BioScrip Reports First Quarter 2018 Financial Results
First Quarter 2018 Highlights
- Net revenue of
$168.6 million , including core product mix of 75.4%, compared to 71.9% in the prior year quarter, including the impact of the implementation of ASC 606* in the first quarter of 2018, which resulted in the recognition of amounts previously reported as bad debt expense as a reduction to revenue - Net revenues, primarily for antibiotics therapies that carry higher than average gross profit margins, were negatively impacted by an estimated
$2.5 million during the first quarter of 2018, due to temporary closures of the Company’s branches resulting from inclement winter weather - Cost of revenue for the quarter included additional product acquisition and delivery costs of approximately
$1.0 million related to temporary product shortages - Net loss from continuing operations of
$13.0 million , a$6.4 million improvement compared to the prior year quarter - Adjusted EBITDA of
$5.6 million , 16% above the prior year quarter, driven by a 530 basis point improvement in gross profit margin and a$3.6 million reduction in operating expenses, compared to the prior year quarter reflecting ASC 606 pro forma adjustments - Net cash used in operating activities of
$5.2 million , reflecting$8.9 million of operational and working capital improvements over the prior year quarter, and$15.9 million of interest payments, including a bi-annual bond interest payment of$8.8 million - Liquidity of
$40.4 million atMarch 31, 2018 , consisting of$30.4 million of cash and equivalents and$10.0 million of senior credit facility availability, compared to$16.0 million atMarch 31, 2017
“BioScrip’s first quarter adjusted EBITDA increased 16% year over year, as we continued to execute successfully on our turnaround strategy. Our teammates navigated significant weather-related branch closures and temporary product shortages, which resulted in lower revenue and increased cost of revenue during the quarter,” said
* Implementation of ASC 606 during the first quarter of 2018 resulted in the recognition of amounts previously recorded as bad debt expense as a reduction to revenue. The impact of the change in accounting principle reduced both revenue and bad debt expense by
Conference Call and Presentation
An audio webcast and archive will be available within two hours of the call’s completion under the “Investors" section of the Company's website.
About
| Investor Contacts Stephen Deitsch Chief Financial Officer & Treasurer T: (720) 697-5200 stephen.deitsch@bioscrip.com |
Kalle Ahl, CFA The Equity Group T: (212) 836-9614 kahl@equityny.com |
Forward-Looking Statements – Safe Harbor
This 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 guidance, projections of certain measures of the Company's results of operations, projections of future levels of certain charges and expenses incremental cost structure improvements and other statements regarding the Company's financial improvement plan and strategy and anticipated effects of the Cures Act. 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 make principal and interest payments on our debt and unsecured notes and satisfy the other covenants contained in its debt agreements; the Company’s ability to grow its core Infusion revenues; 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 success of the Company’s initiatives to mitigate the impact of the Cures Act on its business; 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
Note Regarding Use of Non-GAAP Financial Measures
In 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.
| Schedule 1 | ||||||||
| BIOSCRIP, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands) | ||||||||
| March 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 30,352 | $ | 39,457 | ||||
| Restricted cash | 4,950 | 4,950 | ||||||
| Receivables, less allowance for doubtful accounts of $37,912 as of December 31, 2017 | 88,185 | 85,522 | ||||||
| Inventory | 41,549 | 38,044 | ||||||
| Deferred taxes | 1,066 | 1,098 | ||||||
| Prepaid expenses and other current assets | 9,848 | 18,620 | ||||||
| Total current assets | 175,950 | 187,691 | ||||||
| Property and equipment, net | 24,971 | 26,973 | ||||||
| Goodwill | 367,198 | 367,198 | ||||||
