Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Option Care Health, Inc. | d350663d8k.htm |
| EX-2.1 - AMENDMENT NO. 1, DATED AS OF MAY 4, 2012 - Option Care Health, Inc. | d350663dex21.htm |
Exhibit 99.1
BIOSCRIP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Pharmacy Services Asset Sale
On February 1, 2012, the Company entered into a Community Pharmacy and Mail Business Purchase Agreement, as amended by Amendment No. 1 dated May 4, 2012 (as amended, the “Asset Purchase Agreement”), by and among Walgreen Co. and certain subsidiaries (collectively, the “Buyers”) and the Company and certain subsidiaries with respect to the sale of certain assets, rights and properties (the “Pharmacy Services Asset Sale”) relating to the Company’s traditional and specialty pharmacy mail operations and community retail pharmacy stores.
On May 4, 2012, the Company and the Buyers completed the sale of the assets subject to the Asset Purchase Agreement. The Company received a total purchase price of approximately $158.0 million at closing, including the value of inventories on hand attributable to the operations subject to the Pharmacy Services Asset Sale. Based on events related directly or indirectly to the Buyers’ retention of certain business after the closing, BioScrip has received approximately $740,000 and may receive up to an additional $15.0 million in additional purchase price or be required to refund up to approximately $6.4 million of purchase price to the Buyers. The purchase price excluded all accounts receivable and working capital liabilities relating to the traditional and specialty pharmacy mail operations and community retail pharmacy stores, which was approximately $64.3 million as of March 31, 2012. We intend to continue to collect retained accounts receivable and realize additional proceeds from the sale of any remaining equipment and fixtures not sold to the Buyers.
Concurrently with the execution of the Asset Purchase Agreement on February 1, 2012, the Company, BioScrip Pharmacy Services, Inc. and certain subsidiaries of Walgreen Co. entered into an agreement which provided that BioScrip Pharmacy Services, Inc. ceased to be the sole fulfillment pharmacy for customers who came through the drugstore.com website. The agreement provided for a cash payment of $3.0 million to the Company and the payment of $2.9 million to a subsidiary of Walgreen Co. related to contingent consideration from the Company’s 2010 acquisition of the prescription pharmacy business of DS Pharmacy, both of which occurred during the three months ended March 31, 2012.
Pro Forma Information
The accompanying unaudited pro forma consolidated statements of operations of the Company for the year ended December 31, 2011 and the three months ended March 31, 2012 are presented as if the sale of the Company’s traditional and specialty pharmacy mail operations and community retail pharmacy stores had occurred on January 1, 2011. The accompanying unaudited pro forma consolidated balance sheet of the Company as of March 31, 2012 is presented as if the Pharmacy Services Asset Sale had occurred on March 31, 2012. The pro forma adjustments related to the Pharmacy Services Asset Sale do not reflect the final purchase price or final asset and liability balances of the Company’s traditional and specialty pharmacy mail operations and community retail pharmacy stores. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma consolidated financial information. The unaudited pro forma financial information is not necessarily indicative of the results of operations or financial position that might have been achieved for the dates or periods indicated, nor is it necessarily indicative of the results of operations or financial position that may occur in the future.
The historical consolidated financial information has been adjusted in the unaudited pro forma financial information to give effect to pro forma events that are (1) directly attributable to the disposal, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. The pro forma information does not reflect several changes the Company expects to realize after the Pharmacy Services Asset Sale because the changes are not certain. The effects of the following are not reflected in the pro forma information:
| • | corporate operating cost savings which are expected to be realized after the Pharmacy Services Asset Sale, |
| • | expenses related to post-closing exit costs that may be incurred by the Company in connection with the Pharmacy Services Asset Sale, |
| • | reduction of interest expense that is anticipated when sale proceeds are used to reduce indebtedness and |
| • | growth through acquisition or new site development that is anticipated when proceeds of the Pharmacy Services Asset Sale are invested in the continuing businesses. |
The following is a brief description of the amounts recorded under each of the column headings in the unaudited pro forma consolidated statements of operations and balance sheet:
Historical BioScrip
This column reflects the Company’s historical audited operating results for the year ended December 31, 2011 and the historical unaudited operating results of continuing operations and financial condition as of and for the three months ended March 31, 2012 prior to any adjustment for the sale described above. The three month period ended March 31, 2012 does not include the results of the Company’s traditional and specialty pharmacy mail operations and community retail pharmacy stores business due to its presentation in discontinued operations in that period.
