BioScrip, Inc. (NASDAQ: BIOS) today announced 2012 third quarter
financial results. Third quarter revenue from continuing operations
was $170.4 million and the net loss from continuing operations was
$0.6 million, or $0.01 per diluted share. Consolidated Adjusted
EBITDA for the third quarter was $11.6 million versus $11.7 million
for the third quarter of 2011.
As a result of the sale of the Company’s traditional and
specialty pharmacy mail operations and community retail pharmacy
stores on May 4, 2012 (the “Pharmacy Services Asset Sale”), the
Company’s financial statements reflect the discontinued operations’
results for the three months ended September 30, 2012 and 2011, and
assets transferred in the transaction as of September 30, 2012, and
December 31, 2011, separate from the continuing operations of the
business. The remaining assets and liabilities of the divested
business that were not transferred as a part of the Pharmacy
Services Asset Sale are included in continuing operations. The
Company anticipates the collection, payment or resolution of these
balances during the remainder of the year.
Third Quarter Highlights
- Revenue from continuing operations
increased $36.5 million, or 27.3%, as compared to the prior year
period;
- Gross profit from continuing operations
was $58.0 million, or 34.0% of revenue, as compared to $53.6
million, or 40.1% of revenue, in the prior year period;
- Adjusted EBITDA from continuing
operations was $11.6 million, compared to $11.7 million in the
prior year and $9.0 million in the second quarter, a 28.9%
sequential quarter improvement; and,
- Acquired privately held InfuScience,
Inc. (“InfuScience) for $38.3 million in cash.
“We are pleased to report strong third quarter results,
reflecting continued growth in our infusion business and another
quarter of sequential improvement in our Adjusted EBITDA,” said
Rick Smith, President and Chief Executive Officer of BioScrip. “Our
business is tracking with our strategic plan and we are making
solid operational progress.”
Results of Operations
Third Quarter 2012 versus Third Quarter 2011
Revenue from continuing operations for the third quarter of 2012
totaled $170.4 million, compared to $133.8 million for the same
period a year ago, an increase of $36.5 million or 27.3%. Infusion
Services segment revenue was $125.9 million in the third quarter,
as compared to $90.2 million for the same period in 2011. The 39.5%
increase was driven primarily by overall volume growth as well as
the addition of the InfuScience business. Home Health Services
segment revenue was $17.3 million for the third quarter of 2012, as
compared to $17.5 million in the prior year quarter. The 1.4%
decrease was primarily the result of the previously announced
reimbursement reductions from Medicare and the state of Tennessee
TennCare program. PBM Services segment revenue was $27.1 million
for the third quarter of 2012, compared to $26.0 million for the
prior year period. The 4.2% increase was due primarily to higher
volume.
Consolidated gross profit for the third quarter of 2012 was
$58.0 million, or 34.0% of revenue, compared to $53.6 million, or
40.1% of revenue, for the third quarter of 2011. The increase in
gross profit was primarily the result of growth in the volume of
Infusion Services segment revenues. The decline in gross profit
margin rate resulted primarily from a shift in the therapy mix in
the Infusion Services segment, as well as a decrease in home health
reimbursement rates from certain government payors.
During the third quarter of 2012, BioScrip generated $18.2
million of Segment Adjusted EBITDA, or 10.7% of total revenue,
compared to $17.2 million, or 12.8% of total revenue in the same
period last year. The Infusion Services Segment Adjusted EBITDA was
$9.9 million, or 7.9% of segment revenue, compared to $7.6 million,
or 8.4% of segment revenue, in the prior year. These results were
also affected by the Pharmacy Services Asset Sale as gross profit
was impacted by the factors highlighted above and by an increased
cost allocation to the Infusion Segment of certain retained
corporate resources that are being redirected to grow and support
the Infusion business or which will be rationalized over time.
The Home Health Services Segment Adjusted EBITDA in the third
quarter of 2012 was $1.4 million, or 8.1% of segment revenue. This
compares to Segment Adjusted EBITDA of $1.7 million, or 9.5% of
segment revenue in the comparable prior year period. The PBM
Services segment Adjusted EBITDA was $6.9 million, or 25.5% of
segment revenue, for the third quarter of 2012 compared to $8.0
million, or 30.6% of segment revenue, in the prior year.
