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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
BioScrip, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies:
   
(2)
Aggregate number of securities to which transaction applies:
   
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
   
(4)
Proposed maximum aggregate value of transaction:
   
(5)
Total fee paid:
   

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:

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PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION — DATED JUNE 6, 2019
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BIOSCRIP, INC.
1600 Broadway, Suite 700
Denver, Colorado 80202
YOUR VOTE IS VERY IMPORTANT
Dear BioScrip Stockholder:
On March 14, 2019, BioScrip, Inc., a Delaware corporation (“BioScrip” or “Beta”) entered into an Agreement and Plan of Merger, by and among BioScrip, HC Group Holdings II, Inc., a Delaware corporation (“Option Care” or “Omega” or “HC II”), and HC Group Holdings I, LLC, a Delaware limited liability company (“Omega Parent” or “HCI” or the “Shareholder”), and certain other subsidiaries of BioScrip and Option Care, as it may be amended from time to time, pursuant to which BioScrip and Option Care agreed to combine their respective businesses. The combination is expected to create a leading independent provider of infusion services with the national reach, comprehensive therapy offering and financial capacity to succeed in the attractive and growing home and alternate site infusion services segment of the $100 billion U.S. infusion market. Pursuant to the terms of the merger agreement, Omega will merge (the “First Merger”) with and into Beta Sub, Inc., a Delaware corporation and a wholly owned subsidiary of BioScrip (“Beta Sub, Inc.” or “Merger Sub Inc.”), with Omega continuing as the surviving corporation (the “Surviving Corporation”). Immediately following the First Merger, the Surviving Corporation will merge with and into Beta Sub, LLC, a Delaware limited liability company wholly and owned subsidiary of BioScrip (“Beta Sub, LLC” or “Merger Sub LLC”), with Beta Sub, LLC continuing as the surviving company and a wholly owned subsidiary of BioScrip (the First Merger and such subsequent merger referred to as the “Mergers”).
Upon successful completion of the First Merger, all of the shares of Omega’s common stock will be cancelled and converted into the right of Omega Parent to receive 542,261,567 shares of BioScrip’s common stock, which shares are referred to as the merger consideration. The number of shares to be issued as part of the merger consideration is fixed and will not change between now and the date of the closing of the Mergers (referred to as the closing date), regardless of whether the market price of the BioScrip common stock changes during such period. BioScrip’s existing stockholders as of immediately prior to the First Merger will continue to hold their shares of BioScrip’s common stock. Based on the estimated shares outstanding of BioScrip at the effective time of the First Merger, Omega Parent will own approximately 79.5% of the issued and outstanding shares of the combined company immediately following the completion of the First Merger. In addition, at the effective time of the First Merger, 28,193,428.41 shares of BioScrip common stock shall be issued to Omega Parent in respect of certain outstanding unvested contingent restricted stock units of BioScrip.
On March 14, 2019, BioScrip also entered into a Preferred Stock Repurchase Agreement with certain funds and accounts managed by Coliseum Capital Management, LLC, pursuant to which BioScrip will repurchase 100% of its outstanding Series C Convertible Preferred Stock (“Series C Preferred Stock”) from the current holders for (i) an amount in cash equal to 120% of the liquidation preference payable in respect of such shares and (ii) 2.5226 shares of BioScrip common stock per preferred share. The BioScrip Board of Directors has also approved an amendment to BioScrip’s Series A Convertible Preferred Stock (“Series A Preferred Stock”) Certificate of Designations pursuant to which, following the closing of the Mergers (i) ninety-six one-hundredths (96/100) of each share of Series A Preferred Stock will be redeemed for an amount in cash equal to 120% of the liquidation preference then-applicable to such share of Series A Preferred Stock as of the date of such redemption (including any dividends accrued through such date) and (ii) (A) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on March 9, 2015 then issued and outstanding will automatically be converted into 2.5226 shares of BioScrip

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common stock and (B) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on July 29, 2015 then issued and outstanding will automatically be converted into 2.4138 shares of BioScrip common stock, totaling approximately 1,602,711 shares of BioScrip common stock in the aggregate.
On March 14, 2019, BioScrip also entered into an Amended and Restated Warrant Agreement with the holders of the BioScrip warrants issued on June 29, 2017, to fix the maximum number of shares of BioScrip common stock issuable upon exercise of the warrants at 8,287,317 shares in the aggregate. In connection with the Amended and Restated Warrant Agreement, at the closing of the Mergers, BioScrip will also issue 1,855,747 shares of BioScrip common stock in the aggregate to such warrant holders.
Concurrently with the closing of the First Merger, the BioScrip certificate of incorporation will be amended and restated to be in substantially the form attached as Annex B to provide for, among other things, (i) an increase in authorized shares of BioScrip to permit BioScrip to issue a sufficient number of shares as merger consideration, and otherwise in connection with the merger agreement and the transactions contemplated thereby, (ii) the waiver of certain fiduciary duties of BioScrip’s officers and directors, including the duty to offer certain business opportunities to BioScrip, that would otherwise be applicable to the officers and directors of BioScrip under Delaware law, and (iii) amendments to the rights of BioScrip stockholders to act by written consent, call a special meeting of stockholders, remove directors without cause and amend the organizational documents of BioScrip.
We are calling a special meeting of BioScrip’s stockholders to be held on [•], 2019, at [•], local time, at [•] in connection with the proposed mergers. At the special meeting, BioScrip stockholders will be asked to consider and vote on:
1.
The proposal to approve the issuance of shares of BioScrip common stock to Omega Parent pursuant to the merger agreement, which proposal is referred to as the share issuance proposal;
2.
The proposal to approve the third amended and restated certificate of incorporation of BioScrip, which proposal is referred to as the amended charter proposal;
3.
The proposal to approve the amendment to the certificate of designations of Series A Preferred Stock of BioScrip, which proposal is referred to as the Series A COD amendment proposal;
4.
The proposal to approve, on a non-binding advisory basis, certain compensation that may be paid or become payable to certain BioScrip named executive officers in connection with the Mergers, which proposal is referred to as the compensation proposal; and
5.
The proposal to adjourn the special meeting to solicit additional proxies if there are not sufficient votes to approve the share issuance proposal, the amended charter proposal and the Series A COD amendment proposal or to ensure that any supplement or amendment to the accompanying proxy statement is timely provided to BioScrip stockholders, which proposal is referred to as the adjournment proposal.
The BioScrip board of directors has unanimously (with Christopher Shackelton abstaining from any vote regarding the Series A COD amendment and the Preferred Stock Repurchase Agreement for the reasons described in the accompanying proxy statement) (i) determined that the merger agreement, the Mergers, the share issuance proposal, the amended charter Proposal, the Series A COD amendment proposal and the other transactions contemplated by the merger agreement are advisable and fair to and in the best interests of BioScrip and its stockholders and (ii) approved, authorized, adopted and declared advisable the merger agreement, the Mergers, the share issuance proposal, the amended charter proposal, the Series A COD amendment proposal and the other transactions contemplated by the merger agreement. THE BIOSCRIP BOARD OF DIRECTORS RECOMMENDS THAT BIOSCRIP STOCKHOLDERS VOTE: (1) “FOR” THE SHARE ISSUANCE PROPOSAL; (2) “FOR” THE AMENDED CHARTER PROPOSAL; (3) “FOR” THE SERIES A COD AMENDMENT PROPOSAL; (4) “FOR” THE COMPENSATION PROPOSAL AND (5) “FOR” THE ADJOURNMENT PROPOSAL.
We cannot complete the Mergers unless BioScrip stockholders approve the share issuance proposal, the amended charter proposal and the Series A COD amendment proposal.

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Whether or not you plan to attend the special meeting and regardless of the number of shares you own, your careful consideration of, and vote on, the proposals is important, and we encourage you to vote promptly. After reading the accompanying proxy statement, please make sure to vote your shares promptly by completing, signing and dating the accompanying proxy card and returning it in the enclosed prepaid envelope or by voting by telephone or through the Internet by following the instructions on the accompanying proxy card. Instructions regarding all three methods of voting are provided on the proxy card. If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee.
The proxy statement accompanying this letter provides you with more specific information concerning the special meeting, the merger agreement, the Mergers and the other transactions contemplated by the merger agreement as well as each of the proposals. We encourage you to carefully read the accompanying proxy statement, in particular the “Risk Factors” section beginning on page 21 for a discussion of risks relevant to the Mergers, and the copy of the merger agreement attached as Annex A to the proxy statement.
Thank you in advance for your continued support and your consideration of these matters.
Sincerely,
R. Carter Pate
Chairman of the BioScrip Board of Directors
Neither the United States Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Mergers, passed upon the merits or fairness of the Mergers or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.
This proxy statement is dated [•], 2019, and is first being mailed to BioScrip stockholders on or about [•], 2019.

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BioScrip, Inc.
1600 Broadway, Suite 700
Denver, Colorado 80202
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On [•], 2019
To the Stockholders of BioScrip:
Please take notice that the board of directors of BioScrip Inc., a Delaware Corporation (“BioScrip” or “Beta”) has called a special meeting of the stockholders of BioScrip which will be held at [•] beginning at [•] local time on [•], 2019, or at any adjournment or postponements thereof, for the purpose of considering and taking appropriate action with respect to the following (referred to as the BioScrip proposals):
1.
to consider and vote on a proposal to approve the issuance of shares (the “Share Issuance Proposal”) of common stock, par value $0.0001 per share, of BioScrip, to HC Group Holdings I, LLC, a Delaware limited liability company (“Omega Parent” or “HCI” or the “Shareholder”), pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”), dated as of March 14, 2019, by and among BioScrip, Omega Parent, HC Group Holdings II, Inc., a Delaware corporation (“Option Care” or “Omega” or “HC II”), HC Group Holdings III, Inc., a Delaware corporation, Beta Sub, Inc., a Delaware corporation (“Beta Sub, Inc.” or “Merger Sub Inc.”), and Beta Sub, LLC, a Delaware limited liability company (“Beta Sub, LLC” or “Merger Sub LLC”), a copy of which is included as Annex A to this proxy statement;
2.
to consider a vote on a proposal to approve BioScrip’s third amended and restated certificate of incorporation (the “Amended Charter Proposal”) in connection with the closing of the Mergers contemplated by the Merger Agreement, a copy of which is included as Annex B to this proxy statement;
3.
to consider a vote on a proposal to approve an amendment to BioScrip’s certificate of designations of Series A Convertible Preferred Stock (“Series A Preferred Stock”) (the “Series A COD Amendment Proposal”) in connection with the Mergers, a copy of which is included as Annex C to this proxy statement;
4.
to consider and vote on a proposal to approve, on a non-binding advisory basis, certain compensation that may be paid or become payable to certain BioScrip named executive officers in connection with the Mergers (the “Compensation Proposal”); and
5.
to consider and vote on a proposal to approve any motion to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the proposals in the foregoing clauses (1) through (3) (the “Adjournment Proposal”).
Completion of the mergers is conditioned on, among other things, BioScrip stockholder approval of the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal. BioScrip stockholders will also be asked to approve the compensation proposal and, if necessary, the adjournment proposal. BioScrip will transact no other business at the special meeting.
The BioScrip board of directors has unanimously (with Christopher Shackelton abstaining from any vote regarding the Series A COD Amendment and the Preferred Stock Repurchase Agreement for the reasons described in the accompanying proxy statement) (i) determined that the Merger Agreement, the Mergers, the Share Issuance Proposal, the Amended Charter Proposal, the Series A COD Amendment Proposal and the other transactions contemplated by the Merger Agreement are advisable and fair to and in the best interests of BioScrip and its stockholders and (ii) approved, authorized, adopted and declared advisable the Merger Agreement, the Mergers, the Share Issuance Proposal, the Amended Charter Proposal, the Series A COD Amendment Proposal and the other transactions contemplated by the Merger Agreement. THE BIOSCRIP BOARD OF DIRECTORS RECOMMENDS THAT BIOSCRIP STOCKHOLDERS VOTE: (1)FOR

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THE SHARE ISSUANCE PROPOSAL; (2)FORTHE AMENDED CHARTER PROPOSAL; (3) FORTHE SERIES A COD AMENDMENT PROPOSAL; (4)FORTHE COMPENSATION PROPOSAL AND (5)FORTHE ADJOURNMENT PROPOSAL.
BioScrip’s issued and outstanding capital stock consists of outstanding shares of common stock, Series A Preferred Stock and Series C Convertible Preferred Stock (the “Series C Preferred Stock”). Accordingly, only holders of record of BioScrip common stock, Series A Preferred Stock and Series C Preferred Stock at the close of business on [•], 2019, the record date, are entitled to receive notice of, and to vote at, the special meeting or at any adjournments or postponements thereof.
The Share Issuance Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the BioScrip preferred stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Share Issuance Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Share Issuance Proposal.
The approval of the Amended Charter Proposal requires the affirmative vote of  (i) the holders of a majority of the outstanding shares of BioScrip common stock (inclusive of the BioScrip preferred stock on an as-converted basis) entitled to vote on such proposal at the special meeting, (ii) the holders of a majority of the outstanding shares of BioScrip common stock entitled to vote on such proposal at the special meeting, (iii) the holders of a majority of the outstanding shares of Series A Preferred Stock entitled to vote on such proposal at the special meeting and (iv) the holders of a majority of the outstanding shares of Series C Preferred Stock entitled to vote on such proposal at the special meeting. Failures to vote, votes to abstain, and broker non-votes will have the same effect as a vote “AGAINST” the Amended Charter Proposal.
The approval of the Series A COD Amendment Proposal requires the affirmative vote of  (i) the holders of a majority of the outstanding shares of BioScrip common stock (inclusive of the BioScrip preferred stock on an as-converted basis) entitled to vote on such proposal at the special meeting and (ii) the holders of a majority of the outstanding shares of Series A Preferred Stock entitled to vote on such proposal at the special meeting. Failures to vote, votes to abstain, and broker non-votes will have the same effect as a vote “AGAINST” the Series A COD Amendment Proposal.
The Compensation Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the BioScrip preferred stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Compensation Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Compensation Proposal.
The Adjournment Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the BioScrip preferred stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Adjournment Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Adjournment Proposal.
You may vote your shares via the Internet by accessing the URL listed on your proxy card and following the instructions on the website, no later than 11:59 p.m. Eastern Time on [•], 2019 (as directed on the enclosed proxy card) or vote by completing, signing and promptly returning the enclosed proxy card by mail. If you choose to submit your proxy card by mail, BioScrip has enclosed a prepaid return envelope for your use, which is prepaid if mailed in the United States. If you are attending the special meeting and your shares are registered in your name, you may also vote at the special meeting until voting is closed.
YOUR VOTE IS IMPORTANT.   All holders of BioScrip common stock and preferred stock are cordially invited to attend the special meeting. Whether or not you plan to attend the special meeting in person, you are requested to complete and return the enclosed proxy card in the accompanying prepaid return envelope or vote your shares via the Internet. You may revoke your proxy at any time before it is exercised by giving written notice to the Corporate Secretary of BioScrip at BioScrip, Inc., 1600 Broadway, Suite 700, Denver, Colorado 80202, Attention: Corporate Secretary, or returning a later-dated proxy.

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If you hold your shares through a broker or bank in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee.
The accompanying proxy statement provides a detailed description of the Mergers and the Merger Agreement, the ancillary agreements thereto, as well as a description of the proposed issuance of shares of BioScrip common stock to Omega Parent pursuant to the Merger Agreement and a description of BioScrip’s Amended Charter Proposal, the Series A COD Amendment Proposal and other proposals. In addition, the Merger Agreement, the amended charter and the Series A COD amendment are attached in their entirety hereto as Annex A, Annex B and Annex C. We urge you to read this proxy statement, including the documents incorporated by reference, and the Annexes carefully and in their entirety.
If you have any questions concerning the Mergers or the proxy statement, would like additional copies or need help voting your shares of BioScrip common stock or preferred stock, please contact BioScrip’s proxy solicitor:
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005

Stockholders call toll-free: (800) 499-8541
Banks and brokers call: (212) 269-5550
By Order of the Board of Directors of BioScrip, Inc.
R. Carter Pate
Chairman of the Board
Denver, Colorado
[•], 2019

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REFERENCES TO ADDITIONAL INFORMATION
This proxy statement incorporates important business and financial information about BioScrip from other documents that BioScrip has filed with the U.S. Securities and Exchange Commission, which is referred to as the SEC, and that are contained in or incorporated by reference into this proxy statement. For a listing of documents incorporated by reference into this proxy statement (the “Proxy Statement”), please see the section entitled “Where You Can Find Additional Information” beginning on page 239. This information is available for you free of charge to review through the SEC’s website at www.sec.gov.
Any person may request a copy of this proxy statement and any of the documents incorporated by reference into this Proxy Statement or other information concerning BioScrip, without charge, by written or telephonic request directed to the appropriate company or its proxy solicitor at the following contacts:
Company:

BioScrip, Inc.
1600 Broadway
Suite 700
Denver, Colorado 80202
(720) 697-5200
Attention: Corporate Secretary
Solicitor:
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005
Stockholders call toll-free: (800) 499-8541
Banks and brokers call: (212) 269-5550
In order for you to receive timely delivery of the documents in advance of the special meeting of BioScrip stockholders to be held on [•], 2019, which is referred to as the special meeting, you must request the information no later than [•], 2019.
The contents of the websites of the SEC and BioScrip or any other entity are not being incorporated into this Proxy Statement. The information about how you can obtain certain documents that are incorporated by reference into this Proxy Statement at these websites is being provided only for your convenience.

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QUESTIONS AND ANSWERS
Q:
Why am I receiving this proxy statement?
A:
On March 14, 2019, BioScrip entered into the Merger Agreement with Option Care and certain other parties signatory thereto. You are receiving this proxy statement (this “Proxy Statement”) in connection with the solicitation of proxies by the BioScrip Board of Directors (the “BioScrip Board”) in favor of the proposals to approve (1) the issuance of shares of BioScrip common stock to Omega Parent pursuant to the Merger Agreement, (2) the third amended and restated BioScrip certificate of incorporation, (3) an amendment to Series A Preferred Stock Certificate of Designations, (4) on a non-binding advisory basis, certain compensation that may be paid or become payable to certain BioScrip named executive officers in connection with the Mergers and (5) an adjournment of the special meeting to solicit additional proxies if there are not sufficient votes to approve the proposals described in the immediately preceding clauses (1), (2) and (3) or to ensure that any supplement or amendment to this Proxy Statement is timely provided to BioScrip stockholders.
Q:
When and where will the special meeting of stockholders be held?
A:
The special meeting of BioScrip stockholders will be held at on [•], 2019, at [•], local time, at [•].
Q:
Who is entitled to vote at the special meeting?
A:
Only holders of record of BioScrip common stock and Series A Preferred Stock and Series C Preferred Stock (collectively, the “Preferred Stock”), as of the close of business on [•] (the “Record Date”) for the special meeting, are entitled to vote at the special meeting. As of the close of business on the Record Date, BioScrip had outstanding [•] shares of BioScrip common stock, [•] shares of Series A Preferred Stock (representing [•] shares of BioScrip common stock on an as-converted into common stock basis, with [•] shares of Series A Preferred Stock convertible into [•] shares of BioScrip common stock, and another [•] shares of Series A Preferred Stock convertible into [•] shares of BioScrip common stock), and [•] shares of Series C Preferred Stock (representing [•] shares of BioScrip common stock on an as-converted into BioScrip common stock basis).
Q:
What proposals will be considered at the special meeting?
A:
At the special meeting, you will be asked to consider and vote on:
The proposal to approve the issuance of shares of BioScrip common stock to Omega Parent pursuant to the Merger Agreement (“Share Issuance Proposal”);
The proposal to approve the third amended and restated certificate of incorporation of BioScrip (the “Amended Charter Proposal”);
The proposal to approve the amendment to the certificate of designations of Series A Preferred Stock of BioScrip (the “Series A COD Amendment Proposal”);
The proposal to approve, on a non-binding advisory basis, certain compensation that may be paid or become payable to certain BioScrip named executive officers in connection with the Mergers (the “Compensation Proposal”); and
The proposal to adjourn the special meeting to solicit additional proxies if there are not sufficient votes to approve the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal or to ensure that any supplement or amendment to this Proxy Statement is timely provided to BioScrip stockholders (the “Adjournment Proposal”).
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Q:
What vote is required to approve each of the proposals? What will happen if I fail to vote or abstain from voting on each proposal?
A:
The following votes are required for each proposal:
The Share Issuance Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Share Issuance Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Share Issuance Proposal.
The approval of the Amended Charter Proposal requires the affirmative vote of  (i) the holders of a majority of the outstanding shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) entitled to vote on such proposal at the special meeting, (ii) the holders of a majority of the outstanding shares of BioScrip common stock entitled to vote on such proposal at the special meeting, (iii) the holders of a majority of the outstanding shares of Series A Preferred Stock entitled to vote on such proposal at the special meeting and (iv) the holders of a majority of the outstanding shares of Series C Preferred Stock entitled to vote on such proposal at the special meeting. Failures to vote, votes to abstain, and broker non-votes will have the same effect as a vote “AGAINST” the Amended Charter Proposal.
The approval of the Series A COD Amendment Proposal requires the affirmative vote of  (i) the holders of a majority of the outstanding shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) entitled to vote on such proposal at the special meeting and (ii) the holders of a majority of the outstanding shares of Series A Preferred Stock entitled to vote on such proposal at the special meeting. Failures to vote, votes to abstain, and broker non-votes will have the same effect as a vote “AGAINST” the Series A COD Amendment Proposal.
The Compensation Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Compensation Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Compensation Proposal.
The Adjournment Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Adjournment Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Adjournment Proposal.
Q:
How does the BioScrip Board recommend that I vote on the proposals?
A:
Upon careful consideration, the BioScrip Board has unanimously (with Christopher Shackelton abstaining from any vote regarding the Series A COD Amendment and the Preferred Stock Repurchase Agreement) (i) determined that the Merger Agreement, the Mergers, the issuance of shares of BioScrip common stock to Omega Parent pursuant to the Merger Agreement (the “Share Issuance”), the third amended and restated certificate of incorporation of BioScrip (the “Amended Charter”), the amendment to the Series A Preferred Stock Certificate of Designations of BioScrip (the “Series A COD Amendment”) and the other transactions contemplated by the Merger Agreement are advisable and fair to and in the best interests of BioScrip and its stockholders and (ii) approved, authorized, adopted and declared advisable the Merger Agreement, the Mergers, the Share Issuance, the Amended Charter, the Series A COD Amendment and the other transactions contemplated by the Merger Agreement. The BioScrip Board recommends that BioScrip stockholders vote: (1) “FOR” the Share Issuance Proposal; (2) “FOR” the Amended Charter Proposal; (3) “FOR” the Series A COD Amendment Proposal; (4) “FOR” the Compensation Proposal and (5) “FOR” the Adjournment Proposal.
For a discussion of the factors that the BioScrip Board considered in determining to make the foregoing recommendation, please see the section entitled “The Mergers — Recommendation of the Board of Directors of BioScrip; BioScrip’s Reasons for the Mergers” beginning on page 66. In addition,
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in considering the recommendation of the BioScrip Board, you should be aware that some of BioScrip’s directors and executive officers have interests that may be different from, or in addition to, the interests of BioScrip stockholders generally. See the section entitled “The Mergers — Interests of Certain BioScrip Directors and Executive Officers in the Mergers” beginning on page 85.
Q:
What percentage of the combined company will BioScrip stockholders hold immediately following the consummation of the Mergers?
A:
At the effective time of the First Merger, Omega Parent will receive 542,261,567 shares of BioScrip common stock. In addition, at the effective time of the First Merger, 28,193,428.41 shares of BioScrip common stock will be issued to Omega Parent in respect of certain outstanding and unvested contingent restricted stock units of BioScrip, which shares are referred to as the escrowed shares. If such contingent restricted stock units do not vest, Omega Parent will forfeit such BioScrip shares back to BioScrip. See the section entitled “The Merger Agreement — Escrowed Shares” beginning on page 95 for additional information regarding such contingent shares. As of the date of the Merger Agreement, it is estimated that BioScrip security holders would own approximately 20.5% of the combined company on a fully diluted pro forma basis (based on the BioScrip share price as of signing, and taking into account the share issuance in respect of the Amended and Restated Warrant Agreement and the Warrant Letter Agreements, the Preferred Stock Repurchase Agreement, the Series A COD Amendment and the vesting of certain restricted stock units and performance restricted stock units as a result of the Mergers).
At the closing of the Mergers (referred to as the closing), in connection with the Preferred Stock Repurchase Agreement entered into with funds and accounts managed by Coliseum Capital Management, LLC (“Coliseum Capital”), BioScrip has agreed to issue 2.5226 shares of BioScrip common stock per share of Series C Preferred Stock to the holders of Series C Preferred Stock, totaling approximately 1,549,323 shares of BioScrip common stock in the aggregate. See the section entitled “The Ancillary Agreements — Preferred Stock Repurchase Agreement” beginning on page 119 for additional information regarding the Preferred Stock Repurchase Agreement.
Pursuant to the Series A COD Amendment, immediately following the effectiveness of the Mergers, (i) (A) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on March 9, 2015, then issued and outstanding will automatically be converted into 2.5226 shares of BioScrip common stock and (B) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on July 29, 2015 then issued and outstanding will automatically be converted into 2.4138 shares of BioScrip common stock, totaling 53,388 shares of BioScrip common stock in the aggregate and (ii) ninety-six one-hundredths (96/100) of each share of Series A Preferred Stock referred to in the foregoing clause (i) will be redeemed for an amount in cash equal to 120% of the liquidation preference then-applicable to such share of Series A Preferred Stock as of the date of such redemption (including any dividends accrued through such date). See the section entitled “The Ancillary Agreements — Series A COD Amendment” beginning on page 118 for additional information regarding the Series A COD Amendment.
Furthermore, in connection with the Mergers, BioScrip has agreed to amend and restate the warrant agreement dated June 29, 2017 (the “Warrant Amendment”). In connection with the Warrant Amendment, BioScrip has agreed to issue 1,855,747 shares of BioScrip common stock (the “Amendment Shares”) in the aggregate to the holders of warrants issued under the Warrant Amendment. See the section entitled “The Ancillary Agreements — Amended and Restated Warrant Agreement and Warrant Letter Agreements” beginning on page 120 for additional information regarding the Warrant Amendment.
Following the issuance of the shares in connection with the merger consideration, the escrowed shares, the shares in connection with the Preferred Stock Repurchase Agreement and the Series A COD Amendment and the Amendment Shares, the 128,160,291 shares of BioScrip common stock outstanding on the date of the Merger Agreement will represent approximately 20.5% of the combined company on a fully diluted pro forma basis (based on the BioScrip share price as of signing, and without taking into account any dilution resulting from the share issuance in respect of the Amended
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and Restated Warrant Agreement and the Warrant Letter Agreements, the Preferred Stock Repurchase Agreement, the Series A COD Amendment and the vesting of certain restricted stock units and performance restricted stock units as a result of the Mergers).
Q:
What will happen to the BioScrip Series A Preferred Stock and the BioScrip Series C Preferred Stock in the Mergers?
A:
Concurrently with the execution of the Merger Agreement, BioScrip and certain funds and accounts managed by Coliseum Capital entered into a Preferred Stock Repurchase Agreement pursuant to which BioScrip agreed to repurchase 100% of its outstanding Series C Preferred Stock from such holders for (i) an amount in cash equal to 120% of the liquidation preference payable in respect of such shares and (ii) 2.5226 shares of BioScrip common stock per preferred share. See the section entitled “The Ancillary Agreements — Preferred Stock Repurchase Agreement” on page 119 for a more detailed description of the Preferred Stock Repurchase Agreement.
The BioScrip Board also approved the Series A COD Amendment, which is subject to the approval of the BioScrip stockholders at the special meeting. Pursuant to the Series A COD Amendment, immediately following the effectiveness of the Mergers (i) (A) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on March 9, 2015 then issued and outstanding will automatically be converted into 2.5226 shares of BioScrip common stock and (B) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on July 29, 2015 then issued and outstanding will automatically be converted into 2.4138 shares of BioScrip common stock and (ii) the remaining portion of all Series A Preferred Stock (constituting ninety-six one-hundredths (96/100) of each share of Series A Preferred Stock subject to conversion pursuant to the immediately preceding clause (i)) will be redeemed for an amount in cash equal to 120% of the liquidation preference then-applicable to such share of Series A Preferred Stock as of the date of such redemption (including any dividends accrued through such date). See the section entitled “The Ancillary Agreements — Series A COD Amendment” on page 118 for a more detailed description of the Series A COD Amendment.
Q:
Why is the BioScrip Certificate of Incorporation being amended and restated?
A:
The proposed third amended and restated certificate of incorporation, attached as Annex B, provides for, among other things, (i) an increase in authorized shares to permit issuance of a sufficient number of shares as merger consideration, and otherwise in connection with the Merger Agreement and the transactions contemplated thereby, (ii) a prohibition on BioScrip stockholders’ ability to act by written consent after the date on which Omega Parent and its affiliates cease to beneficially own, in the aggregate, capital stock of BioScrip representing 50% or more of the voting power of BioScrip, referred to as the trigger date, (iii) the right of BioScrip stockholders to remove directors with or without cause with the consent of  (A) a majority of the voting power of BioScrip’s capital stock prior to the trigger date, or (B) a 6623% supermajority of the voting power of BioScrip’s capital stock after the trigger date, (iv) the right of BioScrip’s stockholders to amend the bylaws or certificate of incorporation of BioScrip with the consent of  (A) a majority of the voting power of BioScrip’s capital stock prior to the trigger date, or (B) a 6623% supermajority of the voting power of BioScrip’s capital stock after the trigger date, (v) the waiver of certain fiduciary duties of BioScrip’s officers and directors, including the duty to offer certain business opportunities to BioScrip, that would otherwise be applicable to the officers and directors of BioScrip under Delaware law, and (vi) the right, prior to the trigger date, of the holders of a majority of the voting power of the then-outstanding shares of capital stock of BioScrip, to cause a special meeting of the BioScrip stockholders to be called.
Q:
Who will be the directors and executive officers of the combined company following the Mergers?
A:
Upon consummation of the First Merger, the size of the BioScrip Board will be increased to ten directors. Pursuant to the terms of the Merger Agreement, BioScrip will cause the BioScrip Board to be comprised of the following directors at the effective time of the First Merger (i) eight directors selected by Option Care, who initially will be Timothy Sullivan, Elizabeth Q. Betten, Nitin Sahney, Harry M. Jansen Kraemer, Jr., John J. Arlotta, John Rademacher, Mark Vainisi and Alan Nielsen; and (ii) two directors selected by BioScrip, who initially will be R. Carter Pate and David W. Golding.
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John Rademacher, the current chief executive officer of Omega, will serve as the chief executive officer of BioScrip. Michael Shapiro, the current chief financial officer of Omega, will serve as the chief financial officer of BioScrip. In addition, Dan Greenleaf, current chief executive officer of BioScrip, will serve as a special advisor to the BioScrip Board.
Q:
Do I need to attend the special meeting in person?
A:
No. It is not necessary for you to attend the special meeting in order to vote your shares. You may vote by mail, by telephone or through the Internet, as described in more detail below.
Q:
How many shares need to be represented at the special meeting?
A:
A quorum requires the presence, in person or by proxy, of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the preferred stock on an as-converted into common stock basis) issued and outstanding and entitled to vote at the special meeting, which, as of the Record Date, totals [•] shares. In accordance with the Certificate of Designations filed by BioScrip with the Secretary of State of the State of Delaware on March 9, 2015 (the “Series A Certificate of Designations”), and the Certificate of Designations filed by BioScrip with the Secretary of State of the State of Delaware on June 14, 2016 (the “Series C Certificate of Designations”), the shares of common stock into which shares of Series A Preferred Stock and Series C Preferred Stock are convertible will be counted for purposes of establishing a quorum at the special meeting. Abstentions are counted as present and entitled to vote for purposes of determining whether a quorum exists. Broker “non-votes” are counted as present solely for purposes of determining whether a quorum exists.
If you are a BioScrip stockholder as of the close of business on the Record Date and you vote by mail, by telephone, through the Internet or in person at the special meeting, you will be considered part of the quorum. If you are a “street name” holder of shares of BioScrip capital stock and you provide your bank, broker, trust or other nominee with voting instructions, then your shares will be counted in determining the presence of a quorum. If you are a “street name” holder of shares and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.
All shares of BioScrip capital stock held by holders that are present in person, or represented by proxy, and entitled to vote at the special meeting, regardless of how such shares are voted or whether such holders have indicated on their proxy that they are abstaining from voting, will be counted in determining the presence of a quorum. In the absence of a quorum, the special meeting may be adjourned.
Q:
Why am I being asked to consider and cast a non-binding advisory vote to approve the compensation that may be paid or become payable to BioScrip’s named executive officers that is based on or otherwise relates to the Mergers?
A:
In July 2010, the SEC adopted rules that require companies to seek a non-binding advisory vote to approve certain compensation that may be paid or become payable to their named executive officers that is based on or otherwise relates to corporate transactions such as the Mergers. In accordance with the rules promulgated under Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), BioScrip is providing its holders of capital stock with the opportunity to cast a non-binding advisory vote on compensation that may be paid or become payable to BioScrip’s named executive officers in connection with the Mergers. For additional information, see the section entitled “BioScrip Proposals — Proposal 4: Approval of the Compensation Proposal,” beginning on page 49.
Q:
What will happen if BioScrip stockholders do not approve the non-binding compensation advisory proposal?
A:
The vote to approve the non-binding compensation advisory proposal is a vote separate and apart from the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal. Approval of the non-binding compensation advisory proposal is not a condition to completion of the Mergers, and it is advisory in nature only, meaning that it will not be binding on BioScrip, Option Care or Omega Parent or any of their respective subsidiaries. Accordingly, if the
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Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal are approved by BioScrip’s stockholders and the Mergers are completed, the compensation that is based on or otherwise relates to the Mergers will be payable to BioScrip’s named executive officers even if this proposal is not approved.
Q:
What do I need to do now?
A:
After carefully reading and considering the information contained in this Proxy Statement and the Annexes attached to this Proxy Statement, please vote your shares of BioScrip common stock, Series A Preferred Stock and Series C Preferred Stock in one of the ways described below as soon as possible. Each stockholder is entitled to cast one vote for each share of common stock owned (including holders of preferred stock on an as-converted into common stock basis) owned as of the close of business on that record date.
Q:
How do I vote if I am a stockholder of record?
A:
You may vote by:

submitting your proxy by completing, signing and dating each proxy card you receive and returning it by mail in the enclosed prepaid envelope;

submitting your proxy by using the telephone number printed on each proxy card you receive;

submitting your proxy through the Internet voting instructions printed on each proxy card you receive; or