Disposition
This column reflects the elimination of the historical operating results of the Company’s traditional and specialty pharmacy mail operations and community retail pharmacy stores business for the year ended December 31, 2011 at the amounts that have been reflected in the Company’s consolidated statement of operations for that period. The disposition column on the unaudited pro forma consolidated balance sheet as of March 31, 2012 reflects the value of assets included in the Pharmacy Services Assetas of that date.
Pro Forma Adjustments
This column on the unaudited pro forma consolidated balance sheet reflects the pro forma effect of the receipt and use of the approximately $162 million of net cash proceeds from the sale of the Company’s traditional and specialty pharmacy mail operations and community retail pharmacy stores business and adjustments to remove accounts receivable and working capital liabilities of the sold business which were retained by the Company and will be collected, paid or otherwise resolved during the remainder of the year.
This column on the unaudited pro forma consolidated statement of operations for the year ended December 31, 2011 reflects adjustments to the historical BioScrip statement of operations for expenses that because those historical expenses will be modified directly related to the disposition.
Pro forma adjustments on the unaudited pro forma consolidated statement of operations for the three months ended March 31, 2012 are not required because the historical statement of operations included in the quarterly report on Form 10-Q for the period ended March 31, 2012 filed on May 10, 2012 already reflects the effect of the disposition.
BIOSCRIP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands)
| As of March 31, 2012 | ||||||||||||||||
| Historical BioScrip |
Disposition | Pro Forma Adjustments |
Pro Forma | |||||||||||||
| ASSETS |
||||||||||||||||
| Current assets |
||||||||||||||||
| Cash and cash equivalents |
$ | — | $ | — | $ | 158,170 | (A) | $ | 158,170 | |||||||
| Receivables, less allowance for doubtful accounts |
242,173 | — | (137,008 | )(B) | 105,165 | |||||||||||
| Inventory |
13,783 | — | (1,307 | )(B) | 12,476 | |||||||||||
| Prepaid expenses and other current assets |
6,442 | — | (18 | )(B) | 6,424 | |||||||||||
| Current assets from discontinued operations |
32,171 | (32,171 | ) | — | — | |||||||||||
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|
|||||||||
| Total current assets |
294,569 | (32,171 | ) | 19,837 | 282,235 | |||||||||||
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|
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| Property and equipment, net |
26,229 | — | (5,881 | )(B) | 20,348 | |||||||||||
| Goodwill |
312,387 | — | — | 312,387 | ||||||||||||
| Intangible assets, net |
18,743 | — | — | 18,743 | ||||||||||||
| Deferred financing costs |
3,678 | — | — | 3,678 | ||||||||||||
| Other non-current assets |
1,420 | — | (44 | )(B) | 1,376 | |||||||||||
| Non-current assets from discontinued operations |
17,010 | (17,010 | ) | — | — | |||||||||||
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| Total assets |
$ | 674,036 | $ | (49,181 | ) | $ | 13,912 | $ | 638,767 | |||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||||||
| Current liabilities |
||||||||||||||||
| Current portion of long-term debt |
$ | 64,053 | $ | — | $ | (32,729 | )(B) | $ | 31,324 | |||||||
| Accounts payable |
84,742 | — | (61,259 | )(B) | 23,483 | |||||||||||
| Claims payable |
5,168 | — | — | 5,168 | ||||||||||||
| Amounts due to plan sponsors |
24,345 | — | (4,518 | )(B) | 19,827 | |||||||||||
| Accrued interest |
11,614 | — | — | 11,614 | ||||||||||||
| Accrued expenses and other current liabilities |
28,445 | — | (8,224 | )(B) | 20,221 | |||||||||||
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| Total current liabilities |
218,367 | — | (106,730 | ) | 111,637 | |||||||||||
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| Long-term debt, net of current portion |
227,318 | — | (867 | )(B) | 226,451 | |||||||||||