On a consolidated basis, BioScrip reported $11.6 million of
Adjusted EBITDA during the third quarter of 2012, or 6.8% of total
revenue, compared to $11.7 million, or 8.8% of total revenue, in
the same period last year. On a sequential basis, Adjusted EBITDA
increased by $2.6 million, or 28.9%, and Adjusted EBITDA as a
percent of revenue from continuing operations has increased 1.0%
from 5.8% to 6.8%.
Interest expense in the third quarter of 2012 was $6.5 million,
consistent with the prior year.
Income tax benefit for continuing operations in the third
quarter was $2.5 million compared to income tax benefit of $1.9
million in the third quarter of 2011.
Net loss from continuing operations for the third quarter of
2012 was $0.6 million, or $0.01 per diluted share, compared to a
net loss of $0.3 million, or a loss of $0.01 per diluted share, for
the third quarter of 2011.
Nine Months Ended 2012 versus Nine Months Ended 2011
Revenue from continuing operations for the nine months ended
September 30, 2012 totaled $481.9 million, compared to $396.2
million for the same period a year ago, a 21.6% increase. Infusion
Services segment revenue was $346.0 million for the nine months
ended September 30, 2012, compared to $271.8 million for the same
period in 2011. The 27.3% increase was driven primarily by overall
volume growth as well as the addition of the InfuScience business.
Home Health Services segment revenue for the nine months ended
September 30, 2012 was $50.9 million compared to $52.4 million in
the prior year. The 3.0% decrease was primarily the result of
reimbursement reductions as previously discussed. PBM Services
segment revenue for the nine months ended September 30, 2012 was
$85.1 million, compared to $72.0 million for the prior year period.
The 18.2% increase primarily reflects the addition of a new Managed
Medicare contract in late 2011.
Consolidated gross profit for the nine months ended September
30, 2012 was $164.6 million, or 34.1% of revenue, compared to
$156.8 million, or 39.6% of revenue, in the comparable prior year
period. The gross profit margin was impacted primarily by therapy
mix in the Infusion Services segment. As previously disclosed, in
connection with the Pharmacy Services Asset Sale, the Company
provided certain lower margin services on behalf of key customers
after the sale. Additionally, there was a substantial decrease in
cross referrals of certain therapies from the specialty sales
personnel affiliated with the divested business.
During the nine months ended September 30, 2012, BioScrip
generated $48.7 million of segment Adjusted EBITDA, or 10.1% of
total revenue, compared to $50.5 million, or 12.7% of total revenue
in the same period last year. The Infusion Services Segment
Adjusted EBITDA was $25.7 million, or 7.4% of segment revenue,
compared to $25.2 million, or 9.3% of segment revenue, in the prior
year. These results were also affected by the Pharmacy Services
Asset Sale as gross profit was impacted by the factors highlighted
above and by an increased cost allocation to the Infusion Segment
of certain retained corporate resources that are being redirected
to grow and support the Infusion business or which will be
rationalized over time.
The Home Health Services Segment Adjusted EBITDA for the nine
months ended September 30, 2012 was $3.6 million, or 7.0% of
segment revenue. This compares to Segment Adjusted EBITDA of $4.5
million, or 8.5% of segment revenue in the comparable prior year
period. The PBM Services Segment Adjusted EBITDA was $19.4 million,
or 22.8% of segment revenue, for the nine months ended September
30, 2012 compared to $20.8 million, or 29.0% of segment revenue, in
the prior year.
On a consolidated basis, BioScrip reported $29.0 million of
Adjusted EBITDA for the nine months ended September 30, 2012, or
6.0% of total revenue, compared to $33.0 million, or 8.3% of total
revenue, in the same period last year.
Interest expense for the nine months ended September 30, 2012
was $19.7 million compared to $19.4 million in the prior year.
Income tax benefit for continuing operations for the nine months
ended September 30, 2012 was $2.6 million compared to income tax
benefit of $2.4 million in 2011.
Net loss from continuing operations for the nine months ended
September 30, 2012 was $6.9 million, or $0.12 per diluted share,
compared to a net loss of $3.0 million, or $0.06 per diluted share,
in the comparable prior year period.
Liquidity and Capital
Resources
For the nine months ended September 30, 2012, BioScrip generated
$56.9 million in net cash from continuing operating activities
compared to $7.0 million generated from continuing operating
activities during the first nine months of 2011, an increase of
$49.9 million. This increase was due to the collection of accounts
receivable retained after the Pharmacy Services Asset Sale, net of
accounts payable paid related to those businesses. The Company’s
cash balance at the end of the third quarter was $67.2 million.
