Please help me with the following assignment. I have attached the financial documentation needed for this assignment.Please strictly follow the following rubric:

10-K 1 bio s-2 0181231x1 0k.h tm 10-K UNIT ED S T A TES SE C URIT IE S A ND E XC H ANGE C O M MIS SIO N Wash in gto n , D .C . 2 0549 Form 1 0-K (M ark O ne) þ AN NUAL R EPO RT P U RSUAN T T O S EC TIO N 1 3 O R 1 5(d ) O F T H E S EC URIT IE S E X C HAN GE A C T O F 1 934 For t h e f is ca l y ear e n ded D ece m ber 3 1, 2 018 OR o PER IO DIC R EPO RT P U RSUAN T T O S EC TIO N 1 3 O R 1 5(d ) O F T H E S EC URIT IE S E X C HAN GE A C T O F 1 934 For t h e t r a n sitio n p erio d f r o m to Com mis sio n f ile n um ber: 0 01-1 1993 Bio S crip , I n c.

(E xa ct n am e o f r eg is tr a nt a s s p ecifie d in its c h arte r) Dela w are 05-0 489664 (S ta te o f in co rp ora tio n) (I.R .S . E m plo yer I d en tific a tio n N o.) 1600 B ro adw ay, S uite 7 00, D en ve r, C olo ra do 80202 (A ddress o f p rin cip al e xecu tiv e o ffic es) (Z ip C ode) Regis tr a n t’s t e le ph on e n um ber, i n clu din g a re a c o de:

720-6 97-5 200 Secu ritie s r e gis te re d p u rsu an t t o S ectio n 1 2(b ) o f t h e A ct:

Title o f e ach c la ss Nam e o f e ach e xch an ge o n w hic h r e gis te re d Com mon S to ck , $ 0.0 001 p ar v alu e p er s h are Nasd aq G lo bal M ark et Secu ritie s r e gis te re d p u rsu an t t o s e ctio n 1 2(g ) o f t h e A ct: N on e In dic ate b y c h eck m ark if t h e r e gis tra n t is a w ell- k now n s easo ned is su er, a s d efin ed in R ule 4 05 o f t h e S ecu rit ie s A ct. Y es o N o þ In dic ate b y c h eck m ark if t h e r e gis tra n t is n ot r e q uir e d t o f ile r e p orts p urs u an t t o S ectio n 1 3 o r S ectio n 1 5(d ) o f t h e A ct. Y es o N o þ In dic ate b y c h eck m ark w heth er t h e r e gis tra n t ( 1 ) h as f ile d a ll r e p orts r e q uir e d t o b e f ile d b y S ectio n 1 3 o r 1 5(d ) o f t h e S ecu rit ie s E xch an ge A ct o f 1 934 d urin g t h e p re ced in g 1 2 m onth s (o r f o r s u ch s h orte r p erio d t h at t h e r e gis tra n t w as r e q uir e d t o f ile s u ch r e p orts ), a n d ( 2 ) h as b een s u bje ct t o s u ch f ilin g r e q uir e m en ts f o r t h e p ast 9 0 d ay s. Y es þ N o o In dic ate b y c h eck m ark w heth er t h e r e gis tra n t h as s u bm it te d e le ctro nic ally e v ery I n te ra ctiv e D ata F ile r e q uir e d t o b e s u bm it te d p urs u an t t o R ule 4 05 o f R egu la tio n S -T ( § 2 32.4 05 o f th is c h ap te r) d urin g t h e p re ced in g 1 2 m onth s ( o r f o r s u ch s h orte r p erio d t h at t h e r e gis tra n t w as r e q uir e d t o s u bm it s u ch f ile s). Y es þ N o £ In dic ate b y c h eck m ark if d is clo su re o f d elin quen t f ile rs p urs u an t t o It e m 4 05 o f R egu la tio n S -K ( § 2 29.4 05 o f t h is c h ap te r) is n ot c o nta in ed h ere in , a n d w ill n ot b e c o nta in ed , t o t h e best o f r e gis tra n t’s k now le d ge, in d efin it iv e p ro xy o r in fo rm atio n s ta te m en ts in co rp ora te d b y r e fe re n ce in P art I II o f t h is F orm 1 0-K o r a n y a m en dm en t t o t h is F orm 1 0-K . o In dic ate b y c h eck m ark w heth er t h e r e gis tra n t is a la rg e a ccele ra te d f ile r, a n a ccele ra te d f ile r, o r a n on-a ccele ra te d f ile r, a s m alle r r e p ortin g c o m pan y, o r a n e m erg in g g ro w th c o m pan y.

See d efin it io n o f “ la rg e a ccele ra te d f ile r” , “ accele ra te d f ile r” , “ sm alle r r e p ortin g c o m pan y ” a n d “ em erg in g g ro w th c o m pan y ” in R ule 1 2b-2 o f t h e E xch an ge A ct.

Larg e a ccele ra te d f ile r o A ccele ra te d f ile r þ N on-a ccele ra te d f ile r o S m alle r r e p ortin g c o m pan y o Em erg in g g ro w th c o m pan y o In dic ate b y c h eck m ark w heth er t h e r e gis tra n t is a s h ell c o m pan y ( a s d efin ed in R ule 1 2b-2 o f t h e E xch an ge A ct). Y es o N o þ If a n e m erg in g g ro w th c o m pan y, in dic ate b y c h eck m ark if th e re gis tra n t h as e le cte d n ot to u se th e e xte n ded tra n sit io n p erio d fo r c o m ply in g w it h a n y n ew o r re v is ed fin an cia l acco untin g s ta n dard s p ro vid ed p urs u an t t o S ectio n 1 3(a ) o f t h e E xch an ge A ct.

The a ggre gate m ark et v alu e o f th e re gis tra n t’s C om mon S to ck h eld b y n on-a ffilia te s o f th e re gis tra n t a s o f J u ne 3 0, 2 018, th e la st b usin ess d ay o f th e re gis tra n t’s m ost re cen tly co m ple te d s eco nd f is cal q uarte r, w as a p pro xim ate ly $373,5 41,9 20 b ased o n t h e c lo sin g p ric e o f t h e r e gis tra n t’s C om mon S to ck o n t h e N asd aq G lo bal M ark et o n s u ch d ate .

A s o f Marc h 7 , 2 019 , t h ere w ere 128,1 55,2 91 s h are s o f t h e r e gis tra n t’s C om mon S to ck o uts ta n din g.

DO CUM EN TS I N CO RPO RATED B Y R EFER EN CE Portio ns o f th e re gis tra n t’s d efin it iv e p ro xy s ta te m en t fo r it s 2019 A nnual M eetin g o f S to ck hold ers to b e file d w it h th e S ecu rit ie s a n d E xch an ge C om mis sio n (th e “ SE C ”) w it h in 120 d ay s a fte r t h e c lo se o f t h e r e gis tra n t’s f is cal y ear a re in co rp ora te d b y r e fe re n ce in to P art I II o f t h is A nnual R ep ort o n F orm 1 0-K .

Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm TA BLE O F C O NTEN TS Pag e Num ber PA RT I Ite m 1 .

Busin ess 5 Ite m 1 A .

Ris k F acto rs 1 6 Ite m 1 B .

Unre so lv ed S ta ff C om men ts 2 9 Ite m 2 .

Pro pertie s 3 0 Ite m 3 .

Leg al P ro ceed in gs 3 0 Ite m 4 .

Min e S afe ty D is clo su re s 3 0 PA RT I I Ite m 5 .

Mark et f o r R eg is tra n t’s C om mon E quit y , R ela te d S to ckh old er M atte rs a n d I s su er P urc h ases o f E quit y S ecu rit ie s 31 Ite m 6 .

Sele cte d F in an cia l D ata 32 Ite m 7 .

Man ag em en t’s D is cu ssio n a n d A naly sis o f F in an cia l C ondit io n a n d R esu lt s o f O pera tio ns 3 3 Ite m 7 A .

Quan tit a tiv e a n d Q ualit a tiv e D is clo su re s A bout M ark et R is k 4 1 Ite m 8 .

Fin an cia l S ta te m en ts a n d S upple m en ta ry D ata 4 2 Ite m 9 .

Chan ges in a n d D is ag re em en ts w it h A cco unta n ts o n A cco untin g a n d F in an cia l D is clo su re 7 0 Ite m 9 A .

Contro ls a n d P ro ced ure s 7 0 Ite m 9 B .

Oth er I n fo rm atio n 7 2 PA RT I II Ite m 1 0.

Dir e cto rs , E xe cu tiv e O ffic ers a n d C orp ora te G overn an ce 7 2 Ite m 1 1.

Exe cu tiv e C om pen satio n 7 2 Ite m 1 2.

Secu rit y O wners h ip o f C erta in B en efic ia l O wners a n d M an ag em en t a n d R ela te d S to ckh old er M atte rs 7 2 Ite m 1 3.

Certa in R ela tio nsh ip s a n d R ela te d T ra n sactio ns, a n d D ir e cto r I n dep en den ce 7 2 Ite m 1 4.

Prin cip al A cco untin g F ees a n d S erv ic es 7 2 PA RT I V Ite m 1 5.

Exh ib it s a n d F in an cia l S ta te m en t S ch ed ule s 7 3 Ite m 1 6.

Form 1 0-K S um mary 7 3 SIG N A TU RES 8 0 SC H ED ULE I I Valu atio n A llo w an ce a n d Q ualif y in g A cco unts 8 1 2Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm CAUTIO NARY N O TE R EG ARDIN G F O RW ARD-L O OKIN G S TA TEM EN TS This A nnual R ep ort o n F o rm 1 0-K (“ A nnual R ep ort” ) c o nta in s s ta te m en ts th at a re n ot p ure ly h is to ric al a n d w hic h m ay b e c o nsid ere d “ fo rw ard -lo okin g sta te m en ts ” w it h in t h e m ean in g o f S ectio n 2 7 A o f t h e S ecu rit ie s A ct o f 1 933, a s a m en ded ( th e “ S ecu rit ie s A ct” ), a n d S ectio n 2 1 E o f t h e S ecu rit ie s E xc h an ge A ct o f 1934, a s a m en ded ( th e “ E xc h an ge A ct” ), in clu din g s ta te m en ts r e g ard in g o ur e xp ecta tio ns, b elie fs , f u tu re p la n s a n d s tra te g ie s, a n tic ip ate d e v en ts o r t re n ds c o ncern in g m atte rs th at a re n ot h is to ric al fa cts o r th at n ecessarily d ep en d u pon fu tu re e v en ts .

In s o m e c ases, y ou c an id en tif y fo rw ard -lo okin g s ta te m en ts b y te rm s s u ch a s “m ay,” “ w ill,” “ sh ould ,” “ co uld ,” “ w ould ,” “ exp ect,” “ p la n ,” “ an tic ip ate ,” “ b elie v e,” “ estim ate ,” “ p ro je ct,” “ p re d ic t,” “ p ote n tia l” a n d s im ila r e xp re ssio ns. S p ecif ic ally , th is A nnual R ep ort c o nta in s, a m ong o th ers , f o rw ard -lo okin g s ta te m en ts a b out:

• our a b ilit y t o m ake p rin cip al a n d in te re st p ay m en ts o n o ur d eb t a n d u nsecu re d n ote s a n d s atis fy t h e o th er c o ven an ts c o nta in ed in o ur N ote s F acilit ie s ( a s defin ed b elo w ); • our h ig h le v el o f in deb te d ness; • our e xp ecta tio ns r e g ard in g f in an cia l c o ndit io n o r r e su lt s o f o pera tio ns in f u tu re p erio ds; • our f u tu re s o urc es o f, a n d n eed s f o r, liq uid it y a n d c ap it a l r e so urc es; • our e xp ecta tio ns r e g ard in g e co nom ic a n d b usin ess c o ndit io ns; • our e xp ecta tio ns re g ard in g le g is la tiv e a n d re g ula to ry c h an ges im pactin g th e le v el o f re im burs em en t re ceiv ed fro m th e M ed ic are a n d s ta te M ed ic aid pro gra m s; • perio dic r e v ie w s a n d b illin g a u dit s o f p ay m en ts f ro m g overn m en ta l r e im burs em en t p ro gra m s a n d p riv ate p ay ors ; • our e xp ecta tio ns r e g ard in g t h e s iz e a n d g ro w th o f t h e m ark et f o r o ur p ro ducts a n d s erv ic es; • our b usin ess s tra te g ie s a n d o ur a b ilit y t o g ro w o ur b usin ess; • th e im ple m en ta tio n o r in te rp re ta tio n o f c u rre n t o r f u tu re r e g ula tio ns a n d le g is la tio n, p artic u la rly g overn m en ta l o vers ig ht o f o ur b usin ess; • our e xp ecta tio ns r e g ard in g t h e o utc o m e o f lit ig atio n; • our a b ilit y t o m ain ta in c o ntra cts a n d r e la tio nsh ip s w it h o ur c u sto m ers ; • our a b ilit y t o a v oid d ela y s in p ay m en t f ro m o ur c u sto m ers ; • sale s a n d m ark etin g e ffo rts ; • sta tu s o f m ate ria l c o ntra ctu al a rra n gem en ts , in clu din g t h e n eg otia tio n o r r e -n eg otia tio n o f s u ch a rra n gem en ts ; • fu tu re c ap it a l e xp en dit u re s; • our a b ilit y t o h ir e a n d r e ta in k ey e m plo yees; • our a b ilit y t o e xe cu te o ur s tra te g y; • our a b ilit y t o s u ccessfu lly in te g ra te b usin esses w e m ay a cq uir e .

In vesto rs a re c au tio ned th at a n y s u ch fo rw ard -lo okin g s ta te m en ts a re n ot g uara n te es o f fu tu re p erfo rm an ce, in volv e ris ks a n d u ncerta in tie s a n d th at a ctu al re su lt s m ay d if fe r m ate ria lly f ro m t h ose p ossib le r e su lt s d is cu ssed in t h e f o rw ard -lo okin g s ta te m en ts a s a r e su lt o f v ario us f a cto rs . I m porta n t f a cto rs t h at c o uld c au se su ch d if fe re n ces in clu de, a m ong o th er t h in gs:

• ris ks a sso cia te d w it h in cre ased a n d c o m ple x g overn m en t r e g ula tio n r e la te d t o t h e h ealt h c are a n d in su ra n ce in dustrie s in g en era l, a n d m ore s p ecif ic ally , hom e in fu sio n p ro vid ers ; • our a b ilit y t o c o m ply w it h d eb t c o ven an ts in o ur N ote s F acilit ie s a n d u nsecu re d n ote s in den tu re ; • ris ks a sso cia te d w it h o ur is su an ce o f P re fe rre d S to ck a n d P IP E W arra n ts t o t h e P IP E I n vesto rs a n d t h e 2 017 W arra n ts ( a s d efin ed b elo w ); • ris ks a sso cia te d w it h t h e r e te n tio n o r t ra n sit io n o f e xe cu tiv e o ffic ers a n d k ey e m plo yees; • our e xp ecta tio n r e g ard in g t h e in te rim a n d u lt im ate o utc o m e o f c o m merc ia l d is p ute s, in clu din g lit ig atio n; • unfa v ora b le e co nom ic a n d m ark et c o ndit io ns; • dis ru ptio ns in s u pplie s a n d s erv ic es re su lt in g fro m fo rc e m aje u re e v en ts s u ch a s w ar, s trik e, rio t, c rim e, o r “ acts o f G od” s u ch a s h urric an es, flo odin g, bliz za rd s o r e arth quakes; • dela y s o r s u sp en sio ns o f f e d era l a n d s ta te p ay m en ts f o r s erv ic es p ro vid ed ; • effo rts t o r e d uce h ealt h care c o sts a n d a lt e r h ealt h c are f in an cin g, w hic h m ay in volv e r e d uctio ns in r e im burs em en t f o r o ur p ro ducts a n d s erv ic es; • effe cts o f t h e 2 1 st C en tu ry A ct ( th e “ C ure s A ct” ); • th e e ffe ct o f h ealt h re fo rm e ffo rts in clu din g th e P atie n t P ro te ctio n a n d A ffo rd ab le C are A ct, a s a m en ded b y th e H ealt h C are a n d E d ucatio n R eco ncilia tio n Act o f 2010 ( to geth er t h e “ A ffo rd ab le C are A ct” ), a n d v alu e-b ased p ay m en t in it ia tiv es, in clu din g a cco unta b le c are o rg an iz a tio ns ( “ A CO s”); • av aila b ilit y o f f in an cin g s o urc es; • declin es a n d o th er c h an ges in r e v en ue d ue t o t h e e xp ir a tio n o f s h ort-te rm c o ntra cts ; • netw ork lo cko uts a n d d ecis io ns t o in -s o urc e b y h ealt h in su re rs in clu din g lo cko uts w it h r e sp ect t o a cq uir e d e n tit ie s; • unfo re seen c o ntra ct t e rm in atio ns; • dif fic u lt ie s in t h e im ple m en ta tio n a n d o ngoin g e v olu tio n o f o ur o pera tin g s y ste m s; 3Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm • dif fic u lt ie s w it h t h e im ple m en ta tio n o f o ur g ro w th s tra te g y a n d in te g ra tin g b usin esses w e h av e a cq uir e d o r w ill a cq uir e ; • in cre ases o r o th er c h an ges in o ur a cq uis it io n c o st f o r o ur p ro ducts ; • in cre ased c o m petit io n f ro m c o m petit o rs h av in g g re ate r f in an cia l, t e ch nic al, r e im burs em en t, m ark etin g a n d o th er r e so urc es c o uld h av e t h e e ffe ct o f r e d ucin g pric es a n d m arg in s; • dis ru ptio ns in o ur r e la tio nsh ip w it h o ur p rim ary s u pplie r o f p re scrip tio n p ro ducts ; • th e le v el o f o ur in deb te d ness a n d it s e ffe ct o n o ur a b ilit y t o e xe cu te o ur b usin ess s tra te g y a n d in cre ased r is k o f d efa u lt u nder o ur d eb t o blig atio ns; • in tro ductio n o f n ew d ru gs, w hic h c an c au se p re scrib ers t o a d opt t h era p ie s f o r p atie n ts t h at a re le ss p ro fit a b le t o u s; • ch an ges in in dustry p ric in g b en ch m ark s, w hic h c o uld h av e t h e e ffe ct o f r e d ucin g p ric es a n d m arg in s; a n d • oth er r is ks a n d u ncerta in tie s d escrib ed f ro m t im e t o t im e in o ur f ilin gs w it h t h e S EC .

We m ake t h ese f o rw ard -lo okin g s ta te m en ts in r e lia n ce o n t h e s afe h arb or p ro te ctio ns p ro vid ed u nder t h e P riv ate S ecu rit ie s L it ig atio n R efo rm A ct o f 1 995.

You sh ould n ot p la ce u ndue r e lia n ce o n s u ch f o rw ard -lo okin g s ta te m en ts a s t h ey s p eak o nly a s o f t h e d ate t h ey a re m ad e. E xc ep t a s r e q uir e d b y la w , w e a ssu m e n o oblig atio n t o p ublic ly u pdate o r r e v is e a n y f o rw ard -lo okin g s ta te m en t e v en if e xp erie n ce o r f u tu re c h an ges m ake it c le ar t h at a n y p ro je cte d r e su lt s e xp re ssed o r im plie d t h ere in w ill n ot b e r e aliz e d .

4Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts PA RT I Ite m 1 .

Busin ess O ve rvie w Bio Scrip , In c. (“ B io Scrip ”, “ w e”, “ u s”, “ o ur” o r th e “ C om pan y”) is a n atio nal p ro vid er o f in fu sio n a n d h om e c are m an ag em en t s o lu tio ns.

We p artn er w it h physic ia n s, h osp it a l s y ste m s, p ay ors , p harm aceu tic al m an ufa ctu re rs a n d s kille d n urs in g f a cilit ie s t o p ro vid e p atie n ts a ccess t o p ost-a cu te c are s erv ic es. W e o pera te w it h a c o m mit m en t t o b rin g c u sto m er-fo cu sed p harm acy a n d r e la te d h ealt h care in fu sio n t h era p y s erv ic es in to t h e h om e o r a lt e rn ate -s it e s ettin g. B y c o lla b ora tin g w it h th e f u ll s p ectru m o f h ealt h care p ro fe ssio nals a n d t h e p atie n t, w e a im t o p ro vid e c o st-e ffe ctiv e c are t h at is d riv en b y c lin ic al e xc elle n ce, c u sto m er s erv ic e a n d v alu es th at p ro m ote p osit iv e o utc o m es a n d a n e n han ced q ualit y o f lif e f o r t h ose w hom w e s erv e.

Our p la tfo rm p ro vid es n atio nw id e s erv ic e c ap ab ilit ie s a n d t h e a b ilit y t o d eliv er c lin ic al m an ag em en t s erv ic es t h at o ffe r p atie n ts a h ig h-to uch , c o m munit y -b ased an d h om e-b ased c are e n vir o nm en t. O ur c o re s erv ic es a re p ro vid ed in c o ord in atio n w it h , a n d u nder t h e d ir e ctio n o f, t h e p atie n t’s p hysic ia n . O ur m ult id is cip lin ary t e am of c lin ic ia n s, in clu din g p harm acis ts , n urs es, d ie tit ia n s a n d r e sp ir a to ry t h era p is ts , w ork w it h t h e p hysic ia n t o d ev elo p a p la n o f c are s u it e d t o e ach p atie n t’s s p ecif ic need s. W heth er in t h e h om e, p hysic ia n o ffic e, a m bula to ry in fu sio n c en te r, s kille d n urs in g f a cilit y o r o th er a lt e rn ate s it e s o f c are , w e p ro vid e p ro ducts , s erv ic es a n d co ndit io n-s p ecif ic c lin ic al m an ag em en t p ro gra m s ta ilo re d to im pro ve th e c are o f in div id uals w it h c o m ple x h ealt h c o ndit io ns s u ch a s g astro in te stin al a b norm alit ie s, in fe ctio us d is eases, c an cer, m ult ip le s cle ro sis , o rg an a n d b lo od c ell t ra n sp la n ts , b le ed in g d is o rd ers , im mune d efic ie n cie s a n d h eart f a ilu re .

We w ere in co rp ora te d in D ela w are in 1996 as M IM C orp ora tio n, w it h o ur p rim ary b usin ess an d o pera tio ns at th e tim e co nsis tin g o f p harm acy b en efit m an ag em en t s erv ic es.

On S ep te m ber 9 , 2 016, w e a cq uir e d s u bsta n tia lly a ll o f t h e a ssets a n d a ssu m ed c erta in lia b ilit ie s o f H S I n fu sio n H old in gs, I n c. a n d it s s u bsid ia rie s p urs u an t t o a n A sset P u rc h ase A gre em en t d ate d J u ne 1 1, 2 016, b y a n d a m ong H om e S o lu tio ns, a D ela w are c o rp ora tio n, c erta in s u bsid ia rie s o f H om e S o lu tio ns, t h e C om pan y a n d H om eC hoic e P artn ers , In c., a D ela w are c o rp ora tio n.

Hom e S o lu tio ns, a p riv ate ly h eld c o m pan y, p ro vid ed h om e in fu sio n a n d h om e n urs in g p ro ducts a n d s erv ic es t o patie n ts s u ffe rin g f ro m c h ro nic a n d a cu te m ed ic al c o ndit io ns.

On A ugust 2 7, 2 015, w e c o m ple te d t h e s ale o f s u bsta n tia lly a ll o f o ur p harm acy b en efit m an ag em en t s erv ic es s eg m en t. W e u sed t h e n et p ro ceed s f ro m t h e P B M Sale t o p ay d ow n a p ortio n o f o ur o uts ta n din g d eb t.

O ur S tr en gth s Our c o m pan y h as a n um ber o f c o m petit iv e s tre n gth s, in clu din g:

Loca l C om petitiv e M ark et P ositio n w ith in O ur N atio nal P la tfo rm a nd I n fr a str u ctu re As o f Decem ber 3 1, 2 018 , w e h ad a t o ta l o f 68 s erv ic e lo catio ns in 27 s ta te s.

Our m odel c o m bin es lo cal p re sen ce w it h c o m pre h en siv e c lin ic al p ro gra m s f o r m ult ip le th era p ie s a n d s p ecif ic d eliv ery t e ch nolo gie s ( in fu sib le a n d in je cta b le ).

We h av e t h e c ap ab ilit ie s a n d p ay or r e la tio nsh ip s t o d is p en se p re scrip tio ns t o a ll 5 0 s ta te s.

We hav e re la tio nsh ip s w it h a p pro xim ate ly 1 ,0 00 p ay ors , in clu din g M an ag ed C are O rg an iz a tio ns (“ M CO s”), g overn m en t p ro gra m s s u ch a s M ed ic are a n d M ed ic aid a n d co m merc ia l in su re rs (“ T hir d P arty P ay ors ”).

We b elie v e p ay ors g en era lly fa v or fu lly in te g ra te d v en dors th at c an p ro vid e h ig h-to uch p harm acy s o lu tio ns to th eir patie n ts .

We b elie v e w e a re o ne o f a lim it e d n um ber o f p harm acy p ro vid ers th at c an o ffe r a tru ly n atio nal, in te g ra te d a n d c o m pre h en siv e a p pro ach to m an ag in g a patie n t’s c h ro nic o r a cu te c o ndit io ns.

D iv ersifie d a nd F avo ra ble P ayo r B ase We p ro vid e p re scrip tio n d ru gs, in fu sio n th era p y a n d c lin ic al m an ag em en t s erv ic es fo r a b ro ad ra n ge o f c o m merc ia l a n d g overn m en ta l p ay ors .

Appro xim ate ly 81% o f o ur p ay or b ase is c o m pris ed o f c o m merc ia l p ay ors th at o pera te a t a n atio nal, re g io nal o r lo cal le v el.

Aetn a H ealt h M an ag em en t, L LC a cco unte d fo r ap pro xim ate ly 10% o f c o nso lid ate d n et r e v en ue d urin g t h e y ear e n ded D ecem ber 3 1, 2 018 a n d U nit e d H ealt h care In su ra n ce C om pan y a cco unte d f o r 18% a n d 24% o f co nso lid ate d n et re v en ue d urin g th e y ears e n ded D ecem ber 3 1, 2 017 a n d 2 016. G overn m en t p ay ors , in clu din g M ed ic are , s ta te M ed ic aid a n d o th er g overn m en t pay ors , a cco unte d f o r 18% o f c o nso lid ate d r e v en ue d urin g t h e year e n ded D ecem ber 3 1, 2 018 .

Fo r th e year e n ded D ecem ber 3 1, 2 018 , M ed ic are a cco unte d f o r 8% o f our c o nso lid ate d n et r e v en ue.

5Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts The c o sts s av in gs r e aliz e d b y a d m in is te rin g in fu sio n t h era p ie s in t h e h om e v ers u s h osp it a ls , s kille d n urs in g f a cilit ie s o r o th er p ost-a cu te c are f a cilit ie s p osit io ns our b usin ess to b en efit fro m h ealt h care re fo rm in it ia tiv es th at fo cu s o n c o st s av in gs. M ed ic are c u rre n tly o ffe rs lim it e d re im burs em en t fo r h om e in fu sio n th era p y pro ducts a n d s erv ic es.

Alt h ough t h e C ure s A ct s ig nif ic an tly r e d uced t h e le v el o f r e im burs em en t f o r c erta in o f t h e t h era p ie s t h at w e p ro vid e, w e b elie v e t h at h om e in fu sio n a n d o th er lo w -c o st in -h om e t h era p eu tic a lt e rn ativ es w ill b e im pacte d f a v ora b ly b y h ealt h r e fo rm in it ia tiv es f o cu sed o n c o st-re d uctio n. S ig nif ic an t h ealt h p la n co st s av in gs p er in fu sio n c an b e a ch ie v ed w hen t h era p y is p ro vid ed a t a n a lt e rn ativ e t re atm en t s it e c o m pare d t o o th er p atie n t s ettin gs.

E ffe ctiv e C are M anagem en t C lin ic a l P ro gra m s t h at a re D esig ned t o P ro duce P ositiv e C lin ic a l O utc o m es a nd R ed uce R ea dm is sio ns Our d iv ers if ie d a n d c o m pre h en siv e c lin ic al p ro gra m s, w hic h s p an n um ero us th era p eu tic a re as, a re d esig ned to im pro ve p atie n t o utc o m es.

Our h om e in fu sio n busin ess p ro vid es tra d it io nal in fu sio n th era p ie s fo r a cu te c o ndit io ns w it h a cco m pan yin g c lin ic al m an ag em en t a n d h om e c are .

Our in fu sio n p ro duct o ffe rin gs a n d serv ic es a re a ls o d esig ned to tre at p atie n ts w it h c h ro nic in fu sio n n eed s.

Chro nic c o ndit io ns re q uir e lo ng-te rm tre atm en t, o ngoin g c are g iv er a n d p atie n t c o unselin g an d e d ucatio n, a n d o ngoin g m onit o rin g a n d c o m munic atio n w it h p hysic ia n s t o e n co ura g e p atie n ts t o f o llo w t h era p ie s p re scrib ed b y t h eir p hysic ia n s.

Our C en te rs o f E xc elle n ce fo cu s o n in te rd is cip lin ary te am s to p ro vid e c lin ic al e xc elle n ce w it h o uts ta n din g p ers o nal s erv ic e.

Exte rn ally q ualif ie d b y a p an el o f le ad in g in dustry e xp erts , t h ese c en te rs e m plo y e v id en ce-b ased s ta n dard s o f c are , p olic ie s a n d p ro ced ure s b uilt o n in dustry -re co gniz e d b est p ra ctic es.

They a re le d by s p ecia lis ts w it h a d van ced c ertif ic atio ns a n d tra in in g w ho a re d ed ic ate d to d ev elo pin g, im pro vin g a n d s u sta in in g c lin ic al s erv ic es to a ch ie v e o ptim al p atie n t outc o m es a n d e xc eed t h e e xp ecta tio ns o f p atie n ts a n d r e fe rra l s o urc es.

Our c lin ic al m an ag em en t p ro gra m s in m ult ip le d is ease-s ta te th era p y p ro vid e u s o pportu nit ie s to c ro ss-s ell s erv ic es.

We b elie v e w e h av e e arn ed a p osit iv e re p uta tio n a m ong p atie n ts , p hysic ia n s, p ay ors a n d p harm aceu tic al m an ufa ctu re rs b y p ro vid in g q ualit y s erv ic e a n d fa v ora b le c lin ic al o utc o m es.

We b elie v e o ur pla tfo rm p ro vid es t h e n ecessary p ro gra m s a n d s erv ic es f o r b ette r a n d m ore e ffic ie n t c lin ic al o utc o m es f o r o ur p atie n ts .

Servic es We a re o ne o f t h e la rg est p ro vid ers o f h om e in fu sio n s erv ic es in t h e U nit e d S ta te s.

Hom e in fu sio n in volv es t h e p re p ara tio n, d eliv ery , a d m in is tra tio n a n d c lin ic al m onit o rin g o f p harm aceu tic al tre atm en ts th at a re a d m in is te re d to a p atie n t v ia in tra v en ous (in to th e v ein ), s u bcu ta n eo us (in to th e fa tty la y er u nder th e s kin ), in tra m uscu la r (in to th e m uscle ), in tra -s p in al (in to th e m em bra n es a ro und th e s p in al c o rd ) a n d e n te ra l (in to th e g astro in te stin al tra ct) m eth ods.

These m eth ods a re em plo yed w hen a p hysic ia n d ete rm in es th at th e b est o utc o m e c an b e a ch ie v ed th ro ugh u tiliz a tio n o f o ne o r m ore o f th e th era p ie s p ro vid ed th ro ugh th e ro ute s o f ad m in is tra tio n d escrib ed a b ove.

Our h om e in fu sio n s erv ic es p rim arily in volv e th e in tra v en ous a d m in is tra tio n o f m ed ic atio ns to tre at a w id e ra n ge o f a cu te a n d c h ro nic c o ndit io ns, s u ch a s in fe ctio ns, n utrit io nal d efic ie n cie s, v ario us im munolo gic a n d n eu ro lo gic d is o rd ers , c an cer, p ain a n d p allia tiv e c are .

Our s erv ic es a re u su ally p ro vid ed in t h e p atie n t’s hom e b ut m ay a ls o b e p ro vid ed a t o utp atie n t c lin ic s, s kille d n urs in g f a cilit ie s, p hysic ia n o ffic es o r a t o ne o f o ur a m bula to ry in fu sio n c en te rs .

We r e ceiv e p ay m en t f o r our h om e in fu sio n s erv ic es a n d m ed ic atio ns, p urs u an t t o p ro vid er a g re em en ts w it h g overn m en t s o urc es, s u ch a s M ed ic are a n d M ed ic aid p ro gra m s, M CO s a n d T hir d Party P ay ors .

We p ro vid e a w id e a rra y o f h om e in fu sio n p ro ducts a n d s erv ic es to m eet th e d iv ers e n eed s a n d p re fe re n ces o f p hysic ia n s, p atie n ts a n d p ay ors .

Dis eases co m monly re q uir in g in fu sio n th era p y in clu de in fe ctio ns th at a re u nre sp onsiv e to o ra l a n tib io tic s, c an cer a n d c an cer-re la te d p ain , d eh ydra tio n a n d g astro in te stin al dis eases o r d is o rd ers t h at r e q uir e I V f lu id s, p are n te ra l o r e n te ra l n utrit io n.

Oth er c o ndit io ns t h at m ay b e t re ate d w it h in fu sio n t h era p ie s in clu de c h ro nic d is eases s u ch as h eart f a ilu re , C ro hn’s d is ease, h em ophilia , im mune d efic ie n cie s, m ult ip le s cle ro sis , r h eu m ato id a rth rit is , g ro w th d is o rd ers a n d g en etic e n zy m e d efic ie n cie s, s u ch a s Gau ch er’s o r P om pe’s d is ease.

The t h era p ie s a n d p ro ducts m ost c o m monly p ro vid ed a re lis te d b elo w :

6Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Thera p y T ype Descrip tio n Pare n te ra l N utr itio n ( P N ) Pro vid e in tra v en ous n utrit io n c u sto m iz e d to th e n utrit io nal n eed s o f th e p atie n t. P N is u sed in patie n ts th at c an not m eet th eir n utrit io nal n eed s v ia o th er m ean s d ue to d is ease p ro cess o r a s a co m plic atio n o f a d is ease p ro cess, s u rg ic al p ro ced ure o r c o ngen it a l a n om aly . P N m ay b e u sed s h ort te rm o r c h ro nic ally .

Ente ra l N utr itio n ( E N ) Pro vid e n utrit io n d ir e ctly to th e s to m ach o r in te stin e in p atie n ts w ho c an not c h ew o r s w allo w nutrie n ts in t h e u su al m an ner. E N m ay b e d eliv ere d v ia a n aso -g astric t u be o r a t u be p la ced d ir e ctly in to t h e s to m ach o r in te stin e. E N m ay b e u sed s h ort t e rm o r c h ro nic ally .

Antim ic ro bia l T hera py ( A T) Pro vid e in tra v en ous an tim ic ro bia l m ed ic atio ns u sed in th e tre atm en t o f p atie n ts w it h v ario us in fe ctio us p ro cesses s u ch a s: w ound in fe ctio ns, p neu m onia , o ste o m yelit is , c y stic fib ro sis , L y m e dis ease a n d c ellu lit is . A T m ay a ls o b e u sed in p atie n ts w it h d is ease p ro cesses o r t h era p ie s t h at m ay le ad t o in fe ctio ns w hen o ra l a n tim ic ro bia ls a re n ot e ffe ctiv e.

Chem oth era py Pro vid e in je cta b le a n d/o r in fu sed m ed ic atio ns in t h e h om e o r t h e p re scrib er’s o ffic e f o r t h e t re atm en t of c an cer. A dju van t m ed ic atio ns m ay a ls o b e p ro vid ed t o m in im iz e t h e s id e e ffe cts a sso cia te d w it h ch em oth era p y.

Im mune G lo bulin ( IG ) T hera py Pro vid e im mune g lo bulin s in tra v en ously o r s u bcu ta n eo usly o n a n a s-n eed ed b asis in p atie n ts w it h im mune d efic ie n cie s o r a u to -im mune d is eases. T his t h era p y m ay b e c h ro nic b ased o n t h e e tio lo gy of t h e im mune d efic ie n cy .

Pain M anagem en t Pro vid e an alg esic m ed ic atio ns in tra v en ously , su bcu ta n eo usly or ep id ura lly . T his th era p y is gen era lly a d m in is te re d a s a c o ntin uous in fu sio n v ia a n in te rn al o r e xte rn al in fu sio n p um p to tre at sev ere p ain a sso cia te d w it h d is eases s u ch a s C O PD , c an cer a n d s ev ere in ju ry .

Blo od F acto r T hera pie s Pro vid e m ed ic atio ns t o p atie n ts w it h o ne o f s ev era l in herit e d b le ed in g d is o rd ers in w hic h a p atie n t does n ot m an ufa ctu re th e c lo ttin g fa cto rs n ecessary , o r u se th e c lo ttin g fa cto rs th eir liv er m akes, ap pro pria te ly in o rd er t o h alt a n e xte rn al o r in te rn al b le ed in r e sp onse t o a p hysic al in ju ry o r t ra u m a.

In otr o pes T hera py Pro vid e in tra v en ous in otro pes in t h e h om e f o r t h e t re atm en t o f h eart f a ilu re , e it h er in a n tic ip atio n o f card ia c t ra n sp la n t o r t o p ro vid e p allia tio n o f h eart f a ilu re s y m pto m s.

In otro pes in cre ase t h e s tre n gth of w eak h eart m uscle s t o p um p b lo od. T he t h era p y is o nly s ta rte d in la te p hase h eart f a ilu re w hen alt e rn ativ e t h era p ie s p ro ved in ad eq uate .

Resp ir a to ry T hera py/H om e M ed ic a l E quip m en t Pro vid e o xy gen s y ste m s, c o ntin uous o r b i- le v el p osit iv e a ir w ay p re ssu re d ev ic es, n eb uliz e rs , h om e ven tila to rs , r e sp ir a to ry d ev ic es, r e sp ir a to ry m ed ic atio ns a n d o th er m ed ic al e q uip m en t.

Patie n ts g en era lly a re re fe rre d to u s b y p hysic ia n s, h osp it a l d is ch arg e p la n ners , M CO s a n d o th er re fe rra l s o urc es.

Our m ed ic atio ns a re c o m pounded a n d dis p en sed u nder th e s u perv is io n o f a re g is te re d p harm acis t in a s ta te lic en sed p harm acy th at is a ccre d it e d b y a n in dep en den t a ccre d it in g o rg an iz a tio n.

We co m pound p urs u an t to a p atie n t s p ecif ic p re scrip tio n a n d d o s o c o nsis te n tly w it h U .S . P h arm aco peia l C onven tio n (“ U SP”) 7 97 s ta n dard s.

A n atio nal a ccre d it in g org an iz a tio n s u rv ey s o ur p harm acie s fo r c o m plia n ce w it h th e U SP 7 97 s ta n dard s fo r s te rile d ru g c o m poundin g p harm acie s a n d h as c o nfir m ed th at w e o pera te co nsis te n tly w it h th ose sta n dard s.

Thera p ie s are ty pic ally ad m in is te re d in th e p atie n t’s h om e b y a re g is te re d n urs e o r tra in ed care g iv er.

Dep en din g o n th e pre fe re n ces o f t h e p atie n t o r t h e p ay or, t h ese s erv ic es m ay a ls o b e p ro vid ed a t o ne o f o ur a m bula to ry in fu sio n c en te rs , a p hysic ia n 's o ffic e o r a n oth er a lt e rn ate s it e o f ad m in is tra tio n.

We c u rre n tly h av e re la tio nsh ip s w it h a la rg e n um ber o f M CO s a n d o th er T hir d P arty P ay ors to p ro vid e h om e in fu sio n s erv ic es.

These re la tio nsh ip s a re a t a natio nal, r e g io nal o r lo cal le v el.

A k ey e le m en t o f o ur b usin ess s tra te g y is t o le v era g e o ur r e la tio nsh ip s, g eo gra p hic c o vera g e, c lin ic al e xp ertis e a n d r e p uta tio n in o rd er to g ain c o ntra cts w it h p ay ors .

Our in fu sio n s erv ic e c o ntra cts t y pic ally p ro vid e f o r u s t o r e ceiv e a f e e f o r p re p arin g a n d d eliv erin g m ed ic atio ns a n d r e la te d e q uip m en t to p atie n ts in th eir h om es o r in A mbula to ry In fu sio n S it e s (“ A IS ”).

Pric in g fo r p harm aceu tic al p ro ducts is ty pic ally n eg otia te d in ad van ce o n th e b asis o f A vera g e W hole sale P ric e ( “ A W P”) m in us s o m e p erc en ta g e o f c o ntra ctu al d is co unt, o r A vera g e S ale s P ric e ( “ A SP”) p lu s s o m e p erc en ta g e.

In a d dit io n, w e t y pic ally re ceiv e a p er d ie m p ay m en t f o r a d dit io nal s erv ic es a n d s u pplie s p ro vid ed t o p atie n ts in c o nnectio n w it h in fu sio n s erv ic es. A n a d dit io nal p ay m en t is m ad e f o r n urs in g serv ic es w hen s erv ic es a re p ro vid ed .

7Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Sale s a n d M ark etin g We h av e o ver 2 60 s ale s a n d m ark etin g r e p re sen ta tiv es a n d a p pro xim ate ly 1 ,0 00 p ay or r e la tio nsh ip s in clu din g M CO s, M ed ic are P art D p harm acy n etw ork s, o th er govern m en t p ro gra m s s u ch a s M ed ic are a n d M ed ic aid a n d o th er T hir d P arty P ay ors .

Our s ale s a n d m ark etin g e ffo rts a re f o cu sed o n p ay ors , h ealt h care s y ste m s a n d physic ia n p re scrib ers a n d a re d riv en b y d ed ic ate d m an ag ed c are a n d p hysic ia n s ale s te am s a s w ell a s h om e h ealt h c are c o nsu lt a n ts .

Our s ale s a n d m ark etin g stra te g ie s in clu de t h e d ev elo pm en t o f s tro ng r e la tio nsh ip s w it h k ey r e fe rra l s o urc es, s u ch a s p hysic ia n s, h osp it a l d is ch arg e p la n ners , c ase m an ag ers , lo ng-te rm c are fa cilit ie s a n d o th er h ealt h care p ro fe ssio nals , p rim arily t h ro ugh r e g ula r c o nta ct w it h t h e r e fe rra l s o urc es a n d b y f u lf illin g t h e c are a n d s erv ic e e xp ecta tio ns o f o ur m an y cu sto m ers .

Contra cts w it h T hir d P arty P ay ors , in clu din g M CO s, a re a n in te g ra l c o m ponen t f o r s ale s s u ccess.

