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BioScrip Reports Second Quarter 2018 Financial Results

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DENVER, Aug. 07, 2018 (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 2018 financial results.

Second Quarter 2018 Highlights

  • Net revenue of $175.8 million, including core product mix of 75.1%, compared to 73.6% in the prior year quarter, reflecting the impact of the implementation of ASC 606*, which resulted in the recognition of amounts previously reported as bad debt expense as a reduction to revenue
  • Net loss from continuing operations of $15.1 million, a $14.0 million improvement compared to the prior year quarter
  • Adjusted EBITDA of $11.4 million, 14% above the prior year quarter, driven by a 510 basis point improvement in gross profit margin and a $3.0 million reduction in operating expenses, reflecting ASC 606 pro forma adjustments
  • Net cash used in operating activities of $15.1 million, reflecting operational cash use of $7.8 million and interest payments of $7.3 million
  • Liquidity of $20.8 million at June 30, 2018, consisting of cash and equivalents
  • Operational cash flow and liquidity impacted by the timing of strategic inventory purchases related to product shortages and recalls, temporary decreases in cash collections of accounts receivable, as well as payment of 2017 incentive compensation; operational cash flow is expected to return to more normalized levels beginning in the third quarter of 2018

Daniel E. Greenleaf, President and Chief Executive Officer, commented, "BioScrip achieved record second quarter adjusted EBITDA of $11.4 million, up 14% compared to the prior year period, driven by improved core product mix, higher gross profit margin, and ongoing operating expense discipline. We commenced the third quarter with our best sales month of the year during July and are reaffirming our full year 2018 guidance for revenue between $688 million and $698 million*, and adjusted EBITDA between $54 million and $58 million.

"We remain increasingly confident that BioScrip can achieve at least $75 million in adjusted EBITDA in 2019 and are positioning the Company for revitalized longer-term revenue growth and enhanced profitability though key initiatives in sales force productivity, revenue cycle management, procurement and managed care relationships."

* Implementation of ASC 606 during the first quarter of 2018 resulted in the recognition of amounts previously recorded as bad debt expense as a reduction to revenue. The impact of the change in accounting principle reduced both revenue and bad debt expense by $5.4 million during the second quarter. The implementation of ASC 606 did not impact operating income or Adjusted EBITDA during the second quarter of 2018 and will not impact operating income or Adjusted EBITDA on a go-forward basis. The implementation of ASC 606 in the first quarter of 2018 resulted in a reduction of our 2018 revenue guidance by approximately $22 million but did not impact 2018 Adjusted EBITDA guidance.

Conference Call and Presentation

BioScrip will host a conference call and live webcast on August 7, 2018, at 9:00 a.m. Eastern Time, to discuss its second quarter 2018 financial results. Interested parties may participate by dialing 877-423-9820 (U.S.) or by accessing a link under the "Investors" section on the Company's website at www.bioscrip.com.

An audio webcast and archive will be available within two hours of the call's completion under the "Investors" 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 2,100 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 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 guidance, projections of certain measures of the Company's results of operations, projections of future levels of certain charges and expenses, incremental cost structure improvements and other statements regarding the Company's financial improvement plan and strategy and anticipated effects of the Cures Act. 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 make principal and interest payments on our debt and unsecured notes and satisfy the other covenants contained in its debt agreements; 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 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)
(unaudited)
       