On July 31, 2012, the Company reduced its revolving commitments
from $150 million to $125 million and reduced the minimum revolving
balance from $30 million to zero, among other considerations. As a
result, the Company’s outstanding debt as of September 30, 2012,
was comprised of $225.0 million of senior unsecured notes and $1.4
million in capital leases. The Company continues to evaluate
options to deploy its capital resources, taking into account its
cost of capital as well as growth opportunities in support of its
strategic plan.
Outlook
The Company reiterates that it is tracking toward its previously
announced target annualized revenue range of $660-$690 million, and
target annualized Adjusted EBITDA range of $62-65 million in the
fourth quarter of 2012. However, the Company is currently assessing
the impact of Hurricane Sandy on the performance of its locations
in the Northeast region.
Conference Call
BioScrip will host a conference call to discuss its third
quarter 2012 financial results on November 8, 2012 at 9:00 a.m.
Eastern Time.
Interested parties may participate in the conference call by
dialing 800-920-4316 (US), or 212-231-2927 (International), 5-10
minutes prior to the start of the call. A replay of the conference
call will be available for two weeks after the call's completion by
dialing 800-633-8284 (US) or 402-977-9140 (International) and
entering conference call ID number 21607843. An audio webcast and
archive will also be available under the “Investor Relations”
section of the BioScrip website at www.bioscrip.com. for a period
of 30 days following the conference call.
About BioScrip, Inc.
BioScrip, Inc. provides comprehensive infusion and home care
solutions. By partnering with patients, physicians, healthcare
payors, government agencies and pharmaceutical manufacturers we are
able to provide access to infusible medications and management
solutions. Our goal is to optimize outcomes for chronic and other
complex healthcare conditions and enhance the quality of patient
life. BioScrip brings clinical competence in providing high-touch,
comprehensive infusion and nursing services to patients in the most
convenient ways possible. Through our customer services and
treatments we aim to ensure the best possible therapy outcome.
Forward Looking Statements – Safe Harbor
This press release includes statements that may constitute
"forward-looking statements," including projections of certain
measures of the Company's results of operations, projections
of certain charges and expenses, and other statements
regarding the Company's goals, regulatory approvals and
strategy. These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
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," "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 or
contribute to such differences include but are not limited to
risks associated with: the Company’s ability to grow its Infusion
segment organically or through acquisitions and obtain financing in
connection therewith; its ability to reduce operating costs while
sustaining growth; reductions in federal, state and commercial
payor 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, including the Company’s annual report on Form 10-K for
the year ended December 31, 2011. 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.
Reconciliation to Non-GAAP Financial Measures
In addition to reporting all financial information required in
accordance with generally accepted accounting principles (GAAP),
the Company is also reporting EBITDA and Adjusted EBITDA, which are
non-GAAP financial measures. EBITDA and Adjusted EBITDA
are not measurements 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 our liquidity. In addition, the
Company's definitions of EBITDA and Adjusted EBITDA may not be
comparable to similarly titled non-GAAP financial measures reported
by other companies. EBITDA represents net income before net
interest expense, income tax expense, depreciation and
amortization. Adjusted EBITDA, as defined by the
Company, represents net income before net interest expense,
income tax expense, depreciation and amortization, stock-based
compensation expense, acquisition, integration, transitional
expenses, and restructuring-related 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 these non-GAAP
financial measures provide additional important insight into the
Company’s ongoing operations and meaningful metrics to
evidence the Company's continuing profitability trend. For a full
reconciliation of EBITDA and Adjusted EBITDA to the most comparable
GAAP financial measures, please see the attachments to this
earnings release.
