(Mark One) | ||
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2005 | ||
OR | ||
o
|
PERIODIC REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware | 05-0489664 | |
(State of incorporation)
|
(I.R.S. Employer Identification No.) | |
100 Clearbrook Road, Elmsford NY
|
10523 | |
(Address of principal executive offices)
|
(Zip Code) |
o Large accelerated filer | þ Accelerated filer | o Non-accelerated filer |
i
| our expectations regarding financial condition or results of operations for periods after December 31, 2005; | |
| our future sources of, and needs for, liquidity and capital resources; | |
| our expectations regarding general economic and business conditions; | |
| our critical accounting policies; | |
| our expectations regarding the size and growth of the market for our products and services; | |
| our business strategies and our ability to grow our business; | |
| the implementation or interpretation of current or future regulations and legislation; and | |
| our ability to maintain contracts and relationships with our customers; |
Item 1. | Business |
1
2
| Cancer and related conditions | |
| Crohns Disease | |
| Hemophilia | |
| Hepatitis C | |
| HIV/AIDS | |
| Multiple Sclerosis | |
| Organ Transplant | |
| Rheumatoid Arthritis |
Distribution |
Billing and Coordination of Benefits |
3
Professional Intervention |
Patient Education |
Adherence and Persistence Management |
4
Pharmacy Case Management |
Coordinated Medication Delivery |
Pharmacy Data Services |
5
Disease Management |
Formulary and Benefit Design |
6
Clinical Service |
Drug Usage Evaluation |
Pharmacy Data Services |
Disease Management |
7
Pharmacy Dispensing Facility |
Discount Prescription Card Programs |
8
9
2005 | 2004 | 2003 | ||||||||||
Revenue:
|
||||||||||||
Specialty Services
|
$ | 688,512 | $ | 251,487 | $ | 193,243 | ||||||
PBM Services
|
384,723 | 379,029 | 395,527 | |||||||||
Total
|
$ | 1,073,235 | $ | 630,516 | $ | 588,770 | ||||||
(Loss) income from operations:
|
||||||||||||
Specialty Services(1,2)
|
$ | (14,423 | ) | $ | 9,769 | $ | 11,899 | |||||
PBM Services(3)
|
(14,780 | ) | 2,525 | 4,126 | ||||||||
Total
|
$ | (29,203 | ) | $ | 12,294 | $ | 16,025 | |||||
(1) | The year ended December 31, 2005 includes $6.5 million of goodwill and intangible impairment and $4.6 million of merger related expenses associated with the acquisition of Chronimed in the Specialty Services segment (see Note 4 of Notes to Consolidated Financial Statements). |
(2) | The year ended December 31, 2005 includes a $7.1 million charge to reflect an increase in the allowance for doubtful accounts receivable created by lower than expected collections during the Chronimed merger integration period in the Specialty Services segment. |
(3) | The year ended December 31, 2005 includes $18.6 million of goodwill impairment in the PBM Services segment. |
10
11
12
13
14
15
16
Item 1A. | Risk Factors |
17
18
19
Item 1B. | Unresolved Staff Comments |
20
Item 2. | Properties |
Corporate Offices | ||||
Community and Infusion Pharmacies | ||||
Elmsford, NY
Eden Prairie, MN Mail Operations Columbus, OH San Francisco, CA |
California
Burbank (Infusion) Palm Springs San Diego San Francisco Sherman Oaks West Hollywood District of Columbia Washington D. C. Florida Ft. Lauderdale Miami Beach Orlando St. Petersburg Tampa West Palm Beach Georgia Atlanta Indiana Indianapolis(2) Illinois Chicago Massachusetts Boston Minnesota Minneapolis |
Missouri
Kansas City St. Louis Nevada Las Vegas New Jersey Livingston (Infusion) New York Bronx Long Island Manhattan Ohio Columbus Pennsylvania Philadelphia Tennessee Memphis Texas Dallas(2) Houston Washington Seattle Wisconsin Milwaukee |
Item 3. | Legal Proceedings |
21
Item 4. | Submission of Matters to a Vote of Security Holders |
22
Item 5. | Market for Registrants Common Equity and Related Stockholder Matters |
High | Low | |||||||
2004
|
||||||||
First Quarter
|
$ | 8.15 | $ | 6.81 | ||||
Second Quarter
|
$ | 9.80 | $ | 7.10 | ||||
Third Quarter
|
$ | 9.14 | $ | 5.66 | ||||
Fourth Quarter
|
$ | 6.95 | $ | 5.25 | ||||
2005
|
||||||||
First Quarter
|
$ | 7.01 | $ | 5.75 | ||||
Second Quarter
|
$ | 6.57 | $ | 5.13 | ||||
Third Quarter
|
$ | 7.03 | $ | 5.88 | ||||
Fourth Quarter
|
$ | 9.07 | $ | 5.93 |
23
Item 6. | Selected Consolidated Financial Data |
December 31, | ||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance Sheet Data
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 1,521 | $ | 2,957 | $ | 9,428 | $ | 5,751 | $ | 12,487 | ||||||||||
Working capital
|
67,438 | 13,967 | 20,283 | 5,101 | 9,307 | |||||||||||||||
Total assets
|
288,637 | 185,778 | 171,191 | 182,231 | 139,819 | |||||||||||||||
Capital lease obligations, net of current portion
|
| | 35 | 430 | 1,031 | |||||||||||||||
Stockholders equity
|
195,765 | 115,683 | 107,202 | 94,208 | 60,296 |
Year Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
Statement of Operations Data
|
||||||||||||||||||||
Revenue(1)
|
$ | 1,073,235 | $ | 630,516 | $ | 588,770 | $ | 576,596 | $ | 456,646 | ||||||||||
Merger related expenses(2)
|
4,575 | | | | | |||||||||||||||
TennCare
®
reserve(3)
|
| | | (851 | ) | (2,476 | ) | |||||||||||||
Goodwill and intangible impairment(4)
|
25,165 | | | | | |||||||||||||||
Net (loss) income(5,6,7,8)
|
(23,847 | ) | 7,033 | 9,130 | 18,685 | 14,202 | ||||||||||||||
Net (loss) income per basic share
|
(0.70 | ) | 0.32 | 0.41 | 0.83 | 0.67 | ||||||||||||||
Net (loss) income per diluted share(9)
|
(0.70 | ) | 0.31 | 0.40 | 0.79 | 0.64 | ||||||||||||||
Weighted average shares outstanding used in computing basic
(loss) income per share
|
34,129 | 22,245 | 22,164 | 22,616 | 21,273 | |||||||||||||||
Weighted average shares outstanding used in computing diluted
(loss) income per share
|
34,129 | 22,702 | 22,640 | 23,563 | 22,289 |
