Good morning, my name is Sara and I will be your conference operator today. At this time I would like to welcome everyone to the BioScrip First Quarter Earnings Release. [Operator Instructions] Thank you. I would now like to turn the call over to Ms. Kathryn Stalmack. You may begin.

Thank you, Sara. Good morning and thank you for joining us today. By now you should have received a copy of our press release issued this morning. If you have not received it you may access it through the Investor Relations section of our website. Dan Greenleaf, President and Chief Executive Officer; and Stephen Deitsch, Senior Vice President, Chief Financial Officer and Treasurer, will host this morning's call. The call may be accessed through our website at BioScrip.com. A replay will be available shortly after the call and will remain available for a period of two weeks. Interested parties can access the replay by dialing 855-859-2056 in the U.S. and entering access code 8579499. An audio webcast will also be available for 30 days following the call in the Investor Relations section of the BioScrip's website at www.bioscrip.com. Before we get started I'd like to remind everyone that many of our comments may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such forward-looking statements are based upon current expectations and there can be no assurance that the results contemplated in these statements will be realized. Please refer to our press release and our reports filed with the SEC where you will find factors that could cause actual results to differ materially from these forward-looking statements. These forward-looking statements are based on information available to BioScrip today and the Company assumes no obligation to update statements as circumstances change. During this presentation we will refer to adjusted EBITDA, a non-GAAP financial measure. A reconciliation to the most comparable GAAP financial measure is contained in our press release issued this morning which can be obtained from the Investor Relations section of our website. And now I would like to turn the call over to Dan Greenleaf. Dan.

Thanks, Kathryn. Good morning, everyone and thank you for joining us. This morning I will be providing an update on our first quarter performance, as well as the continued progress we're making on the Company's turnaround plan. Steve Deitsch, our new CFO will then provide additional financial details and discuss our 2017 guidance. Before I further elaborate on the quarter, I wanted to formally introduce Steve Deitsch, newest member of our executive leadership team. Steve recently joined BioScrip as Senior Vice President, Chief Financial Officer and Treasurer. Steve brings a wealth of financial and operational experience to BioScrip including executive level financial positions with both public and privately held healthcare companies. Following his addition, I believe BioScrip has never been in a better position to effectively execute on the vast opportunities in front of the company and I look forward to Steve's contribution going forward. I am pleased with the company's first quarter performance which was in line with our plan. The BioScrip leader team continued to execute recently implemented core initiatives. As a reminder, core is an acronym representing our focus on identifying and executing strategies to accelerate BioScrip's core revenue growth and mix, drive operational efficiencies, improve revenue collections and increase employee effectiveness throughout the organization. The BioScrip team continues to accelerate it's 18 to 24 month turnaround plan and our teammate's efforts are positively impacting the business. Our sales team met our revenue target for the quarter and continue to increase our core revenue mix. In addition, our gross profit margin improved 320 basis points year-over-year with the increased driven primarily by the core revenue mix and supply chain initiatives. Our organization continues to improve our revenue mix with core revenue mix increasing to a record 72% of total revenue, an increase of 12 percentage points compared…

Thank you, Dan and good morning everyone. It's an honor to join the BioScrip team as Chief Financial Officer and I look forward to working together with all of you. My prepared remarks will include additional information on the Company's Q1 performance and 2017 guidance. Revenue from continuing operations for the first quarter of 2017 was $217.8 million compared to $238.5 million in the first quarter of 2016, a decrease of $20.7 million or 8.7%. This revenue decrease resulted from the company's previously announced shift in strategy to focus on growing its core revenue mix coupled with the impact of the Cures Act partially offset by the accretive impact of the home solutions acquisition. Our revenue mix is currently 72% core and 28% noncore with core mix increasing 12 percentage points above our 60% core mix from a year ago. Core product mix also increased 200 basis points from the fourth quarter of 2016. Gross profit margin for the first quarter of 2017 was 30.1%, a 320 basis point improvement compared to the first quarter of 2016. This year-over-year improvement reflects the positive impacts from increased core product mix, supply chain initiatives, home solution synergies, and other cost reductions. Adjusted EBITDA for the first quarter the first quarter of 2017 was $5.2 million compared to $7.4 million in the first quarter of 2016. The decrease was primarily driven by the negative impact of the Cures Act offset partially by improved gross profit margins, home solution synergies and other cost reductions. The company's cash balance increased $6.4 million during the first quarter of 2017 to $15.9 million. The increase in cash during the first quarter of 2017 was primarily driven by $19 million of net new borrowings pursuant to the six senior credit facility amendment and a $5.1 million private equity…

[Operator Instructions] And your first question comes from the line of Brooks O'Neil with Lake Street Capital.