by appearing in person at the special meeting and voting by ballot.
If you are submitting your proxy by telephone or through the Internet, your voting instructions must be received by 11:59 p.m. Eastern Time on [•], 2019, the day before the special meeting.
Submitting your proxy by mail, by telephone or through the Internet will not prevent you from voting in person at the special meeting. You are encouraged to submit a proxy by mail, by telephone or through the Internet even if you plan to attend the special meeting in person to ensure that your shares of BioScrip common stock or preferred stock are represented at the special meeting.
If you return your signed proxy card, but do not mark the boxes showing how you wish to vote, your shares will be voted “FOR” the approval of the Share Issuance Proposal; “FOR” the approval of the Amended Charter Proposal; “FOR” the approval of the Series A COD Amendment Proposal; “FOR” the approval of the Compensation Proposal and “FOR” the approval of the Adjournment Proposal.
Q:
If my shares are held for me by a bank, broker, trust or other nominee, will my bank, broker, trust or other nominee vote those shares for me with respect to the proposals?
A:
Under Nasdaq rules, brokers who hold shares in a “street name” for a beneficial owner typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from the beneficial owner on how to vote. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that Nasdaq does not deem “routine.” None of the BioScrip proposals to be voted on at the special meeting are routine under the Nasdaq rules. Consequently, your bank, broker, trust or other nominee will NOT have the power to vote your shares of BioScrip common stock or preferred stock at the special meeting unless you provide instructions to your bank, broker, trust or other nominee on how to vote on each BioScrip proposal. You should instruct your bank, broker, trust or other nominee on how to vote your shares with respect to the BioScrip proposals, using the instructions provided by your bank, broker, trust or other nominee. You may be able to vote by telephone or through the Internet if your bank, broker, trust or other nominee offers these options.
Q:
What if I fail to instruct my bank, broker, trust or other nominee how to vote?
A:
Your bank, broker, trust or other nominee will NOT be able to vote your shares of BioScrip common stock or Preferred Stock unless you have properly instructed your bank, broker, trust or other nominee
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on how to vote. Because the Amended Charter Proposal and the Series A COD Amendment Proposal, which are conditions to the closing of Merger Agreement, require the affirmative vote of holders of at least a majority of the outstanding shares of BioScrip common stock, the failure to provide your nominee with voting instructions will have the same effect as a vote “AGAINST” such proposals. Furthermore, your shares will not be included in the calculation of the number of shares present at the special meeting for purposes of determining whether a quorum is present.
Q:
May I change my vote after I have mailed my proxy card or after I have submitted my proxy by telephone or through the Internet?
A:
Yes. You may revoke your proxy or change your vote at any time before it is voted at the special meeting. You may revoke your proxy by delivering a signed written notice of revocation stating that the proxy is revoked and bearing a date later than the date of the proxy to BioScrip’s Corporate Secretary at 1600 Broadway, Suite 700, Denver, Colorado 80202. You may also revoke your proxy or change your vote by submitting another proxy by telephone or through the Internet in accordance with the instructions on the enclosed proxy card. You may also submit a later-dated proxy card relating to the same shares of BioScrip common stock or preferred stock. If you voted by completing, signing, dating and returning the enclosed proxy card, you should retain a copy of the voter control number found on the proxy card in the event that you later decide to revoke your proxy or change your vote by telephone or through the Internet. Alternatively, your proxy may be revoked or changed by attending the special meeting and voting in person. However, simply attending the special meeting without voting will not revoke or change your proxy. “Street name” holders of shares of BioScrip common stock or preferred stock should contact their bank, broker, trust or other nominee to obtain instructions as to how to revoke or change their proxies.
If you have instructed a bank, broker, trust or other nominee to vote your shares, you must follow the instructions received from your bank, broker, trust or other nominee to change your vote.
All properly submitted proxies received by BioScrip before the special meeting that are not revoked or changed prior to being exercised at the special meeting will be voted at the special meeting in accordance with the instructions indicated on the proxies or, if no instructions were provided, “FOR” each of the BioScrip proposals.
Q:
Do I have appraisal rights?
A:
No appraisal rights are available to the holders of BioScrip common stock or preferred stock in connection with the Mergers.
Q:
Are any BioScrip stockholders already committed to vote in favor of the BioScrip proposals?
A:
Yes. Coliseum Capital Partners, L.P., Coliseum Capital Partners II, L.P. and Blackwell Partners, LLC, which have funds or accounts that are managed by Coliseum Capital have entered into a voting agreement with Option Care and Omega Parent pursuant to which they agreed, among other things, to vote their shares of BioScrip common stock and Series A Preferred Stock and Series C Preferred Stock in favor of the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal on the terms and subject to the conditions set forth in the voting and support agreement as discussed in more detail in the section entitled “The Ancillary Agreements — Voting Agreement” beginning on page 120.
As of the date of the Merger Agreement, the holders subject to the voting agreement collectively beneficially owned 1,888,991 shares of BioScrip common stock representing approximately 1.5% of the outstanding BioScrip common stock, 10,823 shares of Series A Preferred Stock representing approximately 50.04% of the outstanding Series A Preferred Stock and 100% of the Series C Preferred Stock. As of the date of the Merger Agreement, the shares of Preferred Stock owned by such holders, plus the shares of BioScrip common stock owned by such holders, represented approximately 14.24% of the voting rights in respect of BioScrip’s capital stock on an as-converted basis.
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Q:
What happens if I sell my shares of BioScrip common stock or preferred stock before the special meeting?
A:
The Record Date for BioScrip common stockholders and preferred stockholders entitled to vote at the special meeting is earlier than the date of the special meeting. If you transfer your shares after the Record Date but before the special meeting, you will, unless special arrangements are made to confer the voting rights with respect to such shares to the transferee, retain your right to vote at the special meeting.
Q:
When are the Mergers expected to be completed?
A:
Subject to the satisfaction or waiver of the closing conditions described in the section entitled “The Merger Agreement — Conditions to Completion of the Mergers” beginning on page 109, including the approval of the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal by BioScrip common stockholders and preferred stockholders at the special meeting, the transaction is expected to close in the second half of 2019. However, it is possible that factors outside the control of both companies could result in the business combination being completed at a later time, or not being completed at all.
Q:
What happens if the Mergers are not completed?
A:
If the Share Issuance Proposal, Amended Charter Proposal and Series A COD amendment proposal are not approved by our stockholders or if the Mergers are not completed for any other reason, the BioScrip and Option Care businesses will not be combined. Accordingly, Omega Parent stockholders and BioScrip Preferred Stock and warrant holders will not receive shares of BioScrip common stock or cash (as applicable) pursuant to the Merger Agreement. If the Merger Agreement is terminated, under specified circumstances, BioScrip may be required to pay Omega a termination fee of  $15.0 million, and if the Merger Agreement is terminated in certain other specified circumstances, Omega may be required to pay us a reverse termination fee of  $30.0 million. See the section entitled “The Merger Agreement — Termination of the Merger Agreement; Termination Fees” beginning on page 111 of this Proxy Statement.
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
BioScrip has retained D.F. King & Co., Inc., to assist in the solicitation process. BioScrip will pay D.F. King & Co., Inc. a fee of approximately $70,000, which includes a success fee, as well as reasonable and documented out-of-pocket expenses. BioScrip has also agreed to indemnify D.F. King & Co., Inc. against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).
Q:
Whom do I call if I have questions about the special meetings or the Merger Agreement or transactions contemplation thereby?
A:
If you have questions about the BioScrip special meeting, or the Merger Agreement or transactions contemplation thereby, or desire additional copies of this Proxy Statement or additional proxies, you may contact D.F. King & Co., Inc., toll-free at 1 (800) 499-8541 or collect at (212) 269-5550.
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SUMMARY OF THE PROXY STATEMENT
For your convenience, provided below is a summary of certain information contained in this Proxy Statement. This summary highlights selected information from this Proxy Statement, but does not contain all of the information that may be important to you. You are urged to read this Proxy Statement in its entirety, its annexes and the other documents referred to or incorporated by reference herein in order to fully understand the Mergers, the Merger Agreement and other matters to be considered in connection with the special meeting. See “Where You Can Find Additional Information” beginning on page 239.
The Parties
BioScrip, Inc.
1600 Broadway, Suite 700
Denver, CO 80202
Phone: (720) 697-5200
BioScrip, a Delaware corporation listed on Nasdaq Global Select Market under the symbol “BIOS,” is a national provider of infusion and home care management solutions. BioScrip partners with physicians, hospital systems, payors, pharmaceutical manufacturers and skilled nursing facilities to provide patients access to post-acute care services. As of December 31, 2018, BioScrip had a total of 68 service locations in 27 states. BioScrip’s model combines local presence with comprehensive clinical programs for multiple therapies and specific delivery technologies (infusible and injectable). BioScrip has the capabilities and payor relationships to dispense prescriptions to all 50 states.
Beta Sub, Inc.
c/o BioScrip, Inc.
1600 Broadway, Suite 700
Denver, CO 80202
Phone: (720) 697-5200
Beta Sub, Inc. is incorporated in Delaware as a direct, wholly owned subsidiary of BioScrip and for the sole purpose of effecting the First Merger. Upon the completion of the First Merger, Beta Sub, Inc. will cease to exist.
Beta Sub, LLC
c/o BioScrip, Inc.
1600 Broadway, Suite 700
Denver, CO 80202
Phone: (720) 697-5200
Beta Sub, LLC is incorporated in Delaware as a direct, wholly owned subsidiary of BioScrip and for the sole purpose of effecting the second merger. Upon the completion of the second merger, Beta Sub, LLC will survive and continue to exist as a direct, wholly owned subsidiary of BioScrip.
HC Group Holdings II, Inc.
c/o Option Care
3000 Lakeside Dr. Suite 300N
Bannockburn, IL 60015
Attention: General Counsel
HC Group Holdings II, Inc. was incorporated under the laws of the State of Delaware on January 7, 2015, with its sole shareholder being HC Group Holdings I, LLC. On April 7, 2015, HC Group Holdings I, LLC and HC Group Holdings II, Inc. collectively acquired Walgreens Infusion Services, Inc. and its subsidiaries, and the business was rebranded as Option Care. Option Care is a leading national provider of home and alternate site infusion services through its national network of 76 locations in 42 states. Option Care draws on nearly 40 years of clinical care experience to offer patient-centered, cost-effective infusion therapy. Option Care’s signature infusion services include the clinical management of infusion therapy, nursing support and care coordination.
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HC Group Holdings I, LLC
c/o Option Care
3000 Lakeside Dr. Suite 300N
Bannockburn, IL 60015
Attention: General Counsel
HC Group Holdings I, LLC is a Delaware limited liability company and the sole shareholder of HC Group Holdings II, Inc.
The Mergers and the Merger Agreement (page 51 and 94)
The terms and conditions of the Mergers are contained in the Merger Agreement, which is attached to this Proxy Statement as Annex A and is incorporated by reference herein in its entirety. BioScrip encourages you to read the Merger Agreement carefully, as it is the legal document that governs the Mergers.
The BioScrip Board unanimously approved the Merger Agreement. The Merger Agreement provides for the merger of BioScrip and Option Care through the merger of Beta Sub, Inc. with and into Option Care, with Option Care continuing as the surviving corporation of the First Merger. Immediately following the completion of the First Merger, the surviving corporation will merge with and into Beta Sub, LLC and the separate corporate existence of Option Care will cease, with Beta Sub, LLC continuing as the surviving company of the second merger.
Amended and Restated Certificate of Incorporation (page 117)
The proposed third amended and restated certificate of incorporation, attached as Annex B to this Proxy Statement, provides for, among other things, (i) an increase in the number of authorized shares of BioScrip common stock to permit issuance of a sufficient number of shares as merger consideration and otherwise in connection with the Merger Agreement and the transactions contemplated thereby, (ii) a prohibition on BioScrip stockholders’ ability to act by written consent after the date on which Omega Parent and its affiliates cease to beneficially own, in the aggregate, capital stock of BioScrip representing 50% or more of the voting power of BioScrip then outstanding and entitled to vote generally in an election of directors (such stock is referred to herein as voting stock), which date is referred to herein as the trigger date, (iii) the right of BioScrip stockholders to remove directors with or without cause with the consent of holders of  (A) at least a majority of the voting stock of BioScrip, voting as a single class, prior to the trigger date, or (B) at least a 6623% supermajority of the voting stock of BioScrip, voting at a meeting called for that purpose, after the trigger date, (iv) the right of BioScrip’s stockholders to amend the bylaws of BioScrip with the consent of holders of  (A) at least a majority of the voting stock of BioScrip, voting as a single class, prior to the trigger date, or (B) at least a 6623% supermajority of the voting stock of BioScrip’s capital stock, voting as a single class, after the trigger date, (v) the right of BioScrip’s stockholders to amend the certificate of incorporation of BioScrip with the consent of holders of  (A) at least a majority of the voting stock of BioScrip, voting as a single class, prior to the trigger date, or (B) at least a 6623% supermajority of the voting stock of BioScrip’s capital stock, voting as a single class at a meeting called for such purpose, after the trigger date, (vi) the waiver of certain fiduciary duties of BioScrip’s officers and directors, including the duty to offer certain business opportunities to BioScrip, that would otherwise be applicable to the officers and directors of BioScrip under Delaware law, and (vii) the right, prior to the trigger date, of the holders of at least a majority of the voting stock of BioScrip, to cause a special meeting of the BioScrip stockholders to be called.
Voting Agreement (page 120)
Concurrently with the execution of the Merger Agreement, funds and accounts managed by Coliseum Capital entered into a Voting Agreement with Omega Parent and Omega, with respect to all shares of BioScrip common stock, Preferred Stock and BioScrip warrants beneficially owned by such entities. As of the date of the Merger Agreement, such holders collectively beneficially owned 1,888,991 shares of BioScrip common stock representing approximately 1.5% of the outstanding BioScrip common stock, 10,823 shares of Series A Preferred Stock representing approximately 50.04% of the outstanding Series A Preferred Stock and 100% of the Series C Preferred Stock. As of the date of the Merger Agreement, the shares of Preferred
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Stock owned by such holders, plus the shares of BioScrip common stock owned by such holders represented approximately 14.24% of the voting rights in respect of BioScrip’s capital stock on an as-converted basis. The Voting Agreement provides, among other things, that such holders will vote, on the terms and subject to the conditions specified in the voting agreement, in favor of the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal and against any acquisition proposal or matter that would (or would reasonably be expected to) impede, impair, interfere with, delay, postpone, discourage, or otherwise adversely affect the consummation of the Mergers or transactions contemplated thereby. A copy of the Voting Agreement is attached as Annex F to this Proxy Statement.
Preferred Stock Repurchase Agreement (page 119)
Concurrently with the execution of the Merger Agreement, BioScrip and certain funds and accounts managed by Coliseum Capital entered into a Preferred Stock Repurchase Agreement pursuant to which BioScrip agreed to repurchase 100% of its outstanding Series C Preferred Stock from the current holders of such Series C Preferred Stock for (i) an amount in cash equal to 120% of the liquidation preference payable in respect of such shares and (ii) 2.5226 shares of BioScrip common stock per preferred share. If the Merger Agreement is terminated in accordance with its terms, the Preferred Stock Repurchase Agreement will terminate automatically. BioScrip has also agreed to indemnify each holder of Series C Preferred Stock and its respective officers, directors, employees, affiliates and equityholders against all claims, actions, judgments, liabilities, losses, and damages, together with all reasonable and properly documented costs and expenses related thereto, referred to as losses, relating to or arising from (i) the execution or delivery of the Preferred Stock Repurchase Agreement, including the closing of the transaction thereunder and the performance of obligations thereunder, or (ii) the execution and delivery of the Voting Agreement by the holders of Series C Preferred Stock or the performance by any holder of Series C Preferred Stock of its obligations under the Voting Agreement, in each case except to the extent that any such losses are attributable to the breach of the Preferred Stock Repurchase Agreement or the Voting Agreement by such holder or the willful misconduct or fraud of a person otherwise entitled to the foregoing right of indemnification.
Series A COD Amendment (page 118)
In connection with the Mergers, the BioScrip Board approved the Series A COD Amendment which is subject to the approval of the BioScrip stockholders at the special meeting. Pursuant to the Series A COD Amendment, immediately following the effectiveness of the Mergers without any further action on the part of BioScrip or any stockholder of BioScrip, (i) (A) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on March 9, 2015 then issued and outstanding will automatically be converted into 2.5226 shares of BioScrip common stock and (B) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on July 29, 2015 then issued and outstanding will automatically be converted into 2.4138 shares of BioScrip common stock and (ii) the remaining portion of all Series A Preferred Stock (constituting ninety-six one-hundredths (96/100) of each share of Series A Preferred Stock subject to conversion pursuant to the immediately preceding clause (i)) will be redeemed, to the extent BioScrip is permitted to do so under applicable law, for an amount in cash equal to 120% of the Liquidation Preference of such share of Series A Preferred Stock as of the date of such redemption (including any dividends accrued through such date).
Amended and Restated Warrant Agreement and Warrant Letter Agreements (page 120)
Concurrently with the execution of the Merger Agreement, BioScrip entered into an Amended and Restated Warrant Agreement with the holders of the BioScrip warrants issued on June 29, 2017, so as to fix the maximum number of shares of BioScrip common stock issuable upon exercise of the warrants at 8,287,317 shares in the aggregate. The effectiveness of the Warrant Amendment is conditioned upon the consummation of the First Merger. In consideration of the warrantholders’ execution and delivery of the Warrant Amendment, BioScrip entered into a letter agreement with each of the warrantholders, pursuant to which BioScrip agreed to issue to the warrantholders an aggregate of 1,855,747 shares of BioScrip common stock, promptly following, and conditioned upon, the consummation of the First Merger, pro rata in accordance with the warrantholders’ ownership of the warrants.
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Opinion of Moelis, BioScrip’s Financial Advisor (page 69)
BioScrip retained Moelis & Company LLC (“Moelis”) to act as financial advisor to the BioScrip Board in connection with Mergers. The BioScrip Board selected Moelis to act as its financial advisor based on Moelis’ qualifications, expertise and reputation, its knowledge of and involvement in recent transactions in the industry, and its knowledge of BioScrip’s business and affairs. At the meeting of the BioScrip Board on March 14, 2019 to evaluate and approve the Merger Agreement and the Mergers, Moelis delivered an oral opinion, which was confirmed by delivery of a written opinion, dated March 14, 2019, addressed to the BioScrip Board to the effect that, as of the date of the opinion and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the opinion, the exchange ratio whereby, immediately following the consummation of the First Merger, Omega Parent will own 79.5% of the outstanding shares of BioScrip common stock on a fully-diluted basis utilizing the treasury stock method, and the holders of Post-Transaction BioScrip Fully-Diluted Shares (as defined in “The Mergers — Opinion of Moelis, BioScrip’s Financial Advisor” beginning on page 69) will own 20.5% of the outstanding shares of BioScrip common stock on a fully diluted basis utilizing the treasury stock method (the “exchange ratio”).
The full text of Moelis’ written opinion dated March 14, 2019, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex J to this Proxy Statement and is incorporated herein by reference. Moelis’ opinion was provided for the use and benefit of the BioScrip Board (solely in its capacity as such) in its evaluation of the Mergers. Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the exchange ratio to BioScrip, and does not address BioScrip’s underlying business decision to effect the Mergers or the relative merits of the Mergers as compared to any alternative business strategies or transactions that might be available to BioScrip. Moelis’ opinion does not constitute a recommendation as to how any holder of securities should vote or act with respect to the Mergers or any other matter. For a further discussion of Moelis’s opinion, see “The Mergers — Opinion of Moelis, Bio Scrip’s Financial Advisor” beginning on page 69.
Special Meeting of BioScrip Stockholders (page 41)
The special meeting will be held on [•], 2019, at [•], local time, at [•]. The purpose of the special meeting is to consider and vote on the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal, the Compensation Proposal and, if necessary, the Adjournment Proposal.
Approval of the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal is required to complete the Mergers.
Only holders of record of BioScrip common stock, Series A Preferred Stock and Series C Preferred Stock as of the close of business on [•], the record date for the special meeting, are entitled to notice of, and to vote at the special meeting, or any adjournment or postponement of the special meeting. Each stockholder is entitled to cast one vote for each share of common stock owned (including holders of Preferred Stock on an as-converted into common stock basis) owned as of the close of business on that record date.
A quorum is necessary to hold a valid meeting. A quorum will exist at the special meeting with respect to each matter to be considered at the special meeting if the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted into common stock basis) issued and outstanding and entitled to vote at the special meeting as of the record date are present in person or represented by proxy at the special meeting. In accordance with the Series A Certificate of Designations and the Series C Certificate of Designations, the shares of common stock into which shares of Series A Preferred Stock and Series C Preferred Stock are convertible will be counted for purposes of establishing a quorum at the special meeting.
If you are a “street name” holder of shares of BioScrip capital stock and you provide your bank, broker, trust or other nominee with voting instructions on at least one of the proposals brought before the special meeting, then your shares will be counted in determining the presence of a quorum. The proposals for consideration at the special meeting are considered “non-routine” matters, and, therefore, no broker has
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discretion to vote on any of the proposals to be considered at the meeting without voting instructions from the beneficial owner of the shares. If you are a “street name” holder of shares and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.
Under Nasdaq rules, brokers who hold shares in a “street name” for a beneficial owner typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from the beneficial owner on how to vote. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that Nasdaq does not deem “routine.” None of the proposals to be voted on at the special meeting are routine under the Nasdaq rules. Consequently, your bank, broker, trust or other nominee will NOT have the power to vote your shares of BioScrip common stock or preferred stock at the special meeting unless you provide instructions to your bank, broker, trust or other nominee on how to vote on each BioScrip proposal. You should instruct your bank, broker, trust or other nominee on how to vote your shares with respect to the BioScrip proposals, using the instructions provided by your bank, broker, trust or other nominee. You may be able to vote by telephone or through the Internet if your bank, broker, trust or other nominee offers these options.
The Share Issuance Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Share Issuance Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Share Issuance Proposal.
The approval of the Amended Charter Proposal requires the affirmative vote of  (i) the holders of a majority of the outstanding shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) entitled to vote on such proposal at the special meeting, (ii) the holders of a majority of the outstanding shares of BioScrip common stock entitled to vote on such proposal at the special meeting, (iii) the holders of a majority of the outstanding shares of Series A Preferred Stock entitled to vote on such proposal at the special meeting and (iv) the holders of a majority of the outstanding shares of Series C Preferred Stock entitled to vote on such proposal at the special meeting. Failures to vote, votes to abstain, and broker non-votes will have the same effect as a vote “AGAINST” the Amended Charter Proposal.
The approval of the Series A COD Amendment Proposal requires the affirmative vote of  (i) the holders of a majority of the outstanding shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) entitled to vote on such proposal at the special meeting and (ii) the holders of a majority of the outstanding shares of Series A Preferred Stock entitled to vote on such proposal at the special meeting. Failures to vote, votes to abstain, and broker non-votes will have the same effect as a vote “AGAINST” the Series A COD Amendment Proposal.
The Compensation Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Compensation Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Compensation Proposal.
The Adjournment Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Adjournment Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Adjournment Proposal.
Recommendation of the BioScrip Board
The BioScrip Board unanimously (with Christopher Shackelton abstaining from any vote regarding the Series A COD Amendment for the reasons described in this proxy statement) recommends that BioScrip stockholders vote: (1) “FOR” the Share Issuance Proposal; (2) “FOR” the Amended Charter Proposal; (3) “FOR” the Series A COD Amendment Proposal; (4) “FOR” the Compensation Proposal and (5) “FOR” the Adjournment Proposal.
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Directors and Officers of BioScrip Following the Mergers (page 88)
Upon consummation of the First Merger, the size of the BioScrip Board will be increased to ten directors. Pursuant to the terms of the Merger Agreement, BioScrip will cause the BioScrip Board to be comprised of the following directors at the effective time of the First Merger:

eight directors selected by Option Care, who initially will be Timothy Sullivan, Elizabeth Q. Betten, Nitin Sahney, Harry M. Jansen Kraemer, Jr., John J. Arlotta, John Rademacher, Mark Vainisi and Alan Nielsen; and

two directors selected by BioScrip, who initially will be R. Carter Pate and David W. Golding.
The Merger Agreement also requires BioScrip to cause the continuing BioScrip directors to be included in the slate of nominees recommended by the BioScrip Board to BioScrip’s stockholders for election as directors at the next annual meeting of BioScrip stockholders to occur following the effective time of the First Merger and will use no less rigorous efforts to solicit proxies in favor of such directors than the manner in which BioScrip supports all other nominees proposed by the BioScrip Board. However, if, following the closing, any such continuing BioScrip director resigns or is unable to serve for any other reason prior to the first anniversary following the first annual meeting after the effective time of the First Merger (in each case, a “removed designee”), then the remaining continuing BioScrip director will recommend a replacement for such removed designee to the Governance, Compliance and Nominating Committee of the BioScrip Board, which will consider such replacement in good faith.
As of the effective time of the First Merger, the BioScrip bylaws will be amended as necessary to provide for the foregoing commitments. Such provision may not be amended prior to the first anniversary of the first annual meeting of BioScrip stockholders following the completion of the business combination without the affirmative vote of at least 85% of the voting stock of the corporation outstanding.
Following the effective time of the First Merger, BioScrip’s management team will include executives from each of Omega and BioScrip. John Rademacher, the current chief executive officer of Omega, will serve as the chief executive officer of BioScrip. Michael Shapiro, the current chief financial officer of Omega, will serve as the chief financial officer of BioScrip.
Interests of BioScrip Directors and Executive Officers in the Mergers (page 85)
BioScrip’s directors and executive officers have interests in the Mergers that are different from, or in addition to, the interests of BioScrip’s stockholders generally. These interests include, but are not limited to, continued service of certain members of the BioScrip Board on the board of directors of the combined company. In addition, the closing will be considered a “change in control” of BioScrip for purposes of the BioScrip Amended and Restated 2008 Equity Incentive Plan and the BioScrip 2018 Equity Incentive Plan. Certain executive officers of BioScrip, including Daniel Greenleaf, Stephen Deitsch, Harriet Booker and Kathryn Stalmack, hold restricted stock unit awards with respect to BioScrip common stock that will become fully vested at the closing of the Mergers. In addition, certain members of BioScrip’s senior management, including Daniel Greenleaf, Stephen Deitsch, Harriet Booker, Kathryn Stalmack, Robert Roose, Rich Denness, Leslie McIntosh and John McMahon hold restricted stock units with respect to BioScrip common stock and options to purchase BioScrip common stock granted pursuant to the BioScrip Amended and Restated 2008 Equity Incentive Plan and/or the BioScrip 2018 Equity Incentive Plan that will become fully vested if the executive officer is terminated without “cause” or resigns for “good reason” within 12 months following the occurrence of a “change in control.” BioScrip has entered into employment or severance agreements with its executive officers that provide for severance payments and benefits in the event of a termination of employment by BioScrip without “cause” or resignation for “good reason” within 12 months following the occurrence of a “change in control” of BioScrip. The severance benefits consist of a lump sum severance payment equal to one times (two times for Mr. Greenleaf) the executive’s base salary and target annual bonus, plus 12 months of company-paid COBRA coverage. Executive officers and directors also have rights to indemnification and directors’ and officers’ liability insurance that will survive completion of the Mergers. Harriet Booker has entered into a letter agreement with Option Care outlining her role and responsibilities with the combined company and confirming the terms of her compensation arrangements effective upon the completion of the Mergers.
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In addition, Christopher Shackelton, a director on the BioScrip Board, is a co-founder and managing Partner of Coliseum Capital. Funds and accounts managed by Coliseum Capital beneficially owns 100% of the Series C Preferred Stock and 50.04% of the Series A Preferred Stock. In connection with the Merger Agreement, BioScrip entered into the Preferred Stock Repurchase Agreement and the BioScrip Board approved the Series A COD Amendment. Pursuant to the Preferred Stock Repurchase Agreement, BioScrip agreed to repurchase 100% of its outstanding Series C Preferred Stock from the current holders for (i) an amount in cash equal to 120% of the liquidation preference payable in respect of such shares and (ii) 2.5226 shares of Beta common stock per preferred share. See the section entitled “The Ancillary Agreements — Preferred Stock Repurchase Agreement” on page 119 for a more detailed description of the Preferred Stock Repurchase Agreement. Pursuant to the Series A COD Amendment, immediately following the effectiveness of the Mergers (i) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on March 9, 2015 then issued and outstanding will automatically be converted into 2.5226 shares of Beta common stock and (ii) the remaining portion of all Series A Preferred Stock (constituting ninety-six one-hundredths (96/100) of each share of Series A Preferred Stock subject to conversion pursuant to the immediately preceding clause (i)) will be redeemed, to the extent BioScrip is permitted to do so under applicable law, for an amount in cash equal to 120% of the liquidation preference then-applicable to such share of Series A Preferred Stock as of the date of such redemption (including any dividends accrued through such date). See the section entitled “The Ancillary Agreements — Series A COD Amendment” on page 118 for a more detailed description of the Series A COD Amendment.
The members of the BioScrip Board were aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and approving the Mergers and in determining to recommend to BioScrip stockholders that they adopt the Merger Agreement.
These interests are described in more detail in the section entitled “The Mergers — Interests of Certain BioScrip Directors and Executive Officers in the Mergers” beginning on page 85.
Financing (page 124)
It is anticipated that the total amount of funds necessary to complete the Mergers and the related transactions will be approximately $1.325 billion, in addition to the amount then drawn under Option Care’s Existing Revolving Credit Facility. As of March 31, 2019, Option Care’s Existing Revolving Credit Facility was undrawn. The Mergers will be funded via the debt financing required to be obtained by Option Care under the Merger Agreement (the “debt financing”) described below, as well as cash on hand of BioScrip and Option Care. This amount includes funds needed to (i) repay in full certain outstanding indebtedness of BioScrip and its subsidiaries and Option Care and its subsidiaries and (ii) pay fees, commissions and expenses in connection with the foregoing.
In connection with the Mergers, Option Care has obtained debt financing commitments from Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Ares Capital Management LLC, Ares Management LLC (together with Ares Capital Management LLC, “Ares Management”), ACF Finco I LP, certain funds and investment vehicles managed or advised by the Goldman Sachs Merchant Banking Division (collectively the “Goldman Sachs Merchant Banking Division”), DDJ Capital Management and certain of their respective affiliates, pursuant to which they have severally committed to provide Option Care with a $925 million senior secured first lien term loan facility (the “First Lien Term Loan Facility”), a $150 million senior secured first lien asset-based revolving credit facility (the “ABL Facility”) and a $400 million second lien secured notes facility (the “Second Lien Notes”), which will be available to fund a portion of the payments contemplated by the Merger Agreement; provided that borrowings under the asset-based revolving credit facility shall be limited to $20 million in order to finance the Mergers. The obligation of Option Care to consummate the Mergers is not subject to any financing condition. For more information, see the section of this Proxy Statement captioned “The Mergers — The Ancillary Agreements — Debt Commitment Letters” beginning on page 124.
Accounting Treatment (page 90)
The Mergers will be accounted for as a reverse acquisition using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, (“ASC 805”), under which the assets and liabilities of BioScrip will be recorded by Omega at their respective fair values as
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of the date the Mergers are consummated. Omega will be deemed the acquirer in the Mergers for accounting purposes and BioScrip will be treated as the acquiree, based on a number of factors considered at the time of preparation of this Proxy Statement.
Market Listing (page 90)
BioScrip is required to file a new listing application with Nasdaq because the Mergers constitute a change of control of BioScrip under Nasdaq rules.
Conditions to the Completion of the Mergers (page 109)
Mutual Closing Conditions
Each party’s obligation to consummate the Mergers is conditioned upon its satisfaction or waiver, at or prior to the effective time of the effective time of the First Merger, of each of the following:

HSR Approval.   The waiting period (and any extension thereof) applicable to the Mergers and the transactions contemplated by the Merger Agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended, the “HSR Act”) will have been terminated or will have expired.

Share Issuance.   Approval of the Share Issuance pursuant to the Merger Agreement by obtaining approval for the Share Issuance Proposal at the special meeting.

Omega Stockholder Approval.   Adoption of the Merger Agreement by Omega Parent, as the sole stockholder of Omega.

No Restraints.   No temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition will be in effect, and no law will have been enacted, entered, promulgated, enforced or deemed applicable by any governmental authority that, in any such case, prohibits or makes illegal the consummation of the Mergers.
BioScrip’s Closing Conditions
In addition, the obligations of BioScrip to effect the Mergers are subject to the satisfaction or waiver of the following additional conditions:

the representations and warranties of Omega and Omega Parent regarding the amounts and types of authorized capital stock and other classes of equity securities of Omega being validly issued and outstanding, fully paid and non-assessable, free of preemptive rights and other obligations to repurchase, redeem, convert or vote any such capital stock or other equity securities of Omega, will be true and correct in all respects as of the date the Merger Agreement was executed and as of the closing date, as though made as of the closing date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except for de minimis inaccuracies.

the representations and warranties of Omega and Omega Parent relating to: their valid organization, standing and power; the capitalization of each of Omega’s subsidiaries; Omega Parent’s ownership of 100% of the Omega common stock; Omega’s and Omega Parent’s authority to execute and deliver the Merger Agreement and perform the transactions contemplated by the Merger Agreement; there being no conflicts or violations under Omega’s or Omega Parent’s organizational documents as a result of Omega’s or Omega Parent’s execution and delivery of the Merger Agreement and performance of the transactions contemplated by the Merger Agreement; and there being no broker, investment banker, financial advisor or other person entitled to any broker’s or similar fee in connection with the transactions contemplated by the Merger Agreement (other than the fees payable to Goldman Sachs & Co., LLC) will be true and correct in all material
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respects as of the date of the Merger Agreement and as of the closing date as though made as of the closing date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date).

the representations and warranties of Omega and Omega Parent in the Merger Agreement (other than the Omega capitalization representations and the Omega fundamental representations (set forth above)) will be true and correct as of the date of the Merger Agreement and as of the closing date as though made as of the closing date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except for inaccuracies of representations or warranties the circumstances giving rise to which, individually or in the aggregate, have not had and would not reasonably be expected to have an Omega Material Adverse Effect (without giving effect to materiality and “Omega Material Adverse Effect” qualifications and exceptions contained in such representations and warranties).

Omega and Omega Parent having performed in all material respects all obligations required to be performed by it under the Merger Agreement at or prior to the effective time of the First Merger;

Since the date of the Merger Agreement, there will not have been an Omega Material Adverse Effect;

receipt of a certificate executed by an executive officer of Omega certifying as to the satisfaction of the conditions described in the preceding five bullet points; and

receipt of a copy of a statement, issued pursuant to Treasury Regulations Section 1.897-2(h), certifying that the Omega common stock does not constitute a “United States real property interest” under Section 897(c) of the Internal Revenue Code of 1986, as amended (the “Code”) (together with the notice to the Internal Revenue Service required under Treasury Regulations Section 1.897-2(h)(2)).
Omega’s Closing Conditions
In addition, the obligations of each of Omega and Omega Parent to effect the First Merger are subject to the satisfaction or waiver of the following additional conditions:

the representations and warranties of BioScrip regarding:   the amounts and types of authorized capital stock and other classes of equity securities of BioScrip being validly issued and outstanding, fully paid and non-assessable, free of preemptive rights and other obligations to repurchase, redeem, convert or vote any such capital stock or other equity securities of BioScrip, will be true and correct in all respects as of the date the Merger Agreement was executed and as of the closing date, as though made as of the closing date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except for de minimis inaccuracies.

the representations and warranties of BioScrip relating to:   its valid organization, standing and power; the amounts, types and terms of BioScrip’s stock options, restricted stock units and stock appreciation right; the BioScrip common stock issued in the Share Issuance being duly authorized, fully paid and non-assessable, free and clear of all liens (other than those imposed by applicable securities laws); the validity and enforceability of the Preferred Stock Repurchase Agreement and the Warrant Amendment; the capitalization of each of BioScrip’s subsidiaries; BioScrip’s authority to execute and deliver the Merger Agreement and perform the transactions contemplated by the Merger Agreement; there being no conflicts or violations under BioScrip’s organizational documents as a result of BioScrip’s execution and delivery of the Merger Agreement and performance of the transactions contemplated by the Merger Agreement; and there being no broker, investment banker, financial advisor or other person entitled to any broker’s or similar fee in connection with the transactions contemplated by the Merger Agreement (other than the fees payable to Moelis & Company LLC and Jefferies LLC in connection with the transactions contemplated by the Merger Agreement); will be true and correct in all material
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respects as of the date of the Merger Agreement and as of the closing date as though made as of the closing date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date).

the representations and warranties of BioScrip in the Merger Agreement (other than the BioScrip capitalization representations and the BioScrip fundamental representations (as set forth above)) will be true and correct as of the date of the Merger Agreement and as of the closing date as though made as of the closing date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except for inaccuracies of representations or warranties the circumstances giving rise to which, individually or in the aggregate, have not had and would not reasonably be expected to have a BioScrip Material Adverse Effect (as defined in the Merger Agreement and as described in more detail in the section below entitled “The Merger Agreement — Representations and Warranties — Beta Material Adverse Effect”) (without giving effect to materiality and “BioScrip Material Adverse Effect” and similar qualifications contained in such representations and warranties).