(1) | Revenue includes: TennCare ® PBM Services revenue of $67.8 million, $140.2 million and $141.9 million for the years 2003, 2002 and 2001, respectively; Synagis ® revenue of $13.7 million, $14.6 million and $3.7 million for the years 2003, 2002 and 2001, respectively; and Value Options revenue of $19.7 million and $20.8 million for the years 2004 and 2003, respectively. Revenue from TennCare and Synagis ended in 2003. Revenue from Value Options ended in 2004. |
(2) | Reflects merger, integration and re-branding expenses related to the Companys acquisition of Chronimed on March 12, 2005. |
(3) | In 1999, we recorded $6.0 million of TennCare ® reserve adjustments for estimated losses on contract receivables relating to Tennessee Health Partnership (THP), Preferred Health Plans and Xantus Health Plans of Tennessee, Inc. (Xantus). During 2001, we recorded a reserve adjustment credit of $1.0 million to reflect a favorable settlement with THP relative to the amount initially reserved in 1999. In the third quarter of 2001 and the first quarter of 2002, we recorded TennCare ® reserve adjustment credits of $1.5 million and $0.9 million, respectively, as a result of the collection of the receivables reserved in 1999 from Xantus. |
24
(4) | Includes a $4.0 million charge, net of tax, related to write-off of trade names due to our rebranding strategy in the Specialty Services segment, and an $18.2 million charge, net of tax, related to goodwill impairment in the PBM Services segment. |
(5) | Net income in 2003 includes a $0.6 million charge, net of tax, related to a settlement with our founder, E. David Corvese, and a restructuring charge of $0.9 million, net of tax. |
(6) | Net income in 2004 includes a $0.5 million charge, net of tax, related to a global settlement with Value Options of Texas, Inc. |
(7) | Net loss in 2005 includes a $4.3 million charge, net of tax, in the fourth quarter to reflect an increase in the allowance for doubtful accounts receivable created by lower than expected collections during the merger integration period. |
(8) | Effective tax rate (see Managements Discussion and Analysis for explanation of the change in the effective tax rate). |
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||
19.4 | % | 38.8 | % | 40.0 | % | 20.0 | % | 6.2 | % |
(9) | The 2005 net loss per diluted share excludes the effect of common stock equivalents, as their inclusion would be anti-dilutive. |
25
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
26
27
Revenue Recognition |
28
Allowance for Doubtful Accounts |
Allowance for Contractual Discounts |
Rebates |
Payables to Plan Sponsors |
Income Taxes |
29
Purchase Price Allocation |
Goodwill |
Impairment of Long Lived Assets |
30
Accounting for Stock-Based Compensation |
31
Year Ended December 31, 2005
BioScrip As
Chronimed
Pro Forma
Pro Forma
Reported
Pre-Merger
Adjustments
Combined
$
688,512
$
114,079
$
$
802,591
384,723
384,723
1,073,235
114,079
1,187,314
956,968
101,155
1,058,123
116,267
12,924
129,191
10.8
%
11.3
%
10.9
%
96,521
10,498
107,019
12,814
840
13,654
6,395
958
(1)
7,353
4,575
2,037
6,612
25,165
25,165
145,470
13,375
958
159,803
13.6
%
11.7
%
13.5
%
(29,203
)
(451
)
(958
)
(30,612
)
(392
)
84
(308
)
(29,595
)
(367
)
(958
)
(30,920
)
(5,748
)
(143
)
(114
)
(6,005
)
$
(23,847
)
$
(224
)
$
(844
)
$
(24,915
)
34,129
34,129
34,129
34,129
$
(0.70
)
$
(0.73
)
$
(0.70
)
$
(0.73
)
(1) | Reflects estimated amortization expense as if Chronimed was acquired at the beginning of the year |
32
Year Ended December 31, 2004
MIM Corp.
Chronimed
Pro Forma
Pro Forma
As Reported
Pre-Merger
Adjustments
Combined
$
251,487
$
589,034
$
$
840,521
379,029
379,029
630,516
589,034
1,219,550
562,360
525,511
1,087,871
68,156
63,523
131,679
10.8
%
10.8
%
10.8
%
50,935
50,767
101,702
1,908
4,163
6,071
3,019
4,960
(1)
7,979
55,862
54,930
4,960
115,752
8.9
%
9.3
%
9.5
%
12,294
8,593
(4,960
)
15,927
(808
)
280
(528
)
326
326
11,486
9,199
(4,960
)
15,725
4,453
3,530
(1,882
)
6,101
$
7,033
$
5,669
$
(3,078
)
$
9,624
22,245
36,609
22,702
37,204
$
0.32
$
0.26
$
0.31
$
0.26
(1) | Reflects estimated amortization expense as if Chronimed was acquired at the beginning of the year |
33
Year Ended December 31, 2003
MIM Corp.
Chronimed
Pro Forma
Pro Forma
As Reported
Pre-Merger
Adjustments
Combined
$
193,243
$
487,147
$
$
680,390
395,527
395,527
588,770
487,147
1,075,917
520,249
428,889
949,138
68,521
58,258
126,779
11.6
%
12.0
%
11.8
%
48,920
46,167
95,088
1,713
3,595
5,307
1,863
4,960
(1)
6,823
52,496
49,762
4,960
107,218
8.9
%
10.2
%
10.0
%
16,025
8,496
(4,960
)
19,561
(808
)
263
(545
)
75
75
15,217
8,834
(4,960
)
19,091
6,087
2,747
(1,198
)
7,636
$
9,130
$
6,087
$
(3,762
)
$
11,455
22,164
36,528
22,640
37,142
$
0.41
$
0.31
$
0.40
$
0.31
(1) | Reflects estimated amortization expense as if Chronimed was acquired at the beginning of the year |
34
Year ended December 31, 2005 vs. December 31, 2004 |
35
36
Year ended December 31, 2004 vs. December 31, 2003 |
37
38
39
Payments Due in Period | ||||||||||||||||||||
Less than | After | |||||||||||||||||||
Contractual Obligations | Total | 1 Year | 1-3 Years | 4-5 Years | 5 Years | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Line of Credit
|
$ | 7,427 | $ | 7,427 | $ | | $ | | $ | | ||||||||||
Operating Leases
|
12,789 | 3,689 | 5,478 | 3,411 | 210 | |||||||||||||||
Total Contractual Cash Obligations
|
$ | 20,216 | $ | 11,116 | $ | 5,478 | $ | 3,411 | $ | 210 | ||||||||||
Controls and Procedures |
Restructure |
Regulatory Matters |
40
7A. | Quantitative and Qualitative Disclosures About Market Risk |
41
Item 8. | Financial Statements and Supplementary Data |
/s/ Ernst & Young LLP |
42
2005
2004
ASSETS
$
1,521
$
2,957
118,762
65,439
25,873
11,897
2,054
2,113
11,225
1,666
159,435
84,072
9,232
4,300
2,830
939
427
104,268
