Following the announcement of the acquisition of HS Infusion Holdings, Inc. (Home Solutions), by BioScrip, Inc, (Nasdaq: BIOS) in June, the deal has been finalized. BioScrip, a national provider of infusion and home care management solutions will now integrate Home Solutions, also a provider of home infusion and home nursing products and services for patients with chronic and acute medical conditions.
BioScrip, Inc. (NASDAQ:BIOS) (“BioScrip” or the “Company”), a leading national provider of infusion and home care management solutions, today announced that it has entered into an agreement to acquire the business of HS Infusion Holdings, Inc. (“Home Solutions”), in a highly synergistic, transformational and accretive transaction with significant benefits for all stakeholders. Based in Hammonton, New Jersey, Home Solutions is a leading provider of home infusion and home nursing products and services to patients suffering from chronic and acute medical conditions. Home Solutions is a privately held company whose principal shareholder is KRG Capital Partners LLC.
Under the terms of the transaction, BioScrip will acquire substantially all of the assets and assume certain liabilities of Home Solutions and its subsidiaries for total transaction consideration of $85.0 million at closing (the “Closing Consideration”) and additional contingent consideration in the form of restricted stock units (“RSUs”) (the “Contingent Consideration”).
The Closing Consideration will consist of $80.0 million payable in cash, subject to certain adjustments and $5.0 million in shares of the Company’s common stock. The Contingent Consideration will consist of restricted shares of BioScrip common stock, issued in two tranches with different vesting conditions. The number of RSUs in Tranche A and Tranche B is approximately 3.1 million and 2.475 million, respectively. The RSUs would vest in two tranches when BioScrip shares exceed 20-day average trading prices of $4.00 per share and $5.00 per share, respectively, subject to certain time restrictions and under certain circumstances, in the event of a change of control.
In 2015, BioScrip and Home Solutions generated revenue of $982 million and $109 million, respectively. On a pro forma basis, the combined company is expected to generate over $1 billion in revenue. The transaction is expected to be accretive to BioScrip’s financial results and is estimated to generate $14-17 million of synergies approximately 12-18 months following the closing. The operating synergies are primarily related to supply chain efficiencies, infrastructure optimization and other corporate and organizational improvements.
The additional financial contribution from Home Solutions, including anticipated synergies, is expected to strengthen the Company’s balance sheet and leverage profile, thereby improving BioScrip’s strategic flexibility and competitive positioning and realigning the Company as a growth platform in the attractive post-acute care segment.
The combination of BioScrip and Home Solutions brings together two highly complementary core infusion services portfolios that will have greater scale and financial resources. Home Solutions is one of the largest independent home infusion providers in the country, with branches that span across the East Coast. For full year 2015, core revenue increased 8.3% and core admits increased 12.0%, both over the prior year period.
The combined company will have an enhanced national presence, providing expanded core infusion services for patients and benefitting from additional payor relationships. The addition of Home Solutions will enhance BioScrip’s revenue mix and margins, as Home Solutions’ revenues from core infusion therapies represented 81% of total gross revenues at the end of 2015.
Daniel Greenleaf, Chairman and Chief Executive Officer of Home Solutions, said, “This transaction is a terrific opportunity to combine with a complementary infusion services company that shares our passion and commitment for providing national reach and local care. Together we will be able to further deliver on our shared mission of providing cost-effective care that is driven by clinical excellence, customer service, and values that promote positive outcomes and an enhanced quality of life for patients. I appreciate Rick’s partnership and friendship, as well as the support of Carter and the entire Board as we deliver value to shareholders by building the largest independent home infusion provider.”
BioScrip will continue to be headquartered in Denver, Colorado and plans to maintain branches throughout the United States, and maintain Home Solutions’ Hammonton, New Jersey billing and operations center.
The transaction is anticipated to be financed through the net proceeds from an equity offering to be initiated promptly under the Company’s existing shelf registration statement, subject to market conditions. Any excess proceeds from the offering following the acquisition will be primarily used to reduce BioScrip’s outstanding indebtedness.
The transaction, which is expected to close in the third quarter of 2016, is subject to receipt of necessary regulatory approvals, a financing contingency and approval of certain matters by BioScrip shareholders, as well as customary closing conditions.