In te lle ctu al P roperty We o w n a n d u se a v arie ty o f t ra d em ark s, t ra d e n am es a n d s erv ic e m ark s, in clu din g w it h out lim it a tio n “ B io Scrip ”, “ B io Scrip I n fu sio n S erv ic es”, “ B io Scrip N urs in g Serv ic es”, “ B io Scrip P h arm acy S erv ic es”, “ C are P o in t P artn ers ”, “ H om eC hoic e P artn ers ”, “ In fu Scie n ce”, “ In fu sio n C are ”, “ In fu sio n P artn ers ”, “ In fu sio n S o lu tio ns”, “N ew E n gla n d H om e T hera p ie s”, “ O ptio n H ealt h ”, “ P ro fe ssio nal H om e C are S erv ic es”, “ W ilc o x H om e In fu sio n”, a n d “ H om e S o lu tio ns”, e ach o f w hic h h as e it h er been r e g is te re d a t t h e s ta te o r f e d era l le v el o r is b ein g u sed p urs u an t t o c o m mon la w r ig hts .

We a re r e co gniz e d in lo cal m ark ets b y s ev era l o f t h ese t ra d e n am es, b ut w e d o n ot c o nsid er t h e m ark s m ate ria l t o o ur b usin ess.

C om petitio n The h om e in fu sio n s erv ic es m ark et is h ig hly c o m petit iv e a n d in clu des a lim it e d n um ber o f n atio nal p ro vid ers a n d n um ero us lo cal a n d re g io nal c o m pan ie s.

Pro vid ers s triv e t o d if fe re n tia te t h eir s erv ic es b ased o n t h eir r e sp onsiv en ess t o p atie n t n eed s, q ualit y o f c are , r e p uta tio n, o utc o m es, a n d c o st o f s erv ic e.

Our C en te rs of E xc elle n ce o ffe r a h ig h t o uch , h ig h s erv ic e a p pro ach t o c are o n a lo cal b asis , w hic h w e b elie v e d if fe re n tia te s o ur s erv ic e.

Our c o m petit o rs w it h in t h e h om e in fu sio n m ark et in clu de O ptio n C are , C ora m C VS/s p ecia lt y in fu sio n s erv ic es ( a d iv is io n o f C VS H ealt h ), A ccre d o H ealt h G ro up, In c. (a u nit o f C ig na), B rio va (a s u bsid ia ry o f O ptu m Rx, w hic h is a u nit o f th e U nit e d H ealt h care In su ra n ce C om pan y) a n d v ario us re g io nal a n d lo cal p ro vid ers o f alt e rn ate s it e h ealt h care s erv ic es s u ch a s h osp it a ls a n d p hysic ia n p ra ctic es.

G ove rn m en t R eg ula tio n The h ealt h care in dustry is s u bje ct t o e xte n siv e r e g ula tio n b y a n um ber o f g overn m en ta l e n tit ie s a t t h e f e d era l, s ta te a n d lo cal le v el. L aw s a n d r e g ula tio ns in t h e healt h care in dustry a re e xtre m ely c o m ple x a n d, in m an y in sta n ces, th e in dustry d oes n ot h av e th e b en efit o f s ig nif ic an t re g ula to ry o r ju dic ia l in te rp re ta tio n.

Our busin ess is im pacte d n ot o nly b y th ose la w s a n d re g ula tio ns th at a re d ir e ctly a p plic ab le to u s b ut a ls o b y c erta in la w s a n d re g ula tio ns th at a re a p plic ab le to o ur pay ors , v en dors a n d r e fe rra l s o urc es.

While o ur m an ag em en t b elie v es w e a re in s u bsta n tia l c o m plia n ce w it h a ll o f t h e e xis tin g la w s a n d r e g ula tio ns a p plic ab le t o u s, su ch la w s a n d r e g ula tio ns a re s u bje ct t o r a p id c h an ge a n d o fte n a re u ncerta in in t h eir a p plic atio n a n d e n fo rc em en t.

Fu rth er, t o t h e e xte n t w e e n gag e in n ew b usin ess in it ia tiv es, w e m ust c o ntin ue t o e v alu ate w heth er n ew la w s a n d r e g ula tio ns a re a p plic ab le t o u s.

There c an b e n o a ssu ra n ce t h at w e w ill n ot b e s u bje ct t o s cru tin y o r ch alle n ge u nder o ne o r m ore o f t h ese la w s o r t h at a n y e n fo rc em en t a ctio ns w ould n ot b e s u ccessfu l.

Any s u ch c h alle n ge, w heth er o r n ot s u ccessfu l, c o uld h av e a m ate ria l a d vers e e ffe ct u pon o ur b usin ess a n d c o nso lid ate d f in an cia l s ta te m en ts .

Among t h e v ario us f e d era l a n d s ta te la w s a n d r e g ula tio ns t h at m ay g overn o r im pact o ur c u rre n t a n d p la n ned o pera tio ns a re t h e f o llo w in g:

M ed ic a re a nd M ed ic a id R eim burse m en t Man y o f t h e p ro ducts a n d s erv ic es t h at w e p ro vid e a re r e im burs ed b y M ed ic are a n d s ta te M ed ic aid p ro gra m s a n d a re t h ere fo re s u bje ct t o e xte n siv e g overn m en t re g ula tio n.

Med ic are is a f e d era lly f u nded p ro gra m t h at p ro vid es h ealt h in su ra n ce c o vera g e f o r q ualif ie d p ers o ns a g e 6 5 o r o ld er, s o m e d is ab le d p ers o ns, a n d p ers o ns w it h en d-s ta g e r e n al d is ease a n d p ers o ns w it h L o u G eh rig ’s d is ease. M ed ic aid p ro gra m s a re jo in tly f u nded b y t h e f e d era l a n d s ta te g overn m en ts a n d a re a d m in is te re d b y sta te s u nder a p pro ved p la n s.

8Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Med ic aid p ro vid es m ed ic al b en efit s to e lig ib le p eo ple w it h lim it e d in co m e a n d re so urc es a n d p eo ple w it h d is ab ilit ie s, a m ong o th ers . A lt h ough th e fe d era l govern m en t e sta b lis h es g en era l g uid elin es f o r t h e M ed ic aid p ro gra m , e ach s ta te s ets it s o w n g uid elin es r e g ard in g e lig ib ilit y a n d c o vere d s erv ic es. S o m e in div id uals , kn ow n a s d ual e lig ib le s, m ay b e e lig ib le f o r b en efit s u nder b oth M ed ic are a n d a s ta te M ed ic aid p ro gra m . R eim burs em en t u nder t h e M ed ic are a n d M ed ic aid p ro gra m s is c o ntin gen t o n th e s atis fa ctio n o f n um ero us ru le s a n d re g ula tio ns, in clu din g th ose re q uir in g c ertif ic atio n a n d/o r lic en su re . C ongre ss o fte n e n acts le g is la tio n th at affe cts t h e r e im burs em en t r a te s u nder g overn m en t h ealt h care p ro gra m s.

Appro xim ate ly 18% o f o ur re v en ue fo r th e year e n ded D ecem ber 3 1, 2 018 w as d eriv ed d ir e ctly fro m M ed ic are , M ed ic aid o r o th er g overn m en t-s p onso re d healt h care p ro gra m s.

Als o , w e in dir e ctly p ro vid e s erv ic es to b en efic ia rie s o f M ed ic are , M ed ic aid a n d o th er g overn m en t-s p onso re d h ealt h care p ro gra m s th ro ugh m an ag ed c are e n tit ie s.

Sh ould th ere b e m ate ria l c h an ges to fe d era l o r s ta te re im burs em en t m eth odolo gie s, re g ula tio ns o r p olic ie s, o ur d ir e ct re im burs em en ts fro m govern m en t-s p onso re d h ealt h care p ro gra m s, a s w ell a s s erv ic e f e es t h at r e la te in dir e ctly t o s u ch r e im burs em en ts , c o uld b e a d vers ely a ffe cte d .

Med ic a re We r e ceiv e r e im burs em en t f o r in fu sio n t h era p y u nder t h e M ed ic are p ro gra m , w hic h h as f o ur p arts . M ed ic are P art A g en era lly c o vers in patie n t h osp it a l, s kille d nurs in g fa cilit y , h om e n urs in g a n d h osp ic e s erv ic es; M ed ic are P art B c o vers p hysic ia n s' s erv ic es, o utp atie n t s erv ic es, it e m s a n d s erv ic es p ro vid ed b y m ed ic al su pplie rs a n d a lim it e d n um ber o f p re scrip tio n d ru gs; M ed ic are P art C a llo w s b en efic ia rie s t o e n ro ll in p riv ate h ealt h care p la n s ( k n ow n a s M ed ic are A dvan ta g e p la n s); an d M ed ic are P art D p ro vid es f o r a v olu nta ry p re scrip tio n d ru g b en efit .

Med ic are f e e-fo r-s erv ic e p ro gra m s, P art A a n d P art B , g en era lly c o ver in fu sio n t h era p y p ro vid ed in h osp it a ls a n d h osp it a l o utp atie n t d ep artm en ts , s kille d n urs in g fa cilit ie s, a n d p hysic ia n o ffic es. P art A c o vers in fu sio n th era p y s erv ic es u nder th e h om e h ealt h b en efit if th e s erv ic es a re re n dere d b y a M ed ic are -c ertif ie d h om e healt h a g en cy a n d t h e b en efic ia ry m eets c rit e ria f o r h om eb ound s ta tu s. P art B g en era lly d oes n ot c o ver t h e f u ll r a n ge o f s erv ic es f o r in fu sio n t h era p ie s in a p atie n t’s hom e b ut it c o vers a lim it e d n um ber o f d ru gs a d m in is te re d u sin g a n e xte rn al in fu sio n p um p u nder th e d ura b le m ed ic al e q uip m en t (“ D M E”) b en efit . A lt h ough M ed ic are P art D c o vers p ay m en t fo r d ru gs (in clu din g m an y n ot c o vere d u nder P art B ) a n d a re ta il- b ased d is p en sin g fe e, P art D d oes n ot c o ver in fu sio n-re la te d serv ic es, e q uip m en t a n d s u pplie s.

Fo r e lig ib le M ed ic are b en efic ia rie s, th e c o st o f e q uip m en t a n d s u pplie s a sso cia te d w it h in fu sed d ru gs c o vere d u nder M ed ic are Part D m ay b e re im burs ed o n a lim it e d b asis u nder P art A o r P art B , a n d th e c o st o f a sso cia te d p ro fe ssio nal s erv ic es m ay b e re im burs ed o n a lim it e d b asis u nder M ed ic are P art A .

CM S h as a tte m pte d to c la rif y th e re la tio nsh ip o f P art B a n d P art D w it h re g ard to c o vera g e o f in fu sed d ru gs. C M S h as s ta te d th at c o vera g e is gen era lly d ete rm in ed b y t h e d ia g nosis a n d t h e m eth od o f d ru g d eliv ery .

The U .S . D ep artm en t o f H ealt h a n d H um an S erv ic es ( “ H HS”), O ffic e o f t h e I n sp ecto r G en era l ( “ O IG ”) a n d C M S c o ntin ue t o is su e r e g ula tio ns a n d g uid an ce w it h re g ard t o t h e M ed ic are P art D p ro gra m a n d c o m plia n ce b y M ed ic are P art D s p onso rs a n d t h eir s u bco ntra cto rs .

The r e ceip t o f f u nds m ad e a v aila b le t h ro ugh M ed ic are Part D is s u bje ct t o c o m plia n ce w it h g overn m en t la w s a n d r e g ula tio ns a n d p ro vis io ns in c o ntra cts w it h p re scrip tio n d ru g p la n s.

There a re m an y u ncerta in tie s a b out th e f in an cia l a n d r e g ula to ry r is ks o f p artic ip atin g in t h e M ed ic are P art D p ro gra m , a n d t h ese r is ks c o uld n eg ativ ely im pact o ur b usin ess in f u tu re p erio ds.

Med ic a re A dva nta ge Under M ed ic are P art C , a ls o k n ow n a s M ed ic are A dvan ta g e, b en efic ia rie s c an c h oose t o e n ro ll in a h ealt h in su ra n ce p la n a d m in is te re d b y a n M CO . M ed ic are A dvan ta g e p la n s a re r e q uir e d t o o ffe r t h e b en efit s c o vere d u nder M ed ic are P art A a n d P art B , w it h t h e e xc ep tio n o f h osp ic e c are , a n d m ay in clu de a d dit io nal b en efit s .

To s erv e M ed ic are A dvan ta g e b en efic ia rie s, a p ro vid er m ust c o ntra ct w it h a M ed ic are A dvan ta g e p la n .

Reim burs em en t a n d o th er re q uir e m en ts im posed o n th e pro vid er a re g overn ed b y th e a g re em en t w it h th e M ed ic are A dvan ta g e p la n ra th er th an b y s ta tu te o r re g ula tio n a n d a s s u ch v ary fro m p la n to p la n .

Med ic are A dvan ta g e p la n s a re p erm it te d to c o ver c erta in s erv ic es th at fe e-fo r-s erv ic e M ed ic are d oes n ot c o ver.

Hom e in fu sio n th era p y s erv ic es a re c o vere d u nder m an y M ed ic are A dvan ta g e p la n s. W e c u rre n tly h av e c o ntra cts w it h a n um ber o f M ed ic are A dvan ta g e p la n s.

Changes t o M ed ic a re R eim burse m en t In re cen t y ears , le g is la tiv e a n d re g ula to ry c h an ges h av e re su lt e d in lim it a tio ns a n d re d uctio ns in re im burs em en t u nder g overn m en t h ealt h care p ro gra m s. F o r exa m ple , t h e C ure s A ct, w hic h C ongre ss p assed in D ecem ber o f 2 016, c h an ged t h e p ay m en t m eth odolo gy f o r c erta in in fu sio n d ru gs u nder t h e P art B D M E b en efit .

Sig nif ic an t re d uctio ns to th e am ount p aid b y M ed ic are fo r m an y in fu sio n d ru gs to ok effe ct Ja n uary 1, 2017. In ad dit io n, th e C ure s A ct p ro vid es fo r th e im ple m en ta tio n o f a c lin ic al s erv ic es p ay m en t u nder P art B f o r “ q ualif ie d h om e in fu sio n t h era p y s u pplie rs .” U nder t h is n ew p ay m en t s y ste m , M ed ic are w ill r e im burs e hom e in fu sio n t h era p y s u pplie rs b ased o n a s in gle , a ll- in clu siv e r a te .

The s erv ic es p ay m en t p ro vis io n d oes n ot t a ke e ffe ct u ntil 9Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Ja n uary 1 , 2 021. H ow ev er, t h e B ip artis an B udget A ct o f 2 018 p ro vid es f o r t e m pora ry t ra n sit io nal b en efit p ay m en ts , s ta rtin g J a n uary 1 , 2 019, f o r M ed ic are P art B h om e in fu sio n s erv ic es. C M S f in aliz e d a r u le in O cto ber 2 018 t o im ple m en t t h is t e m pora ry b en efit , w hic h w ill c o ntin ue u ntil J a n uary 1 , 2 021 w hen t h e s erv ic es p ay m en t in th e C ure s A ct ta kes e ffe ct. W e h av e ta ken s te p s to m it ig ate th e im pact o f th e C ure s A ct o n o ur b usin ess, b ut th e A ct h as h ad a m ate ria l n eg ativ e im pact o n o ur re v en ues a n d p ro fit a b ilit y .

Med ic a id Med ic aid c o vera g e o f in fu sio n t h era p y v arie s b y s ta te . W e a re s en sit iv e t o p ossib le c h an ges in s ta te M ed ic aid p ro gra m s. B udgeta ry c o ncern s in m an y s ta te s hav e r e su lt e d in , a n d m ay c o ntin ue t o r e su lt in , r e d uctio ns t o M ed ic aid r e im burs em en t a n d d ela y s in p ay m en t o f o uts ta n din g c la im s. In a d dit io n, m an y s ta te s h av e im ple m en te d o r a re c o nsid erin g s tra te g ie s t o r e d uce c o vera g e, r e stric t e lig ib ilit y , o r e n ro ll M ed ic aid r e cip ie n ts in m an ag ed c are p ro gra m s. A s o f J a n uary 1 , 2 018, a ll pharm acie s p artic ip atin g in a M ed ic aid m an ag ed c are p ro gra m m ust b e r e g is te re d w it h t h e s ta te M ed ic aid a g en cy. A ny r e d uctio ns t o o r d ela y s in c o lle ctin g a m ounts re im burs ab le b y s ta te M ed ic aid p ro gra m s fo r o ur p ro ducts o r s erv ic es, o r c h an ges in re g ula tio ns g overn in g s u ch re im burs em en ts , c o uld c au se o ur re v en ue a n d pro fit a b ilit y to d eclin e a n d in cre ase o ur w ork in g c ap it a l re q uir e m en ts . E ffe ctiv e Ja n uary 1 , 2 018, C M S lim it e d M ed ic aid re im burs em en t fo r D M E to n o m ore th an M ed ic are p ay m en t r a te s. F o r f u rth er d is cu ssio n o n s ta te M ed ic aid r e d uctio ns, r e fe r t o “ M an ag em en t’s D is cu ssio n a n d A naly sis o f F in an cia l C ondit io n a n d R esu lt s of O pera tio ns” in P art I I, I te m 7 .

In a d dit io n, s o m e M ed ic aid p ro gra m s o nly a llo w f o r r e im burs em en t t o p harm acie s r e sid in g in t h e s ta te o r in a b ord er s ta te . W hile w e b elie v e w e c an s erv ic e o ur cu rre n t M ed ic aid p atie n ts t h ro ugh o ur e xis tin g in fu sio n p harm acie s, t h ere c an b e n o a ssu ra n ce t h at a d dit io nal s ta te s w ill n ot e n act in -s ta te d is p en sin g r e q uir e m en ts fo r t h eir M ed ic aid p ro gra m s. T o t h e e xte n t s u ch r e q uir e m en ts a re e n acte d , c erta in t h era p eu tic p harm aceu tic al r e im burs em en ts c o uld b e a d vers ely a ffe cte d .

Sta te L eg is la tio n a nd O th er M atte rs A ffe ctin g D ru g P ric es Man y s ta te s h av e a d opte d “ m ost f a v ore d n atio n” le g is la tio n, w hic h lim it s t h e a m ount a p harm acy p artic ip atin g in t h e s ta te M ed ic aid p ro gra m is p aid b ased o n th e p harm acy ’s p ric es a p plic ab le t o t h ir d p arty p la n s, o r in s o m e in sta n ces, s elf -p ay p atie n ts .

Becau se o f t h ese lim it a tio ns, w e m ay n ot r e ceiv e t h e f u ll M ed ic aid f e e sch ed ule a m ounts in s o m e in sta n ces.

There is w id e v aria tio n in d ra ftin g, in te rp re ta tio n a n d e n fo rc em en t o f s ta te “ m ost f a v ore d n atio n” le g is la tio n.

Our m an ag em en t care fu lly c o nsid ers th ese la w s a n d b elie v es th at e ach o f o ur re sp ectiv e c o m pan ie s is in m ate ria l c o m plia n ce w it h th em ; h ow ev er, w e c an not p re d ic t w heth er th e re g ula to rs w ill d is ag re e w it h o ur in te rp re ta tio n o r c h an ge t h eir in te rp re ta tio n o f t h e la w s o r t h eir e n fo rc em en t p rio rit ie s.

Pric in g b en ch m ark s in t h e p harm acy in dustry a re p ublis h ed b y t h ir d -p artie s s u ch a s F ir s t D ata B an k, M ed i- S p an , M ic ro m ed ex, R J H ealt h , a n d C M S. T he A vera g e W hole sale P ric e (“ A W P”) is o ne o f th e m ost c o m monly u sed b en ch m ark s. A lt h ough v ario us p ay ors h av e d is cu ssed e sta b lis h in g a n ew b en ch m ark a n d F ir s t D ata B an k c eased p ublic atio n o f th e A W P, th e in dustry h as n ot y et d ev elo ped a v ia b le g en era lly a ccep te d a lt e rn ativ e to th e A W P b en ch m ark . S ee “ R is k F acto rs - Ris ks R ela te d t o O ur B usin ess - C han ges in in dustry p ric in g b en ch m ark s c o uld a d vers ely a ffe ct o ur f in an cia l p erfo rm an ce.” H ea lth ca re R efo rm In r e cen t y ears , f e d era l a n d s ta te g overn m en ts h av e c o nsid ere d a n d e n acte d p olic y c h an ges d esig ned t o r e fo rm t h e h ealt h care in dustry . T he m ost p ro m in en t o f th ese h ealt h care re fo rm e ffo rts , th e A ffo rd ab le C are A ct, h as re su lt e d in s w eep in g c h an ges to th e U .S . s y ste m fo r th e d eliv ery a n d fin an cin g o f h ealt h c are .

As cu rre n tly s tru ctu re d , th e A ffo rd ab le C are A ct in cre ases th e n um ber o f p ers o ns c o vere d u nder g overn m en t p ro gra m s a n d p riv ate in su ra n ce; fu rn is h es e co nom ic in cen tiv es f o r m easu ra b le im pro vem en ts in h ealt h c are q ualit y o utc o m es; p ro m ote s a m ore in te g ra te d h ealt h c are d eliv ery s y ste m a n d t h e c re atio n o f n ew h ealt h c are deliv ery m odels ; r e v is es p ay m en t f o r h ealt h c are s erv ic es u nder t h e M ed ic are a n d M ed ic aid p ro gra m s; a n d in cre ases g overn m en t e n fo rc em en t t o ols a n d s an ctio ns fo r c o m batin g fra u d a n d a b use.

In a d dit io n, th e A ffo rd ab le C are A ct re d uced c o st s h arin g fo r M ed ic are b en efic ia rie s u nder th e P art D p re scrip tio n d ru g b en efit pro gra m a n d e xp an ded m ed ic atio n t h era p y m an ag em en t s erv ic es f o r in div id uals w it h c h ro nic c o ndit io ns.

How ev er, th e fu tu re o f th e A ffo rd ab le C are A ct is u ncerta in . T he A ffo rd ab le C are A ct h as b een s u bje ct to le g is la tiv e a n d re g ula to ry c h an ges a n d c o urt ch alle n ges, a n d t h e p re sid en tia l a d m in is tra tio n a n d c erta in m em bers o f C ongre ss h av e e xp re ssed t h eir in te n t t o r e p eal o r m ake a d dit io nal s ig nif ic an t c h an ges t o t h e A ffo rd ab le C are A ct, it s im ple m en ta tio n o r in te rp re ta tio n. T he p re sid en t h as s ig ned a n e xe cu tiv e o rd er th at d ir e cts a g en cie s to m in im iz e “ eco nom ic a n d re g ula to ry burd en s” o f t h e A ffo rd ab le C are A ct.

Fin al r u le s is su ed in 2 018 e xp an d t h e a v aila b ilit y o f a sso cia tio n h ealt h p la n s a n d a llo w t h e s ale o f s h ort-te rm , lim it e d -d ura tio n healt h p la n s, n eit h er o f w hic h a re re q uir e d to c o ver a ll o f th e e ssen tia l h ealt h b en efit s m an date d b y th e A ffo rd ab le C are A ct.

Effe ctiv e J a n uary 1 , 2 019, C ongre ss elim in ate d t h e f in an cia l p en alt y a sso cia te d w it h t h e in div id ual m an date . T hese c h an ges m ay a ffe ct t h e n um ber o f in div id uals e le ctin g t o p urc h ase h ealt h in su ra n ce o r th e s co pe o f s u ch c o vera g e, if p urc h ased . F u rth er, b ecau se t h e f in an cia l p en alt y a sso cia te d w it h in div id ual m an date w as e lim in ate d , a f e d era l c o urt in T exa s r u le d in D ecem ber 2 018 10 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts th at t h e e n tir e A ffo rd ab le C are A ct w as u nco nstit u tio nal.

How ev er, t h e la w r e m ain s in p la ce p en din g a p peal.

The im pact o f t h ese d ev elo pm en ts o r r e p eal o f o r f u rth er ch an ges to th e A ffo rd ab le C are A ct, a s w ell a s th e im pact o f a n y a lt e rn ativ e p ro vis io ns, o n th e h ealt h care in dustry a n d o ur b usin ess is u nkn ow n.

Mem bers o f Congre ss h av e a ls o p ro posed m easu re s th at w ould e xp an d g overn m en t-fu nded c o vera g e, s u ch a s s in gle -p ay or p ro posals .

Oth er in dustry p artic ip an ts , s u ch a s priv ate p ay ors a n d la rg e e m plo yer g ro ups a n d th eir a ffilia te s, m ay a ls o in tro duce fin an cia l o r d eliv ery s y ste m re fo rm s.

We a re u nab le to p re d ic t th e n atu re a n d su ccess o f s u ch in it ia tiv es.

R eg ula tio n o f t h e P harm acy I n dustr y Fo r e ach p hysic al p harm acy lo catio n in a s ta te , la w s r e q uir e m ain te n an ce o f a n in -s ta te p harm acy lic en se t o d is p en se p harm aceu tic als . P h arm acy a n d c o ntro lle d su bsta n ces la w s o fte n a d dre ss t h e q ualif ic atio ns o f p ers o nnel, t h e a d eq uacy o f p re scrip tio n f u lf illm en t a n d in ven to ry c o ntro l p ra ctic es a n d t h e a d eq uacy o f f a cilit ie s.

W e b elie v e o ur p harm acy lo catio ns m ate ria lly c o m ply w it h a ll s ta te lic en sin g la w s a p plic ab le t o t h eir p ra ctic e.

If o ur p harm acy lo catio ns b eco m e s u bje ct t o a d dit io nal lic en su re r e q uir e m en ts , a re u nab le o r o th erw is e f a il t o m ain ta in t h eir r e q uir e d lic en ses o r if s ta te s p la ce o verly b urd en so m e r e stric tio ns o r lim it a tio ns o n p harm acie s, our a b ilit y t o o pera te in s o m e s ta te s w ould b e lim it e d , w hic h c o uld h av e a n a d vers e im pact o n o ur b usin ess.

We b elie v e t h e im pact o f a n y s u ch r e q uir e m en ts w ould be m it ig ate d b y o ur a b ilit y t o s h if t b usin ess a m ong o ur n um ero us lo catio ns.

Man y s ta te s, a s w ell a s th e fe d era l g overn m en t, a re c o nsid erin g im posin g, o r h av e a lr e ad y b eg un to im pose, m ore s trin gen t re q uir e m en ts o n c o m poundin g pharm acie s in clu din g th e D ru g Q ualit y a n d S ecu rit y A ct (“ D QSA ”) (s ee F o od, D ru g, a n d C osm etic A ct b elo w ).

We b elie v e th at o ur c o m poundin g is d one in s afe en vir o nm en ts w it h c lin ic ally a p pro pria te p olic ie s a n d p ro ced ure s in p la ce.

Those c o m poundin g p harm acie s a d here to rig oro us s afe ty a n d q ualit y s ta n dard s fo r co m pounded s te rile p re p ara tio ns a n d o nly f ill p re scrip tio ns f o r in div id ually id en tif ie d p atie n ts p urs u an t t o a v alid p re scrip tio n f ro m a p re scrib er.

All c o m poundin g is done c o nsis te n tly w it h U SP 7 97 s ta n dard s.

Man y o f t h e s ta te s in to w hic h w e d eliv er p harm aceu tic als h av e la w s a n d r e g ula tio ns t h at r e q uir e o ut-o f-s ta te p harm acie s t o r e g is te r w it h o r b e lic en sed b y t h e board s o f p harm acy o r s im ila r r e g ula to ry b odie s in t h ose s ta te s.

These s ta te s g en era lly p erm it t h e d is p en sin g p harm acy t o f o llo w t h e la w s o f t h e s ta te w it h in w hic h th e d is p en sin g p harm acy is lo cate d .

How ev er, v ario us s ta te p harm acy b oard s h av e e n acte d la w s a n d/o r a d opte d ru le s o r re g ula tio ns d ir e cte d a t re stric tin g o r pro hib it in g th e o pera tio n o f o ut-o f-s ta te p harm acie s b y, a m ong o th er th in gs, re q uir in g c o m plia n ce w it h a ll la w s o f th e s ta te s in to w hic h th e o ut-o f-s ta te p harm acy dis p en ses m ed ic atio ns, w heth er o r n ot th ose la w s c o nflic t w it h th e la w s o f th e s ta te in w hic h th e p harm acy is lo cate d , o r re q uir in g th e p harm acis t-in -c h arg e to b e lic en sed in t h at s ta te .

To t h e e xte n t t h at s u ch la w s o r r e g ula tio ns a re a p plic ab le t o o ur o pera tio ns, w e b elie v e w e c o m ply w it h t h em .

To t h e e xte n t t h at t h e f o re g oin g la w s o r re g ula tio ns p ro hib it o r re stric t th e o pera tio n o f o ut-o f-s ta te p harm acie s a n d a re fo und to b e a p plic ab le to u s, th ey c o uld h av e a n a d vers e e ffe ct o n o ur opera tio ns.

Law s e n fo rc ed b y t h e U .S . D ru g E n fo rc em en t A dm in is tra tio n ( “ D EA ”) r e q uir e e ach o f o ur p harm acy lo catio ns t o r e g is te r w it h t h e D EA in o rd er t o h an dle a n d dis p en se c o ntro lle d s u bsta n ces.

A s ep ara te r e g is tra tio n is r e q uir e d a t e ach p rin cip al p la ce o f b usin ess w here w e d is p en se c o ntro lle d s u bsta n ces.

Fed era l a n d s ta te la w s a ls o re q uir e u s to fo llo w s p ecif ic la b elin g, re p ortin g a n d re co rd -k eep in g re q uir e m en ts fo r c o ntro lle d s u bsta n ces.

We m ain ta in fe d era l a n d s ta te c o ntro lle d su bsta n ce re g is tra tio ns fo r e ach o f o ur fa cilit ie s th at re q uir e s u ch re g is tra tio n a n d fo llo w p ro ced ure s in te n ded to c o m ply w it h a ll a p plic ab le fe d era l a n d s ta te re q uir e m en ts re g ard in g c o ntro lle d s u bsta n ces.

These la w s c an c h an ge fro m tim e to tim e.

We c o ntin uously re v ie w th ese c h an ges to la w s a n d b elie v e w e a re in m ate ria l c o m plia n ce w it h th e a p plic ab le fe d era l a n d s ta te c o ntro lle d s u bsta n ces la w s.

If a n y o f o ur p harm acy lo catio ns is d eem ed to b e o ut o f c o m plia n ce, it c o uld hav e a n a d vers e im pact o n o ur b usin ess.

Man y s ta te s in w hic h w e o pera te a ls o r e q uir e h om e in fu sio n c o m pan ie s t o b e lic en sed a s h om e h ealt h a g en cie s.

We b elie v e w e a re c o m plia n t w it h t h ese la w s in all m ate ria l re sp ects .

If o ur in fu sio n lo catio ns b eco m e s u bje ct t o n ew lic en su re r e q uir e m en ts , a re u nab le t o m ain ta in r e q uir e d lic en ses o r if s ta te s p la ce b urd en so m e re stric tio ns o r lim it a tio ns o n h om e h ealt h a g en cie s o r h om e n urs in g a g en cie s, o ur in fu sio n lo catio ns’ a b ilit y to p ro vid e n urs in g s erv ic es in s o m e s ta te s w ould b e lim it e d , w hic h c o uld h av e a n a d vers e im pact o n o ur b usin ess.

Each o f o ur p harm acie s a n d in fu sio n lo catio ns a re e lig ib le to p artic ip ate in M ed ic are a n d M ed ic aid p ro gra m s. If a n y p ro vid er w ere to lo se it s M ed ic are o r M ed ic aid c ertif ic atio n, th e p ro vid er w ould b e u nab le to re ceiv e re im burs em en t fro m fe d era l h ealt h care p ro gra m s. T he c o ndit io ns fo r M ed ic are a n d M ed ic aid partic ip atio n v ary d ep en din g o n t h e t y pe o f f a cilit y , b ut, in g en era l, r e q uir e o ur f a cilit ie s t o m eet s p ecif ie d s ta n dard s r e la tin g t o lic en su re , p ers o nnel, p atie n t r ig hts , patie n t c are , p atie n t re co rd s, p hysic al s it e , a d m in is tra tiv e re p ortin g a n d le g al c o m plia n ce.

The re q uir e m en ts fo r c ertif ic atio n a re s u bje ct to c h an ge a n d, in o rd er to re m ain q ualif ie d , it m ay b eco m e n ecessary f o r u s t o m ake c h an ges in o ur f a cilit ie s, e q uip m en t, p ers o nnel a n d s erv ic es. F o r e xa m ple , in O cto ber 2 018, C M S f in aliz e d a ru le t h at im ple m en ts q ualit y s ta n dard s f o r h om e in fu sio n s u pplie rs .

11 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts The r e q uir e m en ts f o r lic en su re , c ertif ic atio n a n d a ccre d it a tio n a ls o in clu de n otif ic atio n o r a p pro val in t h e e v en t o f t h e t ra n sfe r o r c h an ge o f o w ners h ip o r c erta in oth er c h an ges. F ailu re t o p ro vid e r e q uir e d n otif ic atio ns o r o bta in n ecessary a p pro vals in t h ese c ir c u m sta n ces c an r e su lt in t h e in ab ilit y t o c o m ple te a n a cq uis it io n o r ch an ge o f o w ners h ip , lo ss o f lic en su re , la p ses in r e im burs em en t o r o th er p en alt ie s.

Pro fe ssio nal L ic en su re Nurs es, p harm acis ts a n d c erta in o th er p ro fe ssio nals e m plo yed b y u s a re re q uir e d to b e in div id ually lic en sed a n d/o r c ertif ie d u nder a p plic ab le s ta te la w .

We perfo rm c rim in al a n d o th er b ackg ro und c h ecks o n e m plo yees t o t h e e xte n t a llo w ed b y s ta te la w a n d c o nfir m t h at o ur e m plo yees p ossess a ll lic en ses a n d c ertif ic atio ns re q uir e d in o rd er t o p ro vid e h ealt h care -re la te d s erv ic es.

We b elie v e o ur e m plo yees c o m ply w it h a p plic ab le lic en su re la w s.

Food, D ru g a nd C osm etic A ct Pharm acy o pera tio ns Certa in pro vis io ns of th e Fed era l Fo od, D ru g an d C osm etic A ct (“ F D CA ”) govern th e pre p ara tio n, han dlin g, sto ra g e, m ark etin g an d dis trib utio n of pharm aceu tic al pro ducts .

Man y o f th e p harm aceu tic als a n d m ed ic al d ev ic es w e d is p en se a re e xe m pt fro m c erta in fe d era l re q uir e m en ts a s lo ng a s th ey a re n ot ad ult e ra te d o r m is b ra n ded a n d a re d is p en sed in a cco rd an ce w it h , a n d p urs u an t t o , a v alid p re scrip tio n.

The F D A d ir e ctly r e g ula te s o uts o urc in g f a cilit ie s, b ut d oes n ot d ir e ctly r e g ula te n on-o uts o urc in g f a cilit ie s o r p harm acie s.

Outs o urc in g fa cilit ie s a re p harm acie s th at a re e n gag ed in s te rile c o m poundin g o f d ru gs th at a re n ot fo r a n in div id ually id en tif ia b le p atie n t.

Outs o urc in g fa cilit ie s a re s u bje ct to s ta n dard s re la tin g to ste riliz a tio n a n d th e p hysic al fa cilit y in clu din g th e C urre n t G ood M an ufa ctu rin g P ra ctic e (“ c G M P”) re g ula tio ns.

Becau se o ur c o m poundin g a ctiv it ie s a re lim it e d to pro ducts c o m pounded p urs u an t t o v alid p re scrip tio ns f o r in div id ually id en tif ia b le p atie n ts , w e d o n ot q ualif y a s a n o uts o urc in g f a cilit y , a n d t h ere fo re , s h ould n ot b e re q uir e d t o c o m ply w it h t h e c G M P s ta n dard s.

The F D A h as b een c o nductin g in sp ectio ns o f p harm acie s t h at e n gag e in c o m poundin g, in clu din g o urs , a n d h as b een atte m ptin g t o a p ply t h e c G M P s ta n dard s e v en t h ough t h ose p harm acie s a re n ot o uts o urc in g f a cilit ie s.

While t h e F D A h as is su ed r e p orts f o llo w in g t h eir s u rv ey s, t o date , n o e n fo rc em en t a ctio n h as b een t a ken a g ain st u s.

We c an not p re d ic t w hat f u rth er a ctio ns t h e F D A m ay t a ke.

We b elie v e o ur o pera tio ns a re in c o m plia n ce w it h ap plic ab le la w s a n d t h at t h e r e q uir e m en ts f o r o uts o urc in g f a cilit ie s a re n ot a p plic ab le t o o ur o pera tio ns.

We c an not p re d ic t t h e im pact o f in cre ased s cru tin y o n o r n ew re g ula tio n o f c o m poundin g p harm acie s.

In a d dit io n, th e F D CA g overn s p harm aceu tic al p ro ducts ’ m ovem en t in in te rs ta te c o m merc e.

The F D A h as b eg un s cru tin iz in g m ore c lo sely c o m poundin g pharm acie s’ o pera tio ns a n d c o m pounded p harm aceu tic als ’ m ovem en t in in te rs ta te c o m merc e.

Sp ecif ic ally , th e F D A h as p ro posed re g ula tio ns th at c o uld h av e th e effe ct o f lim it in g o ur a b ilit y to s h ip p re scrip tio ns o ut o f s ta te b y p harm acie s th at h old v alid lic en ses b ut d o n ot c o m ply w it h c G M P s ta n dard s.

We d o n ot k n ow if th ese re g ula tio ns, a s p ro posed , w ill b e a d opte d , b ut if th ey a re , w e w ill lik ely n eed to m odif y o ur o pera tio ns to c o m ply .

While w e c an not p re d ic t c h an ges to th e re g ula to ry e n vir o nm en t u nder t h e D QSA , w e b elie v e w e c o m ply in a ll m ate ria l r e sp ects w it h a ll a p plic ab le r e q uir e m en ts o f a n on-o uts o urc in g-fa cilit y p harm acy .

In fu sio n s e rv ic es The F D A re g ula te s c erta in m ed ic al d ev ic es (e .g ., in fu sio n p um ps) e ssen tia l to th e C om pan y’s in fu sio n s erv ic es.

An in fu sio n p um p, lik e a n y m ed ic al d ev ic e, is su bje ct to fa ilu re .

Sin ce 2 010, d ue to th e re la tiv ely la rg e n um ber o f a d vers e e v en ts a sso cia te d w it h th e u se o f in fu sio n p um ps, F D A h as in cre ased it s o vers ig ht o f in fu sio n p um ps.

Chan ges h av e in clu ded h ig her le v els o f s cru tin y, in te n sif y in g m an ufa ctu re r e n gag em en t a n d b ols te rin g u ser e d ucatio n a n d a d vers e e v en t r e p ortin g.

The s h if tin g r e g ula to ry c lim ate a ro und in fu sio n p um ps; t h e r e q uir e m en t t o m ain ta in h ig h le v els o f p ro fic ie n cy in u sin g a n d t ra in in g p atie n ts in t h e s afe u se o f in fu sio n pum ps; c y bers ecu rit y is su es, in clu din g m odif ic atio n a n d m is u se o f in fu sio n p um ps, a n d u nau th oriz e d u se o f in fo rm atio n t h at is s to re d o n o r a ccessed f ro m in fu sio n pum ps; a n d, fin ally , th e n eed to s ta y c u rre n t in in fu sio n p um p d esig n a n d “ b est p ra ctic es,” p re sen t e le m en ts o f ris k.

Nev erth ele ss, w e b elie v e w e c o m ply in a ll m ate ria l r e sp ects w it h a ll a p plic ab le r e q uir e m en ts a n d t h at o ur e m plo yees a re a d eq uate ly t ra in ed a n d e q uip ped t o u se t h ese d ev ic es.

F ra ud a nd A buse L aw s Anti-K ic k back L aw s The f e d era l A nti- K ic kb ack S ta tu te m akes it a f e lo ny f o r a p ers o n o r e n tit y t o k n ow in gly a n d w illf u lly o ffe r, p ay, s o lic it , o r r e ceiv e a n y r e m unera tio n w it h t h e in te n t of in ducin g t h e r e fe rra l o f a n in div id ual o r t h e p urc h ase, le ase o r o rd er ( o r t h e a rra n gin g 12 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts fo r o r r e co m men din g o f t h e p urc h ase, le ase o r o rd er) o f h ealt h care it e m s o r s erv ic es p aid f o r in w hole o r in p art b y a f e d era l h ealt h care p ro gra m s u ch a s M ed ic are o r M ed ic aid . C ourts h av e h eld t h at t h ere is a v io la tio n o f t h e s ta tu te e v en if o nly o ne p urp ose o f a p ay m en t a rra n gem en t is t o in duce r e fe rra ls , e v en if t h ere a re o th er la w fu l p urp oses. V io la tio ns o f t h e f e d era l A nti- K ic kb ack S ta tu te c o uld s u bje ct u s t o c rim in al a n d/o r c iv il p en alt ie s, in clu din g s u sp en sio n o r e xc lu sio n f ro m M ed ic are an d M ed ic aid p ro gra m s a n d o th er g overn m en t-fu nded h ealt h care p ro gra m s.

In a d dit io n, s u bm is sio n o f a c la im f o r it e m s o r s erv ic es g en era te d in v io la tio n o f t h e A nti- K ic kb ack S ta tu te m ay a ls o b e t h e b asis o f lia b ilit y u nder t h e f e d era l F als e C la im s A ct ( “ F als e C la im s A ct” ).

The fe d era l A nti- K ic kb ack Sta tu te has been in te rp re te d bro ad ly by co urts , th e O IG an d oth er ad m in is tra tiv e bodie s.

Fo r exa m ple , alt h ough th e te rm “re m unera tio n” is n ot d efin ed in th e fe d era l A nti- K ic kb ack S ta tu te , it h as b een b ro ad ly in te rp re te d to in clu de a n yth in g o f v alu e, in clu din g fo r e xa m ple , g if ts , donatio ns, t h e f u rn is h in g o f s u pplie s o r e q uip m en t, c re d it a rra n gem en ts , p ay m en ts o f c ash , w aiv ers o f p ay m en t, o w ners h ip in te re sts a n d p ro vid in g a n y it e m , s erv ic e, or c o m pen satio n f o r s o m eth in g o th er t h an f a ir m ark et v alu e.

Becau se o f t h e b ro ad s co pe o f t h e s ta tu te , t h ere a re s ev era l s ta tu to ry e xc ep tio ns t o t h e la w , a n d f e d era l re g ula tio ns e sta b lis h c erta in s afe h arb ors f ro m lia b ilit y .