Welcome, Steve. I could tell you with certainly I’m breathing a big kind of sigh of relief this morning.

Thank you, Brooks. It’s a pleasure to be here, and that look forward to working with the team.

So I have a few questions. First, you talked, Steve, about the liquidity situation. I’m just hoping you might be able to give us some insight into the impact of the United roll off from a liquidity cash flow perspective.

So our contract with United Healthcare continues through most of this year. And so our team is going through the process of evaluating the transition of that contract. In the near-term, we’re not experiencing any negative impacts from it.

Second question. Obviously you’re making great progress on the core mix. I see that as a central pillar of the transformation occurring at the company. How high do you think that can go given what you see in the marketplace today and the plans for the company?

I have no doubt we can get to 85% approximately. And keep in mind, every single percentage point is improved derivative somewhere between $0.5 million and $1 million. So there's a large push within the organization to get it done. Brooks, I like to think of it as percentage point. Every month is probably very optimistic. I think it's probably going to be more like a percentage point or two every quarter. And so that's how we're kind of thinking about this. But again, Brooks, I think what our experience has been is that 8515 is the right number. It gets the company into a very healthy place, very sustainable place. But also allows us to also be a good steward to our customers. And there is a need out there for us to do some business that’s less than favorable, and we think the 8515 is the right balance of that.

And I know there was quite a bit. I mean, that as a percentage. But just a quite a bit of a core business this United. Do you see that as having a negative impact on the business or the company in any way terminating that part of the relationship?

I don't, Brooks. If I look at the overall contract as a percent, United core to non-core was significantly less than our company average. And so I think the impact of that is going to be significantly less than you might see based on our 72% number.

Just two more quickies. In the past, you’ve mentioned the potential for partnerships and potentially new relationships with health plans. Do you still see that as an opportunity for BioScrip in 2017?

I haven’t published any numbers on that, Brooks. But we've literally doubled the number of hospital arrangements we've had previously just the last six months. So we feel there's tremendous momentum there. There's tremendous interest. I think we've got a great product for our hospital referral partners. And then on the payer side, there’s obviously tremendous amount of interest in working with a company like ours. I mean, by virtue of what we do, Brooks, we’re a value based purchasing organization. And clearly, people understand that. There is significant value in making sure that the patient is going to the home at the right time. And the payers understand that, the healthcare systems understand that. So I would expect that these relationships will continue to become more formalized in the future.

Last question for me. My sense is when cures was put into effect at the beginning of year, you still had some Medicare patients who were getting those therapies. Can you just give us a sense for where you're at in sort of mitigating the negative impact of the cures act, and maybe any sense for whether that should be incrementally a positive for you moving forward into Q2?

I think like anything, Brooks, when we took the action plan, and part of the action plan was labor. And that labor had to be bled off in the first quarter because people had jobs, they had to do associate with these patients, and we wanted to make sure that there was going to be an orderly transition. We’ll get the full impact of that in the second quarter. Other things we did subsequent to that announcement was we even stepped up our supply chain initiatives, and we’ve seen very favorable impact on the first quarter. But I would expect that those will get the full value of what we did in the first quarter. But I fully expect those things to continue to accelerate. And then obviously the other piece that isn't completely baked into this is just our improvement in our profit margins our gross profit margins. And as we continue to grow core, we can fully expect that those will continue to improvement. And again, the fourth quarter was 410 basis point improvement year-over-year, and first quarter 330 basis point improvements And that is driven by core certainly supply chain. But again, Brooks, we’ll continue to see those things accelerate into the second quarter.

You guys are off to a terrific start, and I’m excited for the year.

And your next question comes from the line of Brian Tanquilut with Jefferies.

Good morning, guys. Good morning, Dan, and welcome, Steve. To follow up on Brook’s question on United first. So how should we think about the pace of roll offs of United? Dan, if you don’t mind just walking us through your views on the mechanics of mitigating the United hit whether it’s supply chain because we’re getting a lot of question from folks wondering how it would not be - whether or not our purchasing power, and what you can do to flex the cost structure to address the United role off.

