DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2012

DISCONTINUED OPERATIONS [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

DISCONTINUED OPERATIONS

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

On May 4, 2012, pursuant to the terms of the Asset Purchase Agreement, the Company received a total purchase price of approximately $158.0 million at closing, including the value of inventories on hand attributable to the operations subject to the Pharmacy Services Asset Sale. Based on events related directly or indirectly to the Buyers' retention of certain business after the closing, the Company has received approximately $740,000 and may receive up to an additional $15.0 million in additional purchase price or be required to refund up to approximately $6.4 million of purchase price to the Buyers. The purchase price excluded all accounts receivable and working capital liabilities relating to the operations subject to the Pharmacy Services Asset Sale, which were carried at $64.3 million of net assets based on the Company's Consolidated Balance Sheet at March 31, 2012, and will be retained by the Company. As a result of the Pharmacy Services Asset Sale, the Company expects to recognize a pretax gain in the second quarter.  The Company estimates that the pretax gain will be approximately $111.3 million based on March 31, 2012 asset balances, however, this amount is subject to change once final entries are recorded in May.  In addition, the Company expects to recognize approximately $22.3 million of restructuring costs, transaction costs, and other one-time charges as a result of the transaction in the second quarter for a net effect of approximately $89.0 million.

In addition, the Company and its subsidiaries and certain subsidiaries of the Buyers entered into an agreement concurrently with the Asset Purchase Agreement which provided that BioScrip ceased to be the sole fulfillment pharmacy for customers who came through the drugstore.com website. The agreement provided for a cash payment of $3.0 million to the Company and the payment of $2.9 million to the Buyers related to contingent consideration from the Company's 2010 acquisition of the prescription pharmacy business of DS Pharmacy, both of which occurred during the three months ended March 31, 2012.

The transaction included the sale of 27 community pharmacy locations and certain assets of three community pharmacy locations and three traditional and specialty mail service operations, which constituted all of the Company's operations in the community pharmacy and mail order lines of business. Two mail order locations which were not transferred as part of the Pharmacy Services Asset Sale will be converted in the second half of the year to provide infusion pharmacy services.  The Company is evaluating whether to convert some or all of the other retained locations to provide infusion pharmacy services. The assets of the components of the businesses being transferred are included in discontinued operations on the accompanying Consolidated Balance Sheets. On March 31, 2012, the carrying value of the assets included in the Pharmacy Services Asset Sale was as follows (in thousands):

	March 31, 2012
Inventory	$	31,982
Prepaid expenses and other current assets	189
Total current assets	32,171
Property and equipment, net	2,477
Goodwill	11,754
Intangible assets, net	2,503
Other non-current assets	276
Total assets	$	49,181

The following are assets and liabilities of the community pharmacy and mail order lines of business that were not transferred as part of the Pharmacy Services Asset Sale and were not included in discontinued operations on the accompanying Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011, respectively. The Company anticipates the collection, payment or resolution of these balances during the remainder of the year.

	March 31, 2012		December 31, 2011
	(in thousands)
Receivables, less allowance for doubtful accounts	$	137,008	$	126,075
Inventory	1,307		1,092
Prepaid expenses and other current assets	18		2,946
Total current assets	138,333		130,113
Property and equipment, net	5,881		6,234
Other non-current assets	44		46
Total assets	$	144,258	$	136,393
Current portion of long-term debt	$	32,729	$	34,802
Accounts payable	61,259		55,988
Amounts due to plan sponsors	4,518		4,330
Accrued expenses and other current liabilities	8,224		11,870
Total current liabilities	106,730		106,990
Long-term debt, net of current portion	867		867
Other non-current liabilities	1,652		1,642
Total liabilities	$	109,249	$	109,499

As of the filing of this report, management has commenced a further strategic assessment of its business and operations in order to align its corporate structure with its remaining business operations. As part of these efforts, the Company may incur significant charges such as the write down of certain long−lived assets, employee severance, other restructuring type charges, potential cash bonus payments and potential accelerated payments of certain of its contractual obligations, which may impact the Company's future Unaudited Consolidated Financial Statements.

The operating results of the traditional and specialty pharmacy mail operations and community pharmacies for the three months ended March 31, 2012 and 2011 are summarized below (in thousands). These results include costs directly attributable to the components of the businesses being disposed of. In addition, interest expense of $0.7 million and $0.6 million for the three months ended March 31, 2012 and 2011, respectively, has been allocated to discontinued operations on the basis of the borrowing base that will be reduced as a result of the Pharmacy Services Asset Sale and the working capital associated with the business which will be reduced. Income tax expense of $8,000 and $0.7 million for the three months ended March 31, 2012 and 2011, respectively, has also been allocated to discontinued operations. These adjustments have been made for all periods presented. Depreciation expense was no longer incurred on fixed assets included in the disposal group as of February 1, 2012, the date the Company entered into the Asset Purchase Agreement.

	Three Months Ended March 31,
	2012			2011
Revenue	$	338,103		$	308,460
Gross profit	$	22,960		$	25,912
Gross profit as a percentage of revenue	6.8		%	8.4		%
(Loss) income from discontinued operations	$	(680	)	$	3,956

On March 8, 2012, the Compensation Committee of the Board of Directors of the Company approved contingent cash awards in the aggregate amount of $930,000 to a total of seventeen of the Company’s management team.

The awards were made in recognition of the efforts and leadership of those individuals toward accomplishing the Company’s strategic assessment to shift its primary business focus to the Infusion Services and Home Health Services segments of the Company’s business. The awards were paid upon completion of the Asset Purchase Agreement.