Fo r e xa m ple , t h ere a re s afe h arb ors r e la tin g t o c erta in d is co unts r e ceiv ed f ro m v en dors , in vestm en t in te re sts , gro up p urc h asin g o rg an iz a tio ns, m an ag ed c are a n d w aiv ers o f c o pay m en t o blig atio ns. A p ra ctic e t h at d oes n ot f a ll w it h in a s afe h arb or is n ot n ecessarily u nla w fu l, but m ay b e s u bje ct t o in cre ased s cru tin y a n d c h alle n ge b y g overn m en t e n fo rc em en t a u th orit ie s.

Govern m en ta l e n tit ie s h av e in vestig ate d p harm acie s a n d th eir d ealin gs w it h p harm aceu tic al m an ufa ctu re rs c o ncern in g, a m ong o th er th in gs, re ta il d is trib utio n, sale s a n d m ark etin g p ra ctic es a n d p ro duct c o nvers io n o r p ro duct s w it c h in g p ro gra m s.

Govern m en ta l e n tit ie s h av e a ls o in vestig ate d p harm acie s w it h r e sp ect t o t h eir re la tio nsh ip s w it h p hysic ia n s a n d o th er r e fe rra l s o urc es, in clu din g m ark etin g p ra ctic es.

There c an b e n o a ssu ra n ce t h at w e w ill n ot r e ceiv e s u bpoen as o r b e r e q ueste d to p ro duce d ocu m en ts in p en din g in vestig atio ns o r lit ig atio n fro m tim e to tim e.

In a d dit io n, w e m ay b e th e ta rg et o r s u bje ct o f o ne o r m ore s u ch in vestig atio ns o r nam ed p artie s in c o rre sp ondin g a ctio ns.

In 2 003, t h e O IG r e le ased C om plia n ce P ro gra m G uid an ce f o r P h arm aceu tic al M an ufa ctu re rs ( th e “ G uid an ce”), w hic h p ro vid es v olu nta ry , n onbin din g g uid an ce in dev is in g e ffe ctiv e c o m plia n ce p ro gra m s t o a ssis t c o m pan ie s t h at d ev elo p, m an ufa ctu re , m ark et a n d s ell p harm aceu tic al p ro ducts o r b io lo gic al p ro ducts .

The G uid an ce sets f o rth t h e f u ndam en ta l e le m en ts o f a p harm aceu tic al m an ufa ctu re r’s c o m plia n ce p ro gra m a n d p rin cip le s t h at s h ould b e c o nsid ere d w hen c re atin g, im ple m en tin g, an d m ain ta in in g a n e ffe ctiv e c o m plia n ce p ro gra m .

While w e a re n ot a m an ufa ctu re r, w e b elie v e t h at m an y a sp ects o f it a re u sefu l t o o ur b usin ess a n d t h ere fo re w e cu rre n tly m ain ta in a c o m plia n ce p ro gra m t h at in clu des t h e k ey c o m plia n ce p ro gra m e le m en ts d escrib ed in t h e G uid an ce.

We b elie v e t h e f u ndam en ta l e le m en ts o f o ur co m plia n ce p ro gra m s a re c o nsis te n t w it h t h e p rin cip le s, p olic ie s a n d in te n t o f t h e G uid an ce.

A n um ber o f s ta te s h av e e n acte d a n ti- k ic kb ack la w s t h at m ay a p ply n ot o nly t o s ta te -s p onso re d h ealt h care p ro gra m s, b ut a ls o t o it e m s o r s erv ic es t h at a re p aid fo r b y p riv ate in su ra n ce a n d s elf -p ay p atie n ts . S ta te a n ti- k ic kb ack la w s c an v ary c o nsid era b ly in t h eir a p plic ab ilit y a n d s co pe a n d s o m etim es h av e f e w er s ta tu to ry a n d re g ula to ry e xc ep tio ns th an d oes th e fe d era l la w . O ur m an ag em en t c are fu lly c o nsid ers th e im porta n ce o f s u ch a n ti- k ic kb ack la w s w hen s tru ctu rin g e ach c o m pan y’s opera tio ns a n d b elie v es t h at e ach o f o ur r e sp ectiv e c o m pan ie s is in c o m plia n ce t h ere w it h .

The S ta rk L aw s The f e d era l p hysic ia n s elf -re fe rra l la w , c o m monly k n ow n a s t h e “ S ta rk L aw ,” p ro hib it s p hysic ia n s f ro m r e fe rrin g M ed ic are a n d M ed ic aid p atie n ts f o r “ d esig nate d healt h s erv ic es” to a n e n tit y w it h w hic h th e p hysic ia n , o r a n im med ia te fa m ily m em ber o f th e p hysic ia n , h as a d ir e ct o r in dir e ct fin an cia l re la tio nsh ip , u nle ss th e fin an cia l r e la tio nsh ip is s tru ctu re d t o m eet a n a p plic ab le e xc ep tio n.

Desig nate d h ealt h s erv ic es in clu de o utp atie n t p re scrip tio n d ru gs, D M E a n d s u pplie s, p are n te ra l an d e n te ra l n utrie n t, e q uip m en t a n d s u pplie s, a n d h om e h ealt h s erv ic es. A n e n tit y t h at b ills M ed ic are o r M ed ic aid f o r d esig nate d h ealt h s erv ic es t h at r e su lt f ro m a pro hib it e d r e fe rra l is r e q uir e d t o r e fu nd a m ounts c o lle cte d p urs u an t t o t h e p ro hib it e d r e fe rra l o n a t im ely b asis .

Pen alt ie s f o r v io la tio n o f t h e S ta rk L aw in clu de d en ia l of p ay m en t, c iv il m oneta ry p en alt ie s a n d e xc lu sio n fro m fe d era l h ealt h care p ro gra m s.

A k n ow in g v io la tio n o f th e S ta rk L aw c an a ls o c o nstit u te a v io la tio n o f th e fe d era l F als e C la im s A ct.

Our m an ag em en t c are fu lly c o nsid ers th e S ta rk L aw a n d it s a cco m pan yin g re g ula tio ns in s tru ctu rin g o ur fin an cia l re la tio nsh ip s w it h physic ia n s a n d b elie v es w e a re in c o m plia n ce t h ere w it h .

We a re a ls o s u bje ct t o s ta te s ta tu te s a n d r e g ula tio ns t h at p ro hib it s elf -re fe rra l a rra n gem en ts .

The la w s a n d e xc ep tio ns o r s afe h arb ors m ay v ary f ro m t h e f e d era l Sta rk L aw a n d v ary s ig nif ic an tly fro m s ta te to s ta te . S o m e o f th ese s ta te s ta tu te s m ir ro r th e fe d era l S ta rk L aw w hile o th ers a re b ro ad er. F o r e xa m ple , s o m e s ta te sta tu te s a n d r e g ula tio ns a p ply t o s erv ic es r e im burs ed b y g overn m en ta l a s w ell a s p riv ate p ay ors , a n d s o m e e xte n d t o p ro vid ers o th er t h an p hysic ia n s.

Vio la tio n o f th ese la w s m ay r e su lt in p ro hib it io n o f p ay m en t f o r s erv ic es r e n dere d , lo ss o f p harm acy o r h ealt h p ro vid er lic en ses, f in es a n d c rim in al p en alt ie s.

The s ta te la w s a re ofte n v ag ue a n d, in m an y c ases, h av e n ot b een w id ely in te rp re te d b y c o urts o r r e g ula to ry a g en cie s. W e b elie v e w e a re in c o m plia n ce w it h s u ch la w s.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Sta tu te s P ro hib itin g F als e C la im s a nd F ra udule n t B illin g A ctiv itie s A r a n ge o f f e d era l c iv il a n d c rim in al la w s t a rg et t h e s u bm is sio n o f f a ls e c la im s a n d f ra u dule n t b illin g a ctiv it ie s.

One o f t h e m ost s ig nif ic an t o f t h ese la w s is t h e fe d era l F als e C la im s A ct, w hic h p ro vid es f o r lia b ilit y o f t re b le d am ag es a n d c iv il p en alt ie s f o r k n ow in gly m akin g o r c au sin g t o b e m ad e f a ls e c la im s in o rd er t o s ecu re re im burs em en t fro m g overn m en t-s p onso re d p ro gra m s, s u ch a s M ed ic are a n d M ed ic aid .

In vestig atio ns o r a ctio ns c o m men ced u nder th e F als e C la im s A ct m ay b e bro ught e it h er b y th e g overn m en t o r b y p riv ate in div id uals o n b eh alf o f th e g overn m en t, th ro ugh a “ w his tle b lo w er” o r “ q ui ta m ” a ctio n.

The F als e C la im s A ct au th oriz e s t h e p ay m en t o f a p ortio n o f a n y r e co very t o t h e in div id ual b rin gin g s u it .

Su ch a ctio ns a re in it ia lly r e q uir e d t o b e f ile d u nder s eal p en din g t h eir r e v ie w b y th e D ep artm en t o f Ju stic e.

If th e g overn m en t in te rv en es in th e la w su it a n d p re v ails , th e w his tle b lo w er (o r p la in tif f filin g th e in it ia l c o m pla in t) m ay s h are w it h th e fe d era l g overn m en t in an y settle m en t o r ju dgm en t.

If th e g overn m en t d oes n ot in te rv en e in th e la w su it , th e w his tle b lo w er p la in tif f m ay p urs u e th e actio n in dep en den tly .

The F als e C la im s A ct m ay re su lt in s u bsta n tia l fin an cia l p en alt ie s fo r s m all b illin g e rro rs th at a re re p lic ate d in a la rg e n um ber o f c la im s, a s e ach in div id ual c la im c o uld b e d eem ed t o b e a s ep ara te v io la tio n o f t h e F als e C la im s A ct.

Sig nif ic an tly , t h e A ffo rd ab le C are A ct a m en ded t h e F als e C la im s A ct t o im pose lia b ilit y f o r k n ow in g f a ilu re s t o r e tu rn o verp ay m en ts w hic h , u nder t h e A ffo rd ab le C are A ct’s 6 0-D ay R ule , in clu de f a ilu re s t o r e p ort a n d r e tu rn a n o verp ay m en t t o t h e govern m en t w it h in 6 0 d ay s a fte r it is id en tif ie d .

The F als e C la im s A ct h as b een u sed b y th e fe d era l g overn m en t a n d p riv ate w his tle b lo w ers to b rin g e n fo rc em en t a ctio ns u nder fra u d a n d a b use la w s lik e th e fe d era l A nti- K ic kb ack S ta tu te a n d th e S ta rk L aw , in cre asin g p ote n tia l fin an cia l e xp osu re fo r a lle g ed v io la tio ns. S u ch a ctio ns a re b ased o n th e th eo ry th at w hen a n en tit y s u bm it s a c la im , it e it h er e xp re ssly o r im plie d ly c ertif ie s th at it h as p ro vid ed th e u nderly in g s erv ic es in c o m plia n ce w it h m ate ria l la w s, in clu din g th e A nti- K ic kb ack S ta tu te o r S ta rk L aw . L ia b ilit y m ay r e su lt e v en if t h e c la im s a re o th erw is e b ille d a ccu ra te ly f o r a p pro pria te a n d m ed ic ally n ecessary s erv ic es. T hese a ctio ns are c o stly a n d t im e-c o nsu m in g t o d efe n d.

So m e s ta te s a ls o h av e e n acte d s ta tu te s s im ila r to th e F als e C la im s A ct, w hic h m ay in clu de c rim in al p en alt ie s, s u bsta n tia l fin es, a n d tre b le d am ag es, a n d s o m e allo w in div id uals t o b rin g q ui t a m a ctio ns. F ed era l la w p ro vid es a n in cen tiv e t o s ta te s t o e n act f a ls e c la im s la w s c o m para b le t o t h e f e d era l F als e C la im s A ct.

In r e cen t y ears , f e d era l a n d s ta te g overn m en ts h av e la u nch ed s ev era l in it ia tiv es a im ed a t u nco verin g p ra ctic es t h at v io la te f a ls e c la im s o r f ra u dule n t b illin g la w s.

W e h av e e xp erie n ced in cre asin g a u dit a ctiv it y b y e n fo rc em en t e n tit ie s, a n d w e m ay b e t h e s u bje ct o f f u tu re a u dit s . W e b elie v e w e h av e p ro ced ure s in p la ce t o e n su re th e a ccu ra cy o f o ur c la im s.

While w e b elie v e w e a re in c o m plia n ce w it h M ed ic aid a n d M ed ic are b illin g ru le s a n d re q uir e m en ts , th ere c an b e n o a ssu ra n ce th at re g ula to rs w ould a g re e w it h t h e m eth odolo gy e m plo yed b y u s in b illin g f o r o ur p ro ducts a n d s erv ic es.

A m ate ria l d is ag re em en t w it h g overn m en ta l a g en cie s o n t h e m an ner in w hic h w e p ro vid e o r b ill f o r p ro ducts o r s erv ic es c o uld h av e a m ate ria l a d vers e e ffe ct o n o ur b usin ess a n d C onso lid ate d F in an cia l S ta te m en ts .

Civ il M oneta ry P en altie s A ct The C iv il M oneta ry P en alt ie s L aw a u th oriz e s t h e U .S . S ecre ta ry o f H HS t o im pose c iv il m oney p en alt ie s, a ssessm en ts a n d p ro gra m s u perv is io n o r e xc lu sio n f o r vario us f o rm s o f f ra u d a n d a b use in volv in g t h e M ed ic are a n d M ed ic aid p ro gra m s.

Pen alt ie s o f u p t o $ 100,0 00 f o r e ach v io la tio n m ay b e im posed , d ep en din g o n t h e sp ecif ic m is co nduct in volv ed . T hese p en alt ie s a re u pdate d a n nually b ased o n c h an ges t o t h e c o nsu m er p ric e in dex. In s o m e c ases, v io la tio ns o f t h e C iv il M oneta ry Pen alt y L aw m ay re su lt in p en alt ie s o f u p to th re e tim es th e re m unera tio n o ffe re d , p aid , s o lic it e d o r re ceiv ed , a n d m ay a ls o re su lt in e xc lu sio n fro m g overn m en t healt h care p ro gra m s. T he a v aila b ilit y o f th e C iv il M oney P en alt ie s L aw to e n fo rc e a lle g ed fra u d a n d a b use v io la tio ns h as in cre ased th e p ote n tia l fo r e n fo rc em en t actio ns, a s it r e q uir e s a lo w er b urd en o f p ro of t h an s o m e c rim in al s ta tu te s, a n d it h as in cre ased t h e p ote n tia l f in an cia l e xp osu re f o r s u ch a ctio ns.

These a ctio ns a re co stly a n d t im e-c o nsu m in g t o d efe n d.

Oth er F ra ud & A buse L aw s We a re a ls o s u bje ct t o a d dit io nal f ra u d a n d a b use la w s, in clu din g f e d era l c rim in al s ta tu te s t h at p ro hib it , a m ong o th er a ctio ns, k n ow in gly a n d w illf u lly e xe cu tin g, or a tte m ptin g t o e xe cu te , a s ch em e t o d efra u d a n y h ealt h care b en efit p ro gra m , in clu din g p riv ate t h ir d -p arty p ay ors , a n d k n ow in gly a n d w illf u lly f a ls if y in g, c o ncealin g or c o verin g u p a m ate ria l f a ct o r m akin g a n y m ate ria lly f a ls e, f ic tit io us o r f ra u dule n t s ta te m en t in c o nnectio n w it h t h e d eliv ery o f o r p ay m en t f o r h ealt h care b en efit s , it e m s or serv ic es.

Fed era l e n fo rc em en t a u th orit ie s m ay e xc lu de fro m M ed ic are a n d M ed ic aid a n y b usin ess e n tit ie s a n d a n y in vesto rs , o ffic ers a n d m an ag in g em plo yees a sso cia te d w it h b usin ess e n tit ie s th at h av e c o m mit te d h ealt h c are fra u d. O ffic ers a n d m an ag in g e m plo yees m ay b e e xc lu ded e v en if th ey h ad n o kn ow le d ge o f t h e f ra u d.

We m ay a ls o b e s u bje ct t o la w s p ro m otin g t ra n sp are n cy o f f in an cia l r e la tio nsh ip s w it h p ro vid ers a n d o th er p ote n tia l r e fe rra l s o urc es. F o r e xa m ple , t h e P h ysic ia n Pay m en t S unsh in e A ct r e q uir e s p harm aceu tic al, b io lo gic al, d ev ic e, a n d m ed ic al s u pply 14 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts m an ufa ctu re rs t o r e p ort p ay m en ts o r o th er t ra n sfe rs o f v alu e t o p hysic ia n s a n d t e ach in g h osp it a ls , a s w ell a s p hysic ia n o w ners h ip a n d in vestm en t in te re sts . T hese in it ia tiv es m ay r e su lt in in cre ased s cru tin y b y g overn m en t e n fo rc em en t a u th orit ie s o r im pact o ur p ublic r e p uta tio n.

C onfid en tia lity , P riv a cy a nd H IP A A Man y o f o ur a ctiv it ie s in volv e th e re ceip t, u se a n d/o r d is clo su re o f c o nfid en tia l m ed ic al, p harm acy o r o th er h ealt h -re la te d in fo rm atio n c o ncern in g in div id ual patie n ts , in clu din g t h e d is clo su re o f s u ch c o nfid en tia l in fo rm atio n t o a n in div id ual's h ealt h p la n .

The H ealt h I n su ra n ce P o rta b ilit y a n d A cco unta b ilit y A ct o f 1 996 ( “ H IP A A”) a n d it s im ple m en tin g r e g ula tio ns, a s a m en ded , g iv e p eo ple g re ate r c o ntro l o ver t h e priv acy o f t h eir m ed ic al in fo rm atio n.

The f e d era l p riv acy r e g ula tio ns ( th e “ P riv acy R eg ula tio ns”) a re d esig ned t o p ro te ct h ealt h -re la te d in fo rm atio n t h at c o uld b e u sed to id en tif y a n in div id ual, a ls o k n ow n a s p ro te cte d h ealt h in fo rm atio n ( “ P H I” ).

Among n um ero us o th er r e q uir e m en ts , t h e P riv acy R eg ula tio ns: ( i) lim it p erm is sib le u ses an d d is clo su re s o f P H I; ( ii) lim it m ost u ses a n d d is clo su re s o f P H I t o t h e m in im um n ecessary t o a cco m plis h t h e in te n ded p urp ose; ( iii) r e q uir e p atie n t a u th oriz a tio n f o r uses a n d d is clo su re s o f P H I u nle ss a n e xc ep tio n a p plie s; a n d ( iv ) g uara n te e p atie n ts t h e r ig ht t o a ccess t h eir m ed ic al r e co rd s a n d t o r e ceiv e a n a cco untin g o f c erta in dis clo su re s.

The fe d era l s ecu rit y re g ula tio ns (th e “ S ecu rit y R eg ula tio ns”) s et c erta in s ta n dard s re g ard in g th e s to ra g e, u tiliz a tio n o f, a ccess to a n d tra n sm is sio n o f ele ctro nic P H I.

The f e d era l b re ach n otif ic atio n r e g ula tio ns ( th e “ B re ach N otif ic atio n R eg ula tio ns”) r e q uir e n otif ic atio n t o in div id uals , t h e f e d era l g overn m en t a n d, in so m e c ases, t h e m ed ia in t h e e v en t o f a b re ach o f u nsecu re d P H I.

These re g ula tio ns a p ply to “ co vere d e n tit ie s,” w hic h in clu de m ost h ealt h care p ro vid ers a n d h ealt h p la n s, a n d s o m e o f th ese re g ula tio ns a p ply to “ b usin ess asso cia te s,” w hic h a re p ers o ns o r e n tit ie s t h at p erfo rm o r a ssis t in p erfo rm in g s erv ic es o r a ctiv it ie s f o r o r o n b eh alf o f a c o vere d e n tit y , if t h e p erfo rm an ce o f t h ose serv ic es o r a ctiv it ie s in volv es t h e c re atio n, r e ceip t, m ain te n an ce o r t ra n sm is sio n o f P H I.

HIP A A a ls o r e q uir e s t h at a c o vere d e n tit y a n d it s b usin ess a sso cia te s e n te r in to w rit te n c o ntra cts w here b y th e b usin ess a sso cia te a g re es to re stric t it s u se a n d d is clo su re o f P H I.

We p ro vid e a v arie d lin e o f s erv ic es to p atie n ts a n d o th er en tit ie s.

When w e a re a ctin g a s a p harm acy o r h ealt h c are p ro vid er, w e f u nctio n a s a c o vere d e n tit y .

There m ay a ls o b e s it u atio ns w hen w e a ct o n b eh alf o f a n oth er co vere d e n tit y a s a b usin ess a sso cia te .

The re q uir e m en ts im posed b y H IP A A a re e xte n siv e, a n d it h as re q uir e d s u bsta n tia l c o st a n d e ffo rt to a ssess a n d im ple m en t m easu re s to c o m ply w it h th ose re q uir e m en ts .

We h av e t a ken a n d in te n d t o c o ntin ue t o t a ke s te p s t h at w e b elie v e a re r e aso nab ly n ecessary t o e n su re o ur p olic ie s a n d p ro ced ure s a re in c o m plia n ce w it h th e P riv acy R eg ula tio ns, th e S ecu rit y R eg ula tio ns a n d th e B re ach N otif ic atio n R eg ula tio ns.

The re q uir e m en ts im posed b y H IP A A h av e in cre ased o ur b urd en an d c o sts o f re g ula to ry c o m plia n ce (in clu din g o ur h ealt h im pro vem en t p ro gra m s a n d o th er in fo rm atio n-b ased p ro ducts ), a lt e re d o ur re p ortin g a n d re d uced th e am ount o f in fo rm atio n w e c an u se o r d is clo se if p atie n ts d o n ot a u th oriz e s u ch u ses o r d is clo su re s.

So m e f e d era l a n d s ta te p riv acy -re la te d la w s a re m ore r e stric tiv e t h an H IP A A a n d c o uld r e su lt in a d dit io nal p en alt ie s. F o r e xa m ple , t h e F ed era l T ra d e C om mis sio n uses it s c o nsu m er p ro te ctio n a u th orit y t o in it ia te e n fo rc em en t a ctio ns in r e sp onse t o d ata b re ach es. I n a d dit io n, m ost s ta te s h av e e n acte d p riv acy a n d s ecu rit y la w s, in clu din g la w s t h at p ro te ct p artic u la rly s en sit iv e m ed ic al in fo rm atio n ( s u ch a s H IV s ta tu s o r m en ta l h ealt h r e co rd s) a n d b re ach n otif ic atio n la w s t h at m ay im pose a n oblig atio n t o n otif y p ers o ns if t h eir p ers o nal in fo rm atio n h as o r m ay h av e b een a ccessed b y a n u nau th oriz e d p ers o n.

So m e o f t h ese la w s a p ply t o o ur b usin ess a n d hav e in cre ased a n d w ill c o ntin ue t o in cre ase o ur b urd en a n d c o sts o f p riv acy a n d s ecu rit y -re la te d r e g ula to ry c o m plia n ce.

Em plo yees As o f Decem ber 3 1, 2 018 , w e h ad 1,6 57 fu ll- tim e, 47 p art-tim e a n d 339 p er d ie m e m plo yees.

Per d ie m e m plo yees a re d efin ed a s th ose a v aila b le o n a n a s-n eed ed basis .

None o f o ur e m plo yees a re r e p re sen te d b y a n y u nio n a n d, in o ur o pin io n, r e la tio ns w it h o ur e m plo yees a re s atis fa cto ry .

A va ila ble I n fo rm atio n Our p rin cip al e xe cu tiv e o ffic es a re lo cate d a t 1 600 B ro ad w ay, S u it e 7 00, D en ver, C O 8 0202, o ur te le p hone n um ber is 7 20-6 97-5 200, a n d o ur In te rn et a d dre ss is w ww.b io scrip .c o m . T he in fo rm atio n c o nta in ed o n o ur w eb sit e is n ot in co rp ora te d b y r e fe re n ce in to t h is A nnual R ep ort a n d s h ould n ot b e c o nsid ere d p art o f t h is re p ort.

Our A nnual R ep orts o n F o rm 1 0-K , Q uarte rly R ep orts o n F o rm 1 0-Q , C urre n t R ep orts o n F o rm 8 -K , a n d o ur P ro xy S ta te m en ts a re a v aila b le th ro ugh o ur w eb sit e , f re e o f c h arg e, a s s o on a s r e aso nab ly p ra ctic ab le a fte r t h ey a re f ile d w it h o r f u rn is h ed t o t h e S EC .

The S EC m ain ta in s a w eb sit e t h at c o nta in s r e p orts , p ro xy a n d in fo rm atio n s ta te m en ts , a n d o th er in fo rm atio n r e g ard in g is su ers t h at f ile e le ctro nic ally w it h t h e S EC at w ww.s ec.g ov.

15 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Ite m 1 A .

Ris k F acto rs R is k s R ela te d t o O ur B usin ess D ela ys i n r e im burse m en t m ay a dverse ly a ffe ct o ur l iq uid ity , c a sh f lo w s a nd o pera tin g r e su lts .

The r e im burs em en t p ro cess f o r t h e s erv ic es w e p ro vid e is t im e c o nsu m in g a n d c o m ple x, r e su lt in g in d ela y s b etw een t h e t im e w e b ill f o r a s erv ic e a n d r e ceip t o f pay m en t th at c an b e s ig nif ic an t. R eim burs em en t a n d p ro ced ura l is su es o fte n re q uir e u s to re su bm it c la im s s ev era l tim es a n d re sp ond to m ult ip le a d m in is tra tiv e re q uests b efo re p ay m en t is r e m it te d . T he c o lle ctio n o f a cco unts r e ceiv ab le is a s ig nif ic an t c h alle n ge, r e q uir e s c o nsta n t f o cu s a n d in volv em en t b y m an ag em en t a n d ongoin g e n han cem en ts t o in fo rm atio n s y ste m s a n d b illin g c en te r o pera tin g p ro ced ure s. W hile m an ag em en t b elie v es t h at o ur c o ntro ls a n d p ro cesses a re s atis fa cto ry , th ere c an b e n o a ssu ra n ce th at c o lle ctio ns o f a cco unts re ceiv ab le w ill c o ntin ue a t h is to ric al ra te s. T he ris ks a sso cia te d w it h th ir d -p arty p ay ors a n d th e in ab ilit y to co lle ct o uts ta n din g a cco unts r e ceiv ab le c o uld h av e a m ate ria l a d vers e e ffe ct o n o ur liq uid it y , c ash f lo w s a n d o pera tin g r e su lt s .

Pre ssu re s r e la tin g t o d ow ntu rn s i n t h e e co nom y c o uld a dverse ly a ffe ct o ur b usin ess a nd c o nso lid ate d f in ancia l s ta te m en ts .

Med ic are a n d o th er fe d era l a n d s ta te p ay ors a cco unt fo r a s ig nif ic an t p ortio n o f o ur re v en ues.

Durin g e co nom ic d ow ntu rn s a n d p erio ds o f s ta g nan t o r s lo w eco nom ic g ro w th , fe d era l a n d s ta te b udgets a re ty pic ally n eg ativ ely a ffe cte d , re su lt in g in re d uced re im burs em en ts o r d ela y ed p ay m en ts b y th e fe d era l a n d s ta te govern m en t h ealt h c are c o vera g e p ro gra m s in w hic h w e p artic ip ate , in clu din g M ed ic are , M ed ic aid , a n d o th er f e d era l o r s ta te a ssis ta n ce p la n s.

Govern m en t p ro gra m s co uld a ls o s lo w o r te m pora rily s u sp en d p ay m en ts , n eg ativ ely im pactin g o ur c ash flo w a n d in cre asin g o ur w ork in g c ap it a l n eed s a n d in te re st p ay m en ts .

We h av e seen , a n d b elie v e w e w ill c o ntin ue t o s ee, M ed ic are a n d s ta te M ed ic aid p ro gra m s in stit u te m easu re s a im ed a t c o ntro llin g s p en din g g ro w th , in clu din g r e d uctio ns in re im burs em en t r a te s.

Hig her u nem plo ym en t ra te s a n d s ig nif ic an t e m plo ym en t la y offs a n d d ow nsiz in gs m ay le ad to lo w er n um bers o f p atie n ts e n ro lle d in e m plo yer-p ro vid ed p la n s.

A dvers e e co nom ic c o ndit io ns c o uld a ls o c au se e m plo yers to s to p o ffe rin g, o r lim it , h ealt h care c o vera g e, o r m odif y p ro gra m d esig ns, s h if tin g m ore c o sts to th e in div id ual a n d e xp osin g u s t o g re ate r c re d it r is k f ro m p atie n ts o r t h e d is co ntin uan ce o f t h era p y.

E xis tin g a nd n ew g overn m en t l e g is la tiv e a nd r e g ula to ry a ctio n c o uld a dverse ly a ffe ct o ur b usin ess a nd f in ancia l r e su lts .

Our b usin ess is s u bje ct to n um ero us fe d era l, s ta te a n d lo cal la w s a n d re g ula tio ns.

See “ B usin ess - G overn m en t R eg ula tio n.” These la w s a n d re g ula tio ns, a n d th eir in te rp re ta tio ns, a re s u bje ct t o c h an ge. C han ges in t h ese e xis tin g la w s a n d r e g ula tio ns m ay r e q uir e e xte n siv e c h an ges t o o ur s y ste m s a n d, o r t h eir in te rp re ta tio ns, or th e e n actm en t o f n ew la w s o r re g ula tio ns c o uld h av e a m ate ria l a d vers e e ffe ct o n o ur b usin ess a n d c o nso lid ate d fin an cia l c o ndit io n, re su lt s o f o pera tio ns, a n d cash f lo w s.

These c h an ges m ay b e d if fic u lt t o im ple m en t. F u rth er, w e c an not p re d ic t t h e t im in g o r im pact o f a n y f u tu re le g is la tiv e, r u le m akin g, o r o th er r e g ula to ry a ctio ns.

U ntim ely c o m plia n ce o r n onco m plia n ce w it h a p plic ab le la w s a n d re g ula tio ns c o uld a d vers ely a ffe ct th e c o ntin ued o pera tio n o f o ur b usin ess a s a re su lt o f c iv il o r crim in al p en alt ie s, in clu din g, b ut n ot lim it e d t o : im posit io n o f m oneta ry p en alt ie s; s u sp en sio n o f p ay m en ts f ro m g overn m en t p ro gra m s; lo ss o f r e q uir e d g overn m en t certif ic atio ns o r a p pro vals ; s u sp en sio n o r e xc lu sio n f ro m p artic ip atio n in g overn m en t r e im burs em en t p ro gra m s; o r lo ss o f lic en su re .

Red uctio ns in r e im burs em en t b y M ed ic are , M ed ic aid a n d o th er g overn m en ta l p ay ors c o uld a d vers ely a ffe ct o ur b usin ess a s w ell.

The la w a n d r e g ula tio ns t o w hic h w e a re s u bje ct in clu de, b ut a re n ot lim it e d to , th e fe d era l A nti- K ic kb ack S ta tu te an d S ta rk L aw , an d sta te co unte r-p arts ; H IP A A; F als e C la im s A ct; C iv il M oneta ry P en alt ie s A ct; re g ula tio ns pro m ulg ate d b y t h e F D A , U .S . F ed era l T ra d e C om mis sio n, D EA , H HS a n d C M S, a n d r e g ula tio ns o f in div id ual s ta te r e g ula to ry a u th orit ie s.

In t h at r e g ard , o ur b usin ess an d c o nso lid ate d f in an cia l s ta te m en ts c o uld b e a ffe cte d b y o ne o r m ore o f t h e f o llo w in g:

• fe d era l a n d s ta te la w s a n d re g ula tio ns g overn in g th e p urc h ase, d is trib utio n, m an ag em en t, c o m poundin g, d is p en sin g a n d re im burs em en t o f p re scrip tio n dru gs a n d r e la te d s erv ic es, in clu din g s ta te a n d f e d era l c o ntro lle d s u bsta n ces la w s a n d r e g ula tio ns; • ru le s a n d re g ula tio ns is su ed p urs u an t to H IP A A a n d H IT EC H ; a n d o th er fe d era l a n d s ta te la w s a ffe ctin g th e u se, d is clo su re a n d tra n sm is sio n o f h ealt h in fo rm atio n, s u ch a s s ta te s ecu rit y b re ach n otif ic atio n la w s a n d s ta te la w s lim it in g t h e u se a n d d is clo su re o f p re scrib er in fo rm atio n; • ad m in is tra tio n o f M ed ic are a n d s ta te M ed ic aid p ro gra m s, in clu din g le g is la tiv e c h an ges a n d/o r r u le m akin g a n d in te rp re ta tio n; • fe d era l a n d s ta te la w s a n d r e g ula tio ns t h at r e q uir e r e p ortin g a n d p ublic d is sem in atio n o f p ay m en ts t o a n d b etw een v ario us h ealt h c are p ro vid ers a n d o th er in dustry p artic ip an ts ; • govern m en t r e g ula tio n o f t h e d ev elo pm en t, a d m in is tra tio n, r e v ie w a n d u pdatin g o f f o rm ula rie s a n d d ru g lis ts ; 16 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts • man ag ed c are r e fo rm a n d p la n d esig n le g is la tio n, in clu din g s ta te la w s r e g ard in g o ut-o f-n etw ork c h arg es a n d p artic ip atio n; • sta te s’ r e stric tio ns o n n ew h om e in fu sio n c are e n tra n ts in to t h eir m ark et v ia lic en sin g, c ertif ic atin g, a n d p erm it tin g r e q uir e m en ts ; a n d • fe d era l o r s ta te la w s g overn in g o ur r e la tio nsh ip s w it h p hysic ia n s o r o th ers in a p osit io n t o r e fe r t o u s.

The A ffo rd able C are A ct a nd o th er h ea lth ca re r e fo rm e ffo rts c o uld h ave a m ate ria l a dverse e ffe ct o n o ur b usin ess.

In re cen t y ears , h ealt h care re fo rm e ffo rts a t fe d era l a n d s ta te le v els o f g overn m en t h av e re su lt e d in s w eep in g c h an ges to th e d eliv ery a n d fin an cin g o f h ealt h care . T he A ffo rd ab le C are A ct is t h e m ost p ro m in en t o f t h ese e ffo rts . H ow ev er, t h ere is s u bsta n tia l u ncerta in ty r e g ard in g it s n et e ffe ct a n d it s f u tu re . T he A ffo rd ab le Care A ct h as b een s u bje ct t o le g is la tiv e a n d r e g ula to ry c h an ges a n d c o urt c h alle n ges. T he p re sid en tia l a d m in is tra tio n a n d c erta in m em bers o f C ongre ss c o ntin ue t o atte m pt t o r e p eal o r m ake s ig nif ic an t c h an ges t o t h e A ffo rd ab le C are A ct, it s im ple m en ta tio n a n d it s in te rp re ta tio n. E ffe ctiv e J a n uary 2 019, C ongre ss e lim in ate d t h e fin an cia l p en alt y a sso cia te d w it h th e in div id ual m an date to m ain ta in h ealt h in su ra n ce c o vera g e. B ecau se th e p en alt y a sso cia te d w it h th e in div id ual m an date w as elim in ate d , a fe d era l c o urt in T exa s ru le d in D ecem ber 2 018 th at th e e n tir e A ffo rd ab le C are A ct w as u nco nstit u tio nal.

How ev er, th e la w re m ain s in p la ce p en din g ap peal. I t is im possib le t o p re d ic t t h e f u ll im pact o f t h e A ffo rd ab le C are A ct a n d r e la te d r e g ula tio ns o r t h e im pact o f it s m odif ic atio n o n o ur o pera tio ns in lig ht o f t h e uncerta in ty re g ard in g w heth er, w hen o r h ow th e la w w ill b e c h an ged a n d w hat a lt e rn ativ e re fo rm s, s u ch a s s in gle -p ay or p ro posals , m ay b e e n acte d . H ealt h re fo rm effo rts m ay a d vers ely a ffe ct o ur c u sto m ers , w hic h m ay c au se t h em t o r e d uce o r d ela y u se o f o ur p ro ducts a n d s erv ic es. A s s u ch , w e c an not p re d ic t t h e im pact o f t h e A ffo rd ab le C are A ct o n o ur b usin ess, o pera tio ns o r f in an cia l p erfo rm an ce.

F ed era l a ctio ns a nd l e g is la tio n m ay r e d uce r e im burse m en t r a te s f r o m g overn m en ta l p ayo rs a nd a dverse ly a ffe ct o ur r e su lts o f o pera tio ns.

In r e cen t y ears , C ongre ss h as p assed le g is la tio n r e d ucin g p ay m en ts t o h ealt h c are p ro vid ers . T he B udget C ontro l A ct o f 2 011, a s a m en ded , r e q uir e s a u to m atic sp en din g r e d uctio ns t o r e d uce t h e f e d era l d efic it , in clu din g M ed ic are s p en din g r e d uctio ns o f u p t o 2 % p er f is cal y ear t h at e xte n d t h ro ugh 2 027. C M S b eg an im posin g a 2 % r e d uctio n o n M ed ic are c la im s o n A pril 1 , 2 013.

The A ffo rd ab le C are A ct p ro vid es fo r m ate ria l re d uctio ns in th e g ro w th o f M ed ic are p ro gra m s p en din g.

More re cen tly , t h e C ure s A ct s ig nif ic an tly r e d uced t h e a m ount p aid b y M ed ic are f o r d ru g c o sts , w hile d ela y in g t h e im ple m en ta tio n o f a c lin ic al s erv ic es p ay m en t, a lt h ough Congre ss a ls o p assed a te m pora ry tra n sit io nal s erv ic e p ay m en t th at ta kes e ffe ct Ja n uary 1 , 2 019. In a d dit io n, fro m tim e to tim e, C M S re v is es th e re im burs em en t sy ste m s u sed t o r e im burs e h ealt h c are p ro vid ers , w hic h m ay r e su lt in r e d uced M ed ic are p ay m en ts .

Becau se m ost s ta te s m ust o pera te w it h b ala n ced b udgets a n d b ecau se t h e M ed ic aid p ro gra m is o fte n a s ta te ’s la rg est p ro gra m , s o m e s ta te s h av e e n acte d o r m ay co nsid er e n actin g le g is la tio n d esig ned to re d uce th eir M ed ic aid e xp en dit u re s.

Fu rth er, m an y s ta te s h av e ta ken s te p s to re d uce c o vera g e a n d/o r e n ro ll M ed ic aid re cip ie n ts in m an ag ed c are p ro gra m s.

The c u rre n t e co nom ic e n vir o nm en t h as in cre ased t h e b udgeta ry p re ssu re s o n m an y s ta te s, a n d t h ese b udgeta ry p re ssu re s h av e re su lt e d , a n d lik ely w ill c o ntin ue to re su lt , in d ecre ased s p en din g, o r d ecre ased s p en din g g ro w th , fo r M ed ic aid p ro gra m s a n d th e C hild re n ’s H ealt h In su ra n ce Pro gra m in m an y s ta te s.

In s o m e c ases, T hir d P arty P ay ors r e ly o n a ll o r p ortio ns o f M ed ic are p ay m en t s y ste m s t o d ete rm in e p ay m en t r a te s.

Chan ges t o g overn m en t h ealt h care p ro gra m s th at re d uce p ay m en ts u nder th ese p ro gra m s m ay n eg ativ ely im pact p ay m en ts fro m T hir d P arty P ay ors .

Curre n t o r fu tu re h ealt h care re fo rm a n d d efic it re d uctio n effo rts , c h an ges in o th er la w s o r re g ula tio ns a ffe ctin g g overn m en t h ealt h care p ro gra m s, c h an ges in th e a d m in is tra tio n o f g overn m en t h ealt h care p ro gra m s a n d ch an ges b y T hir d P arty P ay ors c o uld h av e a m ate ria l, a d vers e e ffe ct o n o ur f in an cia l p osit io n a n d r e su lt s o f o pera tio ns.

In a d dit io n, m an y T hir d P arty P ay ors a re in cre asin gly c o nsid erin g n ew m etric s a s th e b asis fo r re im burs em en t ra te s. It is p ossib le th at th e p harm aceu tic al in dustry o r re g ula to rs m ay e v alu ate a n d/o r d ev elo p a n a lt e rn ativ e p ric in g re fe re n ce to re p la ce a v era g e w hole sale p ric e. F u tu re c h an ges to th e p ric in g b en ch m ark s used t o e sta b lis h p harm aceu tic al p ric in g, in clu din g c h an ges in t h e b asis f o r c alc u la tin g r e im burs em en t b y t h ir d -p arty p ay ers , c o uld a d vers ely a ffe ct u s.

W e f a ce p erio dic r e vie w s a nd b illin g a udits b y g overn m en ta l a nd p riv a te p ayo rs, a nd t h ese a udits c o uld h ave a dverse f in din gs t h at m ay n eg ativ ely i m pact o ur busin ess .

As a r e su lt o f o ur p artic ip atio n in t h e M ed ic are a n d M ed ic aid p ro gra m s, w e a re s u bje ct t o v ario us g overn m en ta l r e v ie w s a n d a u dit s t o v erif y o ur c o m plia n ce w it h th ese p ro gra m s a n d a p plic ab le la w s a n d r e g ula tio ns.

We a ls o a re s u bje ct t o a u dit s u nder v ario us g overn m en t p ro gra m s in w hic h t h ir d p arty f ir m s e n gag ed b y C M S co nduct e xte n siv e r e v ie w s o f c la im s d ata a n d m ed ic al a n d o th er r e co rd s t o id en tif y p ote n tia l im pro per p ay m en ts u nder t h e M ed ic are p ro gra m .

Thir d P arty P ay ors m ay als o c o nduct a u dit s . D is p ute s w it h p ay ors c an a ris e f ro m t h ese r e v ie w s. P ay ors c an c la im t h at p ay m en ts b ased o n c erta in b illin g p ra ctic es o r 17 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts billin g e rro rs w ere m ad e in co rre ctly . I f b illin g e rro rs a re id en tif ie d in t h e s am ple o f r e v ie w ed c la im s, t h e b illin g e rro r c an b e e xtra p ola te d t o a ll c la im s f ile d w hic h c o uld re su lt in a la rg er o verp ay m en t th an o rig in ally id en tif ie d in th e s am ple o f re v ie w ed c la im s.

Our c o sts to re sp ond to a n d d efe n d c la im s, re v ie w s a n d a u dit s m ay b e sig nif ic an t a n d c o uld h av e a m ate ria l a d vers e e ffe ct o n o ur b usin ess a n d c o nso lid ate d f in an cia l c o ndit io n, r e su lt s o f o pera tio ns a n d c ash f lo w s.