74,874
14,713
17,583
1,702
$
288,587
$
185,788
LIABILITIES AND STOCKHOLDERS EQUITY
$
7,427
$
7,303
39,969
20,012
31,402
28,659
1,695
2,217
11,454
11,914
91,947
70,105
875
92,822
70,105
4
2
(8,002
)
(8,002
)
234,958
131,031
(31,195
)
(7,348
)
195,765
115,683
$
288,587
$
185,788
43
2005
2004
2003
$
1,073,235
$
630,516
$
588,770
956,968
562,360
520,249
116,267
68,156
68,521
96,521
50,935
48,920
12,814
1,908
1,713
6,395
3,019
1,863
4,575
25,165
(29,203
)
12,294
16,025
(392
)
(808
)
(808
)
(29,595
)
11,486
15,217
(5,748
)
4,453
6,087
$
(23,847
)
$
7,033
$
9,130
$
(0.70
)
$
0.32
$
0.41
$
(0.70
)
$
0.31
$
0.40
34,129
22,245
22,164
34,129
22,702
22,640
44
Additional
Total
Common
Treasury
Paid-In
Accumulated
Stockholders
Stock
Stock
Capital
Deficit
Equity
$
2
$
(2,934
)
$
120,651
$
(23,511
)
$
94,208
911
911
8,021
8,021
(5,068
)
(5,068
)
9,130
9,130
2
(8,002
)
129,583
(14,381
)
107,202
969
969
479
479
7,033
7,033
2
(8,002
)
131,031
(7,348
)
115,683
1,892
1,892
475
475
2
101,560
101,562
(23,847
)
(23,847
)
$
4
$
(8,002
)
$
234,958
$
(31,195
)
$
195,765
45
2005
2004
2003
$
(23,847
)
$
7,033
$
9,130
3,520
2,005
3,102
6,395
3,020
1,979
25,165
(6,032
)
2,584
2,516
476
479
8,021
116
93
289
12,814
1,908
1,713
465
(21,471
)
(3,818
)
12,938
(3,556
)
(2,559
)
767
1,154
136
(56
)
11,073
(3,949
)
(445
)
2,743
1,300
(7,510
)
(522
)
(9,011
)
(12,694
)
(14,915
)
4,073
(5,407
)
(6,422
)
3,294
14,343
(5,129
)
(1,058
)
(961
)
6,918
(14,256
)
1,332
(1,764
)
(20
)
3,121
(17,078
)
(981
)
124
7,303
(4,608
)
(5,068
)
1,776
876
622
(467
)
(35
)
(399
)
(631
)
1,865
7,313
(9,685
)
(1,436
)
(6,471
)
3,677
2,957
9,428
5,751
$
1,521
$
2,957
$
9,428
$
613
$
727
$
421
$
1,620
$
3,349
$
1,836
46
Corporate Organization |
Business |
Basis of Presentation |
47
Consolidation |
Use of Estimates |
Cash and Cash Equivalents |
Receivables |
Allowance for Doubtful Accounts |
Allowance for Contractual Discounts |
48
Inventory |
Property and Equipment |
Asset | Useful Life | |||
Computer and office equipment
|
3-5 years | |||
Furniture and fixtures
|
5-7 years |
Claims Payable |
Payables to Plan Sponsors |
Rebates |
49
Revenue Recognition |
Cost of Revenue |
Impairment of Long Lived Assets |
50
Goodwill |
Lease Accounting |
Income Taxes |
51
Disclosure of Fair Value of Financial Instruments |
Accounting for Stock-Based Compensation |
For the Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Net (loss) income, as reported
|
$ | (23,847 | ) | $ | 7,033 | $ | 9,130 | ||||||
Add: Stock award-based employee compensation included in
reported net income, net of related tax effect
|
27 | 19 | 49 | ||||||||||
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards, net of
related tax effect
|
(2,023 | ) | (3,626 | ) | (3,289 | ) | |||||||
Pro forma net (loss) income
|
$ | (25,843 | ) | $ | 3,426 | $ | 5,890 | ||||||
Earnings per share:
|
|||||||||||||
Basic as reported
|
$ | (0.70 | ) | $ | 0.32 | $ | 0.41 | ||||||
Basic pro forma
|
$ | (0.76 | ) | $ | 0.15 | $ | 0.27 | ||||||
Diluted as reported
|
$ | (0.70 | ) | $ | 0.31 | $ | 0.40 | ||||||
Diluted pro forma
|
$ | (0.76 | ) | $ | 0.15 | $ | 0.26 |
52
2005
2004
2003
69.5
%
89.5
%
98.4
%
4.98
%
3.25
%
2.00
%
4.5 years
5 years
5 years
$3.74
$5.30
$4.95
(Loss) Income per Share |
Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Numerator:
|
|||||||||||||
Net (loss) income
|
$ | (23,847 | ) | $ | 7,033 | $ | 9,130 | ||||||
Denominator Basic:
|
|||||||||||||
Weighted average number of common shares outstanding
|
34,129 | 22,245 | 22,164 | ||||||||||
Basic (loss) income per common share
|
$ | (0.70 | ) | $ | 0.32 | $ | 0.41 | ||||||
Denominator Diluted:
|
|||||||||||||
Weighted average number of common shares outstanding
|
34,129 | 22,245 | 22,164 | ||||||||||
Common share equivalents of outstanding stock options
|
| 457 | 476 | ||||||||||
Total shares outstanding
|
34,129 | 22,702 | 22,640 | ||||||||||
Diluted (loss) income per common share
|
$ | (0.70 | ) | $ | 0.31 | $ | 0.40 | ||||||
Recent Accounting Pronouncements |
53
54
For the Years Ended December 31
2005
2004
2003
$
688,512
$
251,487
$
193,243
384,723
379,029
395,527
$
1,073,235
$
630,516
$
588,770
$
2,231
$
832
$
673
1,289
1,173
2,429
$
3,520
$
2,005
$
3,102
$
(14,423
)
$
9,769
$
11,899
(14,780
)
2,525
4,126
$
(29,203
)
$
12,294
$
16,025
$
242,657
$
124,510
$
103,694
45,930
61,278
66,600
$
288,587
$
185,788
$
170,294
$
4,652
$
609
$
479
477
449
482
$
5,129
$
1,058
$
961
(1) | The year ended December 31, 2005 includes $6.5 million of goodwill and intangible impairment and $4.6 million of merger related expenses (see Note 4 of Notes to the Financial Statements) in the Specialty Services segment. |
(2) | The year ended December 31, 2005 includes a $7.1 million charge to reflect an increase in the allowance for doubtful accounts receivable created by lower than expected collections during the Chronimed merger integration period in the Specialty Services segment. |
(3) | The year ended December 31, 2005 includes $18.6 million of goodwill impairment in the PBM Services segment. |
55
For the Year Ended
December 31,
2005
2004
$
133,143
$
102,122
12
%
16
%
$
113,914
$
102,467
11
%
16
%
$
21,524
$
17,153
2
%
3
%
Chronimed Inc. Acquisition |
| the opportunity to combine the companies individual strengths in payor contracting, physician sales, manufacturer services, clinical management and fulfillment; | |
| the opportunity to sell the Companys products through Chronimeds existing retail pharmacies; | |
| the opportunity to broaden the Companys suite of disease states and customer base; | |
| the expansion of the Companys retail pharmacy coverage; | |
| the opportunity to create significant mail-operations synergies; and |
56
the opportunity to create corporate function and other cost
synergies, which will enable the combined entity to grow and
improve margins.