Beta Sub, Inc. and Beta Sub, LLC having performed in all material respects all obligations required to be performed by them under the Merger Agreement at or prior to the effective time of the First Merger;

since the date of the Merger Agreement, there will not have been a BioScrip Material Adverse Effect;

receipt of a certificate executed by an executive officer of BioScrip certifying as to the satisfaction of the conditions described in the preceding five bullet points;

receipt of a written opinion from Kirkland & Ellis LLP, dated as of the closing date, to the effect that the Mergers will qualify as a “reorganization” within the meaning of Section 368(a) of the Code; and

receipt of certain consents under applicable pharmacy laws in the states of California and North Carolina or, where applicable, receipt of correspondence from the applicable governmental entity that such consent will be delivered promptly after the closing.
No Solicitation of Alternative Proposals (page 103)
The Merger Agreement prohibits each of BioScrip, Omega and Omega Parent from soliciting, proposing, initiating, knowingly encouraging, facilitating, or participating in (including by furnishing any non-public information of Omega or BioScrip, as applicable, to any third party), any inquiries, proposals, offers, discussions or negotiations with any third party with respect to an Acquisition Proposal (as defined in the Merger Agreement and described in section below entitled “The Merger Agreement — No Solicitation of Alternative Proposals” beginning on page 103). However, the Merger Agreement provides that if, at any time prior to obtaining the approval of the BioScrip stockholders for the BioScrip Proposals, BioScrip receives an unsolicited, written proposal for a competing transaction in compliance with its non-solicitation obligations under the Merger Agreement and, among other things, the BioScrip Board determines in good faith (i) after consultation with outside legal counsel and a financial advisor that such proposal constitutes or is reasonably likely to lead to a Superior Proposal (as defined in the Merger Agreement and described in section below entitled “The Merger Agreement — No Solicitation of Alternative Proposals” beginning on page 103) and (ii) after consultation with outside legal counsel, the failure to participate in discussions and negotiations regarding such Superior Proposal or furnish non-public information to the third party making such proposal would be reasonably expected to be inconsistent with the BioScrip Board’s fiduciary duties under applicable law, then BioScrip may furnish non-public information to the third party making such proposal or participate in discussions and negotiations regarding such proposal.
For a more detailed description of the non-solicitation restrictions in the Merger Agreement, please see the section entitled “The Merger Agreement — No Solicitation of Alternative Proposals” beginning on page 103.
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Termination of the Merger Agreement (page 111)
Mutual Termination Rights
The Merger Agreement may be terminated at any time prior to the consummation of the First Merger by mutual written consent of BioScrip and Omega. Also, subject to specified qualifications and exceptions, either Omega or BioScrip may terminate the Merger Agreement prior to the consummation of the First Merger:

if the First Merger has not occurred by December 13, 2019 (the “Outside Date”). The right to terminate the Merger Agreement at the Outside Date will not be available to a terminating party to the extent such party’s material breach of any representation, warranty, covenant or other agreement under the Merger Agreement is the primary cause, or the primary factor that resulted in, of the failure of the Mergers to be consummated by the Outside Date;

if any court of competent jurisdiction or other governmental entity has issued a judgment, order, injunction, rule or decree, or taken any other action restraining, enjoining or otherwise prohibiting any of the transactions contemplated by the Merger Agreement and such judgment, order, injunction, rule, decree or other action will have become final and non-appealable; or

if the Amended Charter Proposal, the Share Issuance Proposal and the Series A COD Amendment Proposals have not been approve by the BioScrip stockholders at the special meeting.
BioScrip Termination Rights
The Merger Agreement also provides that, subject to specified qualifications and exceptions, BioScrip may terminate the Merger Agreement prior to the consummation of the First Merger:

if Omega has breached or failed to perform any of its representations, warranties, covenants or agreements, or if any such representation or warranty of Omega has become untrue, which breach or failure to perform or to be true, either individually or in the aggregate, if occurring or continuing at the effective time of the First Merger (i) would result in the failure of any of the party’s mutual closing conditions or BioScrip’s closing conditions and (ii) cannot be or has not been cured by the earlier of  (1) the Outside Date and (2) 30 days after the giving of written notice to Omega of such breach or failure. BioScrip will not have such right to terminate if BioScrip, Merger Sub Inc. or Merger Sub LLC is then in material breach of any of its representations, warranties, covenants or agreements in the Merger Agreement that would cause any mutual closing condition or any of Omega’s closing conditions to fail to be satisfied;

if, prior to obtaining the BioScrip stockholder approval in respect of the BioScrip proposals at the special meeting, the BioScrip Board determines to enter into a definitive written agreement with respect to a Superior Proposal, but only if  (x) BioScrip is permitted to terminate the Merger Agreement and accept such Superior Proposal in accordance with the terms of the Merger Agreement (see the section entitled “The Merger Agreement — No Solicitation of Alternative Proposals,” for a description of such terms), (y) BioScrip has not materially breached or failed to perform any of its covenants or agreements contained in the no solicitation covenant of the Merger Agreement (see the section entitled “The Merger Agreement — No Solicitation of Alternative Proposals,” for a description of such covenants and agreements) and (z) immediately prior to or substantially concurrently with such termination, BioScrip pays the BioScrip Termination Fee to Omega Parent in accordance with the Merger Agreement (see the section entitled “The Merger Agreement — Termination Fees and Expenses,” for a more detailed description of the BioScrip Termination Fee); or

if  (i) all of the mutual closing conditions and all of Omega’s closing conditions have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing), (ii) Omega and Omega Parent have failed to consummate the closing by the date on which the closing was required to occur in accordance with the Merger Agreement, (iii) BioScrip has confirmed in writing to Omega and Omega Parent at least two business days prior to the termination of the Merger Agreement that the BioScrip, Beta Sub, Inc. and Beta Sub, LLC stand
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ready, willing and able to consummate the transactions contemplated by the Merger Agreement and (iv) Omega and Omega Parent fail to consummate the transactions contemplated by the Merger Agreement within two Business Days after receipt of such irrevocable confirmation by Omega.
Omega Termination Rights
The Merger Agreement also provides that, subject to specified qualifications and exceptions, Omega may terminate the Merger Agreement prior to the consummation of the First Merger:

if BioScrip, Beta Sub, Inc. or Beta Sub, LLC will have breached or failed to perform any of its representations, warranties, covenants or agreements, or if any such representation or warranty of such party will have become untrue, which breach or failure to perform or to be true, either individually or in the aggregate, if occurring or continuing at the effective time of the First Merger (i) would result in the failure of any of the mutual closing conditions or Omega’s closing conditions and (ii) cannot be or has not been cured by the earlier of  (1) the Outside Date and (2) 30 days after the giving of written notice to BioScrip of such breach or failure. Omega will not have such right to terminate if Omega is then in material breach of any of its representations, warranties, covenants or agreements in the Merger Agreement that would cause any mutual closing condition or any of BioScrip’s closing conditions to fail; or

if, prior to obtaining the BioScrip stockholder approval, BioScrip or the BioScrip Board will have effected an Adverse Recommendation Change (as defined in the Merger Agreement and as discussed in the section below entitled “The Merger Agreement — Changes in Board Recommendations”).
Termination Fees and Expenses (page 112)
Omega Termination Fee
The Merger Agreement provides that, upon termination under certain specified circumstances, Omega may be required to pay to BioScrip a termination fee equal to $30,000,000 (the “Omega Termination Fee”). The circumstances under which the Omega Termination Fee may be payable include:

a termination by BioScrip as a result of an Omega material breach (as described in the first bullet under the section entitled “BioScrip Termination Rights” above);

a termination by BioScrip as a result of a failure of Omega to obtain and deliver its debt financing at the closing (as described in the second bullet under the section entitled “BioScrip Termination Rights” above); or

a termination by either BioScrip or Omega in connection with a termination at the Outside Date, provided that at the time of such termination BioScrip could have terminated the Merger Agreement for an Omega material breach.
In addition, the Merger Agreement provides that payment of the Omega Termination Fee will be BioScrip’s sole and exclusive remedy (except as otherwise expressly provided with respect to BioScrip’s right to specific performance in the Merger Agreement) if the Merger Agreement is terminated prior to the effective time of the First Merger. In no event will Omega, Omega Parent, or their respective affiliates, equityholders, debt financing sources, partners or employees or such person’s respective successors or assigns be liable for money damages in excess of the Omega Termination Fee, except that BioScrip may recover its costs and expenses in connection with enforcing its right to payment of the Omega Termination Fee and interest on the amount of the Omega Termination Fee in accordance with the Merger Agreement if Omega fails to pay the Omega Termination Fee on a timely basis in accordance with the Merger Agreement.
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BioScrip Termination Fee
The Merger Agreement provides that upon termination under certain specified circumstances, BioScrip may be required to pay to Omega a termination fee equal to $15,000,000 (the “BioScrip Termination Fee”). The circumstances under which the BioScrip Termination Fee may be payable include:

In the event that:
(a)
an Acquisition Proposal is made directly to BioScrip’s stockholders or is otherwise publicly disclosed or otherwise communicated to senior members of management of BioScrip or the BioScrip Board prior to termination of the Merger Agreement;
(b)
the Merger Agreement is terminated by BioScrip or Omega as a result of an outside date termination or a failure of the BioScrip stockholders to approve the Share Issuance Proposal, the Amended Charter Proposal or the Series A COD Amendment Proposal, or by Omega as a result of a BioScrip material breach; and
(c)
within 12 months after the date of such termination, BioScrip or any of its subsidiaries enters into an agreement in respect of any Acquisition Proposal, or recommends or submits an Acquisition Proposal to its stockholders for adoption, or a transaction in respect of an Acquisition Proposal is consummated which, in each case, need not be the same Acquisition Proposal that was made, disclosed or communicated prior to termination of the Merger Agreement;

In the event that Omega terminates the Merger Agreement as a result of BioScrip or the BioScrip Board effecting a change in its recommendation in favor of the BioScrip Proposals in certain circumstances (as described in more detail in the section below entitled “The Merger Agreement — Changes in Board Recommendations” beginning on page 103) prior to the approval by BioScrip’s stockholders of the Share Issuance Proposal, the Amended Charter Proposal or the Series A COD Amendment Proposal at the special meeting; or

In the event that BioScrip terminates the Merger Agreement as a result of a superior proposal (as described in the second bullet under the section entitled “BioScrip Termination Rights” above).
The Merger Agreement provides that in no event (i) will BioScrip be required to pay the BioScrip Termination Fee on more than one occasion or (ii) will Omega be required to pay the Omega Termination Fee on more than one occasion.
Expense Reimbursement
If the Merger Agreement is terminated by BioScrip or Omega as a result of a failure of the BioScrip stockholders to approve the share issuance proposal, the amended charter proposal or the Series A COD amendment proposal and the BioScrip Termination Fee is not otherwise payable, then, within six months after demand by Omega Parent, BioScrip will pay to Omega Parent up to $5,000,000 of the reasonable and documented out-of-pocket fees and expenses (including legal fees and expenses) incurred by Omega, Omega Parent and their affiliates on or prior to the termination of the Merger Agreement in connection with the transactions contemplated by the Merger Agreement (the “Omega Expenses”).
Regulatory Approvals (page 89)
The completion of the Mergers is subject to the receipt of certain required regulatory approvals, including the receipt of antitrust clearance in the United States. Under the HSR Act, the Mergers may not be completed until Notification and Report Forms have been filed with the United States Federal Trade Commission, referred to as the FTC, and the Antitrust Division of the United States Department of Justice, referred to as the DOJ, and the applicable waiting period has expired or been terminated. BioScrip and Omega each filed an HSR notification with the FTC and the DOJ on March 28, 2019 and the waiting period was terminated early on April 8, 2019.
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At any time before or after consummation of the Mergers, notwithstanding the expiration or termination of the applicable waiting period under the HSR Act, the DOJ or the FTC, or any state, could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the Mergers, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights. Private parties also may seek to take legal action under the antitrust laws under certain circumstances.
Omega’s and Omega Parent’s obligation to effect the First Merger is further subject to obtaining the consent (or written correspondence that such consent will be issued shortly after the closing) of the California Board of Pharmacy and the North Carolina Board of Pharmacy in respect of the Mergers for certain pharmacy permits currently held by BioScrip and Omega. While Beta and Omega expect those consents to be obtained, there is no guarantee that such consents will be obtained. The failure to obtain any such consent, or any condition or delay arising in connection with obtain such consents, could result in the conditions to the Mergers not being satisfied.
Under the Merger Agreement, each of BioScrip and Omega are required to use reasonable best efforts to obtain any applicable regulatory consents, approvals, waivers or clearances from governmental authorities in connection with the transactions contemplated by the Merger Agreement, as more fully described in the section of this Proxy Statement entitled “The Merger Agreement — Reasonable Best Efforts” on page 105. However, neither BioScrip nor Omega is required to undertake any divestiture the effect of which would (i) reasonably be expected to have a material adverse effect after the closing on the combined business, taken as a whole, or (ii) would result in the divestiture of assets or businesses of BioScrip, Omega or any of their respective subsidiaries representing $100,000,000 or more of revenue of BioScrip, Omega and their respective subsidiaries in the aggregate determined as of the trailing 12 month period ended December 31, 2018.
Material U.S. Federal Income Tax Consequences of the Business Combination (page 126)
The Mergers are intended to qualify as a reorganization under Section 368 of the Code. Accordingly, the Mergers (i) are not expected to cause BioScrip or any of its subsidiaries to recognize any taxable income or gain for U.S. federal income tax purposes and (ii) will also generally not result in U.S. federal income tax consequences to the BioScrip stockholders, who are neither receiving consideration nor disposing of shares in the Mergers.
No Appraisal Rights (page 236)
No appraisal rights are available to the holders of BioScrip common stock or preferred stock in connection with the Mergers.
Expected Timing of the Mergers (page 89)
BioScrip currently expects the closing of the Mergers to occur in the second half of 2019. However, as the Mergers are subject to the satisfaction or waiver of conditions described in the Merger Agreement, it is possible that factors outside the control of BioScrip could result in the Mergers being completed at an earlier time, a later time, or not at all.
Comparison of Stockholders’ Rights (page 149)
Upon consummation of the Mergers, the rights of BioScrip stockholders, will be governed by the Amended Charter and bylaws of BioScrip. At the closing, BioScrip will also enter into the Director Nomination Agreement. The rights associated with BioScrip capital stock as of the date hereof and prior to the closing are different from the rights which will be associated with the BioScrip capital stock after the closing. These differences are described in detail under “Comparison of Stockholders’ Rights.”
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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Proxy Statement and the documents to which BioScrip refers you to in this Proxy Statement, as well as oral statements made or to be made by BioScrip, include certain “forward-looking statements” within the meaning of, and subject to the safe harbor created by, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995, which are referred to as the safe harbor provisions with respect to the businesses, strategies and plans of BioScrip, its expectations relating to the Mergers and its future financial condition and performance. Statements included in or incorporated by reference into this Proxy Statement that are not historical facts are forward-looking statements, including statements about the beliefs and expectations of the management of each of BioScrip and Omega. Words such as “believe,” “continue,” “could,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “should,” “may,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements that are intended to be covered by the safe harbor provisions. BioScrip cautions investors that any forward-looking statements are subject to known and unknown risks and uncertainties, many of which are outside BioScrip’s control, and which may cause actual results and future trends to differ materially from those matters expressed in, or implied or projected by, such forward-looking statements, which speak only as of the date of this Proxy Statement. Investors are cautioned not to place undue reliance on these forward-looking statements. Among the risks and uncertainties that could cause actual results to differ from those described in forward-looking statements are the following:

the occurrence of any change, event, series of events or circumstances that could give rise to the termination of the Merger Agreement, including a termination of the Merger Agreement under circumstances that could require BioScrip to pay the termination fee to Omega;

uncertainties related to the timing of the receipt of required regulatory approvals for the Mergers and the possibility that BioScrip and Omega may be required to accept conditions that could reduce or eliminate the anticipated benefits of the Mergers as a condition to obtaining regulatory approvals or that the required regulatory approvals might not be obtained at all;

the inability to complete the Mergers due to the failure, or unexpected delays, of BioScrip stockholders to approve the proposals at the special meeting, or the failure to satisfy other conditions to the completion of the Mergers;

delays in closing, or the failure to close, the Mergers for any reason could negatively impact BioScrip;

risks that the Mergers and the other transactions contemplated by the Merger Agreement disrupt current plans and operations that may harm BioScrip’s business;

difficulties or delays in integrating the businesses of BioScrip and Omega following completion of the Mergers or fully realizing the anticipated synergies and other benefits expected from the Mergers;

certain restrictions during the pendency of the proposed Mergers that may impact the ability of BioScrip to pursue certain business opportunities or strategic transactions;

the outcome of any legal proceedings that have been or may be instituted against BioScrip, Omega and/or others relating to the Mergers;

risks related to the diversion of the attention and time of BioScrip’s or Omega’s respective management teams from ongoing business concerns;

the risk that the proposed Mergers and any announcement relating to the proposed Mergers could have an adverse effect on the ability of BioScrip or Omega to retain and hire key personnel or maintain relationships with customers, suppliers, vendors, or other third parties, standing with regulators, or on BioScrip’s or Omega’s respective operating results and businesses generally;

the amount of any costs, fees, expenses, impairments or charges related to the Mergers;
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events beyond BioScrip’s control, such as acts of terrorism; and

other risks and uncertainties indicated in this Proxy Statement, including those set forth in the section entitled “Risk Factors,” beginning on page 21.
For further discussion of these and other risks, contingencies and uncertainties applicable to BioScrip, see the section entitled “Risk Factors” beginning on page 21 and in BioScrip’s other filings with the SEC incorporated by reference into this Proxy Statement. See also the section entitled “Where You Can Find Additional Information” beginning on page 239 for more information about the SEC filings incorporated by reference into this Proxy Statement.
All subsequent written or oral forward-looking statements attributable to BioScrip or any person acting on its or their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. BioScrip is not under any obligation, and BioScrip expressly disclaims any obligation, to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise, except as may be required by law.
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF BIOSCRIP
The following table presents selected historical condensed consolidated financial data for BioScrip as of and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014. The selected historical condensed consolidated financial data for each of the years ended December 31, 2018, 2017 and 2016, and as of December 31, 2018 and 2017, were derived from BioScrip’s Annual Report on Form 10-K filed on March 15, 2019, and BioScrip’s Quarterly Report on Form 10-Q for the unaudited quarterly period ended March 31, 2019, filed on May 3, 2019 incorporated herein by reference. The selected historical condensed consolidated financial data for BioScrip as of and for each of the years ended December 31, 2015 and 2014, and as of December 31, 2016, 2015 and 2014, have been derived from BioScrip’s audited financial statements for such years, which have not been incorporated by reference into this Proxy Statement.
The selected historical consolidated financial data set forth below is not necessarily indicative of future results of BioScrip and should be read together with the other information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes appearing elsewhere in BioScrip’s Annual Report on Form 10-K filed on March 15, 2019 and BioScrip’s Quarterly Report on Form 10-Q for the unaudited quarterly period ended March 31, 2019, filed on May 3, 2019, which are incorporated herein by reference.
Acquisitions during the periods below include BioScrip’s acquision of Home Solutions beginning September 2016. Divestitures during the periods below include the sale of BioScrip’s Home Health Business in March 2014, and the sale of BioScrip’s pharmacy benefit management services segment in August 2015. All historical amounts have been restated to reclassify amounts directly associated with these divested operations as discontinued operations. The amounts below are not necessarily indicative of what the actual results would have been if BioScrip’s Home Health Business and the pharmacy benefit management services business were divested at the beginning of the period.
See the section entitled “Where You Can Find Additional Information” beginning on page 239.
March 31,
December 31,
2019
2018
2017
2016
2015
2014
(in thousands)
Consolidated Balance Sheets Data:
Working capital(1)
$ 55,497 $ 67,389 $ 81,463 $ 43,180 $ 29,574 $ 25,347
Total assets(2)
$ 597,190 $ 583,938 $ 603,092 $ 604,985 $ 528,416 $ 801,204
Total debt
$ 511,255 $ 504,674 $ 480,588 $ 451,934 $ 418,121 $ 423,803
Stockholders’ equity (deficit)
$ (156,342) $ (144,004) $ (84,752) $ (33,621) $ (81,515) $ 216,589
Total assets of discontinued operations
$ $ $ $ $ $ 22,294
Three Months Ended
March 31,
Year Ended December 31,
2019
2018
2017
2016
2015
2014
(in thousands, except per share amounts)
Consolidated Statements of Operations Data:
Net revenue
$ 178,956 $ 708,903 $ 817,190 $ 935,589 $ 982,223 $ 922,654
Operating income (loss)(3)
$ (5,110) $ 10,903 $ 2,260 $ (10,989) $ (289,413) $ (98,025)
Loss from continuing operations, before income taxes
$ (10,266) $ (51,024) $ (67,433) $ (34,157) $ (326,351) $ (138,943)
Basic loss per share:
   ​
Loss from continuing operations
$ (0.10) $ (0.49) $ (0.59) $ (0.48) $ (4.58) $ (2.19)
Income (loss) from discontinued operations,
$ (0.01) $ (0.07) $ 0.07 $ 0.04
Net loss, (3)
$ (0.10) $ (0.49) $ (0.60) $ (0.55) $ (4.51) $ (2.15)
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Three Months Ended
March 31,
Year Ended December 31,
2019
2018
2017
2016
2015
2014
(in thousands, except per share amounts)
Diluted loss per share:
Loss from continuing operations
$ (0.18) $ (0.49) $ (0.59) $ (0.48) $ (4.58) $ (2.19)
Income (loss) from discontinued operations
$ (0.01) $ (0.07) $ 0.07 $ 0.04
Net loss(3)
$ (0.18) $ (0.49) $ (0.60) $ (0.55) $ (4.51) $ (2.15)
Weighted average common shares outstanding:
Basic 128,108 127,942 123,791 93,740 68,710 68,476
Diluted 131,358 127,942 123,791 93,740 68,710 68,476
(1)
Working capital calculation excludes current assets and liabilities of discontinued operations and includes the impact of applying the retrospective adoption of ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that all deferred tax assets and liabilities be presented as non-current.
(2)
Total assets exclude total assets of discontinued operations as of December 31, 2014.
(3)
Operating loss for the year ended December 31, 2015 includes goodwill impairment of  $251.9 million.
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF OPTION CARE
HC II was incorporated under the laws of the State of Delaware on January 7, 2015, with its sole shareholder being HC Group Holdings I, LLC (“HC I” or the “Shareholder”). On April 7, 2015, HC I and HC II collectively acquired Walgreens Infusion Services, Inc. and its subsidiaries, and the business was rebranded as Option Care (“Option Care”). Prior to April 7, 2015, Walgreens Infusion Services, Inc. (the “Predecessor”), was a wholly owned subsidiary of Walgreen Co. (the “Predecessor Shareholder”). As a result of the Option Care acquisition and associated purchase accounting, HC II’s (the “Successor”) financial statements have been presented on a different basis than the Predecessor financial statements, and are therefore not comparable. The Predecessor and Successor periods are demarcated by a black line.
The following tables present, as of the dates and for the periods indicated, (1) the selected historical condensed consolidated financial data for HC II and (2) the selected historical condensed consolidated financial data for Predecessor. The selected historical condensed consolidated financial data for HC II as of and for each of the years ended December 31, 2018, 2017 and 2016 have been derived from HC II’s audited financial statements for such years, which have been included elsewhere this Proxy Statement. The selected condensed consolidated statement of income data for the 2015 Predecessor Period has been derived from the audited consolidated financial statements of Predecessor and its subsidiaries. The selected consolidated statement of income data for the 2015 Successor Period and the selected consolidated balance sheet data as of December 31, 2015 have been derived from the audited consolidated financial statements of HC II and its subsidiaries. The selected condensed consolidated statement of income data for HC II for the three months ended March 31, 2019 and 2018 and the selected condensed consolidated balance sheet data as of March 31, 2019 have been derived from the unaudited condensed consolidated financial statements of HC II included elsewhere in this Proxy Statement. In the opinion of management, such unaudited interim financial data contains all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of our financial position and results of operations as of and for such periods.
The selected consolidated financial data set forth below is not necessarily indicative of future results of Option Care and should be read together with the other information contained in the section entitled “Option Care Management’s Discussion and Analysis ” appearing on page 172 of this Proxy Statement and Option Care’s consolidated financial statements and the related notes appearing on page 195 of this Proxy Statement.
Audited condensed consolidated financial data for fiscal year 2014 is not presented above because preparation of this information would be a practical impossibility. During this time, the results of the Option Care business were included within the results of the Predecessor Shareholder, which had a fiscal year end of August 31. Option Care does not have access to the financial information necessary to prepare audited 2014 financial statements for the Option Care business on a carve-out basis. Additionally, Option Care management believes that the audited financial statements of Option Care for the years ended December 31, 2018, 2017 and 2016 are the most useful to an investor evaluating Option Care’s financial performance because these results show the standalone Option Care business and therefore provide a strong foundation for an investor to better understand Option Care’s results of operations.
December 31,
March 31,
2018
2017
2016
2015
2019
(in thousands)
(in thousands)
Consolidated Balance Sheets Data:
Working capital
$ 227,428 $ 226,535 $ 227,763 $ 229,243 $ 225,627
Total assets
1,434,753 1,436,084 1,411,827 1,383,817 1,427,296
Total debt
539,375 540,346 541,500 542,888 539,136
Shareholder’s equity
602,825 606,105 600,770 596,121 597,171
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Year Ended December 31,
Successor
Predecessor
Three Months Ended March 31,
2018
2017
2016
April 7, 2015 – 
December 31, 2015
January 1, 2015 – 
April 6, 2015
2019
2018
(in thousands)
Consolidated Statements of Comprehensive Income (Loss):
Net Revenue
$ 2,001,132 $ 1,828,046 $ 1,711,438 $ 1,163,009 $ 379,672 $ 493,010 $ 474,928
Gross Profit
483,556 445,999 449,307 312,597 96,518 378,298 358,947
Operating Income
38,269 27,279 52,448 6,129 (1,721) 5,438 3,065
Net Income (Loss)
(6,115) 3,878 3,910 (17,696) (5,761) (3,712) (6,851)
Net Comprehensive Income (Loss)
(5,341) 3,936 3,910 (17,696) (5,761) (4,217) (5,821)
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RISK FACTORS
In deciding whether to vote for the adoption of Share Issuance Proposal, the Amended Charter Proposal or the Series A COD Amendment Proposal, you are urged to carefully consider all of the information included or incorporated by reference in this Proxy Statement, which is listed in the section entitled “Where You Can Find Additional Information” beginning on page 239. You should also read and consider the risks associated with each of the businesses of BioScrip and Omega because these risks will affect the combined company. The risks associated with the business of BioScrip can be found in BioScrip’s Annual Report on Form 10-K filed on March 15, 2019 for the fiscal year ended December 31, 2018, and BioScrip’s Quarterly Report on Form 10-Q for the unaudited quarterly period ended March 31, 2019 as such risks may be updated or supplemented in BioScrip’s subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K (excluding any information and exhibits furnished under Item 2.02 or 7.01 thereof), each of which are incorporated by reference into this Proxy Statement. In addition, you are urged to carefully consider the following material risks relating to the Mergers and the business of the combined company after the closing.
Risks Relating to BioScrip’s Business
BioScrip’s business will continue to be subject to the risks described in the sections entitled “Risk Factors” in BioScrip’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and BioScrip’s Quarterly Report on Form 10-Q for the unaudited quarterly period ended March 31, 2019 and in other documents incorporated by reference into this Proxy Statement. See the section entitled “Where You Can Find Additional Information” beginning on page 239 for the location of information incorporated by reference into this Proxy Statement.
Risks Relating to Option Care’s Business
Option Care’s revenue and profitability will decline if the pharmaceutical industry undergoes certain changes, including limiting or discontinuing research, development, production and marketing of the pharmaceuticals that are compatible with the services Option Care provides.
Option Care’s business is highly dependent on the ability of pharmaceutical manufacturers to develop, supply and market pharmaceuticals that are compatible with the services it provides. Option Care’s revenue and profitability will decline if those companies were to sell pharmaceuticals directly to the public, fail to support existing pharmaceuticals or develop new pharmaceuticals with different administration requirements than Option Care’s service offerings are currently equipped to handle. Option Care’s business could also be harmed if the pharmaceutical industry experiences any supply shortages, pharmaceutical recalls, changes in FDA approval processes, or changes to how pharmaceutical manufacturers finance, promote or sell pharmaceutical products.
If Option Care loses relationships with managed care organizations and other non-governmental third party payors, Option Care could lose access to a significant number of patients and its revenue and profitability could decline.
Option Care is highly dependent on reimbursement from managed care organizations and other non-governmental third party payors. For the fiscal years ended December 31, 2018, 2017 and 2016, respectively, 88%, 86% and 83% of Option Care’s revenue came from managed care organizations and other non-governmental payors, including Medicare Advantage plans, Managed Medicaid plans, pharmacy benefit managers (“PBM’s”), and self-pay patients. Many payors seek to limit the number of providers that supply pharmaceuticals to their enrollees in order to build volume that justifies their discounted pricing. From time to time, payors with whom Option Care has relationships require that it bids against its competitors to keep their business. As a result of such bidding process, Option Care may not be retained, and even if Option Care is retained, the prices at which it is able to retain the business may be reduced. The loss of a payor relationship could significantly reduce the number of patients Option Care serves and have a material adverse effect on its revenue and net income, and a reduction in pricing could reduce its gross margins and net income.
Delays in reimbursement may adversely affect Option Care’s liquidity, cash flows and operating results.
The reimbursement process for the services Option Care provides is time consuming and complex, resulting in delays between the time Option Care bills for a service and receipt of payment that can be
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significant. Reimbursement and procedural issues often require Option Care to resubmit claims several times and respond to multiple administrative requests before payment is remitted. The collection of accounts receivable requires constant focus and involvement by management and ongoing enhancements to information systems and billing center operating procedures. While management believes that Option Care’s controls and processes are satisfactory, there can be no assurance that collections of accounts receivable will continue at historical rates. The risks associated with third-party payors and the inability to collect outstanding accounts receivable could have a material adverse effect on Option Care’s liquidity, cash flows and operating results.
Changes in reimbursement rates from Medicare and Medicaid for the services Option Care provides may cause Option Care’s revenue and profitability to decline.
For the fiscal years ended December 31, 2018, 2017 and 2016, respectively, 12%, 14% and 17% of Option Care’s revenue directly came from reimbursement by federal and state programs such as Medicare and Medicaid. Reimbursement from these and other government programs is subject to statutory and regulatory requirements, administrative rulings, interpretations of policy, implementation of reimbursement procedures, retroactive payment adjustments, governmental funding restrictions and changes to or new legislation, all of which may materially affect the amount and timing of reimbursement payments to Option Care. Changes to the way Medicare pays for Option Care’s services, including mandatory payment reductions such as sequestration, may reduce Option Care’s revenue and profitability on services provided to Medicare patients and increase Option Care’s working capital requirements. In addition, Option Care is sensitive to possible changes in state Medicaid programs as it does business with a number of state Medicaid providers.
Budgetary concerns in many states have resulted in and may continue to result in, reductions to Medicaid reimbursement as well as delays in payment of outstanding claims. Any reductions to or delays in collecting amounts reimbursable by state Medicaid programs for Option Care’s products or services, or changes in regulations governing such reimbursements, could cause Option Care’s revenue and profitability to decline and increase its working capital requirements.
Option Care’s actual financial results might vary from its publicly disclosed results and forecasts.
Option Care’s actual financial results might vary from those anticipated by it, and these variations could be material. From time to time Option Care publicly provides earnings guidance. Option Care’s forecasts reflect numerous assumptions concerning its expected performance, as well as other factors, which are beyond Option Care’s control, and which might not turn out to be correct. Although Option Care believes that the assumptions underlying its projections are reasonable, actual results could be materially different. Option Care’s financial results are subject to numerous risks and uncertainties and estimates, including those identified throughout these “Risks Relating to Option Care’s Business” and elsewhere in this report and the documents incorporated by reference.
Option Care is subject to pricing pressures and other risks involved with third party payors.
Competition for patients, efforts by traditional third party payors to contain or reduce healthcare costs, and the increasing influence of managed care payors such as health maintenance organizations, has resulted in reduced rates of reimbursement for home infusion and specialty pharmacy services. Changes in reimbursement policies of governmental third party payors, including policies relating to Medicare, Medicaid and other federal and state funded programs, could reduce the amounts reimbursed to Option Care’s customers for its products and, in turn, the amount these customers would be willing to pay for Option Care’s products and services, or could directly reduce the amounts payable to Option Care by such payors. Pricing pressures by third party payors may continue, and these trends may adversely affect Option Care’s business.
Also, continued growth in managed care plans has pressured healthcare providers to find ways of becoming more cost competitive. Managed care organizations have grown substantially in terms of the percentage of the population they cover and in terms of the portion of the healthcare economy they control. Managed care organizations have continued to consolidate to enhance their ability to influence the delivery of healthcare services and to exert pressure to control healthcare costs. A rapid concentration of revenue derived from individual managed care payors could harm Option Care’s business.
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If Option Care does not adequately respond to competitive pressures, demand for Option Care’s products and services could decrease.
The markets Option Care serves are highly competitive. Local, regional and national companies are currently competing in many of the healthcare markets Option Care serves and others may do so in the future. Additionally, the formation of equity-based infusion joint ventures formed with hospitals as they seek to position themselves for new paradigms in the delivery of coordinated healthcare. Option Care expects to continue to encounter competition in the future that could limit its ability to grow revenue and/or maintain acceptable pricing levels.
Consolidation among Option Care’s competitors, such as PBM’s and regional and national infusion pharmacy or specialty pharmacy providers could result in price competition and other competitive factors that could cause a decline in Option Care’s revenue and profitability. Some of Option Care’s competitors have vertically integrated business models with commercial payers, or are under common control with, or owned by, pharmaceutical wholesalers and distributors, managed care organizations, pharmacy benefit managers or retail pharmacy chains and may be better positioned with respect to the cost-effective distribution of pharmaceuticals. In addition, some of Option Care’s competitors may have secured long-term supply or distribution arrangements for prescription pharmaceuticals necessary to treat certain chronic disease states on price terms substantially more favorable than the terms currently available to it. As a result of such advantageous pricing, Option Care may be less price competitive than some of these competitors with respect to certain pharmaceutical products. Some of Option Care’s competitors may negotiate exclusivity provisions with managed care plans or otherwise interfere with the ability of managed care companies to contract with Option Care. Increasing consolidation in the payer and supplier industries, including vertical integration efforts among insurers, providers, and suppliers, and cost-reduction strategies by large employer groups and their affiliates may limit Option Care’s ability to negotiate favorable terms and conditions in its contracts and otherwise intensify competitive pressure. In addition, Option Care’s competitive position could be adversely affected by any inability to obtain access to new pharmaceutical products.
Some pharmaceutical suppliers have chosen to limit the number of distributors of their products. If Option Care is not selected as a preferred distributor of one or more of its core products, Option Care’s business and results of operations could be seriously harmed.
Some pharmaceutical manufacturers attempt to limit the number of preferred distributors that may market certain of their pharmaceutical products. If this trend continues, Option Care cannot be certain that it will be selected and retained as a preferred distributor or can remain a preferred distributor to market these products. Although Option Care believes it can effectively meet its suppliers’ requirements, there can be no assurance that Option Care will be able to compete effectively with other pharmacy companies to retain its position as a distributor of each of its core products. Adverse developments with respect to this trend could have a material adverse effect on Option Care’s business and results of operations.
Any termination of, or adverse change in, Option Care’s relationships with a single source product manufacturer or the loss of supply of a specific, single source specialty drug could have a material adverse effect on its operations.
Option Care sells pharmaceuticals that are supplied to it by a variety of manufacturers, many of which are the only source of that specific pharmaceutical. In order to have access to these pharmaceuticals, and to be able to participate in the launch of new pharmaceuticals, Option Care must maintain good working relations with the manufacturers. Most of the manufacturers of the pharmaceuticals Option Care sells have the right to cancel their supply contracts with Option Care without cause and after giving only minimal notice. The loss of Option Care’s relationship with one or more other pharmaceutical manufacturers would reduce its revenue and profitability.
An impairment of goodwill on Option Care’s financial statements could adversely affect its financial position and results of operations.
Option Care’s acquisitions have resulted in the recording of a significant amount of goodwill on its financial statements. Goodwill was recorded because the purchase price was in excess of the fair value of the net identifiable tangible and intangible assets acquired. Option Care may not realize the full value of
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this goodwill. As such, Option Care evaluates on at least an annual basis whether events and circumstances indicate that all or some of the carrying value of goodwill is no longer recoverable, in which case Option Care would write off the unrecoverable goodwill as a charge against its earnings. When evaluating goodwill for potential impairment, Option Care compares the fair value of its reporting units to their respective carrying amounts. Option Care estimates the fair value of its reporting units using the income approach. If the carrying amount of a reporting unit exceeds its estimated fair value, a goodwill impairment loss is recognized in an amount equal to the excess to the extent of the goodwill balance. The income approach requires Option Care to estimate a number of factors for its reporting unit, including projected future operating results, economic projections, anticipated future cash flows, and discount rates. The fair value determined using the income approach was then compared to marketplace fair value data from within a comparable industry grouping for reasonableness. Because of the significance of Option Care’s goodwill and intangible assets, any future impairment of these assets could require material non cash charges to Option Care’s results of operations, which could have a material adverse effect on its financial condition and results of operations.
Since Option Care’s growth strategy will potentially involve the acquisition of other companies, Option Care may record additional goodwill in the future. The possible write-off of this goodwill could negatively impact Option Care’s future earnings. Option Care will also be required to allocate a portion of the purchase price of any acquisition to the value of any intangible assets other than goodwill that meet the criteria specified in the ASC 805, such as marketing, customer or contract-based intangibles. The amount allocated to these intangible assets could be amortized over a fairly short period, which may negatively affect Option Care’s earnings.
As of December 31, 2018, Option Care has goodwill of  $639.0 million, or 45% of its total assets and approximately 106% of stockholder’s equity.
Failure to maintain effective internal control over our financial reporting could have an adverse effect on Option Care’s ability to report financial results on a timely and accurate basis.
Option Care’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Effective internal control over financial reporting is necessary to provide reliable financial reports, to help mitigate the risk of fraud and to operate successfully. However, maintaining Option Care’s internal control over financial reporting can be expensive and divert management’s attention from other business matters. Any failure to implement and maintain effective internal controls could result in material weaknesses or material misstatements in Option Care’s consolidated financial statements.
If Option Care fails to maintain effective internal control over financial reporting, Option Care may be required to take corrective measures or restate the affected historical financial statements, which cause investors to lose confidence in the reported financial information and in Option Care and would likely result in a decline in Option Care’s ability to raise additional financing if needed in the future.
Existing and new government legislative and regulatory action could adversely affect Option Care’s business and financial results.
Option Care’s business is subject to numerous federal, state and local laws and regulations. These laws and regulations, and their interpretations, are subject to change. Changes in these existing laws and regulations may require extensive changes to Option Care’s systems or their interpretations, or the enactment of new laws or regulations could have a material adverse effect on Option Care’s business and consolidated financial condition, results of operations, and cash flows.
These changes may be difficult to implement. Further, Option Care cannot predict the timing or impact of any future legislative, rule making, or other regulatory actions. Untimely compliance or noncompliance with applicable laws and regulations could adversely affect the continued operation of Option Care’s business as a result of civil or criminal penalties, including, but not limited to: imposition of monetary penalties; suspension of payments from government programs; loss of required government certifications or approvals; suspension or exclusion from participation in government reimbursement programs; or loss of licensure. Reductions in reimbursement by Medicare, Medicaid and other governmental payors could adversely affect Option Care’s business as well. The law and regulations to
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which Option Care is subject include, but are not limited to, the federal Anti-Kickback Statute and Stark Law, and state counter-parts; the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”); the Food, Drug and Cosmetic Act (“FDCA”); the Drug Quality and Security Act (“DQSA”); False Claims Act; Civil Monetary Penalties Act; regulations promulgated by the FDA, U.S. Federal Trade Commission, Drug Enforcement Administration (“DEA”), the U.S. Department of Health and Human Services (“HHS”), the Office of the Inspector General (“OIG”) the Centers for Medicare and Medicaid Service (“CMS”); and regulations of individual state regulatory authorities, including professional licensure regulations of Option Care’s employees and pharmacy and home infusion licensing and registration requirements. In that regard, Option Care’s business and consolidated financial statements could be affected by one or more of the following:

federal and state laws and regulations governing the purchase, distribution, management; compounding, dispensing and reimbursement of prescription drugs and related services, including state and federal controlled substances laws and regulations;

federal and state laws and regulations governing pharmacy and home infusion licensing and registration;

rules and regulations issued pursuant to HIPAA and the Health Information Technology for Economic and Clinical Health Act (“HITECH”); and other federal and state laws affecting the use, disclosure and transmission of health information, such as state security breach notification laws and state laws limiting the use and disclosure of prescriber information;

administration of Medicare and state Medicaid programs, including legislative changes and/or rulemaking and interpretation;

federal and state laws and regulations that require reporting and public dissemination of payments to and between various health care providers and other industry participants;

government regulation of the development, administration, review and updating of formularies and drug lists;

