BioScrip Inc. (BIOS, Financial) filed Quarterly Report for the period ended 2009-03-31.
BioScrip provides comprehensive pharmaceutical care solutions. We partner with healthcare payors pharmaceutical manufacturers government agencies physicians and patients to deliver cost effective programs that enhance the quality of patient life. We focus our products and services in two core areas: specialty medication distribution and clinical management services both nationally and community-based and pharmacy benefit management services. BioScrip Inc. has a market cap of $130.4 million; its shares were traded at around $3.31 with a P/E ratio of 12.3 and P/S ratio of 0.1.
Cost of Revenue and Gross Profit. Cost of revenue for the first quarter of 2009 was $289.8 million as compared to $295.1 million for the same period in 2008. Gross margin dollars during the first quarter of 2009 were $36.0 million, compared to $32.4 million for the first quarter of 2008, an increase of $3.6 million. Gross margin as a percentage of revenue increased to 11.0% in the first quarter of 2009 from 9.9% in the first quarter of 2008. The increase in gross margin percentage from 2008 to 2009 is partially a result of the termination of the CAP and UHC contracts, as well as action taken to purchase drugs during the fourth quarter of 2008 in anticipation of drug cost increases during the first quarter of 2009. In the first quarter of 2008, the gross profit percentage was negatively impacted by timing delays in obtaining increases in reimbursement rates after drug acquisition cost increases were implemented by manufacturers of specialty drugs. Drug acquisition cost increases typically occur in the first quarter of each year along with a corresponding increase in reimbursement rates. In 2008 there was a longer than usual delay in updating the industry price lists used by us and our peers to charge customers for reimbursement.
Provision for Income Taxes. Income tax expense of $0.4 million was recorded for the first quarter of 2009 on pre-tax net income of $3.7 million, an 11.0% effective tax rate. The effective tax rate for the quarter is below the statutory rate due to a reduction in the Company s valuation allowance associated with the expected utilization of a portion of the net operating losses in 2009. This compares to $0.1 million of income tax expense on a pre-tax loss of $0.4 million for the same period a year ago. The prior year provision relates primarily to liabilities for state income taxes.
Net Income (Loss) and Income (Loss) Per Share. Net income for the first quarter of 2009 was $3.3 million, or $0.08 per diluted share, as compared to a net loss of $0.5 million, or ($0.01) per diluted share, for the same period last year.
Net cash provided by operating activities totaled $15.4 million during the first three months of 2009, as compared to $12.5 million of cash used in operating activities during the first three months of 2008. The increase in cash provided by operating activities was primarily the result of net income of $3.3 million, as well as decreases in accounts receivable and decreases in inventory offset by cash used in accounts payable. The decrease of $14.0 million in accounts receivable is due to improved cash collections. The decrease of $6.2 million in inventory was a result of purchases made in the fourth quarter of 2008 in anticipation of price increases, as well as the termination of the CAP and UHC contracts. The decrease of $9.6 million in accounts payable is related to the reduction of inventory.
At March 31, 2009, there was $36.1 million in outstanding borrowings under our revolving credit facility (the “Facility”) with an affiliate of Healthcare Finance Group, Inc. (“HFG”), as compared to $48.5 million at March 31, 2008. The Facility provides for borrowing up to $85.0 million at the London Inter-Bank Offered Rate (“LIBOR”) or a pre-determined minimum rate plus the applicable margin and other associated fees. The term of the Facility runs through November 1, 2010. Under the terms of the Facility, we may request to increase the amount available for borrowing up to $100.0 million, and convert a portion of any outstanding borrowings from a Revolving Loan into a Term Loan. The borrowing base utilizes receivable balances and proceeds thereof as security under the Facility. At March 31, 2009 we had $48.9 million of credit available under the Facility.
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BioScrip provides comprehensive pharmaceutical care solutions. We partner with healthcare payors pharmaceutical manufacturers government agencies physicians and patients to deliver cost effective programs that enhance the quality of patient life. We focus our products and services in two core areas: specialty medication distribution and clinical management services both nationally and community-based and pharmacy benefit management services. BioScrip Inc. has a market cap of $130.4 million; its shares were traded at around $3.31 with a P/E ratio of 12.3 and P/S ratio of 0.1.
