BioScrip Reports First Quarter 2017 Financial Results
May 04 2017 - 8:00AM
BioScrip, Inc. (NASDAQ:BIOS) (“BioScrip” or the “Company”) today
announced its first quarter 2017 financial results. For the first
quarter, the Company reported revenue from continuing operations of
$217.8 million, net loss from continuing operations of $19.0
million, and adjusted EBITDA of $5.2 million, in line with the
Company’s plan. For the full-year 2017, the Company continues to
expect to achieve adjusted EBITDA in the range of $45.0 million to
$55.0 million.
First Quarter 2017 Results
- Net revenue was $217.8 million, reflecting a core revenue mix
increase to 72%, up from 60% in the first quarter of 2016, and 70%
in the fourth quarter of 2016;
- Gross profit margin increased to 30.1%, up from 26.9% in the
first quarter of 2016, reflecting the positive impacts from
increased core product mix, Home Solutions synergies, and other
cost reductions;
- The Company remains on track to achieve the previously
announced $17.0 million in Home Solutions synergies and other
incremental annualized cost reductions of $23.0 to $25.0 million,
by the end of 2017;
- Consolidated loss from continuing operations, net of income
taxes, was $19.0 million, an increased loss of $9.2 million from
the first quarter of 2016. The increased loss was primarily driven
by the negative impact of the Cures Act, plus additional
depreciation, amortization and interest expense, offset partially
by higher gross margins resulting from increased core product mix,
Home Solutions synergies, and other cost reductions;
- Consolidated Adjusted EBITDA was $5.2 million, as compared to
$7.4 million in the first quarter of 2016. This expected
decrease was primarily driven by the negative impact of the Cures
Act, offset partially by higher gross margins resulting from
increased core product mix, Home Solutions synergies, and other
cost reductions;
- As of March 31, 2017, the Company had $16.0 million of cash and
it was in full compliance with its bank covenants.
“I am pleased with our Company’s first quarter
performance, which was in line with our plan. Our sales team met
our revenue target for the quarter and continued to increase our
core revenue mix. In addition, our gross profit margin improved 320
basis points year over year and adjusted EBITDA met our
expectations, driven by improved core revenue mix, supply chain
efficiencies and cost-structure improvements,” said Daniel E.
Greenleaf, President and Chief Executive Officer. “We also
successfully completed the integration of the Home Solutions
business and we remain on track to realize the full $17.0 million
of cost synergies and incremental $23.0 million to $25.0 million in
cost savings.”
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. This guidance incorporates the estimated negative
impact of the Cures Act legislation and the Company’s estimates
regarding its contract with UnitedHealthcare. The Company continues
to evaluate the impact of the UnitedHealthcare contract on its 2017
revenue and will provide updated 2017 revenue guidance at the
appropriate time.
Conference Call and
Presentation
BioScrip will host a conference call and live
webcast, May 4, 2017, at 9:00 a.m. Eastern Time, to discuss its
first 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 8579499.
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) |
|
|
|
|
|
|
|
March 31, 2017 |
|
December 31, 2016 |
|
|
|
|
|
ASSETS |
|
|
|
|
Current
assets |
|
|
|
|
Cash and
cash equivalents |
|
$ |
15,969 |
|
|
$ |
9,569 |
|
Restricted cash |
|
|
5,132 |
|
|
|
- |
|
Receivables, less allowance for doubtful accounts of $44,061 and
$44,730 |
|
|
|
|
as of
March 31, 2017 and December 31, 2016, respectively |
|
|
109,477 |
|
|
|
111,811 |
|
Inventory |
|
|
30,549 |
|
|
|
36,165 |
|
Prepaid
expenses and other current assets |
|
|
14,896 |
|
|
|
18,507 |
|
Total current assets |
|
|
176,023 |
|
|
|