  June 30, 2018   December 31, 2017
       
ASSETS      
Current assets      
Cash and cash equivalents $ 20,820     $ 39,457  
Restricted cash   4,950       4,950  
Receivables, less allowance for doubtful accounts of $0 and $37,912 as of June 30, 2018      
and December 31, 2017, respectively   96,917       85,522  
Inventory   25,286       38,044  
Prepaid expenses and other current assets   8,583       18,620  
Total current assets     156,556         186,593  
Property and equipment, net of accumulated depreciation of $92,588 and $86,675 as of      
June 30, 2018 and December 31, 2017, respectively   25,004       26,973  
Goodwill   367,198       367,198  
Intangible assets, net of accumulated amortization of $44,904 and $40,036 as of June 30, 2018      
and December 31, 2017, respectively   14,247       19,114  
Deferred income taxes   1,041       1,098  
Other non-current assets   2,100       2,116  
Total assets $    566,146     $    603,092  
LIABILITIES AND STOCKHOLDERS' DEFICIT      
Current liabilities      
Current portion of long-term debt $ 957     $ 1,722  
Accounts payable   49,264       65,963  
Amounts due to plan sponsors   2,184       4,621  
Accrued interest   6,728       6,706  
Accrued expenses and other current liabilities   23,028       26,118  
Total current liabilities     82,161         105,130  
Long-term debt, net of current portion   492,309       478,866  
Other non-current liabilities   21,151       21,769  
Total liabilities     595,621         605,765  
Series A convertible preferred stock, $.0001 par value; 825,000 shares authorized;      
21,643 shares issued and outstanding as of June 30, 2018 and December 31, 2017;      
and $3,084 and $2,916 liquidation preference as of June 30, 2018 and December 31, 2017,      
respectively   3,022       2,827  
Series C convertible preferred stock, $.0001 par value; 625,000 shares authorized;      
614,177 shares issued and outstanding as of June 30, 2018 and December 31, 2017;      
and $89,455 and $84,555 liquidation preference as of June 30, 2018 and December 31, 2017,      
respectively   84,469       79,252  
Stockholders' deficit      
Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued and      
outstanding as of June 30, 2018 and December 31, 2017, respectively   -       -  
Common stock, $.0001 par value; 250,000,000 shares authorized; 128,046,122 and 127,634,012    
shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively   13       13  
Treasury stock, 110,496 and 5,106 shares outstanding, at cost, as of June 30, 2018 and      
December 31, 2017, respectively   (327 )     (16 )
Additional paid-in capital   621,015       624,762  
Accumulated deficit   (737,667 )     (709,511 )
Total stockholders' deficit     (116,966 )       (84,752 )
Total liabilities and stockholders' deficit $    566,146     $    603,092  
       


 
Schedule 2
BIOSCRIP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS 
(in thousands, except per share amounts)
(unaudited)
                   
    Three Months Ended June 30,   Six Months Ended June 30, 
      2018   2017   2018   2017
                   
Net revenue     $    175,789     $    218,106     $    344,373     $    435,916  
Cost of revenue (excluding depreciation expense)         115,832         150,495         229,368         303,430  
Gross profit         59,957         67,611         115,005         132,486  
  % of revenues       34.1 %     31.0 %     33.4 %     30.4 %
                   
Other operating expenses       38,861       42,293       78,160       86,612  
Bad debt expense       -       6,117       -       13,160  
General and administrative expenses       10,931       9,654       21,600       18,920  
Restructuring, acquisition, integration, and other expenses, net       2,024       4,147       3,906       7,370  
Change in fair value of equity linked liabilities       3,064       -       (375 )     -  
Depreciation and amortization expense       6,366       7,065       12,852       14,230  
Interest expense       13,805       12,630       27,200       25,290  
Loss on extinguishment of debt       -       13,453       -       13,453  
(Gain) loss on dispositions       (13 )     685       (318 )     685  
Loss from continuing operations, before income taxes         (15,081 )       (28,433 )       (28,020 )       (47,234 )
Income tax expense       43       718       91       1,337  
Loss from continuing operations, net of income taxes         (15,124 )       (29,151 )       (28,111 )       (48,571 )
Loss from discontinued operations, net of income taxes       (15 )     (373 )     (45 )     (672 )
Net loss     $    (15,139 )   $    (29,524 )   $    (28,156 )   $    (49,243 )
Dividends on preferred stock       (2,756 )     (2,478 )     (5,413 )     (4,866 )
Loss attributable to common stockholders     $    (17,895 )   $    (32,002 )   $    (33,569 )   $    (54,109 )
                   
Loss per common share:                  
Loss from continuing operations, basic and diluted     $ (0.14 )   $ (0.26 )   $ (0.26 )   $ (0.44 )
Loss from discontinued operations, basic and diluted       -       -       -       (0.01 )
Loss per common share, basic and diluted     $    (0.14 )   $    (0.26 )   $    (0.26 )   $    (0.45 )
                   
Weighted average number of common shares outstanding,                  
basic and diluted         128,038         121,189         127,906         119,993  
                   


 
Schedule 3
BIOSCRIP, INC. AND SUBSIDIARIES
 QUARTERLY RECONCILIATION BETWEEN GAAP AND NON-GAAP MEASURES
(in thousands)
(unaudited)
                 
    Three Months Ended June 30,   Six Months Ended June 30, 
    2018   2017   2018   2017
                 
