BioScrip Reports Third Quarter 2018 Financial Results
Third Quarter 2018 Highlights
- Net revenue of
$181.0 million , compared to$198.7 million in the third quarter of 2017. Excluding exited UHC therapy line revenue from the prior year quarter, net revenue increased approximately 5%. - Net loss from continuing operations of
$8.1 million , a$5.0 million improvement compared to the prior year quarter. - Adjusted EBITDA of
$16.4 million , 25% above the prior year quarter, driven by a 510 basis point improvement in gross profit margin, reflecting ASC 606 pro forma adjustments. - Core mix increased to 75.7%, a 60 basis point sequential increase compared to the second quarter of 2018, and a 10 basis point increase compared to the prior year quarter.
- Net cash provided by operating activities of
$0.2 million in the third quarter, reflecting operational cash flow of$13.8 million , offset by interest payments of$13.6 million , including bi-annual bond interest payments of$8.8 million . - Liquidity of
$18.9 million atSeptember 30, 2018 , consisting of cash and cash equivalents.
“Further, we remain increasingly confident that
* 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 | Kalle Ahl, CFA |
Chief Financial Officer & Treasurer | The Equity Group |
T: (720) 697-5200 | T: (212) 836-9614 |
stephen.deitsch@bioscrip.com | 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, except for share amounts) | |||||||
(unaudited) | |||||||
September 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 18,944 | $ | 39,457 | |||
Restricted cash | 4,320 | 4,950 | |||||
Accounts receivable, net of allowance for doubtful accounts of $0 and $37,912 as of | |||||||
September 30, 2018 and December 31, 2017, respectively | 113,628 | 85,522 | |||||
Inventory | 23,105 | 38,044 | |||||
Prepaid expenses and other current assets | 11,944 | 18,620 | |||||
Total current assets | 171,941 | 186,593 | |||||
Property and equipment, net of accumulated depreciation of $97,788 and $88,298 as of | |||||||
September 30, 2018 and December 31, 2017, respectively | 25,177 | 26,973 | |||||
Goodwill | 367,198 | 367,198 | |||||
Intangible assets, net of accumulated amortization of $47,120 and $40,436 as of September 30, 2018 | |||||||
and December 31, 2017, respectively | 12,030 | 19,114 | |||||
Deferred taxes | 990 | 1,098 | |||||
Other non-current assets | 1,836 | 2,116 | |||||
Total assets | $ | 579,172 | $ | 603,092 | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 2,076 | $ | 1,722 | |||
Accounts payable | 63,901 | 65,963 | |||||
Amounts due to plan sponsors | 1,546 | 4,621 | |||||
Accrued interest | 2,268 | 6,706 | |||||
Accrued expenses and other current liabilities | 26,204 | 26,118 | |||||
Total current liabilities | 95,995 | 105,130 | |||||
Long-term debt, net of current portion | 496,770 | 478,866 | |||||
Other non-current liabilities | 22,744 | 21,769 | |||||
Total liabilities | 615,509 | 605,765 | |||||
Series A convertible preferred stock, $.0001 par value; 825,000 shares authorized; | |||||||
21,630 and 21,645 shares issued and outstanding as of September 30, 2018 and | |||||||
December 31, 2017, respectively; and $3,172 and $2,916 liquidation preference as of | |||||||
September 30, 2018 and December 31, 2017, respectively | 3,126 | 2,827 | |||||
Series C convertible preferred stock, $.0001 par value; 625,000 shares authorized; | |||||||
614,177 shares issued and outstanding as of September 30, 2018 and December 31, 2017; | |||||||
and $92,038 and $84,555 liquidation preference as of September 30, 2018 and | |||||||
December 31, 2017, respectively | 87,225 | 79,252 | |||||
Stockholders' deficit | |||||||
Preferred stock, $.0001 par value; 5,000,000 shares authorized; no shares issued and | |||||||
outstanding as of September 30, 2018 and December 31, 2017, respectively | - | - | |||||
Common stock, $.0001 par value; 250,000,000 shares authorized; 128,064,145 and 127,634,012 | |||||||
shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 13 | 13 | |||||