| Intangible assets, net | 16,681 | 19,114 | ||||||
| Other non-current assets | 2,082 | 2,116 | ||||||
| Total assets | $ | 586,882 | $ | 603,092 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities | ||||||||
| Current portion of long-term debt | $ | 1,055 | $ | 1,722 | ||||
| Accounts payable | 68,835 | 65,963 | ||||||
| Amounts due to plan sponsors | 3,652 | 4,621 | ||||||
| Accrued interest | 2,219 | 6,706 | ||||||
| Accrued expenses and other current liabilities | 27,933 | 26,118 | ||||||
| Total current liabilities | 103,694 | 105,130 | ||||||
| Long-term debt, net of current portion | 480,382 | 478,866 | ||||||
| Other non-current liabilities | 18,282 | 21,769 | ||||||
| Total liabilities | 602,358 | 605,765 | ||||||
| Series A convertible preferred stock, $.0001 par value; 825,000 shares authorized; | ||||||||
| 21,643 and 21,645 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively; and | ||||||||
| $2,998 and $2,916 liquidation preference as of March 31, 2018 and December 31, 2017, respectively | 2,923 | 2,827 | ||||||
| Series C convertible preferred stock, $.0001 par value; 625,000 shares authorized; | ||||||||
| 614,177 shares issued and outstanding; and $86,952 and $84,555 liquidation | ||||||||
| preference as of March 31, 2018 and December 31, 2017, respectively. | 81,813 | 79,252 | ||||||
| Stockholders' (deficit) equity | ||||||||
| Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued and | ||||||||
| outstanding as of March 31, 2018 and December 31, 2017, respectively | - | - | ||||||
| Common stock, $.0001 par value; 250,000,000 shares authorized; 127,793,785 and 127,634,012 | ||||||||
| shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively | 13 | 13 | ||||||
| Treasury stock, 96,467 and 5,106 shares outstanding, at cost as of March 31, 2018 and | ||||||||
| December 31, 2017, respectively. | (354 | ) | (16 | ) | ||||
| Additional paid-in capital | 622,657 | 624,762 | ||||||
| Accumulated deficit | (722,528 | ) | (709,511 | ) | ||||
| Total stockholders' deficit | (100,212 | ) | (84,752 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 586,882 | $ | 603,092 | ||||
| Schedule 2 | |||||||||||
| BIOSCRIP, INC. AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
| (in thousands, except per share amounts) | |||||||||||
| (unaudited) | |||||||||||
| Quarters Ended March 31, | |||||||||||
| 2018 | 2017 | ||||||||||
| Net revenue | $ | 168,584 | $ | 217,810 | |||||||
| Cost of revenue (excluding depreciation expense) | 113,536 | 152,936 | |||||||||
| Gross profit | 55,048 | 64,874 | |||||||||
| % of revenues | 32.7 | % | 29.8 | % | |||||||
| Other operating expenses | 39,299 | 44,319 | |||||||||
| Bad debt expense | - | 7,042 | |||||||||
| General and administrative expenses | 10,669 | 9,266 | |||||||||
| Restructuring, acquisition, integration, and other expenses, net | 1,882 | 3,223 | |||||||||
| Change in fair value of equity linked liabilities | (3,439 | ) | - | ||||||||
| Depreciation and amortization expense | 6,486 | 7,165 | |||||||||
| Interest expense | 13,395 | 12,659 | |||||||||
| Gain on dispositions | (305 | ) | - | ||||||||
| Loss from continuing operations, before income taxes | (12,939 | ) | (18,800 | ) | |||||||
| Income tax expense | 48 | 619 | |||||||||
| Loss from continuing operations, net of income taxes | (12,987 | ) | (19,419 | ) | |||||||
| Loss from discontinued operations, net of income taxes | (30 | ) | (299 | ) | |||||||
| Net loss | $ | (13,017 | ) | $ | (19,718 | ) | |||||
| Accrued dividends on preferred stock | (2,481 | ) | (2,214 | ) | |||||||
| Deemed dividend on preferred stock | (176 | ) | (174 | ) | |||||||
| Loss attributable to common stockholders | $ | (15,674 | ) | $ | (22,106 | ) | |||||
| Denominator - Basic and Diluted: | |||||||||||
| Weighted average number of common shares outstanding | 127,772 | 118,783 | |||||||||
| Loss from continuing operations, basic and diluted | $ | (0.12 | ) | $ | (0.18 | ) | |||||
| Income from discontinued operations, basic and diluted | - | - | |||||||||
| Loss per common share, basic and diluted | $ | (0.12 | ) | $ | (0.18 | ) | |||||
| Schedule 3 | ||||||||||
| BIOSCRIP, INC. AND SUBSIDIARIES | ||||||||||
| QUARTERLY RECONCILIATION BETWEEN GAAP AND NON-GAAP MEASURES | ||||||||||