$
90,192
11,370
3,696
105,258
58,316
$
46,942
$
9,560
37,382
$
46,942
Cash and short term investments
|
$ | 20,788 | ||
Accounts receivable
|
42,591 | |||
Inventory
|
9,661 | |||
Prepaids and other current assets
|
1,077 | |||
Fixed assets
|
3,771 | |||
Deferred tax assets
|
2,682 | |||
Long term assets
|
143 | |||
Total assets acquired
|
80,713 | |||
Accounts payable
|
(5,075 | ) | ||
Accrued expenses
|
(13,052 | ) | ||
Accrued severance
|
(1,013 | ) | ||
Deferred tax liability
|
(3,257 | ) | ||
Total liabilities assumed
|
(22,397 | ) | ||
Net tangible assets acquired
|
$ | 58,316 | ||
57
$
939
74
(1,013
)
$
Twelve Months Ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
(Unaudited) | (Unaudited) | |||||||
Revenue
|
$ | 1,187,314 | $ | 1,219,550 | ||||
Net (loss) income
|
(24,915 | ) | 9,624 | |||||
Basic income (loss) per common share
|
$ | (0.73 | ) | $ | 0.26 | |||
Diluted income (loss) per common share
|
$ | (0.73 | ) | $ | 0.26 |
Northland Medical Pharmacy Acquisition |
Natural Living Acquisition |
58
Intravenous Therapy Service Acquisition |
Payments to date
|
$ | (1,073 | ) | |
Provisions to date
|
2,172 | |||
Ending liability at December 31, 2005
|
$ | 1,297 | ||
59
Specialty Services
PBM Services
Total
$
42,456
$
18,629
$
61,085
13,789
13,789
56,245
18,629
74,874
47,924
47,924
99
99
(18,629
)
(18,629
)
$
104,268
$
$
104,268
As of December 31, 2005 | As of December 31, 2004 | |||||||||||||||||||||
Weighted | ||||||||||||||||||||||
Average Life | Gross Carrying | Accumulated | Gross Carrying | Accumulated | ||||||||||||||||||
(in months) | Amount | Amortization | Amount | Amortization | ||||||||||||||||||
Amortized intangible assets:
|
||||||||||||||||||||||
Non compete agreements
|
21.1 | $ | 4,130 | $ | (1,873 | ) | $ | 3,834 | $ | (732 | ) | |||||||||||
Customer relationships and other(1)
|
41.5 | 20,200 | (7,744 | ) | 14,288 | (5,896 | ) | |||||||||||||||
Tradename(2)
|
0.6 | 360 | (360 | ) | 2,000 | (611 | ) | |||||||||||||||
Total
|
$ | 24,690 | $ | (9,977 | ) | $ | 20,122 | $ | (7,239 | ) | ||||||||||||
Unamortized intangible assets:
|
||||||||||||||||||||||
Tradename(2)
|
$ | | $ | 4,700 | ||||||||||||||||||
(1) | Certain intangible assets associated with customer lists totaling $0.8 million were written off in the fourth quarter of 2005. |
(2) | The Company has completed the process of rebranding to a single name, BioScrip, in 2005; as a result, all legacy trade names were written off in the second quarter of 2005; this writeoff totaled $5.8 million. A tradename acquired with the Chronimed purchase was valued at $0.4 million and completely amortized in 2005. |
60
$
6,455
$
2,813
$
1,855
$
1,292
$
1,150
2005 | 2004 | ||||||||
Computer and office equipment, including equipment acquired
under capital leases
|
$ | 21,804 | $ | 20,585 | |||||
Furniture and fixtures
|
2,486 | 1,789 | |||||||
Leasehold improvements
|
4,442 | 1,888 | |||||||
28,732 | 24,262 | ||||||||
Less: Accumulated depreciation
|
(19,500 | ) | (19,962 | ) | |||||
Property and equipment, net
|
$ | 9,232 | $ | 4,300 | |||||
61
Legal Proceedings |
62
Government Regulation |
63
Operating Leases |
2006
|
$ | 3,689 | ||
2007
|
2,885 | |||
2008
|
2,593 | |||
2009
|
2,053 | |||
2010
|
1,359 | |||
Thereafter
|
210 | |||
Total
|
$ | 12,789 | ||
Capital Leases |
64
For the Years Ended December 31,
2005
2004
2003
$
341
$
1,686
$
2,620
(57
)
183
951
284
1,869
3,571
(4,862
)
2,512
2,141
(1,170
)
72
375
(6,032
)
2,584
2,516
$
(5,748
)
$
4,453
$
6,087
For the Years Ended | |||||||||||
December 31, | |||||||||||
2005 | 2004 | ||||||||||
Deferred tax assets:
|
|||||||||||
Reserves not currently deductible
|
$ | 7,701 | $ | 1,666 | |||||||
Net operating loss carryforwards
|
5,457 | 6,074 | |||||||||
Accrued expenses
|
1,448 | | |||||||||
Payor audit accrual
|
884 | | |||||||||
Capital loss carryover
|
915 | 798 | |||||||||
Property basis differences
|
148 | 141 | |||||||||
Other
|
139 | | |||||||||
Subtotal
|
16,692 | 8,679 | |||||||||
Deferred tax liabilities:
|
|||||||||||
Goodwill and intangibles
|
(5,444 | ) | (2,935 | ) | |||||||
Subtotal
|
11,248 | (5,744 | ) | ||||||||
Less: valuation allowance
|
(898 | ) | (1,248 | ) | |||||||
Net deferred tax asset
|
$ | 10,350 | $ | 4,496 | |||||||
65
2005 | 2004 | 2003 | |||||||||||
Tax (benefit) provision at statutory rate
|
$ | (10,062 | ) | $ | 3,905 | $ | 5,174 | ||||||
State tax (benefit) provision , net of Federal taxes
|
(576 | ) | 259 | 1,071 | |||||||||
Non-deductible goodwill
|
5,926 | | | ||||||||||
Merger related expenses
|
223 | | | ||||||||||
Change in tax contingencies
|
(744 | ) | | | |||||||||
Rate change on deferred items
|
(463 | ) | | | |||||||||
Other
|
(52 | ) | 289 | (158 | ) | ||||||||
Provision for income taxes
|
$ | (5,748 | ) | $ | 4,453 | $ | 6,087 | ||||||
Stock Options |
66
Weighted | |||||||||
Options | Average Price | ||||||||
Balance, December 31, 2002
|
3,023,596 | $ | 8.42 | ||||||
Granted, $5.20 $7.95 Range
|
1,235,000 | 6.74 | |||||||
Canceled
|
(262,664 | ) | 9.91 | ||||||
Exercised
|
(136,396 | ) | 4.56 | ||||||
Balance, December 31, 2003
|
3,859,536 | 7.92 | |||||||
Granted, $7.03 $7.95 Range
|
420,000 | 7.49 | |||||||
Canceled
|
(157,215 | ) | 7.63 | ||||||
Exercised
|
(224,831 | ) | 4.32 | ||||||
Balance, December 31, 2004
|
3,897,490 | 8.09 | |||||||
Granted, $5.29 $8.92 Range
|
2,061,950 | 6.11 | |||||||
Assumed in Chronimed acquisition, $3.87 $13.06 Range
|
2,612,146 | 7.15 | |||||||
Canceled
|
(2,296,908 | ) | 7.06 | ||||||
Exercised
|
(381,872 | ) | 4.44 | ||||||
Balance, December 31, 2005
|
5,892,806 | $ | 7.62 | ||||||
67
December 31, 2005
Options Outstanding
Options Exercisable
Weighted
Weighted
Average
Weighted Average
Average
Range of Option
Options
Exercise
Remaining
Options
Exercise
Exercise Price
Outstanding
Price
Contractual Life
Exercisable
Price
$ 0.00 - $ 5.2
0 1,609,685
$
3.65
5.4 Years
1,403,686
$
3.93
$ 5.57 - $ 7.0
3 1,635,153
$
6.35
7.2 Years
929,214
$
6.34
$ 7.26 - $ 9.5
6 1,546,192
$
8.55
7.4 Years
1,234,531
$
8.70
$ 9.60 - $13.06
724,109
$
12.00
4.2 Years
724,109
$
12.00
$15.13 - $20.25
377,667
$
17.75
6.1 Years
377,667
$
17.75
5,892,806
$
7.62
6.3 Years
4,669,207
$
8.04
Performance Shares |
Performance Units |
68
Plan
Sponsor
A
B
16
%
*
*
*
16
%
19
%
*
18
%
12
%
13
%
*
16
%
* | Less than 10%. |
69
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
$
188,398
$
286,617
$
293,976
$
304,244
$
20,447
$
30,513
$
31,719
$
33,588
$
1,667
$
(3,540
)
$
641
$
(22,615
)
$
0.07
$
(0.10
)
$
0.02
$
(0.61
)
$
0.06
$
(0.10
)
$
0.02
$
(0.61
)
$
148,052
$
154,125
$
161,498
$
166,840
$
16,964
$
16,850
$
16,734
$
17,608
$
2,180
$
1,946
$
1,722
$
1,190
$
0.10
$
0.09
$
0.08
$
0.05
$
0.10
$
0.09
$
0.08
$
0.05
(1) | The Company acquired Chronimed in March 2005, and Northland in October 2005. |
(2) | The Company recorded $0.2 million, $0.5 million, $0.6 million, and $1.5 million of charges, net of tax, related to the Chronimed acquisition and merger, in each of the first, second, third and fourth quarters of 2005, respectively. |
(3) | In the second quarter of 2005, the Company recorded a $3.5 million charge, net of tax, for the write-off of trade name intangibles relating to its re-branding strategy. In the fourth quarter of 2005, the Company recorded $18.2 million, net of tax, in goodwill and intangible impairment charges. |