176,052 |
|
Property and equipment,
net |
|
|
30,416 |
|
|
|
32,535 |
|
Goodwill |
|
|
365,947 |
|
|
|
365,947 |
|
Intangible assets,
net |
|
|
27,858 |
|
|
|
31,043 |
|
Other non-current
assets |
|
|
2,173 |
|
|
|
2,163 |
|
Total assets |
|
$ |
602,417 |
|
|
$ |
607,740 |
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT |
|
|
|
|
Current
liabilities |
|
|
|
|
Current
portion of long-term debt |
|
$ |
22,426 |
|
|
$ |
18,521 |
|
Accounts
payable |
|
|
47,446 |
|
|
|
59,134 |
|
Amounts
due to plan sponsors |
|
|
4,444 |
|
|
|
3,799 |
|
Accrued
interest |
|
|
5,549 |
|
|
|
6,705 |
|
Accrued
expenses and other current liabilities |
|
|
41,867 |
|
|
|
42,191 |
|
Total current liabilities |
|
|
121,732 |
|
|
|
130,350 |
|
Long-term debt, net of
current portion |
|
|
450,072 |
|
|
|
433,413 |
|
Deferred taxes |
|
|
2,900 |
|
|
|
2,281 |
|
Other non-current
liabilities |
|
|
1,180 |
|
|
|
1,257 |
|
Total liabilities |
|
|
575,884 |
|
|
|
567,301 |
|
|
|
|
|
|
Series A
convertible preferred stock, $.0001 par value; 825,000 shares
authorized; |
|
|
|
|
21,645
shares issued and outstanding as of March 31, 2017 and December 31,
2016; |
|
|
|
|
and,
$2,677 and $2,603 liquidation preference as of March 31, 2017
and |
|
|
|
|
December
31, 2016, respectively |
|
|
2,549 |
|
|
|
2,462 |
|
Series C
convertible preferred stock, $.0001 par value; 625,000 shares
authorized; |
|
|
|
|
614,177
shares issued and outstanding as of March 31, 2017 and December 31,
2016; |
|
|
|
|
and
$77,632 and $75,491 liquidation preference as of March 31, 2017
and |
|
|
|
|
December
31, 2016, respectively |
|
|
71,842 |
|
|
|
69,540 |
|
Stockholders'
(deficit) equity |
|
|
|
|
Preferred stock, $.0001 par value; 5,000,000 shares
authorized; no shares issued and |
|
|
|
|
outstanding as of March 31, 2017 and December 31, 2016,
respectively |
|
|
- |
|
|
|
- |
|
Common
stock, $.0001 par value; 250,000,000 shares authorized; 120,982,543
and |
|
|
|
|
117,682,543 shares issued and outstanding as of March 31, 2017
and |
|
|
|
|
December
31, 2016, respectively |
|
|
12 |
|
|
|
12 |
|
Additional paid-in capital |
|
|
614,977 |
|
|
|
611,844 |
|
Accumulated deficit |
|
|
(662,847 |
) |
|
|
(643,419 |
) |
Total stockholders' deficit |
|
|
(47,858 |
) |
|
|
(31,563 |
) |
Total liabilities and stockholders' deficit |
|
$ |
602,417 |
|
|
$ |
607,740 |
|
|
|
|
|
|
Schedule 2 |
BIOSCRIP, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
Three Months Ending March
31, |
|
|
2017 |
|
2016 |
|
|
|
|
|
Net
revenue |
|
$ |
217,810 |
|
|
$ |
238,462 |
|
Cost of revenue
(excluding depreciation expense) |
|
|
152,226 |
|
|
|
174,230 |
|
Gross
profit |
|
|
65,584 |
|
|
|
64,232 |
|
%
of revenues |
|
|
30.1 |
% |
|
|
26.9 |
% |
|
|
|
|
|
Other operating
expenses |
|
|
44,358 |
|
|
|
39,658 |
|
Bad debt expense |
|
|
7,164 |
|
|
|
7,592 |
|
General and
administrative expenses |
|
|
9,479 |
|
|
|
11,051 |
|
Restructuring,
acquisition, integration, and other expenses, net |
|
|
3,223 |
|
|
|
2,667 |
|
Depreciation and
amortization expense |
|
|
6,988 |
|
|
|
4,538 |
|
Interest expense |
|
|
12,744 |
|
|
|
9,412 |
|
Gain on
dispositions |
|
|
- |
|
|
|
(939 |
) |
Loss from continuing
operations, before income
taxes |
|
|
(18,372 |
) |
|
|
(9,747 |
) |
Income
tax expense |
|
|
619 |
|
|
|
23 |
|
Loss from continuing operations, net of income
taxes |
|
|
(18,991 |
) |
|
|
(9,770 |
) |
Income
(loss) from discontinued operations, net of income taxes |
|
|
(437 |
) |
|
|
233 |
|
Net loss |
|
$ |
(19,428 |
) |
|
$ |
(9,537 |
) |
Accrued dividends on
preferred stock |
|
|
(2,214 |
) |
|
|
(1,998 |
) |
Deemed dividend on
preferred stock |
|
|
(174 |
) |
|
|
(172 |
) |
Loss
attributable to common stockholders |
|
$ |
(21,816 |
) |
|
$ |
(11,707 |
) |
|
|
|
|
|
Denominator - Basic and
Diluted: |
|
|
|
|
Weighted
average number of common shares outstanding |
|
|
118,783 |
|
|
|
68,771 |
|
|
|
|
|
|
Loss from
