BIOS BioPlus Acquisition Corporation

BioScrip, Inc. (NASDAQ: BIOS) today reported fourth quarter 2005 revenue of $304.2 million and a net loss of $22.6 million or $0.61 per share. For the year ended December 31, 2005, reported revenue was $1.1 billion and a net loss of $23.8 million or $0.70 per share. Included in the net loss for the quarter and year end are the following previously communicated pre-tax charges: -0- *T 2005 2005 Amounts in millions 4th Quarter Full Year ----------- ----------- Goodwill and intangible impairment $ 19.4 $ 25.2 Allowance for doubtful accounts receivable adjustment 7.1 7.1 Merger related expenses 2.5 4.6 ---------- ---------- Total $ 29.0 $ 36.9 ========== ========== *T Executive Chairman, Richard H. Friedman stated, "We achieved revenues and gross margin percentages in line with our expectations. We did not achieve all of the planned synergies due to system limitations in finance and IT. Our strategic focus is now to successfully conclude the integration, grow our community pharmacy and infusion business and leverage our relationships with manufacturers. Our unique pharmacy model combines local, regional and national distribution. Specialty pharmaceuticals will be driven through a significant number of anticipated new product approvals. We intend to take full advantage of this pipeline." Fourth Quarter Reported Results Revenue for the fourth quarter 2005 was $304.2 million. Revenue, gross profit and operating expenses were up significantly in 2005 due to the acquisition of Chronimed Inc. on March 12, 2005, the results of which were not included in fourth quarter 2004 results. The Company had higher than expected auditing and consulting fees, including costs associated with Sarbanes-Oxley related compliance. In addition, the Company incurred costs associated with its continuing merger integration. Net loss was $22.6 million or $0.61 per share for the fourth quarter 2005 compared with net income of $1.2 million or $0.05 per diluted share for the fourth quarter 2004. Pre-tax charges in the fourth quarter 2005, as discussed below, were $29.0 million. Reported results are provided in Schedules 1 and 2 attached to this press release. Goodwill and Intangible Impairment In the fourth quarter 2005, BioScrip recorded a goodwill and intangible impairment charge totaling $19.4 million principally in the PBM Services segment related to contract terminations. As previously reported, Centene Corporation, the Company's largest PBM customer, acquired its own PBM business and is transitioning its accounts to that business throughout 2006. Allowance for Doubtful Accounts Receivable Adjustment The Company recorded an additional charge of $7.1 million in the fourth quarter of 2005 to reflect an increase in its allowance for doubtful accounts receivable. The scheduled integration of accounting operations in fourth quarter 2005 caused deterioration in the Company's collections and adversely impacted the accounts receivable aging and collections in that period. The Company is currently taking affirmative steps to remediate and improve its collections efforts. Merger Related Expenses Merger related expenses in the fourth quarter were $2.5 million. These expenses consisted of expenses incurred to integrate the acquisition of Chronimed during 2005 including severance, facility lease termination costs, consolidation to one company-wide brand, BioScrip, and duplicate labor costs associated with the consolidation of certain functions into our Minnesota operations. Calendar Year 2005 Reported Results Revenue for the year ended December 31, 2005 was $1.1 billion. Revenue, gross profit and operating expenses were up significantly in 2005 due to the acquisition of Chronimed Inc. on March 12, 2005, the results of which were not included in the year ended December 31, 2004 results. The Company also had higher than expected auditing and consulting fees, including costs associated with Sarbanes-Oxley related compliance, and costs associated with the Company's continuing merger integration. Net loss was $23.8 million or $0.70 per share for 2005 compared with net income of $7.0 million or $0.31 per diluted share for 2004. Pre-tax charges in 2005, as discussed below, were $36.9 million. Goodwill and Intangible Impairment In 2005 BioScrip, recorded goodwill and intangible impairment charges totaled $25.2 million. These charges related to contract terminations in the PBM Services segment and the write off of intangible assets as a result of our re-branding around the BioScrip name. Allowance for Doubtful Accounts Receivable Adjustment The Company recorded an additional charge of $7.1 million in the fourth quarter of 2005 to reflect an increase in the allowance for doubtful accounts receivable. The scheduled integration of accounting operations in fourth quarter 2005 caused deterioration in collections and adversely impacted the accounts receivable aging. The Company is currently taking affirmative steps to remediate and improve its collections efforts. Merger Related Expenses Merger related expenses for the year were $4.6 million consisting of expenses incurred to integrate the acquisition of Chronimed during 2005 including severance, facility lease termination costs, consolidation to one company-wide brand, BioScrip, and duplicate labor costs associated with the consolidation of certain functions into our Minnesota operations. BioScrip acquired Northland Medical Pharmacy, a community-based specialty pharmacy, located in Columbus, Ohio in October 2005, and more recently, Intravenous Therapy Services, a specialty infusion company in California in March 2006. Conference Call Information BioScrip will host a conference call to discuss fourth quarter and calendar year 2005 financial results on Wednesday, March 29 10:00 a.m. EST. Interested parties may participate in the conference call by dialing 888-214-7577 (US), or 415-537-1881 (International), 5-10 minutes prior to the start of the call. A replay of the conference call will be available from 12:00 PM ET on March 29 