More o ver, a n a d vers e cla im , r e v ie w o r a u dit c o uld r e su lt in :

• re q uir e d r e fu ndin g o r r e tro activ e a d ju stm en t o f a m ounts w e h av e b een p aid b y g overn m en ta l p ay ors o r T hir d P arty P ay ors ; • sta te o r f e d era l a g en cie s im posin g f in es, p en alt ie s a n d o th er s an ctio ns o n u s; • su sp en sio n o r e xc lu sio n f ro m t h e M ed ic are p ro gra m , s ta te p ro gra m s, o r o ne o r m ore T hir d P arty P ay or n etw ork s; o r • dam ag e t o o ur b usin ess a n d r e p uta tio n in v ario us m ark ets .

These r e su lt s c o uld h av e a m ate ria l a d vers e e ffe ct o n o ur b usin ess a n d c o nso lid ate d f in an cia l c o ndit io n, r e su lt s o f o pera tio ns a n d c ash f lo w s.

If a ny o f o ur p harm acie s f a il t o c o m ply w ith t h e c o nditio ns o f p artic ip atio n i n t h e M ed ic a re p ro gra m , t h at p harm acy c o uld b e t e rm in ate d f r o m M ed ic a re , w hic h co uld a dverse ly a ffe ct o ur c o nso lid ate d f in ancia l s ta te m en ts .

Our p harm acie s m ust c o m ply w it h th e e xte n siv e c o ndit io ns o f p artic ip atio n in th e M ed ic are p ro gra m .

If a p harm acy fa ils to m eet a n y o f th e M ed ic are s u pplie r sta n dard s, t h at p harm acy c o uld b e t e rm in ate d f ro m t h e M ed ic are p ro gra m .

We r e sp ond in t h e o rd in ary c o urs e t o d efic ie n cy n otic es is su ed b y s u rv ey ors , a n d n one o f our p harm acie s h as e v er b een te rm in ate d fro m th e M ed ic are p ro gra m fo r fa ilu re to c o m ply w it h th e s u pplie r s ta n dard s.

Any te rm in atio n o f o ne o r m ore o f o ur pharm acie s f ro m t h e M ed ic are p ro gra m f o r f a ilu re t o s atis fy t h e M ed ic are s u pplie r s ta n dard s c o uld a d vers ely a ffe ct o ur c o nso lid ate d f in an cia l s ta te m en ts .

W e c a nnot p re d ic t t h e i m pact o f c h angin g r e q uir e m en ts o n c o m poundin g p harm acie s.

Com poundin g p harm acie s a re c lo sely m onit o re d b y fe d era l a n d s ta te g overn m en ta l a g en cie s.

We b elie v e th at o ur c o m poundin g is d one in s afe e n vir o nm en ts an d w e h av e c lin ic ally a p pro pria te p olic ie s a n d p ro ced ure s in p la ce.

We o nly c o m pound p urs u an t t o a p atie n t-s p ecif ic p re scrip tio n a n d d o s o in c o m plia n ce w it h U SP 797 s ta n dard s.

In 2 013, C ongre ss p assed t h e D QSA , w hic h c re ate s a n ew c ate g ory o f c o m pounders c alle d o uts o urc in g f a cilit ie s, w hic h a re r e g ula te d b y t h e F D A .

We do n ot b elie v e th at o ur c u rre n t c o m poundin g p ra ctic es q ualif y u s a s a n o uts o urc in g fa cilit y a n d th ere fo re w e c o ntin ue to o pera te c o nsis te n tly w it h U SP 7 97 sta n dard s.

Sh ould s ta te r e g ula to rs o r t h e F D A d is ag re e, o r s h ould o ur b usin ess p ra ctic es c h an ge t o q ualif y u s a s a n o uts o urc in g f a cilit y , t h ere is a r is k o f r e g ula to ry actio n a n d/o r in cre ased re so urc es re q uir e d to c o m ply w it h fe d era l re q uir e m en ts im posed p urs u an t to th e D QSA o n o uts o urc in g fa cilit ie s th at c o uld s ig nif ic an tly in cre ase o ur c o sts o r o th erw is e a ffe ct o ur r e su lt s o f o pera tio ns.

Furth erm ore , w e c an not p re d ic t t h e o vera ll im pact o f in cre ased s cru tin y o n c o m poundin g p harm acie s.

C om petitio n i n t h e h ea lth ca re i n dustr y m ay a dverse ly a ffe ct o ur b usin ess.

The h ealt h care in dustry is v ery c o m petit iv e.

Our c o m petit o rs in clu de la rg e a n d w ell- e sta b lis h ed c o m pan ie s th at m ay h av e g re ate r fin an cia l, m ark etin g a n d te ch nolo gic al r e so urc es t h an w e d o. A s a r e su lt , t h ey m ay b e b ette r a b le t o c o m pete f o r m ark et s h are , e v en in a re as in w hic h o ur s erv ic es m ay b e s u perio r.

So m e o f o ur c o m petit o rs h av e v ertic ally in te g ra te d b usin ess m odels w it h c o m merc ia l p ay ers , o r a re u nder c o m mon c o ntro l w it h , o r o w ned b y, p harm aceu tic al w hole sale rs a n d d is trib uto rs , m an ag ed c are o rg an iz a tio ns, p harm acy b en efit m an ag ers o r re ta il p harm acy c h ain s a n d m ay b e b ette r p osit io ned w it h re sp ect to th e co st-e ffe ctiv e d is trib utio n o f p harm aceu tic als .

In a d dit io n, s o m e o f o ur c o m petit o rs m ay h av e s ecu re d lo ng-te rm s u pply o r d is trib utio n a rra n gem en ts f o r p re scrip tio n pharm aceu tic als n ecessary t o t re at c erta in c h ro nic d is ease s ta te s o n p ric e t e rm s s u bsta n tia lly m ore f a v ora b le t h an t h e t e rm s c u rre n tly a v aila b le t o u s.

As a r e su lt o f su ch a d van ta g eo us p ric in g, w e m ay b e le ss p ric e c o m petit iv e th an s o m e o f th ese c o m petit o rs w it h re sp ect to c erta in p harm aceu tic al p ro ducts .

ACO s a n d o th er clin ic al in te g ra tio n m odels m ay re su lt in lo w er re im burs em en t ra te s. S o m e o f o ur c o m petit o rs m ay n eg otia te e xc lu siv it y p ro vis io ns w it h m an ag ed c are p la n s o r oth erw is e in te rfe re w it h t h e a b ilit y o f m an ag ed c are c o m pan ie s t o c o ntra ct w it h u s. In cre asin g c o nso lid atio n in t h e p ay er a n d s u pplie r in dustrie s, in clu din g v ertic al in te g ra tio n e ffo rts a m ong in su re rs , p ro vid ers , a n d s u pplie rs , a n d c o st-re d uctio n s tra te g ie s b y la rg e e m plo yer g ro ups a n d th eir a ffilia te s m ay lim it o ur a b ilit y to neg otia te fa v ora b le te rm s a n d c o ndit io ns in o ur c o ntra cts a n d o th erw is e in te n sif y c o m petit iv e p re ssu re .

In a d dit io n, o ur c o m petit iv e p osit io n c o uld b e a d vers ely affe cte d b y a n y in ab ilit y t o o bta in a ccess t o n ew b io te ch p harm aceu tic al p ro ducts .

18 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts If w e a re u nable t o m ain ta in r e la tio nsh ip s w ith e x is tin g p atie n t r e fe rra l s o urc es, o ur b usin ess a nd c o nso lid ate d f in ancia l c o nditio n, r e su lts o f o pera tio ns, a nd ca sh f lo w s c o uld b e m ate ria lly a dverse ly a ffe cte d .

Our s u ccess d ep en ds o n r e fe rra ls f ro m p hysic ia n s, h osp it a ls , a n d o th er s o urc es in t h e c o m munit ie s w e s erv e a n d o n o ur a b ilit y t o m ain ta in g ood r e la tio nsh ip s w it h e xis tin g r e fe rra l s o urc es. O ur r e fe rra l s o urc es a re n ot c o ntra ctu ally o blig ate d t o r e fe r p atie n ts t o u s a n d m ay r e fe r t h eir p atie n ts t o o th er p ro vid ers . O ur g ro w th an d p ro fit a b ilit y d ep en ds, in p art, o n o ur a b ilit y t o e sta b lis h a n d m ain ta in c lo se w ork in g r e la tio nsh ip s w it h t h ese p atie n t r e fe rra l s o urc es, a n d t o in cre ase a w are n ess an d a ccep ta n ce o f t h e b en efit s o f h om e in fu sio n b y o ur r e fe rra l s o urc es a n d t h eir p atie n ts . O ur lo ss o f, o r f a ilu re t o m ain ta in , e xis tin g r e la tio nsh ip s o r o ur f a ilu re t o dev elo p n ew r e fe rra l r e la tio nsh ip s c o uld h av e a m ate ria l a d vers e e ffe ct o n o ur b usin ess a n d c o nso lid ate d f in an cia l c o ndit io n, r e su lt s o f o pera tio ns, a n d c ash f lo w s.

If w e a re u nable t o m ain ta in o ur c o rp ora te r e p uta tio n, o ur b usin ess m ay s u ffe r.

Our s u ccess d ep en ds o n o ur a b ilit y to m ain ta in o ur c o rp ora te re p uta tio n, in clu din g o ur re p uta tio n fo r p ro vid in g q ualit y p atie n t c are a n d fo r c o m plia n ce w it h M ed ic are r e q uir e m en ts a n d t h e o th er la w s t o w hic h w e a re s u bje ct. A dvers e p ublic it y s u rro undin g a n y a sp ect o f o ur b usin ess, in clu din g t h e d eath o r d is ab ilit y o f an y o f o ur p atie n ts d ue t o o ur f a ilu re t o p ro vid e p ro per c are , o r d ue t o a n y f a ilu re o n o ur p art t o c o m ply w it h M ed ic are r e q uir e m en ts o r o th er la w s t o w hic h w e a re su bje ct, c o uld n eg ativ ely a ffe ct o ur C om pan y’s o vera ll r e p uta tio n a n d t h e w illin gness o f r e fe rra l s o urc es t o r e fe r p atie n ts t o u s.

C hanges i n t h e c a se m ix o f p atie n ts , a s w ell a s p aym en t m eth odolo gie s, p ayo r m ix o r p ric in g c o uld a dverse ly a ffe ct o ur c o nso lid ate d f in ancia l s ta te m en ts .

The s o urc es a n d a m ounts o f o ur p atie n t re v en ue a re d ete rm in ed b y a n um ber o f fa cto rs , in clu din g th e m ix o f p atie n ts a n d th e ra te s o f re im burs em en t a m ong pay ors .

Chan ges in t h e c ase m ix o f t h e p atie n ts , p ay m en t m eth odolo gie s, p ay or m ix o r p ric in g a m ong p riv ate p ay, M ed ic are a n d M ed ic aid m ay s ig nif ic an tly a ffe ct o ur co nso lid ate d f in an cia l s ta te m en ts , r e su lt s o f o pera tio ns, a n d c ash f lo w s.

C hanges i n i n dustr y p ric in g b en ch m ark s c o uld a dverse ly a ffe ct o ur f in ancia l p erfo rm ance.

Contra cts w it h in o ur b usin ess g en era lly u se c erta in p ublis h ed b en ch m ark s t o e sta b lis h p ric in g f o r t h e r e im burs em en t o f p re scrip tio n m ed ic atio ns d is p en sed b y us.

These b en ch m ark s in clu de A W P, w hole sale a cq uis it io n c o st, a n d a v era g e m an ufa ctu re r p ric e.

Man y o f o ur c o ntra cts u tiliz e t h e A W P b en ch m ark .

Pu blic atio n o f th e A W P b en ch m ark w as e xp ecte d t o c ease in 2 011 a s a r e su lt o f t h e s ettle m en t o f c la ss-a ctio n la w su it s b ro ught a g ain st F ir s t D ata B an k a n d M ed i- S p an , t h ir d -p arty publis h ers o f v ario us p ric in g b en ch m ark s.

How ev er, M ed i- S p an c o ntin ues t o p ublis h t h e A W P b en ch m ark a n d h as in dic ate d t h at it w ill c o ntin ue t o d o s o u ntil a n ew ben ch m ark is w id ely a ccep te d . S ev era l in dustry p artic ip an ts h av e e xp lo re d e sta b lis h in g a n ew b en ch m ark b ut th ere is n ot c u rre n tly a v ia b le g en era lly a ccep te d alt e rn ativ e t o t h e A W P b en ch m ark . W it h out a s u it a b le p ric in g b en ch m ark in p la ce, m an y o f o ur c o ntra cts w ill h av e t o b e m odif ie d a n d c o uld p ote n tia lly c h an ge t h e eco nom ic s tru ctu re o f o ur a g re em en ts .

C ontr a ct r e n ew als , o r la ck th ere o f, w ith k ey r e ven ue s o urc es a nd k ey b usin ess r e la tio nsh ip s c o uld r e su lt in le ss fa vo ra ble p ric in g, lo ss o f e x clu siv ity a nd/o r re d uced d is tr ib utio n a nd a ccess t o c u sto m ers, w hic h c o uld h ave a n a dverse e ffe ct o n o ur b usin ess, f in ancia l c o nditio n, a nd r e su lts o f o pera tio ns.

We h av e c o ntra ctu al a n d b usin ess r e la tio nsh ip s w it h k ey r e v en ue s o urc es, in clu din g T hir d P arty P ay ors .

Our f u tu re g ro w th a n d s u ccess d ep en ds o n o ur a b ilit y to m ain ta in th ese re la tio nsh ip s a n d re n ew s u ch c o ntra cts o n a ccep ta b le te rm s.

How ev er, w e m ay n ot b e a b le to c o ntin ue to m ain ta in th ese re la tio nsh ip s. W e m ay hav e d is p ute s w it h T hir d P arty P ay ors r e g ard in g t h ese c o ntra ctu al r e la tio nsh ip s; t h ese d is p ute s m ay a ls o d is ru pt o ur o ngoin g c o ntra ctu al r e la tio nsh ip s w it h t h ese pay ors . A ny b re ak in t h ese k ey b usin ess r e la tio nsh ip s c o uld r e su lt in lo st c o ntra cts a n d r e d uce o ur a ccess t o c erta in c u sto m ers a n d d is trib utio n c h an nels .

Furth er, w hen t h ese c o ntra cts n ear e xp ir a tio n, w e m ay n ot b e a b le t o s u ccessfu lly r e n eg otia te a ccep ta b le t e rm s.

Any in cre ase in p ric in g o r lo ss o f e xc lu siv it y c o uld r e su lt in re d uced m arg in s.

Acco rd in gly , it is p ossib le t h at o ur o ngoin g e ffo rts t o r e n ew c o ntra cts a n d b usin ess r e la tio nsh ip s w it h s u ch k ey r e v en ue s o urc es a s T hir d P arty Pay ors c o uld re su lt in le ss fa v ora b le p ric in g o r e v en re d uced a ccess to c u sto m ers a n d d is trib utio n c h an nels , a n y o f w hic h c o uld h av e a n a d vers e e ffe ct o n o ur busin ess, fin an cia l c o ndit io n, a n d re su lt s o f o pera tio ns.

In a d dit io n, e v en w hen s u ch c o ntra cts a re re n ew ed , th ey m ay b e re n ew ed fo r o nly a s h ort te rm o r m ay b e te rm in ab le o n r e la tiv ely s h ort n otic e.

W e a nd c erta in o f o ur f o rm er d ir e cto rs a nd e x ecu tiv e o ffic ers w ere n am ed a s d efe n dants i n a d eriv a tiv e c o m pla in t a nd w e m ay b e s u bje ct t o s im ila r l a w su its i n th e f u tu re .

Certa in o f o ur c u rre n t a n d f o rm er d ir e cto rs a n d e xe cu tiv e o ffic ers w ere n am ed a s d efe n dan ts in a d eriv ativ e c o m pla in t ( th e “ D eriv ativ e C om pla in t” ) t h at g en era lly alle g ed t h at c erta in d efe n dan ts b re ach ed t h eir f id ucia ry d utie s w it h r e sp ect t o t h e C om pan y’s 19 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts public d is clo su re s, o vers ig ht o f C om pan y o pera tio ns, s eco ndary s to ck o ffe rin gs, a n d s to ck s ale s.

The C om pan y w as a ls o n am ed a s a n om in al d efe n dan t in th e D eriv ativ e C om pla in t.

The D eriv ativ e C om pla in t a ls o c o nte n ded th at c erta in d efe n dan ts a id ed a n d a b ette d th ose a lle g ed b re ach es. O n A pril 1 8, 2 017, th e C ourt gra n te d t h e d efe n dan ts ’ m otio n t o d is m is s, a n d o n N ovem ber 2 7, 2 017, t h e D ela w are S u pre m e C ourt a ffir m ed t h e d is m is sal. A ddit io nal d em an ds a n d la w su it s r e la te d to t h e s am e f a cts a n d c ir c u m sta n ces, h ow ev er, c o uld b e p urs u ed in t h e f u tu re .

In th at e v en t, th ere is n o a ssu ra n ce th at a n y d efe n ses w ill b e s u ccessfu l o r th at in su ra n ce w ill b e a v aila b le o r a d eq uate to fu nd a n y s ettle m en t, ju dgm en t o r lit ig atio n co sts asso cia te d w it h th is actio n.

Certa in o f th e d efe n dan ts m ay als o seek in dem nif ic atio n fro m th e C om pan y p urs u an t to certa in in dem nif ic atio n ag re em en ts , f o r w hic h t h ere m ay b e n o in su ra n ce c o vera g e.

Any c o nclu sio n in t h is m atte r o r in a n y r e la te d m an ner a d vers e t o u s w ould h av e a n a d vers e e ffe ct o n o ur f in an cia l c o ndit io n a n d b usin ess a n d t h e C om pan y.

W e c o uld in cu r s u bsta n tia l c o sts n ot c o vere d b y o ur d ir e cto rs ’ a n d o ffic ers ’ lia b ilit y in su ra n ce, s u ffe r a s ig nif ic an t a d vers e im pact o n o ur re p uta tio n a n d d iv ert m an ag em en t’s a tte n tio n a n d re so urc es fro m o th er p rio rit ie s, in clu din g th e e xe cu tio n o f b usin ess p la n s a n d s tra te g ie s th at a re im porta n t to o ur a b ilit y to g ro w o ur busin ess, a n y o f w hic h c o uld h av e a n a d vers e e ffe ct o n o ur b usin ess.

Pen din g a nd f u tu re l itig atio n c o uld s u bje ct u s t o s ig nific a nt m oneta ry d am ages a nd/o r r e q uir e u s t o c h ange o ur b usin ess p ra ctic es.

We a re s u bje ct t o r is ks r e la tin g t o a sserte d c la im s, lit ig atio n a n d o th er p ro ceed in gs in c o nnectio n w it h o ur o pera tio ns. W e a re o r m ay f a ce c la im s o r b eco m e a party t o a v arie ty o f le g al a ctio ns t h at a ffe ct o ur b usin ess, in clu din g b re ach o f c o ntra ct a ctio ns, e m plo ym en t a n d e m plo ym en t d is crim in atio n-re la te d s u it s , e m plo yee ben efit c la im s, s to ckh old er s u it s a n d o th er s ecu rit ie s la w s c la im s, a n d t o rt c la im s. .

Due t o t h e n atu re o f o ur b usin ess, w e, t h ro ugh o ur e m plo yees a n d c are g iv ers w ho pro vid e s erv ic es o n o ur b eh alf , m ay b e th e s u bje ct o f m ed ic al m alp ra ctic e c la im s. A c o urt c o uld fin d th ese in div id uals s h ould b e c o nsid ere d o ur a g en ts , a n d, a s a re su lt , w e c o uld b e h eld lia b le f o r t h eir a cts o r o m is sio ns.

We m ay in cu r s u bsta n tia l e xp en ses in d efe n din g s u ch c la im s o r lit ig atio n, r e g ard le ss o f m erit , a n d s u ch c la im s o r lit ig atio n c o uld r e su lt in a s ig nif ic an t d iv ers io n of th e e ffo rts o f o ur m an ag em en t p ers o nnel. S u ccessfu l c la im s a g ain st u s m ay re su lt in m oneta ry lia b ilit y o r a m ate ria l d is ru ptio n in th e c o nduct o f o ur b usin ess.

Sim ila rly , if w e s ettle s u ch le g al p ro ceed in gs, it m ay a ffe ct h ow w e o pera te o ur b usin ess. S ee It e m 3 -L eg al P ro ceed in gs fo r a d escrip tio n o f m ate ria l p ro ceed in gs pen din g a g ain st u s.

We b elie v e t h at t h ese s u it s a re w it h out m erit a n d, t o t h e e xte n t n ot a lr e ad y c o nclu ded , in te n d t o c o nte st t h em v ig oro usly .

How ev er, a n a d vers e outc o m e in o ne o r m ore o f th ese s u it s m ay h av e a m ate ria l a d vers e e ffe ct o n o ur c o nso lid ate d re su lt s o f o pera tio ns, c o nso lid ate d fin an cia l p osit io n, a n d/o r co nso lid ate d c ash f lo w f ro m o pera tio ns, o r m ay r e q uir e u s t o m ake m ate ria l c h an ges t o o ur b usin ess p ra ctic es.

We p erio dic ally r e sp ond t o s u bpoen as a n d r e q uests f o r in fo rm atio n f ro m g overn m en ta l a g en cie s.

To o ur k n ow le d ge, w e a re n ot a t a rg et o r a p ote n tia l s u bje ct o f a c rim in al in vestig atio n, b ut w e c an not p re d ic t w it h c erta in ty w heth er w e m ay in t h e f u tu re b eco m e a t a rg et o r p ote n tia l t a rg et o f a n in vestig atio n o r t h e s u bje ct o f fu rth er in quir ie s o r u lt im ate ly s ettle m en ts w it h re sp ect to th e s u bje ct m atte r o f a n y s u bpoen as.

In a d dit io n to p ote n tia l m oneta ry lia b ilit y a ris in g fro m s u it s a n d pro ceed in gs, f ro m t im e t o t im e w e in cu r c o sts in p ro vid in g d ocu m en ts t o g overn m en t a g en cie s.

Curre n t p en din g c la im s a n d a sso cia te d c o sts m ay b e c o vere d b y o ur in su ra n ce, b ut c erta in o th er c o sts a re n ot in su re d .

Such c o sts m ay in cre ase a n d/o r c o ntin ue t o b e m ate ria l t o o ur p erfo rm an ce in t h e f u tu re .

In a d dit io n, a s w e c o ntin ue o ur s tra te g ic a ssessm en t a n d c o st re d uctio n e ffo rts , th ere is a n in cre ased ris k o f e m plo ym en t a n d w ork ers ’ c o m pen satio n-re la te d lit ig atio n a n d/o r a d m in is tra tiv e c la im s b ro ught a g ain st u s.

We w ould d efe n d a g ain st a n y a n d a ll s u ch lit ig atio n a n d c la im s, a s a p pro pria te .

Su ch c la im s c o uld h av e a m ate ria l a d vers e e ffe ct o n o ur c o nso lid ate d f in an cia l s ta te m en ts in a n y p artic u la r r e p ortin g p erio d.

O ur a cq uis itio n s tr a te g y e x pose s u s t o a v a rie ty o f o pera tio nal a nd f in ancia l r is k s.

A p rin cip al e le m en t o f o ur h is to ric b usin ess s tra te g y h as b een to g ro w b y a cq uir in g o th er c o m pan ie s a n d a ssets in th e h om e in fu sio n a n d c o m ple m en ta ry busin es ses.

Gro w th , e sp ecia lly ra p id g ro w th , th ro ugh a cq uis it io ns e xp oses u s to a v arie ty o f o pera tio nal a n d fin an cia l ris ks.

We s u m mariz e th e m ost s ig nif ic an t o f th ese r is ks b elo w .

20 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts In te g ra tio n r is k s .

We m ust in te g ra te o ur a cq uis it io ns w it h o ur e xis tin g o pera tio ns.

This p ro cess in clu des th e in te g ra tio n o f th e v ario us c o m ponen ts o f o ur busin ess ( in clu din g t h e f o llo w in g) a n d o f t h e b usin esses w e h av e a cq uir e d o r m ay a cq uir e in t h e f u tu re :

• healt h c are p ro fe ssio nals a n d e m plo yees w ho a re n ot f a m ilia r w it h o ur p olic ie s a n d p ro ced ure s; • clie n ts w ho m ay t e rm in ate t h eir r e la tio nsh ip s w it h u s; • key e m plo yees w ho m ay s eek e m plo ym en t e ls ew here ; • patie n ts w ho m ay e le ct t o s w it c h t o a n oth er h ealt h c are p ro vid er; • re g ula to ry c o m plia n ce p ro gra m s; a n d • dis p ara te o pera tin g, in fo rm atio n a n d r e co rd k eep in g s y ste m s a n d t e ch nolo gy p la tfo rm s.

In te g ra tin g a n a cq uis it io n c o uld b e e xp en siv e a n d t im e c o nsu m in g a n d c o uld d is ru pt o ur o ngoin g b usin ess, n eg ativ ely a ffe ct c ash f lo w a n d d is tra ct m an ag em en t an d o th er k ey p ers o nnel f ro m d ay -to -d ay o pera tio ns.

We m ay n ot b e a b le t o c o m bin e s u ccessfu lly t h e o pera tio ns o f a cq uir e d c o m pan ie s w it h o ur o pera tio ns, a n d, e v en if s u ch in te g ra tio n is a cco m plis h ed , w e m ay nev er re aliz e th e p ote n tia l b en efit s o f th e a cq uis it io n.

The in te g ra tio n o f a cq uis it io ns re q uir e s s ig nif ic an t a tte n tio n fro m m an ag em en t, m ay im pose s u bsta n tia l dem an ds o n o ur o pera tio ns o r o th er p ro je cts a n d m ay im pose c h alle n ges o n th e c o m bin ed b usin ess in clu din g, b ut n ot lim it e d to , c o nsis te n cie s in b usin ess sta n dard s, p ro ced ure s, p olic ie s a n d b usin ess c u lt u re s.

If w e f a il t o c o m ple te o ngoin g in te g ra tio n e ffo rts , w e m ay n ev er f u lly r e aliz e t h e p ote n tia l b en efit s o f t h e r e la te d acq uis it io ns.

Ben efi ts m ay n ot m ate ria liz e .

When e v alu atin g p ote n tia l a cq uis it io n t a rg ets , w e id en tif y p ote n tia l s y nerg ie s a n d c o st s av in gs t h at w e e xp ect t o r e aliz e u pon t h e su ccessfu l c o m ple tio n o f th e a cq uis it io n a n d th e in te g ra tio n o f th e re la te d o pera tio ns.

We m ay, h ow ev er, b e u nab le to a ch ie v e o r m ay o th erw is e n ev er re aliz e th e exp ecte d ben efit s .

Our a b ilit y to re aliz e th e e xp ecte d b en efit s fro m im pro vem en ts to c o m pan ie s w e a cq uir e a re s u bje ct to s ig nif ic an t b usin ess, e co nom ic a n d co m petit iv e u ncerta in tie s a n d c o ntin gen cie s, m an y o f w hic h a re b ey ond o ur c o ntro l, s u ch a s c h an ges t o g overn m en t r e g ula tio n g overn in g o r o th erw is e im pactin g o ur in dustry , re d uctio ns in re im burs em en t ra te s fro m Thir d P arty P ay ors , re d uctio ns in s erv ic e le v els u nder o ur c o ntra cts , o pera tin g d if fic u lt ie s, c lie n t p re fe re n ces, ch an ges in c o m petit io n a n d g en era l e co nom ic o r in dustry c o ndit io ns.

If w e a re u nsu ccessfu l in im ple m en tin g th ese im pro vem en ts o r if w e d o n ot a ch ie v e o ur exp ecte d r e su lt s , it m ay a d vers ely im pact o ur r e su lt s o f o pera tio ns.

Assu m ptio ns o f u nknow n l ia bilitie s .

Com pan ie s t h at w e a cq uir e m ay h av e u nkn ow n o r c o ntin gen t lia b ilit ie s, in clu din g, b ut n ot lim it e d t o , lia b ilit ie s f o r f a ilu re t o co m ply w it h h ealt h care la w s a n d r e g ula tio ns.

We m ay in cu r m ate ria l lia b ilit ie s f o r t h e p ast a ctiv it ie s o f a cq uir e d o pera tio ns.

Su ch lia b ilit ie s a n d r e la te d le g al o r o th er co sts a n d/o r re su lt in g d am ag e to o ur re p uta tio n c o uld n eg ativ ely im pact o ur b usin ess th ro ugh lo w er-th an -e xp ecte d o pera tin g re su lt s , c h arg es fo r im pair m en t o f acq uir e d in ta n gib le a ssets o r o th erw is e.

Com petin g fo r a cq uis itio ns .

We fa ce c o m petit io n fo r a cq uis it io n c an did ate s p rim arily fro m o th er h om e in fu sio n a n d o th er h ealt h care c o m pan ie s.

So m e o f o ur co m petit o rs h av e g re ate r r e so urc es t h an w e d o.

As a r e su lt , w e m ay p ay m ore t o a cq uir e a t a rg et b usin ess o r m ay a g re e t o le ss f a v ora b le d eal t e rm s t h an w e w ould hav e oth erw is e.

Accu ra te ly assessin g th e v alu e o f acq uis it io n can did ate s is o fte n v ery ch alle n gin g.

Als o , s u it a b le a cq uis it io ns m ay n ot b e a v aila b le d ue to unfa v ora b le t e rm s.

Fu rth er, th e c o st o f a n a cq uis it io n c o uld re su lt in a d ilu tiv e e ffe ct o n o ur re su lt s o f o pera tio ns, d ep en din g o n v ario us fa cto rs , in clu din g e m plo yee s ev era n ce co sts , c erta in le g al a n d p ro fe ssio nal f e es, t ra in in g c o sts , r e d undan t w ag e c o sts , im pacts r e co rd ed f ro m t h e c h an ge in c o ntin gen t c o nsid era tio n o blig atio ns, a n d o th er co sts r e la te d t o c o ntra ct t e rm in atio ns a n d c lo sed b ra n ch es/o ffic es.

Im pro vin g fi n ancia l r e su lts .

So m e o f t h e o pera tio ns w e h av e a cq uir e d o r m ay a cq uir e in t h e f u tu re m ay h av e h ad s ig nif ic an tly lo w er o pera tin g m arg in s t h an o ur cu rre n t o pera tio ns.

If w e f a il t o im pro ve t h e o pera tin g m arg in s o f t h e c o m pan ie s w e a cq uir e , o pera te s u ch c o m pan ie s p ro fit a b ly o r e ffe ctiv ely in te g ra te t h e o pera tio ns of t h e a cq uir e d c o m pan ie s, o ur r e su lt s o f o pera tio ns c o uld b e n eg ativ ely im pacte d .

A cq uis itio ns, s tr a te g ic i n vestm en ts a nd s tr a te g ic r e la tio nsh ip s i n vo lv e c erta in r is k s.

We m ay p urs u e o pportu nis tic a cq uis it io ns, s tra te g ic in vestm en ts in , o r s tra te g ic re la tio nsh ip s w it h b usin esses a n d te ch nolo gie s.

Acq uis it io ns m ay e n ta il num ero us ris ks, in clu din g d if fic u lt ie s in a ssessin g v alu es fo r a cq uir e d b usin esses, in ta n gib le a ssets a n d te ch nolo gie s, d if fic u lt ie s in th e a ssim ila tio n o f a cq uir e d opera tio ns a n d p ro ducts , d iv ers io n o f m an ag em en t’s a tte n tio n fro m o th er b usin ess c o ncern s, a ssu m ptio n o f u nkn ow n m ate ria l lia b ilit ie s o f a cq uir e d c o m pan ie s, am ortiz a tio n o f a cq uir e d in ta n gib le a ssets w hic h c o uld re d uce fu tu re re p orte d e arn in gs, a n d p ote n tia l lo ss o f c lie n ts o r k ey e m plo yees o f a cq uir e d c o m pan ie s.

We m ay n ot b e a b le t o s u ccessfu lly f u lly in te g ra te t h e o pera tio ns, p ers o nnel, s erv ic es o r p ro ducts t h at w e h av e a cq uir e d o r m ay a cq uir e in t h e 21 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts fu tu re .

Stra te g ic in vestm en ts m ay a ls o e n ta il s o m e o f th e ris ks d escrib ed a b ove.

If th ese in vestm en ts a re u nsu ccessfu l, w e m ay n eed to in cu r c h arg es a g ain st earn in gs.

We m ay a ls o p urs u e a n um ber o f s tra te g ic r e la tio nsh ip s.

These r e la tio nsh ip s a n d o th ers w e m ay e n te r in to in t h e f u tu re m ay b e im porta n t t o o ur b usin ess an d g ro w th p ro sp ects .

We m ay n ot b e a b le t o m ain ta in t h ese r e la tio nsh ip s o r d ev elo p n ew s tra te g ic a llia n ces.

W e m ay i n cu r s ig nific a nt c o sts i n c o nnectio n w ith o ur e va lu atio n o f n ew b usin ess o pportu nitie s a nd s u ita ble a cq uis itio n c a ndid ate s.

Our m an ag em en t in te n ds t o id en tif y , a n aly ze a n d e v alu ate p ote n tia l n ew b usin ess o pportu nit ie s, in clu din g p ossib le a cq uis it io n a n d m erg er c an did ate s.

We m ay in cu r s ig nif ic an t c o sts , s u ch a s d ue d ilig en ce a n d le g al a n d o th er p ro fe ssio nal fe es a n d e xp en ses, a s p art o f th ese e ffo rts .

Notw it h sta n din g th ese e ffo rts a n d exp en dit u re s, w e m ay n ot b e a b le t o id en tif y a n a p pro pria te n ew b usin ess o pportu nit y , o r a n y a cq uis it io n o pportu nit y , in t h e n ear t e rm , o r a t a ll.

W e m ay b e s u bje ct t o l ia bility c la im s f o r d am ages a nd o th er e x pen se s t h at a re n ot c o vere d b y i n su ra nce.

As a r e su lt o f o pera tin g in t h e h om e in fu sio n in dustry , o ur b usin ess e n ta ils a n in here n t r is k o f c la im s, lo sses a n d p ote n tia l la w su it s a lle g in g in cid en ts in volv in g our e m plo yees t h at a re lik ely t o o ccu r in a p atie n t’s h om e. W e m ain ta in p ro fe ssio nal lia b ilit y in su ra n ce t o p ro vid e c o vera g e t o u s a n d o ur s u bsid ia rie s a g ain st t h ese ris ks.

A s u ccessfu l p ro duct o r p ro fe ssio nal lia b ilit y c la im in e xc ess o f o ur in su ra n ce c o vera g e c o uld h arm o ur c o nso lid ate d f in an cia l s ta te m en ts .

Vario us a sp ects o f our b usin ess m ay s u bje ct u s t o lit ig atio n a n d lia b ilit y f o r d am ag es.

Fo r e xa m ple , a p re scrip tio n d ru g d is p en sin g e rro r c o uld r e su lt in a p atie n t r e ceiv in g t h e w ro ng o r in co rre ct a m ount o f m ed ic atio n, le ad in g t o p ers o nal in ju ry o r d eath .

Our b usin ess a n d c o nso lid ate d f in an cia l s ta te m en ts c o uld s u ffe r if w e p ay d am ag es o r d efe n se co sts in c o nnectio n w it h a c la im t h at is o uts id e t h e s co pe o f a n y a p plic ab le c o ntra ctu al in dem nit y o r in su ra n ce c o vera g e.

Our in su ra n ce c o vera g e a ls o in clu des f ir e , p ro perty d am ag e a n d g en era l lia b ilit y w it h v ary in g lim it s . W e c an not a ssu re y ou t h at t h e in su ra n ce w e m ain ta in w ill satis fy c la im s m ad e a g ain st u s o r t h at in su ra n ce c o vera g e w ill c o ntin ue t o b e a v aila b le t o u s a t c o m merc ia lly r e aso nab le r a te s, in a d eq uate a m ounts o r o n s atis fa cto ry te rm s. A ny c la im s m ad e a g ain st u s, r e g ard le ss o f t h eir m erit o r e v en tu al o utc o m e, c o uld d am ag e o ur r e p uta tio n a n d b usin ess.

C hanges i n o ur r e la tio nsh ip s w ith p harm aceu tic a l s u pplie rs, i n clu din g c h anges i n d ru g a va ila bility o r p ric in g, c o uld a dverse ly a ffe ct o ur b usin ess a nd f in ancia l re su lts .

We h av e c o ntra ctu al r e la tio nsh ip s w it h p harm aceu tic al m an ufa ctu re rs t o p urc h ase t h e d ru gs t h at w e d is p en se.

Any c h an ges to th ese re la tio nsh ip s, in clu din g, but n ot lim it e d , t o lo ss o f a m an ufa ctu re r r e la tio nsh ip , d ru g s h orta g es o r c h an ges in p ric in g, c o uld h av e a n a d vers e e ffe ct o n o ur b usin ess a n d f in an cia l r e su lt s .

W e p urc h ase a m ajo rity o f o ur p harm aceu tic a l p ro ducts f r o m o ne v en dor a nd a d is ru ptio n i n o ur p urc h asin g a rra ngem en ts c o uld a dverse ly i m pact o ur b usin ess.

We p urc h ase a m ajo rit y o f o ur p re scrip tio n p ro ducts , s u bje ct to c erta in m in im um p erio dic p urc h ase le v els a n d e xc lu din g p urc h ases o f th era p eu tic p la sm a pro ducts , f ro m a s in gle w hole sale r, A meris o urc e B erg en D ru g C orp ora tio n ( “ A BD C”), p urs u an t t o a p rim e v en dor a g re em en t.

The t e rm o f t h is a g re em en t e xte n ds u ntil D ecem ber 2 019, s u bje ct to e xte n sio n fo r u p to tw o a d dit io nal y ears .

Any s ig nif ic an t d is ru ptio n in o ur re la tio nsh ip w it h A BD C, o r in A BD C’s s u pply a n d tim ely deliv ery o f p ro ducts to u s, w ould m ake it d if fic u lt a n d p ossib ly c o stlie r fo r u s to c o ntin ue to o pera te o ur b usin ess u ntil w e a re a b le to e xe cu te a re p la cem en t w hole sale r a g re em en t.

If t h at w ere t o o ccu r, w e m ay n ot b e a b le t o f in d a r e p la cem en t w hole sale r o n a t im ely b asis .

Fu rth er, s u ch w hole sale r m ay n ot b e a b le t o f u lf ill our d em an ds o n s im ila r f in an cia l t e rm s a n d s erv ic e le v els .

If w e a re u nab le t o id en tif y a r e p la cem en t o n s u bsta n tia lly s im ila r f in an cia l t e rm s a n d/o r s erv ic e le v els , o ur co nso lid ate d f in an cia l s ta te m en ts m ay b e m ate ria lly a n d a d vers ely a ffe cte d .

A d is ru ptio n i n s u pply c o uld a dverse ly i m pact o ur b usin ess.

We a ls o s o urc e p harm aceu tic als , m ed ic al s u pplie s a n d e q uip m en t f ro m o th er m an ufa ctu re rs , d is trib uto rs a n d w hole sale rs .

Most o f t h e p harm aceu tic als t h at w e purc h ase a re a v aila b le fro m m ult ip le s o urc es, a n d w e b elie v e th ey a re a v aila b le in s u ffic ie n t q uan tit ie s to m eet o ur n eed s a n d th e n eed s o f o ur p atie n ts .

We k eep safe ty s to ck to e n su re c o ntin uit y o f s erv ic e fo r re aso nab le , b ut lim it e d , p erio ds o f tim e.

Sh ould a s u pply d is ru ptio n re su lt in th e in ab ilit y to o bta in e sp ecia lly h ig h m arg in d ru gs a n d c o m pound c o m ponen ts n ecessary f o r p atie n t c are , o ur c o nso lid ate d f in an cia l s ta te m en ts c o uld b e n eg ativ ely im pacte d .

22 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Pre sc rip tio n v o lu m es m ay d eclin e, a nd o ur n et r e ven ues a nd p ro fita bility m ay b e n eg ativ ely i m pacte d , w hen p ro ducts a re w ith dra w n f r o m t h e m ark et o r w hen in cre a se d s a fe ty r is k p ro file s o f s p ecific d ru gs r e su lt i n u tiliz a tio n d ecre a se s.

We d is p en se s ig nif ic an t v olu m es o f p re scrip tio n m ed ic atio ns fro m o ur p harm acie s.

Our d is p en sin g v olu m e is th e p rin cip al d riv er o f re v en ue a n d p ro fit a b ilit y .

W hen p ro ducts a re w it h dra w n b y m an ufa ctu re rs , o r w hen in cre ased s afe ty r is k p ro file s o f s p ecif ic d ru gs o r c la sses o f d ru gs r e su lt in u tiliz a tio n d ecre ases, p hysic ia n s m ay c ease w rit in g o r r e d uce t h e n um bers o f p re scrip tio ns w rit te n f o r t h ese h ig her-ris k d ru gs.

Addit io nally , n eg ativ e m ed ia r e p orts r e g ard in g d ru gs w it h h ig her s afe ty ris k p ro file s m ay r e su lt in r e d uced c o nsu m er d em an d f o r s u ch d ru gs.

In c ases w here t h ere a re n o a ccep ta b le p re scrip tio n d ru g e q uiv ale n ts o r a lt e rn ativ es f o r t h ese pre scrip tio n d ru gs, o ur p re scrip tio n v olu m es, n et r e v en ues, p ro fit a b ilit y a n d c ash f lo w s m ay d eclin e.

H om e i n fu sio n j o in t v en tu re s f o rm ed w ith h osp ita ls c o uld a dverse ly a ffe ct o ur f in ancia l r e su lts .

The h om e in fu sio n in dustry is c u rre n tly s eein g re n ew ed a ctiv it y in th e fo rm atio n o f e q uit y -b ased in fu sio n jo in t v en tu re s fo rm ed w it h h osp it a ls .

This a ctiv it y ste m s, in p art, f ro m h osp it a ls s eekin g t o p osit io n t h em selv es f o r n ew p ara d ig m s in t h e d eliv ery o f c o ord in ate d h ealt h care a n d n ew m eth ods o f p ay m en t, in clu din g a n em erg in g in te rd is cip lin ary c are m odel k n ow n a s A CO s. T hese o rg an iz a tio ns a re e n co ura g ed b y t h e A ffo rd ab le C are A ct.

These e n tit ie s a re d esig ned t o s av e m oney an d im pro ve q ualit y o f c are b y b ette r in te g ra tin g c are , w it h t h e h ealt h care p ro vid er p ossib ly s h arin g in t h e f in an cia l b en efit s o f t h e n ew e ffic ie n cie s.