(4) | The Company recorded a $4.3 million charge, net of tax, in the fourth quarter of 2005 to reflect an increase in the allowance for doubtful accounts receivable created by lower than expected collections during the Chronimed integration of the Companys accounting and IT functions. |
(5) | The Company acquired Natural Living, Inc. dba Fair Pharmacy in February, 2004. |
(6) | In the fourth quarter of 2004, the Company recorded $0.5 million, net of tax, for a settlement with Value Options of Texas, Inc., a client in the PBM Services segment. |
70
Balance at
Charged to
Beginning
Write-Off of
Costs and
Other
Balance at End
of Period
Receivables
Expenses
Charges
of Period
$
3,126
$
(1,325
)
$
1,713
$
$
3,513
$
357
$
$
$
$
357
$
3,513
$
(2,538
)
$
1,908
$
$
2,883
$
357
$
$
$
$
357
$
2,883
$
(6,797
)
$
12,814
$
$
8,900
$
357
$
(357
)
$
$
$
71
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
| Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the Companys financial transactions; | |
| Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our revenues and expenditures are being made only in accordance with authorizations of our management and directors; and | |
| Provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
72
In the area of information technology, we identified the following ineffective controls which we believe constitute a material weakness in the aggregate: |
| Inadequate control over segregation of duties, and restriction of employee access to application modules within the Companys financial and operating systems, including our general ledger system; | |
| Lack of monitoring controls over personnel in the information technology function with access to the production databases supporting the general ledger financial data; and | |
| Ineffective controls over the documentation, approval, testing and migration of system changes to production environments. |
This material weakness affects the processing of information related to all significant accounts in the financial statements and could potentially result in a material misstatement of the financial statements. | |
In the area of revenue recognition, we identified an ineffective control which we believe constitutes a material weakness: |
| Inadequate system and manual controls to prevent the potential overstatement of revenue for cancelled orders and other non-standard transactions in our community pharmacies. Controls failed to detect necessary revenue adjustments that were more than inconsequential but not material. Furthermore, the failure of our controls could potentially result in revenue adjustments of a material amount. |
In the area of accounts receivable, we identified the following ineffective controls which we believe constitute a material weakness in the aggregate: |
| Ineffective processes and controls to ensure timely collection efforts on past due outstanding accounts receivable; | |
| Ineffective processes and controls to ensure timely application of customer payments to customer accounts receivable; and | |
| The need for an improved process to quantify and document the Companys estimates for uncollectible accounts receivable. |
This material weakness affects the ability to monitor collections of accounts receivable, develop appropriate estimates of uncollectible amounts and to report accounts receivable in the financial statements at net realizable value and resulted in a material adjustment in the fourth quarter. |
73
Information Technology |
| Segregation of duties We are in the process of examining each of our operating and financial systems, including the general ledger system, and will restrict access of those modules and fields to employees requiring access in order to perform their jobs with appropriate internal control. We have identified the necessary segregation of duties changes and intend to implement them in second quarter 2006. We will be implementing other changes across our pharmacy operating systems during 2006. | |
| General ledger data base monitoring controls We have engaged a general ledger software consultant to create a control that will identify any changes made by any IT employee that would have access to the general ledger production data base. We expect the control to be implemented in second quarter 2006. Access to the general ledger data base is already restricted to two individuals in the IT department. | |
| Changes to system software Our information technology function has implemented a new system that identifies all changes to our production software systems. This will allow us to immediately detect such changes and therefore be certain that we have the appropriate management, user and IT approvals as we install enhancements to the production environment. In addition, we have restricted the ability to make changes to our production software systems to a limited number of individuals in the IT function. |
Revenue Recognition |
Accounts Receivable |
74
| We have appointed a full time project executive to drive improvements in receivables performance. | |
| We have added resources to prevent delays in cash posting. We assigned new leadership to manage the cash posting process. We have already implemented new processes to improve timeliness and accountability. We are expanding our use of automated tools to post cash, improving both speed and accuracy. | |
| We are adding personnel to increase our cash collection rates on both old and new accounts, and to resolve customer overpayments on a more timely basis. Also, we are developing an automated workflow and collection tool which we intend to implement in the second quarter for both our community and mail pharmacies that will focus our collectors efforts and better measure performance. | |
| We implemented an improved process to quantify and document our estimates for uncollectible accounts in the fourth quarter of 2005. We will continue to refine our methodology in 2006. |
75
76
77
(1) In the area of information technology, the Company
identified the following ineffective controls which it believes
constitute a material weakness in the aggregate:
a. Inadequate control over segregation of duties, and
restriction of employee access to application modules within the
Companys financial and operating systems, including its
general ledger system.
b. Lack of monitoring controls over personnel in the
information technology function with access to the production
databases supporting the general ledger financial data.
c. Ineffective controls over the documentation, approval,
testing and migration of system changes to production
environments.
Table of Contents
This material weakness affects the processing of information
related to all significant accounts in the financial statements
and could potentially result in a material misstatement to the
financial statements.
(2) In the area of revenue recognition, the Company
identified ineffective controls which it believes constitute a
material weakness:
a. Inadequate system and manual controls to prevent the
overstatement of revenue for cancelled orders and other
non-standard transactions in its community pharmacies. Controls
failed to detect necessary revenue adjustments that were more
than inconsequential but not material. Furthermore, the failure
of its controls could potentially result in revenue adjustments
of a material amount.
