BioScrip Inc. (NASDAQ: BIOS) is the largest independent national provider of infusion and home care management solutions, with approximately 2,500 teammates and nearly 80 service locations across the U.S. BioScrip partners with physicians, hospital systems, pharmaceutical manufacturers and skilled nursing facilities to provide patients access to post-acute care services.
Fully integrated high-touch solutions:
On March 15th, The Company announced its fourth quarter and full year 2018 financial results; BioScrip delivered record comparable net revenue growth of almost 8% in the fourth quarter of 2018. Excluding the bad debt adjustment, the company achieved adjusted EBITDA of $52.6 million for the year, which was slightly below the low-end of the management expectations due to slower than anticipated revenue growth in the month of December. However, the company commenced 2019 on a very strong note, with gross revenue growth of approximately 9% in both January and February, and March gross revenue to date trending at similar levels.
More recently, BioScrip and Option Care jointly announced a definitive merger agreement, which will create the nation’s preeminent home infusion company and transform the industry. The combined company will have a national footprint of more than 150 locations in 46 states and revenue exceeding $2.6 billion, as well as improved financial strength and flexibility through an optimized capital structure. The market is hugely excited about the value this combination will create for all of its combined stakeholders and patients and look forward to closing the transaction.
The transaction, which is expected to be completed in the second half of 2019, is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by BioScrip shareholders.
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Synergies from combining two industry leaders in home infusion:
Unique & differentiating factors:
About BioScrip: BioScrip came about in 2005 through a merger between Chromined Inc. and MIM Corporation. Chromined was founded in 1985 turned public in 1992. The company focused on the distribution of infusible medications to patients with special conditions. MIM Corp also focused on enhancing the quality of patient life through pharmacy benefit and healthcare solutions.
- BIOS provide patients with post-acute home infusion therapy healthcare services.
- BIOS are leading the shift in healthcare from the hospital to the low-cost home setting preferred by patients.
- The company’ solutions improve patient quality of life and reduce overall healthcare system utilization and costs. BIOS partner with physicians, hospital systems and healthcare payers.
- A patient-centric culture guides BIOS and focus on delivering clinical excellence, unparalleled customer service, and superior outcomes.
About Option Care: Option Care Enterprises, Inc. is one of the nation’s largest and most trusted providers of home and alternate treatment site infusion services. Holding accreditations from industry quality organizations ACHC, PCAB, ASHP, and URAC,* the company draws on nearly 40 years of clinical care experience to offer patient-centered therapy management. Option Care’s signature Home Infusion Plus services include the clinical management of infusion medicines, nursing support, and care coordination. Option Care’s multidisciplinary team of more than 1,800 clinicians – including pharmacists, nurses, and dietitians – are able to provide home infusion service coverage for nearly all patients across the United States needing treatment for complex and chronic conditions.
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Home Infusion Market Overview: Expanding Home Infusion Market: Attractive Market Growth + Significant Site of Care Opportunity: Global market for Home infusion is estimated at $100B. Out of which, U.S. market is growing organically by 5%-7%. From a competitive landscape perspective; the home infusion market is highly fragmented with four large national providers. Therefore, the industry has significant consolidation opportunities with 800+ individual small-scale infusion companies in the U.S. Hospital systems, physicians, and skilled nursing centers.
Fourth Quarter 2018 Highlights
- Net revenue of $183.6 million, up 2.8% compared to $178.5 million in the fourth quarter of 2017, on a comparable ASC 606 basis.
- The company recorded a lousy debt adjustment which reduced both net revenue and adjusted EBITDA by $7.5 million.
- Net revenue year over year growth of 7.8%, excluding bad debt expense of $13.3 million and $4.0 million from both current and prior year net revenue.
- Net loss from continuing operations of $15.4 million, compared to $1.7 million in the prior year.
- Adjusted EBITDA of $11.6 million, or $19.1 million before the $7.5 million bad debt adjustment, compared to $17.1 million in the prior year quarter.
- Liquidity of $14.5 million at December 31, 2018, consisting of cash and cash equivalents.
2018 Highlights
- Net revenue of $708.9 million, compared to $793.5 million in 2017, on a comparable ASC 606 basis.
- Net loss from continuing operations of $51.6 million, compared to $63.3 million in 2017.
- Adjusted EBITDA of $45.1 million, or $52.6 million before the bad debt expense adjustment of $7.5 million, compared to $45.0 million in the prior year.
Key Stock Influences
Some key influences that might govern future stock price performance include:
- Widespread acceptance of the company’s services could be a catalyst.
- The outcome of the synergies as envisaged and the upcoming guidance for the merged entity would be a major catalyst for the company
- Further improvement in the company’s operating and market risk profile could be a medium-term catalyst. The full-fledged impact of the company’s cost reduction & resource optimization initiatives is yet to be seen.
- Notwithstanding recent improvements, BioScrip’s capital structure is still leveraged, which could indicate a need for additional funding.
- BIOS’ ability to maintain its liquidity and financial flexibility to fund its incremental capital requirements. Also, any additional equity raise is exposed to significant dilution risk.
- The company’s business risk profile is impinged by competitive pressure. Although BioScrip is making an effort to improve its operating margin through financial improvement initiatives, it is still facing challenges in achieving a competitive operating margin.
Stock Performance:
On Friday, March 15th, 2019, BIOS shares closed at $2.78 on an average volume of 0.95 million exchanging hands. Market capitalization is $355.57 Million. The current RSI is 30.25
In the past 52 weeks, shares of BIOS have traded as low as $2.32 and as high as $4.14
At $2.78, shares of BIOS are trading below their 50-day moving average (MA) at $3.53 and below their 200-day MA at $3.17
The present support and resistance levels for the stock are at $1.52 and $4.40 respectively.
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