BioScrip Reports Third Quarter 2016 Financial Results

DENVER, Nov. 07, 2016 (GLOBE NEWSWIRE) -- BioScrip, Inc. (NASDAQ:BIOS) ("BioScrip" or the "Company") today announced financial results for the third quarter 2016. For the third quarter, the Company reported revenue from continuing operations of $224.5 million, net loss from continuing operations of ($11.1) million and diluted EPS of ($0.12) loss per share.

Third Quarter Highlights
  • Net revenue for the third quarter 2016 was $224.5 million, a decrease year over year partly as a result of lower than expected core sales volumes and partly as a result of anticipated revenue declines in connection with the ongoing shift in revenue mix to a greater percentage of core infusion revenue and less lower-margin chronic infusion revenue.  Home Solutions experienced double digit year over year core revenue growth in 2016 prior to its acquisition.  The core revenues of Home Solutions and its continued core growth will be accretive to the Company on a go forward basis; 
  • Consolidated Loss from continuing operations, net of income taxes was $(11.1) million, an improvement of $13.4 million compared to the prior year third quarter consolidated loss from continuing operations, net of income taxes of $(24.5) million. The year over year reduction in loss was the result of a prior year third quarter 2015 non-cash goodwill impairment charge, which did not recur in 2016, partially offset by lower year over year revenues and higher year over year operating expenses during the third quarter of 2016; and
  • Consolidated Adjusted EBITDA was $3.5 million for the third quarter 2016, as compared to the $6.0 million consolidated Adjusted EBITDA in the prior year third quarter.  The year over year $2.5 million decrease in consolidated Adjusted EBITDA resulted from lower than expected core sales volumes combined with higher than expected operating expenses during the third quarter of 2016.  Preparations for the integration of the Home Solutions acquisition by the Company took a great deal of effort by management and staff and in some respects took attention away from certain operating processes of the Company leading up to the closing of the transaction thus adversely impacting its operating results.

Daniel E. Greenleaf, President and Chief Executive Officer stated, "I have just completed my first few weeks with the Company and based on my initial review it is clear we have work ahead of us.  We are acutely focused on continuing to improve our operating processes and deliver on our financial commitments.  I believe there is tremendous opportunity at the Company for improved financial performance over the next 18 months. I have made it clear to my leadership team and to the overall organization that the top five priorities that we must deliberately execute upon are driving profitable growth, delivering customer-centric service excellence, enhancing employee effectiveness, optimizing operational efficiencies, and exceeding cash collection targets.  Executing upon these five priorities drove the tremendous financial successes and increases to shareholder value at Coram and later at Home Solutions and I am confident that they will drive similar outcomes at BioScrip." 

Furthermore, Mr. Greenleaf commented on the company's third quarter financial results stating, "We do not believe our third quarter financial results are indicative of the financial capability of the company and what we will achieve going forward.  We have already implemented a number of cost reductions and performance changes at the Company in late September and October.  Those implemented changes include a substantive workforce reduction to enhance our cost structure, renegotiated supply chain arrangements to improve gross margins and re-alignment of our sales organization which will result in core revenue growth.  We are confident these recent adjustments will be beneficial to our fourth quarter financial results and will serve to help form a solid base for our continued restructuring and financial performance in 2017."

The Company reconfirms its plan to achieve between $14 million to $17 million in Home Solutions cost synergies over the next 12 to 18 months.  Additionally, the Company is in the process of finalizing its evaluation of an incrementally larger amount of additional synergies over and above the $14 million to $17 million of synergies initially identified which we also believe may be achievable as incremental additional cost savings over the next 12 to 18 months.

Results of Operations

Third Quarter 2016 versus Prior Year Third Quarter 2015

Revenue from continuing operations for the third quarter of 2016 was $224.5 million, compared to $247.2 million in the third quarter of 2015, a decrease of $22.7 million or 9.2%. This revenue decrease was due in part to lower than expected core sales volumes and in part the result of the Company's previously announced shift in its revenue mix to a greater percentage of core infusion revenue and less lower-margin chronic infusion revenue.

Consolidated gross profit for the third quarter of 2016 was $62.6 million, or 27.9% of revenue, up 150 basis points as a percentage of revenue, compared to the prior year third quarter 2015 gross profit of $65.2 million, or 26.4% of revenue.  The improvement in gross profit percentage was the result of the improved revenue mix year over year.