(3) In the area of accounts receivable, the Company
identified the following ineffective controls which it believes
constitute a material weakness in the aggregate:
a. Ineffective processes and controls to ensure timely
application of customer payments to customer accounts receivable.
b. Ineffective processes and controls to ensure timely
collection efforts on past due outstanding accounts receivable.
c. The lack of a thorough and objective process to quantify
and document the Companys estimates for uncollectible
accounts receivable.
This material weakness affects the ability to monitor
collections of accounts receivable, develop appropriate
estimates of uncollectible amounts, and to report accounts
receivable in the financial statements at net realizable value
and resulted in a material adjustment in the fourth quarter.
/s/ Ernst & Young LLP
Table of Contents
Item 9B. | Other Information |
Item 10. | Directors and Executive Officers of the Registrant |
Item 11. | Executive Compensation |
Item 12. | Security Ownership of Certain Beneficial Owners and Management |
Item 13. | Certain Relationships and Related Transactions |
78
Item 15. | Exhibits, Financial Statement Schedules, and Reports on Form 8-K |
Page | ||||
1. Financial Statements:
|
||||
42 | ||||
43 | ||||
44 | ||||
45 | ||||
46 | ||||
47 | ||||
2. Financial Statement Schedules:
|
||||
71 |
79
Exhibit | ||||||
Number | Description | Location | ||||
2 | .0 | Agreement and Plan of Merger by and Among MIM Corporation, CMP Acquisition Corp., Continental Managed Pharmacy Services, Inc. and Principal Shareholders dated as of January 27, 1998 | (1)(Exhibit 2.1) | |||
2 | .1 | Agreement and Plan of Merger, dated as of August 9, 2004, among MIM Corporation, Chronimed Acquisition Corp. and Chronimed Inc. | (2) (Exhibit 99.1) | |||
2 | .2 | Amendment No. 1 dated January 3, 2005 to Agreement and Plan of Merger dated August 9, 2004 by and among MIM Corporation, Chronimed Acquisition Corp. and Chronimed Inc. | (3) (Exhibit 10.1) | |||
3 | .1 | Second Amended and Restated Certificate of Incorporation of MIM Corporation | (4) (Exhibit 4.1) | |||
3 | .2 | Amended and Restated By-Laws of MIM Corporation | (5) | |||
4 | .1 | Specimen Common Stock Certificate | * | |||
10 | .1 | Indemnity letter from MIM Holdings, LLC dated August 5, 1996 | (6) (Exhibit 10.36) | |||
10 | .2 | Employment Agreement between MIM Corporation and Richard H. Friedman dated as of December 1, 1998 | (7) (Exhibit 10.14) | |||
10 | .3 | Employment Agreement between MIM Corporation and Barry A. Posner dated as of March 1, 1999 | (7) (Exhibit 10.17) | |||
10 | .4 | Registration Rights Agreement-IV between MIM Corporation and John H. Klein, Richard H. Friedman, Leslie B. Daniels, E. David Corvese and MIM Holdings, LLC dated July 31, 1996 | (4) (Exhibit 10.34) | |||
10 | .5 | Registration Rights Agreement-V between MIM Corporation and Richard H. Friedman and Leslie B. Daniels dated July 31, 1996 | (4) (Exhibit 10.35) | |||
10 | .6 | Amendment No. 1 dated August 12, 1996 to Registration Rights Agreement-IV between MIM Corporation and John H. Klein, Richard H. Friedman, Leslie B. Daniels, E. David Corvese and MIM Holdings, LLC dated July 31, 1996 | (8) (Exhibit 10.29) | |||
10 | .7 | Amendment No 2 dated June 16, 1998 to Registration Rights Agreement-IV between MIM Corporation and John H. Klein, Richard H. Friedman, Leslie B. Daniels, E. David Corvese and MIM Holdings, LLC dated July 31, 1996 | (7) (Exibit 10.31) | |||
10 | .8 | Lease between Alchemie Properties, LLC and Pro-Mark Holdings, Inc., dated as of December 1, 1994 | (4) (Exhibit 10.27) | |||
10 | .9 | Lease Agreement between Mutual Properties Stonedale L.P. and MIM Corporation dated April 23, 1997 | (9) (Exhibit 10.41) | |||
10 | .10 | Agreement between Mutual Properties Stonedale L.P. and MIM Corporation dated as of April 23, 1997 | (9) (Exhibit 10.42) | |||
10 | .11 | Lease Amendment and Extension Agreement between Mutual Properties Stonedale L.P. and MIM Corporation dated December 10, 1997 | (9) (Exhibit 10.43) | |||
10 | .12 | Lease Amendment and Extension Agreement-II between Mutual Properties Stonedale L.P. and MIM Corporation dated March 27, 1998 | (9) (Exhibit 10.44) | |||
10 | .13 | Lease Agreement between Mutual Properties Stonedale L.P. and Pro-Mark Holdings, Inc., dated December 23, 1997 | (9) (Exhibit 10.45) | |||
10 | .14 | Amendment No. 1 to Employment Agreement, dated as of October 11, 1999 between MIM Corporation and Richard H. Friedman | (10) (Exhibit 10.60) | |||
10 | .15 | Form of Performance Shares Agreement | (10) (Exhibit 10.61) | |||
10 | .16 | Form of Performance Units Agreement | (10) (Exhibit 10.62) | |||
10 | .17 | Form of Non-Qualified Stock Option Agreement | (10) (Exhibit 10.63) |
80
Exhibit
Number
Description
Location
10
.18
Corporate Integrity Agreement between the Office of the
Inspector General of the Department of Health and Human Services
and MIM Corporation, dated as of June 15, 2000
(11) (Exhibit 10.2)
10
.19
Loan and Security Agreement, dated November 1, 2000,
between MIM Funding LLC and HFG Healthco-4 LLC
(12) (Exhibit 10.1)
10
.20
Receivables Purchase and Transfer Agreement, dated as of
November 1, 2000, among MIM Health Plans, Inc., Continental
Pharmacy, Inc., American Disease Management Associates LLC and
MIM Funding LLC
(12) (Exhibit 10.2)
10
.21
Lease Agreement, dated as of February 24, 2000, by and
between American Duke-Weeks Realty Limited Partnership and
Continental Managed Pharmacy Services, Inc.
(13) (Exhibit 10.68)
10
.22
First Lease Amendment, dated as of February 24, 2000, by
and between Duke-Weeks Realty Limited Partnership and
Continental Managed Pharmacy Services, Inc.