Partic ip atio n in e q uit y -b ased jo in t v en tu re s o ffe r h osp it a ls a n d o th er p ro vid ers a n o pportu nit y to m ore e ffic ie n tly tra n sfe r p atie n ts to le ss e xp en siv e c are settin gs, w hile k eep in g t h e p atie n t w it h in it s n etw ork .

Addit io nally , it p ro vid es m an y h osp it a ls w it h a m ech an is m t o in vest a ccu m ula te d p ro fit s in a g ro w in g s ecto r w it h a ttra ctiv e m arg in s.

If th ese h om e in fu sio n jo in t v en tu re s c o ntin ue to e xp an d, th en w e c o uld lo se re fe rra ls a n d o ur c o nso lid ate d fin an cia l s ta te m en ts c o uld b e a d vers ely a ffe cte d .

A ls o , t h ere a re r is ks a n d c o sts a sso cia te d w it h jo in t v en tu re p artic ip atio n.

We c o nsid er jo in t v en tu re s w it h h osp it a ls f ro m t im e t o t im e.

A s h orta ge o f q ualifie d r e g is te re d n ursin g s ta ff, p harm acis ts a nd o th er p ro fe ssio nals c o uld a dverse ly a ffe ct o ur a bility to a ttr a ct, tr a in a nd r e tr a in q ualifie d perso nnel a nd c o uld i n cre a se o pera tin g c o sts .

Our b usin ess re lie s s ig nif ic an tly o n it s a b ilit y to a ttra ct a n d re ta in n urs in g s ta ff, p harm acis ts a n d o th er p ro fe ssio nals w ho p ossess th e s kills , e xp erie n ce a n d lic en ses n ecessary t o m eet t h e r e q uir e m en ts o f t h eir jo b r e sp onsib ilit ie s.

Fro m t im e t o t im e a n d p artic u la rly in r e cen t y ears , t h ere h av e b een s h orta g es o f n urs in g s ta ff, pharm acis ts a n d o th er p ro fe ssio nals in c erta in lo cal a n d r e g io nal m ark ets .

As a r e su lt , w e a re o fte n r e q uir e d t o c o m pete f o r p ers o nnel w it h o th er h ealt h care s y ste m s an d o ur c o m petit o rs . O ur a b ilit y to a ttra ct a n d re ta in p ers o nnel d ep en ds o n s ev era l fa cto rs , in clu din g o ur a b ilit y to p ro vid e th em w it h e n gag in g a ssig nm en ts a n d co m petit iv e s ala rie s a n d b en efit s .

We m ay n ot b e s u ccessfu l in a n y o f t h ese a re as.

In a d dit io n, w here la b or s h orta g es a ris e in m ark ets in w hic h w e o pera te , w e m ay f a ce h ig her c o sts t o a ttra ct p ers o nnel, a n d w e m ay h av e t o p ro vid e t h em w it h m ore a ttra ctiv e b en efit p ackag es th an o rig in ally a n tic ip ate d o r a re b ein g p aid in o th er m ark ets w here s u ch s h orta g es d on’t e xis t a t th e tim e.

In e it h er c ase, s u ch cir c u m sta n ces c o uld c au se o ur p ro fit a b ilit y to d eclin e.

Fin ally , if w e e xp an d o ur o pera tio ns in to g eo gra p hic a re as w here h ealt h care p ro vid ers h is to ric ally h av e unio niz e d o r u nio niz a tio n o ccu rs in o ur e xis tin g g eo gra p hic a re as, n eg otia tin g c o lle ctiv e b arg ain in g a g re em en ts m ay h av e a n eg ativ e e ffe ct o n o ur a b ilit y t o t im ely an d s u ccessfu lly r e cru it q ualif ie d p ers o nnel a n d o n o ur f in an cia l r e su lt s .

If w e a re u nab le t o a ttra ct a n d r e ta in n urs in g s ta ff, p harm acis ts a n d o th er p ro fe ssio nals , t h e qualit y o f o ur s erv ic es m ay d eclin e a n d w e c o uld lo se p atie n ts a n d re fe rra l s o urc es, w hic h c o uld h av e a m ate ria l a d vers e e ffe ct o n o ur b usin ess a n d c o nso lid ate d fin an cia l c o ndit io n, r e su lt s o f o pera tio ns a n d c ash f lo w s.

In tr o ductio n o f n ew d ru gs o r a ccele ra te d a doptio n o f e x is tin g lo w er m arg in d ru gs c o uld c a use u s to e x perie n ce lo w er re ven ues a nd p ro fita bility w hen pre sc rib ers p re sc rib e t h ese d ru gs f o r t h eir p atie n ts o r t h ey a re m andate d b y t h ir d p arty p ayo rs.

The p harm aceu tic al in dustry p ip elin e o f n ew d ru gs in clu des m an y d ru gs t h at o ver t h e lo ng t e rm m ay r e p la ce o ld er, m ore e xp en siv e t h era p ie s.

As a r e su lt o f s u ch old er d ru gs g oin g o ff p ate n t a n d b ein g re p la ced b y g en eric s u bstit u te s, n ew a n d le ss e xp en siv e d eliv ery m eth ods (s u ch a s w hen a n in fu sio n o r in je cta b le d ru g is re p la ced w it h a n o ra l d ru g) o r a d dit io nal p ro ducts a re a d ded t o a t h era p eu tic c la ss, t h ere b y in cre asin g p ric e c o m petit io n a m ong c o m petin g m an ufa ctu re r’s p ro ducts in th at t h era p eu tic c ate g ory .

In s u ch c ases, m an ufa ctu re rs h av e t h e a b ilit y t o in cre ase d ru g a cq uis it io n c o sts o r lo w er t h e s ellin g p ric e o f r e p la ced p ro ducts .

This c o uld hav e t h e e ffe ct o f lo w erin g o ur r e v en ues a n d/o r m arg in s.

23 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts A cts o f G od s u ch a s m ajo r w ea th er d is tu rb ances c o uld d is ru pt o ur b usin ess.

We o pera te in a n etw ork o f p re scrib ers , p ro vid ers , p atie n ts a n d f a cilit ie s t h at c an b e n eg ativ ely im pacte d b y lo cal w eath er d is tu rb an ces a n d o th er f o rc e m aje u re ev en ts .

Fo r e xa m ple , in a n tic ip atio n o f m ajo r w eath er e v en ts , p atie n ts w it h im pair e d h ealt h m ay b e m oved t o a lt e rn ate s it e s.

Afte r a m ajo r w eath er e v en t, a v aila b ilit y o f ele ctric it y , c le an w ate r a n d tra n sp orta tio n c an im pact o ur a b ilit y to p ro vid e s erv ic e in th e h om e.

Sim ila rly , s u ch e v en ts c o uld im pact k ey s u pplie rs o r v en dors , dis ru ptin g th e s erv ic es o r m ate ria ls th ey p ro vid e u s. In a d dit io n, a cts o f G od a n d o th er fo rc e m aje u re e v en ts m ay c au se a re d uctio n in o ur b usin ess o r in cre ased co sts , s u ch a s in cre ased c o sts in o ur o pera tio ns a s w e in cu r o vertim e c h arg es o r re d ir e ct s erv ic es to o th er lo catio ns, d ela y s in o ur a b ilit y to w ork w it h p ay ors , hosp it a ls , p hysic ia n s a n d o th er s tra te g ic p artn ers o n n ew b usin ess in it ia tiv es, a n d d is ru ptio n t o r e fe rra l p atte rn s a s p atie n ts a re m oved o ut o f f a cilit ie s a ffe cte d b y su ch e v en ts o r a re u nab le t o r e tu rn t o s it e s o f s erv ic e in t h e h om e.

F ailu re t o d evelo p n ew s e rv ic es o r a dapt t o c h anges a nd t r e n ds w ith in t h e i n dustr y m ay a dverse ly a ffe ct o ur b usin ess.

We o pera te in a h ig hly c o m petit iv e e n vir o nm en t.

We d ev elo p n ew s erv ic es fro m tim e to tim e to a ssis t o ur c lie n ts .

If w e a re u nsu ccessfu l in d ev elo pin g in novativ e s erv ic es, o ur a b ilit y t o a ttra ct n ew c lie n ts a n d r e ta in e xis tin g c lie n ts m ay s u ffe r.

Tech nolo gy, in clu din g th e a b ilit y to c ap tu re a n d re p ort o utc o m es, is a ls o a n im porta n t c o m ponen t o f o ur b usin ess a s w e c o ntin ue to u tiliz e n ew a n d b ette r ch an nels t o c o m munic ate a n d in te ra ct w it h o ur c lie n ts , m em bers a n d b usin ess p artn ers .

If o ur c o m petit o rs a re m ore s u ccessfu l t h an u s in e m plo yin g t h is t e ch nolo gy, our a b ilit y to a ttra ct n ew c lie n ts , re ta in e xis tin g c lie n ts a n d o pera te e ffic ie n tly m ay s u ffe r.

Any s ig nif ic an t s h if ts in th e s tru ctu re o f th e h ealt h care p ro ducts a n d serv ic es in dustry in g en era l c o uld a lt e r th e in dustry d ynam ic s a n d a d vers ely a ffe ct o ur a b ilit y to a ttra ct o r re ta in c lie n ts .

Our fa ilu re to a n tic ip ate o r a p pro pria te ly ad ap t t o c h an ges in t h e in dustry c o uld n eg ativ ely im pact o ur c o m petit iv e p osit io n a n d a d vers ely a ffe ct o ur b usin ess a n d r e su lt s o f o pera tio ns.

C yb erse cu rity r is k s c o uld c o m pro m is e o ur i n fo rm atio n a nd e x pose u s t o l ia bility , w hic h m ay h arm o ur a bility t o o pera te e ffe ctiv ely a nd m ay c a use o ur b usin ess and r e p uta tio n t o s u ffe r.

Cybers ecu rit y re fe rs to th e c o m bin atio n o f te ch nolo gie s, p ro cesses a n d p ro ced ure s e sta b lis h ed to p ro te ct in fo rm atio n te ch nolo gy s y ste m s a n d d ata fro m unau th oriz e d a ccess, a tta ck, o r d am ag e.

We r e ly o n o ur in fo rm atio n s y ste m s t o p ro vid e s ecu rit y f o r p ro cessin g, t ra n sm is sio n a n d s to ra g e o f c o nfid en tia l in fo rm atio n ab out o ur p atie n ts , c u sto m ers a n d p ers o nnel, s u ch a s n am es, a d dre sses a n d o th er in div id ually id en tif ia b le in fo rm atio n p ro te cte d b y H IP A A a n d o th er p riv acy la w s.

Cyber in cid en ts c an re su lt fro m d elib era te a tta cks o r u nin te n tio nal e v en ts .

Cyber-a tta cks a re in cre asin gly m ore c o m mon, in clu din g in th e h ealt h c are in dustry .

The re g ula to ry e n vir o nm en t s u rro undin g in fo rm atio n s ecu rit y a n d p riv acy is in cre asin gly d em an din g, w it h th e fre q uen t im posit io n o f n ew a n d c h an gin g re q uir e m en ts .

Com plia n ce w it h c h an ges in p riv acy a n d in fo rm atio n s ecu rit y la w s a n d w it h r a p id ly e v olv in g in dustry s ta n dard s m ay r e su lt in o ur in cu rrin g s ig nif ic an t e xp en se d ue t o in cre ased in vestm en t in t e ch nolo gy a n d t h e d ev elo pm en t o f n ew o pera tio nal p ro cesses.

We h av e n ot exp erie n ced an y kn ow n atta cks o n o ur in fo rm atio n te ch nolo gy sy ste m s th at co m pro m is ed an y co nfid en tia l in fo rm atio n.

We m ain ta in o ur in fo rm atio n te ch nolo gy s y ste m s w it h s afe g uard p ro te ctio n a g ain st c y ber-a tta cks in clu din g p assiv e in tru sio n p ro te ctio n, fir e w alls a n d v ir u s d ete ctio n s o ftw are .

H ow ev er, t h ese s afe g uard s d o n ot e n su re t h at a s ig nif ic an t c y ber-a tta ck c o uld n ot o ccu r.

Alt h ough w e h av e t a ken s te p s t o p ro te ct t h e s ecu rit y o f o ur in fo rm atio n sy ste m s a n d t h e d ata m ain ta in ed in t h ose s y ste m s, it is p ossib le t h at o ur s afe ty a n d s ecu rit y m easu re s w ill n ot p re v en t t h e s y ste m s’ im pro per f u nctio nin g o r d am ag e or t h e im pro per a ccess o r d is clo su re o f p ers o nally id en tif ia b le in fo rm atio n s u ch a s in t h e e v en t o f c y ber-a tta cks.

Secu rit y b re ach es, in clu din g p hysic al o r e le ctro nic b re ak-in s, c o m pute r v ir u ses, a tta cks b y h ackers a n d s im ila r b re ach es c an c re ate s y ste m d is ru ptio ns o r sh utd ow ns o r t h e u nau th oriz e d u se o r d is clo su re o f c o nfid en tia l in fo rm atio n.

If p ers o nal in fo rm atio n o r p ro te cte d h ealt h in fo rm atio n is im pro perly a ccessed , t a m pere d w it h o r d is clo sed a s a re su lt o f a s ecu rit y b re ach , w e m ay in cu r s ig nif ic an t c o sts to n otif y a n d m it ig ate p ote n tia l h arm to th e a ffe cte d in div id uals , a n d w e m ay b e su bje ct t o s an ctio ns a n d c iv il o r c rim in al p en alt ie s if w e a re f o und t o b e in v io la tio n o f t h e p riv acy o r s ecu rit y r u le s u nder H IP A A o r o th er s im ila r f e d era l o r s ta te la w s pro te ctin g c o nfid en tia l p ers o nal in fo rm atio n.

In a d dit io n, a s ecu rit y b re ach o f o ur in fo rm atio n s y ste m s c o uld d am ag e o ur r e p uta tio n, s u bje ct u s t o lia b ilit y c la im s o r re g ula to ry p en alt ie s f o r c o m pro m is ed p ers o nal in fo rm atio n a n d c o uld h av e a m ate ria l a d vers e e ffe ct o n o ur b usin ess, f in an cia l c o ndit io n, a n d r e su lt s o f o pera tio ns.

The s u ccess o f o ur b usin ess d ep en ds o n m ain ta in in g a w ell-s e cu re d a nd u p t o d ate b usin ess a nd t e ch nolo gy i n fr a str u ctu re .

We a re d ep en den t o n o ur in fra stru ctu re , in clu din g o ur in fo rm atio n s y ste m s, fo r m an y a sp ects o f o ur b usin ess o pera tio ns.

A fu ndam en ta l re q uir e m en t fo r o ur busin ess is t h e s ecu re s to ra g e a n d t ra n sm is sio n o f p ro te cte d h ealt h in fo rm atio n a n d o th er c o nfid en tia l d ata .

Our b usin ess a n d o pera tio ns m ay b e h arm ed if w e d o n ot m ain ta in o ur b usin ess p ro cesses a n d in fo rm atio n 24 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts sy ste m s in a s ecu re m an ner, a n d m ain ta in a n d c o ntin ually im pro ve t h e in te g rit y o f o ur c o nfid en tia l in fo rm atio n.

Alt h ough w e h av e d ev elo ped s y ste m s a n d p ro cesses th at a re d esig ned to p ro te ct in fo rm atio n a g ain st s ecu rit y b re ach es, fa ilu re to p ro te ct o ur c o nfid en tia l in fo rm atio n o r m it ig ate h arm c au sed b y s u ch b re ach es m ay ad vers ely a ffe ct o ur o pera tin g re su lt s .

Malf u nctio ns in o ur b usin ess p ro cesses, b re ach es o f o ur in fo rm atio n s y ste m s o r th e fa ilu re to m ain ta in e ffe ctiv e a n d u p-to - date in fo rm atio n s y ste m s c o uld d is ru pt o ur b usin ess o pera tio ns, re su lt in c u sto m er a n d m em ber d is p ute s, d am ag e o ur re p uta tio n, e xp ose u s to ris k o f lo ss o r lit ig atio n, r e su lt in r e g ula to ry v io la tio ns a n d r e la te d c o sts a n d p en alt ie s, in cre ase a d m in is tra tiv e e xp en ses o r le ad t o o th er a d vers e c o nseq uen ces.

O ur b usin ess i s d ep en den t o n t h e s e rv ic es p ro vid ed b y t h ir d p arty i n fo rm atio n t e ch nolo gy v en dors.

Our in fo rm atio n te ch nolo gy in fra stru ctu re in clu des h ostin g serv ic es p ro vid ed b y th ir d p artie s.

While w e b elie v e th ese th ir d p artie s are h ig h-p erfo rm in g org an iz a tio ns w it h s ecu re p la tfo rm s a n d c u sto m ary c ertif ic atio ns, th ey c o uld s u ffe r a s ecu rit y b re ach o r b usin ess in te rru ptio n w hic h in tu rn c o uld im pact o ur opera tio ns n eg ativ ely .

In a d dit io n, c h an ges in p ric in g t e rm s c h arg ed b y o ur t e ch nolo gy v en dors m ay a d vers ely a ffe ct o ur f in an cia l p erfo rm an ce.

O ur a bility to u se n et o pera tin g lo ss c a rry fo rw ard s to o ffs e t fu tu re ta xable in co m e fo r U .S . fe d era l ta x p urp ose s is s u bje ct to lim ita tio n a nd r is k th at c o uld fu rth er l im it o ur a bility t o u tiliz e o ur n et o pera tin g l o sse s.

Under U .S . f e d era l in co m e t a x la w , a c o rp ora tio n’s a b ilit y t o u tiliz e it s n et o pera tin g lo sses ( “ N OLs”) t o o ffs et f u tu re t a xa b le in co m e m ay b e s ig nif ic an tly lim it e d if it e xp erie n ces a n “ o w ners h ip c h an ge” a s d efin ed in S ectio n 3 82 o f t h e In te rn al R ev en ue C ode, a s a m en ded .

In g en era l, a n o w ners h ip c h an ge w ill o ccu r if t h ere is a cu m ula tiv e c h an ge in a c o rp ora tio n’s o w ners h ip b y “ 5-p erc en t s h are h old ers ” t h at e xc eed s 5 0 p erc en ta g e p oin ts o ver a r o llin g t h re e-y ear p erio d.

A c o rp ora tio n th at exp erie n ces a n o w ners h ip c h an ge w ill g en era lly b e s u bje ct t o a n a n nual lim it a tio n o n t h e u se o f it s p re -o w ners h ip c h an ge N OLs e q ual t o t h e v alu e o f t h e c o rp ora tio n im med ia te ly b efo re th e o w ners h ip c h an ge, m ult ip lie d b y th e lo ng-te rm ta x-e xe m pt ra te (s u bje ct to c erta in a d ju stm en ts ).

The a n nual lim it a tio n fo r a ta xa b le y ear gen era lly is in cre ased b y t h e a m ount o f a n y “ re co gniz e d b uilt -in g ain s” f o r s u ch y ear a n d t h e a m ount o f a n y u nused a n nual lim it a tio n in a p rio r y ear.

On D ecem ber 2 2, 2017, a la w c o m monly k n ow n a s t h e T ax C uts a n d J o bs A ct ( “ T CJA ”) w as e n acte d in t h e U nit e d S ta te s. C erta in p ro vis io ns o f t h e T CJA im pact t h e a b ilit y t o u tiliz e N OLs g en era te d in 2 018 a n d f o rw ard ; a n y lim it a tio n t o o ur a n nual u se o f N OLs c o uld r e q uir e u s t o p ay a g re ate r a m ount o f U .S . f e d era l ( a n d in s o m e c ases, s ta te ) in co m e t a xe s, w hic h c o uld r e d uce o ur a fte r-ta x in co m e f ro m o pera tio ns f o r f u tu re t a xa b le y ears a n d a d vers ely im pact o ur f in an cia l c o ndit io n.

C hanges t o f e d era l a nd s ta te i n co m e t a x l a w s a nd r e g ula tio ns c o uld a dverse ly a ffe ct o ur p ositio n o r i n co m e t a xes a nd e stim ate d i n co m e l ia bilitie s.

We a re s u bje ct t o b oth s ta te a n d f e d era l in co m e t a xe s in t h e U .S . a n d v ario us s ta te ju ris d ic tio ns a n d o ur o pera tio ns, p la n s a n d r e su lt s a re a ffe cte d b y t a x a n d oth er in it ia tiv es. T he T CJA im pacte d o ur f in an cia l r e su lt s in 2 018. A mong o th er t h in gs, t h e T CJA r e d uced t h e U .S . c o rp ora te in co m e t a x r a te t o 21% , th is re d uctio n re su lt e d in c h an ges in t h e v alu atio n o f o ur d efe rre d t a x a sset a n d lia b ilit ie s.

We a re a ls o s u bje ct t o r e g ula r r e v ie w s, e xa m in atio ns, a n d a u dit s b y t h e I n te rn al R ev en ue S erv ic e a n d o th er t a xin g a u th orit ie s w it h r e sp ect t o o ur t a xe s. T here a re uncerta in tie s a n d a m big uit ie s in th e a p plic atio n o f th e T CJA a n d it is p ossib le th at th e IR S c o uld is su e s u bseq uen t g uid an ce o r ta ke p osit io ns o n a u dit th at d if fe r fro m o ur in te rp re ta tio ns a n d a ssu m ptio ns. A lt h ough w e b elie v e o ur t a x e stim ate s a re r e aso nab le , if a t a xin g a u th orit y d is ag re es w it h t h e p osit io ns w e h av e t a ken , w e co uld f a ce a d dit io nal t a x lia b ilit y , in clu din g in te re st a n d p en alt ie s. O ur e ffe ctiv e t a x r a te c o uld b e a d vers ely a ffe cte d b y c h an ges in t h e m ix o f e arn in gs in s ta te s w it h dif fe re n t s ta tu to ry t a x r a te s, c h an ges in t h e v alu atio n o f d efe rre d t a x a ssets a n d lia b ilit ie s, c h an ges in t a x la w s a n d r e g ula tio ns, c h an ges in o ur in te rp re ta tio ns o f t a x la w s, in clu din g th e T CJA . U nan tic ip ate d c h an ges in o ur ta x ra te s o r e xp osu re to a d dit io nal in co m e ta x lia b ilit ie s c o uld a ffe ct o ur p ro fit a b ilit y . T here c an b e n o assu ra n ce t h at p ay m en t o f s u ch a d dit io nal a m ounts u pon f in al a d ju dic atio n o f a n y d is p ute s w ill n ot h av e a m ate ria l im pact o n o ur r e su lt s o f o pera tio ns a n d f in an cia l posit io n.

The is su ance o f s h are s o f o ur P re fe rre d S to ck r e d uced th e p erc en ta ge in te re sts o f o ur o th er s to ck hold ers, a nd a ny fu tu re e x erc is e o f th e C la ss A a nd C la ss B W arra nts o r t h e 2 017 W arra nts w ill f u rth er r e d uce t h e p erc en ta ge i n te re sts o f o ur o th er s to ck hold ers.

On M arc h 9 , 2 015, w e e n te re d in to a s ecu rit ie s p urc h ase a g re em en t ( th e “ P u rc h ase A gre em en t” ) w it h C olis eu m C ap it a l P artn ers , L .P ., C olis eu m C ap it a l P artn ers I I, L.P ., a n d B la ckw ell P artn ers , L LC , S erie s A (c o lle ctiv ely , th e “ P IP E In vesto rs ”).

Pu rs u an t to th e te rm s o f th e P u rc h ase A gre em en t, w e is su ed a n d s o ld to th e P IP E In vesto rs in a p riv ate p la cem en t a n a g gre g ate o f (a ) 625,0 00 s h are s o f S erie s A C onvertib le P re fe rre d S to ck, p ar v alu e $ 0.0 001 p er s h are (th e “ S erie s A P re fe rre d Sto ck”), a t a p urc h ase p ric e p er s h are o f $100.0 0 , ( b ) 1,8 00,0 00 C la ss A w arra n ts ( th e “ C la ss A W arra n ts ”), a n d ( c ) 1,8 00,0 00 C la ss B w arra n ts ( th e “ C la ss B W arra n ts ” an d, t o geth er w it h t h e C la ss A W arra n ts , t h e “ P IP E W arra n ts ”), f o r g ro ss p ro ceed s o f $62.5 m illio n .

We 25 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts als o c o nducte d a R ig hts O ffe rin g (a s d escrib ed b elo w ) p urs u an t to w hic h w e s o ld a n a d dit io nal 10,8 22 s h are s o f S erie s A P re fe rre d S to ck a lo ng w it h th e P IP E W arra n ts .

On J u ne 1 0, 2 016, in o rd er to fa cilit a te th e 2 016 E q uit y O ffe rin g, th e C om pan y a n d th e P IP E In vesto rs a g re ed to e xc h an ge 614,1 77 s h are s o f th e e xis tin g Serie s A P re fe rre d S to ck f o r a n id en tic al n um ber o f s h are s o f S erie s B P re fe rre d S to ck.

On J u ne 1 4, 2 016, in o rd er t o f a cilit a te t h e 2 016 E q uit y O ffe rin g, t h e C om pan y an d t h e P IP E In vesto rs a g re ed t o e xc h an ge 614,1 77 s h are s o f t h e S erie s B P re fe rre d S to ck f o r a n id en tic al n um ber o f s h are s o f S erie s C P re fe rre d S to ck ( th e S erie s C Pre fe rre d S to ck, t o geth er w it h t h e S erie s A P re fe rre d S to ck, t h e “ P re fe rre d S to ck”).

As a r e su lt o f t h ese e xc h an ges, t h ere a re c u rre n tly ( a ) 21,6 30 s h are s o f S erie s A Pre fe rre d S to ck o uts ta n din g, o f w hic h 10,8 23 s h are s a re o w ned b y t h e P IP E I n vesto rs , ( b ) n o s h are s o f S erie s B P re fe rre d S to ck o uts ta n din g, a n d ( c ) 614,1 77 s h are s o f Serie s C P re fe rre d S to ck o uts ta n din g, a ll o f w hic h a re o w ned b y t h e P IP E I n vesto rs .

In a d dit io n, in c o nnectio n w it h t h e S eco nd L ie n N ote F acilit y , t h e C om pan y a ls o is su ed t h e 2 017 W arra n ts t o t h e p urc h asers o f t h e S eco nd L ie n N ote s p urs u an t to t h e W arra n t P u rc h ase A gre em en t. T he 2 017 W arra n ts e n tit le t h e p urc h asers o f t h e 2 017 W arra n ts t o p urc h ase s h are s o f C om mon S to ck, r e p re sen tin g a t t h e t im e o f an y e xe rc is e o f t h e 2 017 W arra n ts a n e q uiv ale n t n um ber o f s h are s e q ual t o 4 .9 9% o f t h e C om mon S to ck o f t h e C om pan y o n a f u lly d ilu te d b asis , s u bje ct t o t h e t e rm s of t h e W arra n t A gre em en t.

As o f t h e d ate o f t h is A nnual R ep ort, if a ll h old ers o f t h e P re fe rre d S to ck c o nverte d t h eir s h are s in f u ll, a n d e xe rc is ed t h e P IP E W arra n ts a n d t h e 2 017 W arra n ts in fu ll, t h e C om mon S to ck is su ed in r e sp ect o f s u ch c o nvers io ns a n d e xe rc is es w ould r e p re sen t a p pro xim ate ly 19.6 % o f o ur o uts ta n din g C om mon S to ck.

The is su an ce o f th e P re fe rre d S to ck t o t h e P IP E I n vesto rs r e d uced t h e r e la tiv e v otin g p ow er a n d p erc en ta g e o w ners h ip in te re sts o f o ur o th er c u rre n t s to ckh old ers .

The f u tu re e xe rc is e of t h e P IP E W arra n ts b y t h e h old ers o f t h ose s ecu rit ie s w ill c au se a f u rth er r e d uctio n in t h e r e la tiv e v otin g p ow er a n d p erc en ta g e o w ners h ip in te re sts o f o ur o th er sto ckh old ers .

The P IP E I n vesto rs m ay e x erc is e i n flu en ce o ver u s, i n clu din g t h ro ugh t h eir a bility t o i n flu en ce m atte rs r e q uir in g t h e a ppro va l o f h old ers o f o ur C om mon S to ck or P re fe rre d S to ck .

Hold ers o f t h e P re fe rre d S to ck a re e n tit le d t o v ote o n a n a s-c o nverte d b asis u pon a ll m atte rs u pon w hic h h old ers o f o ur C om mon S to ck h av e t h e r ig ht t o v ote .

The s h are s o f P re fe rre d S to ck o w ned b y th e P IP E In vesto rs c u rre n tly re p re sen t a p pro xim ate ly 1 3% o f th e v otin g rig hts in re sp ect o f o ur s h are c ap it a l o n a n a s- co nverte d b asis , a n d a cco rd in gly th e P IP E In vesto rs m ay h av e th e a b ilit y to s ig nif ic an tly in flu en ce th e o utc o m e o f m ost m atte rs s u bm it te d fo r th e v ote o f o ur sto ckh old ers .

The P IP E I n vesto rs a re c u rre n tly t h e b en efic ia l o w ners o f 625,0 00 o f t h e 635,8 07 s h are s o f o ur S erie s A a n d S erie s C P re fe rre d S to ck.

Fu rth er, s o lo ng a s s h are s o f t h e S erie s C P re fe rre d S to ck r e p re sen t a t le ast 5 % o f o ur o uts ta n din g v otin g s to ck ( o n a n a s c o nverte d in to C om mon S to ck b asis ), th e h old ers o f o ur S erie s C P re fe rre d S to ck a re e n tit le d t o d esig nate o ne m em ber o f t h e B oard b y a m ajo rit y o f t h e v otin g p ow er o f t h e o uts ta n din g s h are s o f S erie s C Pre fe rre d S to ck.

The P IP E I n vesto rs a re c u rre n tly t h e b en efic ia l o w ners o f a ll 6 14,1 77 is su ed a n d o uts ta n din g s h are s o f o ur S erie s C P re fe rre d S to ck.

The P IP E In vesto rs ’ m ajo rit y o w ners h ip o f o ur S erie s A a n d S erie s C P re fe rre d S to ck w ill lim it th e a b ilit y o f a n y c u rre n t o r fu tu re h old ers o f s u ch s erie s o f Pre fe rre d S to ck t o in flu en ce c o rp ora te m atte rs r e q uir in g t h e a p pro val o f t h e h old ers o f s u ch s erie s o f P re fe rre d S to ck, in clu din g t h e r ig ht, v otin g a s a s ep ara te c la ss, t o ele ct o ne d ir e cto r to o ur B oard , a n d to a p pro ve c erta in a m en dm en ts to o ur c ertif ic ate o f in co rp ora tio n, o r c erta in o th er c h an ges, th at w ould a d vers ely a ffe ct th e hold ers o f t h e s erie s o f P re fe rre d S to ck.

The P IP E I n vesto rs ’ v otin g p ow er o f t h e P re fe rre d S to ck m ay a ls o d ela y, d efe r o r e v en p re v en t a n a cq uis it io n b y a t h ir d p arty or o th er c h an ge o f c o ntro l o f o ur c o m pan y t o t h e e xte n t t h at t h e c o nsid era tio n t h at w ould b e r e ceiv ed b y t h e P IP E I n vesto rs a n d o th er h old ers o f P re fe rre d S to ck in su ch a cq uis it io n o r c h an ge o f c o ntro l is le ss t h an t h eir liq uid atio n p re fe re n ce, a n d m ay m ake s o m e t ra n sactio ns m ore d if fic u lt o r im possib le w it h out t h e s u pport o f t h e PIP E In vesto rs , e v en if s u ch e v en ts a re in t h e b est in te re sts o f o ur o th er s to ckh old ers .

Acco rd in gly , t h e o w ners h ip p osit io n a n d t h e g overn an ce r ig hts o f t h e P IP E In vesto rs c o uld d is co ura g e a t h ir d p arty f ro m p ro posin g a c h an ge o f c o ntro l o r o th er s tra te g ic t ra n sactio n w it h u s.

In a n y o f t h ese m atte rs , t h e in te re sts o f t h e P IP E In vesto rs m ay d if fe r f ro m o r c o nflic t w it h t h e in te re sts o f o ur o th er s to ckh old ers .

In a d dit io n, t h e P IP E I n vesto rs a re in t h e b usin ess o f m akin g in vestm en ts in c o m pan ie s a n d m ay, f ro m t im e t o t im e, a cq uir e in te re sts in b usin esses t h at d ir e ctly o r in dir e ctly c o m pete w it h o ur b usin ess, a s w ell a s b usin esses t h at a re s ig nif ic an t e xis tin g o r p ote n tia l c u sto m ers .

C hanges i n f u tu re b usin ess c o nditio ns c o uld c a use b usin ess i n vestm en ts a nd/o r r e co rd ed g oodw ill t o b eco m e f u rth er i m pair e d , a nd o ur f in ancia l c o nditio n, a nd re su lts o f o pera tio ns c o uld s u ffe r i f t h ere i s a n a dditio nal i m pair m en t o f g oodw ill o r o th er i n ta ngib le a sse ts w ith i n defin ite l iv es.

We a re r e q uir e d t o t e st in ta n gib le a ssets w it h in defin it e liv es, in clu din g g oodw ill, a n nually a n d o n a n in te rim b asis if a n e v en t 26 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts occu rs o r t h ere is a c h an ge in c ir c u m sta n ce t o in dic ate t h at t h e c arry in g v alu e o f g oodw ill o r in defin it e -liv ed in ta n gib le a ssets m ay n o lo nger b e r e co vera b le .

When th e c arry in g v alu e o f a re p ortin g u nit ’s g oodw ill e xc eed s it s fa ir v alu e, a c h arg e to o pera tio ns is re co rd ed .

If th e c arry in g a m ount o f a n in ta n gib le a sset w it h a n in defin it e lif e e xc eed s it s f a ir v alu e, a c h arg e t o o pera tio ns is r e co gniz e d .

Eit h er e v en t w ould r e su lt in in cre m en ta l e xp en ses f o r t h at q uarte r, w hic h w ould r e d uce a n y earn in gs o r in cre ase a n y lo ss f o r t h e p erio d in w hic h t h e im pair m en t w as d ete rm in ed t o h av e o ccu rre d .

Durin g 2 015, w e re co rd ed a $ 251.9 m illio n n on-c ash im pair m en t c h arg e re la te d to g oodw ill a sso cia te d w it h o ur In fu sio n S erv ic es b usin ess. T he e stim ate d im pair m en t t o ok in to c o nsid era tio n o ur u pdate d b usin ess o utlo ok, p urs u an t t o w hic h w e u pdate d o ur f u tu re c ash f lo w a ssu m ptio ns a n d c alc u la te d u pdate d e stim ate s of fa ir v alu e. T he e stim ate d im pair m en t lo ss w as e q ual to th e e xc ess o f th e a ssets ' c arry in g a m ount o ver it s fa ir v alu e a s d ete rm in ed b y a n a n aly sis o f d is co unte d fu tu re c ash f lo w s. I n c o nnectio n w it h o ur a n nual a ssessm en t o f p ossib le g oodw ill im pair m en t d urin g t h e f o urth q uarte r o f 2 018, w e c o nclu ded n o f u rth er im pair m en t ch arg e w as n eed ed .

Our g oodw ill im pair m en t a n aly sis is s en sit iv e t o c h an ges in k ey a ssu m ptio ns u sed in o ur a n aly sis , s u ch a s t h e d eg re e o f v ola tilit y in e q uit y a n d d eb t m ark ets a n d our s to ck p ric e.

If t h e a ssu m ptio ns u sed in o ur a n aly sis a re n ot r e aliz e d , it is p ossib le t h at a n a d dit io nal im pair m en t c h arg e m ay n eed t o b e r e co rd ed in t h e f u tu re . W e can not a ccu ra te ly p re d ic t t h e a m ount a n d t im in g o f a n y im pair m en t o f g oodw ill o r o th er in ta n gib le a ssets .

Fu rth er, a s w e c o ntin ue t o w ork t o w ard s a t u rn aro und o f our b usin ess, w e w ill n eed to c o ntin ue to e v alu ate th e c arry in g v alu e o f o ur g oodw ill.

Any a d dit io nal im pair m en t c h arg es th at w e m ay ta ke in th e fu tu re c o uld b e m ate ria l t o o ur r e su lt s o f o pera tio ns a n d f in an cia l c o ndit io n.

F ailu re t o m ain ta in e ffe ctiv e i n te rn al c o ntr o l o ver o ur f in ancia l r e p ortin g c o uld h ave a n a dverse e ffe ct o n o ur a bility t o r e p ort o ur f in ancia l r e su lts o n a t im ely and a ccu ra te b asis .

Our m an ag em en t is re sp onsib le fo r e sta b lis h in g a n d m ain ta in in g a d eq uate in te rn al c o ntro l o ver fin an cia l re p ortin g, a s d efin ed in R ule 1 3a-1 5(f) u nder th e Secu rit ie s E xc h an ge A ct o f 1 934 ( th e “ E xc h an ge A ct” ), a n d is r e q uir e d t o e v alu ate t h e e ffe ctiv en ess o f t h ese c o ntro ls a n d p ro ced ure s o n a p erio dic b asis a n d p ublic ly dis clo se t h e r e su lt s o f t h ese e v alu atio ns a n d r e la te d m atte rs in a cco rd an ce w it h t h e r e q uir e m en ts o f S ectio n 4 04 o f t h e S arb an es-O xle y A ct o f 2 002. E ffe ctiv e in te rn al co ntro l o ver f in an cia l r e p ortin g is n ecessary f o r u s t o p ro vid e r e lia b le f in an cia l r e p orts , t o h elp m it ig ate t h e r is k o f f ra u d a n d t o o pera te s u ccessfu lly .

How ev er, te stin g an d m ain ta in in g o ur in te rn al c o ntro l o ver fin an cia l re p ortin g c an b e e xp en siv e a n d d iv ert o ur m an ag em en t's a tte n tio n fro m o th er b usin ess m atte rs . A ny fa ilu re to im ple m en t a n d m ain ta in e ffe ctiv e in te rn al c o ntro ls c o uld r e su lt in m ate ria l w eakn esses o r m ate ria l m is sta te m en ts in o ur c o nso lid ate d f in an cia l s ta te m en ts .

If w e fa il to m ain ta in e ffe ctiv e in te rn al c o ntro l o ver fin an cia l re p ortin g, o r o ur in dep en den t re g is te re d p ublic a cco untin g fir m is u nab le to p ro vid e u s w it h a n unqualif ie d a tte sta tio n re p ort o n o ur in te rn al c o ntro l, w e m ay b e re q uir e d to ta ke c o rre ctiv e m easu re s o r re sta te th e a ffe cte d h is to ric al fin an cia l s ta te m en ts .

In ad dit io n, w e m ay b e s u bje cte d to in vestig atio ns a n d/o r s an ctio ns b y fe d era l a n d s ta te s ecu rit ie s re g ula to rs , a n d/o r c iv il la w su it s b y s ecu rit y h old ers . A ny o f th e fo re g oin g c o uld a ls o c au se in vesto rs t o lo se c o nfid en ce in o ur r e p orte d f in an cia l in fo rm atio n a n d in o ur c o m pan y a n d w ould lik ely r e su lt in a d eclin e in t h e m ark et pric e o f o ur s to ck a n d in o ur a b ilit y t o r a is e a d dit io nal f in an cin g if n eed ed in t h e f u tu re .

N ew a cco untin g p ro nouncem en ts o r n ew i n te rp re ta tio ns o f e x is tin g s ta ndard s c o uld r e q uir e u s t o m ake a dju stm en ts i n o ur a cco untin g p olic ie s t h at c o uld a ffe ct our f in ancia l s ta te m en ts .

We p re p are o ur c o nso lid ate d f in an cia l s ta te m en ts in a cco rd an ce w it h a cco untin g p rin cip le s g en era lly a ccep te d in t h e U nit e d S ta te s o f A meric a ( “ G A AP”). T he Fin an cia l A cco untin g S ta n dard s B oard , th e S EC , o r o th er acco untin g o rg an iz a tio ns o r g overn m en ta l en tit ie s fre q uen tly is su e n ew p ro nouncem en ts o r n ew in te rp re ta tio ns o f e xis tin g a cco untin g s ta n dard s.

Chan ges in a cco untin g s ta n dard s, h ow t h e a cco untin g s ta n dard s a re in te rp re te d , o r t h e a d optio n o f n ew a cco untin g sta n dard s c an h av e a s ig nif ic an t e ffe ct o n o ur r e p orte d r e su lt s , a n d c o uld e v en r e tro activ ely a ffe ct p re v io usly r e p orte d t ra n sactio ns, a n d m ay r e q uir e t h at w e m ake sig nif ic an t c h an ges t o o ur s y ste m s, p ro cesses a n d c o ntro ls .

Chan ges re su lt in g fro m th ese n ew s ta n dard s m ay re su lt in m ate ria lly d if fe re n t fin an cia l re su lt s a n d m ay re q uir e th at w e c h an ge h ow w e p ro cess, a n aly ze a n d re p ort fin an cia l in fo rm atio n a n d th at w e c h an ge fin an cia l re p ortin g c o ntro ls .

Su ch c h an ges in a cco untin g s ta n dard s m ay h av e a n a d vers e e ffe ct o n o ur b usin ess, fin an cia l p osit io n, a n d in co m e, w hic h m ay n eg ativ ely im pact o ur f in an cia l r e su lt s .

In F eb ru ary 2 016, t h e F A SB is su ed A SU 2 016-0 2-L eases ( T opic 8 42), r e q uir in g le ssees t o r e co gniz e a r ig ht-o f-u se a sset a n d a le ase lia b ilit y o n t h e b ala n ce s h eet fo r a ll le ases w it h t h e e xc ep tio n o f s h ort-te rm le ases. F o r le ssees, le ases w ill c o ntin ue t o b e c la ssif ie d a s e it h er o pera tin g o r f in an ce le ases in t h e in co m e s ta te m en t.

The C om pan y is e v alu atin g t h e e ffe ct t h at t h e u pdate d s ta n dard w ill h av e o n it s c o nso lid ate d f in an cia l s ta te m en ts .

27 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts R is k s R ela te d t o O ur I n debte dn ess W e h ave i n cu rre d s u bsta ntia l i n deb te d ness, w hic h i m pose s o pera tin g a nd f in ancia l r e str ic tio ns o n u s t h at, t o geth er w ith t h e r e su ltin g d eb t s e rv ic e o blig atio ns, m ay s ig nific a ntly l im it o ur a bility t o e x ecu te o ur b usin ess s tr a te g y a nd m ay i n cre a se t h e r is k o f d efa ult u nder o ur d eb t o blig atio ns.

