I
received a few inquiries since the initial post on BioScrip Inc. ("BIOS" or the
"Company") including a phone call from BIOS Investor Relations contact Craig
Allison. Craig was frank about the issues facing BIOS as well as being open to
increasing transparency in terms of the Company's various operating segments.
Nonetheless, after speaking with Craig I continued me review of BIOS and
concluded that irrespective of what the "plan" is, execution is paramount and
BIOS management is not the team needed to execute in this environment. While
CEO Richard Friedman may have had an enjoyably holiday weekend, I spent this
past three day weekend working on a presentation that should hopefully cement
the notion that BIOS management and Board members should be removed immediately.
Since the Q1 earnings warnings, shares in BIOS are down 70% and roughly
75% for the year. This would be somewhat excusable in this difficult
environment until one reviews the performance of BIOS against its peers in 2008,
over the past 2 years, and over the past 5 years. During those periods, BIOS is
essentially the worst performing stock amongst its peers. This makes the
continued election of Friedman as CEO and continued tenure of BIOS Board members
very concerning.
In addition, despite the awful stock performance of the Company, the Board
continues to reward Friedman with higher levels of compensation. This should
not be a surprise when one reviews the holdings of Board members and realizes
that there have been just four insider purchases since 2006 and that the
majority of Board members own a bulk of shares through free option grants as
opposed to actually paying for them like real shareholders. Board members
receive a free annuity through laughably "earned" Board fees so why take away
the Kool-Aid when directors can bilk an average of $40,000 per member per year
from shareholders for doing nothing but destroying value and ignoring Friedman's
incompetence? Since they have no real interest in BIOS, Board members are
better served not rocking the boat and collecting these fees every year.
What's even more frustrating is that despite reaching multi-year lows,
Friedman has yet to make a single open market purchase, further expressing his
own lack of confidence in his own abilities and the Company. Despite an
$850,000 salary, Friedman refuses to spend a dime on buying shares in the
Company he runs and his lack of faith in the Company is also echoed by Board
members, who for the most part have been reluctant to purchase any shares, even
a token amount like the 300 shares Board member Charlotte Collins purchased in
September 2006.
Investors and those concerned with BIOS should review the presentation
available at the link below. The Company has considerable potential with the
right management team due to its fixed cost structure and growth in specialty
pharmaceuticals. It's currently an average company run by horrific management
and insiders. Shareholders should work together to remedy the current situation
and install a real Board and competent management team that can reverse the
Company's current direction.