continuing operations, basic and diluted |
|
$ |
(0.18 |
) |
|
$ |
(0.17 |
) |
Income from
discontinued operations, basic and diluted |
|
|
- |
|
|
|
- |
|
Loss per common
share, basic and diluted |
|
$ |
(0.18 |
) |
|
$ |
(0.17 |
) |
|
|
|
|
|
Schedule 3 |
BIOSCRIP, INC. AND SUBSIDIARIES |
QUARTERLY RECONCILIATION BETWEEN
GAAP AND NON-GAAP MEASURES |
(in thousands) |
|
|
|
|
|
|
|
Three Months Ended |
|
|
3/31/2017 |
|
3/31/2016 |
Adjusted EBITDA
by Segment: |
|
|
|
|
Infusion Services
Adjusted EBITDA |
|
$ |
14,062 |
|
|
$ |
16,982 |
|
Adjusted
EBITDA margin % |
|
|
6.5 |
% |
|
|
7.1 |
% |
Corporate Overhead
Adjusted EBITDA |
|
|
(8,885 |
) |
|
|
(9,577 |
) |
Adjusted
EBITDA margin % |
|
|
(4.1 |
%) |
|
|
(4.0 |
%) |
|
|
|
|
|
Consolidated
Adjusted EBITDA |
|
|
5,177 |
|
|
|
7,405 |
|
Adjusted
EBITDA margin % |
|
|
2.4 |
% |
|
|
3.1 |
% |
|
|
|
|
|
Interest expense |
|
|
(12,744 |
) |
|
|
(9,412 |
) |
Gain on
dispositions |
|
|
- |
|
|
|
939 |
|
Income tax expense |
|
|
(619 |
) |
|
|
(23 |
) |
Depreciation and
amortization expense |
|
|
(6,988 |
) |
|
|
(4,538 |
) |
Stock-based
compensation (expense) benefit |
|
|
(594 |
) |
|
|
(1,474 |
) |
Restructuring,
acquisition, integration, and other expenses, net (1) |
|
|
(3,223 |
) |
|
|
(2,667 |
) |
Loss from
continuing operations, net of income taxes |
|
$ |
(18,991 |
) |
|
$ |
(9,770 |
) |
|
|
|
|
|
|
|
|
|
|
General and
Administrative Expenses on Face of Income Statement: |
|
|
|
|
Corporate overhead
adjusted EBITDA |
|
$ |
(8,885 |
) |
|
$ |
(9,577 |
) |
Stock-based
compensation (expense) |
|
|
(594 |
) |
|
|
(1,474 |
) |
General
and administrative expenses |
|
$ |
(9,479 |
) |
|
$ |
(11,051 |
) |
|
|
|
|
|
(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 |
|
3/31/2017 |
|
3/31/2016 |
Cash flows from
operating activities: |
|
|
|
Net loss from
continuing operations |
$ |
(18,991 |
) |
|
$ |
(9,770 |
) |
Receivables, net of bad debt expense |
|
2,333 |
|
|
|
(4,417 |
) |
Inventory |
|
5,616 |
|
|
|
13,867 |
|
Prepaid
expenses and other assets |
|
3,601 |
|
|
|
7,897 |
|
Accounts
payable |
|
(11,688 |
) |
|
|
(11,995 |
) |
Accrued
interest |
|
(1,157 |
) |
|
|
(4,630 |
) |
Accrued
expenses and other liabilities |
|
244 |
|
|
|
(2,227 |
) |
Non-Cash Adjustments: |
|
|
|
Depreciation and amortization |
|
6,988 |
|
|
|
4,538 |
|
Deferred
taxes |
|
619 |
|
|
|
174 |
|
Other
Non-Cash |
|
1,839 |
|
|
|
1,589 |
|
Operating Cash
Flow (Use) |
|
(10,596 |
) |
|
|
(4,974 |
) |
Discontinued operations |
|
(437 |
) |
|
|
(5,989 |
) |
Capital
expenditures |
|
(1,684 |
) |
|
|
(2,429 |
) |
Investment in restricted cash |
|
(5,132 |
) |
|
|
- |
|
Proceeds
from dispositions |
|
- |
|
|
|
1,105 |
|
Proceeds
from priming credit agreement, net |
|
23,060 |
|
|
|
- |
|
Proceeds
from private placement, net |
|
5,052 |
|
|
|
- |
|
Term note
(repayments) |
|
(3,137 |
) |
|
|
(3,137 |
) |
Revolver
(repayments) |
|
(437 |
) |
|
|
8,000 |
|
Deferred
financing costs and other |
|
(289 |
) |
|
|
(104 |
) |
Total All Cash
Flow |
$ |
6,400 |
|
|
$ |
(7,528 |
) |
|
|
|
|
Schedule
5 |
|
|
|
|
|
BIOSCRIP, INC AND SUBSIDIARIES |
FULL YEAR 2017
GUIDANCE |
(dollars in millions, except EPS) |
|
|
|
Low
End |
|
High
End |
|
|
of
Range |
|
of
Range |
|
|
|
|
|
Adjusted EBITDA |
|
$ |
45.0 |
|
|
$ |
55.0 |
|
|
|
|
|
|
Stock Compensation |
|
|
3.0 |
|
|
|
2.5 |
|
Depreciation &
Amortization |
|
|
27.0 |
|
|
|
25.0 |
|
Interest Expense,
net |
|
|
52.0 |
|
|
|
49.0 |
|
Restructuring
Costs |
|
|
4.0 |
|
|
|
3.0 |
|
Income Tax Expense |
|
|
3.0 |
|
|
|
2.0 |
|
Preferred Stock
Dividends |
|
|
9.4 |
|
|
|
9.4 |
|
Net Loss
- Continuing Ops |
|
$ |
(53.4 |
) |
|
$ |
(35.9 |
) |
|
|
|
|
|
Diluted Loss Per Common
Share |
|
$ |
(0.45 |
) |
|
$ |
(0.30 |
) |
|
|
|
|
|
weighted-average
diluted shares |
|
|
118,000 |
|
|
|
118,000 |
|
|
|
|
|
|
|
|
|
|
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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