On J u ne 2 9, 2 017, t h e C om pan y e n te re d in to ( i) a f ir s t lie n n ote p urc h ase a g re em en t, a m ong t h e C om pan y, w hic h is t h e is su er u nder t h e a g re em en t, t h e f in an cia l in stit u tio ns a n d n ote p urc h asers fro m tim e to tim e p arty to th e a g re em en t, p urs u an t to w hic h th e C om pan y is su ed fir s t lie n s en io r s ecu re d n ote s in a n a g gre g ate prin cip al a m ount o f $ 200.0 m illio n; a n d (ii) a s eco nd lie n n ote p urc h ase a g re em en t a m ong th e C om pan y, w hic h is th e is su er u nder th e a g re em en t, th e fin an cia l in stit u tio ns a n d n ote p urc h asers fro m tim e to tim e p arty to th e a g re em en t, p urs u an t to w hic h th e C om pan y (a ) is su ed s eco nd lie n s en io r s ecu re d n ote s in a n ag gre g ate in it ia l p rin cip al a m ount o f $ 100.0 m illio n a n d (b ) h ad th e a b ilit y to d ra w u pon th e S eco nd L ie n N ote F acilit y a n d is su e s eco nd lie n d ela y ed d ra w s en io r secu re d n ote s in a n a g gre g ate in it ia l p rin cip al a m ount o f $ 10.0 m illio n f o r a p erio d o f 1 8 m onth s a fte r t h e c lo sin g d ate , s u bje ct t o c erta in t e rm s a n d c o ndit io ns.

The Com pan y e xe rc is ed t h e d ra w o n t h e a d dit io nal $ 10 m illio n d urin g J u ne 2 018. T he C om pan y u sed t h e p ro ceed s o f t h e s ale o f t h e F ir s t L ie n N ote s a n d t h e I n it ia l S eco nd Lie n N ote s to re p ay in fu ll a ll a m ounts o uts ta n din g u nder th e P rio r C re d it A gre em en ts a n d e xtin guis h ed th e lia b ilit y . E ach o f th e P rio r C re d it A gre em en ts w as te rm in ate d f o llo w in g s u ch r e p ay m en t. T he N ote s a ccru e in te re st, p ay ab le m onth ly in a rre ars , a t a f lo atin g r a te . T he F ir s t L ie n N ote s w ill a m ortiz e in e q ual q uarte rly in sta llm en ts e q ual t o 0 .6 25% o f t h e a g gre g ate p rin cip al a m ount o f t h e F ir s t L ie n N ote F acilit y , c o m men cin g o n S ep te m ber 3 0, 2 019, a n d o n t h e la st d ay o f e ach t h ir d m onth t h ere afte r, w it h t h e b ala n ce p ay ab le a t m atu rit y . T he F ir s t L ie n N ote s m atu re o n A ugust 1 5, 2 020, p ro vid ed t h at if t h e C om pan y’s 2 021 N ote s ( d efin ed b elo w ) are r e fin an ced p rio r t o A ugust 1 5, 2 020, t h en t h e s ch ed ule d m atu rit y d ate o f t h e F ir s t L ie n N ote s s h all b e J u ne 3 0, 2 022.

Our in deb te d ness in clu des m an y c o ven an ts an d r e stric tio ns t h at m ay s ig nif ic an tly lim it t h e t y pes o f s tra te g ic r e la tio nsh ip s a n d o ur a b ilit y t o e xe cu te o ur b usin ess s tra te g y.

In a d dit io n, w e h av e is su ed $ 200.0 m illio n in a g gre g ate p rin cip al a m ount o f 8 .8 75% s en io r n ote s d ue 2 021 (th e “ 2021 N ote s”). S ee “ It e m 7 - M an ag em en t’s D is cu ssio n a n d A naly sis o f F in an cia l C ondit io n a n d R esu lt s o f O pera tio ns - L iq uid it y a n d C ap it a l R eso urc es.” The 2 021 N ote s a re o ur s en io r u nsecu re d o blig atio ns an d a re f u lly a n d u nco ndit io nally g uara n te ed b y a ll e xis tin g a n d f u tu re s u bsid ia rie s o f t h e C om pan y.

In te re st is p ay ab le s em i- a n nually o n F eb ru ary 1 5 a n d A ugust 1 5.

The o pera tin g a n d f in an cia l r e stric tio ns a n d c o ven an ts o f o ur d eb t in stru m en ts , in clu din g t h e N ote s F acilit ie s a n d t h e in den tu re g overn in g t h e 2 021 N ote s, m ay ad vers ely a ffe ct o ur a b ilit y t o f in an ce o ur f u tu re o pera tio ns o r c ap it a l n eed s o r e n gag e in o th er b usin ess a ctiv it ie s t h at m ay b e in o ur in te re st.

The t e rm s o f t h e N ote s Facilit ie s r e q uir e u s t o c o m ply w it h c erta in f in an cia l c o ven an ts .

In a d dit io n, s u bje ct to a n um ber o f im porta n t e xc ep tio ns, th e N ote s F acilit ie s c o nta in c erta in c o ven an ts a n d re stric tio ns im pactin g o ur a b ilit y to , a m ong o th er th in gs:

• in cu r o r g uara n te e a d dit io nal in deb te d ness o r is su e c erta in p re fe rre d s to ck; • tra n sfe r o r s ell a ssets ; • make c erta in in vestm en ts a n d lo an s; • pay d iv id en ds o r d is trib utio ns, r e d eem s u bord in ate d in deb te d ness, o r m ake o th er r e stric te d p ay m en ts ; • cre ate o r in cu r lie n s; • in cu r d iv id en d o r o th er p ay m en t r e stric tio ns a ffe ctin g c erta in s u bsid ia rie s; • is su e c ap it a l s to ck o f o ur s u bsid ia rie s; • en te r in to h ed gin g t ra n sactio ns o r s ale a n d le aseb ack t ra n sactio ns; • co nsu m mate a m erg er, c o nso lid atio n o r s ale o f a ll o r s u bsta n tia lly a ll o f o ur a ssets o r t h e a ssets o f a n y o f o ur s u bsid ia rie s; a n d • en te r in to t ra n sactio ns w it h a ffilia te s.

The in den tu re g overn in g th e 2 021 N ote s c o nta in s s im ila r re stric tio ns.

Our a b ilit y to c o m ply w it h th ese c o ven an ts , in clu din g th e fin an cia l c o ven an ts , m ay b e affe cte d b y e v en ts b ey ond o ur c o ntro l.

There fo re , in o rd er t o e n gag e in s o m e c o rp ora te a ctio ns, w e m ay n eed t o s eek p erm is sio n f ro m o ur le n ders o r t h e n ote h old ers , w hose in te re sts m ay b e d if fe re n t f ro m o urs .

We c an not g uara n te e t h at w e w ill b e a b le t o o bta in c o nsen t f ro m t h ese p artie s w hen n eed ed .

If w e d o n ot c o m ply w it h t h e re stric tio ns a n d c o ven an ts in o ur N ote s F acilit ie s, w e m ay n ot b e a b le to fin an ce o ur fu tu re o pera tio ns, m ake a cq uis it io ns o r p urs u e b usin ess o pportu nit ie s.

The re stric tio ns c o nta in ed in o ur N ote s F acilit ie s m ay p re v en t u s f ro m t a kin g a ctio ns t h at w e b elie v e w ould b e in t h e b est in te re st o f o ur b usin ess a n d m ay m ake it d if fic u lt fo r u s t o s u ccessfu lly e xe cu te o ur b usin ess s tra te g y o r e ffe ctiv ely c o m pete w it h c o m pan ie s t h at a re n ot s im ila rly r e stric te d .

A b re ach o f a n y o f th ese c o ven an ts o r th e in ab ilit y to c o m ply w it h th e re q uir e d fin an cia l ra tio c o uld re su lt in a d efa u lt u nder th e N ote s F acilit ie s.

If a n y s u ch defa u lt o ccu rs , t h e le n ders u nder t h e r e sp ectiv e N ote s F acilit ie s m ay e le ct t o d ecla re a ll o f t h eir 28 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts re sp ectiv e o uts ta n din g d eb t, t o geth er w it h a ccru ed in te re st a n d o th er a m ounts p ay ab le t h ere u nder, t o b e im med ia te ly d ue a n d p ay ab le .

Under s u ch c ir c u m sta n ces, w e m ay n ot h av e s u ffic ie n t f u nds o r o th er r e so urc es t o s atis fy a ll o f o ur o blig atio ns.

In a d dit io n, t h e lim it a tio ns im posed o n o ur a b ilit y t o in cu r a d dit io nal d eb t a n d t o ta ke o th er c o rp ora te a ctio ns m ig ht s ig nif ic an tly im pair o ur a b ilit y t o o bta in o th er f in an cin g.

There c an b e n o a ssu ra n ce th at w e w ill b e g ra n te d fu tu re w aiv ers o r a m en dm en ts to th e re stric tio ns in th e N ote s F acilit ie s if fo r a n y re aso n w e a re u nab le to co m ply w it h s u ch r e stric tio ns o r t h at w e w ill b e a b le t o r e fin an ce o ur d eb t o n t e rm s a ccep ta b le t o u s, o r a t a ll.

The le n ders u nder t h e N ote s F acilit ie s a ls o h av e t h e r ig ht in t h ese c ir c u m sta n ces t o t e rm in ate a n y c o m mit m en ts t h ey h av e t o p ro vid e f u rth er b orro w in gs.

If w e w ere u nab le t o p ay s u ch a m ounts , t h e le n ders u nder t h e N ote s F acilit ie s c o uld r e co ver a m ounts o w ed t o t h em b y f o re clo sin g a g ain st t h e c o lla te ra l p le d ged t o t h em .

W e h av e p le d ged a s u bsta n tia l p ortio n o f o ur a ssets t o t h e le n ders u nder t h e N ote s F acilit ie s, in clu din g t h e e q uit y o f a ll o f t h e C om pan y’s s u bsid ia rie s.

In a d dit io n, t h e d eg re e t o w hic h w e a re le v era g ed c o uld :

• make u s m ore v uln era b le t o g en era l a d vers e e co nom ic , r e g ula to ry a n d in dustry c o ndit io ns; • lim it o ur f le xib ilit y in p la n nin g f o r, o r r e actin g t o , c h an ges a n d o pportu nit ie s in t h e m ark ets in w hic h w e c o m pete ; • pla ce u s a t a c o m petit iv e d is ad van ta g e c o m pare d t o o ur c o m petit o rs t h at h av e le ss d eb t; • re q uir e u s to d ed ic ate a s u bsta n tia l p ortio n o f o ur c ash flo w to s erv ic e o ur d eb t, re d ucin g th e a v aila b ilit y o f o ur c ash flo w a n d s u ch p ro ceed s to fu nd work in g c ap it a l, c ap it a l e xp en dit u re s a n d o th er g en era l c o rp ora te p urp oses; o r • re stric t u s f ro m m akin g s tra te g ic a cq uis it io ns o r e xp lo it in g o th er b usin ess o pportu nit ie s.

To s e rv ic e o ur i n deb te d ness a nd o th er o blig atio ns, w e w ill r e q uir e a s ig nific a nt a m ount o f c a sh .

Our a bility t o g en era te c a sh d ep en ds o n m any f a cto rs b eyo nd our c o ntr o l, a nd a ny f a ilu re t o m eet o ur d eb t o blig atio ns c o uld h arm o ur b usin ess, f in ancia l c o nditio n, a nd r e su lts o f o pera tio ns.

Our a b ilit y t o m ake p ay m en ts o n a n d t o r e fin an ce o ur in deb te d ness, in clu din g t h e F ir s t L ie n N ote F acilit y , f o r w hic h p rin cip al p ay m en ts a re r e q uir e d b eg in nin g in 2019, t h e S eco nd L ie n N ote F acilit y , a n d t h e 2 021 N ote s, a n d t o f u nd w ork in g c ap it a l n eed s a n d p la n ned c ap it a l e xp en dit u re s w ill d ep en d o n o ur a b ilit y t o g en era te cash in t h e f u tu re .

A s ig nif ic an t r e d uctio n in o ur o pera tin g c ash f lo w s r e su lt in g f ro m c h an ges in e co nom ic c o ndit io ns, c h an ges in g overn m en t r e im burs em en t r a te s o r m eth ods, in cre ased c o m petit io n o r o th er e v en ts b ey ond o ur c o ntro l c o uld in cre ase t h e n eed f o r a d dit io nal o r a lt e rn ativ e s o urc es o f liq uid it y a n d c o uld h av e a m ate ria l ad vers e e ffe ct o n o ur b usin ess, c o nso lid ate d f in an cia l s ta te m en ts , p ro sp ects a n d o ur a b ilit y t o s erv ic e o ur d eb t a n d o th er o blig atio ns.

We c an not a ssu re y ou th at o ur b usin ess w ill g en era te s u ffic ie n t c ash flo w s fro m o pera tio ns o r th at fu tu re b orro w in gs w ill b e a v aila b le to u s u nder th e N ote Facilit ie s o r o th erw is e in a n a m ount s u ffic ie n t t o e n ab le u s t o p ay o ur in deb te d ness, in clu din g o ur in deb te d ness u nder t h e F ir s t L ie n N ote F acilit y , t h e S eco nd L ie n N ote F acilit y , a n d t h e 2 021 N ote s, o r t o f u nd o ur o th er liq uid it y n eed s.

Our in ab ilit y t o p ay o ur d eb ts w ould r e q uir e u s t o p urs u e o ne o r m ore a lt e rn ativ e s tra te g ie s, su ch a s s ellin g a ssets , r e fin an cin g a ll o r a p ortio n o f o ur in deb te d ness o r s ellin g e q uit y c ap it a l.

How ev er, o ur a lt e rn ativ e s tra te g ie s m ay n ot b e f e asib le a t t h e t im e o r m ay n ot p ro vid e a d eq uate f u nds t o a llo w u s t o p ay o ur d eb ts a s t h ey c o m e d ue a n d f u nd o ur o th er liq uid it y n eed s.

In a d dit io n, s o m e a lt e rn ativ e s tra te g ie s a re lik ely to r e q uir e t h e p rio r c o nsen t o f o ur N ote s F acilit ie s le n ders , w hic h w e m ay n ot b e a b le t o o bta in .

D esp ite o ur su bsta ntia l in deb te d ness, w e m ay still n eed to in cu r sig nific a ntly m ore d eb t.

This c o uld e x acerb ate th e ris k s a sso cia te d w ith o ur su bsta ntia l le vera ge.

We m ay n eed to in cu r s u bsta n tia l a d dit io nal in deb te d ness, in clu din g a d dit io nal s ecu re d in deb te d ness, in th e fu tu re , in c o nnectio n w it h fu tu re a cq uis it io ns, stra te g ic in vestm en ts a n d s tra te g ic re la tio nsh ip s.

Alt h ough t h e F ir s t L ie n N ote F acilit y , t h e S eco nd L ie n N ote F acilit y a n d t h e in den tu re g overn in g t h e 2 021 N ote s co nta in c o ven an ts a n d r e stric tio ns o n t h e in cu rre n ce o f a d dit io nal d eb t, t h ese r e stric tio ns a re s u bje ct t o a n um ber o f q ualif ic atio ns a n d e xc ep tio ns a n d, u nder c erta in cir c u m sta n ces, d eb t in cu rre d in c o m plia n ce w it h t h ese r e stric tio ns, in clu din g s ecu re d d eb t, c o uld b e s u bsta n tia l.

Addin g a d dit io nal d eb t t o c u rre n t d eb t le v els c o uld exa cerb ate t h e le v era g e-re la te d r is ks d escrib ed a b ove.

Ite m 1 B .

Unre so lv ed S ta ff C om men ts None.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Ite m 2 .

Pro pertie s We c u rre n tly le ase a ll o f o ur p ro pertie s f ro m t h ir d p artie s u nder v ario us le ase t e rm s e xp ir in g o ver p erio ds e xte n din g t h ro ugh 2029 , in a d dit io n t o a n um ber o f n on- m ate ria l m onth -to -m onth le ases.

Our p ro pertie s m ain ly c o nsis t o f in fu sio n p harm acie s e q uip ped w it h c le an ro om a n d c o m poundin g c ap ab ilit ie s.

So m e in fu sio n pharm acie s a re c o -lo cate d w it h a n a m bula to ry in fu sio n c en te r w here p atie n ts re ceiv e in fu sio n tre atm en ts .

As o f Decem ber 3 1, 2 018 o ur p ro perty lo catio ns, a ll in su pport o f o ur in fu sio n s erv ic es b usin ess, w ere a s f o llo w s:

Bir m in gham , A L Ale xa n dria , L A Omah a, N E Duncan , S C Burb an k, C A Bato n R ouge, L A Bed fo rd , N H Mount P le asan t, S C Irv in e, C A Covin gto n, L A Morris P la in s, N J Knoxv ille , T N Onta rio , C A Ham mond, L A Som ers P oin t, N J Mem phis , T N Cro m well, C T ( fir s t) Houm a, L A Elm sfo rd , N Y Austin , T X Cro m well, C T ( s eco nd) Lafa y ette , L A Fore st H ills , N Y Housto n, T X Cora l S prin gs, F L Lake C harle s, L A Lake S uccess, N Y Ric h ard so n, T X Ja ckso nville , F L Meta ir ie , L A Can fie ld , O H Annan dale , V A M elb ourn e, F L Monro e, L A Can to n, O H Ash la n d, V A Tam pa, F L Shre v ep ort, L A Cin cin nati, O H Chan tilly , V A Alb an y, G A South boro ugh, M A Dublin , O H New port N ew s, V A Augusta , G A Auburn , M E Sylv an ia , O H Norfo lk , V A Norc ro ss, G A Eag an , M N Audubon, P A Roan oke, V A Sav an nah , G A Cheste rfie ld , M O Dunm ore , P A Ric h m ond, V A Elm hurs t, I L Pearl, M S York , P A Rutla n d, V T Silv is , I L Charlo tte , N C South am pto n, P A Charle sto n, W V Lexin gto n, K Y Fay ette v ille , N C Sm it h fie ld , R I Fair m ount, W V Ite m 3 .

Leg al P ro ceed in gs The in fo rm atio n s et f o rth u nder N ote 1 4, “ C om mit m en ts a n d C ontin gen cie s,” in t h e N ote s t o t h e C onso lid ate d F in an cia l S ta te m en ts u nder t h e c ap tio n “ L eg al Pro ceed in gs” in clu ded in P art I I, I te m 8 o f t h is A nnual R ep ort is in co rp ora te d h ere in b y r e fe re n ce.

Ite m 4 .

Min e S afe ty D is clo su res Ite m n ot a p plic ab le .

30 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts PA RT I I Ite m 5 .

Mark et f o r R eg is tr a nt’s C om mon E quity , R ela te d S to ck hold er Matte rs a nd I ssu er P urc h ase s o f E quity S ecu ritie s C om mon S to ck Our C om mon S to ck, p ar v alu e $ 0.0 001 p er s h are , is t ra d ed o n t h e N asd aq G lo bal M ark et u nder t h e s y m bol “ B IO S”.

H old ers o f R eco rd As o f Marc h 7 , 2 019 , t h ere w ere 1 80 s to ckh old ers o f r e co rd o f o ur C om mon S to ck.

D iv id en d P olic y We h av e n ev er p aid c ash d iv id en ds o n o ur C om mon S to ck a n d d o n ot a n tic ip ate d oin g s o in t h e f o re seeab le f u tu re .

Our N ote s F acilit ie s c o nta in c o ven an ts a n d re stric tio ns im pactin g o ur a b ilit y t o p ay d iv id en ds.

Secu ritie s A uth oriz e d f o r I ssu ance u nder E quity C om pen sa tio n P la ns In fo rm atio n re g ard in g s ecu rit ie s a u th oriz e d fo r is su an ce u nder o ur e q uit y c o m pen satio n p la n s re q uir e d b y th is It e m 5 is in clu ded in o ur d efin it iv e p ro xy sta te m en t t o b e f ile d w it h t h e S EC o n o r b efo re A pril 3 0, 2 019 in c o nnectio n w it h o ur 2019 A nnual M eetin g o f S to ckh old ers a n d is h ere b y in co rp ora te d b y r e fe re n ce.

R ecen t S ale s o f U nre g is te re d S ecu ritie s a nd U se o f P ro ceed s The in fo rm atio n d is clo sed in N ote 8 - P re fe rre d S to ck a n d S to ckh old ers ’ D efic it u nder t h e h ead in gs “ F ir s t Q uarte r 2 017 P riv ate P la cem en t,” “ S eco nd Q uarte r 2 017 Priv ate P la cem en t” a n d “ 2017 W arra n ts ” is h ere b y in co rp ora te d b y r e fe re n ce. T he C om pan y r e lie d o n S ectio n 4 (a )(2 ) o f t h e S ecu rit ie s A ct f o r t h e is su an ce o f t h e 2 017 W arra n ts a n d t h e C om mon S hare s is su ed in b oth t h e F ir s t Q uarte r 2 017 P riv ate P la cem en t a n d t h e S eco nd Q uarte r 2 017 P riv ate P la cem en t.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Sto ck P erfo rm ance G ra ph The f o llo w in g g ra p h c o m pare s o ur t o ta l c u m ula tiv e r e tu rn t o h old ers o f o ur C om mon S to ck w it h t h e t o ta l c u m ula tiv e r e tu rn s o f t h e N asd aq C om posit e I n dex a n d th e N asd aq H ealt h S erv ic es I n dex f o r t h e f iv e-y ear p erio d f ro m Decem ber 3 1, 2 013 t h ro ugh Decem ber 3 1, 2 018 .

The g ra p h s h ow s t h e p erfo rm an ce o f a $ 100 in vestm en t in o ur C om mon S to ck a n d in e ach in dex a s o f Decem ber 3 1, 2 013 .

Year E nded D ecem ber 3 1, 2013 2014 2015 2016 2017 2018 Bio Scrip , I n c.

$ 100.0 0 $ 94.4 6 $ 23.6 5 $ 14.0 5 $ 39.3 2 $ 48.2 4 Nasd aq C om posit e I n dex $ 100.0 0 $ 113.4 0 $ 119.8 9 $ 128.8 9 $ 165.2 9 $ 158.8 7 Nasd aq H ealt h S erv ic es I n dex $ 100.0 0 $ 128.4 7 $ 137.2 8 $ 114.0 6 $ 138.3 6 $ 132.5 9 * $ 100 in veste d o n Decem ber 3 1, 2 013 in s to ck o r in dex in clu din g r e in vestm en t o f d iv id en ds.

Ite m 6 .

Sele cte d F in ancia l D ata The s ele cte d c o nso lid ate d fin an cia l d ata p re sen te d b elo w s h ould b e re ad in c o nju nctio n w it h , a n d is q ualif ie d in it s e n tir e ty b y re fe re n ce to , M an ag em en t’s D is cu ssio n a n d A naly sis o f F in an cia l C ondit io n a n d R esu lt s o f O pera tio ns a n d o ur C onso lid ate d F in an cia l S ta te m en ts a n d t h e N ote s t h ere to a p pearin g e ls ew here in th is A nnual R ep ort.

Acq uis it io ns d urin g t h e p erio ds b elo w in clu de H om e S olu tio ns b eg in nin g S ep te m ber 2 016.

Div estit u re s d urin g t h e p erio ds b elo w in clu de t h e s ale of th e H om e H ealt h B usin ess in M arc h 2 014, a n d th e s ale o f th e P B M B usin ess in A ugust 2 015.

All h is to ric al a m ounts h av e b een re sta te d to re cla ssif y a m ounts dir e ctly a sso cia te d w it h th ese d iv este d o pera tio ns a s d is co ntin ued o pera tio ns.

The a m ounts b elo w a re n ot n ecessarily in dic ativ e o f w hat th e a ctu al re su lt s w ould hav e b een if t h e H om e H ealt h B usin ess a n d t h e P B M B usin ess w ere d iv este d a t t h e b eg in nin g o f t h e p erio d.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Decem ber 3 1, 2018 2017 2016 2015 2014 (in t h ou san ds) Con solid ate d B ala n ce S heets D ata :

W ork in g c ap it a l (1 ) $ 67,3 89 $ 81,4 63 $ 43,1 80 $ 29,5 74 $ 25,3 47 Tota l a ssets (2 ) $ 583,9 38 $ 603,0 92 $ 604,9 85 $ 528,4 16 $ 801,2 04 Tota l d eb t $ 504,6 74 $ 480,5 88 $ 451,9 34 $ 418,1 21 $ 423,8 03 Sto ckh old ers ’ e q uit y ( d efic it ) $ (1 44,0 04 ) $ (8 4,7 52 ) $ (3 3,6 21 ) $ (8 1,5 15 ) $ 216,5 89 Tota l a ssets o f d is co ntin ued o pera tio ns $ — $ — $ — $ — $ 22,2 94 Year E nded D ecem ber 3 1, 2018 2017 2016 2015 2014 (in t h ou san ds, e xcept p er s h are a m ou nts ) Con solid ate d S ta te m en ts o f O peratio n s D ata :

Net r e v en ue $ 708,9 03 $ 817,1 90 $ 935,5 89 $ 982,2 23 $ 922,6 54 Opera tin g in co m e ( lo ss) (3 ) $ 10,9 03 $ 2,2 60 $ (1 0,9 89 ) $ (2 89,4 13 ) $ (9 8,0 25 ) Loss f ro m c o ntin uin g o pera tio ns, b efo re in co m e t a xe s $ (5 1,0 24 ) $ (6 7,4 33 ) $ (3 4,1 57 ) $ (3 26,3 51 ) $ (1 38,9 43 ) Loss p er c o m mon s h are :

Loss f ro m c o ntin uin g o pera tio ns, b asic a n d d ilu te d $ (0 .4 9 ) $ (0 .5 9 ) $ (0 .4 8 ) $ (4 .5 8 ) $ (2 .1 9 ) W eig hte d a v era g e c o m mon s h are s o uts ta n din g, b asic a n d d ilu te d 127,9 42 123,7 91 93,7 40 68,7 10 68,4 76 (1 ) Work in g c ap it a l c alc u la tio n e xc lu des c u rre n t a ssets a n d lia b ilit ie s o f d is co ntin ued o pera tio ns a n d in clu des t h e im pact o f a p ply in g t h e r e tro sp ectiv e a d optio n o f ASU 2 015-1 7 Bala nce S heet C la ssifi c a tio n o f D efe rre d T axes , w hic h r e q uir e s t h at a ll d efe rre d t a x a ssets a n d lia b ilit ie s b e p re sen te d a s n on-c u rre n t.

(2 ) Tota l a ssets e xc lu de t o ta l a ssets o f d is co ntin ued o pera tio ns a s o f D ecem ber 3 1, 2 014.

(3 ) Opera tin g lo ss f o r t h e y ear e n ded D ecem ber 3 1, 2 015 in clu des g oodw ill im pair m en t o f $ 251.9 m illio n.

Ite m 7 .

Managem en t’s D is c u ssio n a nd A naly sis o f F in ancia l C onditio n a nd Resu lts o f O pera tio ns The f o llo w in g M an ag em en t’s D is cu ssio n a n d A naly sis o f F in an cia l C ondit io n a n d R esu lt s o f O pera tio ns is d esig ned t o a ssis t t h e r e ad er in u nders ta n din g o ur Conso lid ate d F in an cia l S ta te m en ts , t h e c h an ges in c erta in k ey it e m s in t h ose f in an cia l s ta te m en ts f ro m y ear-to -y ear a n d t h e p rim ary f a cto rs t h at a cco unte d f o r t h ose ch an ges, a s w ell a s h ow c erta in a cco untin g p rin cip le s a ffe ct o ur C onso lid ate d F in an cia l S ta te m en ts .

Exc ep t fo r th e h is to ric al in fo rm atio n c o nta in ed h ere in , th e fo llo w in g d is cu ssio n c o nta in s fo rw ard -lo okin g s ta te m en ts th at a re s u bje ct to k n ow n a n d u nkn ow n ris ks, u ncerta in tie s a n d o th er f a cto rs t h at m ay c au se o ur a ctu al r e su lt s t o d if fe r m ate ria lly f ro m t h ose e xp re ssed o r im plie d b y s u ch f o rw ard -lo okin g s ta te m en ts .

We dis cu ss s u ch r is ks, u ncerta in tie s a n d o th er f a cto rs t h ro ughout t h is A nnual R ep ort a n d s p ecif ic ally u nder t h e c ap tio n “ C au tio nary N ote R eg ard in g F o rw ard -L o okin g Sta te m en ts ” a n d u nder “ It e m 1 A . R is k F acto rs” in t h is A nnual R ep ort.

In a d dit io n, t h e f o llo w in g d is cu ssio n o f f in an cia l c o ndit io n, a n d r e su lt s o f o pera tio ns s h ould be r e ad in c o nju nctio n w it h t h e C onso lid ate d F in an cia l S ta te m en ts a n d N ote s t h ere to a p pearin g e ls ew here in t h is A nnual R ep ort.

B usin ess O ve rvie w We are a natio nal pro vid er of in fu sio n an d hom e care m an ag em en t so lu tio ns.

We p artn er w it h p hysic ia n s, h osp it a l sy ste m s, p ay ors , p harm aceu tic al m an ufa ctu re rs a n d s kille d n urs in g fa cilit ie s to p ro vid e p atie n ts a ccess to p ost-a cu te c are s erv ic es.

We o pera te w it h a c o m mit m en t to b rin g c u sto m er-fo cu sed pharm acy a n d r e la te d h ealt h care in fu sio n t h era p y s erv ic es in to t h e h om e o r a lt e rn ate -s it e s ettin g.

By c o lla b ora tin g w it h t h e f u ll s p ectru m o f h ealt h care p ro fe ssio nals an d th e p atie n t, w e a im to p ro vid e c o st-e ffe ctiv e c are th at is d riv en b y c lin ic al e xc elle n ce, c u sto m er s erv ic e a n d v alu es th at p ro m ote p osit iv e o utc o m es a n d a n en han ced q ualit y o f lif e f o r t h ose w hom w e s erv e. A s o f Decem ber 3 1, 2 018 , w e h ad a t o ta l o f 68 s erv ic e lo catio ns in 27 s ta te s.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Our p la tfo rm p ro vid es n atio nw id e s erv ic e c ap ab ilit ie s a n d t h e a b ilit y t o d eliv er c lin ic al m an ag em en t s erv ic es t h at o ffe r p atie n ts a h ig h-to uch , c o m munit y -b ased an d h om e-b ased c are e n vir o nm en t.

Our c o re s erv ic es a re p ro vid ed in c o ord in atio n w it h , a n d u nder t h e d ir e ctio n o f, t h e p atie n t’s p hysic ia n .

Our m ult id is cip lin ary t e am of c lin ic ia n s, in clu din g p harm acis ts , n urs es, d ie tit ia n s a n d r e sp ir a to ry t h era p is ts , w ork w it h t h e p hysic ia n t o d ev elo p a p la n o f c are s u it e d t o e ach p atie n t’s s p ecif ic need s.

Wheth er in t h e h om e, p hysic ia n o ffic e, a m bula to ry in fu sio n c en te r, s kille d n urs in g f a cilit y o r o th er a lt e rn ate s it e s o f c are , w e p ro vid e p ro ducts , s erv ic es a n d co ndit io n-s p ecif ic c lin ic al m an ag em en t p ro gra m s ta ilo re d to im pro ve th e c are o f in div id uals w it h c o m ple x h ealt h c o ndit io ns s u ch a s g astro in te stin al a b norm alit ie s, in fe ctio us d is eases, c an cer, m ult ip le s cle ro sis , o rg an a n d b lo od c ell t ra n sp la n ts , b le ed in g d is o rd ers , im mune d efic ie n cie s a n d h eart f a ilu re .

Seg m en ts We o pera te in o ne seg m en t, in fu sio n serv ic es.

On a n o ngoin g b asis w e w ill n ot re p ort o pera tin g s eg m en t in fo rm atio n u nle ss a c h an ge in th e b usin ess necessit a te s t h e n eed t o d o s o .

Str a te g ic A sse ssm en t a nd T ra nsa ctio ns We c o ntin ually p erfo rm s tra te g ic a ssessm en ts o f o ur b usin ess a n d o pera tio ns.

The a ssessm en ts e xa m in e o ur m ark et s tre n gth s a n d o pportu nit ie s a n d c o m pare our p osit io n to th at o f o ur c o m petit o rs .

As a r e su lt o f t h ese o ngoin g a ssessm en ts , w e h av e f o cu sed o ur g ro w th o n in vestm en ts in t h e in fu sio n s erv ic es b usin ess, w hic h r e m ain s t h e p rim ary d riv er o f o ur g ro w th s tra te g y.

Recen t t ra n sactio ns w hic h r e p re sen t e xe cu tio n o f t h e s tra te g ic a ssessm en ts in clu de:

• On S ep te m ber 9 , 2 016, w e a cq uir e d s u bsta n tia lly a ll o f t h e a ssets a n d a ssu m ed c erta in lia b ilit ie s o f H om e S o lu tio ns a n d it s s u bsid ia rie s ( th e “ H om e S o lu tio ns Tra n sactio n”) p urs u an t to a n A sset P u rc h ase A gre em en t d ate d Ju ne 1 1, 2 016 (a s a m en ded , th e “ H om e S o lu tio ns A gre em en t” ), b y a n d a m ong H om e So lu tio ns, a D ela w are c o rp ora tio n, c erta in s u bsid ia rie s o f H om e S o lu tio ns, th e C om pan y a n d H om eC hoic e P artn ers , In c., a D ela w are c o rp ora tio n.

Hom e So lu tio ns, a p riv ate ly h eld c o m pan y, p ro vid ed h om e in fu sio n a n d h om e n urs in g p ro ducts a n d s erv ic es t o p atie n ts s u ffe rin g f ro m c h ro nic a n d a cu te m ed ic al co ndit io ns. T he a g gre g ate c o nsid era tio n p aid b y t h e C om pan y in t h e T ra n sactio n w as e q ual t o ( i) $ 67.5 m illio n in c ash ( th e “ C ash C onsid era tio n); p lu s ( ii) ( a ) 3,7 50,0 00 s h are s o f C om pan y c o m mon s to ck ( th e “ T ra n sactio n C lo sin g E q uit y C onsid era tio n”) a n d ( b ) t h e r ig ht t o r e ceiv e c o ntin gen t e q uit y s ecu rit ie s o f t h e Com pan y, in th e fo rm o f re stric te d s h are s o f C om pan y c o m mon s to ck (th e “ R SU s”), is su ab le in tw o tra n ch es, T ra n ch e A a n d T ra n ch e B , w it h d if fe re n t vestin g c o ndit io ns ( c o lle ctiv ely , t h e “ C ontin gen t S hare s”).

• On A ugust 2 7, 2 015, w e c o m ple te d t h e s ale o f s u bsta n tia lly a ll o f o ur p harm acy b en efit m an ag em en t s erv ic es s eg m en t ( th e “ P B M B usin ess”) p urs u an t t o a n Asset P u rc h ase A gre em en t d ate d a s o f A ugust 9 , 2 015 ( th e “ P B M A sset P u rc h ase A gre em en t” ), b y a n d a m ong t h e C om pan y, B io Scrip P B M S erv ic es, L LC an d Pro C are Ph arm acy B en efit M an ag er In c. (th e “P B M B uyer” ).

Under th e P B M A sset Pu rc h ase A gre em en t, th e P B M B uyer ag re ed to acq uir e su bsta n tia lly a ll o f t h e a ssets u sed s o le ly in c o nnectio n w it h t h e P B M B usin ess a n d t o a ssu m e c erta in P B M B usin ess lia b ilit ie s ( th e “ P B M S ale ”).

On th e clo sin g d ate , p urs u an t t o t h e t e rm s o f t h e P B M A sset P u rc h ase A gre em en t, w e r e ceiv ed t o ta l c ash c o nsid era tio n o f a p pro xim ate ly $ 24.6 m illio n, in clu din g a n ad ju stm en t f o r e stim ate d c lo sin g d ate n et w ork in g c ap it a l.

On O cto ber 2 0, 2 015, w e f in aliz e d w ork in g c ap it a l a d ju stm en t n eg otia tio ns in r e la tio n t o t h e P B M Sale w here b y w e a g re ed t o r e p ay a p pro xim ate ly $ 1.0 m illio n t o t h e P B M B uyer.

We u sed t h e n et p ro ceed s f ro m t h e P B M S ale t o p ay d ow n a p ortio n o f o ur outs ta n din g d eb t.

R eg ula to ry M atte rs U pdate Appro xim ate ly 18% o f re v en ue fo r th e y ear e n ded Decem ber 3 1, 2 018 w as d eriv ed d ir e ctly fro m M ed ic are , s ta te M ed ic aid p ro gra m s a n d o th er g overn m en t pay ors .

We a ls o p ro vid e s erv ic es to b en efic ia rie s o f M ed ic are , M ed ic aid a n d o th er g overn m en t-s p onso re d h ealt h care p ro gra m s th ro ugh m an ag ed c are e n tit ie s.

M ed ic are P art D , f o r e xa m ple , is a d m in is te re d t h ro ugh m an ag ed c are e n tit ie s.

In t h e n orm al c o urs e o f b usin ess, w e a n d o ur c u sto m ers a re s u bje ct t o le g is la tiv e a n d re g ula to ry c h an ges im pactin g t h e le v el o f r e im burs em en t r e ceiv ed f ro m t h e M ed ic are a n d s ta te M ed ic aid p ro gra m s.

Sta te M ed ic a id P ro gra m s Over t h e la st s ev era l y ears , in cre ased M ed ic aid s p en din g, c o m bin ed w it h s lo w s ta te r e v en ue g ro w th , le d m an y s ta te s t o in stit u te m easu re s a im ed a t c o ntro llin g sp en din g g ro w th .

Sp en din g c u ts h av e t a ken m an y f o rm s in clu din g r e d ucin g e lig ib ilit y a n d b en efit s , e lim in atin g c erta in t y pes o f s erv ic es, a n d p ro vid er r e im burs em en t re d uctio ns.

In a d dit io n, s o m e s ta te s h av e b een m ovin g b en efic ia rie s t o m an ag ed c are p ro gra m s in a n e ffo rt t o r e d uce c o sts .

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Each in div id ual s ta te M ed ic aid p ro gra m re p re sen ts le ss th an 5% o f o ur c o nso lid ate d re v en ue fo r th e year e n ded D ecem ber 3 1, 2 018 a n d n o in div id ual s ta te M ed ic aid re im burs em en t re d uctio n is e xp ecte d to h av e a m ate ria l e ffe ct o n o ur C onso lid ate d F in an cia l S ta te m en ts .

We a re c o ntin ually a ssessin g th e im pact o f th e sta te M ed ic aid re im burs em en t c u ts a s s ta te s p ro pose, fin aliz e a n d im ple m en t v ario us c o st-s av in g m easu re s. T hese m easu re s m ay in clu de s tra te g ie s to re d uce co vera g e, r e stric t e n ro llm en t, o r e n ro ll m ore b en efic ia rie s in m an ag ed c are p ro gra m s.

Giv en th e re im burs em en t p re ssu re s, w e c o ntin ue to im pro ve o pera tio nal e ffic ie n cie s a n d re d uce c o sts to m it ig ate th e im pact o n re su lt s o f o pera tio ns w here possib le .

In s o m e c ases, r e im burs em en t r a te r e d uctio ns m ay r e su lt in n eg ativ e o pera tin g r e su lt s , a n d w e w ould lik ely e xit s o m e o r a ll s erv ic es w here r a te r e d uctio ns re su lt in u naccep ta b le r e tu rn s t o o ur s to ckh old ers .

M ed ic a re Med ic are c u rre n tly c o vers h om e in fu sio n th era p y fo r s ele cte d th era p ie s p rim arily th ro ugh th e d ura b le m ed ic al e q uip m en t b en efit . T he C ure s A ct c h an ged th e new p ay m en t s y ste m f o r c erta in h om e in fu sio n t h era p y s erv ic es p aid u nder M ed ic are P art B . T he C ure s A ct s ig nif ic an tly r e d uced t h e a m ount p aid b y M ed ic are f o r th e d ru g c o sts , a n d a ls o p ro vid es f o r t h e im ple m en ta tio n o f a c lin ic al s erv ic es p ay m en t. U nder t h e C ure s A ct, t h e s erv ic es p ay m en t d oes n ot t a ke e ffe ct u ntil 2 021.

H ow ev er, t h e B ip artis an B udget A ct o f 2 018 p ro vid es f o r a t e m pora ry t ra n sit io nal p ay m en t, s ta rtin g J a n uary 1 , 2 019, f o r M ed ic are P art B h om e in fu sio n s erv ic es. C M S is su ed a f in al r u le in O cto ber 2 018 im ple m en tin g t h is t e m pora ry b en efit , w hic h w ill c o ntin ue u ntil J a n uary 1 , 2 021, w hen t h e s erv ic es p ay m en t in t h e C ure s A ct t a kes effe ct. W e h av e t a ken s te p s t o m it ig ate t h e im pact o f t h e C ure s A ct o n o ur b usin ess, b ut t h e A ct h as h ad m ate ria l n eg ativ e im pact o n o ur r e v en ues a n d p ro fit a b ilit y .

Appro xim ate ly 8% a n d 7% o f r e v en ue f o r t h e years e n ded D ecem ber 3 1, 2 018 a n d 2 017 , r e sp ectiv ely , w as d eriv ed f ro m M ed ic are .

C ritic al A ccou ntin g E stim ate s Our C onso lid ate d F in an cia l S ta te m en ts h av e b een p re p are d in a cco rd an ce w it h U nit e d S ta te s G A AP.

In p re p arin g o ur fin an cia l s ta te m en ts , w e a re re q uir e d to m ake e stim ate s a n d a ssu m ptio ns t h at a ffe ct t h e r e p orte d a m ounts o f a ssets a n d lia b ilit ie s, t h e d is clo su re o f c o ntin gen t a ssets a n d lia b ilit ie s a t t h e d ate o f t h e f in an cia l sta te m en ts a n d t h e r e p orte d a m ounts o f r e v en ue a n d e xp en ses d urin g t h e r e p ortin g p erio d.

We e v alu ate o ur e stim ate s a n d ju dgm en ts o n a n o ngoin g b asis .

We b ase our e stim ate s a n d ju dgm en ts o n h is to ric al e xp erie n ce a n d o n v ario us o th er f a cto rs t h at w e b elie v e t o b e r e aso nab le u nder t h e c ir c u m sta n ces, t h e r e su lt s o f w hic h f o rm th e b asis f o r m akin g ju dgm en ts a b out t h e c arry in g v alu es o f a ssets a n d lia b ilit ie s a t t h e d ate o f t h e f in an cia l s ta te m en ts a n d t h e r e p orte d a m ounts o f r e v en ues a n d exp en ses fo r th e p erio d p re sen te d .

Our a ctu al re su lt s m ay d if fe r fro m th ese e stim ate s, a n d d if fe re n t a ssu m ptio ns o r c o ndit io ns m ay y ie ld d if fe re n t e stim ate s.