through 12:00 PM ET on April 5, by dialing 800-633-8284 (US), or 402-977-9140 (International), and entering reservation #21286494. A 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 provides comprehensive pharmaceutical care solutions. We partner with healthcare payors, pharmaceutical manufacturers, government agencies, physicians, and patients to deliver cost effective programs that enhance the quality of patient life. We focus our products and services in two core areas: Specialty medication distribution and clinical management services, both nationally and community-based, and Pharmacy Benefit Management services. Our specialty medication distribution capabilities include condition-specific clinical management programs tailored to improve the care of individuals with complex health conditions such as HIV/AIDS, Cancer, Infusion IVIG, Hepatitis C, Rheumatoid Arthritis, Multiple Sclerosis, and Transplantation. Our complete pharmacy benefit management programs include customized benefit plan design, pharmacy network management and sophisticated reporting capabilities that deliver improved clinical and economic outcomes. In addition, we have 34 locations including community and infusion pharmacies in major metropolitan markets across the U.S., providing nationwide access and clinical management capabilities in a high-touch community-based environment. Forward Looking Statements 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 and our success with respect to the integration and consolidation. 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. Notes to Press Release Tables On March 12, 2005 we completed our acquisition of Chronimed Inc. The accompanying balance sheet (Schedule 2) as of December 31, 2005, reflects the impact of this transaction and the allocation of the purchase price to the net assets from Chronimed Inc. This purchase price allocation is based on an independent valuation and management's assessment of that valuation. BioScrip financial results include Chronimed Inc. financial results for the nineteen days ended March 31, 2005 through the most recently completed quarter and year ended December 31, 2005. Actual GAAP reported financial results are provided in Schedules 1 and 2 attached to this press release. -0- *T Schedule 1 BIOSCRIP, INC. Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Twelve Months Ended ----------------------------------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2005 2004 2005 (a) 2004 ---------------------------------------------------------------------- Revenue $ 304,243 $ 166,840 $1,073,235 $ 630,516 Cost of revenue 270,655 149,232 956,968 562,360 ---------------------------------------------------------------------- Gross profit 33,588 17,608 116,267 68,156 Operating expenses Selling, general and administrative expenses 28,067 14,214 96,521 50,935 Bad debt expense 9,322 684 12,814 1,908 Amortization of intangibles 1,796 795 6,395 3,019 Merger related expenses 2,469 - 4,575 - Goodwill and intangible impairment 19,409 - 25,165 - ---------------------------------------------------------------------- Total operating expenses 61,063 15,693 145,470 55,862 (Loss) Income from operations (27,475) 1,915 (29,203) 12,294 Interest income (expense), net (201) (176) (392) (808) ---------------------------------------------------------------------- Income before income taxes (27,676) 1,739 (29,595) 11,486 Income tax (expense) benefit 5,061 (554) 5,748 (4,453) ---------------------------------------------------------------------- Net (loss) income $ (22,615) $ 1,185 $ (23,847) $ 7,033 ---------------------------------------------------------------------- Basic net (loss) income per share $ (0.61) $ 0.05 $ (0.70) $ 0.32 Diluted net income per share $ (0.61) $ 0.05 $ (0.70) $ 0.31 ---------------------------------------------------------------------- Basic weighted-average shares 37,012 22,307 34,129 22,245 Diluted weighted- average shares 37,012 22,626 34,129 22,702 ---------------------------------------------------------------------- (a) Includes the results of operations of MIM for the full twelve months and of Chronimed from March 13, 2005 through December 31, 2005. Schedule 2 BIOSCRIP, INC. Consolidated Balance Sheets (in thousands) Dec. 31, 2005 December 31, (unaudited) 2004 ---------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 1,521 $ 2,957 Receivables, less allowance for doubtful accounts of $8,900 and $3,240 at December 31, 2005 and 2004, respectively 118,762 65,439 Inventory 25,873 11,897 Prepaid expenses and other current assets 2,054 2,112 Short term deferred taxes 11,225 1,901 ---------------------------------------------------------------------- Total current assets 159,435 84,306 Property and equipment, net 9,232 4,300 Long term deferred taxes, net - 2,383 Other assets and investments 939 427 Goodwill 104,318 74,874 Deferred acquisition costs - 1,702 Intangible assets, net 14,713 17,583 ---------------------------------------------------------------------- Total assets $ 288,637 $ 185,575 ---------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Line of credit $ 7,427 7,303 Accounts payable 39,969 20,012 Claims payable 31,402 28,659 Payables to plan sponsors 1,695 2,217 Accrued expenses and other current liabilities 11,504 11,701 ---------------------------------------------------------------------- Total current liabilities 91,997 69,892 Deferred taxes 875 - Stockholders' equity Common stock, $.0001 par value; 37,094,252 and 22,306,658 shares issued and outstanding at December 31, 2005 and 2004, respectively 4 2 Treasury stock, 2,198,076 at cost at December 31, 2004 and 2003 (8,002) (8,002) Additional paid-in capital 234,958 131,031 Accumulated deficit (31,195) (7,348) ---------------------------------------------------------------------- Total stockholders' equity 195,765 115,683 ---------------------------------------------------------------------- Total liabilities and stockholders' equity $ 288,637 $ 185,575 ---------------------------------------------------------------------- *T