BioScrip's CEO Discusses Q4 2011 Results - Earnings Call Transcript

BioScrip (BIOS)

Q4 2011 Earnings Call

March 09, 2012 8:30 am ET

Executives

Lisa Wilson -

Richard M. Smith - Chief Executive Officer, President, Chief Operating Officer and Director

Mary Jane Graves - Interim Chief Financial Officer and Treasurer

Analysts

Brooks G. O'Neil - Dougherty & Company LLC, Research Division

Kyle D. Smith - Jefferies & Company, Inc., Research Division

Unknown Analyst

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to BioScrip Fourth Quarter and Year End Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Friday, March 9, 2012. I would now like to turn the conference over to Lisa Wilson, Investor Relations for BioScrip. Please go ahead.

Lisa Wilson

Good morning, and thank you for joining us today. By now, you should've received a copy of our press release issued this morning. If you have not received it, you may access it through the Investor Relations section at our website at BioScrip.com.

Rick Smith, President and Chief Executive Officer; and MJ Graves, Interim Chief Financial Officer and Treasurer, will host this morning's call.

The call may be accessed through our website at bioscrip.com. A replay will be available shortly after the call. Interested parties can access the replay by dialing (800) 633-8284 in the U.S. and (402) 977-9140 internationally and entering access code 21579469. An audio webcast will also be available under the Investor Relations section of the BioScrip website at bioscrip.com.

Before we get started, I would like to remind everyone that any statements made on the call today or in our press release that express a belief, expectation or intent, as well as those that are historical facts are considered forward-looking statements and are protected under the Safe Harbor provision of the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to BioScrip today, and the company assumes no obligation to update statements as circumstances change.

These forward-looking statements may involve a number of risks and uncertainties, which may cause the company's results to differ materially from such statements. Forward-looking statements are subject to inherent risks and uncertainty surrounding future expectations generally and may differ materially from actual future experience.

Risks and uncertainties that could affect forward-looking statements include the ability to consummate the pending transaction with Walgreens; the failure to realize annualized cost savings associated with any restructuring or cost reduction efforts; the impact of members of management in executing these efforts; our ability to leverage core competencies or maximize margins and operating cash flow; and the risks described from time to time in the company's reports filed with the SEC, including the company's annual report on Form 10-K for the year ended December 31, 2011.

During this presentation, we will refer to non-GAAP financial measures. A reconciliation of such measures to the comparable GAAP financial measure is contained in our press release issued earlier today, which again can be obtained from our website at bioscrip.com.

And now, we'd like to turn the call over to Rick Smith. Rick?

Richard M. Smith

Thank you, Lisa. Good morning, everyone. Thank you for joining today's call. We are very pleased with our achievements this year. We ended 2011 on a high note as we continue to deliver solid organic revenue growth and adjusted EBITDA improvement.

We believe we are creating significant momentum in our key businesses. With 10 consecutive months of patient census build across our targeted therapies and solid revenue growth in the Infusion business, we are just beginning to see the true potential of BioScrip.

Our positive performance reflects the diligent efforts of our clinical, operations, sales and marketing teams. These teams remain focused and delivered against our plan while at the same time we successfully executed an agreement to sell a community mail -- community and mail and especially Pharmacy businesses.

Now I'd like to highlight the -- address the highlights of the quarter. For the fourth quarter, revenue was $483.3 million, a $29.3 million sequential increase.

Gross profit for the quarter was $81.8 million or 16.9% of sales compared to $77.1 million or 17% of sales in the third quarter.

Adjusted EBITDA increased 3.8% from $19 million in the third quarter to $19.8 million in the fourth quarter.

The Infusion/Home Health segment revenue grew both on a sequential and a year-over-year basis.

In the fourth quarter, Infusion/Home Health revenue increased sequentially by $12.1 million or 11%, driven by a 13.5% growth in infusion revenue.

On a year-over-year basis, revenue growth for the Infusion business was $9.3 million, an increase of 9.8%. We also saw previously impacted category such as antibiotics and IVIG continue to grow. In addition, Q4 2011 Infusion adjusted EBITDA was up by $1.4 million or 15.4% year-over-year.

Home health revenue was down slightly compared to Q3 and to prior year Q4.

As you know, the home health industry was impacted by 2011 cuts in Medicare and Medicaid reimbursement. These cuts and other factors also contributed to a $1.2 million reduction in home health adjusted EBITDA compared to the prior year's quarter.

The Infusion/Home Health segment adjusted EBITDA increased $1.8 million or 17.3% sequentially from $10.5 million in Q3 to $12.3 million in Q4.

Based on the progress we continue to see, we expect 7% to 9% organic revenue growth in Infusion/Home Health in 2012. Clearly, infusion services offer a significant opportunity for growth due to rapidly changing industry trends, where more healthcare services are projected to be provided in the home or at alternate sites of administration.

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