The fo llo w in g d is cu ssio n h ig hlig hts w hat w e b elie v e to b e th e c rit ic al a cco untin g e stim ate s a n d ju dgm en ts m ad e in th e p re p ara tio n o f o ur C onso lid ate d F in an cia l Sta te m en ts .

The f o llo w in g d is cu ssio n is n ot in te n ded t o b e a c o m pre h en siv e lis t o f a ll t h e a cco untin g p olic ie s, e stim ate s o r ju dgm en ts m ad e in t h e p re p ara tio n o f o ur f in an cia l sta te m en ts .

A d is cu ssio n o f o ur sig nif ic an t acco untin g p olic ie s, in clu din g fu rth er d is cu ssio n o f th e acco untin g p olic ie s d escrib ed b elo w , can b e fo und in N ote 2 , Sum mary o f S ig nifi c a nt A cco untin g P olic ie s , w it h in t h e N ote s t o t h e C onso lid ate d F in an cia l S ta te m en ts in clu ded in t h is A nnual R ep ort.

R even ue R eco gnitio n We g en era te re v en ue p rin cip ally th ro ugh th e p ro vis io n o f h om e in fu sio n s erv ic es to p ro vid e c lin ic al m an ag em en t s erv ic es a n d th e d eliv ery o f c o st e ffe ctiv e pre scrip tio n m ed ic atio ns.

Refe r to Reven ue R eco gnitio n w it h in N ote 2 , Su m mary o f S ig nifi c a nt A cco untin g P olic ie s w it h in t h e N ote s t o t h e C onso lid ate d F in an cia l Sta te m en ts f o r f u ll d is cu ssio n o f o ur r e v en ue r e co gnit io n p olic y .

Net r e v en ue is in it ia lly r e co rd ed n et o f e stim ate s o f v aria b le c o nsid era tio n, c o nsis tin g o f ( i) im plic it p ric e c o ncessio ns r e su lt in g f ro m d if fe re n ces b etw een r a te s ch arg ed fo r s erv ic es p erfo rm ed a n d e xp ecte d re im burs em en ts , a n d (ii) re tro activ e re v en ue a d ju stm en ts d ue to a u dit s o r re v ie w s b y o ur th ir d -p arty p ay ors .

We re g ula rly u pdate o ur e stim ate s o f p ric e c o ncessio ns b ased o n h is to ric al c o lle ctio n e xp erie n ce w it h s im ila r p ay or c la sses, a g ed a cco unts re ceiv ab le b y p ay or c la ss, te rm s o f p ay m en t a g re em en ts , c o rre sp onden ce f ro m p ay ors r e la te d t o r e v en ue a u dit s o r r e v ie w s, o ur h is to ric al s ettle m en t a ctiv it y o f a u dit e d a n d r e v ie w ed c la im s a n d cu rre n t e co nom ic c o ndit io ns.

Sig nif ic an t c h an ges t o o ur m ix o f p ay ors , t e rm s o f p ay m en t a g re em en ts , c h an ges t o g overn m en t p ro gra m s, n ew le g is la tio n o r c u rre n t e co nom ic c o ndit io ns c o uld im pact o ur e stim ate s o f v aria b le c o nsid era tio n in f u tu re p erio ds.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts 2017 W arra nts The C om pan y e stim ate d t h e f a ir v alu e o f t h e 2 017 W arra n ts u sin g a v alu atio n m odel t h at c o nsid ere d a ttrib ute s o f t h e C om pan y’s c o m mon s to ck, in clu din g t h e num ber o f o uts ta n din g s h are s, s h are p ric e a n d v ola tilit y .

The m odel f u rth er c o nsid ers t h e e xe rc is e p erio d o f t h e w arra n ts a n d t h e c h ara cte ris tic s o f o th er c o nvertib le in stru m en ts in e stim atin g t h e n um ber o f s h are s t h at w ill b e is su ed u pon t h e e xe rc is e o f t h e w arra n ts .

The m odel c o nsid ers k ey a ssu m ptio ns t h at a m ark et p artic ip an t w ould u se in p ric in g t h e w arra n ts w hen a ctin g in t h eir b est e co nom ic in te re st.

Chan ges t o t h e e stim ate d f a ir v alu e o f t h e w arra n ts a re p rim arily d riv en b y c h an ges t o t h e C om pan y’s s to ck p ric e.

A 1 .0 % c h an ge in t h e C om pan y’s s to ck p ric e w ould c h an ge th e e stim ate o f th e fa ir v alu e o f th e w arra n ts b y a p pro xim ate ly $ 0.3 m illio n.

Refe r to 2017 W arra nts p re sen te d w it h in N ote 8 - P re fe rre d S to ck a n d Sto ckh old ers ’ D efic it in t h e a cco m pan yin g N ote s t o C onso lid ate d F in an cia l S ta te m en ts f o r f u rth er d is cu ssio n o f t h e 2 017 W arra n ts .

O ff-B ala n ce S heet A rran gem en ts As o f Decem ber 3 1, 2 018 , w e d id n ot h av e a n y o ff-b ala n ce s h eet a rra n gem en ts th at h av e, o r a re re aso nab ly lik ely to h av e, a c u rre n t o r fu tu re e ffe ct o n o ur fin an cia l c o ndit io n, c h an ges in f in an cia l c o ndit io n, r e v en ue o r e xp en ses, r e su lt s o f o pera tio ns, liq uid it y , c ap it a l e xp en dit u re s o r c ap it a l r e so urc es t h at a re m ate ria l.

R esu lts o f O peratio n s Our a n aly sis p re sen te d b elo w is o rg an iz e d t o p ro vid e t h e in fo rm atio n w e b elie v e w ill f a cilit a te a n u nders ta n din g o f o ur h is to ric al p erfo rm an ce a n d r e le v an t t re n ds goin g f o rw ard , a n d s h ould b e r e ad in c o nju nctio n w it h o ur C onso lid ate d F in an cia l S ta te m en ts , in clu din g t h e n ote s t h ere to , in P art I I, I t e m 8 o f t h is A nnual R ep ort o n Form 1 0-K .

N et R even ue The f o llo w in g t a b le s u m mariz e s o ur n et r e v en ue, g ro ss p ro fit a n d g ro ss m arg in f o r t h e y ears e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016 ( in t h ousan ds):

Year E nded D ecem ber 3 1, Chan ge 2018 2017 2016 2018 v . 2 017 2017 v . 2 016 Net r e v en ue $ 708,9 03 $ 817,1 90 $ 935,5 89 $ (1 08,2 87 ) (1 3.3 )% $ (1 18,3 99 ) (1 2.7 )% Gro ss p ro fit , e xc lu din g d ep re cia tio n exp en se $ 243,0 38 $ 269,2 42 $ 262,0 82 $ (2 6,2 04 ) (9 .7 )% $ 7,1 60 2.7 % Gro ss m arg in 34.3 % 32.9 % 28.0 % Net R even ue.

Net re v en ue fo r th e year e n ded D ecem ber 3 1, 2 018 d ecre ased p rim arily d ue to th e im pact o f th e U nit e d H ealt h care c o ntra ct tra n sit io n e ffe ctiv e Sep te m ber 3 0, 2 017 a n d lo w er p atie n t v olu m es in c erta in p ro duct lin es, in clu din g th e im pact o f te m pora ry c lo su re s o f C om pan y b ra n ch es d ue to in cle m en t w in te r w eath er d urin g t h e f ir s t q uarte r o f 2 018.

Addit io nally , im ple m en ta tio n o f A SC 6 06 d urin g 2 018 r e su lt e d in t h e r e co gnit io n o f a m ounts p re v io usly r e co rd ed a s b ad d eb t exp en se a s a r e d uctio n t o r e v en ue o f $29.9 m illio n .

Net r e v en ue f o r t h e y ear e n ded D ecem ber 3 1, 2 017 d ecre ased p rim arily d ue t o t h e C om pan y’s s h if t in s tra te g y t o fo cu s o n g ro w in g it s c o re r e v en ue m ix , in clu din g t h e im pact o f t h e U nit e d H ealt h care c o ntra ct t ra n sit io n e ffe ctiv e S ep te m ber 3 0, 2 017, t h e im pact o f t h e C ure s A ct, a n d th e im pact o f t h e C om pan y’s e xit f ro m t h e H ep atit is C m ark et in 2 016, p artia lly o ffs et b y a d dit io nal r e v en ues r e su lt in g f ro m t h e a cq uis it io n o f H om e S olu tio ns.

Gro ss P ro fi t.

Gro ss p ro fit c o nsis ts o f n et re v en ue le ss c o st o f re v en ue (e xc lu din g d ep re cia tio n e xp en se).

The c o st o f re v en ue p rim arily in clu des th e c o sts o f pre scrip tio n m ed ic atio ns, m ed ic al s u pplie s, n urs in g s erv ic es, s h ip pin g a n d o th er d ir e ct a n d in dir e ct c o sts .

The d ecre ase in g ro ss p ro fit d urin g 2018 a s c o m pare d to 2017 w as p rim arily d riv en b y th e d ecre ase in re v en ue o f $29.9 m illio n a sso cia te d w it h th e im pact o f im ple m en ta tio n o f A SC T opic 6 06 (s ee Reven ue R eco gnitio n w it h in N ote 2 - S u m mary o f S ig nif ic an t A cco untin g P o lic ie s), lo w er r e v en ues f ro m t h e im pact o f t h e U nit e d H ealt h care c o ntra ct t ra n sit io n e ffe ctiv e S ep te m ber 3 0, 2 017, an d lo w er p atie n t v olu m es in c erta in p ro duct lin es, in clu din g t h e im pact o f t e m pora ry c lo su re s o f C om pan y b ra n ch es d ue t o in cle m en t w in te r w eath er d urin g t h e f ir s t quarte r o f 2 018, p artia lly o ffs et b y h ig her g ro ss p ro fit m arg in s d ue t o h ig her c o re m ix a n d lo w er c o sts o f p re scrip tio n m ed ic atio ns. T he in cre ase in g ro ss p ro fit d urin g 2017 a s c o m pare d t o 2 016 w as p rim arily d riv en b y t h e H om e S o lu tio ns a cq uis it io n, a n im pro ved m ix o f h ig her m arg in c o re t h era p y r e v en ues v ers u s lo w er m arg in n on- co re t h era p y r e v en ues, a n d a d ecre ased c o st o f p re scrip tio n m ed ic in es a n d m ed ic al s u pplie s a s a r e su lt o f im pro ved s u pply c h ain 36 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts m an ag em en t, p artia lly o ffs et b y t h e C om pan y’s s h if t in s tra te g y t o f o cu s o n g ro w in g it s c o re r e v en ue m ix , in clu din g t h e U nit e d H ealt h care c o ntra ct t ra n sit io n e ffe ctiv e Sep te m ber 3 0, 2 017.

O pera tin g E xpen se s The f o llo w in g t a b le s s u m mariz e o ur o pera tin g e xp en ses, a n d p erc en ta g es o f n et r e v en ue, f o r t h e y ears e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016 ( in t h ousan ds):

Year E nded D ecem ber 3 1, As a P ercen ta g e o f N et R eve n ue 2018 2017 2016 2018 2017 2016 Serv ic e lo catio n o pera tin g e xp en ses $ 154,8 13 $ 163,2 73 $ 169,7 81 21.8 % 20.0 % 18.1 % Gen era l a n d a d m in is tra tiv e e xp en ses 47,2 64 39,6 25 38,7 98 6.7 % 4.8 % 4.1 % Dep re cia tio n a n d a m ortiz a tio n e xp en se 23,6 01 27,7 25 22,0 25 3.3 % 3.4 % 2.4 % Restru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er exp en ses 6,4 57 12,6 62 15,8 59 0.9 % 1.5 % 1.7 % Bad d eb t e xp en se — 23,6 97 26,6 08 — % 2.9 % 2.8 % Tota l o pera tin g e xp en ses $ 232,1 35 $ 266,9 82 $ 273,0 71 32.7 % 32.6 % 29.1 % Year E nded D ecem ber 3 1, Chan ge 2018 2017 2016 2018 v . 2 017 2017 v . 2 016 Serv ic e lo catio n o pera tin g e xp en ses $ 154,8 13 $ 163,2 73 $ 169,7 81 $ (8 ,4 60 ) (5 .2 )% $ (6 ,5 08 ) (3 .8 )% Gen era l a n d a d m in is tra tiv e e xp en ses 47,2 64 39,6 25 38,7 98 7,6 39 19.3 % 827 2.1 % Dep re cia tio n a n d a m ortiz a tio n e xp en se 23,6 01 27,7 25 22,0 25 (4 ,1 24 ) (1 4.9 )% 5,7 00 25.9 % Restru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er exp en ses 6,4 57 12,6 62 15,8 59 (6 ,2 05 ) (4 9.0 )% (3 ,1 97 ) (2 0.2 )% Bad d eb t e xp en se — 23,6 97 26,6 08 (2 3,6 97 ) (1 00.0 )% (2 ,9 11 ) (1 0.9 )% Tota l o pera tin g e xp en ses $ 232,1 35 $ 266,9 82 $ 273,0 71 $ (3 4,8 47 ) (1 3.1 )% $ (6 ,0 89 ) (2 .2 )% Serv ic e L o ca tio n O pera tin g E xp en se s.

Serv ic e lo catio n o pera tin g e xp en ses c o nsis t p rim arily o f w ag es a n d b en efit s , tra v el e xp en ses, a n d p ro fe ssio nal s erv ic e an d fie ld o ffic e e xp en ses fo r o ur h ealt h care p ro fe ssio nals e n gag ed in p ro vid in g in fu sio n s erv ic es to o ur p atie n ts .

Serv ic e lo catio n o pera tin g e xp en ses fo r th e year en ded D ecem ber 3 1, 2 018 d ecre ased d ue to lo w er w ag e, b en efit , a n d o th er e m plo yee c o sts a s a re su lt o f th e U nit e d H ealt h care c o ntra ct tra n sit io n a n d in te g ra tio n, re stru ctu rin g, a n d o th er w ork fo rc e o ptim iz a tio n e ffo rts .

Serv ic e lo catio n o pera tin g e xp en ses f o r t h e y ear e n ded D ecem ber 3 1, 2 017 d ecre ased p rim arily a s t h e r e su lt o f re stru ctu rin g a n d o th er w ork fo rc e o ptim iz a tio n e ffo rts .

Gen era l a nd A dm in is tr a tiv e E xp en se s .

Gen era l a n d a d m in is tra tiv e e xp en ses c o nsis t o f w ag es a n d b en efit s fo r c o rp ora te o verh ead p ers o nnel a n d c erta in co rp ora te le v el p ro fe ssio nal s erv ic e fe es, in clu din g le g al, a cco untin g, in vesto r re la tio ns a n d IT fe es. G en era l a n d a d m in is tra tiv e e xp en ses fo r th e year en ded D ecem ber 3 1, 2 018 in cre ased p rim arily fro m in cre ases in le g al, a cco untin g a n d o th er p ro fe ssio nal fe es o f $ 2.3 m illio n, s to ck-b ased c o m pen satio n e xp en se o f $ 1.9 m illio n, tra v el re la te d c o sts o f $ 1.8 m illio n, h ealt h a n d g en era l c o rp ora te in su ra n ce c o sts o f $ 1.5 m illio n, m ark etin g o f $ 0.6 m illio n, IT e xp en ses o f $ 0.4 m illio n a n d fa cilit y re n t o f $ 0.3 m illio n, o ffs et b y d ecre ased p ay ro ll a n d b en efit s o f $ 1.2 m illio n. G en era l a n d a d m in is tra tiv e e xp en ses fo r th e y ear e n ded D ecem ber 3 1, 2 017 in cre ased p rim arily d ue t o in cre ased w ag es a n d b en efit s e xp en se, p rim arily in cen tiv e b ased c o m pen satio n e xp en se.

Dep re cia tio n a nd A m ortiz a tio n E xp en se .

Dep re cia tio n a n d a m ortiz a tio n e xp en se in clu des th e d ep re cia tio n o f p ro perty a n d e q uip m en t a n d th e a m ortiz a tio n o f in ta n gib le a ssets s u ch a s c u sto m er r e la tio nsh ip s, m an ag ed c are c o ntra cts , lic en ses, t ra d e n am es, a n d n on-c o m pete a g re em en ts w it h e stim ab le liv es. T he d ecre ase in dep re cia tio n e xp en se in 2 018 is a ttrib uta b le t o t h e t im in g o f p la cin g a ssets in s erv ic e a n d a ssets b eco m in g f u lly d ep re cia te d . T he d ecre ase in a m ortiz a tio n e xp en se in 2018 a s c o m pare d t o 2 017 is a ttrib uta b le t o f u ll a m ortiz a tio n o f c erta in in ta n gib le a ssets r e d ucin g e xp en se b y $ 1.1 m illio n.

The in cre ase in a m ortiz a tio n e xp en se in 2 017 as c o m pare d t o 2 016 is a ttrib uta b le t o a $ 5.6 m illio n in cre ase in in ta n gib le a sset a m ortiz a tio n a sso cia te d w it h t h e a cq uis it io n o f H om e S o lu tio ns in t h e t h ir d q uarte r o f 2016.

37 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Restr u ctu rin g, A cq uis itio n, I n te g ra tio n, a nd O th er E xp en se s.

Restru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er e xp en ses in clu de n on-re cu rrin g c o sts a sso cia te d w it h r e stru ctu rin g, a cq uis it io n a n d in te g ra tio n in it ia tiv es s u ch a s e m plo yee s ev era n ce c o sts , c erta in le g al a n d p ro fe ssio nal f e es, t ra in in g c o sts , r e d undan t w ag e c o sts , im pacts re co rd ed fro m th e ch an ge in co ntin gen t co nsid era tio n oblig atio ns, an d oth er co sts re la te d to co ntra ct te rm in atio ns an d clo sed bra n ch es/o ffic es.

Restru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er e xp en ses, d ecre ased d urin g t h e year e n ded D ecem ber 3 1, 2 018 p rim arily d ue to th e c o m ple tio n o f H om e S o lu tio ns in te g ra tio n a ctiv it ie s in 2 017. R estru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er e xp en ses d ecre ased d urin g t h e y ear e n ded D ecem ber 3 1, 2 017 p rim arily d ue t o lo w er exp en ses r e la te d t o t h e H om e S olu tio ns a cq uis it io n a n d in te g ra tio n, p artia lly o ffs et b y r e stru ctu rin g a n d o th er w ork fo rc e o ptim iz a tio n e ffo rts d urin g 2 017.

Bad D eb t E xp en se .

Bad d eb t e xp en se d ecre ased d urin g t h e year e n ded D ecem ber 3 1, 2 018 a s c o m pare d t o 2 017 a s a r e su lt o f t h e im ple m en ta tio n o f A SC T opic 606 (s ee Reven ue R eco gnitio n w it h in N ote 2 - S u m mary o f S ig nif ic an t A cco untin g P o lic ie s) w hic h re su lt e d in th e re co gnit io n o f a ll o f th e C om pan y’s b ad d eb t exp en se a s a r e d uctio n t o r e v en ue f o r t h e year e n ded D ecem ber 3 1, 2 018 .

Bad d eb t e xp en se f o r t h e y ear e n ded D ecem ber 3 1, 2 017 d ecre ased p rim arily d ue t o im pro ved co lle ctio ns o f a cco unts r e ceiv ab le .

The f o llo w in g t a b le s u m mariz e s o ur o th er e xp en ses a n d in co m e a n d in co m e t a xe s f o r t h e y ears e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016 ( in t h ousan ds):

Year E nded D ecem ber 3 1, Chan ge 2018 2017 2016 2018 v . 2 017 2017 v . 2 016 In te re st e xp en se, n et $ 57,4 33 $ 52,0 72 $ 37,5 72 $ 5,3 61 10.3 % $ 14,5 00 38.6 % Chan ge in f a ir v alu e o f e q uit y lin ked lia b ilit ie s 4,8 36 3,5 87 (1 0,4 50 ) 1,2 49 34.8 % 14,0 37 (1 34.3 )% Loss ( g ain ) o n d is p osit io ns (3 42 ) 581 (3 ,9 54 ) (9 23 ) (1 58.9 )% 4,5 35 (1 14.7 )% Loss o n e xtin guis h m en t o f d eb t — 13,4 53 — (1 3,4 53 ) (1 00.0 )% 13,4 53 — % Tota l o th er e xp en ses $ 61,9 27 $ 69,6 93 $ 23,1 68 $ (7 ,7 66 ) (1 1.1 )% $ 46,5 25 200.8 % In co m e t a xe s:

In co m e t a x b en efit ( e xp en se) $ (5 68 ) $ 4,1 30 $ (2 ,0 15 ) $ (4 ,6 98 ) (1 13.8 )% $ 6,1 45 (3 05.0 )% In te re st E xp en se , N et .

In te re st e xp en se, n et c o nsis ts o f in te re st e xp en se a n d a m ortiz a tio n o f d efe rre d f in an cin g c o sts o ffs et b y a n im mate ria l a m ount o f in te re st in co m e.

Durin g t h e y ears e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016, w e r e co rd ed $1.3 m illio n , $1.3 m illio n a n d $ 3.6 m illio n o f a m ortiz a tio n o f d efe rre d f in an cin g c o sts , re sp ectiv ely .

The in cre ase in in te re st e xp en se in 2018 a s c o m pare d t o 2017 is p rim arily t h e r e su lt o f in cre asin g v aria b le in te re st r a te s o n t h e F ir s t a n d S eco nd L ie n N ote Facilit ie s a n d a n in cre ase t o t h e p rin cip al b ala n ce o f t h e S eco nd L ie n N ote F acilit y o f $ 17.8 m illio n a s a r e su lt o f a n a d dit io nal $ 10.0 m illio n b orro w in g d urin g J u ne 2 018 an d $ 7.8 m illio n o f p aid -in -k in d in te re st b ein g c ap it a liz e d a s p rin cip al d urin g t h e s eco nd h alf o f 2 018.

The in cre ase in in te re st e xp en se in 2 017 a s c o m pare d t o 2 016 is th e r e su lt o f t h e c h an ges in o ur d eb t s tru ctu re ( s ee N ote 7 - D eb t), w hic h a ls o r e su lt e d in a h ig her e ffe ctiv e in te re st r a te s p ecif ic t o t h e a m ortiz a tio n o f t h e d is co unt asso cia te d w it h t h e 2 017 W arra n ts .

Change i n F air V alu e o f E quity L in ked L ia bilitie s.

The in cre ases in t h e c h an ge in f a ir v alu e o f e q uit y lin ked lia b ilit ie s d urin g t h e y ears e n ded D ecem ber 3 1, 2 018 an d 2 017, re p re sen ts th e m ark -to -m ark et a d ju stm en t to th e e stim ate d fa ir v alu e o f th e 2 017 W arra n ts .

The in cre ases w ere p rim arily d riv en b y a n in cre ase in th e Com pan y’s s to ck p ric e.

Durin g th e y ear e n ded D ecem ber 3 1, 2 016 th ere w as a g ain o n th e re v ers al o f a lia b ilit y re co rd ed in c o nnectio n w it h c o ntin gen t e q uit y secu rit ie s, in t h e f o rm o f r e stric te d s h are s o f C om pan y c o m mon s to ck, is su ab le in c o nnectio n w it h t h e H om e S olu tio ns T ra n sactio n.

Lo ss o n E xtin guis h m en t o f D eb t.

T he lo ss o n e xtin guis h m en t o f d eb t d urin g t h e y ear e n ded D ecem ber 3 1, 2 017 is a ttrib uta b le t o t h e C om pan y’s e n try in to t h e N ote s F acilit ie s a n d t h e a sso cia te d e xtin guis h m en t o f t h e S en io r C re d it F acilit ie s a n d t h e P rio r C re d it A gre em en ts ( s ee N ote 7 - D eb t).

In co m e T a x B en efi t ( E xp en se ).

Our in co m e ta x p ro vis io n fo r th e year e n ded D ecem ber 3 1, 2 018 re fle cts e xp en se o f $0.6 m illio n , c o m pare d to a b en efit o f $4.1 m illio n d urin g th e year e n ded D ecem ber 3 1, 2 017 .

The 2 018 in co m e t a x e xp en se o f $0.6 m illio n in clu des a f e d era l t a x b en efit o f $ 10.7 m illio n a n d a s ta te t a x b en efit o f $1.5 m illio n, a $ 10.2 m illio n a d ju stm en t r e la te d t o d efe rre d t a x a sset v alu atio n a llo w an ces a n d o th er a d ju stm en ts o f $ 2.6 m illio n. O ur in co m e t a x p ro vis io n f o r t h e y ear en ded D ecem ber 3 1, 2 017 r e fle cts a $ 4.1 m illio n b en efit , c o m pare d t o a p ro vis io n o f $ 2.0 m illio n d urin g t h e y ear e n ded D ecem ber 3 1, 2 016. T he p rim ary d riv er o f t h e ch an ge w as t h e r e v ers al o f t h e v alu atio n a llo w an ce, w hic h c re ate d a n in co m e t a x b en efit in 2 017. T he r e v ers al o f t h e v alu atio n a llo w an ce w as t h e r e su lt o f n ew f e d era l N OL c arry fo rw ard ru le s e n acte d u nder T CJA , w hic h p re scrib e a n in defin it e fe d era l N OL c arry fo rw ard p erio d fo r N OLs g en era te d in 2 018 a n d b ey ond (s u bje ct to a 20% r e d uctio n). T he 2 017 38 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts in co m e t a x b en efit in clu des a f e d era l t a x b en efit o f $ 23.7 m illio n a n d a s ta te t a x b en efit o f $ 4.6 m illio n, a $ 41.6 m illio n a d ju stm en t r e la te d t o d efe rre d t a x a sset v alu atio n allo w an ces a n d o th er a d ju stm en ts o f $ 2.0 m illio n, o ffs et b y a $ 67.7 m illio n a d ju stm en t a sso cia te d w it h t h e im pact o f t h e c h an ge in t h e c o rp ora te t a x r a te b ro ught a b out by t h e e n actm en t o f t h e T CJA . T he 2 016 in co m e t a x e xp en se in clu des a f e d era l t a x b en efit o f $ 11.9 m illio n a n d a s ta te t a x b en efit o f $ 1.4 m illio n a t s ta tu to ry t a x r a te s, offs et b y a $ 14.7 m illio n a d ju stm en t r e la te d t o d efe rre d t a x a sset v alu atio n a llo w an ces a n d o th er a d ju stm en ts o f $ 0.7 m illio n.

N on-G AAP M ea su re s The f o llo w in g t a b le r e co ncile s G A AP lo ss f ro m c o ntin uin g o pera tio ns, n et o f in co m e t a xe s t o C onso lid ate d A dju ste d E B IT D A .

Conso lid ate d A dju ste d E B IT D A is n et lo ss f ro m c o ntin uin g o pera tio ns, n et o f in co m e t a xe s, a d ju ste d f o r in te re st e xp en se, n et, lo ss o n e xtin guis h m en t o f d eb t, g ain ( lo ss) o n d is p osit io ns, in co m e t a x ben efit (e xp en se), d ep re cia tio n a n d a m ortiz a tio n e xp en se, s to ck-b ased c o m pen satio n e xp en se, a n d c h an ge in fa ir v alu e o f e q uit y lin ked lia b ilit ie s. C onso lid ate d A dju ste d E B IT D A a ls o e xc lu des re stru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er e xp en ses, in clu din g a sso cia te d n on-re cu rrin g c o sts s u ch a s e m plo yee s ev era n ce co sts , c erta in le g al a n d p ro fe ssio nal f e es, t ra in in g c o sts , r e d undan t w ag e c o sts , im pacts r e co rd ed f ro m t h e c h an ge in c o ntin gen t c o nsid era tio n o blig atio ns, a n d o th er co sts r e la te d t o c o ntra ct t e rm in atio ns a n d c lo sed b ra n ch es/o ffic es.

Conso lid ate d A dju ste d E B IT D A is a m easu re o f e arn in gs th at m an ag em en t m onit o rs a s a n im porta n t in dic ato r o f fin an cia l p erfo rm an ce, p artic u la rly fu tu re earn in gs p ote n tia l a n d re cu rrin g c ash flo w .

Conso lid ate d A dju ste d E B IT D A is a ls o a p rim ary o bje ctiv e o f th e m an ag em en t b onus p la n . In clu sio n o f C onso lid ate d A dju ste d E B IT D A is in te n ded t o p ro vid e in vesto rs in sig ht in to t h e m an ner in w hic h m an ag em en t v ie w s t h e p erfo rm an ce o f t h e C om pan y.

Non-G A AP f in an cia l m easu re s h av e lim it a tio ns a s a n aly tic al t o ols a n d s h ould n ot b e c o nsid ere d in is o la tio n o r a s a s u bstit u te f o r o ur f in an cia l r e su lt s p re p are d in a cco rd an ce w it h G A AP.

Our c alc u la tio n o f C onso lid ate d A dju ste d E B IT D A , a s p re sen te d , m ay d if fe r f ro m s im ila rly t it le d m easu re s r e p orte d b y o th er c o m pan ie s.

W e e n co ura g e in vesto rs t o r e v ie w t h ese r e co ncilia tio ns a n d w e q ualif y o ur u se o f n on-G A AP f in an cia l m easu re s w it h c au tio nary s ta te m en ts a s t o t h eir lim it a tio ns.

Year E nded D ecem ber 3 1, 2018 2017 2016 (in t h ou san ds) Loss f r om c on tin uin g o peratio n s $ (5 1,5 92 ) $ (6 3,3 03 ) $ (3 6,1 72 ) In te re st e xp en se, n et (5 7,4 33 ) (5 2,0 72 ) (3 7,5 72 ) Loss o n e xtin guis h m en t o f d eb t — (1 3,4 53 ) — Gain ( lo ss) o n d is p osit io ns 342 (5 81 ) 3,9 54 In co m e t a x b en efit ( e xp en se) (5 68 ) 4,1 30 (2 ,0 15 ) Dep re cia tio n a n d a m ortiz a tio n e xp en se (2 3,6 01 ) (2 7,7 25 ) (2 2,0 25 ) Sto ck-b ased c o m pen satio n (4 ,1 75 ) (2 ,3 60 ) (1 ,8 01 ) Chan ge in f a ir v alu e o f e q uit y lin ked lia b ilit ie s (4 ,8 36 ) (3 ,5 87 ) 10,4 50 Restru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er e xp en ses (6 ,4 57 ) (1 2,6 62 ) (1 5,8 59 ) Con solid ate d A dju ste d E B IT D A $ 45,1 36 $ 45,0 07 $ 28,6 96 Conso lid ate d A dju ste d E B IT D A in cre ased d urin g t h e year e n ded D ecem ber 3 1, 2 018 c o m pare d t o t h e y ear e n ded D ecem ber 3 1, 2 017 p rim arily d ue t o in cre ased gro ss p ro fit m arg in s a n d lo w er o pera tin g e xp en ses re su lt in g fro m h ig her c o re m ix a n d lo w er c o sts o f p re scrip tio n m ed ic atio ns, a n d re d uced p ay ro ll e xp en ses.

Conso lid ate d A dju ste d E B IT D A in cre ased d urin g t h e y ear e n ded D ecem ber 3 1, 2 017 c o m pare d t o t h e y ear e n ded D ecem ber 3 1, 2 016 p rim arily d ue t o in cre ased g ro ss pro fit re su lt in g fro m im pro ved g ro ss p ro fit m arg in s d riv en b y in cre ased c o re re v en ue m ix a n d s u pply c h ain m an ag em en t, a s w ell a s re stru ctu rin g a n d in te g ra tio n effo rts w hic h o ptim iz e d o pera tio ns.

Liq u id ity a n d C apita l R esou rces At Decem ber 3 1, 2 018 , w e h ad n et w ork in g c ap it a l o f $67.4 m illio n , in clu din g $14.5 m illio n o f c ash o n h an d, c o m pare d to $81.5 m illio n o f n et w ork in g c ap it a l a t D ecem ber 3 1, 2 017 .

The w ork in g c ap it a l d ecre ase o f $14.1 m illio n w as th e re su lt o f a d ecre ase in c ash a n d c ash e q uiv ale n ts o f $24.9 m illio n d ue to lo w er o pera tin g cash flo w d riv en b y a n in cre ase in a cco unts re ceiv ab le d ue to a te m pora l re d uctio n o f c o lle ctio n ra te s.

At Decem ber 3 1, 2 018 , w e h ad o uts ta n din g le tte rs o f c re d it to ta lin g $4.3 m illio n , c o lla te ra liz e d b y r e stric te d c ash o f $4.3 m illio n .

In J u ne 2 018, w e e xe rc is ed o ur o ptio n t o d ra w u pon t h e S eco nd L ie n N ote F acilit y in t h e a m ount o f $10.0 m illio n t o s u pple m en t o ur w ork in g c ap it a l n eed s.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts We r e g ula rly e v alu ate m ark et c o ndit io ns a n d f in an cin g o ptio ns t o im pro ve o ur c u rre n t liq uid it y p ro file a n d e n han ce o ur f in an cia l f le xib ilit y . T hese o ptio ns m ay in clu de o pportu nit ie s t o r a is e a d dit io nal f u nds t h ro ugh t h e is su an ce o f v ario us f o rm s o f e q uit y a n d/o r d eb t s ecu rit ie s o r o th er in stru m en ts , o r t h e s ale o f a ssets o r re fin an cin g a ll o r a p ortio n o f o ur in deb te d ness. H ow ev er, t h ere is n o a ssu ra n ce t h at, if n ecessary , w e w ould b e a b le t o r a is e c ap it a l t o p ro vid e r e q uir e d liq uid it y .

Addit io nally , w e w ill re v ie w a ra n ge o f s tra te g ic a lt e rn ativ es, w hic h c o uld in clu de, a m ong o th er th in gs, tra n sit io nin g c h ro nic th era p ie s to a llia n ce p artn ers , a pote n tia l s ale o r m erg er o f o ur c o m pan y, o r c o ntin uin g to p urs u e o ur o pera tio nal a n d s tra te g ic p la n . A ddit io nally , w e m ay p urs u e jo in t v en tu re a rra n gem en ts , ad dit io nal b usin ess a cq uis it io ns a n d o th er t ra n sactio ns d esig ned t o e xp an d o ur b usin ess.

If w e c an not s u ccessfu lly e xe cu te o ur s tra te g ic p la n s, in clu din g a ccele ra tin g c ash c o lle ctio ns, t h is c o uld h av e a n a d vers e e ffe ct o n o ur liq uid it y a n d r e su lt s o f opera tio ns a n d w e w ill lik ely r e q uir e a d dit io nal o r a lt e rn ativ e s o urc es o f liq uid it y , in clu din g a d dit io nal b orro w in gs.

As o f th e filin g o f th is A nnual R ep ort, w e e xp ect th at o ur c ash o n h an d a n d c ash fro m o pera tio ns w ill b e s u ffic ie n t to fu nd o ur a n tic ip ate d w ork in g c ap it a l, sch ed ule d in te re st r e p ay m en ts a n d o th er c ash n eed s f o r a t le ast t h e n ext 1 2 m onth s. P rin cip al p ay m en ts o n t h e N ote s F acilit ie s c o m men ce o n S ep te m ber 3 0, 2 019.

O pera tin g A ctiv itie s Net c ash u sed in o pera tin g a ctiv it ie s fro m c o ntin uin g o pera tio ns w as $20.0 m illio n fo r th e year e n ded D ecem ber 3 1, 2 018 , c o m pare d to n et c ash p ro vid ed b y opera tin g a ctiv it ie s fro m c o ntin uin g o pera tio ns o f $ 5.6 m illio n fo r th e y ear e n ded D ecem ber 3 1, 2 017. T he d ecre ase p rim arily re la te s to lo w er c ash c o lle ctio ns o f acco unts r e ceiv ab le a n d a n et d ecre ase in a cco unts p ay ab le a n d a ccru ed e xp en ses.

The d ecre ase w as p artia lly o ffs et b y s tra te g ic in ven to ry m an ag em en t in it ia tiv es an d a r e d uctio n o f p re p aid e xp en ses.

Net c ash p ro vid ed b y o pera tin g a ctiv it ie s fro m c o ntin uin g o pera tio ns w as $ 5.6 m illio n fo r th e y ear e n ded D ecem ber 3 1, 2 017, a $ 41.1 m illio n im pro vem en t, co m pare d t o n et c ash u sed in o pera tin g a ctiv it ie s f ro m c o ntin uin g o pera tio ns o f $ 35.5 m illio n f o r t h e y ear e n ded D ecem ber 3 1, 2 016. C ash in te re st p ay m en ts in cre ased $10.7 m illio n t o $ 45.4 m illio n in 2 017, c o m pare d t o $ 34.7 m illio n d urin g 2 016. T hese h ig her c ash in te re st p ay m en ts d urin g 2 017 w ere m ore t h an o ffs et b y t h e f a v ora b le im pacts o f in cre ased C onso lid ate d A dju ste d E B IT D A , lo w er r e stru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er e xp en ses a n d w ork in g c ap it a l m an ag em en t.

In vestin g A ctiv itie s Net c ash u sed in in vestin g a ctiv it ie s f ro m c o ntin uin g o pera tio ns d urin g t h e year e n ded D ecem ber 3 1, 2 018 w as $13.5 m illio n c o m pare d t o $8.7 m illio n o f c ash u sed durin g t h e s am e p erio d in 2017 . T he in cre ase in c ash u sed in in vestin g w as p rim arily d ue t o in cre ased r e n ovatio n, e xp an sio n o f c erta in c o m pan y b ra n ch lo catio ns, a n d th e o pen in g o f n ew lo catio ns d urin g t h e y ear.

Net c ash u sed in in vestin g a ctiv it ie s f ro m c o ntin uin g o pera tio ns d urin g t h e y ear e n ded D ecem ber 3 1, 2 017 w as $ 8.7 m illio n c o m pare d t o $ 73.2 m illio n o f c ash u sed durin g t h e s am e p erio d in 2 016. F lu ctu atio ns in in vestin g c ash f lo w s d urin g t h e y ear e n ded D ecem ber 3 1, 2 017, a s c o m pare d t o t h e s am e p erio d in 2 016, w ere p rim arily attrib uta b le t o a y ear o ver y ear d ecre ase in c ash c o nsid era tio n p aid f o r a cq uis it io ns o f $ 67.5 m illio n a sso cia te d w it h t h e p rio r y ear a cq uis it io n o f H om e S o lu tio ns, I n c.

an d a y ear o ver y ear d ecre ase in p urc h ases o f p ro perty a n d e q uip m en t o f $ 1.2 m illio n, o ffs et b y a y ear o ver y ear d ecre ase o f $ 4.2 m illio n a sso cia te d w it h p ro ceed s re ceiv ed in d iv estit u re s r e la te d t o t h e s tra te g ic d iv estit u re o f t h e H ep atit is C b usin ess d urin g 2 016.

F in ancin g A ctiv itie s Net c ash p ro vid ed b y f in an cin g a ctiv it ie s w as $8.1 m illio n a n d $44.3 m illio n d urin g t h e years e n ded D ecem ber 3 1, 2 018 a n d 2 017 , re sp ectiv ely .

The c ash p ro vid ed in 2 018 in clu des t h e n et p ro ceed s o f a p pro xim ate ly $ 10.0 m illio n f ro m d ra w s o n t h e S eco nd L ie n N ote F acilit y , o ffs et b y r e p ay m en ts o f c ap it a l le ases o f $ 1.9 m illio n.

Net c ash p ro vid ed b y f in an cin g a ctiv it ie s o f $ 44.3 m illio n d urin g t h e y ear e n ded D ecem ber 3 1, 2 017 in clu des t h e n et p ro ceed s o f a p pro xim ate ly $ 20.8 m illio n f ro m th e F ir s t Q uarte r 2 017 P riv ate P la cem en t a n d S eco nd Q uarte r 2 017 P riv ate P la cem en t, $ 23.1 m illio n fro m th e P rim in g C re d it A gre em en t, a n d $ 294.4 m illio n fro m th e N ote s F acilit ie s o ffs et b y r e p ay m en ts o f $ 55.9 m illio n o n o ur R ev olv in g C re d it F acilit y a n d b y $ 236.8 m illio n o f p rin cip al p ay m en ts m ad e o n t h e T erm L o an F acilit y a n d th e P rim in g C re d it A gre em en t.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Net c ash p ro vid ed b y f in an cin g a ctiv it ie s o f $ 109.7 m illio n d urin g t h e y ear e n ded D ecem ber 3 1, 2 016 r e su lt s f ro m $ 83.3 m illio n f ro m t h e 2 016 E q uit y O ffe rin g a n d by a d van ces o f $ 104.3 m illio n o ffs et b y r e p ay m en ts o f $ 64.0 m illio n o n o ur R ev olv in g C re d it F acilit y a n d $ 12.6 m illio n o f p rin cip al p ay m en ts m ad e o n t h e T erm L o an Facilit y .

D eb t F acilitie s For a d is cu ssio n o f o ur lo ng-te rm d eb t, s ee N ote 7 - D eb t, o f t h e a cco m pan yin g N ote s t o C onso lid ate d F in an cia l S ta te m en ts .

C ontr a ctu al O blig atio ns The f o llo w in g t a b le s ets f o rth o ur c o ntra ctu al o blig atio ns a ffe ctin g f u tu re c ash f lo w s a s o f Decem ber 3 1, 2 018 ( in t h ousan ds):

Paym en ts D ue i n Y ear E ndin g D ecem ber 3 1, Con tr actu al O blig atio n s Tota l 2019 2020 2021 2022 2022 2023 a n d Beyon d Long-te rm d eb t (1 ) $ 547,2 18 $ 2,5 00 $ 344,7 18 $ 200,0 00 $ — $ — $ — In te re st o n lo ng-te rm d eb t (2 ) 74,9 75 36,7 21 29,3 79 8,8 75 Opera tin g le ase o blig atio ns 37,9 16 8,9 34 7,1 43 6,2 52 4,7 97 3,3 20 7,4 70 Cap it a l le ase o blig atio ns 990 679 311 — — — — Tota l $ 661,0 99 $ 48,8 34 $ 381,5 51 $ 215,1 27 $ 4,7 97 $ 3,3 20 $ 7,4 70 (1 ) Long-te rm d eb t in clu des in te re st in cu rre d o n t h e S eco nd L ie n N ote F acilit y a ssu m in g c o ntin ued c ap it a liz a tio n t o p rin cip al a t t h e v aria b le in te re st r a te a s o f Decem ber 3 1, 2 018.

Cap it a liz e d in te re st o n t h e S eco nd L ie n N ote F acilit y is d ue a t m atu rit y .

(2 ) In te re st o n lo ng-te rm d eb t in clu des e stim ate d c ash in te re st t o b e p aid o n t h e F ir s t L ie n N ote F acilit y a n d t h e 2 021 N ote s.

In te re st o n t h e 2 021 N ote s w as estim ate d u sin g t h e s ta te d in te re st r a te o n t h e b orro w in g.

