Good morning, my name is Andrea. Ladies and gentleman thank you for standing-by and welcome to the BioScrip First Quarter 2009 Earnings Call. During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded Thursday, April 30th. I would now turn the conference over to Mr. Bill Bunting, Managing Director of In-Site. Please go ahead, sir

By now you should have received a copy of our earnings press release issued this morning. If you have not, you may access it through the investor relations section at our website. Richard Friedman, Chairman and Chief Executive Officer, Stanley Rosenbaum, Executive Vice President and Chief Financial Officer, and Rick Smith, President and Chief Operating Officer, will host this morning’s call. This call is expected to last about 45 minutes and may be accessed through our website at bioscrip.com. Before we get started, I’d like to remind everyone that any statements made on the conference call today or in our press release that express a belief, expectation or intent, as well as those that are historical facts, are considered forward-looking statements, and are protected under the Safe Harbor of the Private Securities Litigation and Reform Act. These forward-looking statements are based on information available to BioScrip today, and the company assumes no obligation to update these statements as circumstances change. These forward-looking statements may involve a number of risks and uncertainties, which may cause the company’s results to differ materially from such statements. These risks and uncertainties include factors detailed in our SEC filings, including our Form 10-K and 10-Q. Also, the company urges cautioning considering any current trends or guidance that may be discussed on this conference call. The pharmacy services industry is highly competitive, and trends and guidance are subject to numerous factors, risks and influence, which are described in the company's reports in registration statements, filed with the SEC. In addition the impact of current national and global economic conditions on our business may be difficult to predict. The company disclaims any obligation to update information on trends and targets other than in its periodic filings with the SEC. In addition, as required by the SEC Regulation G, the reconciliation of any non-GAAP measures mentioned during our call today, to the most comparable GAAP measures, can be found in schedule 3 to today's press release and is available on our website on the Investor Relations page under the link to Press Releases. Thank you, and I would now like to turn the call over to Rich Friedman. Rich?

We are pleased with our operating performance and financial results. Comparable revenues increased 6.3%. Gross margins reached 11%, the upper range of our forecast. Operating expenses declined, earnings per share was $0.08, and liquidity continues to improve. During the quarter we added greater depth to our management teams, starting with Rick Smith, our President and Chief Operating Officer, who you will from in a few minutes. Rick has extensive experience in the specialty sector, and has and will continue to be instrumental in implementing our expansion plans. Over the years, BioScrip has built a foundation of assets that uniquely address and meet many of the healthcare related challenges that this nation faces. More specifically, these include BioScrip cares, clinical and outcomes management programs associated with the chronically ill and other complex conditions. At BioScrip, we believe that management of the chronically ill, consisting of access, adherence, compliance and retention are the key factors that influence quality and cost control and is the most effective way to improve quality of life. This strategy also provides a cost effective management solution for payors and physicians, while providing critical medical data for manufacturers. BioScrip's care management programs, coupled with our distribution platform including, infusion pharmacies and other alternative sites of care, community pharmacies and mail service benefit all healthcare stakeholders. Stan will now review the first quarter financials, and then Rick will review our first quarter operating performance, along with our goals and objectives for the balance of 2009. Stan?