managed care reform and plan design legislation, including state laws regarding out-of-network charges and participation;

states’ restrictions on new home infusion care entrants into their market via certificating and permitting requirements;

state laws and regulations governing licensure and certification of nurses, pharmacists and certain other healthcare professionals; and

federal or state laws governing Option Care’s relationships with physicians or others in a position to refer to Option Care.
The Affordable Care Act and other healthcare reform efforts could have a material adverse effect on Option Care’s business.
In recent years, healthcare reform efforts at federal and state levels of government have resulted in sweeping changes to the delivery and financing of health care. The Affordable Care Act (“ACA”) is the most prominent of these efforts. However, there is substantial uncertainty regarding its net effect and its future. The ACA has been subject to legislative and regulatory changes and court challenges. The presidential administration and certain members of Congress continue to attempt to repeal or make significant changes to the ACA, its implementation and its interpretation. Effective January 2019, Congress eliminated the financial penalty associated with the individual mandate to maintain health insurance coverage. Because the penalty associated with the individual mandate was eliminated, a federal court in Texas ruled in December 2018 that the entire ACA was unconstitutional. However, the law remains in place pending appeal. It is impossible to predict the full impact of the ACA and related regulations or the impact of its modification on Option Care’s operations in light of the uncertainty regarding whether, when or how the
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law will be changed and what alternative reforms, such as single-payor proposals, may be enacted. Health reform efforts may adversely affect Option Care’s customers, which may cause them to reduce or delay use of Option Care’s products and services. As such, Option Care cannot predict the impact of the ACA on its business, operations or financial performance.
Federal actions and legislation may reduce reimbursement rates from governmental payors and adversely affect Option Care’s results of operations.
In recent years, Congress has passed legislation reducing payments to health care providers. The Budget Control Act of 2011, as amended, requires automatic spending reductions to reduce the federal deficit, including Medicare spending reductions of up to 2% per fiscal year that extend through 2027. CMS began imposing a 2% reduction on Medicare claims on April 1, 2013. The ACA provides for material reductions in the growth of Medicare program spending. More recently, the 21st Century Act, referred to as the Cures Act significantly reduced the amount paid by Medicare for drug costs, while delaying the implementation of a clinical services payment, although Congress also passed a temporary transitional service payment that takes effect January 1, 2019. In addition, from time to time, CMS revises the reimbursement systems used to reimburse health care providers, which may result in reduced Medicare payments.
Because most states must operate with balanced budgets and because the Medicaid program is often a state’s largest program, some states have enacted or may consider enacting legislation designed to reduce their Medicaid expenditures. Further, many states have taken steps to reduce coverage and/or enroll Medicaid recipients in managed care programs. The current economic environment has increased the budgetary pressures on many states, and these budgetary pressures have resulted, and likely will continue to result, in decreased spending, or decreased spending growth, for Medicaid programs and the Children’s Health Insurance Program in many states.
In some cases, managed care organizations, government programs such as Medicare and Medicaid and commercial insurers (“Third Party Payors”) rely on all or portions of Medicare payment systems to determine payment rates. Changes to government healthcare programs that reduce payments under these programs may negatively impact payments from Third Party Payors. Current or future healthcare reform and deficit reduction efforts, changes in other laws or regulations affecting government healthcare programs, changes in the administration of government healthcare programs and changes by Third Party Payors could have a material, adverse effect on Option Care’s financial position and results of operations.
In addition, many Third Party Payors are increasingly considering new metrics as the basis for reimbursement rates. It is possible that the pharmaceutical industry or regulators may evaluate and/or develop an alternative pricing reference to replace average wholesale price. Future changes to the pricing benchmarks used to establish pharmaceutical pricing, including changes in the basis for calculating reimbursement by third-party payers, could adversely affect Option Care.
Contract renewals, or lack thereof, with key revenue sources and key business relationships could result in less favorable pricing, loss of exclusivity and/or reduced distribution and access to customers, which could have an adverse effect on Option Care’s business, financial condition, and results of operations.
Option Care has contractual and business relationships with key revenue sources, including Third Party Payors. Option Care’s future growth and success depends on its ability to maintain these relationships and renew such contracts on acceptable terms. However, Option Care may not be able to continue to maintain these relationships. Option Care may have disputes with Third Party Payors regarding these contractual relationships; these disputes may also disrupt its ongoing contractual relationships with these payors. Any break in these key business relationships could result in lost contracts and reduce its access to certain customers and distribution channels. Further, when these contracts near expiration, Option Care may not be able to successfully renegotiate acceptable terms. Any increase in pricing or loss of exclusivity could result in reduced margins. Accordingly, it is possible that Option Care’s ongoing efforts to renew contracts and business relationships with such key revenue sources as Third Party Payors could result in less favorable pricing or even reduced access to customers and distribution channels, any of which could have an adverse effect on Option Care’s business, financial condition, and results of operations. In addition, even when such contracts are renewed, they may be renewed for only a short term or may be terminable on relatively short notice.
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Option Care faces periodic reviews and billing audits by governmental and private payors, and these audits could have adverse findings that may negatively impact Option Care’s business.
As a result of Option Care’s participation in the Medicare and Medicaid programs, Option Care is subject to various governmental reviews and audits to verify its compliance with these programs and applicable laws and regulations. Option Care also is subject to audits under various government programs in which third party firms engaged by CMS conduct extensive reviews of claims data and medical and other records to identify potential improper payments under the Medicare program. Third Party Payors may also conduct audits. Disputes with payors can arise from these reviews. Payors can claim that payments based on certain billing practices or billing errors were made incorrectly. If billing errors are identified in the sample of reviewed claims, the billing error can be extrapolated to all claims filed which could result in a larger overpayment than originally identified in the sample of reviewed claims. Option Care’s costs to respond to and defend claims, reviews and audits may be significant and could have a material adverse effect on its business and consolidated financial condition, results of operations and cash flows. Moreover, an adverse claim, review or audit could result in:

required refunding or retroactive adjustment of amounts Option Care has been paid by governmental payors or Third Party Payors;

state or federal agencies imposing fines, penalties and other sanctions on Option Care;

suspension or exclusion from the Medicare program, state programs, or one or more Third Party Payor networks; or

damage to Option Care’s business and reputation in various markets.
These results could have a material adverse effect on its business and consolidated financial condition, results of operations and cash flows.
If any of Option Care’s pharmacies fail to comply with the conditions of participation in the Medicare program, that pharmacy could be terminated from Medicare, which could adversely affect Option Care’s consolidated financial statements.
Option Care’s pharmacies must comply with the extensive conditions of participation in the Medicare program. If a pharmacy fails to meet any of the Medicare supplier standards, that pharmacy could be terminated from the Medicare program. Option Care responds in the ordinary course to deficiency notices issued by surveyors, and none of Option Care’s pharmacies has ever been terminated from the Medicare program for failure to comply with the supplier standards. Any termination of one or more of Option Care’s pharmacies from the Medicare program for failure to satisfy the Medicare supplier standards could adversely affect Option Care’s consolidated financial statements.
Option Care cannot predict the impact of changing requirements on compounding pharmacies.
Compounding pharmacies are closely monitored by federal and state governmental agencies. Option Care believe that its compounding is done in safe environments and it has clinically appropriate policies and procedures in place. Option Care only compounds pursuant to a patient-specific prescription and do so in compliance with U.S. Pharmacopeial Convention (“USP”) guidelines (“USP 797”). In 2013, Congress passed the DQSA, which creates a new category of compounders called outsourcing facilities, which are regulated by the FDA. Option Care does not believe that its current compounding practices qualify it as an outsourcing facility and therefore Option Care continues to operate consistently with USP 797 standards. Should state regulators or the FDA disagree, or should Option Care’s business practices change to qualify it as an outsourcing facility, there is a risk of regulatory action and/or increased resources required to comply with federal requirements imposed pursuant to the DQSA on outsourcing facilities that could significantly increase Option Care’s costs or otherwise affect its results of operations. Furthermore, Option Care cannot predict the overall impact of increased scrutiny on compounding pharmacies.
Failure to develop new services or adapt to changes and trends within the industry may adversely affect Option Care’s business.
Option Care operates in a highly competitive environment. Option Care develops new services from time to time to assist its clients. If Option Care is unsuccessful in developing innovative services, its ability to attract new clients and retain existing clients may suffer.
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Technology, including the ability to capture and report outcomes, is also an important component of Option Care business as it continues to utilize new and better channels to communicate and interact with its clients, members and business partners. If Option Care’s competitors are more successful than it in employing this technology, its ability to attract new clients, retain existing clients and operate efficiently may suffer. Any significant shifts in the structure of the healthcare products and services industry in general could alter the industry dynamics and adversely affect Option Care’s ability to attract or retain clients. Option Care’s failure to anticipate or appropriately adapt to changes in the industry could negatively impact its competitive position and adversely affect its business and results of operations.
Cybersecurity risks could compromise Option Care’s information and expose it to liability, which may harm its ability to operate effectively and may cause its business and reputation to suffer.
Cybersecurity refers to the combination of technologies, processes and procedures established to protect information technology systems and data from unauthorized access, attack, or damage. Option Care relies on its information systems to provide security for processing, transmission and storage of confidential information about its patients, customers and personnel, such as names, addresses and other individually identifiable information protected by HIPAA and other privacy laws. Cyber incidents can result from deliberate attacks or unintentional events. Cyber-attacks are increasingly more common, including in the health care industry. The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and changing requirements. Compliance with changes in privacy and information security laws and with rapidly evolving industry standards may result in Option Care’s incurring significant expense due to increased investment in technology and the development of new operational processes.
Option Care has not experienced any known attacks on its information technology systems that compromised any confidential information. Option Care maintains its information technology systems with safeguard protection against cyber-attacks including passive intrusion protection, firewalls and virus detection software. Option Care is dependent on its infrastructure, including its information systems, for many aspects of its business operations. A fundamental requirement for Option Care’s business is the secure storage and transmission of protected health information and other confidential data. Although Option Care has developed systems and processes that are designed to protect information against security breaches, failure to protect its confidential information or mitigate harm caused by such breaches may adversely affect its operating results. Malfunctions in Option Care’s business processes, breaches of its information systems or the failure to maintain effective and up-to-date information systems could disrupt Option Care’s business operations, result in customer and member disputes, damage its reputation, expose it to risk of loss or litigation, result in regulatory violations and related costs and penalties, increase administrative expenses or lead to other adverse consequences.
Although Option Care has taken steps to protect the security of its information systems and the data maintained in those systems, it is possible that its safety and security measures will not prevent the systems’ improper functioning or damage or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. If personal information or protected health information is improperly accessed, tampered with or disclosed as a result of a security breach, Option Care may incur significant costs to notify and mitigate potential harm to the affected individuals, and it may be subject to sanctions and civil or criminal penalties if it is found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personal information. In addition, a security breach of Option Care’s information systems could damage its reputation, subject Option Care to liability claims or regulatory penalties for compromised personal information and could have a material adverse effect on Option Care’s business, financial condition, and results of operations.
Option Care’s business is dependent on the services provided by third party information technology vendors.
Option Care’s information technology infrastructure includes hosting services provided by third parties. While Option Care believes these third parties are high-performing organizations with secure platforms and customary certifications, they could suffer a security breach or business interruption which in turn could impact its operations negatively. In addition, changes in pricing terms charged by Option Care’s technology vendors may adversely affect its financial performance.
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Comprehensive tax reform legislation could adversely affect Option Care’s business and financial condition.
Option Care is subject to both state and federal income taxes in the U.S. and various state jurisdictions and its operations, plans and results are affected by tax and other initiatives. On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act of 2017 (the “TCJA”) that significantly reforms the Code. The TCJA, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating loss carryforwards, allows for the expensing of capital expenditures, and puts into effect the migration from a “worldwide” system of taxation to a territorial system.
The TCJA impacted Option Care’s financial results in 2018. Among other things, the TCJA reduced the U.S. corporate income tax rate to 21%. This reduction resulted in changes in the valuation of Option Care’s deferred tax asset and liabilities. While Option Care has reflected the expected impact of the TCJA in its financial statements in accordance with Option Care’s understanding of the TCJA and available guidance, the ultimate effects of the TCJA remain uncertain. The U.S. Department of Treasury may issue regulations and guidance that may significantly impact how the TCJA applies to Option Care and resulting changes may have an adverse impact on its results of operations, cash flows and financial condition.
Option Care is also subject to regular reviews, examinations, and audits by the Internal Revenue Service and other taxing authorities with respect to its taxes. There are uncertainties and ambiguities in the application of the TCJA and it is possible that the Internal Revenue Service could issue subsequent guidance or take positions on audit that differ from Option Care’s interpretations and assumptions. Although Option Care believes its tax estimates are reasonable, if a taxing authority disagrees with the positions Option Care has taken, it could face additional tax liability, including interest and penalties. Option Care’s effective tax rate could be adversely affected by changes in the mix of earnings in states with different statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws and regulations, changes in Option Care’s interpretations of tax laws, including the TCJA. Unanticipated changes in Option Care’s tax rates or exposure to additional income tax liabilities could affect its profitability. There can be no assurance that payment of such additional amounts upon final adjudication of any disputes will not have a material impact on Option Care’s results of operations and financial position.
Option Care may be subject to liability for the services it offers and the products it sells.
Option Care and other participants in the health care market are, have been and are likely to continue to be subject to lawsuits based upon alleged malpractice, product liability, negligence or similar legal theories, many of which involve large claims and significant defense costs. A successful claim not covered by Option Care’s professional liability insurance or substantially in excess of its insurance coverage could cause it to pay out a substantial award. Further, Option Care’s insurance policy is subject to annual renewal and it may not be possible to obtain liability insurance in the future on acceptable terms, with adequate coverage against potential liabilities, or at all. Also, claims against Option Care, regardless of their merit or eventual outcome, could be a serious distraction to management and could harm its reputation.
Option Care employs pharmacists, dietitians, nurses and other health care professionals at home and onsite infusion clinics. Option Care manages and operates 90 ambulatory infusion suites, and also provides in-home care through health care professionals that it employees, as well as, through third-party contractors. As such, Option Care is subject to liability for negligent acts, omissions, or injuries occurring at one of these clinics or caused by one of its employees. The defense of any actions may result in significant expenses that could have a material adverse effect on Option Care’s business, results of operations, financial condition, liquidity and reputation.
Labor strikes or similar work stoppages within the companies that provide Option Care’s local and national distribution services could have a negative impact on its results of operations.
Option Care utilizes several national delivery companies as an important part of the local and national distribution of its products and services, particularly in the delivery of certain specialty pharmaceutical products. A portion of the workforce utilized by these delivery companies are members of labor unions. A labor strike or similar work stoppage within any of the delivery companies that Option Care utilizes for distribution could have a negative impact on Option Care’s results of operations.
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The loss of one or more of Option Care’s key employees could harm its operations.
Option Care’s success depends upon the availability and performance of its key executives, including its Chief Executive Officer, John C. Rademacher. Option Care does not have “key person” insurance for any of its key executives. The loss of the services of Option Care’s Chief Executive Officer or any of its other key executives could have a material adverse effect upon Option Care’s business and results of operations.
The current or future shortage in licensed pharmacists, nurses and other clinicians could adversely affect Option Care’s business.
The healthcare industry is currently experiencing a shortage of licensed pharmacists, nurses and other healthcare professionals. Consequently, hiring and retaining qualified personnel will be difficult due to intense competition for their services and employment. Any failure to hire or retain pharmacists, nurses or other healthcare professionals could impair Option Care’s ability to expand or maintain its operations.
Pressures relating to downturns in the economy could adversely affect Option Care’s business and consolidated financial statements.
Medicare and other federal and state payors account for a significant portion of Option Care’s revenues. During economic downturns and periods of stagnant or slow economic growth, federal and state budgets are typically negatively affected, resulting in reduced reimbursements or delayed payments by the federal and state government health care coverage programs in which Option Care participates, including Medicare, Medicaid, and other federal or state assistance plans. Government programs could also slow or temporarily suspend payments, negatively impacting Option Care’s cash flow and increasing Option Care’s working capital needs and interest payments. Option Care has seen, and believes it will continue to see, Medicare and state Medicaid programs institute measures aimed at controlling spending growth, including reductions in reimbursement rates.
Higher unemployment rates and significant employment layoffs and downsizings may lead to lower numbers of patients enrolled in employer-provided plans. Adverse economic conditions could also cause employers to stop offering, or limit, healthcare coverage, or modify program designs, shifting more costs to the individual and exposing Option Care to greater credit risk from patients or the discontinuance of therapy.
Risks Relating to the Mergers
BioScrip stockholders will have a reduced ownership and voting interest in the combined company after the completion of the Mergers and will exercise less influence over management.
Currently, BioScrip stockholders have the right to vote in the election of the BioScrip Board and the power to approve or reject any matters requiring stockholder approval under Delaware law and BioScrip’s certificate of incorporation and BioScrip’s bylaws. Upon completion of the Mergers, BioScrip’s current stockholders will have a percentage ownership of BioScrip that is smaller than the BioScrip stockholders’ current percentage ownership of BioScrip. At the effective time of the First Merger, Omega Parent will receive 542,261,567 shares of BioScrip common stock. As of the date of the Merger Agreement there were 128,160, 291 shares of BioScrip common stock outstanding, which represent approximately 20.5% of the combined company on a fully diluted pro forma basis (based on the BioScrip share price as of signing, and taking into account the share issuance in respect of the Amended and Restated Warrant Agreement and the Warrant Letter Agreements, the Preferred Stock Repurchase Agreement, the Series A COD Amendment and the vesting of certain restricted stock units and performance restricted stock units as a result of the Mergers). Such aggregate ownership amount will be further reduced as a result of shares of BioScrip common stock issued as a result of the Warrant Amendment, the Preferred Stock Repurchase Agreement, the Series A COD Amendment and the escrowed shares. Even if all former BioScrip stockholders voted together on all matters presented to BioScrip stockholders from time to time, the former BioScrip stockholders would exercise significantly less influence over BioScrip after the completion of the Mergers relative to their influence over BioScrip prior to the completion of the Mergers, and thus would have a less significant impact on the election of the BioScrip Board and on the approval or rejection of future proposals submitted to a stockholder vote. In addition, directors of BioScrip, as of immediately prior to the
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effective time of the First Merger, will represent two of the 10 members of the BioScrip Board as of the effective time of the First Merger. Accordingly, each BioScrip stockholder will have less influence on the management and policies of BioScrip after the closing than such stockholder now has on the management and policies of BioScrip.
The Mergers may not be completed and the Merger Agreement may be terminated in accordance with its terms.
The Mergers are subject to a number of conditions that must be satisfied or waived (to the extent permissible), in each case prior to the completion of the Mergers, including approval of the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal at the special meeting. These conditions are described in the section entitled “The Merger Agreement — Conditions to the Completion of the Mergers” beginning on page 109. These conditions to the completion of the Mergers, some of which are beyond the control of BioScrip, may not be satisfied or waived in a timely manner or at all, and, accordingly, the Mergers may be delayed or not completed.
Additionally, either BioScrip or Omega may terminate the Merger Agreement under certain circumstances, including, among other reasons, if the Mergers are not completed by December 13, 2019. Furthermore, if the Merger Agreement is terminated under certain circumstances specified therein, BioScrip may be required to pay Omega a termination fee of  $15 million, including certain circumstances in which the BioScrip Board effects an Adverse Recommendation Change (as defined in the section entitled “The Merger Agreement — Changes in Board Recommendations” beginning on page 103) or BioScrip terminates the Merger Agreement in connection with entering into a superior proposal.
The termination of the Merger Agreement could negatively impact BioScrip.
If the Mergers are not completed for any reason, including as a result of a failure to obtain the BioScrip Stockholder Approval, the ongoing business of BioScrip may be adversely affected and, without realizing any of the benefits of having completed the Mergers, BioScrip would be subject to a number of risks, including the following:

BioScrip may experience negative reactions from the financial markets, including negative impacts on its stock price;

BioScrip may experience negative reactions from its suppliers, customers and employees;

the possible loss of employees necessary to operate the BioScrip business;

having to pay significant costs relating to the Mergers without receiving the benefits of the Mergers, including, in certain circumstances, a termination fee of  $15 million or an expense reimbursement of up to $5 million;

BioScrip will be required to pay its costs relating to the Mergers, such as financial advisory, legal and accounting costs and associated fees and expenses, whether or not the Mergers are completed;

if the Merger Agreement is terminated and the BioScrip Board seeks another business combination, BioScrip stockholders cannot be certain that BioScrip will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms that Omega has agreed to in the Merger Agreement;

the Merger Agreement places certain restrictions on the conduct of BioScrip’s business prior to completion of the Mergers and such restrictions, the waiver of which is subject to the consent of Omega (not to be unreasonably withheld, conditioned or delayed), which may prevent BioScrip from making certain acquisitions or taking certain other specified actions during the pendency of the Mergers; and

matters relating to the Mergers (including integration planning) will require substantial commitments of time and resources by BioScrip management, which could otherwise have been devoted to day-to-day operations or to other opportunities that may have been beneficial to BioScrip as an independent company.
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Until the completion of the Mergers or the termination of the Merger Agreement in accordance with its terms, BioScrip is prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to BioScrip and its stockholders.
From and after the date of the Merger Agreement and prior to completion of the Mergers, the Merger Agreement restricts BioScrip from taking specified actions without the consent of the Omega (not to be unreasonably withheld, conditioned or delayed) and requires that BioScrip use its reasonable best efforts to carry on its business and to cause its subsidiaries to carry on their respective businesses in the ordinary course consistent with past practice. These restrictions may prevent BioScrip from making appropriate changes to its business or organizational structure or from pursuing attractive business opportunities that may arise prior to the completion of the Mergers, and could have the effect of delaying or preventing other strategic transactions. Adverse effects arising from the pendency of the Mergers could be exacerbated by any delays in consummation of the Mergers or termination of the Merger Agreement. See the section entitled “The Merger Agreement — Conduct of Business Prior to the Completion of the Mergers” beginning on page 101.
The Merger Agreement limits BioScrip’s ability to pursue alternatives to the business combination.
The Merger Agreement contains provisions that may discourage a third party from submitting an acquisition proposal to BioScrip that might result in greater value to BioScrip’s stockholders than the business combination with Omega.
The Merger Agreement contains a general prohibition on BioScrip from soliciting or, subject to certain exceptions relating to the exercise of fiduciary duties by the BioScrip Board, entering into discussions with any third party regarding any acquisition proposal or offer for a competing transaction. Further, subject to limited exceptions, consistent with applicable law, the Merger Agreement provides that the BioScrip Board will not withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify) its recommendation that the BioScrip stockholders vote in favor of the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal. Although the BioScrip Board is permitted to effect an Adverse Recommendation Change, after complying with certain procedures set forth in the Merger Agreement, in response to a Superior Proposal or an intervening event, if it determines in good faith (after consultation with outside counsel) that the failure to do so would reasonably be expected to be inconsistent with its fiduciary duties, such Adverse Recommendation Change would entitle Omega to terminate the Merger Agreement and collect a termination fee from BioScrip in the amount of  $15 million. BioScrip may also terminate the Merger Agreement if, prior to the approval of the BioScrip proposals at the special meeting, the BioScrip Board determines to enter into a definitive written agreement with respect to a superior proposal, but only if  (x) BioScrip is permitted to terminate the Merger Agreement and accept such superior proposal, (y) BioScrip has not materially breached or failed to perform any of its covenants or agreements with respect to non-solicitation of alternative proposals under the Merger Agreement and (z) immediately prior to or substantially concurrently with such termination, BioScrip pays the $15 million termination fee to Omega Parent. For more information, see the sections titled “The Merger Agreement — Termination of the Merger Agreement” beginning on page 111 and “The Merger Agreement — Termination Fees and Expenses” beginning on page 112.
These provisions could discourage a potential competing acquirer from considering or proposing an acquisition or merger, even if it were prepared to pay consideration with a higher value than that implied by the merger consideration, or might result in a potential competing acquirer proposing to pay a lower per-share price than it might otherwise have proposed to pay.
BioScrip stockholders will not be entitled to appraisal rights in the Mergers.
Appraisal rights are statutory rights that, if applicable under law, enable stockholders of a corporation to dissent from an extraordinary transaction, such as a merger, and to demand that such corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to such stockholders in connection with the transaction. Under the Delaware General Corporation Law (as amended, the “DGCL”), stockholders do not have appraisal rights if the shares of stock they hold are either listed on a national securities exchange or held of record by more than 2,000 holders. Notwithstanding the foregoing, appraisal rights are available if stockholders are required by
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the terms of a merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation, (b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than 2,000 holders, (c) cash in lieu of fractional shares or (d) any combination of the foregoing.
Because holders of BioScrip common stock will continue to hold their shares following completion of the Mergers, holders of BioScrip common stock are not entitled to appraisal rights in the Mergers.
Shares of BioScrip common stock after the closing will have rights different from the shares of BioScrip common stock prior to the closing.
Upon consummation of the Mergers, the rights of BioScrip stockholders, will be governed by the Amended Charter and bylaws of BioScrip. At the closing, BioScrip will also enter into the Director Nomination Agreement. The rights associated with BioScrip common stock as of the date hereof and prior to the closing are different from the rights which will be associated with the BioScrip common stock after the closing. See the section entitled “Comparison of Stockholders’ Rights” beginning on page 149 for a discussion of these rights.
Obtaining required approvals and satisfying closing conditions may prevent or delay completion of the Mergers.
The Mergers are subject to a number of conditions to the closing as specified in the Merger Agreement. These closing conditions include, among others, obtaining the approval of the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal at the special meeting, the expiration or earlier termination of any applicable waiting period under the HSR Act, the absence of governmental restraints or prohibitions preventing the consummation of the Mergers and receipt of certain regulatory consents or approvals under laws regulating pharmacies in California and North Carolina. The obligation of each of BioScrip and Omega to consummate the Mergers is also conditioned on, among other things, the absence of a material adverse effect on the other party, the truth and correctness of the representations and warranties made by the other party on the date of the Merger Agreement and on the closing date (subject to certain materiality qualifiers), and the performance by the other party in all material respects of its obligations under the Merger Agreement. No assurance can be given that the required stockholder, governmental and regulatory consents and approvals will be obtained or that the required conditions to closing will be satisfied, and, if all required consents and approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such consents and approvals. Any delay in completing the Mergers could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that BioScrip and Omega expect to achieve if the Mergers are successfully completed within its expected time frame. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Mergers, see the section entitled “The Merger Agreement — Conditions to the Completion of the Mergers” beginning on page 109.
BioScrip and Omega must obtain certain regulatory approvals and clearances to consummate the Mergers, which, if delayed, not granted or granted with unacceptable conditions, could prevent, substantially delay or impair consummation of the Mergers, result in additional expenditures of money and resources or reduce the anticipated benefits of the Mergers.
The completion of the Mergers is subject to the receipt of antitrust clearance in the United States. Under the HSR Act, the Mergers may not be completed until Notification and Report Forms have been filed with the FTC and the DOJ and the applicable waiting period has expired or been terminated. A transaction requiring notification under the HSR Act may not be completed until the expiration of a 30-calendar-day waiting period following the parties’ filing of their respective HSR notifications or the early termination of that waiting period. BioScrip and Omega each filed an HSR notification with the FTC and the DOJ on March 28, 2019 and the waiting period was terminated early on April 8, 2019.
At any time before or after consummation of the Mergers, notwithstanding the expiration or termination of the applicable waiting period under the HSR Act, the DOJ or the FTC, or any state, could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including
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seeking to enjoin the completion of the Mergers, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights. At any time before or after the completion of the Mergers, and notwithstanding the expiration or termination of the applicable waiting period under the HSR Act, any state could take such action under the antitrust laws as it deems necessary or desirable in the public interest. Such action could include seeking to enjoin the completion of the Mergers or seeking divestiture of substantial assets of the parties. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.
In addition, Omegas and Omega Parents obligation to effect the First Merger are subject to obtaining the consent (or written correspondence that such consent will be issued shortly after the closing) of the California Board of Pharmacy and the North Carolina Board of Pharmacy in respect of the Mergers for certain pharmacy permits currently held by BioScrip and Omega. Other state regulatory bodies may also require filings or consents to the Mergers, however, BioScrip and Omega do not believe such other actions are material. While BioScrip and Omega expect to obtain such consents, there is no assurance that such consents will be obtained. The failure to obtain the California or North Carolina consent, or any condition or delay arising in connection with obtaining such consents, could result in the conditions to the Mergers not being satisfied.
Any one of these requirements, limitations, costs, divestitures or restrictions could jeopardize or delay the completion of or reduce the anticipated benefits of the Mergers. There is no assurance that BioScrip and Omega will obtain the required clearances or approvals on a timely basis, or at all. Failure to obtain the necessary clearance under the HSR Act could substantially delay or prevent the consummation of the Mergers, which could negatively impact BioScrip.
BioScrip and Omega may waive one or more of the conditions to the Mergers without resoliciting stockholder approval.
BioScrip and Omega may determine to waive, in whole or in part, one or more of the conditions to its obligations to complete the Mergers, to the extent permitted by applicable laws. BioScrip will evaluate the materiality of any such waiver and its effect on BioScrip stockholders in light of the facts and circumstances at the time to determine whether any amendment of this Proxy Statement and resolicitation of proxies is required or warranted. In some cases, if the BioScrip Board determines that such a waiver is warranted but that such waiver or its effect on BioScrip stockholders is not sufficiently material to warrant resolicitation of proxies, BioScrip has the discretion to complete the Mergers without seeking further stockholder approval. Any determination whether to waive any condition to the Mergers or as to resoliciting stockholder approval or amending this Proxy Statement as a result of a waiver will be made by BioScrip at the time of such waiver based on the facts and circumstances as they exist at that time.
If BioScrip’s due diligence investigation of Option Care was inadequate or if unexpected risks related to Omega’s business materialize, it could have a material adverse effect on BioScrip stockholders’ investment.
Even though BioScrip conducted a due diligence investigation of Option Care, BioScrip cannot be sure that its diligence surfaced all material issues that may be present inside Option Care or its business, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Option Care and its business and outside of its control will not arise later. If any such material issues arise, they may materially and adversely impact the ongoing business of the combined company and BioScrip stockholders’ investment.
Because the lack of a public market for Omega shares makes it difficult to evaluate the fairness of the Mergers, the stockholders of Omega may receive consideration in the Mergers that is more than the fair market value of the Omega shares.
The outstanding capital stock of Omega is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Omega. Because the percentage of BioScrip equity to be issued to Omega stockholders as consideration for the Mergers is determined based on an exchange ratio negotiated between the parties that will not be adjusted even if there is a change in the value of BioScrip, it is possible that the value of BioScrip common stock to be received by Omega stockholders will be more than the fair market value of Omega.
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The directors and executive officers of BioScrip have interests and arrangements that may be different from, or in addition to, those of BioScrip stockholders generally.
Certain of BioScrip’s directors and executive officers have interests in the Mergers that are different from, or in addition to, the interests of BioScrip’s stockholders generally. These interests include, but are not limited to, continued service of certain members of the BioScrip Board on the board of directors of the combined company. In addition, certain executive officers of BioScrip, including Daniel Greenleaf, Stephen Deitsch, and Harriet Booker and certain other executive officers of BioScrip, hold equity awards and options with respect to BioScrip common stock that will become fully vested at the closing and that will become fully vested if the executive officer is terminated without “cause” or resigns for “good reason” within 12 months following the occurrence of the Mergers. Certain BioScrip executive officers also have employment or severance agreements that provide for severance payments and benefits in the event of a termination of employment by BioScrip without “cause” or resignation for “good reason” within 12 months following the occurrence of a “change in control” of BioScrip.
In addition, Christopher Shackelton, a director on the BioScrip Board, is a co-founder and managing partner of Coliseum Capital. Funds and accounts managed by Coliseum Capital beneficially own 100% of the Series C Preferred Stock and 50.04% of the Series A Preferred Stock. In connection with the Merger Agreement, BioScrip entered into the Preferred Stock Repurchase Agreement and the BioScrip Board approved the Series A COD Amendment.
See “The Mergers — Interests of Certain BioScrip Directors and Executive Officers in the Mergers” for a more detailed description of these interests.
Risks Relating to the Combined Business after Closing
The market price for the combined company’s common stock may be affected by factors different from those that historically have affected BioScrip’s common stock.
Following the Mergers, BioScrip stockholders will become stockholders of the combined company. The combined company’s business will differ from that of BioScrip, and accordingly the results of operations of the combined company following the Mergers will be affected by some factors that are different from those currently affecting BioScrip’s results of operations. This Proxy Statement describes the business of Omega and incorporates by reference important information regarding BioScrip’s business and also describes important factors to consider in connection with those businesses and the business of the combined company. For a discussion of these matters, see, for example, the sections entitled “Information About Omega,” “Selected Historical Consolidated Financial Data of Option Care,” “Unaudited Pro Forma Condensed Combined Financial Information” and “Comparative Historical and Unaudited Pro Forma Per Share Data” in this Proxy Statement as well as the section entitled “Where You Can Find Additional Information” beginning on pages 165, 19, 127, 144 and 239, respectively, of this Proxy Statement for the location of information incorporated by reference into this Proxy Statement.
Combining the two companies may be more difficult, costly or time-consuming than expected and the anticipated benefits and cost savings of the Mergers may not be realized.
BioScrip and Omega have operated and, until the completion of the Mergers, will continue to operate independently. The success of the Mergers, including anticipated benefits and cost savings, will depend, in part, on the ability to successfully combine and integrate the BioScrip business with the business of Omega.
The Mergers will involve the integration of Omega’s business with BioScrip’s existing business, which is a complex, costly and time-consuming process. It is possible that the pendency of the Mergers and/or the integration process could result in material challenges, including, without limitation:

the diversion of management’s attention from ongoing business concerns and performance shortfalls at one or both of the companies as a result of the devotion of management’s attention to the Mergers;

managing a larger combined company;
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the transition of management of the combined company from BioScrip’s executive management team to Omega’s executive management team, who has limited experience with operating a public company;

maintaining employee morale and retaining key management and other employees;

difficulties in the acculturation of employees;

difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the combination;

the possibility of faulty assumptions underlying expectations regarding the integration process;

retaining existing business and operational relationships and attracting new business and operational relationships;

consolidating corporate and administrative infrastructures and eliminating duplicative operations and inconsistencies in standards, controls, procedures and policies;

integrating the companies’ financial reporting and internal control systems, including compliance by the combined company with Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and the rules promulgated thereunder by the SEC;

unanticipated issues in integrating information technology, communications and other systems; and

unforeseen expenses or delays associated with the Mergers.
Many of these factors will be outside of the combined company’s control, and any one of them could result in delays, increased costs, decreases in revenues and diversion of management’s time and energy, which could materially affect the combined company’s financial position, results of operations and cash flows.
If BioScrip or Omega experience difficulties with the integration process, the anticipated benefits of the Mergers may not be realized fully or at all, or may take longer to realize than expected. These integration matters could have an adverse effect on (i) each of BioScrip and Omega during this transition period and (ii) the combined company for an undetermined period after completion of the Mergers. In addition, the actual cost savings of the Mergers could be less than anticipated.
The future results of the combined company may be adversely impacted if the combined company does not effectively manage its expanded operations following the completion of the Mergers.
Following the completion of the Mergers, the size of the combined company’s business will be significantly larger than the current size of either BioScrip’s or Omega’s respective businesses. The combined company’s ability to successfully manage this expanded business will depend, in part, upon management’s ability to design and implement strategic initiatives that address not only the integration of two discrete companies, but also the increased scale and scope of the combined business with its associated increased costs and complexity. There can be no assurances that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Mergers.
The combined company is expected to incur substantial expenses related to the completion of the Mergers and the integration of BioScrip and Omega.
BioScrip and Omega have incurred, and expect to continue to incur, a number of nonrecurring costs associated with the Mergers and combining the operations of the two companies. The substantial majority of nonrecurring expenses will be comprised of transaction and regulatory costs related to the Mergers. The combined company also will incur transaction fees and costs related to formulating and implementing integration plans. BioScrip and Omega continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the Mergers and the integration of the two companies’ businesses.
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Following the Mergers, the composition of the combined company board of directors will be different than the composition of the current BioScrip Board.
Upon consummation of the First Merger, the size of the BioScrip Board will be increased to ten directors. Pursuant to the terms of the Merger Agreement, BioScrip will cause the BioScrip Board to be comprised of the following directors at the effective time of the First Merger:

eight directors selected by Option Care, who initially will be Timothy Sullivan, Elizabeth Q. Betten, Nitin Sahney, Harry M. Jansen Kraemer, Jr., John J. Arlotta, John Rademacher, Mark Vainisi and Alan Nielsen; and

