operating activities:
Net income (loss) $ 7,872 $ (69,142 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation 10,687 8,556
Amortization of intangibles 5,189 3,773
Amortization of deferred financing costs 1,055 1,813
Change in deferred income tax 1,155 47,337
Compensation under stock-based compensation plans 4,466 3,320
Loss on disposal of fixed assets 404 350
Loss on extinguishment of debt - 9,561
Changes in assets and liabilities, net of acquired business:
Receivables, net of bad debt expense (31,690 ) (4,321 )
Inventory 9,777 (11,021 )
Prepaid expenses and other assets 8,433 (9,907 )
Accounts payable (1,659 ) 2,944
Claims payable 8,729 (1,030 )
Amounts due to plan sponsors 5,437 6,079
Accrued interest 59 5,766
Accrued expenses and other liabilities   (2,945 )   (15,497 )
Net cash provided by (used in) operating activities   26,969     (21,419 )
Cash flows from investing activities:
Purchases of property and equipment, net (9,444 ) (11,114 )
Cash consideration paid for asset acquisitions (463 ) -
Cash consideration paid to CHS, net of cash acquired - (92,464 )
Cash consideration paid to DS Pharmacy   -     (4,969 )
Net cash used in investing activities   (9,907 )   (108,547 )
Cash flows from financing activities:
Cash consideration paid for Option Health earn-out - (1,000 )
Proceeds from new credit facility, net of fees paid to issuers - 319,000
Borrowings on line of credit 1,773,644 407,277
Repayments on line of credit (1,791,058 ) (356,430 )
Repayments of capital leases (2,635 ) (84 )
Principal payments on CHS long-term debt, paid at closing - (128,952 )
Principal payments on long-term debt - (100,000 )
Repayment of note payable - (2,250 )
Deferred and other financing costs (22 ) (11,583 )
Net proceeds from exercise of employee stock compensation plans 3,198 4,116
Surrender of stock to satisfy minimum tax withholding   (189 )   (128 )
Net cash (used in) provided by financing activities   (17,062 )   129,966  
Net change in cash and cash equivalents - -
Cash and cash equivalents - beginning of period   -     -  
Cash and cash equivalents - end of period $ -   $ -  
 
DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 27,528   $ 20,116  
Cash paid during the period for income taxes $ 1,042   $

2,565

 
 
DISCLOSURE OF NON-CASH TRANSACTIONS:
Capital lease obligations incurred to acquire property and equipment $ 6,631   $ 671  
 
 
Schedule 4
BIOSCRIP, INC
           
Reconciliation between GAAP and Non-GAAP Measures
(unaudited and in thousands)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2011   2010 2011   2010
Results of Operations:
Revenue:
Infusion/Home Health Services - product revenue $ 102,137 $ 92,157 $ 372,616 $ 311,932
Infusion/Home Health Services - service revenue   19,507     20,433     78,391     65,283  
Total Infusion/Home Health Services revenue 121,644 112,590 451,007 377,215
 
Pharmacy Services - product revenue 320,805 319,245 1,250,333 1,196,063
Pharmacy Services - service revenue   40,853     18,537     116,686     65,345  
Total Pharmacy Services revenue 361,658 337,782 1,367,019 1,261,408
       
Total $ 483,302   $ 450,372   $ 1,818,026   $ 1,638,623  
 
Adjusted EBITDA by Segment before corporate overhead:
Infusion and Home Health Services $ 12,290 $ 11,758 $ 45,352 $ 43,460
Pharmacy Services   14,871     9,607     58,020     40,727  
Total Segment Adjusted EBITDA 27,161 21,365 103,372 84,187
 
Corporate overhead   (7,407 )   (11,360 )   (29,906 )   (35,006 )
Consolidated Adjusted EBITDA 19,754 10,005 73,466 49,181
 
Interest expense, net (6,803 ) (8,132 ) (28,306 ) (27,647 )
Loss on extinguishment of debt - (9,561 ) - (9,561 )
Income tax expense (1,112 ) (45,747 ) (1,323 ) (47,728 )
Depreciation (2,863 ) (2,345 ) (10,687 ) (8,556 )
Amortization of intangibles (1,185 ) (1,577 ) (5,189 ) (3,773 )
Stock-based compensation expense (484 ) (594 ) (4,466 ) (3,320 )
Acquisition, integration, severance and other employee costs (357 ) (469 ) (1,938 ) (7,608 )
Restructuring expense (241 ) (3,495 ) (8,885 ) (3,495 )
Legal settlement - (3,893 ) (4,800 ) (3,893 )
Bad debt expense related to contract termination   -     (1,259 )   -     (2,742 )
Net income (loss) $ 6,709   $ (67,067 ) $ 7,872   $ (69,142 )
 
 

Supplemental Operating Data

Capital Expenditures:
Infusion and Home Health Services $ 1,148 $ 1,542 $ 4,162 $ 3,772
Pharmacy Services 46 1,789 1,592 4,833
Corporate unallocated   1,751     1,035     3,690     2,509  
Total $ 2,945   $ 4,366   $ 9,444   $ 11,114  
Depreciation Expense:
Infusion and Home Health Services $ 1,483 $ 1,083 $ 5,292 $ 3,464
Pharmacy Services 1,035 995 4,094 4,014
Corporate unallocated   345     267     1,301     1,078  
Total $ 2,863   $ 2,345   $ 10,687   $ 8,556  
Total Assets
Infusion and Home Health Services $ 420,172 $ 413,067
Pharmacy Services

234,315

225,546

Corporate unallocated  

22,615

   

25,373

 
Total $

677,102

  $

663,986

 
Goodwill
Infusion and Home Health Services $ 299,643 $ 299,643
Pharmacy Services   24,498     24,498  
Total $ 324,141   $ 324,141  
 

Contacts

In-Site Communications, Inc.
Lisa Wilson, 917-543-9932
or
Joele Frank, Wilkinson Brimmer Katcher
Meaghan Repko / Eric Bonach, 212-355-4449

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Contacts

In-Site Communications, Inc.
Lisa Wilson, 917-543-9932
or
Joele Frank, Wilkinson Brimmer Katcher
Meaghan Repko / Eric Bonach, 212-355-4449