BioScrip, Inc. (NASDAQ: BIOS) ("BioScrip" or the "Company"), the
largest independent national provider of infusion and home care
management solutions, today announced its first quarter 2019
financial results.
First Quarter 2019
Highlights
- Net revenue of $179.0 million, up 6.2% compared to $168.6
million in the first quarter of 2018.
- Net revenue up 7.8% on a billing day rate basis; there was one
less billing day in the first quarter of 2019 as compared to the
first quarter of 2018.
- Net loss from continuing operations of $10.3 million, compared
to $13.0 million in the prior year quarter.
- Adjusted EBITDA of $7.1 million, up 25.6% compared to $5.6
million in the prior year quarter, despite $4.5 million of
increased bad debt expense in the current year quarter.
- Net cash used in operating activities of $6.6 million,
reflecting $7.0 million of operational cash flow and $13.6 million
of interest payments, including a bi-annual bond interest payment
of $8.9 million.
- Liquidity of $5.7 million at March 31, 2019, consisting of cash
and cash equivalents.
Daniel E. Greenleaf, President and Chief
Executive Officer, commented, “BioScrip delivered net revenue
growth of 7.8% on a billing day rate basis in the first quarter of
2019. This is the third consecutive quarter of comparable net
revenue growth for BioScrip, and we are confident this trend will
continue. Adjusted EBITDA increased 25.6% year over year, to $7.1
million, despite $4.5 million of higher bad debt expense in the
quarter, and was in line with our internal expectations. We
continue to make progress in improving our cash collections and
expect that bad debt expense as a percent of sales will
improve.”
Mr. Greenleaf continued, “The merger transaction
with Option Care continues to proceed on plan, and we filed the
preliminary merger proxy statement earlier this week, highlighting
the earnings power of the pro forma combined company. We
remain incredibly enthusiastic about the strategic and financial
virtues of this combination, which will create the nation’s leading
independent national provider of home infusion services.”
Financial Guidance and Conference
Call
Given the pending combination with Option Care,
the Company will not be providing BioScrip financial guidance and
will not be hosting a quarterly conference call. The Company and
Option Care intend to conduct investor and analyst meetings in the
coming days. An updated investor presentation to be used in these
meetings will be filed today with the U.S. Securities and Exchange
Commission (“SEC”) and available on the Company’s website.
ADDITIONAL INFORMATION AND WHERE TO FIND
IT
On April 30, 2019, BioScrip, Inc. (“BioScrip” or
the “Company”) filed with the Securities and Exchange Commission
(“SEC”) a preliminary proxy statement in connection with the
proposed transaction. The definitive proxy statement will be sent
to the stockholders of BioScrip and will contain important
information about the proposed transaction and related
matters. INVESTORS AND SECURITY HOLDERS ARE URGED AND ADVISED
TO READ THE PRELIMINARY PROXY STATEMENT AND THE DEFINITIVE PROXY
STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. The proxy statement and other relevant
materials (when they become available) and any other documents
filed by the Company with the SEC may be obtained free of charge at
the SEC’s website, at www.sec.gov. In addition, security
holders will be able to obtain free copies of the proxy statement
and other relevant materials from the Company by contacting
Investor Relations by mail at 1600 Broadway, Suite 700, Denver, CO
80202, Attn: Investor Relations, by telephone at (720) 697-5200, or
by going to the Company’s Investor Relations page on its corporate
web site at https://investors.bioscrip.com.
PARTICIPANTS IN THE
SOLICITATION
The Company and its directors and executive
officers may be deemed to be participants in the solicitation of
proxies from stockholders in connection with the matters discussed
above. Information about the Company’s directors and executive
officers is set forth in the Proxy Statement on Schedule 14A for
the Company’s 2019 annual meeting of stockholders, which was filed
with the SEC on April 30, 2019. This document can be obtained
free of charge from the sources indicated above. Information
regarding the ownership of the Company’s directors and executive
officers in the Company’s securities is included in the Company’s
SEC filings on Forms 3, 4, and 5, which can be found through the
SEC’s website at www.sec.gov. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
is contained in the preliminary proxy statement and will be
contained in the definitive proxy statement and other relevant
materials to be filed with the SEC when they become available.
About BioScrip, Inc.
BioScrip, Inc. is the largest independent
national provider of infusion and home care management solutions,
with approximately 2,100 teammates and nearly 70 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.
