BioScrip Looks to Expand its Infusion/Home Health Pharmacy Business

BioScrip said it will sell certain assets of its community specialty pharmacies and centralized specialty and mail service pharmacy businesses to Walgreens for about $225 million.

BioScrip said it will use proceeds from the deal to expand its infusion pharmacy footprint and pay down debt. Infusion/home health pharmacy — which provides injectable medications and related services in a home setting — added 25 percent to BioScrip’s third-quarter revenue.

BioScrip will continue to leverage its recent acquisition of Critical Homecare Solutions, which is one of the top 5 largest home infusion companies. The top three home infusion companies control about $1.6 billion of the market.

BioScrip’s strategy was to consolidate the home infusion and home nursing sector by acquiring the leading independent providers, grow the business to scale and realize the synergies and economies that come with scale

BioScrip looks to take advantage of a number of positive trends that will impact the home healthcare market:

• Favorable industry dynamics. Favorable demographic trends and the continued shift to in-home healthcare have resulted in patient volume growth in the United States and are expected to continue to drive growth. The CMS Office of the Actuary projects that the number of Medicare beneficiaries will, on average for the years 2011-2013, grow by 3.2% annually. According to a 2008 U.S. Census Bureau projection, the U.S. population aged 55 and over is expected to grow at approximately twice the average rate of population growth from 76.5 million, or 25% of the population, in 2010 to 112 million, or 30% of the population, by 2030.

• Compelling in-home economics. By 2017, the nation’s healthcare spending is projected to increase to $4.3 trillion, growing at an average annual rate of 6.7%, according to CMS. The rising cost of healthcare has caused many payors to look for ways to contain costs and home healthcare is increasingly sought out as an attractive, cost-effective, clinically appropriate alternative to expensive facility-based care.

• Increased prevalence of in-home treatments. Improved technology has resulted in a wider variety of treatments being administered in patients’ homes.

• Preference for in-home care. Many patients prefer the convenience and typical cost advantages of home healthcare over institutional care as it provides patients with greater independence, increased responsibility and improved responsiveness to treatment.

• Development of new infused and injectable drugs. There is a significant number of new infusion or injectable drugs in the development pipeline.

Additional information available