Schedule 1 BIOSCRIP, INC
CONSOLIDATED BALANCE SHEETS (in thousands, except for share
amounts)
September 30, December 31,
2012 2011 (unaudited)
ASSETS Current assets Cash and cash equivalents $
67,182 $ -
Receivables, less allowance for doubtful
accounts of $27,865 and $22,728 at June 30, 2012 and December 31,
2011, respectively
142,139 225,412 Inventory 36,596 17,997 Prepaid expenses and other
current assets 8,868 10,184 Current assets from discontinued
operations - 38,876 Total current
assets 254,785 292,469 Property and
equipment, net 21,122 26,951 Goodwill 350,599 312,387 Intangible
assets, net 17,371 19,622 Deferred financing costs 3,267 3,992
Investments in and advances to unconsolidated joint venture 7,525 -
Other non-current assets 2,151 1,552 Non-current assets from
discontinued operations - 20,129
Total assets $ 656,820 $ 677,102
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Current portion of long-term debt $ 967 $ 66,161
Accounts payable 48,169 79,155 Claims payable 10,667 11,766 Amounts
due to plan sponsors 21,804 25,219 Accrued interest 11,562 5,825
Accrued expenses and other current liabilities 37,428
32,648 Total current liabilities 130,597
220,774 Long-term debt, net of current portion
225,480 227,298 Deferred taxes 11,138 10,295 Other non-current
liabilities 6,084 3,456
Total
liabilities 373,299 461,823
Stockholders' equity
Preferred stock, $.0001 par value;
5,000,000 shares authorized; no shares issued or outstanding
- - Common stock, $.0001 par value; 125,000,000 shares authorized;
shares issued:
59,354,952 and 57,800,791, respectively;
shares outstanding: 56,772,432 and 55,109,038, respectively
6 6 Treasury stock, shares at cost: 2,582,520 and 2,638,421,
respectively (10,311 ) (10,461 ) Additional paid-in capital 386,090
375,525 Accumulated deficit (92,264 ) (149,791 )
Total stockholders' equity 283,521
215,279
Total liabilities and stockholders' equity $
656,820 $ 677,102
Schedule 2
BIOSCRIP, INC CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited and in thousands, except
per share amounts)
Three Months Ended Nine Months
Ended September 30, September 30,
2012 2011 2012
2011 Product revenue $ 123,361 $ 87,869
$ 338,721 $ 265,368 Service revenue 47,004
45,960 143,178 130,873 Total
revenue 170,365 133,829 481,899 396,241 Cost of product
revenue 85,611 57,771 233,057 172,047 Cost of service revenue
26,750 22,423 84,275
67,377 Total cost of revenue 112,361
80,194 317,332 239,424
Gross profit 58,004 53,635 164,567 156,817 % of revenue 34.0 % 40.1
% 34.1 % 39.6 % Operating expenses Selling, general and
administrative expenses 46,772 42,336 135,404 124,165 Bad debt
expense 3,440 3,075 10,677 8,368 Acquisition, integration and
transitional expenses 2,881 1,284 4,562 1,284 Restructuring expense
438 1,750 940 6,524 Amortization of intangibles 1,087
858 2,844 2,496 Total
operating expense 54,618 49,303 154,427 142,837 % of revenue 32.1 %
36.8 % 32.0 % 36.0 % Income from continuing operations 3,386 4,332
10,140 13,980 Interest expense, net 6,497
6,528 19,705 19,375 Loss from
continuing operations before income taxes (3,111 ) (2,196 ) (9,565
) (5,395 ) Income tax expense (benefit) (2,506 )
(1,862 ) (2,644 ) (2,406 ) Loss from continuing
operations, net of income taxes (605 ) (334 ) (6,921 ) (2,989 )
Income (loss) from discontinued operations, net of income taxes
(10,931 ) 882 64,448
4,152 Net income (loss) $ (11,536 ) $ 548 $ 57,527
$ 1,163 Basic weighted average shares
56,640 54,607 56,019
54,348 Diluted weighted average shares 56,640
54,607 56,019 54,348
Basic loss per share from continuing operations $ (0.01 ) $
(0.01 ) $ (0.12 ) $ (0.06 ) Basic income (loss) per share from
discontinued operations (0.19 ) 0.02
1.15 0.08 Basic net income (loss) per share $
(0.20 ) $ 0.01 $ 1.03 $ 0.02 Diluted
loss per share from continuing operations $ (0.01 ) $ (0.01 ) $
(0.12 ) $ (0.06 ) Diluted income (loss) per share from discontinued
operations (0.19 ) 0.02 1.15
0.08 Diluted net income (loss) per share $ (0.20 ) $
0.01 $ 1.03 $ 0.02
Schedule
3 BIOSCRIP, INC CONSOLIDATED STATEMENTS
OF CASH FLOWS (unaudited and in thousands)
Nine
Months Ended September 30, 2012
2011 Cash flows from operating
activities: Net income $ 57,527 $ 1,163 Less: income from
discontinued operations, net of income taxes 64,448