two directors selected by BioScrip, who initially will be R. Carter Pate and David W. Golding.
This new composition of the board of directors of the combined company may affect the future decisions of the combined company.
The combined company will meet the requirements to be a “controlled company” within the meaning of the rules of Nasdaq and, as a result, will qualify for, and intends to rely on, exemptions from certain corporate governance standards, which limit the presence of independent directors on its board of directors or board committees.
Following the Mergers, approximately 79.5% of the outstanding shares of the common stock of the combined company will be held by Omega Parent.
As a result, the combined company will be a “controlled company” for purposes of the Nasdaq listing rules and will be exempt from certain governance requirements otherwise required by Nasdaq. Under Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a “controlled company” and is exempt from certain corporate governance requirements, including requirements that (1) a majority of the board of directors consist of independent directors, (2) compensation of officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee that is composed entirely of independent directors and (3) director nominees be selected or recommended for selection by a majority of the independent directors or by a nominating/corporate governance committee composed solely of independent directors. Following the consummation of the Mergers, the combined company will continue to have an audit committee that is composed entirely of independent directors.
As a result, the procedures for approving significant corporate decisions could be determined by directors who have a direct or indirect interest in such decisions, and the combined company’s stockholders will not have the same protections afforded to stockholders of other companies that are required to comply with the independence rules of Nasdaq.
The unaudited pro forma combined financial information and the comparative historical and pro forma per share data included in this proxy statement may not be indicative of what the combined company’s actual financial position or results of operations would have been.
The unaudited pro forma combined financial information and the comparative historical and pro forma per share data included in this Proxy Statement is presented solely for illustrative purposes and is not necessarily indicative of what the combined company’s actual financial position or results of operations would have been had the Mergers been completed on the dates indicated. This unaudited pro forma combined financial information and the comparative historical and pro forma per share data reflects adjustments that were developed using preliminary estimates based on available information and various assumptions and may be revised as additional information becomes available. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this Proxy Statement.
The agreements that will govern the indebtedness to be incurred in connection with the Mergers will contain various covenants that impose restrictions on the combined company and certain of its subsidiaries that may affect its ability to operate its businesses.
The agreements that will govern the indebtedness to be incurred in connection with the Mergers will contain various affirmative and negative covenants that may, subject to certain significant exceptions,
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restrict the ability of the combined company and certain of its subsidiaries to incur debt and the ability of the combined company and certain of its subsidiaries to, among other things, have liens on their property, and/or merge or consolidate with any other person or sell or convey certain of their assets to any one person, and engage in certain sale and leaseback transactions. The ability of the combined company and its subsidiaries to comply with these provisions may be affected by events beyond their control. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate its repayment obligations and could result in a default and acceleration under other agreements containing cross-default provisions. Under these circumstances, the combined company might not have sufficient funds or other resources to satisfy all of its obligations.
Sale of shares of BioScrip common stock after the Mergers may negatively affect the market price of BioScrip common stock.
The shares of BioScrip common stock issued in the First Merger to Omega Parent as merger consideration will generally be eligible for resale subject to a 12-month lockup period beginning on the date of the Merger Agreement and applicable law. The market price of BioScrip common stock could decline as a result of sales of a large number of shares of BioScrip common stock in the market after the expiration of the lockup period or even the perception that these sales could occur. Following the Mergers, approximately 79.5% of the outstanding shares of the common stock of the combined company will be held by Omega Parent.
Following the completion of the Mergers, Madison Dearborn Partners will be the combined company’s largest stockholder, controlling approximately 79.5% of the combined company’s common stock, and will have the ability to exercise significant influence over decisions requiring the combined company stockholders’ approval.
Following the completion of the Mergers, Madison Dearborn Partners will control approximately 79.5% of the combined company’s common stock through its control of Omega Parent, with an economic interest in approximately 40% of the combined company’s common stock (based on the BioScrip share price as of signing, and taking into account the share issuance in respect of the Amended and Restated Warrant Agreement and the Warrant Letter Agreements, the Preferred Stock Repurchase Agreement, the Series ACOD Amendment and the vesting of certain restricted stock units and performance restricted stock units as a result of the Mergers). As a result, Madison Dearborn Partners will have the ability to exercise significant influence over decisions requiring approval of the combined company’s stockholders including the election of directors, amendments to the combined company’s certificate of incorporation and approval of significant corporate transactions, such as a merger or other sale of the combined company or its assets.
This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of the combined company and may negatively affect the market price of the combined company’s common stock. Also, Madison Dearborn Partners is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete with the combined company. Madison Dearborn Partners or its affiliates may also pursue acquisition opportunities that are complementary to the combined company’s business and, as a result, those acquisition opportunities may not be available to the combined company.
Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the Mergers.
The success of the Mergers will depend in part on the retention of personnel critical to the business and operations of BioScrip after the closing. Competition for qualified personnel can be intense. Current and prospective employees of BioScrip and Omega may experience uncertainty about their future role with BioScrip and Omega until strategies with regard to these employees are announced or executed, which may impair BioScrip’s ability to attract, retain and motivate key employees prior to and following the Mergers. If BioScrip and Omega are unable to retain personnel, including certain members of BioScrip’s and Omega’s key management, who are critical to the successful integration and future operations of the companies, BioScrip and Omega could face disruptions in their operations, loss of existing customers or loss of sales to existing customers, loss of key information, expertise or know-how, and unanticipated additional recruitment and training costs. In addition, the loss of key personnel could diminish the anticipated benefits of the Mergers.
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If key employees of BioScrip or Omega depart, the integration of the companies may be more difficult and the combined company’s business following the Mergers may be harmed. Furthermore, BioScrip may have to incur significant costs after the closing in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent relating to the business of each of BioScrip or Omega, and the combined company’s ability to realize the anticipated benefits of the Mergers may be adversely affected. No assurance can be given that the combined company will be able to attract or retain key employees of BioScrip and Omega to the same extent that those companies have been able to attract or retain their own employees in the past.
The Mergers, and uncertainty regarding the Mergers, may cause customers, suppliers or strategic partners to delay or defer decisions concerning BioScrip and adversely affect BioScrip’s ability to effectively manage its business.
The Mergers will happen only if the stated conditions are met. Many of the conditions are outside the control of BioScrip or Omega, and both parties also have certain rights to terminate the Merger Agreement. Accordingly, there may be uncertainty regarding the completion of the Mergers. This uncertainty may cause customers, suppliers, vendors, strategic partners or others that deal with BioScrip to delay or defer entering into contracts with BioScrip or to make other decisions concerning BioScrip or seek to change or cancel existing business relationships with BioScrip, which could negatively affect BioScrip’s businesses. Any delay or deferral of those decisions or changes in existing agreements could have an adverse impact on the businesses of BioScrip, regardless of whether the Mergers are ultimately completed.
Following the Mergers, provisions of the combined company’s corporate governance documents could make an acquisition of it more difficult and may prevent attempts by the combined company’s stockholders to replace or remove its current management, even if beneficial to its stockholders.
In addition to Omega Parent’s beneficial ownership of approximately 79.5% of the combined company’s common stock after the Mergers, the combined company’s amended and restated certificate of incorporation to be effective in connection with the closing of the Mergers and the DGCL, contains provisions that could make it more difficult for a third party to acquire the combined company, even if doing so might be beneficial to its stockholders. Among other things:

these provisions allow the combined company to authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include supermajority voting, special approval, dividend, or other rights or preferences superior to the rights of stockholders;

these provisions provide that, at any time when Omega Parent beneficially owns, in the aggregate, less than 50% in voting power of the combined company’s stock entitled to vote generally in the election of directors, directors may be removed with or without cause only by the affirmative vote of holders of at least 6623% in voting power of all the then-outstanding vote thereon, voting together as a single class;

these provisions prohibit stockholder action by written consent from and after the date on which Omega Parent beneficially owns, in the aggregate, less than 50% in voting power of the combined company’s stock entitled to vote generally in the election of directors; and

these provisions provide that for as long as Omega Parent beneficially owns, in the aggregate, 50% or more in voting power of the combined company’s stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of combined company’s bylaws or its certificate of incorporation by its stockholders will require the affirmative vote of at least a majority in voting power of the outstanding shares of the combined company’s stock and at any time when Omega Parent beneficially owns, in the aggregate, less than 50% in voting power of all outstanding shares of the combined company’s stock entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of its bylaws or certificate of incorporation by the combined company’s stockholders will require the affirmative vote of the holders of at least 6623% in voting power of all the then-outstanding shares of its stock entitled to vote thereon, voting together as a single class.
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These provisions could discourage, delay or prevent a transaction involving a change in control of the combined company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause the combined company to take other corporate actions you desire, including actions that you may deem advantageous, or negatively affect the trading price of the combined company’s common stock. In addition, because the combined company’s board of directors is responsible for appointing the members of its management team, these provisions could in turn affect any attempt by the combined company’s stockholders to replace current members of its management team.
These and other provisions in the combined company’s amended and restated certificate of incorporation and Delaware law could make it more difficult for stockholders or potential acquirers to obtain control of the combined company’s board of directors or initiate actions that are opposed by the combined company’s then-current board of directors, including delay or impede a merger, tender offer or proxy contest involving the combined company. The existence of these provisions could negatively affect the price of the combined company’s common stock and limit opportunities for you to realize value in a corporate transaction.
Following the Mergers, the combined company’s amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by its stockholders, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with combined company.
Pursuant to the combined company’s amended and restated certificate of incorporation to be effective in connection with the closing of the Mergers, unless it consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (1) any derivative action or proceeding brought on the combined company’s behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of the combined company’s directors, officers, employees and stockholders to the combined company or its stockholders, (3) any action asserting a claim against the combined company’s arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, the Combined Company’s amended and restated certificate of incorporation or the combined company’s bylaws or (4) any other action asserting a claim against the combined company that is governed by the internal affairs doctrine; provided that for the avoidance of doubt, the forum selection provision that identifies the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation, including any “derivative action”, will not apply to suits to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. The combined company’s amended and restated certificate of incorporation will further provide that any person or entity purchasing or otherwise acquiring any interest in shares of its capital stock is deemed to have notice of and consented to the provisions of its certificate of incorporation described above. The forum selection clause in the combined company’s amended and restated certificate of incorporation may have the effect of discouraging lawsuits against the combined company or its directors and officers and may limit its stockholders’ ability to obtain a favorable judicial forum for disputes with the combined company.
Nasdaq considers the Mergers to be a change of control of BioScrip that will require that a new listing application be submitted in connection with the Mergers.
BioScrip is required to file a new listing application with Nasdaq because the Mergers constitute a change of control of BioScrip under Nasdaq rules. Although we believe that Nasdaq will approve the new listing application, it is possible that Nasdaq will deny the application. If the Mergers were to proceed without Nasdaq approval, Nasdaq could issue the combined company a delisting letter immediately after completion of the Mergers. If this were to occur, the combined company would take all reasonable action in order to maintain the listing of its common stock on Nasdaq. However, there can be no assurance that the combined company would be successful under such circumstances, and if the combined company’s common stock were delisted from Nasdaq, stockholders may have difficulty converting their investments into cash effectively. As a result, under such circumstances, the relative price of the combined company’s stock may decline and/or fluctuate more than in the past.
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THE BIOSCRIP SPECIAL MEETING
Date, Time and Place
The BioScrip special meeting will be held at [•] local time on [•], 2019 at [•].
Purpose of the BioScrip special meeting
The purpose of the BioScrip special meeting is to consider and vote on:

The proposal to approve the issuance of shares of BioScrip common stock to Omega Parent pursuant to the Merger Agreement, which proposal is referred to as the Share Issuance Proposal;

The proposal to approve the third amended and restated certificate of incorporation of BioScrip, which proposal is referred to as the Amended Charter Proposal;

The proposal to approve the amendment to the certificate of designations of Series A Preferred Stock of BioScrip, which proposal is referred to as the Series A COD Amendment Proposal;

The proposal to approve, on a non-binding advisory basis, certain compensation that may be paid or become payable to certain BioScrip named executive officers in connection with the Mergers, which proposal is referred to as the Compensation Proposal; and

The proposal to adjourn the special meeting to solicit additional proxies if there are not sufficient votes to approve the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal or to ensure that any supplement or amendment to this Proxy Statement is timely provided to BioScrip stockholders, which proposal is referred to as the Adjournment Proposal.
BioScrip will transact no other business at the BioScrip special meeting. Completion of the Mergers is conditioned on, among other things, approval of the Share Issuance Proposal, the Amended Charter Proposal and the Series A COD Amendment Proposal.
Recommendation of the BioScrip Board
The BioScrip Board unanimously (with Christopher Shackelton abstaining from any vote regarding the Series A COD Amendment for the reasons described in this Proxy Statement) recommends that BioScrip stockholders vote:

“FOR” the approval of the Share Issuance Proposal;

“FOR” the approval of the Amended Charter Proposal;

“FOR” the approval of the Series A COD Amendment Proposal;

“FOR” the approval of the Compensation Proposal; and

“FOR” the approval of the Adjournment Proposal.
See the section entitled “The Mergers — Recommendation of the Board of Directors of BioScrip; BioScrip’s Reasons for the Mergers” beginning on page 66.
Record Date
Only holders of record of issued and outstanding shares of BioScrip common stock, Series A Preferred Stock and Series C Preferred Stock at the close of business on [•], the record date, are entitled to receive notice of, and to vote at, the BioScrip special meeting or at any adjournments or postponements thereof.
Quorum; Required Votes and Broker Non-Votes
A quorum is necessary to hold a valid meeting. A quorum will exist at the special meeting with respect to each matter to be considered at the special meeting if the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted into common stock basis)
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issued and outstanding and entitled to vote at the special meeting as of the record date are present in person or represented by proxy at the special meeting. In accordance with the Series A Certificate of Designations and the Series C Certificate of Designations, the shares of common stock into which shares of Series A Preferred Stock and Series C Preferred Stock are convertible will be counted for purposes of establishing a quorum at the special meeting.
If you are a “street name” holder of shares of BioScrip capital stock and you provide your bank, broker, trust or other nominee with voting instructions on at least one of the proposals brought before the special meeting, then your shares will be counted in determining the presence of a quorum. The proposals for consideration at the special meeting are considered “non-routine” matters, and, therefore, no broker has discretion to vote on any of the proposals to be considered at the special meeting without voting instructions from the beneficial owner of the shares. If you are a “street name” holder of shares and you do not provide your bank, broker, trust or other nominee with voting instructions, then your shares will not be counted in determining the presence of a quorum.
Under Nasdaq rules, brokers who hold shares in a “street name” for a beneficial owner typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from the beneficial owner on how to vote. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that Nasdaq does not deem “routine.” None of the proposals to be voted on at the special meeting are routine under the Nasdaq rules. Consequently, your bank, broker, trust or other nominee will NOT have the power to vote your shares of BioScrip common stock or preferred stock at the special meeting unless you provide instructions to your bank, broker, trust or other nominee on how to vote on each BioScrip proposal. You should instruct your bank, broker, trust or other nominee on how to vote your shares with respect to the BioScrip proposals, using the instructions provided by your bank, broker, trust or other nominee. You may be able to vote by telephone or through the Internet if your bank, broker, trust or other nominee offers these options.
The Share Issuance Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting.
The approval of the Amended Charter Proposal requires the affirmative vote of  (i) the holders of a majority of the outstanding shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) entitled to vote on such proposal at the special meeting, (ii) the holders of a majority of the outstanding shares of BioScrip common stock entitled to vote on such proposal at the special meeting, (iii) the holders of a majority of the outstanding shares of Series A Preferred Stock entitled to vote on such proposal at the special meeting and (iv) the holders of a majority of the outstanding shares of Series C Preferred Stock entitled to vote on such proposal at the special meeting.
The approval of the Series A COD Amendment Proposal requires the affirmative vote of  (i) the holders of a majority of the outstanding shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) entitled to vote on such proposal at the special meeting and (ii) the holders of a majority of the outstanding shares of Series A Preferred Stock entitled to vote on such proposal at the special meeting.
The Compensation Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting.
The Adjournment Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting.
The matters to be voted on at the special meeting are described in the section entitled “BioScrip Proposals” beginning on page 46.
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Methods of Voting
If your shares of BioScrip common stock or preferred stock are registered in your name with BioScrip’s transfer agent, American Stock Transfer & Trust Co., you are a stockholder of record with respect to those shares and you received printed proxy materials directly from BioScrip. If your shares are held in an account at a bank, broker or other nominee, you are the “beneficial owner” of such shares and the printed proxy materials were forwarded to you by that bank, broker or other nominee. In that circumstance, the bank, broker or other nominee is considered the stockholder of record for purposes of voting at the special meeting. As a beneficial owner, you have the right to instruct the bank, broker or other nominee how to vote the shares held in your account.
If you are a stockholder of record of BioScrip common stock or preferred stock, you may vote:
Internet — You may vote by proxy via the Internet by following the instructions provided until 11:59 p.m. Eastern Time on [•];
Telephone — You may vote by proxy by telephone by calling the toll-free telephone number located on the proxy card or available via the Internet until 11:59 p.m. Eastern Time on [•];
Mail — You may vote by completing, signing and returning your proxy card and returning it in the prepaid return provided envelope via mail. If you vote by mail, your proxy card must be received by 11:59 p.m. Eastern Time on [•]; or
In Person — You may vote in person at the special meeting. You will be required to present a valid form of photo identification to be admitted to the BioScrip special meeting and a ballot will be provided to you upon arrival.
If you are a beneficial owner of shares of BioScrip common stock or preferred stock held through a broker or bank in street name, you may submit voting instructions to your bank, broker or other nominee:
Internet — You may vote via the Internet by following the instructions provided to you by your bank, broker or other nominee;
Telephone — You may vote by telephone by calling the toll-free telephone number located on the voting instruction form provided by your bank, broker or other nominee or available via the Internet; or
Mail — You may vote by completing, signing and returning the voting instruction form and returning it in the prepaid return provided envelope via mail; or
In Person — You may vote in person at the special meeting but you must first obtain a legal proxy form from the bank, broker or other nominee that holds your shares of BioScrip common stock or preferred stock. Please contact such broker or organization for instructions regarding obtaining a legal proxy. If you do obtain a legal proxy and plan to attend the special meeting, you will be required to present a valid form of photo identification.
BioScrip provides Internet proxy voting to allow you to vote your shares online. However, please be aware you must bear any costs associated with your Internet access, such as usage charges from Internet access providers or telecommunication companies.
Voting in Person
Owners of record will need to have a valid form of photo identification to be admitted to the special meeting. If your ownership is through a bank, broker or other nominee, then, in addition to a valid form of photo identification, you will also need to have proof of your share ownership to be admitted to the special meeting. A recent account statement, letter or proxy from your bank, broker or other nominee will suffice. In order to vote at the special meeting, if you are not an owner of record, you must first obtain a legal proxy form from the bank, broker or other nominee that holds your shares. Even if you plan to attend the special meeting, the BioScrip Board recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the special meeting.
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Voting by Proxy
If you hold your shares directly as the holder of record, you may vote by proxy without attending the special meeting. You can vote by proxy via the Internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. If you are the beneficial owner of shares held through a broker or bank in street name, you should follow the instructions provided on the voting instructions form provided by your bank, broker or other nominee.
Revocability of Proxies
If you are a stockholder of record of BioScrip, you may change your vote or revoke your proxy at any time before your shares are voted at the special meeting by:

voting again by proxy via the Internet or by telephone;

sending a proxy card dated later than your last vote;

notifying the BioScrip Corporate Secretary in writing at the address listed in the section entitled “Where You Can Find Additional Information” beginning on page 239, stating that you are revoking your proxy; or