| Deferred taxes |
9,995 | — | — | 9,995 | ||||||||||||
| Other non-current liabilities |
3,681 | — | (1,652 | )(B) | 2,029 | |||||||||||
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| Total liabilities |
459,361 | — | (109,249 | ) | 350,112 | |||||||||||
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| Stockholders’ equity |
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| Preferred stock, $.0001 par value; |
— | — | — | — | ||||||||||||
| Common stock, $.0001 par value |
6 | — | — | 6 | ||||||||||||
| Treasury stock, shares at cost: |
(10,461 | ) | — | — | (10,461 | ) | ||||||||||
| Additional paid-in capital |
377,624 | — | — | 377,624 | ||||||||||||
| Accumulated deficit |
(152,494 | ) | (49,181 | ) | 123,161 | (78,514 | ) | |||||||||
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| Total stockholders’ equity |
214,675 | (49,181 | ) | 123,161 | 288,655 | |||||||||||
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| Total liabilities and stockholders’ equity |
$ | 674,036 | $ | (49,181 | ) | $ | 13,912 | $ | 638,767 | |||||||
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BIOSCRIP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except for per share amounts)
| Three Months Ended March 31, 2012 | ||||||||||||
| Historical BioScrip | Pro Forma Adjustments |
Pro Forma | ||||||||||
| Product revenue |
$ | 106,803 | $ | — | $ | 106,803 | ||||||
| Service revenue |
48,830 | — | 48,830 | |||||||||
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| Total revenue |
155,633 | — | 155,633 | |||||||||
| Cost of product revenue |
72,326 | — | 72,326 | |||||||||
| Cost of service revenue |
29,785 | — | 29,785 | |||||||||
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| Total cost of revenue |
102,111 | — | 102,111 | |||||||||
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| Gross profit |
53,522 | — | 53,522 | |||||||||
| Selling, general and administrative expenses |
44,662 | — | 44,662 | |||||||||
| Bad debt expense |
3,465 | — | 3,465 | |||||||||
| Acquisition and integration expenses |
172 | — | 172 | |||||||||
| Restructuring expense |
300 | — | 300 | |||||||||
| Amortization of intangibles |
879 | — | 879 | |||||||||
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| Income from continuing operations |
4,044 | — | 4,044 | |||||||||
| Interest expense, net |
6,569 | — | 6,569 | |||||||||
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| Loss from continuing operations before income taxes |
(2,525 | ) | — | (2,525 | ) | |||||||
| Income tax benefit |
(502 | ) | — | (502 | ) | |||||||
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| Loss from continuing operations, net of income taxes |
(2,023 | ) | — | (2,023 | ) | |||||||
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| Loss from continuing operations per common share: |
||||||||||||
| Basic |
$ | (0.04 | ) | $ | (0.04 | ) | ||||||
| Diluted |
$ | (0.04 | ) | $ | (0.04 | ) | ||||||
| Weighted average common shares outstanding: |
||||||||||||
| Basic |
55,307 | 55,307 | ||||||||||
| Diluted |
55,307 | 55,307 | ||||||||||
BIOSCRIP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except for per share amounts)
| Year Ended December 31, 2011 | ||||||||||||||||
| Historical BioScrip | Disposition | Pro Forma Adjustments |
Pro Forma | |||||||||||||
| Product revenue |
$ | 1,622,949 | $ | (1,261,180 | ) | $ | — | $ | 361,769 | |||||||
| Service revenue |
195,077 | (2,340 | ) | — | 192,737 | |||||||||||
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| Total revenue |
1,818,026 | (1,263,520 | ) | — | 554,506 | |||||||||||
| Cost of product revenue |
1,400,947 | (1,166,649 | ) | — | 234,298 | |||||||||||
| Cost of service revenue |
104,776 | — | — | 104,776 | ||||||||||||
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| Total cost of revenue |
1,505,723 | (1,166,649 | ) | — | 339,074 | |||||||||||
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| Gross profit |
312,303 | (96,871 | ) | — | 215,432 | |||||||||||
| Selling, general and administrative expenses |