Treasury stock, 287,248 and 5,106 shares outstanding, at cost, as of September 30, 2018 and | |||||||
December 31, 2017, respectively | (849 | ) | (16 | ) | |||
Additional paid-in capital | 619,989 | 624,762 | |||||
Accumulated deficit | (745,841 | ) | (709,511 | ) | |||
Total stockholders' deficit | (126,688 | ) | (84,752 | ) | |||
Total liabilities and stockholders' deficit | $ | 579,172 | $ | 603,092 |
Schedule 2 | |||||||||||||||
BIOSCRIP, INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net revenue | $ | 180,962 | $ | 198,692 | $ | 525,335 | $ | 634,608 | |||||||
Cost of revenue (excluding depreciation expense) | 115,051 | 132,129 | 344,419 | 435,560 | |||||||||||
Gross profit | 65,911 | 66,563 | 180,916 | 199,048 | |||||||||||
% of revenues | 36.4 | % | 33.5 | % | 34.4 | % | 31.4 | % | |||||||
Other operating expenses | 38,216 | 38,143 | 116,378 | 124,755 | |||||||||||
Bad debt expense | - | 6,488 | - | 19,648 | |||||||||||
General and administrative expenses | 12,478 | 9,405 | 34,084 | 28,325 | |||||||||||
Restructuring, acquisition, integration, and other expenses | 885 | 4,037 | 4,789 | 11,407 | |||||||||||
Change in fair value of equity linked liabilities | 1,605 | 1,103 | 1,228 | 1,103 | |||||||||||
Depreciation and amortization expense | 5,767 | 7,058 | 18,617 | 21,288 | |||||||||||
Interest expense | 14,971 | 13,360 | 42,171 | 38,649 | |||||||||||
Loss on extinguishment of debt | - | - | - | 13,453 | |||||||||||
Loss (gain) on dispositions | (10 | ) | (33 | ) | (330 | ) | 652 | ||||||||
Loss from continuing operations, before income taxes | (8,001 | ) | (12,998 | ) | (36,021 | ) | (60,232 | ) | |||||||
Income tax expense | 102 | 60 | 191 | 1,397 | |||||||||||
Loss from continuing operations, net of income taxes | (8,103 | ) | (13,058 | ) | (36,212 | ) | (61,629 | ) | |||||||
Income (loss) from discontinued operations, net of income taxes | (71 | ) | 66 | (118 | ) | (606 | ) | ||||||||
Net loss | $ | (8,174 | ) | $ | (12,992 | ) | $ | (36,330 | ) | $ | (62,235 | ) | |||
Accrued dividends on preferred stock | (2,861 | ) | (2,569 | ) | (8,272 | ) | (7,435 | ) | |||||||
Loss attributable to common stockholders | $ | (11,035 | ) | $ | (15,561 | ) | $ | (44,602 | ) | $ | (69,670 | ) | |||
Loss per common share: | |||||||||||||||
Loss from continuing operations, basic and diluted | $ | (0.09 | ) | $ | (0.12 | ) | $ | (0.35 | ) | $ | (0.56 | ) | |||
Loss from discontinued operations, basic and diluted | - | - | - | (0.01 | ) | ||||||||||
Loss per common share, basic and diluted | $ | (0.09 | ) | $ | (0.12 | ) | $ | (0.35 | ) | $ | (0.57 | ) | |||
Weighted average number of common shares outstanding, | |||||||||||||||
basic and diluted | 127,528 | 127,488 | 127,893 | 122,519 |
Schedule 3 | |||||||||||||||
BIOSCRIP, INC. AND SUBSIDIARIES | |||||||||||||||
QUARTERLY RECONCILIATION BETWEEN GAAP AND NON-GAAP MEASURES | |||||||||||||||
(in thousands) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Loss from continuing operations, net of income taxes | $ | (8,103 | ) | $ | (13,058 | ) | $ | (36,212 | ) | $ | (61,629 | ) | |||
Interest expense | (14,971 | ) | (13,360 | ) | (42,171 | ) | (38,649 | ) | |||||||
Change in fair value of equity linked liabilities | (1,605 | ) | (1,103 | ) | (1,228 | ) | (1,103 | ) | |||||||
Gain (loss) on dispositions | 10 | 33 | 330 | (652 | ) | ||||||||||
Loss on extinguishment of debt | - | - | - | (13,453 | ) | ||||||||||
Income tax expense | (102 | ) | (60 | ) | (191 | ) | (1,397 | ) | |||||||
Depreciation and amortization expense | (5,767 | ) | (7,058 | ) | (18,617 | ) | (21,288 | ) | |||||||
Stock-based compensation expense | (1,224 | ) | (545 | ) | (3,032 | ) | (1,525 | ) | |||||||
Restructuring, acquisition, integration, and other expenses (1) | (885 | ) | (4,037 | ) | (4,789 | ) | (11,407 | ) | |||||||
Consolidated Adjusted EBITDA | $ | 16,441 | $ | 13,072 | $ | 33,486 | $ | 27,845 | |||||||
(1) Restructuring, acquisition, integration and other expenses 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 | Nine Months Ended | ||||||||||||||