voting in person at the BioScrip special meeting.
If you are a beneficial owner of shares of BioScrip common stock or preferred stock, you must contact your bank, broker or other nominee with whom you have an account to obtain information regarding changing your voting instructions.
Proxy Solicitation Costs
The enclosed proxy card is being solicited on behalf of the BioScrip Board. In addition to solicitation by mail, BioScrip’s directors, officers and employees may solicit proxies in person, by telephone or by electronic means. These persons will not be specifically compensated for doing this.
BioScrip has retained D.F. King & Co., Inc. to assist in the solicitation process. BioScrip will pay D.F. King & Co., Inc. a fee of approximately $70,000, which includes a success fee, as well as reasonable and documented out-of-pocket expenses. BioScrip also has agreed to indemnify D.F. King & Co., Inc. against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).
BioScrip will ask banks, brokers and other custodians, nominees and fiduciaries to forward the proxy solicitation materials to the beneficial owners of shares of BioScrip common stock and preferred stock held of record by such nominee holders. BioScrip will reimburse these nominee holders for their customary clerical and mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners.
No Appraisal or Dissenters’ Rights
Under Delaware law, because the merger consideration is in the form of BioScrip common stock, no appraisal rights are available to the holders of BioScrip common stock or Option Care common stock in connection with the Mergers. In addition, no appraisal rights are available to the holders of Preferred Stock in connection with the Mergers.
Vote of BioScrip’s Directors and Executive Officers
As of  [•], BioScrip directors and executive officers, and their affiliates (excluding Coliseum Capital and its affiliates), as a group, were entitled to vote or had shared power to vote a total of  [•] shares of BioScrip common stock, or [•]% of the total shares of BioScrip capital stock issued and outstanding as of  [•]. For more information, see the section entitled “Voting Agreement” beginning on page 120.
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BioScrip currently expects that all of its directors and executive officers will vote their shares “FOR” the approval of the Share Issuance Proposal; “FOR” the approval of the Amended Charter Proposal; “FOR” the approval of the Series A COD Amendment Proposal; “FOR” the approval of the Compensation Proposal; and “FOR” the approval of the Adjournment Proposal.
Results of the Special Meeting
Within four business days following the special meeting, BioScrip intends to file the final voting results with the SEC on a Current Report on Form 8-K. If the final voting results have not been certified within that four business day period, BioScrip will report the preliminary voting results on a Current Report on Form 8-K at that time and will file an amendment to the Current Report on Form 8-K to report the final voting results within four business days of the date that the final results are certified.
Contact Information for Questions About Voting
If you have any questions about how to vote or direct a vote in respect of your shares of BioScrip common stock or preferred stock, you may contact D.F. King & Co., Inc., BioScrip’s proxy solicitor, at:
Stockholders may call toll-free at (800) 499-8541.
Banks and brokers may call collect at (212) 269-5550.
BIOSCRIP STOCKHOLDERS SHOULD CAREFULLY READ THIS PROXY STATEMENT IN ITS ENTIRETY FOR MORE DETAILED INFORMATION CONCERNING THE SHARE ISSUANCE PROPOSAL, THE AMENDED CHARTER PROPOSAL, THE SERIES A COD AMENDMENT PROPOSAL AND THE OTHER MATTERS TO BE VOTED ON AT THE SPECIAL MEETING.
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BIOSCRIP PROPOSALS
PROPOSAL 1 — APPROVAL OF THE SHARE ISSUANCE PROPOSAL
It is a condition to completion of the Mergers that BioScrip stockholders approve the Share Issuance Proposal. If the First Merger is completed, all of the shares of Omega common stock issued and outstanding immediately prior to the effective time of the First Merger will be cancelled and converted into the right of Omega Parent to receive 542,261,567 shares of BioScrip common stock. In addition, at the effective time of the First Merger, 28,193,428 shares of BioScrip common stock shall be issued to Omega Parent in respect of certain outstanding and unvested contingent restricted stock units; such shares are referred to as the escrowed shares. If such BioScrip contingent restricted stock units do not vest, Omega Parent shall forfeit such BioScrip shares back to BioScrip. See “The Merger Agreement — Merger Consideration” beginning on page 95 and “The Mergers — Escrowed Shares.
Under Nasdaq rules, a company is required to obtain stockholder approval prior to the issuance of common stock if the number of shares of common stock to be issued is, or will be upon issuance, equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the common stock. The aggregate number of shares of BioScrip common stock that BioScrip will issue in the First Merger will exceed 20% of the shares of BioScrip common stock issued and outstanding before such issuance. For this reason, BioScrip is seeking the approval of BioScrip stockholders for the Share Issuance Proposal. In the event the Share Issuance Proposal is not approved by BioScrip stockholders (inclusive of the Preferred Stock on an as-converted basis), the Mergers cannot be completed.
In the event the Share Issuance Proposal is approved by BioScrip stockholders, but the Merger Agreement is terminated without the Mergers being completed, BioScrip will not issue any shares of BioScrip common stock despite the approval of the Share Issuance Proposal.
Approval of the Share Issuance Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Share Issuance Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Share Issuance Proposal.
The BioScrip Board unanimously recommends you vote “FOR” the Share Issuance Proposal
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PROPOSAL 2 — APPROVAL OF THE AMENDED CHARTER PROPOSAL
The Amended Charter Proposal, if approved, will amend and restate the second amended and restated certificate of incorporation of BioScrip, to provide for, among other things, (i) an increase in the number of authorized shares of BioScrip common stock to permit issuance of a sufficient number of shares as merger consideration or otherwise in connection with the Merger Agreement and the transactions contemplated thereby, (ii) a prohibition on BioScrip stockholders’ ability to act by written consent after the date on which Omega Parent and its affiliates cease to beneficially own, in the aggregate, capital stock of BioScrip representing 50% or more of the voting power of BioScrip then outstanding and entitled to vote generally in an election of directors (such stock is referred to herein as voting stock), which date is referred to herein as the trigger date, (iii) the right of BioScrip stockholders to remove directors with or without cause with the consent of holders of  (A) at a least majority of the voting stock of BioScrip, voting as a single class, prior to the trigger date, or (B) at a least 6623% supermajority of the voting stock of BioScrip, voting at a meeting called for that purpose, after the trigger date, (iv) the right of BioScrip’s stockholders to amend the bylaws of BioScrip with the consent of holders of  (A) at least majority of the voting stock of BioScrip, voting as a single class, prior to the trigger date, or (B) at least a 6623% supermajority of the voting stock of BioScrip’s capital stock, voting as a single class, after the trigger date, (v) the right of BioScrip’s stockholders to amend the certificate of incorporation of BioScrip with the consent of holders of  (A) at least majority of the voting stock of BioScrip, voting as a single class, prior to the trigger date, or (B) at least 6623% supermajority of the voting stock of BioScrip’s capital stock, voting as a single class at a meeting called for such purpose, after the trigger date, (vi) the waiver of certain fiduciary duties of BioScrip’s officers and directors, including the duty to offer certain business opportunities to BioScrip, that would otherwise be applicable to the officers and directors of BioScrip under Delaware law, and (vii) the right, prior to the trigger date, of the holders of a majority of the voting stock of BioScrip, to cause a special meeting of the BioScrip stockholders to be called.
The Amended Charter Proposal, if approved, will increase the number of authorized shares of BioScrip from 255,000,000, consisting of 250,000,000 shares of common stock and 5,000,000 shares of preferred stock, to 1,050,000,000, consisting of 1,000,000,000 shares of common stock and 50,000,000 shares of preferred stock.
Pursuant to the Merger Agreement, approval of the Amended Charter Proposal is a condition to the consummation of the Mergers.
The approval of the Amended Charter Proposal requires the affirmative vote of  (i) the holders of a majority of the outstanding shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) entitled to vote on such proposal at the special meeting, (ii) the holders of a majority of the outstanding shares of BioScrip common stock entitled to vote on such proposal at the special meeting, (iii) the holders of a majority of the outstanding shares of Series A Preferred Stock entitled to vote on such proposal at the special meeting and (iv) the holders of a majority of the outstanding shares of Series C Preferred Stock entitled to vote on such proposal at the special meeting. Failures to vote, votes to abstain, and broker non-votes will have the same effect as a vote “AGAINST” the Amended Charter Proposal.
The BioScrip Board unanimously recommends you vote “FOR” the Amended Charter Proposal
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PROPOSAL 3 — APPROVAL OF THE SERIES A COD AMENDMENT PROPOSAL
The Series A COD Amendment Proposal, if approved, will provide for an amendment to the Series A Certificate of Designations of BioScrip such that, immediately following the effectiveness of the Mergers (i) (A) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on March 9, 2015 then issued and outstanding will automatically be converted into 2.5226 shares of BioScrip common stock and (B) four one-hundredths (4/100) of each share of Series A Preferred Stock issued by BioScrip on July 29, 2015 then issued and outstanding will automatically be converted into 2.4138 shares of BioScrip common stock, totaling 53,388 shares of BioScrip common stock in the aggregate and (ii) ninety-six one-hundredths (96/100) of each share of Series A Preferred Stock referred to in the foregoing clause (i) will be redeemed for an amount in cash equal to 120% of the liquidation preference then-applicable to such share of Series A Preferred Stock as of the date of such redemption (including any dividends accrued through such date).
Pursuant to the Merger Agreement, approval of the Series A COD Amendment Proposal is a condition to the consummation of the Mergers.
The approval of the Series A COD Amendment Proposal requires the affirmative vote of  (i) the holders of a majority of the outstanding shares of BioScrip common stock (inclusive of the Preferred Stock on an as-converted basis) entitled to vote on such proposal at the special meeting and (ii) the holders of a majority of the outstanding shares of Series A Preferred Stock entitled to vote on such proposal at the special meeting. Failures to vote, votes to abstain, and broker non-votes will have the same effect as a vote “AGAINST” the Series A COD Amendment Proposal.
The BioScrip Board unanimously (with Christopher Shackelton abstaining from any vote regarding the Series A COD amendment for the reasons described in this Proxy Statement) recommends you vote “FOR” the Series A COD Amendment Proposal
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PROPOSAL 4 —  APPROVAL OF THE COMPENSATION PROPOSAL
As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, BioScrip is providing its stockholders the opportunity to vote to approve, on a non-binding, advisory basis, certain compensation that may be paid or become payable to BioScrip’s named executive officers that is based on or otherwise relates to the business combination, as described in the section entitled “The Mergers — Interests of Certain BioScrip Directors and Executive Officers in the Mergers” beginning on page 85. Accordingly, BioScrip stockholders are being provided the opportunity to cast an advisory vote on such potential payments.
As an advisory vote, this proposal is not binding upon BioScrip, Omega, Omega Parent or the BioScrip Board and approval of this proposal is not a condition to the completion of the Mergers. Because the merger-related executive compensation to be paid in connection with the Mergers is based on the terms of the Merger Agreement as well as the contractual arrangements with BioScrip’s named executive officers, such compensation will be payable, regardless of the outcome of this advisory vote, if the Mergers are consummated. However, BioScrip seeks the support of its stockholders and believes that stockholder support is appropriate because BioScrip has a comprehensive executive compensation program designed to link the compensation of its executives with BioScrip’s performance and the interests of BioScrip stockholders.
The Compensation Proposal requires the affirmative vote of the holders of a majority of the aggregate shares of BioScrip common stock (inclusive of the BioScrip Preferred Stock on an as-converted basis) represented in person or by proxy and entitled to vote on such proposal at the special meeting. Failures to vote and broker non-votes, if any, will have no effect on the Compensation Proposal. Votes to abstain will have the effect of a vote “AGAINST” the Compensation Proposal.
The BioScrip Board unanimously recommends you vote “FOR” the Compensation Proposal
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PROPOSAL 5 —  APPROVAL OF THE ADJOURNMENT PROPOSAL
BioScrip stockholders are also being asked to approve a proposal to adjourn the BioScrip special meeting to solicit additional proxies if BioScrip has not received proxies representing a sufficient number of shares for the approval of the Share Issuance Proposal, the Amended Charter Proposal or the Series A COD Amendment Proposal, or to allow reasonable additional time for the filing and mailing of any supplemental or amended disclosure which the BioScrip Board has determined in good faith after consultation with outside legal counsel is necessary under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by BioScrip stockholders prior to the special meeting. If the special meeting is adjourned, stockholders who have already submitted revocable proxies will be able to revoke them at any time prior to their exercise.
The approval of the proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of shares representing a majority of the shares of BioScrip common stock present in person or represented by proxy at the special meeting entitled to vote on such matter. In addition, even if a quorum is not present at the special meeting, the affirmative vote of shares representing a majority of the shares of BioScrip common stock present in person or represented by proxy at the special meeting entitled to vote on such matter may adjourn the meeting to another place, date or time. In each case, failures to vote and broker non-votes will have no effect on approval of the Adjournment Proposal; however, the abstention from voting will have the same effect as a vote “AGAINST” the Adjournment Proposal.
The BioScrip Board unanimously recommends you vote “FOR” the Adjournment Proposal
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THE MERGERS
The following is a description of the material aspects of the Mergers and the other transactions contemplated by the Merger Agreement. Although Beta believes that the following description covers the material terms of the Mergers and the other transactions contemplated by the Merger Agreement, the following description may not contain all of the information important to you. You are encouraged to read carefully this Proxy Statement in its entirety, including the Merger Agreement, which is included in this Proxy Statement as Annex A, for a more complete understanding of the Mergers and the other transactions contemplated by the Merger Agreement. In addition, important business and financial information about each of Beta and Omega is included in or incorporated by reference herein. See “Where You Can Find Additional Information” beginning on page 239.
Beta and Omega have entered into the Merger Agreement, pursuant to which Merger Sub Inc., a wholly owned subsidiary of Beta formed for the sole purpose of effecting the Mergers, will be merged with and into Omega in the First Merger, at which time the separate corporate existence of Merger Sub Inc. will cease, and Omega will continue as the Surviving Corporation and a wholly owned subsidiary of Beta. Immediately after the effective time of the First Merger, the Surviving Corporation will be merged with and into Merger Sub LLC (the “Second Merger”), a wholly owned subsidiary of Beta formed for the sole purpose of effecting the Mergers, in the Second Merger, at which time the separate corporate existence of the Surviving Corporation will cease, and Merger Sub LLC will continue as the surviving company. Upon completion of the Mergers, the surviving company will operate as a wholly owned subsidiary of Beta under the name HC Group Holdings II, LLC.
This Proxy Statement is being provided to Beta stockholders in connection with the solicitation of proxies by the BioScrip Board for the special meeting.
The Merger Agreement contains a number of conditions that must be satisfied or waived prior to the completion of the Mergers, including, but not limited to, obtaining Beta stockholder approval of the Share Issuance Proposal, and obtaining regulatory approvals described under “The Mergers — Regulatory Approvals.” There can be no assurance that all of the conditions to the completion of the Mergers will be so satisfied or waived. If the conditions to the Mergers are not able to be satisfied or waived, Omega and Beta will be unable to complete the Mergers and the Merger Agreement may be terminated.
The Mergers are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.
Merger Consideration
If the First Merger is completed, all of the shares of Omega common stock issued and outstanding immediately prior to the effective time of the First Merger (other than Excluded Shares) will be cancelled and converted into the right of Omega Parent to receive 542,261,567 shares of Beta common stock, as further described in “The Merger Agreement — Merger Consideration” beginning on page 95. The number of shares to be issued as part of the merger consideration is fixed, which means that it will not change between now and the date of the closing of the Mergers (the “Closing Date”), regardless of whether the market price of the Beta common stock changes. Therefore, the value of the merger consideration will depend on the market price of the Beta common stock at the effective time of the First Merger. The market price of Beta common stock has fluctuated since the date of the announcement of the parties’ entry into the Merger Agreement and will continue to fluctuate from the date of this Proxy Statement to the date of the special meeting, the date the Mergers are completed and thereafter. The market price of Beta common stock, when received by Omega Parent at the effective time of the First Merger, could be greater than, less than or the same as the market price of Beta common stock on the date of this Proxy Statement.
Background of the Mergers
BioScrip is a national provider of infusion and home care management solutions. As a part of its efforts to strengthen its business and enhance stockholder value, the board of directors and senior management of BioScrip regularly review and assess BioScrip’s operations, performance, prospects and strategic landscape in the industry, including the possibility of pursuing various financial and strategic transactions. From time to time, the senior management of BioScrip has held conversations and
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communicated with various investment banking firms regarding potential strategic transaction opportunities and other strategic alternatives available. BioScrip has long been familiar with Option Care’s business, as they are a quality leader among companies focused on home care management solutions, and with Madison Dearborn Partners, a leading private equity firm with extensive industry relationships. Certain representatives of each company have become acquainted at industry events and have from time to time spoken regarding the state of the industry, the regulatory landscape and other similar and related topics.
On April 3, 2018, Mr. Daniel Greenleaf, Chief Executive Officer, of BioScrip, and Mr. Timothy Sullivan, Managing Director and head of the Madison Dearborn Partners Health Care team and a director on the board of directors of Option Care, had a telephonic meeting. Mr. Greenleaf had requested the meeting following an industry event. During this meeting, Messrs. Greenleaf and Sullivan discussed, among other things, recent developments in the industry and the possibility of exploring a business combination between BioScrip and Option Care.
On May 3, 2018, following a meeting of the Option Care board of directors, Mr. Sullivan arranged a follow-up call with Mr. Greenleaf for May 11, 2018, which Mr. Christopher Shackelton, a director on the BioScrip Board, attended.
On June 26, 2018, following further discussion between Mr. Greenleaf and Mr. Sullivan, during a telephonic meeting Mr. Greenleaf and Mr. Sullivan agreed to have an in-person meeting to continue the discussion regarding exploring a potential business combination.
On July 6, 2018, at a telephonic meeting of the BioScrip Board, the BioScrip Board discussed, among other things, several investment banks as potential financial advisors, including Jefferies LLC (“Jefferies”) and Moelis & Company LLC (“Moelis”), with a view toward retaining a financial advisor to assist the BioScrip Board and management in evaluating a broad range of strategic alternatives available to BioScrip, including capital markets opportunities and the potential opportunity with Option Care. BioScrip had worked with Jefferies on several financings since 2010, and Jefferies had acted as financial advisor in connection with BioScrip’s review of strategic alternatives, including a potential sale or merger of BioScrip announced in January 2016, which resulted in BioScrip’s acquisition of Home Solutions in 2016 (with Jefferies as financial advisor). BioScrip had not engaged Moelis as a financial advisor in the past three years. Mr. Shackelton had recommended inviting Moelis to present to the full BioScrip Board in light of prior positive experiences as a director of other companies. At the meeting, Mr. Michael Goldstein, a director on the BioScrip Board, noted his relationship as an advisor to Jefferies.
On July 9, 2018, Mr. Greenleaf and Mr. Shackelton met with Mr. Sullivan, Ms. Elizabeth Betten, Managing Director of Madison Dearborn Partners and a director on the board of directors of Option Care, Mr. John Rademacher, Chief Executive Officer of Option Care, and Mr. Michael Shapiro, Chief Financial Officer of Option Care, to discuss exploring a potential strategic transaction between BioScrip and Option Care.
On July 26, 2018, the BioScrip Board held a telephonic meeting to receive presentations regarding qualifications of Moelis and Jefferies and preliminary views regarding BioScrip, including strategic alternatives and a potential transaction with Option Care. Jeff Moore, a representative of ASSF IV AIV B Holdings, L.P. (“ASSF IV”), also joined the meeting as an observer. ASSF IV has a contractual right to appoint a board observer. Pursuant to such contractual right, such observer does not have any voting rights and is not subject to any fiduciary duties applicable to the directors of the BioScrip Board. Representatives of Jefferies made a presentation to the BioScrip Board that focused on BioScrip’s ability to access the equity and debt capital markets. Representatives of Jefferies noted that BioScrip’s capital structure, including the pre-payment premiums on the senior secured notes and the unsecured notes, as well as the maturity of the senior secured notes, would present challenges to BioScrip in the near term. Representatives of Jefferies discussed the strategic rationale for a transaction with Option Care, including the significant synergy opportunity, and also indicated their willingness to potentially provide financing for a transaction with Option Care. Representatives of Moelis also provided preliminary views regarding a transaction with Option Care. Representatives of Jefferies and Moelis discussed considerations regarding potential debt and equity capital market transactions such as a private placement and a fully marketed public offering, including, based on available information, the potentially significant dilutive impact of such transactions,
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the potentially large discount to trading price of BioScrip’s common stock that may be required to complete such a transaction. Representatives of Jefferies and Moelis also noted that a debt for debt exchange would be unlikely to achieve significant deleveraging or materially reduce BioScrip’s cash interest burden.
On August 1, 2018, the BioScrip Board met in Denver, Colorado to further discuss a potential transaction with Option Care and engagement of financial advisors. Mr. Goldstein recused himself from the meeting and any discussion of Jefferies’ role in the potential transaction in light of his relationship as an advisor to Jefferies. At the request of the BioScrip Board, representatives of Jefferies presented to the BioScrip Board regarding a possible transaction with Option Care. Representatives of Jefferies noted that the transaction was a transformative opportunity and the combination would create a larger player that is better positioned to compete and that realizing the potentially significant synergies would drive stockholder value. Following the presentation from Jefferies, its representatives left the meeting and the BioScrip Board (with Mr. Goldstein recusing himself) instructed management to pursue engaging both Jefferies and Moelis as financial advisors to the BioScrip Board.
On August 1, 2018, BioScrip engaged Gibson, Dunn & Crutcher LLP (“Gibson Dunn”) as legal counsel in connection with the potential transaction involving Option Care due to the firm’s expertise in M&A transactions and successful prior engagements, including the acquisition of Home Solutions in 2016.
On the same day, Option Care delivered to BioScrip a draft mutual confidentiality agreement to facilitate the exchange of confidential information between BioScrip and its representatives and Option Care and its representatives. Thereafter, BioScrip, together with representatives of Gibson Dunn negotiated the terms of the confidentiality agreement with Option Care. BioScrip and Option Care subsequently entered into the confidentiality agreement on September 6, 2018.
After the August 1, 2018 BioScrip Board meeting, representatives of Gibson Dunn discussed the structuring of the roles of the financial advisors given Jefferies had indicated a willingness to provide financing in the potential transaction so long as Jefferies was retained as M&A advisor which would allow Jefferies to develop a fulsome understanding of the synergies which would be necessary to provide committed financing. Representatives of Gibson Dunn noted that in light of the potential conflict of interest presented by Jefferies potentially providing financing in the potential transaction, a second financial advisor would be recommended. The BioScrip Board determined that if both Jefferies and Moelis were engaged by the BioScrip Board, both Jefferies and Moelis would assist the BioScrip Board in structuring, analyzing and negotiating a transaction with Option Care, but Moelis would be responsible for leading any buyer outreach process and Jefferies would recuse themselves during any discussion of potential alternative counterparties. In addition, if requested by the BioScrip Board, Moelis would undertake an investigation and analysis to render an opinion to the BioScrip Board as to the fairness of any potential transaction.
On August 27, 2018, the BioScrip Board held a telephonic meeting with representatives of BioScrip management and Gibson Dunn. Representatives of Gibson Dunn discussed with the BioScrip Board, among other things, the fiduciary duties of the BioScrip Board in connection with its consideration of any potential transaction, including a potential transaction with Option Care, and potential conflicts of interest, if any, from each of the directors, including Mr. Shackelton’s disclosure that funds and accounts managed by Coliseum Capital, of which Mr. Shackelton was co-founder and managing partner, owned BioScrip preferred stock and the potential for a transaction with Option Care to include a transaction involving the preferred stock. Mr. Goldstein also noted his role as an advisor to Jefferies and Mr. R. Carter Pate, Chairman of the BioScrip Board, noted his role as interim chief executive officers of another company in which Coliseum Capital has a significant ownership interest and for which Mr. Shackelton serves as chairman of the board. The BioScrip Board also discussed and the potential terms of engaging Moelis and Jefferies as financial advisors (with Mr. Goldstein recusing himself from this portion of the meeting).
On September 19, 2018, Mr. Greenleaf and Mr. Rich Denness, BioScrip’s Chief Commercial Officer, met with the President of Party A together with the head of corporate development of Party A, a third-party industry participant, to discuss among other things a potential business combination between the parties.
On September 21, 2018, representatives of BioScrip, including Mr. Greenleaf, Mr. Stephen Deitsch, Chief Financial Officer of BioScrip, and Ms. Harriet Booker, Chief Operating Officer of BioScrip, and certain of its advisors met telephonically with representatives of Option Care and Madison Dearborn
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Partners to share preliminary synergy analyses from a potential combination. Such preliminary analysis from an advisor to BioScrip, without having access to non-public information from Option Care, estimated potential synergies between $60 million and $90 million.
On September 27, 2018, Mr. Greenleaf, Mr. Deitsch, Ms. Booker, Ms. Kathryn Stalmack, General Counsel of BioScrip, and certain other representatives and advisors to BioScrip met with Mr. Rademacher, Mr. Shapiro, Mr. Cliff Berman, General Counsel of Option Care, Mr. Sullivan, Ms. Betten and other representatives of Madison Dearborn Partners and other advisors to Option Care, in Chicago to, among other things, discuss a potential business combination, conduct due diligence and discuss a process for future due diligence, and review potential synergies.
On October 4, 2018, Jefferies and Moelis were formally engaged by BioScrip.
On October 8 and 9, 2018, representatives of BioScrip, including Mr. Greenleaf, Mr. Deitsch, Ms. Booker, and an advisor to BioScrip retained to assist in the synergy analysis, met in Denver, Colorado, with representatives of Option Care and Madison Dearborn Partners, including Mr. Rademacher, Mr. Shapiro and Mr. Robert Kampstra, Chief Accounting Officer of Option Care. to discuss and analyze potential selling, general and administrative cost synergies.
On October 10, 2018, BioScrip entered into a mutual confidentiality agreement with Party A to facilitate the continued exchange of confidential information between BioScrip and Party A.
On October 19, 2018, Madison Dearborn Partners delivered financial information regarding Option Care’s 2018 estimated Adjusted EBITDA of  $118.1 million which represented Option Care management’s estimate of  $95.0 million and pro forma adjustments of  $23.1 million.
On October 22, 2018, an advisor to BioScrip shared with Option Care its preliminary synergy analyses from a potential combination related to selling, general and administrative cost savings.
On October 25, 2018, an advisor to Option Care shared with BioScrip its preliminary synergy analyses from a potential combination related to optimizing the combined pharmacy network.
Also on October 25, 2018, representatives from Moelis and Jefferies delivered to representatives of Madison Dearborn Partners financial information regarding BioScrip’s 2018 estimated Pro Forma Adjusted EBITDA of  $69.1 million which represented research analyst consensus estimates of  $55.8 million and pro forma adjustments of  $13.3 million.
On October 29, 2018, Madison Dearborn Partners delivered a proposal for a business combination between Option Care and BioScrip (the “October 29 Proposal”). The October 29 Proposal presented a valuation framework that contemplated an at market transaction with an exchange ratio contingent on Madison Dearborn Partners’ due diligence of BioScrip’s 2018 Adjusted EBITDA. The October 29 Proposal utilized BioScrip’s $2.64 share price as of October 26, 2018 to imply an equity value for BioScrip of $353 million and an enterprise value/2018 Adjusted EBITDA valuation multiple of 14.2x. The October 29 Proposal was based on the 2018 estimated Pro Forma Adjusted EBITDA for BioScrip of  $69.1 million (which represented research analyst consensus estimates of  $55.8 million and adjustments of  $13.3 million) as delivered on October 25, 2018. The October 29 Proposal applied the 14.2x multiple to Option Care’s $118.1 million 2018 estimated Adjusted EBITDA and calculated Option Care’s equity value to be $1,153 million. Such relative equity values implied a pro forma ownership split of 77% for Option Care stockholders and 23% for BioScrip stockholders. The October 29 Proposal stated that the synergies would be shared pro rata based on ownership, that Option Care would have majority representation on the combined company’s board of directors, commensurate with its ownership of the pro forma entity, that the executive team would be optimized during integration by retaining “best of breed” at each position and corporate headquarters would be consolidated to Bannockburn, Illinois, given Option Care’s relative size and scale. The October 29 Proposal contemplated a transaction structure with a stock for stock exchange and BioScrip continuing as a publicly traded corporation. In connection with the October 29 Proposal, Madison Dearborn Partners stated that the transaction was significantly accretive to BioScrip stockholders at $1.15 value per share, that the preliminary estimated total gross synergies based on interim analyses completed were between $62 million and $83 million, excluding any potential negative synergies, and the transaction would improve BioScrip’s capital structure, liquidity and equity research coverage while creating operating efficiencies and expanding the companies’ geographic reach.
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On October 30, 2018, the BioScrip Board held a meeting in Dallas, Texas to, among other things, discuss the October 29 Proposal. Mr. Moore, a representative of ASSF IV, also joined the meeting as an observer. Representatives of BioScrip management, Gibson Dunn, Moelis and Jefferies also were present either in person or telephonically. Representatives of Moelis and Jefferies presented certain preliminary financial analyses regarding the October 29 Proposal. During such meeting, the BioScrip Board discussed the key range of potential variables that could be negotiated in the transaction that would impact pro forma ownership split, including the EBITDA measure selected (reported EBITDA versus pro forma or adjusted EBITDA), which year’s EBITDA to use, the multiple applied, the allocation of breakage costs associated with the pre-payment of the BioScrip outstanding indebtedness and the allocation of synergies. The BioScrip Board discussed that the allocation of synergies, and whether they are allocated pro rata with ownership or otherwise, would have the greatest impact on pro forma ownership. With representatives of Jefferies recusing themselves, the BioScrip Board also discussed with Moelis and representatives of Gibson Dunn the timing of potential buyer outreach and a preliminary list of potential parties that would be contacted during such process. During such meeting, the BioScrip Board also noted the benefits of forming a strategic transaction committee of the BioScrip Board (the “BioScrip Transaction Committee”) consisting of Mr. Pate, Mr. Goldstein and Mr. Steven Neumann, which would be vested with the power of the BioScrip Board to meet with advisors and evaluate and negotiate transaction proposals, but any definitive agreements would require BioScrip Board approval. The BioScrip Board’s decision to form the BioScrip Transaction Committee was based entirely on considerations of efficiency.
On October 31, 2018, Moelis provided the BioScrip Board with disclosure on its relationships with BioScrip, Option Care and Madison Dearborn Partners. Following receipt of such information, the BioScrip Board concluded that, based upon the information provided by Moelis, Moelis did not have any relationships that would be likely to impair its ability to provide independent advice to the BioScrip Board.
On November 2, 2018, at the direction of the BioScrip Board and in order for the BioScrip Board to properly evaluate all aspects of a potential transaction, representatives of Moelis and Jefferies delivered a letter to Madison Dearborn Partners requesting 2016 financial information and 2019 estimated financial information, a call between the respective management teams to discuss the adjustments to each party’s EBITDA calculations, and cooperation to finalize the ongoing synergy analyses so that the BioScrip Board could respond to Option Care’s October 29 Proposal in a thorough and constructive way.
On November 9, 2018, the BioScrip Transaction Committee met with representatives of BioScrip management, Moelis, Jefferies and Gibson Dunn to discuss the BioScrip stand-alone forecast, including key assumptions underlying the five-year forecast.
On November 12, 2018, representatives of BioScrip, along with its advisors, including representatives of Moelis and Jefferies met telephonically with representatives of Option Care and Madison Dearborn Partners and its advisors, including representatives of Goldman Sachs & Co. LLC (“Goldman Sachs”), financial advisor to Option Care and Madison Dearborn Partners, to continue financial due diligence, including adjustments to each party’s 2018 EBITDA.
On November 13, 2018, the BioScrip Transaction Committee met with representatives of BioScrip management, Moelis, Jefferies and Gibson Dunn to further discuss the preliminary BioScrip stand-alone forecast, including key assumptions underlying such five-year forecast, as well as potential transactions BioScrip could undertake in the capital markets, such as establishing an at-the-market equity program, including the potentially significant dilutive impact of such transactions.
On November 16, 2018, an advisor to Option Care shared with BioScrip its preliminary synergy analyses from a potential combination related to procurement cost savings.
Prior to a November 17, 2018 BioScrip Board meeting, representatives of Moelis and Jefferies discussed with Mr. Shackelton that the October 29 Proposal contemplated the elimination of the BioScrip preferred stock. During such meeting, Mr. Shackelton noted Coliseum Capital’s desire that the preferred stock remain outstanding, with no adjustment, in any transaction, and noted that the certificates of designation for the preferred stock did not give BioScrip a right to redeem the stock at this time or to change the terms of the preferred stock without Coliseum Capital’s consent.
On November 17, 2018, the BioScrip Board held a telephonic meeting together with representatives of BioScrip management, Jefferies, Moelis and Gibson Dunn. The BioScrip Board reviewed a preliminary
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BioScrip stand-alone financial analysis and preliminary indicative valuations of BioScrip and Option Care provided by their financial advisors. During such meeting the BioScrip Board discussed potential counterproposals to Option Care and agreed to propose a 32% pro forma ownership for BioScrip stockholders. The BioScrip Board noted that the counterproposal would be based on 2018 estimated Pro Forma Adjusted EBITDA for BioScrip of  $67.4 million, comprised of  $54.1 million 2018 estimated Adjusted EBITDA and $13.3 million of adjustments, while the October 29 Proposal was based on research analyst consensus of  $55.8 million 2018 estimated Adjusted EBITDA for BioScrip, plus $13.3 million of pro forma adjustments. BioScrip highlighted that BioScrip’s $3.22 per share stock price implied an equity value of approximately $435 million, and 2018 estimated Pro Forma Adjusted EBITDA for BioScrip of $67.4 million implied a Total Enterprise Value/2018 estimated Pro Forma Adjusted EBITDA multiple of 15.7x, which would imply an equity value of Option Care of  $1,327 million. The counterproposal also assumed year 1 synergies of  $70.5 million (representing 75% of the midpoint of BioScrip’s estimated gross synergy range of  $72 million to $116 million) to be allocated 43% to BioScrip and 57% to Option Care. BioScrip noted in its counterproposal that it was willing to take a modest discount to a 50/50 split on the synergies in order to reach agreement. BioScrip also stated in its counterproposal that the headquarters or co-headquarters of the combined company would be determined further upon diligence and “best of breed” management selections.
On November 20, 2018, at the direction of the BioScrip Board, representatives of Moelis and Jefferies delivered the counterproposal to Madison Dearborn Partners.
On November 30, 2018, Option Care delivered a letter (the “November 30 Letter”) to BioScrip in response to BioScrip’s November 20 counterproposal. In the November 30 Letter, Option Care indicated that it disagreed that BioScrip should be entitled to a larger percentage of the synergies than its pro forma ownership of the combined company. Option Care noted that this point was fundamental to its view of the proposed transaction. In addition, Option Care stated that it understood that Coliseum Capital wanted to keep its preferred stock outstanding following the proposed transaction. Option Care indicated that while it was willing to discuss leaving the BioScrip preferred stock outstanding, any transaction would be conditioned on amending the terms of the preferred stock in a manner satisfactory to Option Care, including eliminating any consent or veto rights, eliminating any put or redemption rights, making the shares callable upon a sale of the company or similar transaction, and adjusting the dividend rate. The November 30 Letter also noted that to finalize a more thorough response, Option Care would require certain additional due diligence to better understand BioScrip’s financial results for fiscal year 2018, finalize the analysis of procurement synergies, quantify potential negative synergies as a result of any potential transaction, and understand the 2019 financial budget.
On December 4, 2018, the BioScrip Board, with representatives from BioScrip management, Gibson Dunn, Moelis and Jefferies, held a telephonic meeting to discuss the November 30 Letter. In connection with such meeting the BioScrip Board also received materials from Jefferies, for informational purposes, regarding a potential at-the-market equity financing program. The BioScrip Board discussed potential responses to Option Care’s November 30 Letter, including the amount of due diligence information to provide at this stage of negotiations. After representatives of Jefferies had left the meeting, representatives of Moelis and Gibson Dunn discussed the potential buyer outreach alternatives with the BioScrip Board. At the end of the meeting the BioScrip Board provided guidance to management regarding materials to be provided to Option Care and determined for the buyer outreach to be undertaken later in the process. The parties continued to engage in reciprocal due diligence.
On December 13, 2018, BioScrip and Party A entered into an amended and restated mutual confidentiality agreement, adding, among other things, a mutual customary standstill provision, which would not automatically terminate upon announcement of a competing transaction, but did not prevent either party from requesting a waiver from such standstill restrictions.
On December 14, 2018, Mr. Greenleaf, Mr. Deitsch, Ms. Booker, Ms. Stalmack and representatives of Moelis met with representatives of Party A to continue discussions regarding a potential business combination transaction. No specific proposals regarding a business combination were made during this meeting.
On December 20, 2018, representatives of BioScrip, along with its advisors, including representatives of Moelis and Jefferies, met telephonically with representatives of Option Care and Madison Dearborn
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Partners and its advisors, including representatives of Goldman Sachs, to continue financial due diligence, including the nature and accounting treatment of contractual adjustments, historical bad debt trends, pro forma adjustments to each party’s 2018 EBITDA, and 2019 forecasted operating results.
On December 31, 2018, representatives of BioScrip, along with its advisors, including representatives of Moelis and Jefferies, met telephonically with representatives of Option Care and Madison Dearborn Partners and its advisors, including representatives of Goldman Sachs, to continue reciprocal financial due diligence, including trends in accounts receivables, contractual adjustments, and associated reserves, as well as each party’s historical growth and 2019 forecast.
On January 4, 2019, Option Care delivered a letter to BioScrip (the “January 4 Letter”) regarding a potential transaction. The January 4 Letter noted that Option Care viewed financeable BioScrip EBITDA to be materially lower than the estimate included in its initial proposal delivered to BioScrip. Option Care expressed its view that BioScrip’s 2018 Pro Forma Adjusted EBITDA is below $50 million when normalized for (1) differences in accounting policies between the two companies related to the recognition of contractual adjustments in accounts receivable as income, (2) lower expected run-rate contractual adjustments, (3) higher bad debt expense using historical write-off activity as a percentage of gross revenue, consistent with the methodology used in the presentation of Option Care’s Pro Forma Adjusted EBITDA and (4) changes to BioScrip’s management 2018 Pro Forma adjustments primarily related to (a) a certain product shortage and (b) adjustments related to incentive compensation. In addition, based on ongoing synergy due diligence, Option Care noted its view that the midpoint of the net synergy opportunity to be in the range of  $50-$60 million when incorporating negative synergies related to, among other items, harmonizing accounting policies, harmonizing compensation, employer 401(k) match expense, and IT resources and investments informed by the ongoing analysis of the parties’ advisors. As a result, the January 4 Letter mentioned the valuation framework would imply a pro forma Option Care ownership well in excess of the original proposal of 77%, as a result of  (1) lower BioScrip earnings, (2) significant leverage needed to replace BioScrip’s capital structure on lower combined EBITDA, (3) lower net synergy opportunity, and (4) higher interest costs and upfront financing fees given the financing environment at the time. However, in order to get to an agreement on a potential transaction, Option Care was prepared to move forward on the same transaction economics as its original proposal — a pro forma ownership split of 77% for Option Care and 23% for BioScrip stockholders. In addition, Option Care noted it was willing to discuss leaving the preferred stock outstanding but noted that any potential transaction that leaves the preferred stock outstanding would be conditioned on amending the terms of the preferred stock in a manner satisfactory to Option Care. The January 4 Letter requested certain additional due diligence materials, including a comprehensive cash waterfall analysis and financial information through year end, the ability to engage with additional financing sources, the opportunity to engage each company’s auditors and initiate a joint-review of the differences in accounting policies, and, in light of the considerable commitment of time and resources required, requested exclusivity.
On January 6, 2019, the BioScrip Board met telephonically with representatives of BioScrip management, Moelis, Jefferies and Gibson Dunn. Mr. Shackelton recused himself from meetings of the BioScrip Board until a resolution was reached regarding treatment in any transaction of the preferred stock owned by funds and accounts managed by Coliseum Capital. Representatives of Moelis and Jefferies noted that utilizing Option Care’s assumptions about each party’s 2018 Estimated Pro Forma Adjusted EBITDA of  $118.1 million for Option Care and $50.0 million for BioScrip would imply a 10.7% ownership for BioScrip’s stockholders compared to the 23% ownership level contained in the January 4 Letter. During such meeting the BioScrip Board instructed representatives of Moelis and Jefferies to contact Coliseum Capital to assess Coliseum Capital’s response to the requirement that the preferred stock terms be amended. Representatives of Jefferies also provided an update on discussions with Madison Dearborn Partners regarding financing and noted that they remained confident in their ability to arrange financing for a potential transaction. After representatives of Jefferies left the meeting, the BioScrip Board discussed the potential buyer outreach with representatives of Moelis and Gibson Dunn, as well as Option Care’s request for exclusivity and request to speak with additional financing sources. The BioScrip Board then instructed representatives of Moelis and Jefferies to communicate to Option Care that exclusivity was not appropriate at this stage, that BioScrip would provide the requested due diligence materials and that due to concerns
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regarding confidentiality, Option Care was not authorized to contact additional financing sources at this time (but would allow Option Care to approach other sources at a later date if discussions became more advanced).
Following the meeting, at the direction of the BioScrip Board, representatives of Moelis and Jefferies spoke with representatives of Option Care to deliver the BioScrip Board’s response. As instructed by the BioScrip Board, representatives of Moelis also spoke with Mr. Shackelton of Coliseum Capital and Mr. Shackelton reiterated Coliseum Capital’s desire that the preferred stock remain outstanding and its terms unchanged in connection with any transaction, and requested that if Option Care desired to negotiate amendments to the terms of the preferred stock, it provide Coliseum Capital a specific proposal regarding the terms to be amended. Representatives of Moelis and Jefferies then communicated such request to Option Care.
On January 11, 2019, the BioScrip Transaction Committee met telephonically with representatives of BioScrip management, Moelis and Gibson Dunn to further discuss the buyer outreach process. In discussing the list of parties to reach out to, representatives of Moelis suggested six (including Party A), “tier 1” industry participants and four additional “tier 2” industry participants. Representatives of Moelis noted that the list included input from management and focused on well-capitalized strategic buyers with the potential to achieve meaningful synergies (and that one party had been removed due to a recently announced significant acquisition). Additional parties were then added to the outreach list following discussion with the BioScrip Transaction Committee. Following discussion with representatives of Moelis, the BioScrip Transaction Committee also elected not to pursue stand-alone financial sponsors due to the lack of potential synergies and high cost of standalone financing. The BioScrip Transaction Committee further instructed Moelis to finalize materials, consisting of an information package with an investor presentation, a virtual data room and call script to initiate outbound calls to potential buyers.
Following the meeting, at the direction of the BioScrip Transaction Committee, representatives of Moelis commenced its outreach to potential counterparties. Moelis contacted 13 potential strategic acquirors, including Party A.
In response to the request for a proposal regarding Option Care’s proposal as to the treatment of preferred stock, on January 17, 2019, Option Care provided a letter (the “January 17 Letter”) to BioScrip noting that Option Care was willing to discuss leaving the preferred stock outstanding following the proposed transaction, subject to amending the terms in a manner satisfactory to it, or to have the preferred stock be repurchased and retired by BioScrip for cash at the outstanding liquidation preference at closing. The January 17 Letter noted that if the preferred stock were to be amended rather than retired, among such amendment requirements were that (i) the preferred stock would have no right to convert to BioScrip’s common stock at any time and would only be entitled to its liquidation preference, (ii) the preferred stock would accrue regular dividends at the lesser of  (a) 11.5% and (b) the rate applicable to BioScrip’s junior credit facilities at the consummation of the proposed transaction plus 100 basis points, (iii) the preferred stock would no longer be entitled to vote with the common stock on matters submitted to the common stock for a vote, and (iv) BioScrip would have the right to repurchase the preferred stock for cash at a price equal to its liquidation preference at any time after a set period (period to be determined) following the amendment of the terms of the preferred stock. The January 17 Letter also noted that the amendment to the terms of the preferred stock would (except as otherwise set forth in the letter) remove all powers, preferences and rights of the holders of preferred stock, which would include (1) eliminating any consent or veto rights of the holders of preferred stock (other than the right to approve further amendments to the terms of the preferred stock), (2) eliminating any put or redemption rights of the holders of preferred stock, and (3) eliminating any right to designate a member of the board of directors. Finally, Option Care also required that Moody’s Investors Services provide equity treatment to the preferred stock for credit rating purposes after giving effect to the above changes. At the request of the BioScrip Board, representatives of Moelis subsequently conveyed Option Care’s proposal to Mr. Shackelton.
On January 23, 2019, the BioScrip Transaction Committee held a telephonic meeting to discuss, among other things, an update on the buyer outreach process. Representatives of BioScrip management, Gibson Dunn and Moelis joined the meeting. Representatives of Moelis noted that of the 13 parties contacted (i) four parties, including Party A, declined to pursue the opportunity, (ii) two parties were negotiating
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confidentiality agreements and (iii) seven parties continued to evaluate the opportunity internally. Representatives of Moelis also noted that Coliseum Capital would not be amenable to the terms of the January 17 Letter from Option Care. The BioScrip Transaction Committee discussed Coliseum Capital’s request for Option Care to refine its proposal.
Also on January 23, 2019, an advisor to Option Care shared with BioScrip its updated synergy analyses from a potential combination related to procurement cost savings.
On January 24, 2019, representatives of BioScrip, along with its advisors, including representatives of Moelis and Jefferies met telephonically with representatives of Option Care and Madison Dearborn Partners and its advisors, including representatives of Goldman Sachs, to discuss each party’s view of the range of aggregate gross synergies and certain potential negative synergies.
On January 30, 2019, Mr. Greenleaf, Mr. Deitsch, Ms. Stalmack and certain other representatives and advisors to BioScrip met telephonically with Mr. Rademacher, Mr. Shapiro, Mr. Berman, Mr. Sullivan, Ms. Betten and other representatives of Madison Dearborn Partners and other advisors to Option Care, to discuss budgeted and actual performance for each company, contractual adjustments, bad debt and cash collections and additional quality of earnings clarification questions.
On February 1, 2019, the BioScrip Transaction Committee held a telephonic meeting to receive an update on discussions with Option Care and the buyer outreach process. Representatives of BioScrip management, Gibson Dunn, Moelis and Jefferies were also present. Representatives of Moelis and Jefferies also reviewed certain adjustments made by management to the 2019 budget and financial projections which, among other things, lowered estimated 2019 Adjusted EBITDA to $70.0 million from $76.6 million projected in November in light of, among other things, higher than expected bad debt expense and lower than previously anticipated levels of reimbursement for certain therapies pursuant to the Cures Act. After representatives of Jefferies had left the meeting, representatives of Moelis provided an updated on the buyer outreach process and noted that of the 13 parties contacted (i) five parties, including Party A, had declined to pursue the opportunity, (ii) five parties had either finalized confidentiality agreements or were close to finalizing the confidentiality agreement and (iii) three parties continued to evaluate the opportunity internally.
On February 5, 2019, the BioScrip Board received a revised proposal from Option Care (the “February 5 Proposal”). In the February 5 Proposal, Option Care noted that based on its diligence of the cash collections analysis and Q4 financial information provided, as well as BioScrip’s fiscal year 2018 results being lower than the fiscal year 2018 estimated forecast previously delivered in connection with the transaction, Option Care’s view of normalized BioScrip EBITDA was now materially lower than its previous estimates. Option Care also noted that it viewed the net synergy opportunity to be between $48.4 million and $64.3 million when incorporating its view of  (1) procurement savings and (2) negative synergies related to, among other items, harmonizing compensation, employer 401(k) match expense, and IT and telecommunications resources and investments. The February 5 Proposal stated that based on Option Care’s final view of BioScrip fiscal year 2018 Pro Forma Adjusted EBITDA and synergies shared pro rata based on pro forma ownership, Option Care believed a reasonable valuation framework would imply a pro forma Option Care ownership of 92% based on BioScrip’s current valuation of 19.6x Total Enterprise Value/2018 estimated Consensus EBITDA and Option Care’s view of BioScrip EBITDA. The February 5 Proposal further noted that in order to get to an agreement on a potential transaction, Option Care was prepared to offer a premium of 900 basis points of ownership to BioScrip’s stockholders and to move forward on a pro forma ownership split of 83% to Option Care stockholders and 17% to BioScrip stockholders on a fully as-if-converted share count. Option Care explained that the 83% Option Care ownership assumed shares are issued to Option Care based on BioScrip’s fully as-if-converted share count, pro forma for all warrants, convertible securities and other securities currently outstanding at BioScrip. The February 5 Proposal provided that any dilution associated with securities included in BioScrip’s current capitalization table would be fully borne by the BioScrip stockholders. The February 5 Proposal further proposed that, in response to feedback on the January 17 Letter, Option Care would be amendable to two alternatives regarding treatment of the Preferred Stock. The first alternative was for BioScrip to repurchase the preferred stock for cash at 110% of the outstanding liquidation preference at closing. The second alternative was for the terms of the preferred stock to be amended to provide, among other things, that
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(i) the preferred stock would continue to be convertible into common stock but the number of shares into which it is convertible would be limited to the number of shares resulting from the liquidation preference outstanding at the time of the closing, (ii) the dividend rate would be equal to the lesser of 11.5% and the rate on BioScrip’s junior credit facilities at closing, plus 100 basis points, (iii) the preferred stock would not be entitled to vote with the common stock and (iv) BioScrip would have a right to repurchase the preferred stock for cash at its liquidation preference at any time after two years following the amendment of the terms of the preferred stock. Option Care also required that the 2017 Warrants be amended such that they are exercisable into a fixed number of shares which are taken into account as part of BioScrip’s pre-merger share count as opposed to remaining outstanding and representing 4.99% of the outstanding shares of the combined company. In addition, Option Care requested permission to commence discussions with additional potential financing providers, the ability to complete a third-party assessment of BioScrip’s five largest pharmacy locations, access to BioScrip’s auditors to discuss the 2018 audit and certain additional confirmatory due diligence.
On February 6, 2019, the BioScrip Board met telephonically to discuss, among other things, the February 5 Proposal. Representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis were also present. Representatives of Moelis and Jefferies reviewed with the BioScrip Board the February 5 Proposal, including the implied pro forma financial metrics for the combined company. Representatives of Jefferies noted that Jefferies was prepared to fully commit to finance the transaction. Representatives of Moelis and Jefferies then reviewed preliminary financial analyses in connection with the February 5 Proposal and noted that, assuming 83% ownership by Option Care, the BioScrip stockholders would own 14.6% of the combined company after incurring the dilution associated with the incremental shares issuable pursuant to the 2017 Warrants (on a treasury stock method using BioScrip’s stock price of  $3.78). In considering the February 5 Proposal, representatives of Moelis and Jefferies reviewed with the BioScrip Board the relative accretion of BioScrip shares following a transaction at various ownership levels and synergies. At the meeting, representatives of Moelis and Jefferies also noted BioScrip’s standalone capital structure challenges and liquidity challenges associated with BioScrip’s near term impending debt maturities.
On February 12, 2019, at the request of BioScrip, Coliseum Capital sent a letter to the BioScrip Board with respect to Coliseum Capital’s views regarding the preferred stock. In the letter, Coliseum Capital again expressed its preference for the preferred stock to remain outstanding without change, but offered two alternative proposals should Option Care not be amenable to the preferred stock remaining outstanding without change. Specifically, Coliseum Capital proposed, as part of an Option Care transaction, (i) converting its preferred stock into common stock with a conversion price of  $2.80 (a discount of 21% to then-current market trading price and a reduction from the $5.17 conversion price in the certificate of designations) or (ii) a one-time cash redemption option representing a 35% premium to the outstanding liquidation preference. Coliseum Capital noted that the conversion to common stock was contingent on BioScrip stockholders receiving a minimum of 18% of pro-forma ownership, as well as satisfactory resolution of the anti-dilution provisions of the 2017 Warrants which allowed the warrantholders to retain a 4.99% ownership stake in the larger combined company. Additionally, Coliseum Capital stated it would require registration rights and a board seat.
On February 14, 2019, at the request of Mr. Greenleaf and Mr. Deitsch, a representative of ASSF IV and an account managed by ASSF Operating Manager IV, L.P. (the “Ares Vehicles”) provided preliminary and illustrative feedback regarding his views of a potential refinancing and potential terms thereof.
On February 15, 2019, the BioScrip Transaction Committee met to receive an update on, among other things, the buyer outreach process and the proposal from Coliseum Capital and feedback from the representative of the Ares Vehicles. Representatives of BioScrip management, Gibson Dunn, Moelis and Jefferies were also present. The BioScrip Transaction Committee reviewed the proposal from Coliseum Capital as well as the feedback from the representative of the Ares Vehicles received by BioScrip with representatives of Moelis and Jefferies. Such feedback included both additional preferred equity and a common stock offering in addition to a first lien term loan, which would result in a dilution of outstanding BioScrip common stock. With respect to the buyer outreach process, representatives of Moelis noted that of the five parties that executed confidentiality agreements, (i) three had declined to pursue the opportunity (two of which had conducted due diligence calls with management) and (ii) two parties continued to
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evaluate the opportunity (one of which had conducted a due diligence call with management). The other eight parties contacted had each declined to pursue the opportunity without submitting an indicating of interest or executing a confidentiality agreement.
On February 21, 2019, the BioScrip Transaction Committee met and discussed, among other things, the negotiations regarding the treatment of the BioScrip preferred stock. Representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis were also present. Mr. Pate recused himself from the meeting noting his role as interim chief executive officer of another company in which funds and accounts managed by Coliseum Capital have a significant ownership interest and for which Mr. Shackelton serves as chairman of the board (which relationship was previously described to the BioScrip Board). Following discussion and also considering certain analyses from representatives of Moelis and Jefferies, at the direction of the BioScrip Transaction Committee, following the meeting Mr. Neumann, at the direction of the BioScrip Transaction Committee, communicated to Mr. Shackelton the BioScrip Transaction Committee’s proposal to repurchase the preferred stock owned by Coliseum Capital at 120% of the liquidation preference. Later on February 21, 2019, Mr. Shackelton, on behalf of Coliseum Capital, presented a counterproposal that the preferred stock be repurchased for 125% of the liquidation preference with 120% payable in cash and 5% payable in shares of BioScrip common stock.
On February 22, 2019, the BioScrip Transaction Committee met telephonically. Representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis were also present. During the meeting representatives of Moelis and Jefferies provided an update on recent discussions with Coliseum Capital regarding the preferred stock. Representatives of Moelis and Jefferies also provided the BioScrip Transaction Committee with preliminary financial analyses with respect to the proposed transaction with Option Care, as well as a review of refinancing alternatives available to BioScrip, and discussed with the BioScrip Transaction Committee the challenges presented by the BioScrip capital structure, leverage ratios and impending near term debt maturities. The BioScrip Transaction Committee also discussed a potential counterproposal to Option Care. Representatives of BioScrip management also reviewed updates to the preliminary five-year forecasts since the projections were originally provided in November. Following discussion with BioScrip management and representatives from Jefferies and Moelis, the BioScrip Transaction Committee instructed BioScrip management to continue refining the assumptions regarding 2019 and future years. The BioScrip Transaction Committee also discussed that BioScrip’s stock was trading on the basis of analyst consensus estimates for 2018 and did not reflect the actual 2018 results and reviewed an illustrative share price analysis following the 2018 year-end earnings announcement, which, based on a then expected $45.7 million Adjusted EBITDA for 2018, implied a per share price of  $2.20 at current multiples versus the current $3.61 share price. The BioScrip Transaction Committee also evaluated a proposed response to Option Care’s proposal and agreed to propose a pro forma ownership split that provided BioScrip stockholders with 20.5% ownership in the combined company on a fully as-if-converted basis. The counterproposal assumed the preferred stock was converted to cash at 120% of the liquidation preference and the 2017 Warrants were converted into 4.99% of the shares outstanding prior to the merger. After representatives from Jefferies had left the meeting, representatives of Moelis noted that of the 13 contacted parties, eight had declined to pursue the opportunity without submitting an indication of interest or executing a confidentiality agreement and of the five parties that executed confidentiality agreements (i) four had declined to pursue the opportunity and (ii) one had not formally declined the opportunity but had not been active in the virtual dataroom or scheduled a diligence call with management. The BioScrip Transaction Committee also approved Option Care contacting additional financing sources.
Following the BioScrip Transaction Committee meeting, as instructed by the BioScrip Transaction Committee, representatives of Moelis and Jefferies delivered the written counterproposal to Option Care.
On February 25, 2019, Option Care delivered a letter to BioScrip accepting the proposed ownership splits, requested access to additional financing sources, requested access to BioScrip’s audit team to review the draft 2018 audit, and outlined other confirmatory due diligence items. In its February 25 letter Option Care also noted its belief that the definitive transaction documentation should provide for Option Care to have its out-of-pocket expenses related to the potential transaction reimbursed by BioScrip in the event that BioScrip’s stockholders do not approve the transaction.
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On February 26, 2019, the BioScrip Board met telephonically and discussed Option Care’s response letter as well as a process to reach definitive agreement. Mr. Shackelton recused himself from the meeting. Representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis were also present. The BioScrip Board reviewed the February 25 letter from Option Care and noted that although it was not in agreement with respect to expense reimbursement of Option Care, the BioScrip Board agreed that it could negotiate this term in conjunction with negotiating a definitive transaction agreement. The BioScrip Board approved management and representatives of BioScrip engaging in further due diligence workstreams and the preparation and negotiation of a definitive transaction agreement.
Between February 27, 2019 and March 14, 2019, BioScrip and its representatives had daily teleconferences with Option Care and its representatives to discuss the status of due diligence, transaction documentation and other workstreams.
On February 28, 2019, representatives of BioScrip, including Mr. Greenleaf, Mr. Deitsch and Ms. Stalmack, along with representatives of Moelis, Jefferies and Gibson Dunn, had a teleconference with Option Care and Madison Dearborn Partners and their representatives regarding the BioScrip capitalization. Between February 28 and March 14, 2019, the parties continued to discuss the BioScrip capitalization and treatment of equity and its economic impact on the proposed exchange ratio implied by the ownership splits.
On March 1, 2019 the BioScrip Transaction Committee met telephonically, along with representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis, to discuss a proposal with respect to the 2017 Warrants (the “March 1 Proposal”) and to review management’s revised BioScrip forecast, updated by management in light of BioScrip’s nearly completed audit for 2018. The revised management projections reflected a further decrease in projected 2019 Adjusted EBITDA to $66.5 million from the $70.0 million presented by management on February 1, 2019 as a result of further refinement of management’s estimates. Following the meeting, representatives of Moelis and Jefferies delivered to the Ares Vehicles a letter proposing to convert the 2017 Warrants into shares representing 4.99% of BioScrip’s as-if converted shares outstanding immediately preceding the signing of the warrant agreement amendment. As consideration for amending the warrant agreement for the 2017 Warrants, BioScrip proposed to issue the holders of the 2017 Warrants 1.077 million additional warrants (with a value of  $3.5 million) which would also be converted into BioScrip shares pre-closing.
On March 2, 2019, Gibson Dunn provided an initial draft of the merger agreement to Kirkland & Ellis, LLP (“Kirkland & Ellis”), legal counsel to Option Care.
Between March 3, 2019 and March 14, 2019, Gibson Dunn and Kirkland & Ellis negotiated the various transaction agreements.
On March 4, 2019, Mr. Pate, discussed the March 1 Proposal regarding the 2017 Warrants with representatives of the Ares Vehicles. Such representatives originally proposed to Mr. Pate a payment of $20 million, as an amendment fee for an amendment that would allow the 2017 Warrants to remain outstanding following the closing, but the total number of shares subject to the 2017 Warrants would be fixed. During such call, BioScrip negotiated for the forced exercise of the 2017 Warrants into shares of common stock immediately prior to closing. Ultimately, as consideration for amending the warrant agreement, the parties discussed a warrant amendment fee of  $6 million payable in 1.85 million shares of BioScrip’s common stock (based on a fixed price per share of  $3.25).
On March 5, 2019, Kirkland & Ellis provided a revised draft of the merger agreement. The revised draft provided for a reverse termination fee payable by Option Care for breach of the merger agreement and failure to close or if the financing for the transaction was not available at closing. The proposed reverse termination fee was equal to 4% of BioScrip’s equity value; an amount that was equivalent to the amount of the BioScrip termination fee. In addition, the revised draft provided for a 20 business day “marketing period” and a closing condition that required BioScrip’s net debt not to be in excess of a to be determined threshold at the closing as well as certain healthcare regulatory approvals. The revised draft also provided that Option Care would be reimbursed up to $5 million in the event BioScrip stockholders did not approve the transaction and contemplated a voting agreement to be delivered from the Ares Vehicles and Coliseum Capital.
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On March 7, 2019, the BioScrip Board held a meeting in West Palm Beach, Florida and discussed, among other things, the Option Care transaction. Representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis were also present either in person or by phone. Representatives of Moelis provided the BioScrip Board with its updated preliminary financial analyses with respect to the proposed transaction. Representatives of Jefferies and Moelis discussed with the BioScrip Board the financial analyses as well as a review of refinancing alternatives available to BioScrip, and challenges presented by the BioScrip capital structure and the potential dilution to BioScrip that would accompany a refinancing. Representatives of Gibson Dunn also discussed with the BioScrip Board the outstanding material issues in the merger agreement. Following such presentations Mr. Shackelton recused himself from the meeting. The BioScrip Board then discussed the treatment of the preferred stock. Following such portion of the meeting, BioScrip directors discussed the proposed preferred stock repurchase agreement with Mr. Shackelton and agreed to Coliseum Capital’s proposal regarding the repurchase of the preferred stock for 125% of the liquidation preference with 5% payable in BioScrip shares.
On March 8, 2019, representatives of Gibson Dunn spoke with representatives of Coliseum Capital’s legal counsel, Paul Hastings LLP, regarding the preferred stock repurchase. Coliseum Capital’s legal counsel informed such representatives of Gibson Dunn that Coliseum Capital would require indemnification for any losses incurred in connection with entering into the repurchase agreement, as well as reimbursement of expenses.
Later on March 8, 2019, the BioScrip Transaction Committee met telephonically along with representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis, and continued discussion regarding the outstanding legal issues in the merger agreement, including the reverse termination fee structure, as well as the ancillary agreements, including the documentation regarding the treatment of the preferred stock and the treatment of the 2017 Warrants.
Later on March 8, 2019, representatives of Gibson Dunn provided a revised draft merger agreement to Kirkland & Ellis. The revised draft provided for a termination fee payable by BioScrip of  $8 million (approximately 1.5% of BioScrip’s then-current equity value based on the then current stock price) in certain specified situations, removed the net debt condition and closing conditions regarding healthcare regulatory approvals. The revised draft also noted that, following receipt of drafts of the debt commitment letters, the parties would further discuss the reverse termination fee and “specific performance lite” construct entitling BioScrip to specific performance to cause the closing to occur only if all of the closing conditions are satisfied, BioScrip is ready, willing, and able to close the transaction, and the debt financing is available. The revised draft also deleted the expense reimbursement provisions.
On March 9, 2019, representatives of Moelis and Gibson Dunn had a teleconference with representatives of Madison Dearborn Partners and Kirkland & Ellis to discuss the contemplated financing for the transaction.
On March 9, 2019 the BioScrip Transaction Committee met telephonically, along with representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis, to discuss Option Care’s projections and BioScrip’s projections and receive an update on the status of negotiations of the definitive transaction documents and Option Care’s financing.
Between March 9, 2019 and March 14, 2019, Coliseum Capital’s legal counsel and the Ares Vehicles’ legal counsel negotiated Kirkland & Ellis’s draft voting agreement with Kirkland & Ellis and Gibson Dunn. On March 14, 2019, Option Care withdrew its request for the Ares Vehicles to sign a voting agreement.
On March 10, 2019, representatives of Gibson Dunn sent a draft of the preferred stock repurchase agreement regarding the Series C Preferred Stock and a draft amendment certificate of designation regarding the Series A Preferred Stock to Coliseum Capital’s legal counsel. Later on March 10, 2019, Coliseum Capital’s legal counsel provided a revised draft repurchase agreement including an indemnification provision in favor of Coliseum Capital as well as expense reimbursement.
Later on March 10, 2019, at the direction of the BioScrip Transaction Committee, representatives of Moelis and Jefferies delivered a revised proposal to the Ares Vehicles with respect to the 2017 Warrants. The revised proposal provided for the holders of the 2017 Warrants to receive 7,320,640 warrants based on 4.99% of the fully diluted BioScrip shares basis of 146,706,203 (representing the amount of fully diluted
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BioScrip shares outstanding as of such date without including the 2017 Warrants and the preferred stock). Such warrants would remain outstanding following the closing. No warrants would be issued for the 19,349,567 shares underlying the Series A Preferred Stock and Series C Preferred Stock due to the fact that they would be redeemed or repurchased, as applicable. In addition, the warrant holder would receive 1,855,747 shares issued in connection with the $6.0mm warrant amendment fee, payable in BioScrip common stock (based on Bloomberg 10-day volume weighted average price of  $3.23 as of Friday, March 8, 2019) and 77,197 additional warrants issued in connection with the 5.0% of liquidation preference payment in BioScrip common stock to the holders of the Series A and C Convertible Preferred Stock.
On March 10, 2019, the BioScrip Transaction Committee met telephonically, along with representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis, to discuss the status of negotiations of the definitive transaction documents.
Also on March 10, 2019, Gibson Dunn received a revised draft merger agreement from Kirkland & Ellis. The revised draft provided for a reverse termination fee payable by Option Care if the financing for the transaction was not available at closing. The proposed reverse termination fee was $25 million (approximately 4.7% of the then-current equity value of BioScrip based on the then current stock price). The revised draft also increased the termination fee payable by BioScrip in specified circumstances to $15 million (approximately 2.8% of the then-current equity value of BioScrip based on the then current stock price) and also reinserted the expense reimbursement provision in the event BioScrip stockholders vote down the transaction. In addition, the revised draft provided for a 20 business day marketing period and a closing condition that required BioScrip’s net debt not to be in excess of a to be determined threshold at the closing. The revised draft also included a closing condition for the receipt of certain healthcare regulatory approvals.
On March 11, 2019, representatives of Gibson Dunn and Moelis had a teleconference with representatives of the Ares Vehicles to discuss the warrant agreement amendment for the 2017 Warrants. During such teleconference, representatives of the Ares Vehicles expressed their belief that the amount of warrants that should be issued to the holders of the 2017 Warrants should be based on 4.99% of the fully diluted BioScrip shares immediately prior to closing, which included shares underlying the Series A Preferred Stock and Series C Preferred Stock.
Later that day on March 11, 2019, at the direction of the BioScrip Transaction Committee, representatives of Moelis and Jefferies delivered to the Ares Vehicles a proposal pursuant to which the holders of the 2017 Warrants would receive 7,320,640 warrants based on 4.99% of the fully diluted BioScrip shares of 146,706,203. Such warrants would remain outstanding following the closing. In addition, the warrant holders would receive 1,855,747 shares of BioScrip common stock and an additional 965,543 warrants issued as a warrant amendment fee. Later on March 11, 2019, BioScrip delivered documentation to each of the holders of the 2017 Warrants.
Between March 11, 2019 and March 14, 2019, BioScrip and Gibson Dunn and Kirkland & Ellis negotiated the warrant agreement amendment documentation with the holders of the 2017 Warrants, including the Ares Vehicles.
On March 11, 2019, Coliseum Capital’s legal counsel delivered a message to Gibson Dunn that Coliseum Capital would not continue discussions until BioScrip agreed, among other things, to indemnification and an expense reimbursement.
On March 11, 2019 the BioScrip Board, other than Mr. Shackelton, met telephonically, along with representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis, to discuss, among other things, the status of negotiations of the definitive transaction documents.
On March 12, 2019, the BioScrip Board met, along with representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis, to discuss outstanding legal issues in the merger agreement, the preferred stock documentation and the warrant documentation. Mr. Shackelton recused himself from the meeting until the completion of the discussion regarding the material terms of the preferred stock repurchase agreement and the amendment to the Series A Certificate of Designation. In addition, the BioScrip Board heard presentations from certain of BioScrip’s outside advisors as to the key findings in the due diligence workstreams.
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Later on March 12, 2019, representatives of Gibson Dunn distributed a revised draft preferred stock repurchase agreement to representatives of Kirkland & Ellis and Coliseum Capital’s legal counsel, which revised draft accepted the indemnification provision in favor of Coliseum Capital and provided that each party would bear their own expenses in connection with the transactions. Between March 12 and March 14 representatives of Gibson Dunn, Coliseum Capital and Kirkland & Ellis negotiated the final terms of the preferred stock repurchase agreement and the amendment to the Series A Certificate of Designation.
Also on March 12, 2019, representatives of Gibson Dunn, Moelis and Jefferies met telephonically with representatives of Option Care and Kirkland & Ellis to discuss outstanding issues in the merger agreement. Following such call, the parties continued to negotiate the final terms of the merger agreement until March 14, 2019, including circulating revised draft agreements and teleconferences to discuss outstanding issues, such as provisions regarding Option Care’s financing, termination fees, expense reimbursement and regulatory approvals required.
On March 13, 2019, in the morning, the BioScrip Board met telephonically, along with representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis, to discuss outstanding legal issues in the merger agreement, the preferred stock documentation and the warrant documentation. Mr. Shackelton recused himself from such meeting.
On the evening of March 13, 2019, the BioScrip Board held a telephonic meeting along with representatives of BioScrip management, Gibson Dunn, Jefferies and Moelis. Representatives of Gibson Dunn updated the BioScrip Board on the status of the negotiations with Option Care, the Ares Vehicles and Coliseum Capital. Representatives of Gibson Dunn noted that the negotiations with Coliseum Capital regarding the preferred stock documentation were substantially complete and the material terms had been agreed. Representatives of Moelis also provided the BioScrip Board with its updated preliminary financial analyses with respect to the proposed transaction. The BioScrip Board also discussed the anticipated timeline of, and the key considerations relating to, the announcement should the transaction ultimately be approved by the BioScrip Board. The BioScrip Board agreed to delay the BioScrip earnings call which had been scheduled for the morning of March 14.
On March 13, 2019, Moelis provided the BioScrip Board with updated disclosure on its relationships (if any) with the Ares Vehicles, Coliseum Capital and Walgreens Boots Alliance, Inc. (an affiliate of Option Care). The BioScrip Board reaffirmed, based upon the information provided by Moelis, that Moelis did not have any relationships that would be likely to impair its ability to provide independent advice to the BioScrip Board.
On March 14, 2019, the BioScrip Board held a telephonic meeting with members of BioScrip management and representatives of Gibson Dunn, Moelis and Jefferies in attendance. During the meeting, representatives of Gibson Dunn reviewed the fiduciary duties of the BioScrip Board in connection with reviewing a potential transaction with Option Care, updated the BioScrip Board regarding the outcome of the points in the transaction documents that had remained open at the prior board meeting, and reviewed with the BioScrip Board the resolutions that it would be adopting if it determined to enter into the potential transaction with Option Care. Representatives of Moelis also reviewed with the BioScrip Board its final financial analysis of the exchange ratio as defined in “The Mergers — Opinion of BioScrip’s Financial Advisor” beginning on page 69. Representatives of Moelis delivered to the BioScrip Board its oral opinion, confirmed by its delivery of a written opinion dated March 14, 2019, that, as of the date thereof, and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in Moelis’s written opinion, the exchange ratio was fair, from a financial point of view, to BioScrip. Following further discussion, the BioScrip Board thereafter unanimously (with Mr. Shackelton abstaining from any vote regarding the Series A COD Amendment and the Preferred Stock Repurchase Agreement) (i) determined that the Merger Agreement and the transactions contemplated thereby (including the BioScrip Share Issuance) was fair to and in the best interests of BioScrip and its stockholders, (ii) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby (including the BioScrip Share Issuance), (iii) directed that the BioScrip Share Issuance, the Amended BioScrip Charter and the BioScrip Series A COD Amendment be submitted to a vote at a meeting of BioScrip’s stockholders, and (iv) recommended the approval of the BioScrip Share Issuance, the Amended BioScrip Charter and the BioScrip Series A COD Amendment by BioScrip’s stockholders.
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Later that evening the Merger Agreement, the warrant amendment documentation and the Preferred Stock Repurchase Agreement were executed.
BioScrip’s Reasons for the Mergers; Recommendation of the BioScrip Board of Directors
The BioScrip Board recommends that the BioScrip stockholders vote “FOR” the BioScrip Share Issuance, the Amended BioScrip Charter and the BioScrip Series A COD Amendment.
The BioScrip Board, with the advice and assistance of its financial and legal advisors and BioScrip management, reviewed, evaluated and considered, and, at a meeting held on March 14, 2019, approved the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement (including the BioScrip Share Issuance), the Amended Charter and the BioScrip Series A COD Amendment.
In reaching its decision to approve the Merger Agreement, the Mergers and the transactions contemplated by the Merger Agreement and to recommend that BioScrip stockholders vote in favor of the BioScrip Share Issuance, the Amended Charter and the BioScrip Series A COD Amendment, the BioScrip Board consulted extensively with its financial and legal advisors. After such consultation, the BioScrip Board (i) determined that the Merger Agreement and the transactions contemplated thereby (including the BioScrip Share Issuance) are fair to and in the best interests of BioScrip and its stockholders, (ii) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby (including the BioScrip Share Issuance) and (iii) directed that the BioScrip Share Issuance, the Amended Charter and the BioScrip Series A COD Amendment be submitted to a vote at a meeting of BioScrip’s stockholders.
The BioScrip Board’s decision to approve the Merger Agreement, the Mergers and the other transactions contemplated thereby and to recommend that BioScrip stockholders vote in favor of the BioScrip Share Issuance, the Amended Charter and the BioScrip Series A COD Amendment was based on a number of factors, including the following (which are not necessarily presented in order of relative importance):