Thank you, Rich. Today, we announced first quarter net income of $3.2 million or $0.08 per share or revenues of $325.7 million. These results compared to a net loss of $500,000 or $0.01 per share on revenue of $327.5 million for the first quarter of 2008. EBITDAO was $6.2 million for the first quarter of 2009 compared to $2.7 million for the same period a year ago. Let me share with you some of the highlights of the first quarter. As previously reported, we expected a revenue decline, as a result of our decision to exit the cap program at year-end 2008, and the wind down of our HIV and transplant programs with United Healthcare. Excluding the effect of cap and United, revenues increased 6.3% over the first quarter of 2008. We are pleased to report our gross margin increase to 11%, the upper range of our guidance. Operating expenses as a percent of sales was 9.7% in the first quarter of 2009, compared to 9.8% in the first quarter of 2008. The decline is a result of our program to reduced overall operating expenses. Compared to fourth quarter 2008, total operating expenses net of severance cost was reduced from $33.3 million to $30.7 million. On an annualized basis, this equates to an improvement of over $10 million. Further, we had identified additional cost savings that will benefit future quarters. In a minute, Rick will update you on some of these initiatives. Operating profit was $4.3 million compared to $185,000 last year. EBITDAO increased $3.5 million to $6.2 million for the first quarter of 2009. In determining our full year tax rate, we anticipate a 5% state income tax provision, in addition to an $800,000 banking credit. This yielded an effective tax rate of 11% in the current quarter. Let's turn now to liquidity and capital resources. At March 31st, our borrowings under our credit facility, was $36.1 million. The decrease of borrowings of approximately $14.3 million from December 31st, 2008 is due to a positive cash flow coupled with a reduction in accounts receivable and inventory. We continue to remain focused on improving our liquidity. In the first quarter, our average borrowings under our credit facility was $33 million, an improvement of $8 million from the fourth quarter of 2008. Since the third quarter of 2008, our average borrowings have decreased $15 million, in line with our previously stated goals. Our average borrowings in April are approximately $28 million. Our new enterprise system is scheduled for full implementation by the end of the third quarter. The system supports the strategic direction of our company, while improving day-to-day management controls and liquidity. As to guidance, we believe that the first quarter earnings and EDIBTAO represent a good baseline, to forecast the balance of 2009. Our quality of earnings is improving, and we will continue to replace lower margin business. I will now turn the call over to Rick, who will expand on our plans for the future.

Thanks Stan. As we reported on our February call, 2009 is focused on generating a higher quality of revenue for our business. We believe this will lead to the generation of higher gross margin level, and consequently higher levels of operating income and cash flow. During the first and second quarter, we will have transitioned away from business that we previously announced we were exiting. We are investing in new and expanded programs that are expected to lead to new business opportunities and increase revenue generation. Our focus on delivering the full continuum of care model through clinical management of infusion, injectable and oral technology provides us with a competitive edge in the marketplace. We have seen the value of our high touch clinical model, consistently validated in the diseases states, where we have focused our resources. For example, we have experienced excellent growth in key programs on a year-over-year basis. Our oncology, immunology and multiple sclerosis revenue grew double digits year-over-year, with our oncology category recording a 41% revenue growth. We look to continue to build on the Q1 success of our targeted programs in Q2 and the rest of the year. While we are having good success with our targeted programs we have seen revenue and retention level slightly impacted by the current economic climates. We've all seen plans report a drop in enrolled lives due to layoffs and have experienced the Q1 effect of lower Medicare Part D enrollment. We have also witnessed a slight delay in resale frequency by some of our chronic patients. This is also impacted to related maintenance medications we fill. Our staff is working very hard to continue to provide the necessary education support, to ensure timely compliance and adherence to care plan. We believe overall, that the positive results of new…

Thank you, Rick. As you can see, we are successfully executing on our strategy. Despite the economic climate, we believe we now have the team in place to provide all the healthcare stakeholders, programs that through the management of the chronically ill, will improve the quality of care and ultimately help to control costs. We will now open up the lines for questions.

(Operator Instructions). Your first question comes from the line of Brooks O'Neil with Dougherty & Company. Brooks O'Neil - Dougherty & Company: I have a couple of questions. I guess I might as well start with one of the hotter topics I guess we are all aware that the Board received a letter from Clay Dunnagan earlier this week, and I am just curious if you could comment on the board's consideration of that letter?

We received a letter, as everyone is aware. BioScrip and the board are committed to enhancing and maximizing shareholder value. All responsible letters we receive, whether it's to the board or management from significant shareholders, that contain recommendations about the company's strategy or operations, are in fact refer to the board or the appropriate committees of the board, and all are being considered and when indicated, we will take action and a response. In fact, Anchor's request letter was forwarded to the company's corporate strategy committee, and later today the company intends to respond to Anchor, and after due consideration the committee has determined that it is in the company's and stockholders best interest to continue to pursue our growth strategy, as well as its efforts to further reduce costs and build on our recent improvements in operating efficiency. We have put the team in place, we have taken out significant costs, and we believe it's a best strategy to follow this road. Brooks O'Neil - Dougherty & Company: I am curious, one of the things that the letter highlighted and one of the things that we've talked about over a period of time is the need to balance the opportunities for growth with a very clear need to enhance your profit margins. I am pleased to see the beginning of some improvement in the gross margin this quarter and continued tight expense control. I am just curious, as you think about the improving cash flow dynamics of the business, how do you think about using that cash flow in terms of growth or do you leveraging or whatever?