Investor
Contacts |
|
|
Stephen Deitsch |
Kalle Ahl, CFA |
Chief Financial Officer & Treasurer |
The Equity Group |
T: (720) 697-5200 |
T: (212) 836-9614 |
stephen.deitsch@bioscrip.com |
kahl@equityny.com |
Forward-Looking Statements – Safe
Harbor
This communication, in addition to historical
information, contains “forward-looking statements” (as defined in
the Private Securities Litigation Reform Act of 1995) regarding,
among other things, future events or the future financial
performance of BioScrip and Option Care. All statements other than
statements of historical facts are forward-looking statements. In
addition, words such as “anticipate,” “believe,” “contemplate,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“potential,” “predict,” “project,” “seek,” “should,” “target,”
“will,” “would,” or the negative of these words, and words and
terms of similar substance used in connection with any discussion
of future plans, actions or events identify forward-looking
statements. Forward-looking statements relating to the proposed
transaction include, but are not limited to: statements about the
benefits of the proposed transaction between BioScrip and Option
Care, including future financial and operating results; expected
synergies; BioScrip’s and Option Cares plans, objectives,
expectations and intentions; the expected timing of completion of
the proposed transaction; and other statements relating to the
acquisition that are not historical facts. Forward-looking
statements are based on information currently available to BioScrip
and Option Care and involve estimates, expectations and
projections. Investors are cautioned that all such forward-looking
statements are subject to risks and uncertainties (both known and
unknown), and many factors could cause actual events or results to
differ materially from those indicated by such forward-looking
statements. With respect to the proposed transaction between
BioScrip and Option Care, these factors could include, but are not
limited to: the risk that BioScrip or Option Care may be unable to
obtain governmental and regulatory approvals required for the
transaction, or that required governmental and regulatory approvals
may delay the transaction or result in the imposition of conditions
that could reduce the anticipated benefits from the proposed
transaction or cause the parties to abandon the proposed
transaction; the risk that a condition to closing of the
transaction may not be satisfied; the length of time necessary to
consummate the proposed transaction, which may be longer than
anticipated for various reasons; the risk that the businesses will
not be integrated successfully; the risk that the cost savings,
synergies and growth from the proposed transaction may not be fully
realized or may take longer to realize than expected; the diversion
of management time on transaction-related issues; the effect of
future regulatory or legislative actions on the companies or the
industries in which they operate; the risk that the credit ratings
of the combined company or its subsidiaries may be different from
what the companies expect; economic and foreign exchange rate
volatility; and the other risks contained in BioScrip’s most
recently filed Annual Report on Form 10-K.
Many of these risks, uncertainties and
assumptions are beyond BioScrip’s ability to control or predict.
Because of these risks, uncertainties and assumptions, you should
not place undue reliance on these forward-looking statements.
Furthermore, forward-looking statements speak only as of the
information currently available to the parties on the date they are
made, and neither BioScrip nor Option Care undertakes any
obligation to update publicly or revise any forward-looking
statements to reflect events or circumstances that may arise after
the date of this communication. Nothing in this communication is
intended, or is to be construed, as a profit forecast or to be
interpreted to mean that earnings per BioScrip share for the
current or any future financial years or those of the combined
company, will necessarily match or exceed the historical published
earnings per BioScrip share, as applicable. Neither BioScrip nor
Option Care gives any assurance (1) that either BioScrip or Option
Care will achieve its expectations, or (2) concerning any result or
the timing thereof, in each case, with respect to any regulatory
action, administrative proceedings, government investigations,
litigation, warning letters, consent decrees, cost reductions,
business strategies, earnings or revenue trends or future financial
results. All subsequent written and oral forward-looking statements
concerning BioScrip, Option Care, the proposed transaction, the
combined company or other matters and attributable to BioScrip or
Option Care or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements above.