| (in thousands) | ||||||||||
| Three Months Ended | ||||||||||
| 3/31/2018 | 3/31/2017 | |||||||||
| Loss from continuing operations, net of income taxes | (12,987 | ) | (19,419 | ) | ||||||
| Interest expense | (13,395 | ) | (12,659 | ) | ||||||
| Gain on dispositions | 305 | - | ||||||||
| Income tax expense | (48 | ) | (619 | ) | ||||||
| Depreciation and amortization expense | (6,486 | ) | (7,165 | ) | ||||||
| Stock-based compensation expense | (556 | ) | (594 | ) | ||||||
| Change in fair value of equity linked liabilities | 3,439 | - | ||||||||
| Restructuring, acquisition, integration, and other expenses, net (1) | (1,882 | ) | (3,223 | ) | ||||||
| Consolidated Adjusted EBITDA | $ | 5,636 | $ | 4,841 | ||||||
| (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 4 | ||||||||
| BIOSCRIP, INC AND SUBSIDIARIES | ||||||||
| CONSOLIDATED CONDENSED CASH FLOWS | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| 3/31/2018 | 3/31/2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (13,017 | ) | $ | (19,718 | ) | ||
| Less: Loss from discontinued operations, net of income taxes | (30 | ) | (299 | ) | ||||
| Loss from continuing operations, net of income taxes | (12,987 | ) | (19,419 | ) | ||||
| Adjustments to reconcile net loss from continuing operations, net of income taxes to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 6,486 | 7,165 | ||||||
| Amortization of deferred financing costs and debt discount | 2,023 | 1,318 | ||||||
| Change in fair value of equity linked liabilities | (3,439 | ) | - | |||||
| Change in deferred income tax | 31 | 619 | ||||||
| Compensation under stock-based compensation plans | 556 | 521 | ||||||
| Gain on dispositions | (305 | ) | - | |||||
| Changes in assets and liabilities: | ||||||||
| Receivables | (2,663 | ) | 2,210 | |||||
| Inventory | (3,505 | ) | 5,616 | |||||
| Prepaid expenses and other assets | 8,807 | 3,601 | ||||||
| Accounts payable | 2,872 | (10,936 | ) | |||||
| Amounts due to plan sponsors | (969 | ) | 645 | |||||
| Accrued interest | (4,487 | ) | (1,157 | ) | ||||
| Accrued expenses and other liabilities | 2,418 | (917 | ) | |||||
| Net cash used in operating activities from continuing operations | (5,162 | ) | (10,734 | ) | ||||
| Net cash used in operating activities from discontinued operations | (30 | ) | (299 | ) | ||||
| Net cash used in operating activities | (5,192 | ) | (11,033 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (2,646 | ) | (1,684 | ) | ||||
| Net cash used in investing activities | (2,646 | ) | (1,684 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from priming credit agreement, net | - | 23,060 | ||||||
| Proceeds from private issuances, net | - | 5,052 | ||||||
| Borrowings on revolving credit facility | - | 563 | ||||||
| Repayments on revolving credit facility | - | (1,000 | ) | |||||
| Principal payments of long-term debt | - | (3,137 | ) | |||||
| Repayments of capital leases | (967 | ) | (238 | ) | ||||
| Net activity from exercises of employee stock awards | (300 | ) | (51 | ) | ||||
| Net cash (used in) provided by financing activities | (1,267 | ) | 24,249 | |||||
| Net change in cash and cash equivalents | (9,105 | ) | 11,532 | |||||
| Cash, cash equivalents, and restricted cash - beginning of period | 44,407 | 9,569 | ||||||
| Cash, cash equivalents, and restricted cash - end of period | $ | 35,302 | $ | 21,101 | ||||
| Schedule 5 | |||||||
| BIOSCRIP, INC AND SUBSIDIARIES | |||||||
| FULL YEAR 2018 GUIDANCE | |||||||
| (dollars and shares in millions) | |||||||
| Low End | High End | ||||||
| of Range | of Range | ||||||
| Revenues | $ | 688.0 | $ | 698.0 | |||
| Loss from continuing operations, net of income tax | (51.9 | ) | (43.4 | ) | |||
| Stock Compensation | 5.4 | 4.9 | |||||
| Depreciation & Amortization | 27.0 | 26.0 | |||||
| Interest Expense, net | 55.0 | 54.0 | |||||
| Restructuring Costs | 6.0 | 5.0 | |||||
| Income Tax Expense | 2.0 | 1.0 | |||||
| Preferred Stock Dividends | 10.5 | 10.5 | |||||
| Adjusted EBITDA | $ | 54.0 | $ | 58.0 | |||
| Adjusted EBITDA Margin | 7.8 | % | 8.3 | % | |||
| Diluted Loss Per Common Share | $ | (0.41 | ) | $ | (0.34 | ) | |
| Weighted-Average Diluted Shares | 128.0 | 128.0 | |||||
Source: BioScrip, Inc.