(13) (Exhibit 10.69)
10
.23
Lease Agreement, dated as of July 22, 1996, by and between
American Disease Management Associates, LLC (ADIMA)
and Regent Park Associates
(13) (Exhibit 10.70)
10
.24
First Amendment of Agreement of Lease, dated as of June 15,
1999, by and between ADIMA and Five Regent Park Associates
(13) (Exhibit 10.71)
10
.25
Second Amendment of Agreement of Lease, dated as of
February 11, 2000, by and between ADIMA and Five Regent
Park Associates
(13) (Exhibit 10.72)
10
.26
Asset Purchase Agreement, dated April 4, 2001 among
Continental Managed Pharmacy Services Inc., Community
Prescription Service, Inc., and its Stockholders
(14) (Exhibit 10.74)
10
.27
Purchase Agreement among American Disease Management Associates,
L.L.C., its Members and Certain Related Partners, MIM Health
Plans, Inc. and the Registrant, dated as of August 3, 2000
(incorporated by reference to Exhibit 2.1 to the
Registrants Current Report on Form 8-K filed
August 10, 2000)
(15) (Exhibit 4.2)
10
.28
Registration Rights Agreement between the Registrant and
Livingston Group LLC dated as of August 3, 2000
(incorporated by reference to Exhibit 4.1 to the
Registrants Current Report on Form 8-K filed
August 10, 2000)
(15) (Exhibit 4.3)
10
.29
Employment letter, dated as of June 19, 2001, between MIM
Health Plans, Inc and Michael Sicilian
(16) (Exhibit 10.77)
10
.30
Purchase Agreement, dated as of January 9, 2002, among
Vitality Home Infusion Services, Inc., Marc Wiener, Barbara
Kammerer and MIM Corporation
(17) (Exhibit 2.1)
10
.31
Lease Agreement, dated as of January 31, 2002, between
Bar-Marc Realty, LLC, as landlord, and Vitality Home Infusion
Services, Inc., as Tenant
(18) (Exhibit 10.49)
10
.32
Guaranty of Lease Agreement, dated January 31, 2002, made
by the Company in favor of Bar-Marc Realty, LLC
(18) (Exhibit 10.50)
10
.33
Employment Letter, dated October 15, 2001, between the
Company and Russell J. Corvese
(18) (Exhibit 10.51)
10
.34
Amendment to Employment Agreement entered into as of
September 18, 2002 by and between the Company and Barry A.
Posner
(19) (Exhibit 10.50)
10
.35
Amendment to Employment Agreement effective as of
December 31, 2001 by and between the Company and Richard H.
Friedman
(19) (Exhibit 10.51)
81
Exhibit
Number
Description
Location
10
.36
Employment Letter, dated October 1, 2002, between the
Company and James S. Lusk
(19) (Exhibit 10.52)
10
.37
Third Amendment of Agreement of Lease, dated June 24, 2002,
between Five Regent Park Associates and American Disease
Management Associates
(19) (Exhibit 10.53)
10
.38
Second Amendment and Consent, dated as of January 31, 2002,
to the Receivable Purchase and Transfer Agreement, dated as of
November 1, 2000
(19) (Exhibit 10.54)
10
.39
Amendment No. 3, dated as of November 25, 2002, to the
Receivables Purchase and Transfer Agreement, dated as of
November 1, 2000, each of the parties named on
Schedule I thereto, MIM Funding LLC and HFG Healthco-4 LLC
(19) (Exhibit 10.55)
10
.40
Amended and Restated 2001 Incentive Stock Plan
(20)
10
.41
Amended and Restated 1996 Non-Employee Directors Stock
Incentive Plan (effective April 17, 2002)
(21)
10
.42
Amended and Restated Rights Agreement, dated as of
December 3, 2002 between MIM Corporation and American Stock
Transfer and Trust Company
(22)
10
.43
Extension Agreement, dated as of June 30, 2003, to the
Receivables Purchase and Transfer Agreement dated as of
November 1, 2000, among Scrip Solutions, Inc., each of the
parties named on Schedule I to the Original RPTA and MIM
Funding LLC and consented to by HFG Healthco-4 LLC
(23) (Exhibit 10.1)
10
.44
Extension Agreement, dated as of June 30, 2003, to the Loan
and Security Agreement dated as of November 1, 2000,
between MIM Funding LLC and HFG Healthco-4 LLC
(23) (Exhibit 10.2)
10
.45
Amendment, dated January 28, 2004, to Employment Agreement,
dated as of March 1, 1999, as amended to date, by and
between MIM Corporation and Barry A. Posner
(24) (Exhibit 10.44)
10
.46
Amendment, dated October 13, 2003, to Employment Letter
Agreement entered into as of June 19, 2001, by and between
Scrip Solutions, Inc. and Michael J. Sicilian
(24) (Exhibit 10.45)
10
.47
Amendment, dated September 19, 2003, to Employment Letter
Agreement entered into as of October 15, 2001, by and
between Scrip Solutions, Inc. and Russel J. Corvese
(24) (Exhibit 10.46)
10
.48
Lease Amendment and Extension Agreement, dated August 31,
2003, by and between Scrip Solutions, Inc. and Mutual Properties
Stonedale LLC
(24) (Exhibit 10.47)
10
.49
Letter Agreement, dated January 28, 2004, between the
Company and Alfred Carfora
(25) (Exhibit 10.1)
10
.50
Amendment No. 3 to Employment Agreement, dated as of
August 9, 2004, between MIM Corporation and Richard H.
Friedman
(26) (Exhibit 10.1)
10
.51
Amendment, dated October 28, 2004, to Employment Agreement
for Barry A. Posner
(27) (Exhibit 10.2)
10
.52
Amendment, dated December 1, 2004, to Employment Letter
Agreement for Russel J. Corvese
(28) (Exhibit 10.1)
10
.53
Lease Agreement by and between Alchemie Properties, LLC and
Scrip Solutions, LLC
(29) (Exhibit 10.53)
10
.54
Employment Offer Letter, dated July 18, 2005 from the
Company to Gregory H. Keane
(30) (Exhibit 10.1)
82
Exhibit
Number
Description
Location
10
.55
Employment Offer Letter, dated July 18, 2005 from the
Company to Anthony J. Zappa
(30) (Exhibit 10.2)
10
.56
Amendment No. 2, dated July 18, 2005, to Change of
Control Severance Agreement of Anthony J. Zappa
(30) (Exhibit 10.3)
10
.57
Letter Agreement, dated May 31, 2005, between BioScrip,
Inc. and Alfred Carfora
(31) (Exhibit 10.1)
10
.58
Second Amendment, dated as of March 1, 2006, to Loan and
Security Agreement, dated as of November 1, 2000, between
MIM Funding LLC and HFG Healthco-4 LLC
(32) (Exhibit 99.1)
10
.59
Separation Agreement between the Company and Henry F. Blissenbach
(33) (Exhibit 99.1)
10
.60
Letter Agreement between the Company and Barry A. Posner
(33) (Exhibit 99.3)
10
.61
Employment offer letter, dated July 18, 2005, from the
Company to Brian Reagan
*
10
.62
Amendment to Change of Control Severance Agreement between the
Company and Brian Reagan
*
21
List of Subsidiaries
*
23
.1
Consent of Ernst and Young, LLP
*
31
.1
Certification of Henry F. Blissenbach pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
*
31
.2
Certification of Gregory H. Keane pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
*
32
.1
Certification of Henry F. Blissenbach pursuant to 18
U.S. C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
*
32
.2
Certification of Gregory H. Keane pursuant to 18 U.S. C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
*
(1) | Incorporated by reference to the indicated exhibit to the Companys Registration Statement on Form S-4 (File No. 333-60647), as amended, which became effective on August 21, 1998. | |
(2) | Incorporated by reference to the indicated exhibit to the Companys Current Report on Form 8-K filed on August 9, 2004 | |
(3) | Incorporated by reference to the indicated exhibit to the Companys Current Report on Form 8-K filed on January 5, 2005 | |
(4) | Incorporated by reference to the indicated exhibit to the Companys Current Report on Form 8-K filed on March 17, 2005 | |
(5) | Incorporated by reference to the indicated exhibit to the Companys Registration Statement on Form S-1 (File No. 333-05327), as amended, which became effective on August 14, 1996. | |
(6) | Incorporated by reference to Exhibit 3.2 to the Companys Quarterly Report on Form 10-Q filed with the Commission on May 15, 2003. | |
(7) | Incorporated by reference to the indicated exhibit to the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 1998. | |
(8) | Incorporated by reference to the indicated exhibit to the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 1996. | |
(9) | Incorporated by reference to the indicated exhibit to the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 1997. |
