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Not a Bad Day’s Pay–If You Can Get It!

Bioscrip, Inc., which provides comprehensive pharmaceutical care solutions, recently announced that Henry F. Blissenbach, President & CEO, will retire upon the expiration of his employmeny contract, effective June 30, 2006.

The Company operates in two reportable segments: (1) Specialty Services, which is comprised of specialty pharmacy distribution and clinical management services for complex and life-threatening health conditions, such as HIV/AIDS, cancer, and organ transplantation; and (2) PBM Services, which is comprised of fully integrated pharmacy benefit management and traditional mail RX services. The Company generates revenue principally through the sale of prescription drugs, which are dispensed either through a pharmacy participating in Bioscrip’s retail network in the PBM Services segment or by a pharmacy owned by the Company.

In the last twelve-months, Bioscrip lost two major customers, Centene Corp. and Aetna [on Blissenbach’s watch]. In addition, corporate continues to experience downward pricing pressure in contract signings for both of its reporting segments, attributable to competitive threats from bigger players like Medco, Caremark RX, and Express Scripts. 

Given a weakened fundamental picture, corporate is scrambling to expand membership from existing contracts as well as signing additional contracts. Management believes that a strategy of profit-margin retention can be best executed by expanding in specialty pharmacy and infusion and by acquiring smaller PBMs.

The Company has contracted with Blissenbach to serve as a consultant for a year following the expiration of his contract in June. One might want to question, however, how much value Blissenbach will bring to the table–given that his Separation Contract requires him–at most–only to work five days per month?

On March 1, 2006, the transparency of Henry Blissenbach’s consulting contract was disclosed in an 8-K Filing with the SEC. As a consultant to Bioscrip, Inc., Blissenbach will be paid $550,000–that works out to $45,833 per month, or $9,166.60 (for five-days work per month)! Oh, and he gets to work at home, too.

The agreement provides that Blissenbach will receive a severance payment equal to two years of salary–approximately $1.35 million–at the end of his consulting term. He will also receive reimbursement of any COBRA premiums paid by Mr. Blissenbach on behalf of himself and his dependents for the two years during which Mr. Blissenbach will receive severance. These remunerations exclude the cash-out value of approximately $1.5 million (+) that Mr. Blissenbach still owns in Bioscrip, Inc. stock that he received  for job performance in 2004, prior to the merger of his previous employer, Chronimed, with the so-named Bioscrip, Inc.

PBMs in the coming quarters, including Bioscrip, will probably be reporting comparatively thinner operating margins, for pricing rebates by competitors have to be met or exceeded by deeper discounts to retain existing customer contracts. Let us hope–for the sake of Bioscrip shareholders–that their new consultant, a Mr. Henry Blissenbach, is worth his $9,166 per day fee–excluding reimbursable expenses [travel, ‘business dinners,’ etc.]!