NEWS RELEASE
Contact:
Stanley G. Rosenbaum
Executive Vice President and Chief Financial Officer
Tel: 952-979-3768
srosenbaum@bioscrip.com
Lisa M. Wilson
In-Site Communications
Tel: (917) 543-9932
lwilson@insitecony.com
FOR IMMEDIATE RELEASE
BIOSCRIP, INC. REPORTS 2008 FOURTH QUARTER AND YEAR-END FINANCIAL RESULTS
-- IMPAIRMENT CHARGE RESULTS IN 4th QUARTER 2008 LOSS OF $1.98 PER SHARE; EARNINGS OF $0.09 PER SHARE EXCLUDING THE IMPAIRMENT CHARGE
ELMSFORD, N.Y.--(BUSINESS WIRE)—March 3, 2009—BioScrip, Inc. (Nasdaq: BIOS) today announced a fourth quarter net loss of $76.6 million, or $1.98 per share, on revenues of $366.6 million, which includes a goodwill impairment charge and intangible write off totaling $80.2 million, net of taxes. These results compare to net income of $2.5 million, or $0.06 per diluted share, on revenue of $309.2 million for the fourth quarter of 2007. Excluding the goodwill impairment and intangible write off, the Company would have reported net income of $3.6 million, or $0.09 per diluted share. EBITDAO was $6.6 million for the fourth quarter, compared to $5.9 million for the same period a year ago, a 11.9% increase.
For the year ended December 31, 2008, the Company reported a net loss of $74.0 million, or $1.93 per share, on revenues of $1.4 billion, which includes the $80.2 million impairment charge, net of tax. This compares to net income of $3.3 million, or $0.09 per share, on revenues of $1.2 billion for the same period a year ago. Excluding the impairment charge and intangible write off, the Company would have reported 2008 net income of $6.2 million, or $0.16 per diluted share. The Company’s goodwill impairment and intangible write off was prompted by adverse equity and other market conditions which caused a decrease in current market valuations in the healthcare services industry and BioScrip’s stock price relative to its book value at December 31, 2008.
Richard H. Friedman, BioScrip’s Chairman and Chief Executive Officer, stated, "Our operating performance is in-line with our expectations and continues to be driven by solid organic growth at our specialty pharmacies, demonstrating the underlying strength and consistency of our business. We strengthened and expanded our infusion capabilities over the last year and will continue to focus on strategic growth areas as we increase our national footprint in 2009. We believe that this will yield positive results in 2009.”
Results of Operations
Fourth Quarter Highlights
| ($'s in Millions) | | 4th Quarter 2008 Actual | | | 4th Quarter 2007 Actual | | | % Change | |
| Revenues | | $ | 366.6 | | | $ | 309.2 | | | | 18.6 | % |
| Specialty Services Revenues | | $ | 314.0 | | | $ | 257.1 | | | | 22.1 | % |
| Gross Profit Dollars | | $ | 38.0 | | | $ | 36.2 | | | | 5.0 | % |
| Gross Profit Percent | | | 10.4 | % | | | 11.7 | % | | | -11.1 | % |
| Operating Expense Percent* | | | 9.3 | % | | | 10.7 | % | | | 13.1 | % |
| Operating Profit* | | $ | 4.0 | | | $ | 3.1 | | | | 29.0 | % |
| EBITDAO | | $ | 6.6 | | | $ | 5.9 | | | | 11.9 | % |
*Excludes impairment charge in 4th quarter of 2008.
Revenue for the fourth quarter of 2008 totaled $366.6 million compared to $309.2 million for the same period a year ago. Fourth quarter 2008 Specialty Services revenues were $314.0 million, an increase of $56.9 million, or 22.1% over the same period a year ago. The increase was due primarily to growth from managed care and network contracts in conjunction with direct to physician sales efforts for specialty therapies. PBM Services revenues remained substantially the same year-over-year.
Consolidated gross profit for the fourth quarter of 2008 was $38.0 million, an increase of $1.8 million from $36.2 million for the fourth quarter of 2007. Fourth quarter 2008 gross margin was 10.4% compared to 11.7% for the same period a year ago. Gross margin was negatively impacted by the lower margin Medicare Competitive Acquisition Program (“CAP”) and United Healthcare Group (“UHG”) organ transplant and HIV/AIDS contract. As previously reported, the CAP relationship ended on December 31, 2008 and the UHG exclusive agreement for HIV/AIDS and organ transplant terminate January 31, 2009 and March 31, 2009, respectively. Total revenues associated with those contracts represented an aggregate of approximately $180 million in 2008.