Let’s start with one question at a time if we could just do that, Brian. So the first question was regarding -- we're still working with United on what the transition looks like. I mean they’ve been, frankly, they’ve been a very good partner. And I think for the ending of an arrangement, I think the discussions with them have been ongoingly positive if you will. So I think that this will be a very orderly transition. I believe that both parties are going to work very closely together, and make sure that we're doing right for the patient, and certainly right for both companies. And I think that’s the spirit of everything that we’ve undertaken with them. And again, this is something, as you know, we've done before at Coram and again had a similar experience where it was an orderly transition. The patient was put first. Both companies were able to do this in a manner that didn't hurt either company, and that's the spirit that I think both companies continue to go out this way.

And then, Dan, on the purchasing scale. I mean, what’s your view on whether or not the United loss will eventually cost the deleveraging of Euro.

There’s a few thing to think about. Number one, a lot of our arrangements frankly are already - frankly market share base so have nothing to do with volume. And so I want to point that out the other thing is that there is lots of pricing opportunities in the marketplace related to kind of formulary control that are also not volume-based and are actually a lot more favorable than just going and staying in a volume-based arrangement that from a manufacturing standpoint to win but may not be necessarily a win for us. And we think frankly behind there is a turn of opportunity on that front of just choosing other products for formulary and again we've already done this with Avid, Nestlé and are seeing tremendous success there. We certainly believe there's a lot of opportunity in the IDR G space as well. We've only scratched the surface of that opportunity and then we also have very good partnerships within we made it very partnerships with Innovatives, and we have good partnerships with Amerisource and very good partnerships with MSD and these are long-standing partnerships and we certainly believe that they will continue to be very appropriate partners for now and in the future. And again I mean part of their bet Brian leaving the volume base aside they’re betting on a team that's going to win. They’re betting on a team that can drive formulary, they're betting on a team that keeps its commitments and I think out of equivocally they know this is the team to bet on.

Okay, I appreciate those comments. And then Dan as I think about the mix right you’re trying to push the Core mix higher obviously and margin. Have you seen any push back from referral sources as you try to shift away from the unprofitable non-core drugs?

You'll get some pushback I think initially Brian because this is a change in how we do business, but again we did this at quorum, we did this at home solutions and a big part of it is just really educating the referral sources. And once we've done that and they understand listen we want to be a good citizen to your patients we want to be good healthcare steward, but we also have to do something that works for us to that most people understand that. And so and again that's why we picked 85/15 that’s the number that you know we have empirical validation around that, that’s the right balance. We think when we were below that we’re not optimizing the business when we go above that we believe that we start seeing pushback from referral sources. So that's why again I think we have a lot of empirical validation around this 85/15 and why that’s the right number.

I appreciate that. A couple of quick ones left from me for Steve would be able to quantify what you thought the Cures impact was for the quarter?

It was consistent with the previous guidance and discussion that Dan had had we expected a full year impact of approximately $24 million that was an annual number. And we expected that and was built into our guidance and into our plans for the year and what we saw develop was very consistent with that along with the mitigating efforts that the team has put in place.

Yes to tune of about $50 million.

And lastly from me DSO those were up during the quarter how should we think about progress of those over the rest of the year?

Well Brian when you think about this business it's a seasonal business in that first quarter from a revenue perspective it seasonally the lowest of the year due to some dynamics in the healthcare markets that we serve, because of the elective nature of some of the delivering products and therapies. And so that combined with in the first quarter we see a higher patient mix of pay as compared to payer and as you know unfortunately the patients typically pay a little bit slower than what are our payer partners do. So that the heavier mix of that in the first quarter and a phenomena that we typically see is with insurance carriers a lot of our patients that we serve change insurance carriers effective in the first part of the year. And so with that creates a little bit of disruption within the collection cycle because insurance companies are switching and we have to work closely with two insurance companies as part of the collection cycle. But what I would tell you is that was expected and its consistent with what we seen in the past but we see a raise or a rise in DSO during the first quarter compared to the fourth quarter but that's what this business is typically seen in the past and we saw it last year as well so no surprises there we plan for it that as well.

Got it, all right. Thanks guys, good luck.

And your next question comes from the line of [indiscernible] with Craig-Hallum Capital.