Loss from continuing operations, net of income taxes       (15,124 )       (29,151 )       (28,111 )       (48,571 )
                 
Interest expense     (13,805 )     (12,630 )     (27,200 )     (25,290 )
Change in fair value of equity linked liabilities     (3,064 )     -       375       -  
Gain (loss) on dispositions     13       (685 )     318       (685 )
Loss on extinguishment of debt     -       (13,453 )     -       (13,453 )
Income tax expense     (43 )     (718 )     (91 )     (1,337 )
Depreciation and amortization expense     (6,366 )     (7,065 )     (12,852 )     (14,230 )
Stock-based compensation expense     (1,253 )     (433 )     (1,808 )     (1,027 )
Restructuring, acquisition, integration, and other expenses, net (1)     (2,024 )     (4,147 )     (3,906 )     (7,370 )
Consolidated Adjusted EBITDA   $    11,418     $    9,980     $    17,053     $    14,821  
                 
                 
(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)
(unaudited)
             
  Three Months Ended   Six Months Ended
  March 31, 2018   June 30, 2018     June 30, 2018
Cash flows from operating activities:            
Net loss $    (13,017 )   $    (15,139 )     $    (28,156 )
Less: Loss from discontinued operations, net of income taxes   (30 )     (15 )       (45 )
Loss from continuing operations, net of income taxes   (12,987 )     (15,124 )       (28,111 )
Adjustments to reconcile net loss from continuing operations, net of income taxes to net cash used in operating activities:            
Depreciation and amortization   6,486       6,366         12,852  
Amortization of deferred financing costs and debt discount   2,023       2,048         4,071  
Change in fair value of equity linked liabilities   (3,439 )     3,064         (375 )
Change in deferred income taxes   31       25         56  
Stock-based compensation   556       1,253         1,809  
Gain on dispositions   (305 )     (13 )       (318 )
Changes in assets and liabilities:            
Receivables   (2,663 )     (8,734 )       (11,397 )
Inventory   (3,505 )     16,264         12,759  
Prepaid expenses and other assets   8,807       1,247         10,054  
Accounts payable   2,872       (19,574 )       (16,702 )
Amounts due to plan sponsors   (969 )     (1,468 )       (2,437 )
Accrued interest   (4,487 )     4,510         23  
Accrued expenses and other liabilities   2,418       (4,984 )       (2,566 )
Net cash used in operating activities from continuing operations   (5,162 )     (15,120 )       (20,282 )
Net cash used in operating activities from discontinued operations   (30 )     (15 )       (45 )
Net cash used in operating activities     (5,192 )       (15,135 )         (20,327 )
Cash flows from investing activities:            
Purchases of property and equipment   (2,646 )     (4,300 )       (6,946 )
Net cash used in investing activities     (2,646 )       (4,300 )         (6,946 )
Cash flows from financing activities:            
Borrowing of long-term debt   -       10,000         10,000  
Repayments of capital leases   (967 )     (218 )       (1,185 )
Net activity from exercises of employee stock awards   (300 )     121         (179 )
Net cash (used in) provided by financing activities     (1,267 )       9,903           8,636  
Net change in cash and cash equivalents   (9,105 )     (9,532 )       (18,637 )
Cash and cash equivalents - beginning of period   44,407       35,302         44,407  
Cash and cash equivalents - end of period $    35,302     $    25,770       $    25,770  
             


 
 Schedule 5 
       
BIOSCRIP, INC AND SUBSIDIARIES
 FULL YEAR 2018 GUIDANCE 
(dollars in millions, except EPS)
(unaudited)
   Low End     High End 
   of Range     of Range 
       
Revenues $ 688.0     $ 698.0  
       
Loss from continuing operations, net of income taxes   (51.2 )     (43.2 )
       
Stock Compensation   4.0       3.5  
Depreciation & Amortization   27.0       26.0  
Interest Expense, net   56.0       55.0  
Restructuring Costs   6.0       5.0  
Income Tax Expense   1.0       0.5  
Preferred Stock Dividends   11.2       11.2  
Adjusted EBITDA $ 54.0     $ 58.0  
Adjusted EBITDA Margin    7.8 %     8.3 %
       
 Diluted Loss Per Common Share  $    (0.40 )   $    (0.34 )
       
Weighted-Average Diluted Shares   128.0       128.0  
               

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