DISCONTINUED OPERATIONS

Sale of PBM Services

On August 27, 2015, the Company completed the sale of substantially all of the Company’s PBM Services segment (as defined above, the “PBM Business”) pursuant to an Asset Purchase Agreement dated as of August 9, 2015 (the “Asset Purchase Agreement”), by and among the Company, BioScrip PBM Services, LLC and ProCare Pharmacy Benefit Manager Inc. (the “PBM Buyer”). Under the Asset Purchase Agreement, the PBM Buyer agreed to acquire substantially all of the assets used solely in connection with the PBM Business and to assume certain PBM Business liabilities (the “PBM Sale”). On the Closing Date, pursuant to the terms of the Asset Purchase Agreement, the Company received total cash consideration of approximately $24.6 million, including an adjustment for estimated Closing Date net working capital. On October 20, 2015, the Company finalized working capital adjustment negotiations in relation to the PBM Sale whereby the Company agreed to repay approximately $1.0 million to the PBM Buyer. The Company used the net proceeds from the PBM Sale to pay down a portion of the Company’s outstanding debt.

The sale of the PBM Business was consistent with the Company’s continuing strategic evaluation of its non-core businesses and its decision to continue to focus growth initiatives and capital in the Infusion Services business. As a result, the Company has reclassified its operations to discontinued operations for all prior periods in the accompanying Consolidated Financial Statements.

As of the August 27, 2015 closing date of the sale of the PBM Business, the carrying value of the net assets of the PBM Business was as follows (in thousands):



	Carrying Value
Net accounts receivable	$	7,163
Total current assets	7,163
Property and equipment, net	175
Goodwill	12,744
Total assets	20,082
Amounts due to plan sponsors	6,950
Total liabilities	6,950
Net assets	$	13,132

The operating results included in discontinued operations of the PBM Business for the years ended December 31, 2015, 2014 and 2013 are summarized as follows (in thousands):



	Year Ended December 31,
	2015			2014			2013
Revenue	$	44,375		$	61,401		$	72,986
Gross profit	$	9,763		$	17,635		$	42,819
Other operating expenses	5,444			10,878			26,797
Bad debt expense	(45		)	27			109
Income (loss) from operations	4,364			6,730			15,913
Gain on sale before income taxes	(11,424		)	—			—
Financial advisory fee and legal expenses	1,731			—			—
Other income and expenses, net	1,898			(6		)	—
Income (loss) before income taxes	12,159			6,736			15,913
Income tax expense (benefit)	206			198			1,263
Income (loss) from discontinued operations, net of income taxes	$	11,953		$	6,538		$	14,650

Sale of Home Health Business

On March 31, 2014, the Company completed the sale of substantially all of the Company’s Home Health Services segment (the “Home Health Business”) pursuant to the Stock Purchase Agreement dated as of February 1, 2014 (the “Stock Purchase Agreement”). Pursuant to the terms of the Stock Purchase Agreement, as amended, the Company received total consideration of approximately $59.5 million paid in cash (the “Purchase Price”) at closing. The Company used a portion of the net proceeds from the sale to pay down a portion of the Company’s outstanding debt. Subsequently, the Purchase Price was adjusted for net working capital of the divested Home Health Business companies (the “Subject Companies”) as of the closing date that resulted in an additional payment to the Company of approximately $1.1 million. As a result of this adjustment, the final Purchase Price received by the Company was approximately $60.6 million. The Company has classified the net proceeds received from this sale in cash provided by investing activities from discontinued operations in the accompanying consolidated statements of cash flows.

The sale of the Home Health Business was consistent with the Company’s continuing strategic evaluation of its non-core businesses and its decision to continue to focus growth initiatives and capital in the Infusion Services business. As a result, the Company decided in the second quarter of 2014 to cease the material portion of its Home Health operations at the one location excluded from the Stock Purchase Agreement, as amended, and reclassified its operations to discontinued operations for all prior periods in the accompanying Consolidated Financial Statements.

As of the March 31, 2014 closing date of the sale of the Home Health Business, the carrying value of the net assets of the Subject Companies was as follows (in thousands):



	Carrying Value
Net accounts receivable	$	12,597
Prepaid expenses and other current assets	242
Total current assets	12,839
Property and equipment, net	402
Goodwill	33,784
Intangible assets	15,400
Other non-current assets	28
Total assets	62,453
Accounts payable	673
Amounts due to plan sponsors	229
Accrued expenses and other current liabilities	3,008
Total liabilities	3,910
Net assets	$	58,543

The pre-tax gain on sale of the Home Health Business is approximately $2.1 million based on the March 31, 2014 net asset balances above and before financial advisory fees, legal expenses and other one-time transactions costs and including the net working capital adjustment. The net assets of the Subject Companies have been reclassified to discontinued operations for all prior periods in the accompanying Consolidated Financial Statements.

The operating results included in discontinued operations of the Home Health Business for the years ended December 31, 2015, 2014 and 2013 are summarized as follows (in thousands):



	Year Ended December 31,
	2015			2014			2013
Revenue	$	—		$	18,551		$	72,737
Gross profit	$	—		$	6,918		$	28,201
Other operating expenses	417			8,219			23,464
Bad debt expense	—			902			1,338
Income (loss) from operations	(417		)	(2,203		)	3,399
Gain on sale before income taxes	—			(2,067		)	—
Financial advisor fee and legal expenses	—			2,875			—
Impairment of assets	—			452			—
Other costs and expenses	861			47			(1		)
Income (loss) before income taxes	(1,278		)	(3,510		)	3,400
Income tax expense (benefit)	—			(4,257		)	15
Income from discontinued operations, net of income taxes	$	(1,278	)	$	747		$	3,385

Pharmacy Services Asset Sale

On February 1, 2012, the Company entered into a Community Pharmacy and Mail Business Purchase Agreement by and among Walgreen Co. and certain subsidiaries and the Company and certain subsidiaries (collectively, the “Sellers”) with respect to the sale of certain assets, rights and properties relating to the Sellers’ traditional and specialty pharmacy mail operations and community retail pharmacy stores.

The operating results included in discontinued operations of the divested traditional and specialty pharmacy mail operations and community pharmacies for the years ended December 31, 2015, 2014 and 2013 are summarized as follows (in thousands):



	Year Ended December 31,
	2015			2014			2013
Revenue	$	—		$	—		$	(75	)
Gross profit	$	—		$	(439	)	$	(519	)
Other operating expenses	4,485			3,995			7,118
Legal fees and settlement expense	1,312			—			15,000
Other (income) expense, including gain on sale	1,157			399			(6,589		)
Income (loss) from discontinued operations, net of income taxes	$	(6,954	)	$	(4,833	)	$	(16,048	)

Other operating expenses during the years ended December 31, 2015, 2014 and 2013 primarily consist of legal fees related to the legal proceedings. In January 2016, the Company paid the remaining liability of $6.2 million, including interest, related to the Settlement Agreements and $0.2 million of fees to the Relator (each, as defined below). See discussion in Note 11 - Commitments and Contingencies.