237,274 | (74,526 | ) | 5,867 | (C) | 168,615 | ||||||||||
| Bad debt expense |
18,654 | (7,951 | ) | — | 10,703 | |||||||||||
| Acquisition and integration expenses |
— | — | — | — | ||||||||||||
| Restructuring expense |
8,885 | (2,450 | ) | — | 6,435 | |||||||||||
| Amortization of intangibles |
5,189 | (1,813 | ) | — | 3,376 | |||||||||||
| Legal settlement |
4,800 | (4,800 | ) | — | — | |||||||||||
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| Income from continuing operations |
37,501 | (5,331 | ) | (5,867 | ) | 26,303 | ||||||||||
| Interest expense, net |
28,306 | — | (2,764 | )(D) | 25,542 | |||||||||||
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| Income from continuing operations before income taxes |
9,195 | (5,331 | ) | (3,103 | ) | (761 | ) | |||||||||
| Income tax expense |
1,323 | (1,226 | )(E) | (97 | ) | |||||||||||
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| Income from continuing operations |
7,872 | (5,331 | ) | (1,877 | ) | (664 | ) | |||||||||
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| Income from per common share: |
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| Basic |
$ | 0.14 | $ | (0.01 | ) | |||||||||||
| Diluted |
$ | 0.14 | $ | (0.01 | ) | |||||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
54,505 | 54,505 | ||||||||||||||
| Diluted |
55,150 | 55,150 | ||||||||||||||
BIOSCRIP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(A) The sources and uses of funds relating to the sale are as follows (in thousands):
| Sources: |
||||
| Cash receivable as disposal consideration |
$ | 128,500 | ||
| Value of inventory on hand |
31,982 | |||
| Accounts receivable, net of working capital liabilities retained |
64,332 | |||
| Uses: |
||||
| Payment of accounts payable due to AmerisourceBergen |
(52,348 | ) | ||
| Repayment of capital leases |
(2,031 | ) | ||
| Estimated disposal-related transaction costs |
(12,265 | ) | ||
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| Net adjustment of cash and cash equivalents as of March 31, 2012 |
$ | 158,170 | ||
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| (B) | Reflects adjustment to remove assets and liabilities of the community pharmacy and mail order lines of business which were not sold as part of the Pharmacy Services Asset Sale. The Company anticipates the collection, payment or resolution of these balances during the remainder of the year. The assets and liabilities not sold are summarized below as of March 31, 2012 (in thousands). |
| ASSETS |
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| Current assets |
||||
| Receivables, less allowance for doubtful accounts |
$ | 137,008 | ||
| Inventory |
1,307 | |||
| Prepaid expenses and other current assets |
18 | |||
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| Total current assets |
138,333 | |||
| Property and equipment, net |
5,881 | |||
| Other non-current assets |
44 | |||
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| Total assets |
$ | 144,258 | ||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||
| Current liabilities |
||||
| Current portion of long-term debt |
$ | 32,729 | ||
| Accounts payable |
61,259 | |||
| Amounts due to plan sponsors |
4,518 | |||
| Accrued expenses and other current liabilities |
8,224 | |||
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| Total current liabilities |
106,730 | |||
| Long-term debt, net of current portion |
867 | |||
| Other non-current liabilities |
1,652 | |||
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| Total liabilities |
$ | 109,249 | ||
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| (C) | Reflects certain corporate costs allocated to the traditional and specialty pharmacy mail operations and community retail pharmacy stores businesses in 2011 which are not directly eliminated as a result of the Pharmacy Services Asset Sale. |
| (D) | Reflects the interest expense on the revolving credit facility attributed to the discontinued operations. |
| (E) | Reflects the tax effect of the pre-tax pro forma adjustments at the effective rate of 39.5%. |