Well, first of all. and we'll let Rick take this up in the second. Our expansion plans are clearly aimed towards the infusion business, the infusion therapies, as well as the expansion of the community stores. We really believe that the assets that we have put in place, meet exactly what is happening in this country today, which is the access to quality and the cost controls, and we need to expand our clinical programs we're putting in, a state-of-the-art enterprise system. We have brought in the people that have the experience to execute on this strategy. The expansion plans that we have, which are footprint expansion, requires some capital. It doesn't require heavy capital, but we are a generator of cash, bank debt continues to go down and we will continue to generate that cash and reduce our bank debt, down to very well and hopefully levels where we will have positive cash, hopefully in the near term. Saying that, we will look at opportunities as well, if we see assets that make sense to us, we will go ahead and take a hard look at those. But this company is dedicated, to putting together the programs that are required within the healthcare sector today, to manage the chronically ill. Whether it is injectibles, orals or infused, we have the platform in place and the platform will be expanded. Rick you want to answer that?

In terms of the expansion plans and looking at opportunities. Our priority first is to make sure, going into new markets for infusion that we have managed care contracts and access to lives first. Secondly, we're looking at building off of our existing physical footprints in the cities that we have locations, and that's primarily going to be through a redesign in that footprint, to make sure that we could essentially put aid infusion, pharmacy and ambulatory treatment center, as well our store location in the appropriate way and appropriate market for access to those markets on a cost effective basis. So, our primary focus is to make sure that anything we do in terms of investment is not a drag on earnings, is not a drag on cash flow, but is something that is a fast payback in terms of any investments we make in any particular area. Brooks O'Neil - Dougherty & Company: I think that'd be great. I just have a couple of little detail questions hopefully. They could be short. One, was there any revenue related to United in the first quarter Stan?

Yes, about $17 million. Brooks O'Neil - Dougherty & Company: So, that will likely go away in the second quarter or do you expect some continuation of revenue from that relationship?

That will be very small piece of that to be retained in the second quarter. Brooks O'Neil - Dougherty & Company: Secondly, I was just curious what you guys meant when you said in the press release something related to your annual goals for cost savings have been achieved in the first quarter. I'm just trying to be sure I got that right and I understand what you are saying?

We said that we would reduce our operating expenses between $4 million and $6 million on a couple of calls ago. The example that I gave indicated that we’ve taken $10 million of cost out annualized in the first quarter. Even adjusting for the amortization issue, we believe that we are now taking out in excess of that $4 million to $6 million. Brooks O'Neil - Dougherty & Company: That’s great. Is there any more you see coming out, as the year unfolds?

We've taken some additional physicians in the first quarter, which was representative of some severance charge that we took, and we should those savings come the rest of this year. We also have identified and put back some staffing efficiencies, nursing productivity in the infusion division, as well as our commission programs. So we would expect that we'll see, we could see as much as $2 million to $4 million additional at this moment in time, given our expectations or the actions we took in Q1.

As you know the enterprise system, as Stan pointed out will be in at the end of the third quarter. Once that is fully implemented down the road, and after we do the conversion, we expect greater efficiencies and therefore could generate additional cost reductions through that. Brooks O'Neil - Dougherty & Company: Then, Stan, I hate to be (inaudible) I have been following your company for a long time, but this tax thing continues to confuse me. Obviously, the tax expense this quarter was a little bit lower and I am trying to understand, I think the tax expense was around $400,000 this quarter and I thought you said the naked credit was $800,000 plus 5% state tax.

I know it's a difficult thing, difficult for us as well. But, the $800,000 naked credit was the annual number and as you know we are required under GAAP to determine an annualized effective tax rate based on our projections for the year. So what we do, when we do the tax entry, we take the $800,000 naked credit for the year plus 5% to state taxes. Think around what that percentage is for that, for annual and apply that evenly by quarter. So that's how we got to the 11%. Another way of looking at it, is $200,000 per quarter for the naked credit plus 5%...

(Operator Instructions). Your next question comes from the line of Mike Petusky with Noble Research.