Consolidated Loss from continuing operations, net of income taxes for the third quarter of 2016 was $11.1 million, representing an improvement of $13.4 million versus the same period prior year Consolidated Loss from continuing operations, net of income taxes of $24.5 million.  The year over year change was due to higher operating expenses in the third quarter of 2016, offset by the prior year third quarter 2015 non-cash goodwill impairment charge, which did not recur in 2016.

Consolidated Adjusted EBITDA from continuing operations for the third quarter of 2016 was $3.5 million, representing an decrease of $2.5 million versus the same period prior year Consolidated Adjusted EBITDA of $6.0 million.  The decrease in Consolidated Adjusted EBITDA resulted from lower than expected core revenues and larger than expected year over year operating expenses incurred during the third quarter of 2016.

2016 Guidance Update and Preliminary Guidance for 2017

In light of the Company's third quarter results, the ongoing integration work the Company is undertaking associated with the Home Solutions acquisition, and the Company's new leadership, which has led to a comprehensive assessment of all operating processes, the Company is lowering the prior financial guidance as to the full year 2016 and the fourth quarter 2016 that it previously provided on August 8, 2016.  The updated full year 2016 guidance is revenues in the range of $928 million to $934 million and adjusted EBITDA in the range of $27 million to $29 million. 

The Company is also providing preliminary guidance for full year 2017.  The full year 2017 guidance is preliminary in nature and subject to change given the new management team's comprehensive assessment of all operating processes which is currently underway.  Following the completion of this comprehensive assessment process the Company will further update the preliminary 2017 guidance.  The preliminary full year 2017 guidance is revenues in the range of $940 million to $980 million and adjusted EBITDA in the range of $50 million to $60 million.

Liquidity and Capital Resources

As of September 30, 2016, the Company had $34.2 million of liquidity, which consists of $2.8 million of cash and $31.4 million of undrawn capacity available on its revolving credit facility. 

The Company's net Days Sales Outstanding ("DSO") was 42 days at September 30, 2016, consistent with the year ago third quarter 2015 net DSO.

Through the first nine months of 2016, the Company's cash flows from operations represent a net use of cash from operations totaling $32.5 million, significantly lower than the $70.7 million net use of cash during the same period last year.  The $32.5 million use of cash from operations during the first nine months of 2016 includes the impact of over $8.3 million in cash used for acquisition and restructuring matters.

As of September 30, 2016 the Company is in full compliance with its bank covenants under the terms of the Amended Credit Agreement. We anticipate we will not comply with the more restrictive debt leverage covenant that will apply in the Amended Credit Agreement beginning in 2017.  We are proactively working with our lenders and evaluating options for maintaining compliance, including further amending our Amended Credit Agreement.

Conference Call and Presentation

BioScrip will host a conference call and live webcast, November 8, 2016, at 11:00 a.m. Eastern Time, to discuss its third quarter 2016 financial results. Interested parties may participate by dialing 888-372-9592 (US) or by accessing a link on the Company's website at www.bioscrip.com. 

A replay of the conference call will be available for two weeks after the call's completion by dialing 855-859-2056 (US) and entering conference call ID number 1061955.  An audio webcast and archive will also be available for 30 days under the "Investor Relations" section of the Company's website.

About BioScrip, Inc.

BioScrip, Inc. is a leading national provider of infusion and home care management solutions. BioScrip partners with physicians, hospital systems, skilled nursing facilities, healthcare payors, and pharmaceutical manufacturers to provide patients access to post-acute care services. BioScrip operates with a commitment to bring customer-focused pharmacy and related healthcare infusion therapy services into the home or alternate-site setting. By collaborating with the full spectrum of healthcare professionals and the patient, BioScrip provides cost-effective care that is driven by clinical excellence, customer service, and values that promote positive outcomes and an enhanced quality of life for those it serves.

Forward-Looking Statements - Safe HarborThis press release includes statements that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the statements regarding 2016 and preliminary 2017 guidance, projections of certain measures of the Company's results of operations, projections of future levels of certain charges and expenses, expectations of Home Solutions cost synergies and other statements regarding the Company's financial improvement plan and strategy. 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," "outlook," "aim," "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 actual results to differ materially from those in the forward-looking statement include but are not limited to risks associated with: the Company's ability to successfully integrate the HS Infusion Holdings, Inc. business into its existing businesses; the Company's ability to continue to execute its financial improvement plan to reduce operating costs and focus its business on its Infusion Services segment; the Company's ability to evaluate opportunities for improvement and implement solutions as part of its strategic review process; the Company's ability to comply with the covenants in its debt agreements or obtain amendments to such covenants; reductions in federal, state and commercial 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. 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.