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, pre-merger 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 |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands) |
|
|
March 31, 2019 |
|
December 31, 2018 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Current
assets |
|
|
|
Cash and cash
equivalents |
$ |
5,703 |
|
|
$ |
14,539 |
|
Restricted cash |
4,322 |
|
|
4,321 |
|
Accounts
receivable, net |
120,824 |
|
|
114,864 |
|
Inventory |
27,470 |
|
|
26,689 |
|
Prepaid
expenses and other current assets |
12,766 |
|
|
14,292 |
|
Total current
assets |
171,085 |
|
|
174,705 |
|
Property and equipment,
net of accumulated depreciation of $103,866 and $100,851 as of
March 31, 2019 and December 31, 2018, respectively |
27,798 |
|
|
28,788 |
|
Goodwill |
367,198 |
|
|
367,198 |
|
Deferred taxes |
1,026 |
|
|
1,032 |
|
Intangible assets, net
of accumulated amortization of $50,640 and $49,080 as of March 31,
2019 and December 31, 2018, respectively |
8,910 |
|
|
10,470 |
|
Operating lease
right-of-use assets |
19,454 |
|
|
— |
|
Other non-current
assets |
1,719 |
|
|
1,745 |
|
Total
assets |
$ |
597,190 |
|
|
$ |
583,938 |
|
LIABILITIES AND
STOCKHOLDERS’ DEFICIT |
|
|
|
Current
liabilities |
|
|
|
Current
portion of long-term debt |
$ |
4,536 |
|
|
$ |
3,179 |
|
Current
portion of operating lease liabilities |
5,312 |
|
|
— |
|
Accounts
payable |
77,458 |
|
|
67,025 |
|
Amounts
due to plan sponsors |
848 |
|
|
956 |
|
Accrued
interest |
2,219 |
|
|
6,706 |
|
Accrued
expenses and other current liabilities |
25,215 |
|
|
29,450 |
|
Total current
liabilities |
115,588 |
|
|
107,316 |
|
Long-term debt, net of
current portion |
506,719 |
|
|
501,495 |
|
Operating lease
liabilities, net of current portion |
19,234 |
|
|
— |
|
Other non-current
liabilities |
15,745 |
|
|
25,842 |
|
Total
liabilities |
657,286 |
|
|
634,653 |
|
Series A convertible
preferred stock, $.0001 par value |
3,337 |
|
|
3,231 |
|
Series C convertible
preferred stock, $.0001 par value |
92,909 |
|
|
90,058 |
|
Stockholders’
deficit |
|
|
|
Preferred stock, $.0001 par value |
— |
|
|
— |
|
Common
stock, $.0001 par value |
13 |
|
|
13 |
|
Treasury
stock, shares at cost |
(1,336 |
) |
|
(950 |
) |
Additional paid-in capital |
616,467 |
|
|
618,137 |
|
Accumulated deficit |
(771,486 |
) |
|
(761,204 |
) |
Total
stockholders’ deficit |
(156,342 |
) |
|
(144,004 |
) |
Total
liabilities and stockholders’ deficit |
$ |
597,190 |
|
|
$ |
583,938 |
|
|
Schedule 2
|
BIOSCRIP, INC. AND SUBSIDIARIES |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share
amounts) |
|
|
Three Months Ended
March 31, |
|
2019 |
|
2018 |
Net
revenue |
$ |
178,956 |
|
|
$ |
168,584 |
|
Cost of revenue
(excluding depreciation expense) |
121,292 |
|
|
113,536 |
|
Gross
profit |
57,664 |
|
|
55,048 |
|
Percentage of
net revenue |
32.2 |
% |
|
32.7 |
% |
|
|
|
|
Operating
expenses: |
|
|
|
Service
location operating expenses |
40,187 |
|
|
39,299 |
|
General
and administrative expenses |
11,493 |
|
|
10,669 |
|
Depreciation and amortization expense |
5,073 |
|
|
6,486 |
|
Restructuring, acquisition, integration, and other expenses |
6,021 |
|
|
1,882 |
|
Total
operating expenses |
62,774 |
|
|
58,336 |
|
Operating
loss |
(5,110 |
) |
|
(3,288 |
) |
Other expense: |
|
|
|
Interest
expense, net |
15,231 |
|
|
13,395 |
|
Change in
fair value of equity linked liabilities |
(9,999 |
) |
|
(3,439 |
) |
Gain on
dispositions |
(76 |
) |
|
(305 |
) |
Total
other expense |
5,156 |
|
|
9,651 |
|
Loss from
continuing operations before income taxes |
(10,266 |
) |
|
(12,939 |
) |
Income
tax expense |
(16 |
) |
|
(48 |
) |
Loss from
continuing operations |
(10,282 |
) |
|
(12,987 |
) |
Loss from
discontinued operations, net of income taxes |
— |
|
|
(30 |
) |
Net
loss |
(10,282 |
) |
|
(13,017 |
) |
Accrued
dividends on preferred stock |
(2,957 |
) |
|
(2,657 |
) |
Loss
attributable to common stockholders |
$ |
(13,239 |
) |
|
$ |
(15,674 |
) |
|
|
|
|
Basic loss per
share: |
|
|
|
Loss from
continuing operations |
$ |
(0.10 |
) |
|
$ |
(0.12 |
