DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

Sale of PBM Services

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

On October 20, 2015, the Company finalized working capital adjustment negotiations in relation to the PBM Sale whereby the Company agreed to repay approximately $1.0 million to the PBM Buyer (see Note 16 - Subsequent Events).

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

	Carrying Value
Net accounts receivable	$	7,163
Total current assets	7,163
Property and equipment, net	175
Goodwill	12,744
Total assets	20,082
Claims payable	6,950
Total liabilities	6,950
Net assets	$	13,132

The operating results included in discontinued operations of the PBM Business for the three months and nine months ended September 30, 2015 and 2014 are summarized as follows (in thousands):

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2015			2014			2015			2014
Revenue	$	11,585		$	12,501		$	44,375		$	47,467
Gross profit	$	2,405		$	4,236		$	9,763		$	13,599
Selling, general and administrative expenses	1,168			2,613			5,444			8,466
Bad debt expense	—			(2		)	(45		)	(4		)
Income from operations	1,237			1,625			4,364			5,137
Gain on sale before income taxes	(11,424		)	—			(11,424		)	—
Financial advisory fee and legal expenses	1,828			—			1,828			—
Other costs and expenses	353			(4		)	353			(6		)
Income before income taxes	10,480			1,629			13,607			5,143
Income tax expense	1,384			—			1,384			—
Income from discontinued operations, net of income taxes	$	9,096		$	1,629		$	12,223		$	5,143

Sale of Home Health Business

On March 31, 2014, the Company completed the sale of substantially all of the Company’s Home Health Services segment (the “Home Health Business”) pursuant to the Stock Purchase Agreement dated as of February 1, 2014. The sale of the Home Health Business is consistent with the Company’s continuing strategic evaluation of its non-core businesses and its decision to continue to focus growth initiatives and capital in the Infusion Services segment. As a result, the Company decided in the second quarter of 2014 to cease the material portion of its Home Health operations at the one location excluded from the Stock Purchase Agreement, as amended, and has reclassified its operations to discontinued operations for all prior periods in the accompanying Unaudited Consolidated Financial Statements.

The operating results included in discontinued operations of the Home Health Business for the three months and nine months ended September 30, 2015 and 2014 are summarized as follows (in thousands):

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2015			2014			2015			2014
Revenue	$	—		$	196		$	—		$	18,588
Gross profit	$	—		$	(68	)	$	—		$	6,886
Selling, general and administrative expenses	—			512			—			7,887
Bad debt expense	—			3			—			903
Income (loss) from operations	—			(583		)	—			(1,904		)
Gain on sale before income taxes	—			11			—			(2,056		)
Financial advisory fee and legal expenses	—			—			—			2,875
Impairment of assets	—			—			—			452
Other costs and expenses	29			—			370			47
Income (loss) before income taxes	(29		)	(594		)	(370		)	(3,222		)
Income tax expense (benefit)	—			(57		)	—			(4,243		)
Income (loss) from discontinued operations, net of income taxes	$	(29	)	$	(537	)	$	(370	)	$	1,021

Pharmacy Services Asset Sale

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

The operating results of the divested traditional and specialty pharmacy mail operations and community pharmacies included in discontinued operations for the three months and nine months ended September 30, 2015 and 2014, are summarized below (in thousands):

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2015			2014			2015			2014
Revenue	$	—		$	—		$	—		$	—
Gross profit	$	—		$	—		$	—		$	(27	)
Operating expenses	—			598			—			3,394
Legal fees and settlement expense	1,139			—			4,268			—
Other (income) expense	471			—			874			—
Facilities costs	—			—			1,539			—
Income (loss) from discontinued operations, net of income taxes	$	(1,610	)	$	(598	)	$	(6,681	)	$	(3,421	)

Operating expenses during the three months and nine months ended September 30, 2015 primarily consist of legal fees related to the legal proceedings discussed in Note 11 - Commitments and Contingencies and facilities costs.

As of September 30, 2015 and December 31, 2014, there were accruals of $9.2 million and $13.0 million, respectively, related to these costs in accrued expenses and other current liabilities and other non-current liabilities on the Consolidated Balance Sheets.

	Legal Settlement			Other Costs			Total
Balance at December 31, 2014	$	12,389		$	609		$	12,998
Expenses	6,096			3,136			9,232
Cash payments	(10,847		)	(2,197		)	(13,044		)
Balance at September 30, 2015	$	7,638		$	1,548		$	9,186