--Revenue of $359.4 Million; EPS of $0.04 Including $0.02 One-Time Charge; Specialty Services up 25.6%--

BioScrip, Inc. (Nasdaq: BIOS) today reported net income for the quarter ended September 30, 2008 of $1.4 million, or $0.04 per diluted share, on revenue of $359.4 million, compared to $1.7 million, or $0.04 per diluted share, on revenue of $297.6 million in the third quarter of 2007. BioScrip’s 2008 results include a one-time charge of $795,000, or $0.02 per share as a result of a civil settlement with the U.S. Office of The Inspector General (“OIG”) related to conduct beginning in 2003 and ending when the Company self-reported in late 2006.

Third Quarter Highlights

• Consolidated revenue of $359.4 million, a 20.8% increase over the same period last year; excluding United Healthcare Group (“UHG”) and Medicare’s Competitive Acquisition Program (“CAP”), revenue grew 11.4%.
• Specialty Services revenue of $307.1 million, an increase of 25.6% over the prior year; excluding UHG and CAP, Specialty Services revenue increased 14.4% over the same period last year.
• Gross profit of $36.1 million, or 10.0% of total revenue, compared to $35.4 million, or 11.9% of total revenue, for the same period of 2007. Excluding UHG and CAP, gross margin as a percentage of revenue was 10.9%.
• Operating expense as a percentage of revenue decreased to 9.3% from 10.8% over the same period a year ago.^*
• Operating profit of $2.8 million, a decrease of 10.9% over the prior year.^*
• EBITDAO (earnings before interest, taxes, depreciation, amortization and option expense) of $5.3 million.^*

^* Includes a $795,000 one-time charge.

Richard H. Friedman, BioScrip’s Chairman and Chief Executive Officer, stated, "Our third quarter results demonstrate the success of our Specialty Services sales strategy – excluding the CAP and UHG contracts, Specialty Services sales growth increased 14.4% year-over-year. Looking forward, without CAP and UHG we expect to see further sales growth and reduced operating expenses, resulting in improved operating income.

We have identified those operating expenses directly related to both CAP and United that will be eliminated. We continue to examine our cost structure to find additional ways to improve operating performance and have begun testing our upgraded integrated pharmacy system. This system is expected be fully functional in the second half of 2009. We believe the full implementation will permit us to reduce further operating expenses while growing our core business; the Company anticipates that all the above will result in improved operating profits in 2009,” concluded Friedman.

The Company previously reported that it was notified by Aetna that its network participation agreements, representing approximately $27 million of revenues, would be terminated in the fourth quarter of 2008. The Company has since renegotiated new contracts with Aetna to participate in its retail and specialty networks on a limited basis. The Company anticipates retaining approximately two-thirds of its revenues and associated profitability.

During the third quarter, the Company incurred a one-time charge of $795,000 or $0.02 per share, as a result of entering into a civil settlement with the OIG. The circumstances surrounding the settlement were self-reported by the Company through its corporate compliance program, and related to conduct between 2003 and 2006.

Results of Operations

Total revenue for the third quarter 2008 was $359.4 million compared to $297.6 million for the same period a year ago.

Third quarter 2008 Specialty Services revenue were $307.1 million, an increase of $62.6 million, or 25.6% over the prior year, due to revenue associated with preferred distribution arrangements with manufacturers, UHG, CAP, and other organic growth.

PBM Services revenue remains essentially unchanged at $52.3 million for the second quarter.

Gross profit for the third quarter 2008 was $36.1 million, or 10.0% of total revenue, compared to $35.4 million, or 11.9% of total revenue, for the same period of 2007. The gross margin decreased primarily due to the higher revenue but lower margin UHG and CAP business. Third quarter 2007 gross profit included a one-time favorable adjustment with the Company’s primary drug distributor. On a sequential basis, the Company reported 0.3% lower gross profit margins primarily due to reduced reimbursement rates in the New York State Medicaid program and a temporary decline in Medi-Cal reimbursement (which was reversed by mid-August). Third quarter 2008 operating expenses as a percentage of revenue declined to 9.3% from 10.8% over the prior year. Included in the third quarter 2008 operating expenses is the one-time civil settlement with the OIG. The reduction in operating expenses as a percentage of total revenue is due to the Company’s ability to leverage its overhead structure.

Nine-Month Period Reported Results

For the nine-months ended September 30, 2008, net income was $2.6 million, or $0.07 per share compared to a net income of $0.8 million, or $0.02 per diluted share for the same period a year ago. As discussed above, the Company incurred a one-time charge of $795,000 or $0.02 per share, as discussed above. Revenue increased to $1.0 billion for the nine-month period ended September 30, 2008 from $888.5 million reported in the same period of last year.

Guidance

Looking forward, without CAP and UHG, the Company expects to see further sales growth and gross profit margins to normalize in the range of 10.5% to 11%.

The Company has identified those operating expenses directly related to both CAP and UHG that will be eliminated. Management continues to examine its cost structure to find additional ways to improve operating performance. Furthermore, as a result of anticipated profits and exiting the CAP agreement, the Company will see an improvement in its liquidity and cash flow.

Conference Call Information

BioScrip will host a conference call to discuss third quarter 2008 financial results on Thursday, November 4, at 10:30 a.m. ET. Interested parties may participate in the conference call by dialing 800-954-1053 (US), or 212-231-1901 (International), 5-10 minutes prior to the start of the call. A replay of the conference call will be available from 12:00 p.m. ET on November 4, through 12:00 p.m. ET on November 11, by dialing 800-633-8284 (US), or 402-977-9140 (International), and entering reservation #21397034. An audio webcast and archive of the conference call will also be available under the investor relations section of the BioScrip website, www.bioscrip.com.

About BioScrip, Inc.

BioScrip, Inc. (www.bioscrip.com) (Nasdaq: BIOS) is a specialty pharmaceutical health care organization that partners with patients, physicians, health care payors and pharmaceutical manufacturers to provide access to medications and management solutions to optimize outcomes for chronic and other complex health care conditions.

Forward Looking Statements

This press release may contain statements which constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding, among other things, the intent, belief or current expectations of the Company, its directors, or its officers with respect to the future operating performance, the profitability or lack of profitability of certain customers, the impact on profitability on changes in payer and product mix and the achievement of cost savings initiatives of the Company. Investors are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward looking statements as a result of various factors. Important factors that could cause such differences are described in the Company's periodic filings with the Securities and Exchange Commission.

Earnings before interest, taxes, depreciation, amortization, and option expense ("EBITDAO") and pro forma net income are non-GAAP financial measure as defined under U.S. Securities and Exchange Commission Regulation G. As required by Regulation G, BioScrip has provided on Schedule 2 a reconciliation of this measure to the most comparable GAAP financial measure. The non-GAAP measure presented provides important insight into the ongoing operations and a meaningful benchmark to evidence the Company's trend towards a return to profitability.

BioScrip, Inc.
Stanley G. Rosenbaum, 952-979-3768
Executive Vice President and Chief Financial Officer
srosenbaum@bioscrip.com
or
In-Site Communications
Lisa M. Wilson, 917-543-9932
lwilson@insitecony.com