I just want to follow-up on a couple of points that Brooks was asking about. You said 17 million was the UNH contribution in Q1, was that right? Did I hear that right?

Yes, you did.

So essentially then, the likelihood is sequentially Q2 probably is going to be down somewhat. Is that a fair way to think about the revenue in Q2 versus Q1?

Yes, it is. So we are offset by other gains. But we're going to; essentially look to the second quarter to be that rebuilding quarter for the rest of the year, replacing the United revenue.

Well, Mike, with saying that -- again, Stan said that use the Q1 as a baseline.

Right.

So :

Right, right. Yeah, I mean I absolutely follow that. I didn't see this in the release, and I actually didn’t hear it, and forgive me if I am missing this. But, did you guys break out the specialty revenue versus the PBM revenue.

We will in the Q.

Okay. You can’t give that now for whatever reason.

Sure. PBM services was 51.4 million.

I think even I can do the math from there. Thank you.

I have five CPAs here, and they can't give you the right number.

Quick one for, Rick. You mentioned that oncology was up 41%, and I think you mentioned and MS, and I think you mentioned one other disease state. Do you have actually year-over-year breakout for MS and the other disease state which I didn't catch?

Yes, the MS was up about 15% and neurology was up about 12% as well.

Do you have any more detail, I heard Rich say that you guys are still on track for the enterprise system conversion, I guess to be implemented by the end of Q3. You are running 12, 15 systems at one point, do you have any detail as to how many systems were currently running? I know you are trying to get down to a couple, but do you have any detail beyond just that, it's still on track for end of Q3?

Yes, we have three disbursement systems. We have four receivable systems, and three inventory systems. When we are done, we will have one dispensing system that will also include AR and inventory, and our infusion business runs on a separate module. So we'll be down to two enterprise systems at that time.

Your next question comes from the line of Mark Arnold with Piper Jaffray.

I apologize if I am asking something that’s already been asked. But I jumped on a little late here. But Rick, could you just maybe update us, I think on the last call you talked a lot about the expansion of infusion therapies. I am just wondering where you are out with that. How quickly can you do that and just some timing both, where you are today and then kind of how long that will take throughout the year to expand those therapies and the pharmacies that are already providing infusion services?

I think we did achieve the essentially (inaudible) we mentioned on the February call. The new team has been on board for about 60 days, and they do a deep dive into the division. We've attacked very hard our payor contracts, both existing and new relationships. We've looked at the nursing coverage in all the markets that we have access to life, to insure that we can go to market with that level of clinical coverage, and then we've also have done additional work in terms of training the field sales force, in terms of getting the pull-through strategy at the local level on those contracts. So I think the, a lot of the work has been done over the last 60 days, we'll do some more heavy lifting in terms of April and May. Then I think by the end of Q2, in the month of June and into the third quarter, I think you will start to see some additional growth from the work that has been done so far, and into the next couple of months.

Is there a lot of contracting that has to be done at pharmacies that are already providing IVIG and some other services on the individual therapy level, or if you've got a contract in places that are pretty easy to expand therapies?

It's very easy to expand the therapies, because we do have full infusion contracts where we currently have sites. We hired a new Vice President of Sales in fusion specialty in the West Coast to help broaden our access to IPA lives and other managed care lives that we don't currently have out there, and he sets the ground running. He also joined us in the month of March. Then we are essentially just training our sales force in making a different call than they have historically, and also looking to cross-sell of our therapies. So it's really been putting the foundation in place for us to get out there and spread the word and the message in terms of our opportunities and ability to focus in and service this type of business.

I am not trying to dismiss some of the other programs, BioScrip care and some of the other clinical programs you guys are doing. Is it fair to say, given your hiring Rick and the hiring of the other members of the management team that we announced in the prepared remarks, that infusion really is the key driver of growth here going forward.