That the structure of the transaction would give BioScrip stockholders the opportunity to participate in any future earnings and growth of the combined company and future appreciation in the value of BioScrip’s common stock following the business combination should they decide to retain their BioScrip common stock.

That BioScrip security holders would own approximately 20.5% of the combined company on a fully diluted pro forma basis (based on the BioScrip share price as of signing, and taking into account the share issuance in respect of the Amended and Restated Warrant Agreement and the Warrant Letter Agreements, the Preferred Stock Repurchase Agreement, the Series A COD Amendment and the vesting of certain restricted stock units and performance restricted stock units as a result of the Mergers).

The BioScrip Board’s familiarity with, and understanding of, BioScrip’s business, assets, financial condition, results of operations, capital structure, current business strategy and prospects.

That BioScrip’s 2018 financial results were lower than prior expectations and that BioScrip was not generating cash in excess of the cost to service its outstanding debt.

The BioScrip Board’s expectation that the business combination with Option Care will create a leading independent provider with the national reach, comprehensive therapy offering and financial capacity to succeed in the attractive and growing home and alternate site infusion services segment of the estimated $100 billion U.S. infusion market.

The BioScrip Board’s expectation that the business combination with Option Care will create an enhanced and simplified capital structure with significant deleveraging and no near-term maturities and lower cost of capital for BioScrip that provides flexibility and access to capital on more attractive terms and which in turn would enhance the combined company’s ability to invest in growth initiatives, invest in quality management, and deleverage.
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The BioScrip Board’s belief that BioScrip had unnaturally high leverage, with refinancing required in the short term, and that continued improvements in financial performance would not likely be sufficient to refinance into a sustainable capital structure in the near term.

The liquidity challenges associated with BioScrip’s near term impending debt maturities and the BioScrip Board’s expectation that refinancing on a stand-alone basis would likely require an equity issuance which could be significantly dilutive to existing BioScrip stockholders.

The BioScrip Board’s belief that a combination with Option Care would enhance liquidity for BioScrip stockholders as a result of holding stock in the combined company with a larger market capitalization, a larger ownership base, and expanded analyst coverage.

The BioScrip Board’s expectation that the business combination would be immediately accretive to BioScrip’s earnings per share.

The BioScrip Board’s belief that the terms of the merger agreement would not preclude or deter a willing and financially capable third party, were one to exist, from making a superior proposal following the announcement of the merger agreement.

The BioScrip Board’s expectation that BioScrip stockholders will benefit from synergies and growth from the transaction, considering factors including Option Care’s business, assets, financial condition, results of operations, business plan and prospects, the size and scale of the combined company and the expected pro forma effect of the business combination on the combined company.

The BioScrip Board’s expectation that the business combination would result in estimated total gross synergies ranging from $77 million to $94 million (before implementation costs estimated to be approximately $18 million in 2019 and $18 million in 2020).

The expectation communicated by Option Care that the business combination would result in estimated total net synergies of approximately $68 million per year, based on gross synergies of approximately $75 million per year and negative synergies related to, among other items, harmonizing compensation, employer 401(k) match expense, and IT resources and investments (before (i) additional negative synergies of approximately $11 million related to harmonizing accounting policies and (ii) implementation costs estimated to be approximately $57 million over two years).

The BioScrip Board’s expectation that, following the business combination, the combined company will be well-positioned to capitalize on organic growth opportunities and to pursue additional acquisitions.

The fact that, following the completion of the mergers, two members of the current BioScrip Board will remain on the board of combined company.

The financial presentation and oral opinion of Moelis rendered on March 14, 2019, which was subsequently confirmed by delivery of a written opinion of Moelis, dated of even date therewith, to the BioScrip Board to the effect that, as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in those opinions, the exchange ratio was fair, from a financial point of view, to BioScrip. See the section entitled “The Mergers — Opinion of Moelis, BioScrip’s Financial Advisor” beginning on page 69. The full text of the written opinion of Moelis is attached as Annex J to this Proxy Statement.

The BioScrip Board’s consideration of both the standalone BioScrip business plan and potential alternative transactions and its view, following consultation with its legal and financial advisors, that it was not probable that the standalone BioScrip business plan or any alternative transaction reasonably available to BioScrip within a reasonable timeframe would generate value to the BioScrip stockholders in excess of the value from the Mergers;

The fact that BioScrip initiated a potential buyer outreach and its financial advisor solicited bids from a group of thirteen potential strategic acquirors, of which five entered into confidentiality
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agreements with BioScrip and received an evaluation package containing financial information regarding BioScrip’s business, management presentations and access to a virtual data room, and none of the thirteen potential acquirors submitted indications of interest.

The review by the BioScrip Board with its legal and financial advisors, as applicable, of the structure of the business combination and the financial and other terms of the Merger Agreement, including the parties’ representations, warranties and covenants, the conditions to their respective obligations and the termination provisions, as well as the likelihood of consummation of the business combination and the BioScrip Board’s evaluation of the likely time period necessary to close the business combination. The BioScrip Board also considered the following specific aspects of the Merger Agreement.

The BioScrip Board’s belief that the terms of the Merger Agreement, including BioScrip’s representations, warranties and covenants and the conditions to each party’s obligations, are reasonable and consistent with applicable market practice.

The nature of the closing conditions included in the Merger Agreement, including the market, industry-related and other exceptions to the events that would constitute a material adverse effect on either BioScrip or Option Care for purposes of the Merger Agreement, as well as the likelihood of satisfaction of all conditions to the consummation of the business combination.

That the Merger Agreement provides that, under certain circumstances, and subject to certain conditions, BioScrip is permitted to furnish information to and conduct negotiations with a third party in connection with an unsolicited proposal for a business combination or acquisition of BioScrip that could reasonably be expected to result in a Superior Proposal.

That the BioScrip Board, subject to certain conditions, has the right to change its recommendation to BioScrip stockholders that they adopt the Merger Agreement.

BioScrip’s ability to terminate the Merger Agreement in order to accept a Superior Proposal, subject to Option Care’s ability to match such superior proposal and subject to paying a termination fee of  $15 million.

The BioScrip Board’s belief that the $15 million termination fee payable by BioScrip under certain circumstances is consistent with market practice and would not preclude or deter a willing and financially capable third party, were one to exist, from making a Superior Proposal following the announcement of the transaction with Option Care.

That, in certain instances, if the Merger Agreement is terminated, Option Care would be required to pay BioScrip a termination fee of  $30 million.
In the course of its deliberations, the BioScrip Board also considered a variety of risks, uncertainties and other potentially countervailing factors, including the following (which are not necessarily presented in order of relative importance):

The dilution of the voting interests of BioScrip stockholders as a result of the issuance of the Merger Consideration and escrowed shares to Omega Parent and the issuances of BioScrip common stock in connection with the Preferred Stock Repurchase Agreement, the Series A COD Amendment, the Amended and Restated Warrant Agreement and the Warrant Letter Agreements and the vesting of certain restricted stock units and performance restricted stock units as a result of the Mergers.

The risks and costs to BioScrip if the business combination is delayed or does not occur at all, including the potential negative impact on BioScrip’s ability to retain key employees, the diversion of BioScrip management and employee attention and the potential disruptive effectives on BioScrip’s day-to-day operations and BioScrip’s relationships with third parties, including its customers and suppliers.

The transaction costs to be incurred in connection with the business combination.

That the merger agreement contains restrictions on the conduct of BioScrip’s business prior to the
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completion of the business combination, including the requirement that BioScrip conduct its business only in the ordinary course, subject to specific exceptions, which could delay or prevent BioScrip from undertaking business opportunities that may arise pending the completion of the business combination.

That the merger agreement imposes limitations on BioScrip’s ability to solicit alternative transactions prior to closing and its ability to terminate the merger agreement, including a requirement that BioScrip pay a $15 million termination fee in the circumstances described in “The Merger Agreement — Termination — Termination Fees Payable by BioScrip” beginning on page 113.

That upon consummation of the mergers, the size of the BioScrip Board will be comprised of eight directors selected by Option Care and two directors selected by BioScrip.

The possibility that BioScrip will not realize all of the anticipated strategic and other benefits of the business combination, including as a result of the challenges of combining the businesses, operations and workforces of BioScrip and Option Care, and the risk that expected synergies may not be realized or will cost more to achieve than anticipated.

Various other risks described in the section entitled “Risk Factors” beginning on page 21.
The BioScrip Board considered all of these factors as a whole and concluded that these factors supported a determination that the merger agreement and the transactions contemplated thereby (including the BioScrip Share Issuance, the Amended Charter, and the Series A COD Amendment) were advisable and in the best interests of BioScrip and its stockholders. The foregoing discussion of the information and factors considered by the BioScrip Board is not exhaustive. In view of the wide variety of factors considered by the BioScrip Board in connection with its evaluation of the business combination and the complexity of these matters, the BioScrip Board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. In considering the factors described above and any other factors, individual members of the BioScrip Board may have viewed factors differently or given different weight or merit to different factors.
In considering the recommendation of the BioScrip Board that the BioScrip stockholders vote to approve the BioScrip Share Issuance, the Amended Charter and the BioScrip Series A COD Amendment, BioScrip stockholders should be aware that the directors and executive officers of BioScrip may have certain interests in the business combination that may be different from, or in addition to, the interests of BioScrip stockholders generally. The BioScrip Board was aware of these interests and considered them when approving the merger agreement and recommending that BioScrip stockholders vote to approve and adopt the merger agreement and the transactions contemplated thereby. See the section entitled “The Merger — Interests of Certain BioScrip Directors and Executive Officers in the Mergers” beginning on page 85.
The foregoing discussion of the information and factors considered by the BioScrip Board is forward-looking in nature. This information should be read in light of the factors described in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 15.
Opinion of Moelis, BioScrip’s Financial Advisor
At the meeting of the BioScrip Board on March 14, 2019 to evaluate and approve the Merger Agreement and the Mergers, Moelis delivered an oral opinion, which was confirmed by delivery of a written opinion, dated March 14, 2019, addressed to the BioScrip Board to the effect that, as of the date of the opinion and based upon and subject to the assumptions made, procedures followed, matters considered and other limitations set forth in the opinion, the exchange ratio whereby, immediately following the consummation of the First Merger, Omega Parent will own 79.5% of the outstanding shares of BioScrip common stock on a fully-diluted basis utilizing the treasury stock method, and the holders of Post-Transaction BioScrip Fully-Diluted Shares (as defined below) will own 20.5% of the outstanding shares of BioScrip common stock on a fully diluted basis utilizing the treasury stock method (the “exchange ratio”), was fair, from a financial point of view, to BioScrip.
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In this section:

“Post-Transaction BioScrip Fully-Diluted Shares” means the 139,828,454 shares of BioScrip common stock (calculated on a fully-diluted basis utilizing the treasury stock method) to be held by holders of the Pre-Transaction BioScrip Fully-Diluted Shares (as defined below) and the holders of the Transaction Adjustment Shares (as defined below) as a result of the Mergers;

“Pre-Transaction BioScrip Fully-Diluted Shares” means 134,651,225 shares of BioScrip common stock (calculated on a fully-diluted basis utilizing the treasury stock method) consisting of: (i) shares of BioScrip common stock outstanding, (ii) BioScrip restricted stock units and performance restricted stock units, (iii) shares of BioScrip common stock issuable pursuant to BioScrip options and (iv) shares of BioScrip common stock issuable pursuant to the BioScrip 2017 warrants;

“Transaction Adjustment Shares” means the 5,177,230 shares of BioScrip common stock (calculated on a fully-diluted basis utilizing the treasury stock method) resulting from the Related Transactions and Related Adjustments (each as defined below);

“Related Transactions” means the certain amendments or agreements between BioScrip and certain of BioScrip’s preferred stockholders and warrantholders in connection with the Mergers providing for, among other things, the establishment of the number of shares of BioScrip common stock issuable upon exercise of the BioScrip 2017 warrants and the issuance of additional securities to such preferred stockholders and warrantholders in connection with the Mergers; and

“Related Adjustments” means (i) the downward adjustment to the number of shares of BioScrip common stock issuable upon exercise of certain warrants as a result of the repurchase of certain preferred shares of BioScrip pursuant to certain of the Related Transactions and (ii) the vesting of certain restricted stock units and performance restricted stock units as a result of the Mergers.
The full text of Moelis’ written opinion dated March 14, 2019, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex J to this Proxy Statement and is incorporated herein by reference. Moelis’ opinion was provided for the use and benefit of the BioScrip Board (solely in its capacity as such) in its evaluation of the Mergers. Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the exchange ratio to BioScrip, and does not address BioScrip’s underlying business decision to effect the Mergers or the relative merits of the Mergers as compared to any alternative business strategies or transactions that might be available to BioScrip. Moelis’ opinion also does not address or express any view or opinion as to the net impact of the issuance of the Transaction Adjustment Shares and any resulting reduction to the net ownership percentage of the outstanding shares of BioScrip common stock (on a fully-diluted basis utilizing the treasury stock method) to be held by the holders of Pre-Transaction BioScrip Fully-Diluted Shares, in connection with the Mergers, the Related Transactions and the Related Adjustments. Moelis’ opinion does not constitute a recommendation as to how any holder of securities should vote or act with respect to the Mergers or any other matter.
In arriving at its opinion, Moelis, among other things:

reviewed certain publicly available business and financial information relating to BioScrip;

reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of BioScrip and Option Care furnished to Moelis by BioScrip, including financial forecasts for BioScrip and Option Care provided to or discussed with Moelis by the management of BioScrip (described on page 83 of this document under the captions “Summary of the BioScrip Projections” and “Summary of the BioScrip-Prepared Option Care Projections” and referred to collectively in this section as the “BioScrip Provided Projections”);

reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of Option Care furnished to Moelis by Option Care, including financial forecasts provided to or discussed with Moelis by the management of Option Care (described on page 84 of this document under the caption “Option Care-Prepared Option Care Projections”);
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reviewed (i) certain internal information relating to cost savings, synergies and related expenses expected to result from the Mergers prepared by third party consultants for BioScrip and provided to Moelis by the management of BioScrip (described on page 85 of this document under the caption “Synergies — BioScrip/Option Care” and referred to in this section as the “BioScrip Provided Expected Synergies”), (ii) certain internal information relating to cost savings, synergies and related expenses expected to result from the Mergers prepared by third party consultants for Option Care and provided to Moelis by the management of Option Care (referred to in this section as the “Option Care Provided Expected Synergies”) and (iii) certain other pro forma financial effects of the Mergers furnished to Moelis by BioScrip and Option Care;

reviewed certain estimates of management of BioScrip regarding BioScrip’s and Option Care’s anticipated utilization of their respective net operating losses (“NOLs”) and realization of their respective other tax assets, including the amount and timing thereof  (referred to in this section as the “BioScrip Tax Attribute Estimates”);

reviewed share count information for BioScrip, including the amount of the Pre-Transaction BioScrip Fully-Diluted Shares, the amount of the Post-Transaction BioScrip Fully-Diluted Shares and the amount of the Transaction Adjustment Shares provided to Moelis by the management of BioScrip;

conducted discussions with members of the senior management and representatives of BioScrip and Option Care concerning the information described above, as well as the businesses and prospects of Option Care and BioScrip generally;

reviewed publicly available financial and stock market data of certain other companies in lines of business that Moelis deemed relevant;

reviewed the financial terms of certain other transactions that Moelis deemed relevant;

reviewed drafts, dated March 14, 2019, of the Merger Agreement and the agreements relating to the Related Transactions and the Related Adjustments (collectively referred to in this section as the “Agreements”);

participated in certain discussions and negotiations among representatives of BioScrip and Option Care and their advisors; and

conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate.
In connection with its review, with the consent of the BioScrip Board, Moelis relied on the information supplied to, discussed with or reviewed by it for purposes of its opinion being complete and accurate in all material respects. Moelis did not assume any responsibility for independent verification of  (and did not independently verify) any of such information. With the consent of the BioScrip Board, Moelis relied upon, without independent verification, the assessment of BioScrip and its legal, tax, regulatory and accounting advisors with respect to legal, tax, regulatory and accounting matters. With respect to the BioScrip Provided Projections and the other information relating to Option Care, BioScrip, the BioScrip Provided Expected Synergies and the other pro forma financial effects referred to above, Moelis assumed, at the direction of the BioScrip Board, that they have been reasonably prepared on a basis reflecting the best then available estimates and judgments of the management of BioScrip as to the future performance of Option Care and BioScrip, the BioScrip Provided Expected Synergies (including the amount, timing and achievability thereof) and such other pro forma financial effects. With respect to the BioScrip Tax Attribute Estimates, Moelis assumed, with the consent of the BioScrip Board, that they were reasonably prepared on a basis reflecting the best then available estimates and judgments of the management of BioScrip as to BioScrip’s and Option Care’s respective NOLs and the anticipated utilization thereof  (including the amount and timing thereof). Moelis also assumed, at the direction of the BioScrip Board, that the future financial results (including the BioScrip Provided Expected Synergies and the BioScrip Tax Attribute Estimates) reflected in such forecasts and other information would be achieved at the times and in the amounts projected. With the consent of the BioScrip Board, for purposes of Moelis’ analysis and opinion, Moelis did not include the escrowed shares into the Post-Transaction BioScrip Fully-Diluted Shares at the closing
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of the Mergers. With the consent of the BioScrip Board, for purposes of Moelis’ analysis and opinion, Moelis relied on BioScrip’s share count information reflected in the Post-Transaction BioScrip Fully-Diluted Shares, the Pre-Transaction BioScrip Fully-Diluted Shares and the Transaction Adjustment Shares. Moelis did not express any views as to the reasonableness of any financial forecasts or other information referred to above or the assumptions on which they were based. In addition, with the consent of the BioScrip Board, Moelis did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet, or otherwise) of Option Care or BioScrip, nor was it furnished with any such evaluation or appraisal.
Moelis’ opinion did not address BioScrip’s underlying business decision to effect the Mergers or the relative merits of the Mergers as compared to any alternative business strategies or transactions that might be available to BioScrip and did not address any legal, regulatory, tax or accounting matters. At the direction of the BioScrip Board, Moelis was not asked to, and Moelis did not, offer any opinion as to any terms of the Agreements or any aspect or implication of the Mergers or the Related Transactions, except for the fairness of the exchange ratio from a financial point of view to BioScrip. Without limiting the foregoing, Moelis did not offer any opinion as to, nor did its analysis take into account, any governance, control or other rights that would be obtained by Omega Parent in connection with or as a result of the Mergers. With the consent of the BioScrip Board, Moelis did not express any opinion or view as to (i) the allocation of the ownership of any amount of the pro forma combined company among any holders of BioScrip’s securities, including, without limitation, the holders of shares to be issued in connection with the Related Transactions or Related Adjustments, or (ii) the amount of securities to be issued by BioScrip in connection with the Related Transactions or Related Adjustments. Moelis did not express any views or opinion to holders of BioScrip’s preferred stock or warrants as to any amounts received in connection with the Related Transactions or Related Adjustments. With the consent of the BioScrip Board, Moelis did not express any opinion as to what the value of BioScrip common stock actually will be when issued pursuant to the First Merger or the prices at which BioScrip common stock (or any other security of any party to the Mergers) may trade at any time. In rendering its opinion, Moelis assumed, with the consent of the BioScrip Board, that the final executed forms of the Agreements would not differ in any material respect from the drafts that it reviewed, that the Mergers and the Related Transactions would be consummated in accordance with their terms without any waiver or modification that could be material to its analysis, and that the parties to the Agreements would comply with all the material terms of the Agreements. Moelis assumed, with the consent of the BioScrip Board, that all governmental, regulatory or other consents and approvals necessary for the completion of the Mergers would be obtained except to the extent that could not be material to its analysis. In addition, representatives of BioScrip have advised Moelis, and Moelis assumed, with the consent of the BioScrip Board, that the Mergers would qualify as a tax free reorganization for federal income tax purposes.
Moelis’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Moelis as of, the date thereof, and Moelis assumed no responsibility to update its opinion for developments after such date.
Moelis’ opinion did not address the fairness of the Mergers or any aspect or implication thereof to, or any other consideration of or relating to, the holders of any class of securities, creditors or other constituencies of BioScrip or Option Care. In addition, Moelis did not express any opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any parties to the Mergers, or any class of such persons, whether relative to the exchange ratio or otherwise. Moelis’ opinion was approved by a Moelis & Company LLC fairness opinion committee.
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Summary of Financial Analyses
The following is a summary of the material financial analyses presented by Moelis to the BioScrip Board at its meeting held on March 14, 2019, in connection with its opinion. This summary describes the material analysis underlying Moelis’ opinion but does not purport to be a complete description of the analyses performed by Moelis in connection with its opinion.
Some of the summaries of financial analyses below include information presented in tabular format. In order to fully understand Moelis’ analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Moelis’ analyses.
In connection with its financial analysis:

Moelis noted that it utilized the BioScrip Provided Expected Synergies and did not use the synergies that were prepared and provided by Option Care, at the direction of the BioScrip Board; and