Thanks good morning Dan morning Steve and Jeff few of my questions been asked already so I wanted to ask about liquidity I know in some past releases you had provided a figure of liquidity cash on hand and availability on revolving facility. Just kind of wanted to see if that number was handy for you now as it stands today or at the end of the quarter and I guess related to that wanted to talk about your thoughts around cash flow for the year. Steve you alluded in your commentary that you Q1 is typically a little bit on the on the softer side on cash flow so I’m just kind of curious as to your thoughts overall for the year and if we’ve kind of seen the worst of the liquidity crunch?

Thanks for that, for that's a very good question and the way our plan was developed for the year we did plan the first quarter to be the lowest in terms of liquidity given the seasonality of the revenue as also the collection cycle so both of those impact typical as I mentioned drive the first quarter of the calendar year to be the lowest in terms of a liquidity perspective. And when we look out to the second quarter to the fourth quarter we expect our liquidity to improve sequentially as we move forward given increases in our expected revenue as well as the turnaround plan that Dan and the team have been executing here. We expect our EBITDA to continue to progress upward during the year as our guidance indicates and that will be a driver of additional cash flow. And as we look at our required obligations our interest payments as well as our principal requirements we’re very comfortable with our liquidity profile for the rest of the year and execution of the ongoing operational cost savings and just revenue growth enabling us to mere obligations.

Okay. That's very helpful and very encouraging as well. And I think that’s a good segue I guess the other question that I wanted to ask right now to it sounds like everything is on track as far as home solutions synergies and cost savings activities. Wanted to get a sense of sort of how much of that I assume most of it but how much of that is sort of still yet to be realized and put in place?

We don't typically provide guidance at that level of detail, but what I can tell you is we yielded most of the home solutions synergies. We still have opportunities there, but Dan indicated the integration is done and ahead of schedule which the team did a great job of pulling that complex integration and completing that and yielding the synergies per plan. There are some opportunities over and above where we are at today and that's reflected in our guidance. And then also the cost savings plan in addition to the home solutions synergies that Dan had referenced to previously $23 million to $25 million of total operating cost initiatives. And those are on track we haven't yielded all of those yet, but we've got clear operating plans and as Dan indicated in his prepared comments the team is laser focused on making sure that we yield those commitments that we communicated.

Excellent. Thank you.

Thank you.

Thank you [Paul] and congratulations to you’ve got a larger role as well right.

Indeed I do thank you.

[Operator Instructions] Your next question comes from the line of Mike Petusky with Barrington Research.

Good morning, guys. So when I look just EBITDA guidance – obviously first quarter is expected you guys signaled it would be kind of down comp due to Cures but as you kind of look out throughout the year to me it looks like you the Q2 comp is fairly tough as well I mean would you expect another down comp versus the 2016 result and then positive from there is that kind of how this plays out in your view?

Thanks for the question Mike. And this is Stephen Deitsch looking forward to working with you. We do expect our EBITDA to continue to sequentially improve during the year and looking at last year's comp we did $10.4 million of EBITDA in the second quarter. We’re not going to provide quarterly guidance as we move forward, but what we can tell you is that we expect sequential improvement in our EBITDA as we ramp through the balance of the year. And just looking at our guidance at of $45 million to $55 million you can kind of work through your respective model and make some estimates there. But we're really not in a prepared to nor do we want to provide quarterly guidance on line items.

Okay. In terms of and you guys have touched on this a little bit but in terms of your free cash flow improvement that you see if you said I didn’t catch it – do you see a positive free cash flow quarter in this year?

Again in terms of specific quarterly guidance we don't provide that, but what we can tell you is we are anticipating free cash flow to be a positive as we exited the year and that consistent with our EBITDA guidance and that's the primary driver of our anticipated improvement and liquidity. And EBITDA is obviously driven by our two main initiatives core revenue growth as well as operational cost savings and we’re very comfortable with that for the rest of the year.

Okay. And around [indiscernible] here a little bit but is there any reason you shouldn’t see sequential improvement in gross margin throughout the year I mean I would assume that’s part of the internal expectation?

Yes, I think that’s fair and we don't like to talk about individual line items or quarterly guidance but thinking through the ramp and revenue and our expectations for continued improvements in our cost structure I think that's a fair consideration to think that as our core product mix continues to improve and we yield savings into the second, third and fourth quarters that you should see some sequential improvement in gross profit margins.

Okay. And then just a last question in terms of patients senses and just mix of the first 35 days here of the quarter can give any commentary around how the quarter started off?