Note Regarding Use of Non-GAAP Financial MeasuresIn addition to reporting financial information in accordance with generally accepted accounting principles (GAAP), the Company is also reporting Adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA is not a measurement 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 the Company's liquidity. In addition, the Company's definition of Adjusted EBITDA may not be comparable to similarly titled non-GAAP financial measures reported by other companies. Adjusted EBITDA, as defined by the Company, represents net income before net interest expense, income tax expense, depreciation and amortization, impairment of goodwill, stock-based compensation expense, and restructuring, integration and other 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 that Adjusted EBITDA provides useful supplemental information regarding the performance of BioScrip's business operations and facilitates comparisons to the Company's historical operating results. For a full reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, please see the attachment to this earnings release.  The Company is not able to provide a reconciliation of projected adjusted EBITDA, where provided, to expected results due to the unknown effect, timing and potential significance of gains or losses on disposition and restructuring, acquisition, integration and other similar expenses.

TABLES TO FOLLOW
   
Schedule 1  
BIOSCRIP, INC. AND SUBSIDIARIES  
         
CONSOLIDATED BALANCE SHEETS  
(in thousands, except for share amounts)  
         
  September 30, 2016   December 31, 2015  
         
ASSETS        
Current assets        
Cash and cash equivalents $ 2,835     $ 15,577    
Receivables, less allowance for doubtful accounts of $51,072 and $59,689  at September 30, 2016 and December 31, 2015, respectively   103,688       97,353    
Inventory   33,380       42,983    
Prepaid expenses and other current assets   19,462       27,772    
Total current assets     159,365         183,685    
Property and equipment, net   33,710       31,939    
Goodwill   373,070       308,729    
Intangible assets, net   27,201       5,128    
Other non-current assets   2,055       1,161    
Total assets $     595,401     $     530,642    
LIABILITIES AND STOCKHOLDERS' DEFICIT        
Current liabilities        
Current portion of long-term debt $ 48,189     $ 24,380    
Accounts payable   45,700       65,077    
Amounts due to plan sponsors   3,953       3,491    
Accrued interest   2,268       6,898    
Accrued expenses and other current liabilities   40,804       52,918    
Total current liabilities     140,914         152,764    
Long-term debt, net of current portion   388,052       393,741    
Deferred taxes   773       236    
Contingent consideration liability   15,812       -    
Other non-current liabilities   4,502       1,861    
Total liabilities     550,053         548,602    
         
Series A convertible preferred stock, $.0001 par value; 825,000 shares authorized;   2,386       62,918    
  21,645 and 635,822 shares issued and outstanding; and, $2,530 and $69,702        
  liquidation preference as of September 30, 2016 and December 31, 2015, respectively          
Series C convertible preferred stock, $.0001 par value; 625,000 shares authorized;   67,242       -    
  614,177 shares issued and outstanding; and $73,365 liquidation preference as of        
  September 30, 2016        
Stockholders' equity        
Preferred stock, $.0001 par value; 4,175,000 shares authorized; no shares issued and   -       -    
  outstanding as of September 30, 2016 and December 31, 2015, respectively        
Common stock, $.0001 par value; 125,000,000 shares authorized; 117,682,543 and   12       8    
  71,421,664 shares issued and 117,682,543 and 68,767,613 shares outstanding as of        
  September 30, 2016 and December 31, 2015, respectively        
Treasury stock, no shares outstanding as of September 30, 2016 and 2,654,051   shares outstanding, at cost, as of December 31, 215   -       (10,737 )  
Additional paid-in capital   606,656       531,764    
Accumulated deficit   (630,948 )     (601,913 )  
Total stockholders' deficit     (24,280 )       (80,878 )  
Total liabilities and stockholders' deficit $     595,401     $     530,642    
         

 
   
Schedule 2  
BIOSCRIP, INC. AND SUBSIDIARIES  
   
CONSOLIDATED STATEMENTS OF OPERATIONS    
(in thousands, except per share amounts)  
                     
    Three Months Ended September 30,     Nine Months Ended September 30,    
        2016       2015       2016       2015    
                     
Net revenue     $     224,542     $     247,224     $     695,466     $     738,478    
Cost of revenue (excluding depreciation expense)         161,957         181,991         504,485         543,472    
Gross profit         62,585         65,233         190,981         195,006    
% of revenues       27.9 %     26.4 %     27.5 %     26.4 %  
                     
