BioScrip, Option Care to merge in all-stock transaction

BioScrip (BIOS) and Option Care announced that they have entered into a definitive merger agreement. The combination is expected to create an independent provider with the national reach, comprehensive therapy offering and financial capacity. Under the terms of the merger agreement, BioScrip will issue new shares to Option Care’s shareholder, which is owned by investment funds affiliated with Madison Dearborn Partners, or MDP, and Walgreens Boots Alliance (WBA), in an all-stock transaction. Upon completion of the transaction, MDP funds and WBA will beneficially own approximately 80% of the combined publicly traded company on a fully diluted basis, with current BioScrip shareholders holding the remainder. The combined company’s common stock will continue to be listed on the Nasdaq Global Market. The transaction has been unanimously approved by the boards of directors of both BioScrip and Option Care. The combined company will be led by Option Care CEO John Rademacher and Option Care CFO Mike Shapiro and will incorporate talent, processes and systems from both Option Care and BioScrip. BioScrip president and CEO Daniel Greenleaf will remain active in the combined company as a special advisor to its board. The transaction is expected to drive meaningful operating and supply chain efficiencies, generating over $60M in net synergies forecasted to realize full run-rate within 24 months of the transaction closing. These forecasted synergies and the combined company’s enhanced scale with pro-forma 2018 revenue of more than $2.6B are expected to enable top- and bottom-line growth. Additionally, BioScrip and Option Care have secured committed financing to refinance and simplify the combined company’s capital structure, which is expected to have no near-term maturities, no preferred equity and no financial maintenance covenant. The new capital structure is expected to provide the combined company with a materially lower pro-forma combined net leverage ratio, a lower cost of capital, significant additional liquidity and a path for continued deleveraging. The combined company will pursue a balanced capital allocation strategy, continuing to invest in and enhance patient experiences, as well as its people and services to drive organic growth, while managing its debt profile and continuing to de-lever in a disciplined fashion. The transaction, which is expected to be completed in the second half of 2019, is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by BioScrip shareholders.
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