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BioScrip names COO as chief executive officer
November 2nd, 2010
ELMSFORD, N.Y. – A new chief executive officer will be at the helm of pharmacy provider BioScrip Inc. starting next year.
The company said Tuesday that Richard Smith, its president and chief operating officer, will take the CEO reins on Jan. 1. Smith will replace Richard Friedman, currently chairman and CEO, who is stepping down from the chief executive post to serve as nonexecutive chairman effective Jan. 1.
"Rick [Smith] has made significant improvements to the operations of BioScrip — as demonstrated by the successful integration of the Critical Homecare Solutions acquisition — and now is the perfect time to transition leadership over to him," Friedman said in a statement. "Having spent more than a decade at BioScrip in various executive management and board member roles, I'm proud to have been a part of the company's transformation into a key player in the specialty pharmacy and home infusion industry. I'm enthusiastic about Rick leading BioScrip into the company's next phase of growth."
Smith has served as BioScrip's president and COO since January 2009. Before joining the company, he was CEO and a director of Byram Healthcare Center, Inc., a provider of medical supplies and pharmacy items for long-term chronic patients, from June 2006 to December 2008. And prior to that, he served as president and COO of Option Care Inc., a home infusion and specialty pharmaceutical company, from May 2003 to May 2006.
"It's an exciting time to lead BioScrip given our strong position in the industry," Smith said in a statement. "We have many great assets, and I look forward to building an organization based on accountability, growing value through leveraging core competencies, and maximizing margins and operating cash flow generation."
Friedman has served as chairman of the board and executive chairman of BioScrip since the completion of the merger between MIM Corp. and Chronimed Inc. in March 2005. He previously was chairman and CEO of MIM, holding the chief executive post at the company since April 1998.
"On behalf of BioScrip's board of directors and the entire BioScrip team, I want to express our deep appreciation for Rich's many contributions and dedication to the company during the past 14 years, particularly the past four years when he reassumed the role of CEO," commented Stuart Samuels, a member of BioScrip's board and chairman of the its Management Development and Compensation Committee. "We look forward to Rich's continued commitment to the success of BioScrip in the role of nonexecutive chairman, which will facilitate Rick's smooth transition to CEO."
Elmsford, N.Y.-based BioScrip provides retail and specialty pharmacy services along with pharmacy benefit management, home infusion and other health care services. It operates a network of 32 community retail pharmacies in 16 states and the District of Columbia.
The $375 million cash and stock deal to acquire Critical Homecare Solutions (CHS), a provider of home infusion and chronic and acute care services, created one of the largest U.S. home care providers, according to BioScrip. The deal was unveiled in late January.
More recently, BioScrip purchased the pharmacy business of drugstore.com in a $10.5 million deal that closed this past summer. With the agreement, announced in early May, BioScrip became the pharmacy services provider for drugstore.com customers.
Also on Tuesday, BioScrip reported third-quarter financial results. The company said overall sales for the quarter climbed 32.3% to $441.2 million from $333.5 million a year earlier.
Pharmacy services revenue for the 2010 quarter came in at $329.3 million, up 11% from $296.7 million in the prior-year period. BioScrip said new revenue from the acquired drugstore.com pharmacy operations totaled $3.6 million. Infusion/home health services sales in the quarter was $111.8 million, a gain of $75 million from $36.8 million in the 2009 third quarter. CHS revenue contributed $68 million in the 2010 quarter; excluding the CHS sales, infusion/home health services revenue rose 19.1%, the company reported.
Net income for the 2010 third quarter totaled $2 million, or 4 cents per diluted share, compared with $5.7 million, or 14 cents per diluted share, a year earlier. BioScrip reported $18.1 million of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the 2010 quarter versus $8.9 million in the year-ago period.
"Although the fundamentals of BioScrip are strong and we remain excited about the company's ongoing prospects, we recognize that we did not meet our guidance," Smith stated.
"In our infusion/home health segment, we were successful in posting solid organic growth, but revenue was slightly below our expectations. On the incremental $5.2 million of revenue in this segment, an additional $1 million, or 20%, of adjusted EBITDA was generated from the second quarter to the third, reflecting the strength of the higher-margin home infusion therapies and the cost synergies we are realizing from the CHS acquisition. In our pharmacy services segment, revenue exceeded our expectations, but the mix was not as strong as we anticipated. While new patient census grew, it was offset by lower-than-anticipated patient refill patterns."
BioScrip reported that based on its year-to-date results, the company is withdrawing its core financial guidance for the full-year 2010, as well as fourth-quarter 2010 revenue guidance, as management assesses its business, operations and 2011 outlook. The company said it expects to communicate its plans in January 2011.
"We are examining all aspects of our business model, and we intend to improve the quality of our revenue stream and reduce our overhead structure," according to Smith. "As a result of the company not meeting its expectations, we have accelerated a strategic assessment of our business lines and our operating cost structure."