(10) | Incorporated by reference to the indicated exhibit to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1999. |
83
(11) | Incorporated by reference to the indicated exhibit to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000. |
(12) | Incorporated by reference to the indicated exhibit to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000. |
(13) | Incorporated by reference to the indicated exhibit to the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2000. |
(14) | Incorporated by reference to the indicated exhibit to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2001. |
(15) | Incorporated by reference to the indicated exhibit to the Companys Current Report on Form 8-K filed on August 10, 2000. |
(16) | Incorporated by reference to the indicated exhibit to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2001. |
(17) | Incorporated by reference to the indicated exhibit to the Companys Form 8-K filed on February 5, 2002. |
(18) | Incorporated by reference to the indicated exhibit to the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2001. |
(19) | Incorporated by reference to the indicated exhibit to the Companys Annual Report Form 10-K for the year ended December 31, 2002. |
(20) | Incorporated by reference from the Companys definitive proxy statement for its 2002 annual meeting of stockholders filed with the Commission April 24, 2002. |
(21) | Incorporated by reference from the Companys definitive proxy statement for its 2003 annual meeting of stockholders filed with the Commission April 30, 2003. |
(22) | Incorporated by reference to Exhibit 4.1 to Post-Effective Amendment No. 3 to the Companys Form 8-A/ A dated December 4, 2002. |
(23) | Incorporated by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed with the Commission on August 13, 2003. |
(24) | Incorporated by reference to the indicated exhibit to the Companys Annual Report Form 10-K for the year ended December 31, 2003. |
(25) | Incorporated by reference to the indicated exhibit to the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 |
(26) | Incorporated by reference to the indicated exhibit to the Companys Registration Statement on Form S-4, Registration No. 333-119098 |
(27) | Incorporated by reference to the indicated exhibit to the Companys Current Report on Form 8-K filed on October 28, 2004 |
(28) | Incorporated by reference to the indicated exhibit to the Companys Current Report on Form 8-K filed on December 1, 2004 |
(29) | Incorporated by reference to the indicated exhibit to the Companys Annual Report on Form 10-K for the year ended December 31, 2004 |
(30) | Incorporated by reference to the indicated exhibit to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 |
(31) | Incorporated by reference to the indicated exhibit to the Companys Current Report on Form 8-K filed on June 6, 2005 |
(32) | Incorporated by reference to the indicated exhibit to the Companys Current Report on Form 8-K filed on March 2, 2006 |
(33) | Incorporated by reference to the indicated exhibit to the Companys Current Report on Form 8-K filed on March 1, 2006 |
84
BIOSCRIP INC. | |
/s/ Gregory H. Keane | |
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Gregory H. Keane | |
Chief Financial Officer |
Signature | Title(s) | Date | ||||
/s/ Richard H. Friedman
Richard H. Friedman |
Executive Chairman of the Board | March 31, 2006 | ||||
/s/ Henry F. Blissenbach
Henry F. Blissenbach |
Director and Chief Executive Officer (principal executive officer) | March 31, 2006 | ||||
/s/ Gregory H. Keane
Gregory H. Keane |
Chief Financial Officer (principal financial officer) | March 31, 2006 | ||||
/s/ Charlotte W. Collins
Charlotte W. Collins |
Director | March 31, 2006 | ||||
/s/ Louis T. DiFazio
Louis T. DiFazio, Ph.D. |
Director | March 31, 2006 | ||||
/s/ Myron Z. Holubiak
Myron Z. Holubiak |
Director | March 31, 2006 | ||||
/s/ David R. Hubers
David R. Hubers |
Director | March 31, 2006 | ||||
/s/ Michael Kooper
Michael Kooper |
Director | March 31, 2006 | ||||
/s/ Richard L. Robbins
Richard L. Robbins |
Director | March 31, 2006 | ||||
/s/ Stuart A. Samuels
Stuart A. Samuels |
Director | March 31, 2006 |
85
86
4.1
Specimen Common Stock Certificate
10.61
Employment offer letter, dated July 18, 2005, from the
Company to Brian Reagan
10.62
Amendment to Change of Control Severance Agreement between the
Company and Brian Reagan
21
List of Subsidiaries
23.1
Consent of Ernst and Young LLP
31.1
Certification of Henry F. Blissenbach pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
31.2
Certification of Gregory H. Keane pursuant to 18 U.S.C.
Section 1350,as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1
Certification of Henry F. Blissenbach pursuant to 18
U.S. C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification of Gregory H. Keane pursuant to 18 U.S. C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
BioScrip, Inc. COMMON STOCK INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE COMMON STOCK CUSIP 09069N 10 8 SEE REVERSE FOR CERTAIN DEFINITIONS This is to certify that is the owner of FULLY-PAID AND NON-ASSESSABLE SHARES, PAR VALUE $. 0001 PER SHARE, OF THE COMMON STOCK OF Bioscrip, Inc. (the corporation) transforable on the books of the Corporation in person on by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrer Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: SECRETARY CHAIRMAN OF THE BOARD COUNTERSIGNED AND REGISTERED AMERICAN STOCK TRANSFER & TRUST COMPANY (NEW YORK, NEW YORK) TRANSFER AGENT AND REGISTRARAUTHORIZED OFFICER |
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TEN COM | | as tenants in common | UNIF GIFT MIN ACT Custodian | ||||
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TEN ENT | | as tenants by the entireties | (Cust) (Minor) | ||||
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JTTEN | | as joint tenants with right of | under Uniform Gifts to Minors | ||||
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survivorship and not as tenants in common
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Act
(State)
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For value received, hereby sell, assign and transfer write | ||||||||
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PLEASE INSERT SOCIAL SECURITY OR OTHER | ||||||||
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IDENTIFYING NUMBER OF ASSIGNEE | ||||||||
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shares | ||||||||
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of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint | ||||||||
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to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. | ||||||||
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Dated | ||||||||
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NOTICE: |
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Signature(s) Guaranteed: | ||||||||
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THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. |
10900 Red Circle Drive | Minnetonka, Minnesota 55343 | 952-979-3600 | www.bioscrip.com |
10900 Red Circle Drive | Minnetonka, Minnesota 55343 | 952-979-3600 | www.bioscrip.com |
Re:
|
Amendment to Change of Control Severance Agreement |
/s/ Ernst & Young LLP |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | |
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Henry F. Blissenbach | |
|
|
Henry F. Blissenbach, | |
Chief Executive Officer |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | |
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: March 31, 2006 | |
/s/ Gregory H. Keane | |
|
|
Gregory H. Keane, | |
Chief Financial Officer |
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Henry F. Blissenbach | |
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Henry F. Blissenbach |
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Gregory H. Keane | |
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Gregory H. Keane |