CORE is key to BioScrip reversal
DENVER – BioScrip has pushed closer to its goal of having its core home infusion business make up 85% of its overall revenue, said company executives on a recent earnings call.
On March 3, BioScrip reported net revenues of $166.8 million for its core business for the fourth quarter, an increase of $21.9 million or 15.1% compared to the same quarter in 2015. The core business grew to represent 70% of the company’s total revenues in the quarter.
“We’ve got a great sales team in place, and some terrific initiatives that we’ve kicked off,” said Jeff Kreger, senior vice president, CFO and treasurer. “Once the sales teams is mature in its approach, we’d love to do a half percent to 1% growth a month. We are targeting 7%, 8%, 9% growth this year. We will get this company to a 85% core portfolio mix.”
Overall, net revenues were $240 million for the fourth quarter, a decrease of $3.6 million or 1.5% compared to the same quarter of 2015. Full-year guidance for 2017 is in the range of $920 million to $950 million, and adjusted EBITDA is $45 million to $55 million.
During the fourth quarter, the company launched its CORE initiative to focus on improving home infusion growth, operational efficiencies, revenue collections and employee effectiveness, says Daniel Greenleaf, president and CEO.
“Our most important asset is our workforce of 2,443 teammates,” he said. “We have significantly upgraded our executive team and revamped our compensation structure to align with key sales and operational initiatives.”
Although it didn’t take effect until Jan. 1, 2017, BioScrip execs addressed the payment gap for home infusion created by the 21st Century Cures Act. Per a provision in the act, Medicare pays for Part B infusion drugs under an average sales price model, a move that reduces payments so drastically that, essentially, they no longer cover services. Another provision in the act provides payments for these services, but not until 2021.
BioScrip estimates the impact of the provision to be $24 million to EBITDA in 2017, but it says cost-cutting initiatives, including an 11% reduction in workforce, should offset about $15 million of that.
“We are working diligently internally and externally to mitigate the impact,” Greenleaf said. “We are actively working with the National Home Infusion Association to propose an amendment to the legislation and increase awareness of the negative connotation this legislation has on patients.”