What we're trying to do is look at the business, look at what is required in healthcare, and clearly the infusion therapies has yielded higher margin business. Part of our strategy clearly is to go after higher margin therapies, and we are doing that. We also believe that disease states like HIV AIDS, requires a significant amount of attention in this country, whether it's through Washington, federal and local levels. So we're bringing in people that have expertise in all areas. Rick's expertise was not just in infusion, even though we spent a number of years doing that. So clearly, we're looking for higher margin therapies, but we are looking to be the company with the state-of-the-art centers of excellence, that you could be a company that looks at managing the patients, whether it be for the managed care organizations, physicians, because even if you look at the report that came out of the finance committee, the other day. Clearly, that's what the discussion is going to be about. They're looking to pay for performance, whether a patient is discharged from the hospital, and the hospital's greater fees, paying the physicians a greater fee of doing a better job of taking of the patient. Clearly, BioScrip fits into what is happening right now. So we've developed the assets in order to accomplish that. But we are taking full advantage of the pipeline of products, clearly 60% of the pipeline is going to be infused, but we are not giving up, clearly, on anything related to injectables or orals. We will be there to help manage those chronically ill patients in order to serve our clients in the best we can.

Then just one last question just on those new therapies, that you're talking about. You mentioned, Rich, that you're going after higher margin business. Those therapies tend to be a little bit higher margin than I think where you guys at a corporate level. I'm not trying to pinpoint you to numbers or anything, but I mean, it’s fair to say that as you start to grow that business here, maybe the second half of this year that we should see continued gross margin improvement, is that correct?

What Stan talked about was giving everyone a base for this year with the margin. Clearly the infusion therapies have higher margins, you're absolutely right. There is going to be some additional business coming in, in the mail side and other sides, that are obviously lower. So, what we're trying to do, is give a base right now, that we believe is a conservative number. As we continue to add revenues at the higher margins, we will keep people informed as that happens.

One of your competitors on the HIV/AIDS side has announced a number of partnerships with AIDS efficacy groups over the last year. I guess, I'm curious to what extent are you guys working with some of the larger AIDS efficacy groups and is there the potential for some larger partnership or announcement from BioScrip at some point over the next year as well?

Well, if you look at HIV in this country today, especially in the multicultural communities, it is an area that without a doubt needs a lot of attention. The administration has added an HIV czar. We are taken the appropriate action dealing at both the federal and local level, to make sure that BioScrip is included in what happens going forward around HIV. We have locations in every major city to serve the local communities. We will take advantage of that. We are constantly looking at this disease state, where it makes sense for BioScrip to be strategically, and as we believe we have an announcement, we will absolutely let you know,

Your next question comes from the line of Bill Nasgovitz with Heartland Funds

I was going to ask about infusion too, but I will just change to, Rick, you are the new guy on the block. Can you be candid with shareholders here and just tell us what surprised you at BioScrip pro and con, and what you think BioScrip needs that you had perhaps at Option Care?

Well, I think, 60 more infusion sites. But I think, well, we're working on that. I think that, the thing that I found, I mentioned I think at the last call, the expertise of this organization in terms of handling and clinically managing the oral technology, is a significant positive attribute of this organization. I think that, as we broaden our experience and capabilities in the infusion. Our goal of handling infusion, injectable and oral technologies in a good clinical management program, is I think our opportunity to really lead the marketplace in terms of that needed clinical leadership that Rich has talked about as well. So, I think that the assets that the company has here, are great assets, and I think we are working on pulling them all together, so that we are cross-selling. We're taking advantage of our opportunities, and we are getting out to tell our story in terms of the great clinical management programs we have, and then the passion of our employee base is one of expectations that I thought would be here. The level of commitment that the employee base has, successful as company, is very high and very significant. I don’t think it has been truly appreciated by the investor community, because we have a significant dedicated long-term employee base that is here to serve patients and continue to create value for the shareholders. So those are critical attributes that we have, the other thing is that there has been a positive surprise coming in, it really has been the strength of the cash flows and the reimbursement focus that Stan's organization has provided in terms of continuing to look to improve and reduce our DSO. So there is some good opportunities to continue to do that. So, I think there had not been a lot of what I didn’t expect, spent a lot of time with Rich before I came in, until we knew that we needed to do attack the cost structure aggressively, and get it down to the efficiency needed to drive more operating cash flow to the line. The system installation is going to be one, once we get it in, and we've got an accelerated urgency to do that. That will be the market leading clinical management program in the industry, we believe. So really, some good exciting opportunities to take this company to the next level for the rest of this year.