Fourth quarter operating income, excluding the impairment charge increased to approximately $4.0 million, a 29% increase over last year’s fourth quarter. This increase was primarily due to sales growth and cost-containment efforts, partially offset by a return to normalized bad debt expense.
2008 Reported Results
Year-end 2008 Highlights:
| ($'s in Millions) | | 2008 Actual | | | 2007 Actual | | | % Change | |
| Revenues | | $ | 1,401.9 | | | $ | 1,197.7 | | | | 17.0 | % |
| Specialty Services Revenues | | $ | 1,196.6 | | | $ | 974.6 | | | | 22.8 | % |
| Gross Profit Dollars | | $ | 142.2 | | | $ | 137.0 | | | | 3.8 | % |
| Gross Profit Percent | | | 10.1 | % | | | 11.4 | % | | | -11.4 | % |
| Operating Expense Percent* | | | 9.4 | % | | | 10.7 | % | | | 12.1 | % |
| Operating Profit* | | $ | 10.4 | | | $ | 8.9 | | | | 16.9 | % |
| EBITDAO | | $ | 20.5 | | | $ | 18.9 | | | | 8.5 | % |
*Excludes impairment charge in 4th quarter of 2008; includes 3rd quarter non-recurring settlement of $795,000 with OIG.
For the year ended December 31, 2008, the Company reported a net loss of $74.0 million, or $1.93 per share compared to net income of $3.3 million, or $0.09 per share for the same period a year ago. As discussed above, the Company had an after-tax impairment charge of $80.2 million, or $2.09 per share, which was prompted by adverse equity and other market conditions which caused a decrease in current market valuations in the healthcare services industry and BioScrip’s stock price relative to its book value at December 31, 2008.
Excluding the impairment charge, the Company would have reported net income of $6.2 million, or $0.16 per diluted share, a $2.9 million improvement in net income over the prior year. Revenues increased to $1.4 billion for the year ended December 31, 2008 from $1.2 billion in 2007. The year-over-year increase was principally due to growth in Bioscrip’s Specialty Services business discussed above, partially offset by revenues associated with the loss of PBM contracts. Specialty Services revenue for the 2008 was $1,196.6 million compared to $974.6 million for 2007, an increase of $222.0 million, or 22.8%.
Operating income for 2008 increased 16.9% in 2008 to $10.4 million, excluding the impairment charge versus 2007. This improvement was primarily the result of higher Specialty Services sales.
Balance Sheet Highlights
Accounts receivable days sales outstanding at December 31, 2008 were 43.8 days, essentially unchanged over the prior year. Inventory days on hand at December 31, 2008 were 11.8 days versus 11.4 days at the end of 2007. Inventory on hand increased in the fourth quarter primarily to safeguard against first quarter 2009 price increases.
Outstanding borrowings under our credit facility were $50.4 million at the end of 2008, a $4.6 million decline since September 30, 2008. As of yesterday, our outstanding borrowings were approximately $41.0 million. Average borrowings during the fourth quarter were approximately $41.0 million, an improvement of more than $6.0 million over the third quarter of 2008. BioScrip’s total credit line is $85.0 million.
Conference Call Information
BioScrip will host a conference call to discuss fourth quarter and year-end 2008 financial results on Tuesday, March 3, at 9:00 a.m. ET (Eastern Time). Interested parties may participate in the conference call by dialing 800-755-1805 (US), or 212-231-1901 (International), 5-10 minutes prior to the start of the call. A replay of the conference call will be available from 12:00 p.m. ET on March 3, through 12:00 p.m. ET on March 17, by dialing 800-633-8284 (US), or 402-977-9140 (International), and entering reservation #21414372. An audio webcast and archive of the conference call will also be available under the investor relations section of the BioScrip website, www.bioscrip.com.
About BioScrip, Inc.
BioScrip, Inc. (www.bioscrip.com) (Nasdaq: BIOS) is a specialty pharmaceutical healthcare organization that partners with patients, physicians, healthcare payors and pharmaceutical manufacturers to provide access to medications and management solutions to optimize outcomes for chronic and other complex health care conditions.
Forward Looking Statements-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.
