BioScrip revenue increases 6.2% to $262.4 million in second quarter 2015

BioScrip^®, Inc. (NASDAQ: BIOS) (the "Company") today announced 2015 second quarter financial results. Second quarter revenue from continuing operations was $262.4 million and the net loss from continuing operations was $243.2 million, or $3.60 loss per diluted share, which includes a $238.0 million pre-tax goodwill impairment charge resulting from a decline in the Company's common stock price and related market capitalization, as well as an $8.6 million incremental pre-tax bad debt charge predominately attributable to aged accounts receivable balances over 365 days old.

Company Highlights During and Subsequent to the Second Quarter:

• Total revenue increased by $15.2 million, or 6.2%, compared to the prior year period. Revenue from the Infusion Services segment increased to $247.0 million, reflecting 7.1% growth year-over-year, driven by revenue growth in our core infusion business;
• Gross profit from continuing operations was $66.0 million, or 25.1% of revenue, compared to $65.4 million, or 26.4% of revenue, in the prior year period;
• Consolidated Adjusted EBITDA was a loss of $2.5 million, a $13.5 million decrease compared to Adjusted EBITDA of $11.0 million in the prior year period. The decrease was primarily due to a lower gross margin revenue mix shift as well as the increase of contractual and bad debt expense; and
• In a separate press release, the Company also announced today that it is implementing a financial improvement plan to reduce its cost structure and enhance its financial flexibility to drive shareholder value as a pure play infusion services provider.

Results of Operations

Second Quarter 2015 versus Second Quarter 2014

Revenue from continuing operations for the second quarter of 2015 totaled $262.4 million, compared to $247.1 million for the same period a year ago, an increase of $15.2 million or 6.2%. Infusion Services segment revenue was $247.0 million in the second quarter of 2015 as compared to $230.5 million for the same period in 2014. The 7.1% increase was driven primarily by continued strong organic growth particularly in chronic, nutrition and other therapies.

Consolidated gross profit for the second quarter of 2015 was $66.0 million, or 25.1% of revenue, compared to $65.4 million, or 26.4% of revenue, for the second quarter of 2014. The increase in gross profit dollars was due to revenue growth in the Infusion Services segment partially offset by lower PBM Services gross profit. The decrease in gross margin percentage was primarily the result of an Infusion Services segment mix shift from core therapies to more chronic and other therapies.

During the second quarter of 2015, consolidated Adjusted EBITDA from continuing operations declined by $13.5 million to a loss of $2.5 million. Infusion Services segment Adjusted EBITDA was $4.1 million in the second quarter of 2015, compared to Adjusted EBITDA of $16.2 million in the prior year quarter. The decreases in both consolidated Adjusted EBITDA and Infusion Services segment Adjusted EBITDA were principally due to lower gross margin revenue mix shift combined with the $8.6 million incremental pre-tax bad debt charge, which was predominately attributable to aged accounts receivable balances over 365 days old.

PBM Services segment revenue was $15.4 million for the second quarter of 2015, compared to $16.6 million for the prior year period. PBM Services segment Adjusted EBITDA was $1.7 million for the second quarter of 2015, compared to $1.8 million in the prior year quarter.

Interest expense in the second quarter of 2015 was unchanged from the prior year period at $9.1 million.

Income tax benefit for continuing operations in the second quarter of 2015 was $19.9 million compared to income tax expense of $3.1 million in the prior year period.

Net loss from continuing operations for the second quarter of 2015 was $243.2 million, or a $3.60 loss per diluted share, compared to a net loss of $18.6 million, or $0.27 loss per diluted share in the prior year period, largely due to the $238.0 million pre-tax goodwill impairment charge and the $8.6 million incremental pre-tax bad debt charge.

Liquidity and Capital Resources

For the six months ended June 30, 2015, BioScrip used $42.1 million in net cash from continuing operating activities, as compared to $26.7 million of net cashed used in continuing operating activities in the prior year period. As of June 30, 2015, the Company had $1.2 million in cash and $418.9 million of outstanding debt. As of August 10, 2015, the Company has approximately $54.4 million of liquidity, which is comprised of $22.6 million of cash and $31.8 million of undrawn capacity available on its revolving credit facility.

Events Subsequent to the End of the Second Quarter

In a separate press release issued today, BioScrip announced steps to enhance shareholder value as a pure play infusion services provider:

• Implementing $35 - $40 million in total cost savings over the next 12 months to enhance financial flexibility;
• Announcing sale of non-core PBM business;
• Retaining Jefferies to explore strategic alternatives; and
• Naming Chris Luthin as Chief Operating Officer; Scott Davido as Chief Implementation Officer and announces additional executive appointments.