BUSINESS COMBINATIONS

3 Months Ended

Mar. 31, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

BUSINESS COMBINATIONS

HomeChoice Partners, Inc.

Description of the Transaction

On February 1, 2013, the Company acquired 100% of the ownership interest in HomeChoice Partners, Inc., a Delaware corporation ("HomeChoice") pursuant to that Stock Purchase Agreement dated December 12, 2012 (the "Purchase Agreement") by and among the Company, HomeChoice, DaVita HealthCare Partners Inc., a Delaware corporation and majority stockholder of HomeChoice, and the other stockholders of HomeChoice. The purchase price was $70 million, plus a $2.3 million purchase price adjustment based in part on the net working capital of HomeChoice at closing (the "Purchase Price"). The Purchase Price may also be increased in an amount up to $20 million if HomeChoice reaches certain performance milestones in the two years following the closing. The Company funded the acquisition with a combination of cash on hand and drawing on its revolving credit facility. HomeChoice is a provider of alternate-site infusion pharmacy services. Headquartered in Norfolk, VA, HomeChoice services approximately 15,000 patients annually and has fourteen infusion pharmacy locations in Pennsylvania, Washington, DC, Maryland, Virginia, North Carolina, South Carolina, Georgia, Missouri, and Alabama.

Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. Due to the timing of this acquisition, these amounts are subject to change. The Company will finalize these amounts as it obtains the information necessary to complete the measurement process. Any changes resulting from facts and circumstances that existed as of the acquisition date may result in retrospective adjustments to the provisional amounts recognized at the acquisition date. These changes could be significant. The Company will finalize these amounts no later than a year from the acquisition date.

At March 31, 2013, there is a liability of $8.0 million recorded for the contingent increase in purchase price for HomeChoice. The fair value of the liability for contingent consideration was determined on the basis of the present value of various payout scenarios which were weighted on the basis of probability. Because the additional consideration may be earned over a two year period, $4.0 million is recorded in accrued expenses and other current liabilities and $4.0 million is recorded in other non-current liabilities.

	Amounts Recognized as of Acquisition Date (in thousands)
Accounts receivable	$	12,498
Inventories	1,984
Other current assets	154
Property and equipment	2,864
Identifiable intangible assets(a)	4,000
Other non-current assets	30
Current liabilities	(4,624		)
Total identifiable net assets	16,906
Goodwill	63,419
Total fair value of cash and contingent consideration	$	80,325

(a) The following table summarizes the provisional amounts and useful lives assigned to identifiable intangible assets:

	Weighted-  Average  Useful Lives	Amounts Recognized as of Acquisition Date (in thousands)
Customer relationships	5 mo. - 3 years	$	2,000
Trademarks	23 months	1,000
Non-compete agreements	1 year	1,000
Total identifiable intangible assets acquired		$	4,000

Impact of Acquisition on the Consolidated Financial Statements

The revenues of HomeChoice for the period from the acquisition date to March 31, 2013 were $10.8 million, and the loss from continuing operations was $0.8 million. The loss from continuing operations includes the effects of $0.8 million of acquisition-related costs, included in the acquisition and integration expenses line of the Unaudited Consolidated Statements of Operations.

InfuScience, Inc.

Description of the Transaction

On July 31, 2012, the Company acquired 100% of InfuScience, Inc. (“InfuScience”) for a cash payment of $38.3 million. The purchase price could increase to $41.4 million based on the results of operations during the 24 month period following the closing. InfuScience acquires, develops and operates businesses providing alternate site infusion pharmacy services. Through this acquisition, BioScrip has added five infusion centers located in Eagan, Minnesota; Omaha, Nebraska; Chantilly, Virginia; Charleston, South Carolina; and Savannah, Georgia.

Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. These amounts are provisional and subject to change. The Company will finalize these amounts as it obtains the information necessary to complete the measurement process. Any changes resulting from facts and circumstances that existed as of the acquisition date may result in retrospective adjustments to the provisional amounts recognized at the acquisition date. These changes could be significant. The Company will finalize these amounts no later than a year from the acquisition date.

At March 31, 2013, there is a liability of $3.1 million recorded for the contingent increase in purchase price. The fair value of the liability for contingent consideration was determined on the present value and probability of payout. The liability is recorded in accrued expenses and other current liabilities.

	Amounts Recognized as of Acquisition Date (in thousands)
Cash	$	23
Accounts receivable	4,938
Inventories	586
Other current assets	371
Property and equipment	751
Identifiable intangible assets(a)	400
Other non-current assets	349
Current liabilities	(4,428		)
Total identifiable net assets	2,990
Goodwill	38,429
Total fair value of cash and contingent consideration	$	41,419

______________________

(a) The following table summarizes the provisional amounts and useful lives assigned to identifiable intangible assets:

	Weighted-  Average  Useful Lives  (Months)	Amounts Recognized as of Acquisition Date (in thousands)
InfuScience customer relationships	5	400
Total identifiable intangible assets acquired	5	$	400

Impact of Acquisition on the Consolidated Financial Statements

The revenues of InfuScience for the three months ended March 31, 2013 were $11.4 million, and the loss from continuing operations was $1.0 million. The loss from continuing operations reflects the effects of $0.1 million of acquisition-related costs, included in the acquisition and integration expenses line of the Unaudited Consolidated Statements of Operations.

Pro Forma Impact of Business Combinations

The following table presents unaudited pro forma consolidated results of operations for the three-month periods ended March 31, 2013 and 2012, as if the HomeChoice and InfuScience acquisitions had occurred as of January 1, 2012 (in thousands except share data):

	Three Months Ended March 31,
	2013		2012
Revenues	205,163		182,458
Total net loss from continuing operations	(4,815	)	(3,917	)
Basic loss per share	(0.08	)	(0.07	)
Diluted loss per share	(0.08	)	(0.07	)

The unaudited pro forma consolidated results of operations were prepared using the acquisition method of accounting and are based on the historical financial information of the Company, HomeChoice and InfuScience. Except to the extent realized in the three-month period ended March 31, 2013, the unaudited pro forma information does not reflect any cost savings, operating synergies and other benefits that the Company may achieve as a result of these acquisitions, or the expenses to be incurred to achieve these savings, operating synergies and other benefits. In addition, except to the extent recognized in the three-month period ended March 31, 2013, the unaudited pro forma information does not reflect the costs to integrate the operations of the Company with HomeChoice and InfuScience.

The unaudited pro forma information is not necessarily indicative of what the Company's consolidated results of operations actually would have been had the HomeChoice and InfuScience acquisitions been completed on January 1, 2012. In addition, the unaudited pro forma information does not purport to project the future results of operations of the Company. The unaudited pro forma information primarily reflects the following adjustments related to the acquisition (in thousands):    

	Three Months Ended March 31,
	2013			2012
Interest expense	$	292		$	1,063
Tax benefit	$	(117	)	$	(479	)
Amortization expense	$	(495	)	$	1,304

Expenses incurred to integrate acquisitions are recorded in the acquisition and integration expenses line of the Unaudited Consolidated Statements of Operations.  These costs include legal and financial advisory fees associated with acquisitions; and integration costs to convert to common policies, procedures, and information systems.