Earnings before interest, taxes, depreciation, amortization, and option expense ("EBITDAO") is a non-GAAP financial measure as defined under U.S. Securities and Exchange Commission Regulation G. As required by Regulation G, BioScrip has provided on Schedule 3 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.
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TABLES TO FOLLOW
| BIOSCRIP, INC | |
| | | | | | | | |
| CONSOLIDATED BALANCE SHEETS | |
| SCHEDULE 1 | |
| (in thousands, except for share amounts) | |
| | | December 31, | | | | December 31, | |
| | | 2008 | | | | 2007 | |
| | | | | | | | |
| ASSETS | |
| Current assets | | | | | | | |
| Cash and cash equivalents | | $ | - | | | | $ | - | |
| Receivables, less allowance for doubtful accounts of $11,629 and $12,083 | | | | | | | | | |
| at December 31, 2008 and 2007, respectively | | | 158,649 | | | | | 128,969 | |
| Inventory | | | 45,227 | | | | | 33,598 | |
| Prepaid expenses and other current assets | | | 2,766 | | | | | 1,434 | |
| Total current assets | | | 206,642 | | | | | 164,001 | |
| Property and equipment, net | | | 14,748 | | | | | 11,742 | |
| Other assets | | | 1,069 | | | | | 478 | |
| Goodwill | | | 24,498 | | | | | 114,824 | |
| Intangible assets, net | | | - | | | | | 5,777 | |
| Total assets | | $ | 246,957 | | | | $ | 296,822 | |
| | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |
| Current liabilities | | | | | | | | | |
| Line of credit | | $ | 50,411 | | | | $ | 33,778 | |
| Accounts payable | | | 76,936 | | | | | 57,342 | |
| Claims payable | | | 5,230 | | | | | 5,164 | |
| Amounts due to plan sponsors | | | 5,646 | | | | | 4,568 | |
| Accrued expenses and other current liabilities | | | 9,575 | | | | | 13,936 | |
| Total current liabilities | | | 147,798 | | | | | 114,788 | |
| Deferred taxes | | | 533 | | | | | 12,754 | |
| Income taxes payable | | | 3,089 | | | | | 3,077 | |
| Total liabilities | | | 151,420 | | | | | 130,619 | |
| Stockholders' equity | | | | | | | | | |
| Common stock, $.0001 par value; 75,000,000 shares authorized; shares issued: | | | | | | | | | |
| 41,622,629, and 41,331,346, respectively; shares outstanding; 38,691,356 and | | | | | | | | | |
| 38,250,633, respectively | | | 4 | | | | | 4 | |
| Treasury stock, shares at cost: 2,624,186 and 2,436,642, respectively | | | (10,288 | ) | | | | (9,399 | ) |
| Additional paid-in capital | | | 248,441 | | | | | 244,186 | |
| Accumulated deficit | | | (142,620 | ) | | | | (68,588 | ) |
| Total stockholders' equity | | | 95,537 | | | | | 166,203 | |
| Total liabilities and stockholders' equity | | $ | 246,957 | | | | $ | 296,822 | |
| Schedule 2 | |
| BIOSCRIP, INC | |
| | | | | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF OPERATIONS (1) | |
| (in thousands, except per share amounts) | |
| | | | | | | | | | | | | |
| | | (unaudited) | | | | | | | |
| | | Three Months | | | Twelve Months | |
| | | Ended December 31, | | | Ended December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | |
| Revenue | | $ | 366,573 | | | $ | 309,197 | | | $ | 1,401,911 | | | $ | 1,197,732 | |
| Cost of revenue | | | 328,582 | | | | 273,016 | | | | 1,259,741 | | | | 1,060,717 | |
| Gross profit | | | 37,991 | | | | 36,181 | | | | 142,170 | | | | 137,015 | |
| % of Revenue | | | 10.4 | % | | | 11.7 | % | | | 10.1 | % | | | 11.4 | % |
| Operating expenses | | | | | | | | | | | | | | | | |
| Selling, general and administrative expenses | | | 31,623 | | | | 32,324 | | | | 125,202 | | | | 120,147 | |