You have a follow-up question from the line of Brooks O'Neil. Brooks O'Neil - Dougherty & Company: Just coming back to the tax rate one more time, Stan. I am just curious, what amount of the naked credit or the NOL have you used up at this point or said differently, I guess how much have you got left?

About $40 million of the NOL is still out there. Brooks O'Neil - Dougherty & Company: Big number. So, extrapolating from the comments you've made about the tax rate. One could assume that you are going to pay relatively low taxes for quite some time in the future?

Certainly through the balance of this year. Brooks O'Neil - Dougherty & Company: I hope you use it up all this year.

So do we. Brooks O'Neil - Dougherty & Company: Could you just comment on the bad debt expense? You've mentioned that you returned to historical levels? I think your level was around 0.4% of revenue this quarter. Is that a level you feel comfortable going forward?

No. I have said through the last three or four calls that I believe that our bad debt expense normalizes between 0.5% and 0.6%. Brooks O'Neil - Dougherty & Company: That's what we have on our model. So I just want to make sure we didn’t need to change it. I think there was either a comment in the press release or in your prepared remarks that you are seeing some slower payments from state Medicaid agencies. I am just curious if you could amplify on that and maybe give us a feel those states, where you have a relatively large concentration of business, what you're seeing in the Medicaid area?

Well, clearly two states stand out, one is California, one is Illinois. California in the first quarter, as you know, had all sorts of budgetary problems, and it was basically posted on their website, which is not paying you. Now that their new budget has been in place and was signed on April 1st. We are seeing money coming in from the state of California, so we are clearly feeling better about that. Same is true with Illinois, and several other states. As you know, part of the stimulus package, includes about $120 billion of aid to State Medicaid programs and we expect that once it starts to flow to (inaudible) a lot of the issues as related to slow payments with Medicaid's. Brooks O'Neil - Dougherty & Company: So at this point, you do not anticipate new problems related to State Medicaid reimbursement. Is that a fair way to characterize it?

That's correct. Brooks O'Neil - Dougherty & Company: The last question and we started with the letter from the activists. I am just curious if you guys have plans to get out and talk with investors, I think it's clear from where the stock price has been in the recent past, that there is relatively significant apathy or concern on the part of investors, potential investors about the commitment to shareholder value creation here, and clearly you're moving in the right direction. I applaud that wholeheartedly. I think there is a real need for you guys to get out and talk with investors, and absolutely rebuild the credibility you have on Wall Street.

We agree. Few weeks ago, we went out, spent a day in New York City, there we were down in Delaware and Baltimore. Next week we have some plans to be up in Boston, and we will continue to do that. We wanted to make sure that before we went out; we had the assets in place that moving forward, we were generating the profitability that we expected and have the clinical programs that we wanted. As that is all moving forward towards satisfaction, we will be spending more time out there.

You have a follow-up from the line of Mark Arnold with Piper Jaffray.

Rick, have you had a chance to get out and see many of the companies' pharmacies yet? Again, the question there would be, is the footprint of these pharmacies conducive to adding all the services you'd like to add?

I have not got into all of them. I've been to about 10 of our locations, both infusion as well as our community stores. Our footprints are depending on the location and the state. I think that, what we are working out is really a new design, to hold the structure that we anticipate will be successful for us as we go to market. So some of them have existing capacity and those that we have are the ones that we've extended to so far, and the others may need some additional reconfiguration, as we continue to develop our strategy by market.

Maybe Bill can give you a tour of them of the Milwaukee one, since its right around the corner from his office.

I'm looking to get there.

Thank you. Your next follow-up question comes from the line of Mike Petusky with Noble Research.

My reading of the California situation in terms of Medicaid program is based on the recent ruling on the California is I think you guys are clear and other pharmacies are clear for the rest of ’09, because it looks like the State of California has to essentially make its appeal to the US Supreme Court, and is I think highly unlikely that that gets heard in 2009, because I was just wondering it is your take as well or am I maybe being a little too optimistic on that?

We agree with you Mike.

All right, fair enough. Thanks.

There are no more questions at this time. Mr. Bunting, do you have any closing remarks?

Thanks very much everyone. Management, any comments from you?

Thank you for joining us. As we move forward we will make ourselves available. Thank you again.

Thank you.

Thank you, ladies and gentlemen. This concludes today’s conference call. You may now disconnect.