4,152 Loss from continuing operations, net of income
taxes (6,921 ) (2,989 ) Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation 6,115 4,764
Amortization of intangibles 2,844 2,496 Amortization of deferred
financing costs 662 775 Change in deferred income tax 2,164 199
Compensation under stock-based compensation plans 4,398 3,983 Loss
on disposal of fixed assets 60 129 Changes in assets and
liabilities: Receivables, net of bad debt expense 88,227 (19,127 )
Inventory (17,873 ) 3,765 Prepaid expenses and other assets 4,822
5,273 Accounts payable (34,425 ) (5,591 ) Claims payable (1,099 )
486 Amounts due to plan sponsors (3,415 ) 3,162 Accrued expenses
and other liabilities 11,352 9,694 Net
cash provided by operating activities from continuing operations
56,911 7,019 Net cash provided by operating activities from
discontinued operations (31,599 ) 32,393 Net
cash provided by operating activities 25,312
39,412
Cash flows from investing activities:
Purchases of property and equipment, net (5,837 ) (4,239 ) Cash
consideration paid for acquisitions, net of cash acquired (41,746 )
- Cash consideration paid to DS Pharmacy (2,935 ) (463 ) Cash
consideration paid for unconsolidated joint ventures, net of cash
acquired (7,827 ) - Net cash used in investing
activities from continuing operations (58,345 ) (4,702 ) Net cash
provided by (used in) investing activities from discontinued
operations 161,499 (2,129 ) Net cash used in
investing activities 103,154 (6,831 )
Cash
flows from financing activities: Borrowings on line of credit
1,041,440 1,294,569 Repayments on line of credit (1,105,262 )
(1,325,882 ) Repayments of capital leases (3,210 ) (2,568 )
Deferred and other financing costs - (22 ) Net proceeds from
exercise of employee stock compensation plans 5,922 1,460 Surrender
of stock to satisfy minimum tax withholding (174 )
(138 ) Net cash used in financing activities (61,284 )
(32,581 ) Net change in cash and cash equivalents 67,182 -
Cash and cash equivalents - beginning of period -
-
Cash and cash equivalents - end of
period $ 67,182 $ -
DISCLOSURE OF CASH
FLOW INFORMATION: Cash paid during the period for interest $
13,961 $ 15,031 Cash paid (refunded) during the
period for income taxes $ 1,628 $ (3,175 )
DISCLOSURE OF NON-CASH TRANSACTIONS: Capital lease
obligations incurred to acquire property and equipment $ 20
$ 5,930
Schedule 4 BIOSCRIP, INC
Reconciliation between GAAP and
Non-GAAP Measures (unaudited and in thousands)
Three
Months Ended Nine Months Ended September 30,
September 30, 2012
2011 2012
2011 Results of Operations: Revenue: Infusion
Services - product revenue $ 123,361 $ 87,869 $ 338,721 $ 265,368
Infusion Services - service revenue 2,575
2,376 7,242 6,455 Total Infusion
Services revenue 125,936 90,245 345,963 271,823 Home Health
Services - service revenue 17,299 17,548 50,870 52,429 PBM
Services - service revenue 27,130 26,036 85,066 71,989
Total revenue $ 170,365 $ 133,829
$ 481,899 $ 396,241 Adjusted EBITDA by
Segment before corporate overhead: Infusion Services $ 9,931 $
7,557 $ 25,740 $ 25,181 Home Health Services 1,402 1,663 3,557
4,456 PBM Services 6,905 7,961
19,367 20,848 Total Segment Adjusted EBITDA
18,238 17,181 48,664 50,485 Corporate overhead (6,625
) (5,442 ) (19,665 ) (17,454 ) Consolidated
Adjusted EBITDA 11,613 11,739 28,999 33,031 Interest
expense, net (6,497 ) (6,528 ) (19,705 ) (19,375 ) Income tax
(expense) benefit 2,506 1,862 2,644 2,406 Depreciation (2,134 )
(1,784 ) (6,115 ) (4,764 ) Amortization of intangibles (1,087 )
(858 ) (2,844 ) (2,496 ) Stock-based compensation expense (1,687 )
(1,731 ) (4,398 ) (3,983 ) Acquisition, integration, and
transitional expenses (2,881 ) (1,284 ) (4,562 ) (1,284 )
Restructuring expense (438 ) (1,750 ) (940 )
(6,524 ) Loss from continuing operations, net of income
taxes $ (605 ) $ (334 ) $ (6,921 ) $ (2,989 )
Supplemental
Operating Data
September 30, December 31, 2012
2011 Total Assets: Infusion Services $
427,437
$ 353,999 Home Health Services 68,270 64,672 PBM Services 40,982
40,418 Corporate unallocated
101,501
24,348 Assets from discontinued operations - 59,005 Assets
associated with discontinued operations, not sold 18,630
134,660 Total $ 656,820 $ 677,102
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