| Bad debt expense | | | 1,881 | | | | 314 | | | | 4,667 | | | | 5,119 | |
| Amortization of intangibles | | | 484 | | | | 484 | | | | 1,936 | | | | 2,898 | |
| Goodwill and intangible impairment | | | 93,882 | | | | - | | | | 93,882 | | | | - | |
| Total operating expense | | | 127,870 | | | | 33,122 | | | | 225,687 | | | | 128,164 | |
| % of Revenue | | | 34.9 | % | | | 10.7 | % | | | 16.1 | % | | | 10.7 | % |
| (Loss) income from operations | | | (89,879 | ) | | | 3,059 | | | | (83,517 | ) | | | 8,851 | |
| Interest expense, net | | | (780 | ) | | | (602 | ) | | | (2,711 | ) | | | (3,270 | ) |
| (Loss) income before income taxes | | | (90,659 | ) | | | 2,457 | | | | (86,228 | ) | | | 5,581 | |
| Tax (benefit) provision | | | (14,075 | ) | | | (59 | ) | | | (12,196 | ) | | | 2,264 | |
| | | | | | | | | | | | | | | | | |
| Net (loss) income | | $ | (76,584 | ) | | $ | 2,516 | | | $ | (74,032 | ) | | $ | 3,317 | |
| | | | | | | | | | | | | | | | | |
| Basic weighted average shares | | | 38,589 | | | | 37,991 | | | | 38,417 | | | | 37,647 | |
| Diluted weighted average shares | | | 38,589 | | | | 40,013 | | | | 38,417 | | | | 38,491 | |
| | | | | | | | | | | | | | | | | |
| Basic net (loss) income per share | | $ | (1.98 | ) | | $ | 0.07 | | | $ | (1.93 | ) | | $ | 0.09 | |
| Diluted net (loss) income per share | | $ | (1.98 | ) | | $ | 0.06 | | | $ | (1.93 | ) | | $ | 0.09 | |
(1) Cetain amounts have been reclassified to conform to the current presentation. Such classifications have had no impact on income from operations or net income.
| Schedule 3 | |
| BIOSCRIP, INC | |
| | | | | | | | | | | | | |
| Reconciliation between GAAP and Non-GAAP Measures | |
| (in thousands, except per share amounts) | |
| | | | | | | | | | | | | |
| | | (unaudited) | | | | | | | |
| | | Three Months | | | Twelve Months | |
| | | Ended December 31, | | | Ended December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | |
| Net (loss) income | | $ | (76,584 | ) | | $ | 2,516 | | | $ | (74,032 | ) | | $ | 3,317 | |
| Addback items: | | | | | | | | | | | | | | | | |
| Amortization of intangibles | | | 484 | | | | 484 | | | | 1,936 | | | | 2,898 | |
| Depreciation | | | 1,223 | | | | 1,081 | | | | 4,457 | | | | 4,192 | |
| Net interest | | | 780 | | | | 602 | | | | 2,711 | | | | 3,270 | |
| Taxes | | | (14,075 | ) | | | (59 | ) | | | (12,196 | ) | | | 2,264 | |
| Stock-based compensation expense | | | 931 | | | | 1,269 | | | | 3,790 | | | | 3,004 | |
| Goodwill and intangible writeoff | | | 93,882 | | | | - | | | | 93,882 | | | | - | |
| Earnings before interest, taxes, depreciation, amortization and | | | | | | | | | | | | | | | | |
| share-based compensation expense (EBITDAO) | | $ | 6,641 | | | $ | 5,893 | | | $ | 20,548 | | | $ | 18,945 | |
| Net (loss) income | | $ | (76,584 | ) | | $ | 2,516 | | | $ | (74,032 | ) | | $ | 3,317 | |
| Addback items: | | | | | | | | | | | | | | | | |
| OIG Settlement | | | - | | | | - | | | | 795 | | | | - | |
| Pro forma Net (Loss) Income | | $ | (76,584 | ) | | $ | 2,516 | | | $ | (73,237 | ) | | $ | 3,317 | |
| Basic weighted average shares | | | 38,589 | | | | 37,991 | | | | 38,417 | | | | 37,647 | |
| Diluted weighted average shares | | | 38,589 | | | | 40,013 | | | | 38,417 | | | | 38,491 | |
| Basic pro forma net (loss) income per share | | $ | (1.98 | ) | | $ | 0.07 | | | $ | (1.91 | ) | | $ | 0.09 | |
| Diluted pro forma net (loss) income per share | | $ | (1.98 | ) | | $ | 0.06 | | | $ | (1.91 | ) | | $ | 0.09 | |