Moelis noted BioScrip’s net leverage of 13.3x and Moelis conservatively assumed no potential impact from operational liquidity needs, a debt refinancing or upcoming debt maturities of BioScrip, including any potential dilution to BioScrip common equity shareholders in connection with any of these events.
Selected Publicly Traded Companies Analysis
Moelis performed a selected publicly traded companies analysis of each of BioScrip and Option Care. In connection with such analysis, Moelis reviewed and analyzed certain financial information and market trading data related to selected publicly traded healthcare services companies whose operations Moelis believed, based on its experience and professional judgment, were generally relevant in certain respects to BioScrip. Although none of the selected companies were directly comparable to BioScrip, Moelis selected these companies because, based on its experience and professional judgment, it believed that they had one or more similar operating and financial characteristics. The following table includes the companies reviewed by Moelis (the “peer group”):
Multi-Site Based Services
Home Health/Hospice Providers
Fresenius Medical Care AG & Co. KGaA Encompass Health Corporation
DaVita Inc. Chemed Corporation
Surgery Partners, Inc. Amedisys, Inc.
Diplomat Pharmacy, Inc. LHC Group, Inc.
American Renal Associates Holdings, Inc. Addus HomeCare Corporation
Moelis reviewed, among other things, Total Enterprise Values of the selected publicly traded companies as a multiple of reported EBITDA for the calendar year 2018 (“2018 EBITDA”), estimated EBITDA for the calendar year 2019 (“2019E EBITDA”) and estimated EBITDA for the calendar year 2020 (“2020E EBITDA”). In the case of American Renal Associates Holdings, Inc. (“American Renal”) and Diplomat Pharmacy, Inc. (“Diplomat”), 2018 EBITDA represented estimated 2018 EBITDA as these companies had not yet reported calendar year 2018 results.
“Total Enterprise Value” (or “TEV”) was generally calculated as the market value of the relevant company’s fully diluted common equity based on its closing stock price as of March 13, 2019 (“equity value”) (i) plus preferred stock, if any, (ii) plus debt, (iii) less cash and cash equivalents and (iv) plus book value of non-controlling interests (in each of the foregoing cases (i) through (iv), as of the relevant company’s most recently reported quarter end).
“EBITDA” was generally calculated as the relevant company’s earnings before interest, taxes, depreciation and amortization, as adjusted to exclude one-time charges and benefits and to reflect full-year impact of material M&A transactions.
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In the case of American Renal and Surgery Partners, Inc. (“Surgery Partners”), TEV excluded the book value of non-controlling interests in order to be consistent with equity research estimates for EBITDA which exclude earnings attributable to non-controlling interests.
Financial data for the selected publicly traded companies were based on public filings and other publicly available information. When utilizing estimated EBITDA for 2018 (in the case of companies that did not yet report calendar year 2018 results), 2019 and 2020 for the selected publicly traded companies, Moelis used Thomson consensus estimates.
The following table summarizes the results of the analysis of the selected companies that provide Multi-Site Based Services (“Multi-Site Based Services peer group”) and consensus research estimates and BioScrip management estimates for BioScrip:
Multi-Site Based Services
TEV
($ in
million)
TEV/​
2018
EBITDA
TEV/​
2019E
EBITDA
TEV/​
2020E
EBITDA
Net
Leverage
Fresenius Medical Care AG & Co. KGaA
$ 31,712 8.8x 8.6x 8.0x 1.7x
DaVita Inc.
$ 14,650 6.8x 6.7x 6.5x 2.5x
Surgery Partners, Inc.
$ 3,264 13.9x 12.0x 10.5x 7.6x
Diplomat Pharmacy, Inc.
$ 1,108 6.6x 7.6x 7.0x 3.9x
American Renal Associates Holdings, Inc.
$ 828 7.8x 7.6x 7.0x 2.8x
Mean:
8.8x 8.5x 7.8x 3.7x
Median:
7.8x 7.6x 7.0x 2.8x
BioScrip – Consensus Estimates
$ 1,087 19.4x 14.2x 12.1x 13.3x
BioScrip – BioScrip Management Estimates
$ 1,087 24.1x 16.4x 14.2x 13.3x
The following table summarizes the results of Moelis’ analysis of the selected companies that are Home Health/Hospice Providers (“Home Health/Hospice Providers peer group”) and consensus research estimates and BioScrip management estimates for BioScrip:
Home Health/Hospice Providers
TEV
($ in
million)
TEV/​
2018
EBITDA
TEV/​
2019E
EBITDA
TEV/​
2020E
EBITDA
Net
Leverage
Encompass Health Corporation
$ 8,700 9.5x 9.3x 9.0x 2.7x
Chemed Corporation
$ 5,510 18.2x 16.9x 16.1x 0.3x
Amedisys, Inc.
$ 4,064 20.9x 19.6x 17.7x NM
LHC Group, Inc.
$ 3,782 23.2x 17.2x 16.1x 1.2x
Addus HomeCare Corporation
$ 794 17.7x 15.7x 13.6x NM
Mean:
17.9x 15.7x 14.5x 1.4x
Median:
18.2x 16.9x 16.1x 1.2x
BioScrip – Consensus Estimates
$ 1,087 19.4x 14.2x 12.1x 13.3x
BioScrip – BioScrip Management Estimates
$ 1,087 24.1x 16.4x 14.2x 13.3x
In reviewing the characteristics of the selected publicly traded companies, Moelis noted that, from the Multi-Site Based Services peer group, American Renal and Surgery Partners were most similar in size to BioScrip, and Surgery Partners was most similar in leverage to BioScrip. Moelis further noted that Fresenius Medical Care AG & Co. KGaA (“Fresenius”), DaVita Inc. (“DaVita”) and Diplomat offered home-based services and treatments for patients with chronic conditions. Of the Multi-Site Based Services peer group, Moelis considered Diplomat most applicable in terms of business focus and Surgery Partners most applicable in terms of leverage. Moelis also noted that Diplomat’s multiples were compressed relative to normalized historical levels, given that, on February 22, 2019, Diplomat announced that it would be postponing its earnings release after determining it would need to book an impairment charge related to its pharmacy benefit management business. This announcement resulted in a 52% decline in Diplomat’s share price from February 22, 2019 to March 13, 2019, while consensus research estimates for 2018, 2019 and
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2020 had not been adjusted to reflect this situation. Moelis considered Fresenius and DaVita to be least applicable given their significantly larger scale. Moelis also noted that while the companies in the Home Health/Hospice Providers peer group offered services to patients in a similar care setting as BioScrip, they offered different treatments which required neither the procurement of specialty pharmaceuticals nor the employment of registered pharmacists and therefore typically had higher EBITDA margins than BioScrip.
In addition, Moelis considered companies which own and operate leading providers of in-home infusion services or home health services, such as CVS Health Corporation, Humana Inc., UnitedHealth Group Inc. and Walgreens Boots Alliance, Inc. However, Moelis noted that the segments that competed directly with BioScrip comprised very small portions of these companies and that these companies did not trade based on the performance of these specific segments. Therefore, Moelis considered these companies as less relevant to BioScrip from a valuation perspective.
In light of the foregoing review and based on its professional judgment and experience, Moelis applied ranges of selected multiples derived from the selected publicly traded companies of  (i) 12.0x – 18.0x to 2018 Adjusted EBITDA for each of BioScrip and Option Care, (ii) 12.0x – 18.0x to 2018 Pro Forma Adjusted EBITDA for each of BioScrip and Option Care, (iii) 11.0x – 16.0x to 2019E Adjusted EBITDA for each of BioScrip and Option Care and (iv) 9.5x – 14.5x to 2020E Adjusted EBITDA for each of BioScrip and Option Care. Moelis utilized the same multiple range for both BioScrip and Option Care given both companies primarily operated in the home infusion services industry. The financial data for BioScrip and Option Care was based on the BioScrip Provided Projections and other information and data provided by BioScrip’s management. “Pro Forma Adjusted EBITDA” for each of BioScrip and Option Care are described under the captions “Summary of the BioScrip Projections” and “Summary of the BioScrip-Prepared Option Care Projections” beginning on page 83 of this document.
Based on the selected multiple ranges described above, Moelis calculated TEV and equity value ranges for each of BioScrip and Option Care. The TEV and equity value ranges were calculated without taking into account any potential value from NOLs. The implied TEV ranges for each of BioScrip and Option Care are presented below:
($ in million)
Implied TEV Range of
BioScrip
Implied TEV Range of
Option Care
TEV/2018 Adj. EBITDA (12.0x – 18.0x)
$ 542 – $812 $ 1,141 – $1,711
TEV/2018 Pro Forma Adjusted EBITDA (12.0x – 18.0x)
$ 715 – $1,072 $ 1,292 – $1,938
TEV/2019E Adj. EBITDA (11.0x – 16.0x)
$ 731 – $1,063 $ 1,318 – $1,916
TEV/2020E Adj. EBITDA (9.5x – 14.5x)
$ 727 – $1,109 $ 1,322 – $2,018
The implied equity value ranges for each of BioScrip and Option Care are presented below:
($ in million)
Implied Equity Value
Range of BioScrip
Implied Equity Value
Range of Option Care
TEV/2018 Adj. EBITDA (12.0x – 18.0x)
$ 0 – $210 $ 627 – $1,197
TEV/2018 Pro Forma Adjusted EBITDA (12.0x – 18.0x)
$ 112 – $470 $ 778 – $1,424
TEV/2019E Adj. EBITDA (11.0x – 16.0x)
$ 129 – $461 $ 804 – $1,402
TEV/2020E Adj. EBITDA (9.5x – 14.5x)
$ 124 – $507 $ 808 – $1,504
Based on the implied equity value ranges presented above, Moelis calculated implied ranges of pro forma ownership percentages in BioScrip after giving effect to the Mergers, which are presented below:
Implied Pro Forma
BioScrip Equity
Ownership Excluding
Synergies(1)
Implied Pro Forma Option
Care Equity Ownership
Excluding Synergies
TEV/2018 Adj. EBITDA (12.0x – 18.0x)
0.0% – 25.1%
74.9% – 100.0%
TEV/2018 Pro Forma Adjusted EBITDA (12.0x – 18.0x)
7.3% – 37.6%
62.4% – 92.7%
TEV/2019E Adj. EBITDA (11.0x – 16.0x)
8.4% – 36.5%
63.5% – 91.6%
TEV/2020E Adj. EBITDA (9.5x – 14.5x)
7.6% – 38.5%
61.5% – 92.4%
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(1)
The low end of the range of Implied Pro Forma BioScrip Equity Ownership Excluding Synergies represents the low end of the equity value range of BioScrip versus the high end of the equity value range of Option Care; and the high end of the range of Implied Pro Forma BioScrip Equity Ownership Excluding Synergies represents the high end of the equity value range of BioScrip versus the low end of the equity value range of Option Care.
Moelis compared the ranges of the “Implied Pro Forma BioScrip Equity Ownership Excluding Synergies” to the implied pro forma ownership in BioScrip of 20.5% for the holders of Post-Transaction BioScrip Fully-Diluted Shares based on the exchange ratio. Moelis also noted that the implied pro forma ownership in BioScrip for the holders of Pre-Transaction BioScrip Fully-Diluted Shares would be 19.69%.
Discounted Cash Flow Analysis
Moelis performed discounted cash flow (“DCF”) analyses of both BioScrip and Option Care to calculate the present value of the estimated future unlevered free cash flows projected by BioScrip’s management to be generated by BioScrip and Option Care and an estimate of the present value of the terminal value of each of BioScrip and Option Care.
BioScrip
For BioScrip, Moelis utilized a range of discount rates (based on an estimated range of BioScrip’s weighted average cost of capital, referred to as “WACC”) of 9.5% to 12.5% to calculate estimated present values as of December 31, 2018 of  (i) estimated after-tax unlevered free cash flows for the fiscal years ending December 31, 2019 through December 31, 2023 and (ii) estimated terminal values derived by applying a range of multiples of 10.0x to 13.0x to a terminal year Adjusted EBITDA.
The WACC range for BioScrip was calculated utilizing (i) a range of debt-to-total capitalization ratios reflective of BioScrip’s high leverage and significantly lower credit rating relative to the peer group and (ii) a cost of equity derived using the Capital Asset Pricing Model (“CAPM”) at a range of unlevered betas informed by selected publicly traded companies and a size premium based on publicly traded companies with equity values comparable to BioScrip. The terminal multiple range for BioScrip used by Moelis for purposes of the DCF analysis was informed by current trading multiples of the peer group, as well as historical trading multiples for the peer group over the most recent five year period.
Moelis’ DCF analysis valued BioScrip’s NOLs assuming a federal NOL balance as of December 31, 2018 of approximately $430 million and a state NOL balance as of December 31, 2018 of approximately $480 million, in each case per BioScrip’s management, and utilizing (i) BioScrip Provided Projections for the fiscal years 2019 through 2023, (ii) an estimated earnings growth (with a growth rate range of 4.6% – 6.6% based on the implied perpetuity growth rate range from the DCF analysis) for the fiscal years 2024 through 2038 as approved by BioScrip’s management, (iii) a federal tax rate of 21% and blended state tax rate of 4% per BioScrip’s management and (iv) a discount rate range based on the cost of equity for BioScrip using CAPM.
Based on this analysis, the implied TEV range and the implied equity value range for BioScrip are presented below:
($ in million)
Implied TEV Range
Implied Equity
Value Range
BioScrip
$ 808 – $1,141 $ 205 – $539
Moelis noted that it believed BioScrip’s standalone discount rate could be materially higher than the range utilized by Moelis considering the likely increased cost of debt to refinance BioScrip’s debt and in light of a preliminary illustrative refinancing proposal received by BioScrip. A higher discount rate range for BioScrip would have yielded lower implied TEV and equity value for BioScrip, making the exchange ratio more attractive to BioScrip. Moelis explained that it did not use the credit spread over the risk-free rate for the peer group to calculate BioScrip’s cost of debt for purposes of the DCF analysis given BioScrip’s high leverage and significantly lower credit rating relative to the peer group. Moelis also noted that while it used the CAPM to derive BioScrip’s cost of equity for purposes of the DCF analysis,
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BioScrip’s cost of equity that would prevail in a public market offering would likely be much higher given BioScrip’s current leverage profile. In addition, Moelis noted that if it had used the peer group to determine the appropriate debt-to-total capitalization ratio range for BioScrip, the cost of equity and WACC for BioScrip would be lower.
Moelis also noted that due to BioScrip’s current capital structure and interest payments (which could increase in the case of a future debt refinancing), BioScrip’s management does not expect BioScrip to be a taxpayer and therefore benefit from the NOLs in the near-term.
Option Care
For Option Care, Moelis utilized a range of discount rates (based on an estimated WACC range) of 7.0% to 10.0% to calculate estimated present values as of December 31, 2018 of  (i) estimated after-tax unlevered free cash flows for fiscal years ending December 31, 2019 through December 31, 2023 and (ii) estimated terminal values derived by applying a range of multiples of 10.0x to 13.0x to a terminal year Adjusted EBITDA.
The WACC range for Option Care was calculated utilizing (i) a range of debt-to-total capitalization ratios based on the current capitalization and ratios of the companies comprising the peer group and (ii) a cost of equity derived using CAPM at a range of unlevered betas informed by selected publicly traded companies and a size premium based on publicly traded companies with equity values comparable to Option Care. The terminal multiple range for Option Care used by Moelis for purposes of the DCF analysis was informed by current trading multiples of the peer group, as well as historical trading multiples for the peer group over the most recent five year period.
Moelis’ DCF analysis valued Option Care’s NOLs assuming (i) an NOL balance of approximately $30 million as of December 31, 2018 per Option Care’s management, (ii) a blended federal and state tax rate of 25% per BioScrip’s management and (iii) a discount rate range based on the cost of equity for Option Care using CAPM.
Based on this analysis, the implied TEV range and the implied equity value range for Option Care are presented below:
($ in million)
Implied TEV Range
Implied Equity
Value Range
Option Care
$ 1,567 – $2,189 $ 1,053 – $1,675
DCF-Based Ownership Percentages Analysis
Based on the implied equity value ranges presented in the DCF analysis above, Moelis calculated implied ranges of pro forma ownership percentages in BioScrip after giving effect to the Mergers, which are presented below:
Implied Pro Forma
BioScrip Equity
Ownership Excluding
Synergies(1)
Implied Pro Forma Option
Care Equity Ownership
Excluding Synergies
DCF-Based Ownership Percentages
10.9% – 33.8%
66.2% – 89.1%
(1)
The low end of the range of Implied Pro Forma BioScrip Equity Ownership Excluding Synergies represents the low end of the equity value range of BioScrip versus the high end of the equity value range of Option Care; and the high end of the range of Implied Pro Forma BioScrip Equity Ownership Excluding Synergies represents the high end of the equity value range of BioScrip versus the low end of the equity value range of Option Care.
Moelis compared the ranges of the “Implied Pro Forma BioScrip Equity Ownership Excluding Synergies” to the implied pro forma ownership in BioScrip of 20.5% for the holders of Post-Transaction BioScrip Fully-Diluted Shares based on the exchange ratio. Moelis also noted that the implied pro forma ownership in BioScrip for the holders of Pre-Transaction BioScrip Fully-Diluted Shares would be 19.69%.
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Other Information
Moelis also noted for the BioScrip Board certain additional factors that were not considered part of Moelis’ financial analysis with respect to its opinion but were referenced for informational purposes, including, among other things:
DCF-Based Has/Gets Analysis (BioScrip Provided Expected Synergies)
Moelis performed a DCF-based has/gets analysis to calculate the value accretion/dilution implied by the Mergers. The DCF-based has/gets analysis illustrated a comparison of the standalone DCF equity value of BioScrip with the implied share of the pro forma DCF equity value of the combined company attributable to the holders of the Pre-Transaction BioScrip Fully-Diluted Shares after giving effect to the consummation of the Mergers, including the mid-point of the BioScrip Provided Expected Synergies (taking into account costs to achieve), estimated tax savings attributable to estimated utilization of NOL carryforwards and BioScrip’s estimates of certain transaction costs.
To calculate the pro forma DCF value of the combined company after giving effect to the Mergers, Moelis utilized a range of discount rates (based on an estimated WACC range) of 6.75% to 9.75% to calculate estimated present value as of December 31, 2018 of  (i) estimated after-tax unlevered free cash flows for fiscal years ending December 31, 2019 through December 31, 2023, (ii) operating synergies based on the mid-point of the BioScrip Provided Expected Synergies (taking into account costs to achieve) and (iii) estimated terminal values derived by applying a range of multiples of 10.0x to 13.0x to a terminal year Adjusted EBITDA. The terminal multiple range for the pro forma combined company used by Moelis for purposes of the DCF analysis was informed by current trading multiples of the peer group, as well as historical trading multiples for the peer group over the most recent five year period.
The WACC range for the pro forma combined company was calculated utilizing (i) a range of debt-to-total capitalization ratios based on the current capitalization and ratios of the companies comprising the peer group and (ii) a cost of equity derived using CAPM at a range of unlevered betas informed by selected publicly traded companies and a size premium based on publicly traded companies with equity values comparable to the pro forma combined company. For the DCF analysis for the pro forma combined company, Moelis utilized the mid-point of the BioScrip Provided Expected Synergies (taking into account costs to achieve).
Moelis’ DCF analysis valued the pro forma combined company’s NOLs assuming (i) the BioScrip Provided Projections, (ii) that the existing NOLs of BioScrip would be subject to limitations under Section 382 of the Internal Revenue Code as a result of the Mergers and (iii) a discount rate range based on the cost of equity for the pro forma combined company using CAPM.
Based on this analysis, the implied range indicated by its DCF analysis for BioScrip’s equity value on a stand-alone basis for the Pre-Transaction BioScrip Fully-Diluted Shares (the “Standalone BioScrip Equity Value”), the corresponding implied range for the pro forma equity value of the pro forma combined company (“Pro Forma BioScrip Equity Value”) and the illustrative accretion noted by Moelis are presented below:
($ in million)
Low
High
Standalone BioScrip Equity Value
$ 205 $ 539
Pro Forma BioScrip Equity Value
$ 395 $ 648
Increase (%)
92.6% 20.2%
DCF-Based Has/Gets Analysis (Option Care Provided Expected Synergies)
Moelis also performed a DCF-based has/gets analysis to calculate, solely for informational purposes, the value accretion/dilution implied by the Mergers utilizing the Option Care Provided Expected Synergies. In performing this analysis, Moelis utilized the same methodology as in the DCF-based has/gets analysis based on the BioScrip Provided Expected Synergies described above (including the same WACC range and the same range of terminal year Adjusted EBITDA multiples), except that Moelis relied on operating synergies based on the mid-point of the Option Care Provided Expected Synergies (taking into account costs to achieve).
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Based on this analysis, the Standalone BioScrip Equity Value, the Pro Forma BioScrip Equity Value and the illustrative increase noted by Moelis are presented below:
($ in million)
Low
High
Standalone BioScrip Equity Value
$ 205 $ 539
Pro Forma BioScrip Equity Value
$ 347 $ 583
Increase (%)
69.1% 8.2%
Illustrative Hypothetical BioScrip Standalone Share Price Range
Moelis noted that BioScrip’s stock price as of March 13, 2019 was $3.58 per share, which implied a market capitalization for BioScrip as of such date of approximately $484 million. Moelis noted that BioScrip was planning to announce adjusted EBITDA for 2018 which, according to BioScrip management, would miss Wall Street consensus estimates and forecasts for 2019 and 2020 were below consensus. Moelis noted that if the then current consensus market trading multiples for BioScrip were applied to BioScrip’s actual EBITDA for 2018, and revised management estimates for 2019 and 2020 EBITDA, BioScrip’s hypothetical implied trading price would be $2.09 – $2.57, compared to BioScrip’s current share price of $3.58 as of March 13, 2019. Moelis noted that this information was an arithmetic exercise only, illustrating certain hypothetical equity trading values based on certain estimates of the Adjusted EBITDA of BioScrip, Option Care and the combined company and current BioScrip public market trading multiples, and the illustration does not purport to reflect the value of any securities or the prices at which any securities actually may be sold.
Illustrative Hypothetical Pro Forma Trading Range
Moelis also presented illustrative hypothetical pro forma trading price ranges by applying management estimates for 2019 and 2020 EBITDA to the pro forma combined company to a range of hypothetical market trading multiples (including BioScrip’s current market consensus multiple). Moelis noted that this information was an arithmetic exercise only, illustrating certain hypothetical equity trading values based on certain estimates of the Adjusted EBITDA of BioScrip, Option Care and the combined company and current BioScrip public market trading multiples, and the illustration does not purport to reflect the value of any securities or the prices at which any securities actually may be sold.
TEV/2019E Adj. EBITDA
Illustrative Multiple
11.0x 14.2x 16.0x
Illustrative BioScrip Standalone Share Price
$ 0.99 $ 2.57 $ 3.41
Illustrative Pro Forma Combined Company Share Price
2.60 3.87 4.59
Premium (%)
163.3% 50.6% 34.3%
TEV/2020E Adj. EBITDA
Illustrative Multiple
9.5x 12.1x 14.5x
Illustrative BioScrip Standalone Share Price
$ 0.95 $ 2.42 $ 3.74
Illustrative Pro Forma Combined Company Share Price
2.44 3.59 4.67
Premium (%)
156.5% 48.1% 24.9%
Standalone Refinancing Scenarios
Moelis reviewed with the BioScrip Board certain illustrative standalone refinancing scenarios, and noted that it would be a difficult to refinance BioScrip’s current capital structure without incurring potential dilution and/or additional financing expenses to existing shareholders and that BioScrip would continue to have elevated levels of leverage throughout the projection period based on the scenarios.
Miscellaneous
This summary of the analyses is not a complete description of Moelis’ opinion or the analyses underlying, and factors considered in connection with, Moelis’ opinion. The preparation of a fairness opinion is a complex analytical process and is not necessarily susceptible to partial analysis or summary
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description. Selecting portions of the analyses or summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Moelis’ opinion. In arriving at its fairness determination, Moelis considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, Moelis made its fairness determination on the basis of its experience and professional judgment after considering the results of all of its analyses.
No company used in the analyses described above is identical to BioScrip or Option Care. In addition, such analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because the analyses described above (including much of the information used therein) are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, neither BioScrip nor Moelis or any other person assumes responsibility if future results are materially different from those forecast.
Except as described in this summary, BioScrip and the BioScrip Board imposed no other instructions or limitations on Moelis with respect to the investigations made or procedures followed by Moelis in rendering its opinion. The exchange ratio was determined through arms’ length negotiations between BioScrip, on the one hand, and Option Care and Omega Parent, on the other, and was approved by the boards of directors of BioScrip and Option Care. Moelis did not recommend any specific consideration to BioScrip or the BioScrip Board, or that any specific amount or type of consideration constituted the only appropriate consideration for the Mergers.
Moelis acted as financial advisor to BioScrip in connection with the Mergers and will receive a transaction fee for its services, currently estimated to be approximately $7.76 million in the aggregate, approximately $5.76 million of which is contingent upon the consummation of the Mergers. Moelis also became entitled to receive fees of  $2,000,000 payable upon the delivery of its opinion delivered in connection with the Mergers. Moelis may also receive a discretionary fee in connection with the Mergers. In addition, BioScrip agreed to indemnify Moelis for certain liabilities, including liabilities under the federal securities laws, arising out of its engagement. Moelis’ affiliates, employees, officers and partners may at any time own securities (long or short) of BioScrip, Option Care, Omega Parent and their affiliates. Moelis had not provided investment banking and other services to BioScrip, Option Care or Omega Parent in the past two years prior to the date of its opinion. In the future Moelis may provide such services to BioScrip or Omega Parent or their affiliates and may receive compensation for such services.
The BioScrip Board selected Moelis as its financial advisor in connection with the Mergers because Moelis has substantial experience in similar transactions and familiarity with BioScrip. Moelis is regularly engaged in the valuation of businesses and their securities in connection with Mergers and acquisitions, strategic transactions, corporate restructurings, and valuations for corporate and other purposes.
Certain Financial Projections Reviewed by the BioScrip Board and BioScrip’s Financial Advisors
Nature of Financial Projections Reviewed by the BioScrip Board
In connection with its evaluation of the Mergers, BioScrip management prepared and provided to the BioScrip Board and Moelis certain non-public internal financial projections regarding BioScrip’s anticipated future operations, as well as estimated cost synergies prepared together with an outside advisor to BioScrip arising in connection with the Mergers. In addition, BioScrip management prepared and provided to the BioScrip Board and Moelis certain non-public internal financial projections for Option Care, which were derived from forecasts for Option Care that Option Care prepared and provided to BioScrip management in connection with BioScrip ’s evaluation of the Mergers, as adjusted by BioScrip management. A summary of these financial projections and estimated synergies is included below to give BioScrip stockholders access to certain non-public information that was considered by the BioScrip Board for purposes of evaluating the Mergers and was provided to Moelis for use in connection with rendering its fairness opinion to the BioScrip Board and its related financial analysis.
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The financial projections and estimated synergies summarized below were not prepared for purposes of public disclosure, nor were they prepared on a basis designed to comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of projections, or generally accepted accounting principles (“GAAP”) in the United States.
Although presented with numerical specificity, the projections and estimated synergies were prepared in the context of numerous variables, estimates and assumptions that are inherently uncertain and may be beyond the control of BioScrip, and which may prove not to have been, or to no longer be, accurate. The projections and the estimated synergies are subject to many risks and uncertainties. Important factors that may affect actual results and cause actual results to differ materially from these projections and synergies include, but are not limited to, risks and uncertainties relating to BioScrip’s and Option Care’s businesses (including their ability to achieve strategic goals, objectives and targets over the applicable periods), industry performance, the regulatory environment, general business and economic conditions, market and financial conditions, various risks set forth in BioScrip’s reports filed with the SEC, and other factors described or referenced under “Cautionary Note Regarding Forward-Looking Statements” beginning on page 15. The projections and synergies also reflect assumptions that are subject to change and are susceptible to multiple interpretations and periodic revisions based on actual results, revised prospects for BioScrip’s and Option Care’s businesses, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the projections and estimated synergies were prepared. In addition, other than with respect to the estimated synergies discussed below, the projections do not take into account any of the transactions contemplated by the Merger Agreement, including the Mergers and associated expenses, or BioScrip’s and Option Care’s compliance with their respective covenants under the Merger Agreement. Further, the projections and estimated synergies do not take into account any circumstances, transactions or events occurring after the date they were prepared. Accordingly, actual results will likely differ, and may differ materially, from those contained in the projections and synergies. There can be no assurance that these projections and synergies will be realized or that future financial results of BioScrip or Option Care will not materially vary from these projections and estimated synergies.
The inclusion of a summary of the projections in this document should not be regarded as an indication that any of BioScrip, Option Care or their respective affiliates, officers, directors, advisors or other representatives consider the projections to be necessarily predictive of actual future events, and the projections should not be relied upon as such. None of BioScrip, Option Care or their respective affiliates, officers, directors, advisors or other representatives can give any stockholder or other person any assurance that actual results will not differ materially from the projections and estimated synergies, and, except as otherwise required by law, none of them undertakes any obligation to update or otherwise revise or reconcile the projections or synergies to reflect circumstances existing after the date the projections and synergies were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions and estimates underlying the projections or synergies are shown to be in error.
No one has made or makes any representation to any BioScrip stockholder regarding, nor assumes any responsibility to any BioScrip stockholder for the validity, reasonableness, accuracy or completeness of, the information included in the projections and estimated synergies set forth below. Readers of this document are cautioned not to rely on the projections and estimated synergies. BioScrip has not updated and, except as otherwise required by law, does not intend to update or otherwise revise the projections, even in the short term, to reflect circumstances existing after the date when made or to reflect the occurrence of future events, including the mergers. Further, the projections and estimated synergies do not take into account the effect of any failure of the mergers to occur and should not be viewed as accurate or continuing in that context.
A summary of these financial projections and synergies is included solely to give BioScrip stockholders access to the information that was made available to the BioScrip Board and Moelis, as described below, and is not included in this document in order to influence your decision whether to vote for or against the proposal to issue shares of BioScrip common stock or any of the other proposals. The inclusion of this information should not be regarded as an indication that the BioScrip Board, its advisors or any other person considered, or now considers, it to be a reliable prediction of actual future results. BioScrip
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management’s internal financial projections upon which the BioScrip projections (as defined below) and the BioScrip-prepared Option Care projections (as defined below) were based, as well as the estimated synergies that may result from the mergers, are subjective in many respects. There can be no assurance that these projections or estimated synergies will be realized or that actual results will not be significantly higher or lower than forecasted. The projections included herein cover multiple years, and such information by its nature becomes subject to greater uncertainty with each successive year. The financial projections and summary information should be evaluated, if at all, in conjunction with the historical financial statements and other information, with respect to Option Care, as included in this document, and with respect to BioScrip, as contained in BioScrip’s public filings with the SEC.
Summary of Certain Financial Projections Reviewed by the BioScrip Board
As part of its evaluation of the mergers, BioScrip management prepared the unaudited financial projections regarding BioScrip’s future operations for BioScrip’s fiscal years ending 2019 through 2023 and actual results for 2018 that are summarized below, which projections are referred to in this document as the BioScrip projections. In addition, Option Care management provided certain unaudited financial projections to BioScrip’s management regarding Option Care’s future operations for Option Care’s fiscal years ending 2019 through 2023 and actual results for 2018 that are summarized below, which projections are referred to in this document as the Option Care-prepared Option Care projections. As part of its evaluation of the mergers, BioScrip’s management prepared its own financial projections, based on the Option Care-prepared Option Care projections, regarding Option Care’s future operations for the fiscal years ending 2019 through 2023 that are summarized below, which projections are referred to in this document as the BioScrip-prepared Option Care projections. In preparing the BioScrip-prepared Option Care projections, BioScrip’s management made certain adjustments to the Option Care-prepared Option Care projections. These adjustments were primarily related to: BioScrip management’s view of a market-based growth rate over the projection period; core segment therapy margin increased to reflect BioScrip management’s view of potential profitability of products included in Option Care’s core segment, bad debt expense for the fiscal years ending 2021 through 2023 revised upwards to reflect BioScrip management’s view of what can be achieved; capital expenditures increased to be more in-line with historical levels (from $18 million in 2021 to $21 million and $15 million in 2022 and 2023 to $23 million in 2022 and $24 million in 2024). Both the BioScrip projections and the BioScrip-prepared Option Care projections were provided to the BioScrip Board for use in its evaluation of the mergers and, in connection therewith, also provided to Moelis in connection with Moelis’s fairness opinion. The BioScrip Board directed Moelis to use the BioScrip projections and the BioScrip-prepared Option Care projections in connection with rendering its fairness opinion to the BioScrip Board and its related financial analysis, as described under “The Merger — Opinion of Moelis, BioScrip’s Financial Advisor” beginning on page 69 of this document. The BioScrip projections and the BioScrip-prepared Option Care projections are collectively referred to as BioScrip Provided Projections under “The Merger — Opinion of Moelis, BioScrip’s Financial Advisor” beginning on page 69 of this document.
In November 2018, BioScrip senior management developed projections for fiscal years 2018 through 2023. The original projections were subsequently updated on March 1, 2019. The updated projections reflected a decrease in 2018 revenue, gross profit and Adjusted EBITDA in light of a then anticipated charge due to a bad debt exposure. In accordance with such 2018 results, BioScrip management lowered projected revenue, gross profit and Adjusted EBITDA in future years as well due to higher than previously estimated bad debt expense and lower than anticipated Cures Act reimbursement. The updated projections included, among other things, $66.5 million of projected Adjusted EBITDA in 2019 in contrast to $76.6 million projected in November. The approximate $10 million reduction in Adjusted EBITDA was attributable to, among other things, higher than previously estimated future bad debt expense and lower than anticipated Cures Act reimbursement.
The following tables present a summary of the BioScrip projections, the Option Care-prepared Option Care projections, and the BioScrip-prepared Option Care projections:
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Summary of the BioScrip Projections (in millions)
2018A
2019E
2020E
2021E
2022E
2023E
Net Revenue
$ 709 $ 756 $ 794 $ 836 $ 877 $ 921
Gross Profit
$ 243 $ 268 $ 288 $ 305 $ 321 $ 337
Total Operating Expenses
$ 198 $ 201 $ 212 $ 218 $ 224 $ 230
Adjusted EBITDA
$ 45 $ 66 $ 77 $ 87 $ 97 $ 107
Pro Forma Adjusted EBITDA(1)
$ 60 $ 66 $ 77 $ 87 $ 97 $ 107
Capital Expenditures
$ (14) $ (11) $ (12) $ (13) $ (13) $ (14)
Increase/Decrease in Net Working Capital
$ (15) $ 2 $ 1 $ (6) $ (9) $ (7)
Unlevered Free Cash Flow(2)
N/A(3) $ 43 $ 49 $ 50 $ 54 $ 64
(1)
Pro Forma EBITDA adjustments include bad debt normalization, product disruptions, non-recurring expenses, bonus normalization and weather disruptions.
(2)
Unlevered Free Cash Flow is Adjusted EBITDA (i) less Stock-Based Compensation, Depreciation and Amortization, (ii) less taxes (applying a 25.0% cash tax rate as provided by BioScrip) to the amount calculated thus far, (iii) plus Depreciation and Amortization, (iv) less Capital Expenditures and (v) less the Cash Impact of Net Working Capital based on the information provided by BioScrip’s management, and was calculated by Moelis as described above from the financial projections prepared by BioScrip based on the information provided by BioScrip and, with BioScrip’s approval, was used for purposes of the financial analysis in connection with the delivery of Moelis’s fairness opinion as described in the section of this Proxy Statement captioned “The Merger — Opinion of Moelis, BioScrip’s Financial Advisor.
(3)
Unlevered Free Cash Flow is not included for BioScrip in 2018 due to the timing of the transaction. BioScrip free cash flow for 2018 is not utilized in analysis by Moelis.
Option Care-prepared Option Care projections (in millions)
2018A
2019E
2020E
2021E
2022E
2023E
Net Revenue(1)
$ 1,942 $ 2,110 $ 2,265 $ 2,423 $ 2,576 $ 2,741
Adjusted EBITDA
$ 95 $ 120 $ 141 $ 163 $ 180 $ 201
Pro Forma Adjusted EBITDA(2)
$ 108 $ 120 $ 141 $ 163 $ 180 $ 201
Capital Expenditures
$ (26) $ (21) $ (20) $ (18) $ (15) $ (15)
Increase/Decrease in Net Working Capital
N/A $ (6) $ (8) $ (13) $ (13) $ (13)
(1)
For purposes of the net revenue projection, Option Care has presented its revenue anticipating the impact that the adoption of ASC 606, Revenue from Contracts with Customers (“ASC 606”) will have on the projected results once ASC 606 is adopted by the company in 2019. The most significant change anticipated from the adoption of ASC 606 is to eliminate the provision for doubtful accounts which was historically presented as a separate component of selling, general and administrative expenses and present this balance as a direct reduction of net revenue as such amount is anticipated to consist entirely of implicit price concessions and retroactive price adjustments. The 2018A net revenue was retroactively revised in these projections to present net revenue on a consistent basis with the future projections by reducing net revenue by approximately $61 million for the balance previously presented as a provision for doubtful accounts. Option Care’s 2018 net revenue is $2,001 million prior to the adoption of ASC 606, which is presented in the pro forma and audited financial statements included elsewhere in this proxy statement.
(2)
Pro Forma EBITDA adjustments include bad debt normalization, cost reduction initiatives, product disruptions, acquisition and start-up costs, non-recurring professional fees, out-of-period and other income and bonus normalization.
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TABLE OF CONTENTS
Summary of the BioScrip-Prepared Option Care Projections (in millions)
2018A
2019E
2020E
2021E
2022E
2023E
Net Revenue(1)
$ 1,942 $