BioScrip Announces Fourth Quarter and Calendar Year 2005 Financial Results; Strategic Focus on Realizing Synergies and the Potential of Dynamic Drug Pipeline.ELMSFORD, N.Y. -- BioScrip, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : BIOS BIOS in full Basic Input/Output System Computer program that is typically stored in EPROM and used by the CPU to perform start-up procedures when the computer is turned on. ) 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:
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
========== ==========
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 pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. 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 Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. 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 di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. 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 Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. In the fourth quarter 2005, BioScrip recorded a goodwill and intangible impairment charge totaling $19.4 million principally in the PBM PBM - play by mail. See play by electronic mail. Services segment related to contract terminations Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). . As previously reported, Centene Corporation Centene Corporation is in the industry of Medicaid managed care. Centene is a multi-line healthcare enterprise operating primarily in two segments: Medicaid Managed Care and Specialty Services. , 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 Allowance for Doubtful Accounts An estimation made by a company and documented on its balance sheet for receivables that might go uncollected. Notes: It is standard practice for a company to have funds set aside for money that cannot be collected. 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 de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the Company's collections and adversely impacted the accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying aging and collections in that period. The Company is currently taking affirmative AFFIRMATIVE. Averring a fact to be true; that which is opposed to negative. (q.v.) 2. It is a general rule of evidence that the affirmative of the issue must be proved. Bull. N. P. 298 ; Peake, Ev. 2. 3. steps to remediate re·me·di·a·tion n. The act or process of correcting a fault or deficiency: remediation of a learning disability. re·me 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 The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , facility lease termination costs, consolidation to one company-wide brand, BioScrip, and duplicate DUPLICATE. The double of anything. 2. It is usually applied to agreements, letters, receipts, and the like, when two originals are made of either of them. Each copy has the same effect. 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 Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible 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 north·land also North·land n. A region in the north of a country or an area. north  land Medical Pharmacy, a community-based
specialty pharmacy, located in Columbus, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. in October 2005, and more
recently, Intravenous Therapy Intravenous therapy or IV therapy is the giving of liquid substances directly into a vein. It can be intermittent or continuous; continuous administration is called an intravenous drip. 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 EST electroshock therapy. EST abbr. electroshock therapy . 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 Investor relations The process by which the corporation communicates with its investors. 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 A Pharmacy Benefit Manager (PBM) is a third party administrator of prescription drug programs. They are primarily responsible for processing and paying prescription drug claims. 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 HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome , Cancer, Infusion IVIG IVIG Intravenous immunoglobulin, see there , Hepatitis C Hepatitis C Definition Hepatitis C is a form of liver inflammation that causes primarily a long-lasting (chronic) disease. Acute (newly developed) hepatitis C is rarely observed as the early disease is generally quite mild. , Rheumatoid Arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. , Multiple Sclerosis multiple sclerosis (MS), chronic, slowly progressive autoimmune disease in which the body's immune system attacks the protective myelin sheaths that surround the nerve cells of the brain and spinal cord (a process called demyelination), resulting in damaged areas , and Transplantation transplantation /trans·plan·ta·tion/ (trans?plan-ta´shun) the grafting of tissues taken from the patient's own body or from another. . 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 This article is a list of major pharmacies (also known as chemists and drugstores) by country. Australia Pharmacies in Australia are mostly independently-owned by pharmacists, often operated as franchises of retail brands offered by the three major 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of the purchase price to the net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). reported financial results are provided in Schedules 1 and 2 attached to this press release.
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
----------------------------------------------------------------------
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