BioScrip 'took its eye off the ball'

DENVER - With revenues at BioScrip sliding again in the third quarter, new President and CEO Daniel Greenleaf didn't mince words on a recent earnings call.

“Clearly, the organization took its eye off the ball in the third,” he said. “The people that were involved are no longer part of the organization in any way, shape or form.”

Greenleaf took the reins in September when BioScrip completed its acquisition of HS Holdings, where he had served as CEO since 2014. Prior to that, he served in leadership roles at Coram and Apria.

Net revenues for the third quarter of 2016 were $224.5 million, a decrease of 9.2% from a year ago. Net losses from continuing operations were $11.1 million vs. $24.5 million. Gross profit was 62.6 million or 29% of revenues; and EBITDA was a “disappointing” $3.5 million vs. $6 million, said Jeffrey Kreger, senior vice president, CFO and treasurer.

“This (EBITDA) was the result of lower than expected core revenue combined with higher than expected year-over-year operational expenses, principally in labor,” he said on the call.

BioScrip has, over the last several quarters, sought to shift its focus away from chronic infusion therapies toward its core infusion therapies. Currently split 35% and 65%, respectively, Greenleaf would like to push the core business to 85%.

“Core therapies are profitable therapies,” he said.

Higher than expected operating expenses are attributed to the integration of HS Solutions, which BioScrip paid $75 million for in September. On the call, Greenleaf reassured investors that he has taken on “challenging business situations” before, at both Home Solutions and Coram.

“I think many people, after Apria bought Coram, thought it was a bad idea,” he said. “When I joined, it had $500 million in revenue and $5 million in EBITDA.”

In late 2013, Apria sold Coram to CVS Caremark for $2.1 billion.

The next 18 to 24 months will be a time of great transformation, said Greenleaf. In addition to synergies between BioScrip and Home Solutions that are expected to achieve $14 million to $17 million in savings, Greenleaf has identified areas of substantial cost savings in areas like labor, nursing, supply chain management and deliveries.

For example, BioScrip will use UPS and FedEx “more aggressively,” he said.

“A delivery driver costs $55 compared to $15 for FedEx,” he said. “We want to get to between 65% and 75% of deliveries through FedEx and UPS.”