Other operating expenses       42,729       42,155       123,006       127,120    
Bad debt expense       7,727       9,366       19,598       32,832    
General and administrative expenses       9,948       8,547       30,413       31,881    
Impairment of goodwill       -       13,850       -       251,850    
Restructuring, acquisition, integration, and other expenses, net       2,368       5,368       9,326       15,041    
Depreciation and amortization expense       4,166       5,473       12,956       17,517    
Interest expense, net       9,331       9,506       28,212       27,750    
Gain on disposition of property and equipment       (3,015 )     (2 )     (3,954 )     (5 )  
Loss from continuing operations,   before income taxes         (10,669 )       (29,030 )       (28,576 )       (308,980 )  
Income tax expense (benefit)       421       (4,551 )     593       (22,544 )  
Loss from continuing operations, net of income taxes         (11,090 )       (24,479 )       (29,169 )       (286,436 )  
Income (loss) from discontinued operations, net of income taxes         (174 )     7,698       134       5,172    
Net loss     $     (11,264 )   $     (16,781 )   $     (29,035 )   $     (281,264 )  
Accrued dividends on preferred stock       (2,138 )     (1,899 )     (6,192 )     (4,157 )  
Deemed dividend on preferred stock       (173 )     (169 )     (518 )     (3,519 )  
Loss attributable to common stockholders     $     (13,575 )   $     (18,849 )   $     (35,745 )   $     (288,940 )  
                     
 Denominator - Basic and Diluted:                      
 Weighted average number of common shares outstanding       114,826       68,742       85,701       68,693    
                     
Loss from continuing operations, basic and diluted     $ (0.12 )   $ (0.39 )   $ (0.42 )   $ (4.28 )  
Income from discontinued operations, basic and diluted       -       0.11       -       0.08    
Loss per common share, basic and diluted     $ (0.12 )   $ (0.28 )   $ (0.42 )   $ (4.20 )  
                     

 
                                 
                              Schedule 3  
BIOSCRIP, INC AND SUBSIDIARIES  
CONSOLIDATED CONDENSED CASH FLOWS  
(in thousands)  
         
  Three Months Ended    Nine Months Ended   Three Months Ended    Nine Months Ended  
  3/31/2015   6/30/2015   9/30/2015   9/30/2015   3/31/2016   6/30/2016   9/30/2016   9/30/2016  
Cash flows from operating activities:                                      
Net loss from continuing operations $     (17,056 )   $     (244,901 )   $     (24,479 )   $     (286,436 )   $     (9,768 )   $     (8,311 )   $     (11,090 )   $     (29,169 )  
Receivables, net of bad debt expense   799       7,134       (4,310 )     3,623       (4,417 )     3,136       8,001       6,720    
Inventory   (4,666 )     (483 )     15,477       10,328       13,867       (3,330 )     2,265       12,802    
Prepaid expenses and other assets   (854 )     163       (2,695 )     (3,386 )     7,897       (7,575 )     8,839       9,161    
Accounts payable   995       (13,723 )     (23,094 )     (35,822 )     (11,995 )     (4,195 )     (15,058 )     (31,248 )  
Accrued interest   (4,585 )     4,437       (4,438 )     (4,586 )     (4,630 )     4,438       (4,437 )     (4,629 )  
Accrued expenses and other liabilities     (11,200 )     1,267       24       (9,909 )     (2,227 )     (851 )     (4,302 )     (7,380 )  
Non-Cash Adjustments:                                                                
Depreciation and amortization   5,794       6,247       5,476       17,517       4,538       4,252       4,166       12,956    
Impairment of goodwill   -       238,000       13,850       251,850       -       -       -       -    
Deferred Taxes   1,927       (17,761 )     (5,374 )     (21,208 )     174       178       184       536    
Other Non-Cash   2,219       2,081       3,043       7,343       1,589       1,554       (5,342 )     (2,199 )  
Operating Cash Flow (Use)     (26,627 )       (17,539 )       (26,520 )       (70,686 )       (4,972 )       (10,704 )       (16,774 )       (32,450 )  
Discontinued operations   (1,421 )     (573 )     28,430       26,436       (5,989 )     76       (175 )     (6,088 )  
Capital expenditures   (2,063 )     (3,734 )     (4,349 )     (10,146 )     (2,429 )     (3,037 )     (2,578 )     (8,044 )  
Proceeds from dispositions   -       -       -       -       1,105       27       3,045       4,177    
Preferred stock and warrants   58,951       -       740       59,691       -       -       -       -    
Common stock raise, net   -       -       -       -       -       83,267       -       83,267    
Home Solutions Acquisition   -       -       -       -       -       -       (67,516 )     (67,516 )  
Term note (repayments)   -       -       -       -       (3,137 )     (3,137 )     (3,137 )     (9,411 )  
Revolver borrowing (repayments)   (5,000 )     -       30,000       25,000       8,000       (23,000 )     39,000       24,000    
Deferred financing costs and other   (1,365 )     (229 )     -       (1,594 )     (104 )     (118 )     (455 )     (677 )  
Total All Cash Flow (Use) $     22,475     $     (22,075 )   $     28,301     $     28,701     $     (7,526 )   $     43,374     $     (48,590 )   $     (12,742 )  
                                             