Highlight of Business Operations:
Revenue. Revenue for the first quarter of 2009 was $325.7 million as compared to revenue of $327.5 million in the first quarter of 2008. Specialty Services revenue for the first quarter of 2009 was $274.3 million as compared to revenue of $277.3 million for the same period a year ago, a decrease of $3.0 million, or 1.1%. That decrease is primarily due the termination of the CAP and UHC contracts offset by an increase in other new Specialty Services contracts as well as the increase associated with drug cost inflation. PBM Services revenue for the first quarter of 2009 was $51.4 million, as compared to revenue of $50.2 million in the first quarter of 2008, an increase of $1.2 million, or 2.4%. The increase was primarily attributable to growth in the prescription discount card programs.Cost of Revenue and Gross Profit. Cost of revenue for the first quarter of 2009 was $289.8 million as compared to $295.1 million for the same period in 2008. Gross margin dollars during the first quarter of 2009 were $36.0 million, compared to $32.4 million for the first quarter of 2008, an increase of $3.6 million. Gross margin as a percentage of revenue increased to 11.0% in the first quarter of 2009 from 9.9% in the first quarter of 2008. The increase in gross margin percentage from 2008 to 2009 is partially a result of the termination of the CAP and UHC contracts, as well as action taken to purchase drugs during the fourth quarter of 2008 in anticipation of drug cost increases during the first quarter of 2009. In the first quarter of 2008, the gross profit percentage was negatively impacted by timing delays in obtaining increases in reimbursement rates after drug acquisition cost increases were implemented by manufacturers of specialty drugs. Drug acquisition cost increases typically occur in the first quarter of each year along with a corresponding increase in reimbursement rates. In 2008 there was a longer than usual delay in updating the industry price lists used by us and our peers to charge customers for reimbursement.
Provision for Income Taxes. Income tax expense of $0.4 million was recorded for the first quarter of 2009 on pre-tax net income of $3.7 million, an 11.0% effective tax rate. The effective tax rate for the quarter is below the statutory rate due to a reduction in the Company s valuation allowance associated with the expected utilization of a portion of the net operating losses in 2009. This compares to $0.1 million of income tax expense on a pre-tax loss of $0.4 million for the same period a year ago. The prior year provision relates primarily to liabilities for state income taxes.
Net Income (Loss) and Income (Loss) Per Share. Net income for the first quarter of 2009 was $3.3 million, or $0.08 per diluted share, as compared to a net loss of $0.5 million, or ($0.01) per diluted share, for the same period last year.
Net cash provided by operating activities totaled $15.4 million during the first three months of 2009, as compared to $12.5 million of cash used in operating activities during the first three months of 2008. The increase in cash provided by operating activities was primarily the result of net income of $3.3 million, as well as decreases in accounts receivable and decreases in inventory offset by cash used in accounts payable. The decrease of $14.0 million in accounts receivable is due to improved cash collections. The decrease of $6.2 million in inventory was a result of purchases made in the fourth quarter of 2008 in anticipation of price increases, as well as the termination of the CAP and UHC contracts. The decrease of $9.6 million in accounts payable is related to the reduction of inventory.
At March 31, 2009, there was $36.1 million in outstanding borrowings under our revolving credit facility (the “Facility”) with an affiliate of Healthcare Finance Group, Inc. (“HFG”), as compared to $48.5 million at March 31, 2008. The Facility provides for borrowing up to $85.0 million at the London Inter-Bank Offered Rate (“LIBOR”) or a pre-determined minimum rate plus the applicable margin and other associated fees. The term of the Facility runs through November 1, 2010. Under the terms of the Facility, we may request to increase the amount available for borrowing up to $100.0 million, and convert a portion of any outstanding borrowings from a Revolving Loan into a Term Loan. The borrowing base utilizes receivable balances and proceeds thereof as security under the Facility. At March 31, 2009 we had $48.9 million of credit available under the Facility.
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