Again this is Steve again and we don't like to provide updates mid quarter on revenue or anything like that but I would tell you is that we're comfortable with the full year and I don't like to provide mid quarter updates on how anything is progressing. And so that’s sort of the operating paradigm that Dan and I like to work through and it just gets to be too onerous to provide more than a yearly guidance. And so that we can –and operate the business versus focus on mid quarter updates.

Okay, all right, fair enough. Thanks guys.

And your next question comes from the line of Dana Hambly with Stephens.

Good morning and welcome Steve congratulations on a new role.

Thank you, Dana.

Just a question on the restructuring acquisition expenses 3.2 million in the quarter with the home solutions now largely done will that 3.2 million does that trail off to zero in the in future quarters and just I assume that all cash and if it doesn't drift off kind of what the expectation this year?

Yes, the first quarter number is the likely the highest for the year as we as we look forward given the completion of the home solutions acquisition and in synergies, are that synergies but integration. And most of that is severance expense. So when you think about that with the integration being largely completed at the end of the first quarter, we expect that plan for that to trail off as the year continues.

Okay, all right. And then with respect to the Cures Act and the mitigation, and maybe this is part of the 15 million, but I was just curious if you're able to go to your hospital partners and see if they can share some of the burden or subsidize you in the meantime until we get to 20-21 or earlier? Is there any discussions there?

We’ve had discussions, and I think there’s been modest interest if you will. So I think those kind of discussions are unfolding candidly. The discussions on the hill have been so dynamic, and we’ve kind of spent a lot of our time, energy, and effort really trying to move the legislation forward which again we remain very optimistic about. And so we have ongoing discussions with hospital partners. But the most of our focus frankly has been moving this benefit forward.

And last for me. Dan, you had mentioned last quarter about, you had moved your clinical liaison team under sales from operations. And I guess I don't really appreciate what that does or the reason for making that move. How has that helped the core mix if at all, or what are the benefits of doing that?

No, it's a great question, Dana. And just so that you know, we did this at Coram as well. And so we saw frankly from experience, the value in doing this. And so what it did, Dane, is we added basically a 150 people to our sales organization. So we took our sales organization from roughly 150 people to almost 300. So you just think about sheer numbers. The second thing is this is a group that largely helps with the transition of patients out of the hospital, and they are very instrumental in terms of the relationships with the referral partners, particularly the case managers and social workers, Dane. So that's particularly important. The third piece of it is that they’re now structured under a sales environment. So in other words, they’re being held accountable to referrals, they’re are being held accountable to helping drive the top line, they’re being held accountable to making sure that we're getting the right amount of core. And you can just imagine having that many more feed on the street where we are focused as our sales team is on driving referrals, what the potential impact of this is going to be.

Thanks very much for explaining that.

And you do have a follow-up question from the line of Brian Tanquilut with Jefferies.

Just one follow up. Dan, you’ve been here for six months, seven months, probably a lot more than that now. But just wanted to hear your thoughts on…

It's all years, Brian.

Exactly. But in terms of your conversations with the other managed share companies, beyond United, I mean, how is that progressing? And then do you think that there is an opportunity there to get better pricing because I know it’s one of the weak spots that BioScrip had prior to you coming in?

I think we've had great dialogue with the other payers. And I certainly think there is a high degree of receptivity to price changes, particularly price improvements, Brian. I think they understand that. There’s been years where this company has not had price increases. And I think there's also, as I mentioned, this tremendous understanding around the fact that by getting patients into the home at the right time, the savings are so much more substantive than anything they can do on the drug side. And so we’re saying give us a relief on the drug side, and we’ll work collectively in driving patients to the home sooner. They know that's where the real dollars are. And we’ve had payers actually, Brian, come to us and show us the savings. I mean, there is one example where they looked at 64 patients, and it was roughly $5 million of savings, none of it drug-related Brian, just by moving the patient into the appropriate side of care at the right time.

All right. Thanks.

And we have no further questions at this time. I would now like to turn it over to Dan Greenleaf for any closing remarks.

Yes, just want to thank everybody for joining us today and we remain very pleased with the momentum in our execution of our plans and again we look forward to updating you on our continued progress. Certainly appreciate all the support and I know there's a number of you who have phone calls, who have over the balance of the day and we certainly look forward to speaking with. So thank you everybody.

And that does conclude today's conference call. We thank you for your participation and ask that you please disconnect your lines.