 
   
Schedule 4  
BIOSCRIP, INC. AND SUBSIDIARIES  
   
  QUARTERLY RECONCILIATION BETWEEN GAAP AND NON-GAAP MEASURES  
(in thousands)  
                   
    Three Months Ended September 30,   Nine Months Ended   September 30,  
      2016       2015       2016       2015    
Adjusted EBITDA by Segment:                  
Infusion Services Adjusted EBITDA   $ 12,129     $ 13,712     $ 48,377     $ 35,054    
Adjusted EBITDA margin %     5.4 %     5.5 %     7.0 %     4.7 %  
Corporate Overhead Adjusted EBITDA     (8,590 )     (7,715 )     (27,066 )     (28,230 )  
Adjusted EBITDA margin %     (3.8 %)     (3.1 %)     (3.9 %)     (3.8 %)  
                   
Consolidated Adjusted EBITDA       3,539         5 ,997         21,311         6 ,824    
Adjusted EBITDA margin %     1.6 %     2.4 %     3.1 %     0.9 %  
                   
Interest expense, net     (9,331 )     (9,506 )     (28,212 )     (27,750 )  
Gain on dispositions of property and equipment     3,015       2       3,954       5    
Income tax (provision) benefit     (421 )     4,551       (593 )     22,544    
Depreciation and amortization expense     (4,166 )     (5,473 )     (12,956 )     (17,517 )  
Stock-based compensation expense     (1,358 )     (832 )     (3,347 )     (3,651 )  
Impairment of goodwill     -       (13,850 )     -       (251,850 )  
Restructuring, acquisition, integration, and other expenses, net (1)     (2,368 )     (5,368 )     (9,326 )     (15,041 )  
Loss from continuing operations, net of income taxes   $     (11,090 )   $     (24,479 )   $     (29,169 )   $     (286,436 )  
                   
                   
General and Administrative Expenses on Face of Income Statement:                  
Corporate overhead adjusted EBITDA   $ (8,590 )   $ (7,715 )   $ (27,066 )   $ (28,230 )  
Stock-based compensation expense     (1,358 )     (832 )     (3,347 )     (3,651 )  
General and administrative expenses   $ (9,948 )   $ (8,547 )   $ (30,413 )   $ (31,881 )  
                   
                   
(1) Restructuring, acquisition, integration and other expenses, net include costs associated with restructuring, acquisition, and integration initiatives such as employee severance costs, certain legal and professional fees, redundant wage costs, impacts recorded from the change in contingent consideration obligations, and other costs related to contract terminations and closed locations.  
 

 
   
Schedule 5  
BIOSCRIP, INC. AND SUBSIDIARIES  
   
QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share amounts)  
           
    Three Months Ended   Nine Months Ended  
    3/31/2016   6/30/2016   9/30/2016   9/30/2016  
                   
Net revenue   $     238,462     $     232,462     $     224,542     $     695,466    
Cost of revenue (excluding depreciation expense)       174,230         168,298         161,957         504,485    
Gross profit       64,232         64,164         62,585         190,981    
% of revenues     26.9 %     27.6 %     27.9 %     27.5 %  
                   