March 31, 2018 | June 30, 2018 | September 30, 2018 | September 30, 2018 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net loss | $ | (13,017 | ) | $ | (15,139 | ) | $ | (8,174 | ) | $ | (36,330 | ) | |||
Less: Loss from discontinued operations, net of income taxes | (30 | ) | (15 | ) | (73 | ) | (118 | ) | |||||||
Loss from continuing operations, net of income taxes | (12,987 | ) | (15,124 | ) | (8,101 | ) | (36,212 | ) | |||||||
Adjustments to reconcile net loss from continuing operations, net of income taxes to net cash used in operating activities: | |||||||||||||||
Depreciation and amortization | 6,486 | 6,366 | 5,765 | 18,617 | |||||||||||
Amortization of deferred financing costs and debt discount | 2,023 | 2,048 | 2,013 | 6,084 | |||||||||||
Change in fair value of equity linked liabilities | (3,439 | ) | 3,064 | 1,603 | 1,228 | ||||||||||
Change in deferred income taxes | 31 | 25 | 52 | 108 | |||||||||||
Stock-based compensation | 556 | 1,253 | 1,223 | 3,032 | |||||||||||
Paid-in-kind interest capitalized as principal on Second Lien Note Facility | - | - | 3,800 | 3,800 | |||||||||||
Gain on dispositions | (305 | ) | (13 | ) | (12 | ) | (330 | ) | |||||||
Changes in assets and liabilities: | |||||||||||||||
Accounts receivable | (2,663 | ) | (8,734 | ) | (16,709 | ) | (28,106 | ) | |||||||
Inventory | (3,505 | ) | 16,264 | 2,180 | 14,939 | ||||||||||
Prepaid expenses and other assets | 8,807 | 1,247 | (3,098 | ) | 6,956 | ||||||||||
Accounts payable | 2,872 | (19,574 | ) | 14,640 | (2,062 | ) | |||||||||
Amounts due to plan sponsors | (969 | ) | (1,468 | ) | (638 | ) | (3,075 | ) | |||||||
Accrued interest | (4,487 | ) | 4,510 | (4,461 | ) | (4,438 | ) | ||||||||
Accrued expenses and other liabilities | 2,418 | (4,984 | ) | 1,899 | (667 | ) | |||||||||
Net cash used in operating activities from continuing operations | (5,162 | ) | (15,120 | ) | 156 | (20,126 | ) | ||||||||
Net cash used in operating activities from discontinued operations | (30 | ) | (15 | ) | (72 | ) | (117 | ) | |||||||
Net cash provided by (used in) operating activities | (5,192 | ) | (15,135 | ) | 84 | (20,243 | ) | ||||||||
Cash flows from investing activities: | |||||||||||||||
Purchases of property and equipment | (2,646 | ) | (4,300 | ) | (2,462 | ) | (9,408 | ) | |||||||
Net cash used in investing activities | (2,646 | ) | (4,300 | ) | (2,462 | ) | (9,408 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Borrowing of long-term debt | - | 10,000 | - | 10,000 | |||||||||||
Repayments of capital leases | (967 | ) | (218 | ) | (438 | ) | (1,623 | ) | |||||||
Net activity from exercises of employee stock awards | (300 | ) | 121 | 310 | 131 | ||||||||||
Net cash provided by (used in) financing activities | (1,267 | ) | 9,903 | (128 | ) | 8,508 | |||||||||
Net change in cash, cash equivalents and restricted cash | (9,105 | ) | (9,532 | ) | (2,506 | ) | (21,143 | ) | |||||||
Cash, cash equivalents and restricted cash - beginning of period | 44,407 | 35,302 | 25,770 | 44,407 | |||||||||||
Cash, cash equivalents and restricted cash - end of period | $ | 35,302 | $ | 25,770 | $ | 23,264 | $ | 23,264 |
Schedule 5 | |||||||
BIOSCRIP, INC AND SUBSIDIARIES | |||||||
FULL YEAR 2018 GUIDANCE | |||||||
(dollars in millions, except EPS) | |||||||
Low End | High End | ||||||
of Range | of Range | ||||||
Revenues | $ | 710.0 | $ | 720.0 | |||
Loss from continuing operations, net of income taxes | (41.4 | ) | (33.9 | ) | |||
Interest expense | 58.0 | 57.0 | |||||
Change in fair value of equity linked liabilities | 1.2 | 1.2 | |||||
Gain on dispositions | (0.3 | ) | (0.3 | ) | |||
Income tax expense | 0.8 | 0.3 | |||||
Depreciation and amortization | 25.0 | 24.0 | |||||
Stock-based compensation | 4.7 | 4.2 | |||||
Restructuring, acquisition, integration, and other expenses | 6.0 | 5.5 | |||||
Consolidated Adjusted EBITDA | $ | 54.0 | $ | 58.0 | |||
Consolidated Adjusted EBITDA Margin | 7.6 | % | 8.1 | % | |||
Diluted Loss Per Common Share | $ | (0.32 | ) | $ | (0.26 | ) | |
Weighted-Average Diluted Shares | 128.0 | 128.0 |
Source: BioScrip, Inc.