) |
Loss from
discontinued operations |
— |
|
|
— |
|
Basis loss per share |
$ |
(0.10 |
) |
|
$ |
(0.12 |
) |
|
|
|
|
Diluted loss
per share: |
|
|
|
Loss from
continuing operations |
$ |
(0.18 |
) |
|
$ |
(0.15 |
) |
Loss from
discontinued operations |
— |
|
|
— |
|
Diluted loss per share |
$ |
(0.18 |
) |
|
$ |
(0.15 |
) |
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
Basic |
128,108 |
|
|
127,772 |
|
Diluted |
131,358 |
|
|
130,437 |
|
|
Schedule 3
|
BIOSCRIP, INC. AND SUBSIDIARIES |
QUARTERLY RECONCILIATION BETWEEN GAAP AND
NON-GAAP MEASURES |
(in thousands) |
(unaudited) |
|
|
Three Months Ended
March 31, |
|
2019 |
|
2018 |
Loss from
continuing operations |
$ |
(10,282 |
) |
|
$ |
(12,987 |
) |
Interest expense,
net |
(15,231 |
) |
|
(13,395 |
) |
Gain on
dispositions |
76 |
|
|
305 |
|
Income tax expense |
(16 |
) |
|
(48 |
) |
Depreciation and
amortization expense |
(5,073 |
) |
|
(6,486 |
) |
Stock-based
compensation |
(1,095 |
) |
|
(556 |
) |
Change in fair value of
equity linked liabilities |
9,999 |
|
|
3,439 |
|
Restructuring,
acquisition, integration, and other expenses (1) |
(6,021 |
) |
|
(1,882 |
) |
Adjusted
EBITDA |
$ |
7,079 |
|
|
$ |
5,636 |
|
|
(1)
Restructuring, acquisition, integration, and other expenses include
non-recurring costs associated with restructuring, acquisition, and
integration initiatives such as employee severance costs, certain
legal and professional fees, training costs, redundant wage costs,
and other costs related to contract terminations and closed
branches/offices. |
|
Schedule 4
|
BIOSCRIP, INC. AND SUBSIDIARIES |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS |
(in thousands) |
|
|
Three Months Ended
March 31, |
|
2019 |
|
2018 |
Cash flows from
operating activities: |
|
|
|
Net loss |
$ |
(10,282 |
) |
|
$ |
(13,017 |
) |
Less:
Loss from discontinued operations, net of income taxes |
— |
|
|
(30 |
) |
Loss from continuing
operations |
(10,282 |
) |
|
(12,987 |
) |
Adjustments to
reconcile net loss from continuing operations to net cash used in
operating activities: |
|
|
|
Depreciation and amortization |
5,073 |
|
|
6,486 |
|
Amortization of operating lease right-of-use assets |
1,412 |
|
|
— |
|
Amortization of deferred financing costs and debt discount |
2,054 |
|
|
2,023 |
|
Change in
fair value of equity linked liabilities |
(9,999 |
) |
|
(3,439 |
) |
Change in
deferred income taxes |
6 |
|
|
31 |
|
Stock-based compensation |
1,095 |
|
|
556 |
|
Paid-in-kind interest capitalized as principal on Second Lien Note
Facility |
4,097 |
|
|
— |
|
Gain on
dispositions |
(76 |
) |
|
(305 |
) |
Changes in assets and
liabilities |
|
|
|
Accounts
receivable |
(5,960 |
) |
|
(2,663 |
) |
Inventory |
(781 |
) |
|
(3,505 |
) |
Prepaid
expenses and other assets |
1,627 |
|
|
8,807 |
|
Operating
lease liabilities |
(1,370 |
) |
|
— |
|
Accounts
payable |
10,433 |
|
|
2,872 |
|
Amounts
due to plan sponsors |
(108 |
) |
|
(969 |
) |
Accrued
interest |
(4,487 |
) |
|
(4,487 |
) |
Accrued
expenses and other liabilities |
657 |
|
|
2,418 |
|
Net cash
used in operating activities from continuing operations |
(6,609 |
) |
|
(5,162 |
) |
Net cash
used in operating activities from discontinued operations |
— |
|
|
(30 |
) |
Net cash used in operating activities |
(6,609 |
) |
|
(5,192 |
) |
Cash flows from
investing activities: |
|
|
|
Purchases
of property and equipment, net |
(1,921 |
) |
|
(2,646 |
) |
Net cash used in investing activities |
(1,921 |
) |
|
(2,646 |
) |
Cash flows from
financing activities: |
|
|
|
Repayments of finance leases |
(172 |
) |
|
(967 |
) |
Net
activity from exercises of employee stock awards |
(133 |
) |
|
(300 |
) |
Net cash used in financing activities |
(305 |
) |
|
(1,267 |
) |
Net change in cash,
cash equivalents and restricted cash |
(8,835 |
) |
|
(9,105 |
) |
Cash, cash
equivalents and restricted cash - beginning of period |
18,860 |
|
|
44,407 |
|
Cash, cash
equivalents and restricted cash - end of period |
$ |
10,025 |
|
|
$ |
35,302 |
|
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