Other operating expenses     39,658       40,619       42,729       123,006    
Bad debt expense     7,592       4,279       7,727       19,598    
General and administrative expenses     11,051       9,414       9,948       30,413    
Impairment of goodwill     -       -       -       -    
Restructuring, acquisition, integration, and other expenses, net       2,667       4,291       2,368       9,326    
Depreciation and amortization expense     4,538       4,252       4,166       12,956    
Interest expense, net     9,412       9,469       9,331       28,212    
Gain on disposition of property and equipment     (939 )     -       (3,015 )     (3,954 )  
Loss from continuing operations,   before income taxes       (9,747 )       (8,160 )       (10,669 )       (28,576 )  
Income tax expense (benefit)     23       149       421       593    
Loss from continuing operations, net of income taxes       (9,770 )       (8,309 )       (11,090 )       (29,169 )  
Income from discontinued operations, net of income taxes     233       75       (174 )     134    
Net loss   $     (9,537 )   $     (8,234 )   $     (11,264 )   $     (29,035 )  
Accrued dividends on preferred stock     (1,998 )     (2,056 )     (2,138 )     (6,192 )  
Deemed dividends on preferred stock     (172 )     (173 )     (173 )     (518 )  
Loss attributable to common stockholders   $     (11,707 )   $     (10,463 )   $     (13,575 )   $     (35,745 )  
                   
Loss per common share:                  
  Denominator - Basic and Diluted:                    
 Weighted average number of common shares outstanding       68,771         73,186         114,826         85,701    
                   
Loss from continuing operations, basic and diluted   $ (0.17 )   $ (0.14 )   $ (0.12 )   $ (0.42 )  
Income from discontinued operations, basic and diluted     -       -       -       -    
Net loss per common share, basic and diluted   $ (0.17 )   $ (0.14 )   $ (0.12 )   $ (0.42 )  
                   

 
   
Schedule 6  
BIOSCRIP, INC. AND SUBSIDIARIES  
   
QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share amounts)  
               
    Three Months Ended   Twelve   Months Ended  
    3/31/2015   6/30/2015   9/30/2015   12/31/2015   12/31/2015  
                       
Net revenue   $     244,357     $     246,897     $     247,224     $     243,745     $     982,223    
Cost of revenue (excluding depreciation expense)       179,402         182,079         181,991         177,836         721,308    
Gross profit       64,955         64,818         65,233         65,909         260,915    
% of revenues     26.6 %     26.3 %     26.4 %     27.0 %     26.6 %  
                       
Other operating expenses     41,616       43,313       42,155       38,878       165,962    
Bad debt expense     8,346       15,165       9,366       8,210       41,087    
General and administrative expenses     11,699       11,866       8,547       10,643       42,755    
Impairment of goodwill     -       238,000       13,850       -       251,850    
Restructuring, acquisition, integration, and other expenses, net     3,704       5,969       5,368       9,363       24,404    
Depreciation and amortization expense     5,794       6,247       5,473       5,226       22,740    
Interest expense, net     9,163       9,080       9,504       9,568       37,315    
Loss from continuing operations,   before income taxes       (15,367 )       (264,822 )       (29,030 )       (15,979 )       (325,198 )  
Income tax expense (benefit)     1,928       (19,921 )     (4,551 )     1,012       (21,532 )  
Loss from continuing operations, net of income taxes       (17,295 )       (244,901 )       (24,479 )       (16,991 )       (303,666 )  
(Loss) Income from discontinued operations, net of income taxes       (2,379 )     94       7,698       (1,451 )     3,962    
Net loss   $     (19,674 )   $     (244,807 )   $     (16,781 )   $     (18,442 )   $     (299,704 )  
Accrued dividends on preferred stock     (453 )     (1,805 )     (1,899 )     (1,963 )     (6,120 )  
Deemed dividends on preferred stock     (1,164 )     (2,186 )     (169 )     (171 )     (3,690 )  
Loss attributable to common stockholders   $     (21,291 )   $     (248,798 )   $     (18,849 )   $     (20,576 )   $     (309,514 )  
                       
Loss per common share:                      
  Denominator - Basic and Diluted:                        
 Weighted average number of common shares outstanding       68,637         68,698         68,742         68,760         68,710    
                       
Loss from continuing operations, basic and diluted   $ (0.28 )   $ (3.62 )   $ (0.39 )   $ (0.28 )   $ (4.56 )  
Income from discontinued operations, basic and diluted     -       -       0.11       (0.02 )     0.05    
Net loss per common share, basic and diluted   $ (0.28 )   $ (3.62 )   $ (0.28 )   $ (0.30 )   $ (4.51 )  
                       
Contact:Jeffrey M. Kreger Chief Financial Officer(720) 697-5200Jeffrey.kreger@bioscrip.com

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