In te re st o n t h e v aria b le r a te F ir s t L ie n N ote F acilit y w as e stim ate d u sin g t h e D ecem ber 3 1, 2 018 in te re st r a te .

Ite m 7 A .

Quantita tiv e a nd Q ualita tiv e D is c lo su re s A bout M ark et R is k We a re e xp osed t o m ark et r is k f ro m c h an ges in in te re st r a te s r e la te d t o o ur o uts ta n din g d eb t. A t Decem ber 3 1, 2 018 , w e h ad t o ta l d eb t w it h a f a ce v alu e o f $ 517.8 m illio n, o f w hic h $ 317.8 m illio n is r e la te d t o t h e F ir s t L ie n N ote a n d S eco nd L ie n N ote , a n d is s u bje ct t o f lo atin g in te re st r a te s.

The F ir s t L ie n N ote b ears in te re st a t a flo atin g r a te o r r a te s e q ual t o , a t t h e o ptio n o f t h e C om pan y, ( i) t h e b ase r a te ( d efin ed a s t h e h ig hest o f t h e F ed era l F u nds R ate p lu s 0 .5 % p er a n num , t h e P rim e R ate a s publis h ed b y T he W all S tre et J o urn al a n d t h e o ne-m onth L o ndon I n te rb an k O ffe re d R ate ( “ L IB O R”) ( s u bje ct t o a 1 .0 % f lo or) p lu s 1 .0 % ), o r ( ii) t h e o ne-m onth L IB O R ra te (s u bje ct to a 1 .0 % flo or), p lu s a m arg in o f 6 .0 % if th e b ase ra te is s ele cte d o r 7 .0 % if th e L IB O R O ptio n is s ele cte d . T he S eco nd L ie n N ote b ears in te re st a t a flo atin g ra te o r ra te s e q ual to , a t th e o ptio n o f th e C om pan y, (i) o ne-m onth L IB O R (s u bje ct to a 1 .2 5% flo or) p lu s 9 .2 5% p er a n num in c ash , (ii) o ne-m onth L IB O R (s u bje ct t o a 1 .2 5% f lo or) p lu s 1 1.2 5% p er a n num , w hic h a m ount w ill b e c ap it a liz e d o n e ach in te re st p ay m en t d ate , o r ( iii) o ne-m onth L IB O R ( s u bje ct t o a 1 .2 5% f lo or) plu s 1 0.2 5% p er a n num , o f w hic h o ne-h alf L IB O R p lu s 4 .6 25% p er a n num w ill b e p ay ab le in c ash a n d o ne-h alf L IB O R p lu s 5 .6 25% p er a n num w ill b e c ap it a liz e d o n each in te re st p ay m en t d ate , p ro vid ed t h at, in e ach c ase, if a n y p erm it te d r e fin an cin g in deb te d ness w it h w hic h t h e 2 021 N ote s a re r e fin an ced r e q uir e s o r p erm it s t h e pay m en t o f c ash in te re st, a ll o f t h e in te re st o n t h e S eco nd L ie n N ote s s h all b e p aid in c ash . A s o f Decem ber 3 1, 2 018 , th e E u ro dolla r ra te is a p pro xim ate ly 2.5 % .

An in cre ase in t h e c u rre n t m ark et r a te o f 1.0 0% w ould r e su lt in a n in cre ase in a n nual in te re st e xp en se o f a p pro xim ate ly $3.4 m illio n .

On F eb ru ary 1 1, 2 014, w e is su ed $200.0 m illio n in a g gre g ate p rin cip al a m ount o f t h e 2 021 N ote s ( a s d efin ed in N ote 7 - D eb t).

The in te re st r a te o n t h e 2 021 N ote s of 8.8 75% is f ix e d a n d n ot s u bje ct t o m ark et r is k.

We re g ula rly a ssess th e s ig nif ic an ce o f in te re st ra te m ark et ris k a s p art o f o ur tre asu ry o pera tio ns a n d a s c ir c u m sta n ces c h an ge a n d e n te r in to in stru m en ts to hed ge v aria b le ra te in te re st e xp en se a s a p pro pria te in a cco rd an ce w it h th e te rm s o f th e D eb t F acilit ie s.

We d o n ot u se fin an cia l in stru m en ts fo r tra d in g o r o th er sp ecu la tiv e p urp oses a n d a re n ot a p arty t o a n y d eriv ativ e f in an cia l in stru m en ts a t t h is t im e.

The fa ir v alu e o f o ur lo ng-te rm d eb t u nder o ur N ote F acilit ie s s u bje ct to v aria b le in te re st ra te s a n d th e 2 021 N ote s is d is clo sed in N ote 7 - D eb t, o f th e acco m pan yin g N ote s t o C onso lid ate d F in an cia l S ta te m en ts .

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Ite m 8 .

Fin ancia l S ta te m en ts a nd S upple m en ta ry D ata Report o f I n depen den t R eg is te red P ublic A ccou ntin g F ir m To t h e S to ckh old ers a n d B oard o f D ir e cto rs Bio Scrip , I n c.:

O pin io n o n t h e C onso lid ate d Fin ancia l S ta te m en ts W e h av e a u dit e d th e a cco m pan yin g c o nso lid ate d b ala n ce s h eets o f B io Scrip , In c. a n d s u bsid ia rie s (th e C om pan y) a s o f D ecem ber 3 1, 2 018 a n d 2 017, th e re la te d co nso lid ate d s ta te m en ts o f o pera tio ns, s to ckh old ers ’ d efic it , a n d c ash f lo w s f o r e ach o f t h e y ears in t h e t h re e‑y ear p erio d e n ded D ecem ber 3 1, 2 018, a n d t h e r e la te d note s a n d f in an cia l s ta te m en t s ch ed ule ( c o lle ctiv ely , t h e c o nso lid ate d f in an cia l s ta te m en ts ). I n o ur o pin io n, t h e c o nso lid ate d f in an cia l s ta te m en ts p re sen t f a ir ly , in a ll m ate ria l r e sp ects , t h e f in an cia l p osit io n o f t h e C om pan y a s o f D ecem ber 3 1, 2 018 a n d 2 017, a n d t h e r e su lt s o f it s o pera tio ns a n d it s c ash f lo w s f o r e ach o f t h e y ears in th e t h re e‑y ear p erio d e n ded D ecem ber 3 1, 2 018, in c o nfo rm it y w it h U .S . g en era lly a ccep te d a cco untin g p rin cip le s.

W e a ls o h av e a u dit e d , in a cco rd an ce w it h th e s ta n dard s o f th e P u blic C om pan y A cco untin g O vers ig ht B oard (U nit e d S ta te s) (P C A OB), th e C om pan y’s in te rn al co ntro l o ver f in an cia l r e p ortin g a s o f D ecem ber 3 1, 2 018, b ased o n c rit e ria e sta b lis h ed in In te rn al C ontr o l - In te g ra te d F ra m ew ork ( 2 013) is su ed b y t h e C om mit te e of S p onso rin g O rg an iz a tio ns o f th e T re ad w ay C om mis sio n, a n d o ur re p ort d ate d M arc h 1 4, 2 019 e xp re ssed a n u nqualif ie d o pin io n o n th e e ffe ctiv en ess o f th e Com pan y’s in te rn al c o ntro l o ver f in an cia l r e p ortin g.

C hange i n A cco untin g P rin cip le A s d is cu ssed in N ote 2 to th e c o nso lid ate d fin an cia l s ta te m en ts , th e C om pan y h as c h an ged it s m eth od o f a cco untin g fo r re v en ue re co gnit io n in 2 018 d ue to th e ad optio n o f A cco untin g S ta n dard s C odif ic atio n T opic 6 06, Reven ue fr o m C ontr a cts w ith C usto m ers .

Basis fo r O pin io n These c o nso lid ate d fin an cia l s ta te m en ts a re th e re sp onsib ilit y o f th e C om pan y’s m an ag em en t. O ur re sp onsib ilit y is to e xp re ss a n o pin io n o n th ese c o nso lid ate d fin an cia l s ta te m en ts b ased o n o ur a u dit s . W e a re a p ublic a cco untin g fir m re g is te re d w it h th e P C A OB a n d a re re q uir e d to b e in dep en den t w it h re sp ect to th e Com pan y in a cco rd an ce w it h t h e U .S . f e d era l s ecu rit ie s la w s a n d t h e a p plic ab le r u le s a n d r e g ula tio ns o f t h e S ecu rit ie s a n d E xc h an ge C om mis sio n a n d t h e P C A OB.

W e c o nducte d o ur a u dit s in a cco rd an ce w it h th e s ta n dard s o f th e P C A OB. T hose s ta n dard s re q uir e th at w e p la n a n d p erfo rm th e a u dit to o bta in re aso nab le assu ra n ce a b out w heth er th e c o nso lid ate d fin an cia l s ta te m en ts a re fre e o f m ate ria l m is sta te m en t, w heth er d ue to e rro r o r fra u d. O ur a u dit s in clu ded p erfo rm in g pro ced ure s to a ssess th e ris ks o f m ate ria l m is sta te m en t o f th e c o nso lid ate d fin an cia l s ta te m en ts , w heth er d ue to e rro r o r fra u d, a n d p erfo rm in g p ro ced ure s th at re sp ond to th ose ris ks. S u ch p ro ced ure s in clu ded e xa m in in g, o n a te st b asis , e v id en ce re g ard in g th e a m ounts a n d d is clo su re s in th e c o nso lid ate d fin an cia l sta te m en ts . O ur a u dit s a ls o in clu ded e v alu atin g th e a cco untin g p rin cip le s u sed a n d s ig nif ic an t e stim ate s m ad e b y m an ag em en t, a s w ell a s e v alu atin g th e o vera ll pre sen ta tio n o f t h e c o nso lid ate d f in an cia l s ta te m en ts . W e b elie v e t h at o ur a u dit s p ro vid e a r e aso nab le b asis f o r o ur o pin io n.

/s / K PM G L LP W e h av e s erv ed a s t h e C om pan y’s a u dit o r s in ce 2 014.

D en ver, C olo ra d o M arc h 1 5, 2 019 42 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts BIO SC RIP , I N C. A ND S UB SID IA RIE S CO NSO LID ATED B ALA NCE S H EET S (in t h ou san ds, e xcept f o r s h are a m ou nts ) Decem ber 3 1, 2018 2017 ASSET S Curren t a ssets Cash a n d c ash e q uiv ale n ts $ 14,5 39 $ 39,4 57 Restric te d c ash 4,3 21 4,9 50 Acco unts r e ceiv ab le , n et 114,8 64 85,5 22 In ven to ry 26,6 89 38,0 44 Pre p aid e xp en ses a n d o th er c u rre n t a ssets 14,2 92 18,6 20 Tota l c u rren t a ssets 174,7 05 186,5 93 Pro perty a n d e q uip m en t, n et 28,7 88 26,9 73 Goodw ill 367,1 98 367,1 98 Defe rre d t a xe s 1,0 32 1,0 98 In ta n gib le a ssets , n et 10,4 70 19,1 14 Oth er n on-c u rre n t a ssets 1,7 45 2,1 16 Tota l a ssets $ 583,9 38 $ 603,0 92 LIA BIL IT IE S A ND S TO CKHO LD ER S’ D EFIC IT Curren t l ia bilitie s Curre n t p ortio n o f lo ng-te rm d eb t $ 3,1 79 $ 1,7 22 Acco unts p ay ab le 67,0 25 65,9 63 Amounts d ue t o p la n s p onso rs 956 4,6 21 Accru ed in te re st 6,7 06 6,7 06 Accru ed e xp en ses a n d o th er c u rre n t lia b ilit ie s 29,4 50 26,1 18 Tota l c u rren t l ia bilitie s 107,3 16 105,1 30 Long-te rm d eb t, n et o f c u rre n t p ortio n 501,4 95 478,8 66 Oth er n on-c u rre n t lia b ilit ie s 25,8 42 21,7 69 Tota l l ia bilitie s 634,6 53 605,7 65 Serie s A c o nvertib le p re fe rre d s to ck, $ .0 001 p ar v alu e; 8 25,0 00 s h are s a u th oriz e d ; 2 1,6 30 a n d 2 1,6 45 s h are s is su ed a n d outs ta n din g a s o f D ecem ber 3 1, 2 018 a n d 2 017, r e sp ectiv ely ; a n d $ 3,2 64 a n d $ 2,9 16 liq uid atio n p re fe re n ce a s o f Decem ber 3 1, 2 018 a n d 2 017, r e sp ectiv ely 3,2 31 2,8 27 Serie s C c o nvertib le p re fe rre d s to ck, $ .0 001 p ar v alu e; 6 25,0 00 s h are s a u th oriz e d ; 6 14,1 77 s h are s is su ed a n d outs ta n din g; a n d $ 94,7 06 a n d $ 84,5 55 liq uid atio n p re fe re n ce a s o f D ecem ber 3 1, 2 018 a n d 2 017, r e sp ectiv ely 90,0 58 79,2 52 Sto ck hold ers’ d efic it Pre fe rre d s to ck, $ .0 001 p ar v alu e; 5 ,0 00,0 00 s h are s a u th oriz e d ; n o s h are s is su ed a n d o uts ta n din g a s o f D ecem ber 3 1, 2018 a n d 2 017, r e sp ectiv ely — — Com mon s to ck, $ .0 001 p ar v alu e; 2 50,0 00,0 00 s h are s a u th oriz e d ; 1 28,3 91,4 56 s h are s is su ed a n d 1 28,0 77,6 51 s h are s outs ta n din g a t D ecem ber 3 1, 2 018, a n d 1 27,6 39,1 18 s h are s is su ed a n d 1 27,6 34,0 12 s h are s o uts ta n din g a s o f D ecem ber 31, 2 017, r e sp ectiv ely 13 13 Tre asu ry s to ck, 3 13,8 05 a n d 5 ,1 06 s h are s o uts ta n din g, a t c o st, a s o f D ecem ber 3 1, 2 018 a n d 2 017, r e sp ectiv ely (9 50 ) (1 6 ) Addit io nal p aid -in c ap it a l 618,1 37 624,7 62 Accu m ula te d d efic it (7 61,2 04 ) (7 09,5 11 ) Tota l s to ck hold ers’ d efic it (1 44,0 04 ) (8 4,7 52 ) Tota l l ia bilitie s a n d s to ck hold ers’ d efic it $ 583,9 38 $ 603,0 92 See a cco m pan yin g N ote s t o t h e C onso lid ate d F in an cia l S ta te m en ts .

43 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts BIO SC RIP , I N C. A ND S UB SID IA RIE S CO NSO LID ATED S TA TEM EN TS O F O PER ATIO NS ( in t h ou san ds, e xcept p er s h are a m ou nts ) Year E nded D ecem ber 3 1, 2018 2017 2016 Net r eve n ue $ 708,9 03 $ 817,1 90 $ 935,5 89 Cost o f r eve n ue ( e xclu din g d eprecia tio n e xpen se) 465,8 65 547,9 48 673,5 07 Gross p rofit 243,0 38 269,2 42 262,0 82 Opera tin g e xp en ses:

Serv ic e lo catio n o pera tin g e xp en ses 154,8 13 163,2 73 169,7 81 Gen era l a n d a d m in is tra tiv e e xp en ses 47,2 64 39,6 25 38,7 98 Dep re cia tio n a n d a m ortiz a tio n e xp en se 23,6 01 27,7 25 22,0 25 Restru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er e xp en ses 6,4 57 12,6 62 15,8 59 Bad d eb t e xp en se — 23,6 97 26,6 08 Tota l o pera tin g e xp en ses 232,1 35 266,9 82 273,0 71 Operatin g i n com e ( lo ss) 10,9 03 2,2 60 (1 0,9 89 ) Oth er e xp en se:

In te re st e xp en se, n et 57,4 33 52,0 72 37,5 72 Chan ge in f a ir v alu e o f e q uit y lin ked lia b ilit ie s 4,8 36 3,5 87 (1 0,4 50 ) Loss ( g ain ) o n d is p osit io ns (3 42 ) 581 (3 ,9 54 ) Loss o n e xtin guis h m en t o f d eb t — 13,4 53 — Tota l o th er e xp en se 61,9 27 69,6 93 23,1 68 Loss f r om c on tin uin g o peratio n s, b efo re i n com e t a xes (5 1,0 24 ) (6 7,4 33 ) (3 4,1 57 ) In co m e t a x b en efit ( e xp en se) (5 68 ) 4,1 30 (2 ,0 15 ) Loss f r om c on tin uin g o peratio n s (5 1,5 92 ) (6 3,3 03 ) (3 6,1 72 ) Loss f ro m d is co ntin ued o pera tio ns, n et o f in co m e t a xe s (1 01 ) (8 93 ) (6 ,5 93 ) Net l o ss (5 1,6 93 ) (6 4,1 96 ) (4 2,7 65 ) Accru ed d iv id en ds o n p re fe rre d s to ck (1 1,2 10 ) (1 0,0 77 ) (9 ,0 84 ) Loss a ttr ib u ta ble t o c om mon s to ck hold ers $ (6 2,9 03 ) $ (7 4,2 73 ) $ (5 1,8 49 ) Loss p er c om mon s h are:

Loss f ro m c o ntin uin g o pera tio ns, b asic a n d d ilu te d $ (0 .4 9 ) $ (0 .5 9 ) $ (0 .4 8 ) Loss f ro m d is co ntin ued o pera tio ns, b asic a n d d ilu te d — (0 .0 1 ) (0 .0 7 ) Loss p er c om mon s h are, b asic a n d d ilu te d $ (0 .4 9 ) $ (0 .6 0 ) $ (0 .5 5 ) W eig hte d a ve rag e n um ber o f c om mon s h ares o u ts ta n din g:

Basic a n d d ilu te d 127,9 42 123,7 91 93,7 40 See a cco m pan yin g N ote s t o t h e C onso lid ate d F in an cia l S ta te m en ts .

44 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts BIO SC RIP , I N C. A ND S UB SID IA RIE S CO NSO LID ATED S TA TEM EN TS O F S TO CKHO LD ER S’ D EFIC IT (in t h ou san ds) Pre fe rre d S to ck Com mon Sto ck Tre asu ry Sto ck Additio n al Paid -in Capita l Accu m ula te d Defic it Tota l Sto ck hold ers' Defic it Bala n ce a t D ece m ber 3 1, 2 015 $ — $ 8 $ (1 0,7 37 ) $ 531,7 64 $ (6 02,5 50 ) $ (8 1,5 15 ) Net p ro ceed s f ro m p ublic s to ck offe rin g — 4 — 83,2 63 — 83,2 67 Exerc is e o f s to ck o p tio ns, v estin g o f re stric te d s to ck a n d r e la te d t a x wit h hold in gs — — (3 3 ) — — (3 3 ) Surre n der o f s to ck - s ettle m en t — — (2 55 ) 255 — — Share s is su ed in c o nnectio n w it h t h e acq uis it io n o f H om e S olu tio ns, I n c.

— — 11,0 25 (1 ,0 88 ) — 9,9 37 Equit y lin ked lia b ilit ie s r e cla ssif ie d t o eq uit y u p on a p pro val o f C harte r Amen dm en t — — — 2,8 47 — 2,8 47 Accru ed d iv id en ds o n p re fe rre d s to ck — — — (9 ,0 84 ) — (9 ,0 84 ) Sto ck -b ased c o m pen satio n — — — 3,7 25 — 3,7 25 Net lo ss — — — — (4 2,7 65 ) (4 2,7 65 ) Bala n ce a t D ece m ber 3 1, 2 016 — 12 — 611,6 82 (6 45,3 15 ) (3 3,6 21 ) Net p ro ceed s f ro m p riv ate pla cem en ts — 1 — 20,7 76 — 20,7 77 Exerc is e o f s to ck o p tio ns, v estin g o f re stric te d s to ck a n d r e la te d t a x wit h hold in gs — — (1 6 ) 21 — 5 Accru ed d iv id en ds o n p re fe rre d s to ck — — — (1 0,0 77 ) — (1 0,0 77 ) Sto ck -b ased c o m pen satio n — — — 2,3 60 — 2,3 60 Net lo ss — — — — (6 4,1 96 ) (6 4,1 96 ) Bala n ce a t D ece m ber 3 1, 2 017 — 13 (1 6 ) 624,7 62 (7 09,5 11 ) (8 4,7 52 ) Exerc is e o f s to ck o p tio ns, v estin g o f re stric te d s to ck a n d r e la te d t a x wit h hold in gs — — (9 34 ) 908 — (2 6 ) Accru ed d iv id en ds o n p re fe rre d s to ck — — — (1 1,2 10 ) — (1 1,2 10 ) Sto ck -b ased c o m pen satio n — — — 3,6 77 — 3,6 77 Net lo ss — — — — (5 1,6 93 ) (5 1,6 93 ) Bala n ce a t D ece m ber 3 1, 2 018 $ — $ 13 $ (9 50 ) $ 618,1 37 $ (7 61,2 04 ) $ (1 44,0 04 ) S ee a cco m pan yin g N ote s t o t h e C onso lid ate d F in an cia l S ta te m en ts .

45 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts BIO SC RIP , I N C. A N D S UBSID IA RIE S CO NSO LID ATED S TATEM EN TS O F C ASH F LO W S (in t h ou sa n ds) Yea r E nded D ecem ber 3 1, 2018 2017 2016 Cash f lo w s f ro m o p era tin g a ctiv itie s:

Net lo ss $ (5 1,6 93 ) $ (6 4,1 96 ) $ (4 2,7 65 ) Less: L oss fr o m d is co ntin ued o pera tio ns, n et o f in co m e ta x es (1 01 ) (8 93 ) (6 ,5 93 ) Loss fr o m c o ntin uin g o pera tio ns (5 1,5 92 ) (6 3,3 03 ) (3 6,1 72 ) Adju stm en ts to re co ncile n et lo ss fr o m c o ntin uin g o pera tio ns to n et c ash p ro vid ed b y (u sed in ) o pera tin g a ctiv itie s:

Dep re cia tio n a n d a m ortiz atio n 23,6 01 27,7 25 22,0 25 Am ortiz atio n o f d efe rre d fi n an cin g c o sts a n d d eb t d is co unt 8,1 72 6,9 98 4,0 42 Chan ge in fa ir v alu e o f c o ntin gen t c o nsid era tio n — — (4 ,5 97 ) Chan ge in fa ir v alu e o f e q uity lin ked lia b ilitie s 4,8 36 3,5 87 (1 0,4 50 ) Chan ge in d efe rre d ta x es 66 (3 ,3 79 ) 2,0 45 Sto ck -b ased c o m pen satio n 4,1 75 2,3 60 1,8 01 Paid -in -k in d in te re st c ap ita liz ed a s p rin cip al o n S eco nd L ie n N ote F acility 7,7 87 — — Loss (g ain ) o n d is p ositio ns (3 42 ) 581 (3 ,9 54 ) Loss o n e x tin guis h m en t o f d eb t — 13,4 53 — Chan ges in a ssets a n d lia b ilitie s, n et o f a cq uire d b usin esses:

Acco unts re ceiv ab le (2 9,3 42 ) 23,5 64 (2 ,2 19 ) In ven to ry 11,3 55 (2 ,5 44 ) 10,0 16 Pre p aid e x pen ses a n d o th er a ssets 4,6 99 (2 39 ) (8 93 ) Acco unts p ay ab le 1,0 62 689 (1 5,9 77 ) Am ounts d ue to p la n s p onso rs (3 ,6 65 ) 942 308 Accru ed in te re st — 1 (1 92 ) Accru ed e x pen ses a n d o th er lia b ilitie s (8 15 ) (4 ,8 05 ) (1 ,3 05 ) Net c ash p ro vid ed b y (u sed in ) o pera tin g a ctiv itie s fr o m c o ntin uin g o pera tio ns (2 0,0 03 ) 5,6 30 (3 5,5 22 ) Net c ash u sed in o pera tin g a ctiv itie s fr o m d is co ntin ued o pera tio ns (1 01 ) (6 ,3 93 ) (7 ,0 19 ) Net c a sh u sed in o p era tin g a ctiv itie s (2 0,1 04 ) (7 63 ) (4 2,5 41 ) Cash f lo w s f ro m in vestin g a ctiv itie s:

Cash c o nsid era tio n p aid fo r a cq uis itio ns, n et o f c ash a cq uire d — — (6 7,5 16 ) Purc h ases o f p ro perty a n d e q uip m en t, n et (1 3,8 75 ) (8 ,6 80 ) (9 ,8 70 ) Pro ceed s fr o m d is p ositio ns 360 — 4,1 77 Net c a sh u sed in in vestin g a ctiv itie s (1 3,5 15 ) (8 ,6 80 ) (7 3,2 09 ) Cash f lo w s f ro m f in an cin g a ctiv itie s:

Pro ceed s fr o m p riv ate is su an ces, n et — 20,7 77 83,2 67 Pro ceed s fr o m p rim in g c re d it a g re em en t, n et — 23,0 60 — Fees a ttrib uta b le to e x tin guis h m en t o f d eb t — (9 80 ) — Borro w in gs o n re v olv in g c re d it fa cility — 563 104,3 00 Rep ay m en ts o n re v olv in g c re d it fa cility — (5 5,8 63 ) (6 4,0 00 ) Borro w in g o f lo ng-te rm d eb t, n et o f e x pen ses 10,0 00 294,4 46 — Prin cip al p ay m en ts o f lo ng-te rm d eb t — (2 36,7 70 ) (1 2,5 50 ) Rep ay m en ts o f c ap ita l le ases (1 ,8 73 ) (1 ,0 72 ) (1 ,0 73 ) Net a ctiv ity fr o m e x erc is e o f e m plo yee s to ck a w ard s (5 5 ) 120 (2 02 ) Net c a sh p ro vid ed b y f in an cin g a ctiv itie s 8,0 72 44,2 81 109,7 42 Net c h an ge in c ash a n d c ash e q uiv ale n ts a n d re stric te d c ash (2 5,5 47 ) 34,8 38 (6 ,0 08 ) Cash a n d c a sh e q uiv ale n ts a n d r estr ic te d c a sh - b eg in nin g o f y ea r 44,4 07 9,5 69 15,5 77 Cash a n d c a sh e q uiv ale n ts a n d r estr ic te d c a sh - e n d o f y ea r $ 18,8 60 $ 44,4 07 $ 9,5 69 DIS C LO SU RE O F C ASH F L O W I N FO RM ATIO N:

Cash p aid d urin g th e y ear fo r in te re st $ 41,4 88 $ 45,3 76 $ 34,6 96 Cash p aid d urin g th e y ear fo r in co m e ta x es, n et o f re fu nds $ (3 19 ) $ 649 $ (3 72 ) DIS C LO SU RE O F N O N-C ASH T RANSA CTIO NS:

Is su an ce o f 3 ,7 50,0 00 s h are s in c o nnectio n w ith th e H om e S olu tio ns a cq uis itio n $ — $ — $ 9,9 38 Cap ita l le ase o blig atio ns in cu rre d to a cq uire p ro perty a n d e q uip m en t $ 34 $ 1,8 25 $ 2,3 14 Paid -in -k in d in te re st c ap ita liz ed a s p rin cip al o n S eco nd L ie n N ote F acility $ 7,7 87 $ — $ — Ten an t im pro vem en t a llo w an ces fo r le aseh old im pro vem en ts $ 2,9 14 $ — $ — See a cco m pan yin g N ote s t o t h e C onso lid ate d F in an cia l S ta te m en ts.

46 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts BIO SC RIP , I N C. A ND S UB SID IA RIE S NO TES T O C O NSO LID ATED F IN ANCIA L S TA TEM EN TS N O TE 1 – N ATUR E O F O PER ATIO NS A ND P R ES EN TA TIO N O F F IN ANCIA L S TA TEM EN TS C orp ora te O rg aniz a tio n a nd B usin ess Bio Scrip , In c. (“ B io Scrip ”, “ w e”, “ u s”, “ o ur” o r th e “ C om pan y”) is a n atio nal p ro vid er o f in fu sio n a n d h om e c are m an ag em en t s o lu tio ns.

We p artn er w it h physic ia n s, h osp it a l s y ste m s, p ay ors , p harm aceu tic al m an ufa ctu re rs a n d s kille d n urs in g f a cilit ie s t o p ro vid e p atie n ts a ccess t o p ost-a cu te c are s erv ic es. W e o pera te w it h a c o m mit m en t t o b rin g c u sto m er-fo cu sed p harm acy a n d r e la te d h ealt h care in fu sio n t h era p y s erv ic es in to t h e h om e o r a lt e rn ate -s it e s ettin g. B y c o lla b ora tin g w it h th e f u ll s p ectru m o f h ealt h care p ro fe ssio nals a n d t h e p atie n t, w e a im t o p ro vid e c o st-e ffe ctiv e c are t h at is d riv en b y c lin ic al e xc elle n ce, c u sto m er s erv ic e a n d v alu es th at p ro m ote p osit iv e o utc o m es a n d a n e n han ced q ualit y o f lif e f o r t h ose w hom w e s erv e.

Our p la tfo rm p ro vid es n atio nw id e s erv ic e c ap ab ilit ie s a n d t h e a b ilit y t o d eliv er c lin ic al m an ag em en t s erv ic es t h at o ffe r p atie n ts a h ig h-to uch , c o m munit y -b ased an d h om e-b ased c are e n vir o nm en t. O ur c o re s erv ic es a re p ro vid ed in c o ord in atio n w it h , a n d u nder t h e d ir e ctio n o f, t h e p atie n t’s p hysic ia n . O ur m ult id is cip lin ary t e am of c lin ic ia n s, in clu din g p harm acis ts , n urs es, d ie tit ia n s a n d r e sp ir a to ry t h era p is ts , w ork w it h t h e p hysic ia n t o d ev elo p a p la n o f c are s u it e d t o e ach p atie n t’s s p ecif ic need s. W heth er in t h e h om e, p hysic ia n o ffic e, a m bula to ry in fu sio n c en te r, s kille d n urs in g f a cilit y o r o th er a lt e rn ate s it e s o f c are , w e p ro vid e p ro ducts , s erv ic es a n d co ndit io n-s p ecif ic c lin ic al m an ag em en t p ro gra m s ta ilo re d to im pro ve th e c are o f in div id uals w it h c o m ple x h ealt h c o ndit io ns s u ch a s g astro in te stin al a b norm alit ie s, in fe ctio us d is eases, c an cer, m ult ip le s cle ro sis , o rg an a n d b lo od c ell t ra n sp la n ts , b le ed in g d is o rd ers , im mune d efic ie n cie s a n d h eart f a ilu re .

B asis o f P re se n ta tio n The C om pan y’s C onso lid ate d F in an cia l S ta te m en ts h av e b een p re p are d in a cco rd an ce w it h U .S . g en era lly a ccep te d a cco untin g p rin cip le s ( “ G A AP”).

Prin cip le s o f C onso lid atio n The C onso lid ate d F in an cia l S ta te m en ts in clu de th e a cco unts o f th e C om pan y a n d it s w holly -o w ned s u bsid ia rie s.

All s ig nif ic an t in te rc o m pan y a cco unts a n d tra n sactio ns h av e b een e lim in ate d in c o nso lid atio n.

R ecla ssific a tio ns Certa in p rio r p erio d fin an cia l sta te m en t am ounts h av e b een re cla ssif ie d to co nfo rm to cu rre n t p erio d p re sen ta tio n.

Addit io nally , certa in am ounts in th e Conso lid ate d S ta te m en ts o f O pera tio ns h av e b een r e cla ssif ie d t o in clu de t h e p re sen ta tio n o f o pera tin g e xp en ses a n d o pera tin g in co m e ( lo ss).

U se o f E stim ate s The p re p ara tio n o f fin an cia l s ta te m en ts in c o nfo rm it y w it h G A AP re q uir e s m an ag em en t to m ake c erta in e stim ate s a n d a ssu m ptio ns.

These estim ate s an d assu m ptio ns a ffe ct th e re p orte d a m ounts o f a ssets a n d lia b ilit ie s a n d d is clo su re o f c o ntin gen t a ssets a n d lia b ilit ie s a t th e d ate o f th e fin an cia l s ta te m en ts a n d th e re p orte d a m ounts o f r e v en ue a n d e xp en ses d urin g t h e r e p ortin g p erio d.

Actu al r e su lt s c o uld d if fe r f ro m t h ose e stim ate s.

N O TE 2 – S UM MARY O F S IG NIF IC ANT A CCO UN TIN G P O LIC IE S R even ue R eco gnitio n On J a n uary 1 , 2 018, t h e C om pan y a d opte d A SC 6 06 - R ev en ue f ro m C ontra cts w it h C usto m ers ( “ A SC 6 06”) u sin g t h e m odif ie d r e tro sp ectiv e m eth od a p plie d t o th ose c o ntra cts w hic h w ere n ot c o m ple te d a s o f J a n uary 1 , 2 018. R esu lt s f o r r e p ortin g p erio ds b eg in nin g a fte r J a n uary 1 , 2 018 a re p re sen te d u nder A SC 6 06, w hile prio r p erio d a m ounts a re n ot r e sta te d a n d c o ntin ue t o b e r e p orte d in a cco rd an ce w it h a cco untin g s ta n dard s in e ffe ct f o r t h ose p erio ds.

Net r e v en ues a re p rim arily g en era te d b y t w o p erfo rm an ce o blig atio ns; d eliv ery o f p re scrip tio n m ed ic atio ns t o p atie n ts a n d n urs in g s erv ic es r e la te d t o in fu sio n th era p ie s. A p erfo rm an ce o blig atio n is a p ro m is e in a c o ntra ct t o t ra n sfe r a d is tin ct g ood o r s erv ic e t o t h e c u sto m er a n d is d efin ed a s t h e u nit o f a cco unt f o r r e v en ue re co gnit io n u nder A SC 6 06. S o urc es o f n et re v en ues in clu de c o m merc ia l in su ra n ce p ay ors , M ed ic are , M ed ic aid , o th er g overn m en t in su ra n ce p ay ors , h osp it a l a n d hosp ic e f a cilit ie s 47 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts an d p atie n ts . R ev en ue is a llo cate d t o e ach p erfo rm an ce o blig atio n b ased o n it s r e la tiv e s ta n dalo ne p ric e, d ete rm in ed u sin g r e im burs em en t r a te s e sta b lis h ed b y t h ir d - party p ay or c o ntra cts . R ev en ue is r e co gniz e d in t h e p erio d in w hic h t h e r e la te d p erfo rm an ce o blig atio n is s atis fie d . P re scrip tio n m ed ic atio n r e v en ue is r e co gniz e d a t th e t im e t h e p ro duct is d eliv ere d t o t h e p atie n t a n d n urs in g r e v en ue is r e co gniz e d o n t h e d ate o f s erv ic e.

Tra n sactio n p ric es f o r p erfo rm an ce o blig atio ns w it h c o ntra cte d p ay ors a re b ased o n c o ntra cte d r a te s.

Tra n sactio n p ric es fo r M ed ic are a n d M ed ic aid p ro gra m s are b ased o n p re d ete rm in ed n et r e aliz a b le r a te s t h at a re e sta b lis h ed b y s ta tu te s o r r e g ula tio n.

Tra n sactio n p ric es f o r n on-c o ntra cte d p ay ors a re b ased o n u su al a n d cu sto m ary ra te s fo r s erv ic es p ro vid ed .

These tra n sactio n p ric es a re re d uced b y e stim ate s o f v aria b le c o nsid era tio n, c o nsis tin g o f (i) im plic it p ric e c o ncessio ns re su lt in g fro m d if fe re n ces b etw een ra te s c h arg ed fo r s erv ic es p erfo rm ed a n d e xp ecte d re im burs em en ts , a n d (ii) re tro activ e re v en ue a d ju stm en ts d ue to a u dit s o r re v ie w s b y o ur t h ir d -p arty p ay ors .

We d ete rm in e o ur e stim ate s o f v aria b le c o nsid era tio n b ased o n h is to ric al c o lle ctio n e xp erie n ce w it h s im ila r p ay or c la sses, a g ed a cco unts re ceiv ab le b y p ay or cla ss, te rm s o f p ay m en t a g re em en ts , c o rre sp onden ce fro m p ay ors re la te d to re v en ue a u dit s o r re v ie w s, o ur h is to ric al s ettle m en t a ctiv it y o f a u dit e d a n d re v ie w ed cla im s a n d c u rre n t e co nom ic c o ndit io ns u sin g th e p ortfo lio a p pro ach . R ev en ue is re co gniz e d o nly to th e e xte n t th at it is p ro bab le th at a s ig nif ic an t re v ers al o f th e cu m ula tiv e a m ount r e co gniz e d w ill n ot o ccu r in f u tu re p erio ds.

Net re v en ues a re a d ju ste d w hen c h an ges in e stim ate s o f v aria b le c o nsid era tio n o ccu r.

Chan ges in e stim ate s ty pic ally a ris e a s a re su lt o f n ew in fo rm atio n obta in ed , s u ch a s a ctu al p ay m en t r e ceip t o r d en ia l, o r r e tro activ e p ric in g a d ju stm en ts b y p ay ors f o r n ew m ed ic atio ns o r s erv ic es.

Su bseq uen t c h an ges t o e stim ate s o f tra n sactio n p ric es a re r e co rd ed a s a d ju stm en ts t o n et r e v en ue in t h e p erio d o f c h an ge. S u bseq uen t c h an ges t h at a re d ete rm in ed t o b e t h e r e su lt o f a n a d vers e c h an ge in t h e p ay ors a b ilit y t o p ay a re r e co rd ed a s a n a llo w an ce f o r d oubtfu l a cco unts .

The C om pan y's p erfo rm an ce o blig atio ns re la te to c o ntra cts w it h a d ura tio n o f le ss th an one y ear; th ere fo re , th e C om pan y h as e le cte d to a p ply th e o ptio nal exe m ptio n p ro vid ed b y A SC 6 06 a n d is n ot re q uir e d to d is clo se th e a g gre g ate a m ount o f th e tra n sactio n p ric e a llo cate d to p erfo rm an ce o blig atio ns th at a re unsatis fie d o r p artia lly u nsatis fie d a s o f th e e n d o f th e re p ortin g p erio d. T he u nsatis fie d o r p artia lly u nsatis fie d p erfo rm an ce o blig atio ns a re c o m ple te d w hen pre scrip tio n m ed ic atio ns a re s h ip ped , w hic h g en era lly o ccu rs w it h in a f e w d ay s o f t h e e n d o f t h e r e p ortin g p erio d. T he C om pan y's c o st o f o bta in in g c o ntra cts is n ot m ate ria l.

In a cco rd an ce w it h A SC 6 06, c o ntra ct a ssets a re t o b e r e co gniz e d w hen a n e n tit y h as t h e r ig ht t o r e ceiv e c o nsid era tio n in e xc h an ge f o r g oods o r s erv ic es t h at hav e b een t ra n sfe rre d t o a c u sto m er w hen t h at r ig ht is c o ndit io nal o n s o m eth in g o th er t h an t h e p assag e o f t im e. T he C om pan y d oes n ot r e co gniz e c o ntra ct a ssets a s th e rig ht to re ceiv e c o nsid era tio n is u nco ndit io nal in a cco rd an ce w it h th e p assag e o f tim e c rit e ria . A ls o in a cco rd an ce w it h A SC 6 06, c o ntra ct lia b ilit ie s a re to b e re co gniz e d w hen a n e n tit y is o blig ate d t o t ra n sfe r g oods o r s erv ic es f o r w hic h c o nsid era tio n h as a lr e ad y b een r e ceiv ed . T he C om pan y d oes n ot r e ceiv e c o nsid era tio n prio r to th e tra n sfe r o f g oods o r s erv ic es a n d, th ere fo re , d oes n ot re co gniz e c o ntra ct lia b ilit ie s. T he C om pan y e le cte d a p ra ctic al e xp ed ie n t to e xp en se s ale s co m mis sio ns w hen in cu rre d a s th e a m ortiz a tio n p erio d a sso cia te d th ere w it h is g en era lly o ne y ear o r le ss. T hese c o sts a re re co rd ed in s erv ic e lo catio n o pera tin g exp en ses.

Prio r to th e ad optio n of A SC 606, th e Com pan y acco unte d fo r re v en ue under A SC Su bto pic 605-2 5, Reven ue Reco gnitio n: M ultip le -E le m en t Arra ngem en ts (“ A SC 6 05-2 5”).

The C om pan y c o nclu ded th at it s (i) d eliv ery o f p re scrip tio n m ed ic atio ns to p atie n ts a n d (ii) n urs in g s erv ic es re la te d to in fu sio n th era p ie s re p re sen te d s ep ara te d eliv era b le s to it s c u sto m ers a n d a llo cate d th e to ta l c o nsid era tio n to e ach d eliv era b le b ased o n it s s ta n d-a lo ne s ellin g p ric e.

Pre scrip tio n m ed ic atio n r e v en ue w as r e co gniz e d a t t h e t im e t h e m ed ic atio n is s h ip ped , a n d n urs in g r e v en ue w as r e co gniz e d o n t h e d ate o f s erv ic e.

A cco unts R eceiv a ble a nd A llo w ance f o r D oubtfu l A cco unts Amounts b ille d th at h av e n ot y et b een c o lle cte d th at a ls o m eet th e c o ndit io ns fo r u nco ndit io nal rig ht to p ay m en t a re p re sen te d a s a cco unts re ceiv ab le .

We re p ort a cco unts r e ceiv ab le r e la te d t o d eliv ery o f p re scrip tio n m ed ic atio ns t o p atie n ts a n d n urs in g s erv ic es r e la te d t o in fu sio n t h era p ie s a t t h eir e stim ate d t ra n sactio n pric es, in clu siv e o f a d ju stm en ts f o r v aria b le c o nsid era tio n, b ased o n t h e a m ounts e xp ecte d t o b e c o lle cte d f ro m p ay ors . O ur a cco unts r e ceiv ab le a re u nco lla te ra liz e d an d c o nsis t o f a m ounts d ue f ro m c o m merc ia l, g overn m en t a n d p atie n t p ay ors . W e w rit e o ff a cco unts r e ceiv ab le o nce w e h av e e xh au ste d o ur c o lle ctio n e ffo rts a n d deem a n a cco unt t o b e u nco lle ctib le .

Subseq uen t t o t h e a d optio n o f A SC 6 06, a n a llo w an ce f o r d oubtfu l a cco unts is e sta b lis h ed o nly a s a r e su lt o f a n a d vers e c h an ge in t h e C om pan y’s p ay ors ’ a b ilit y t o p ay o uts ta n din g b illin gs.

There w as no a llo w an ce f o r d oubtfu l a cco unts a s o f D ecem ber 3 1, 2 018.

Prio r to th e a d optio n o f A SC 6 06, e stim ate s o f u nco lle ctib le a cco unts re ceiv ab le w ere re co rd ed a s b ad d eb t e xp en se a n d a re la te d a llo w an ce fo r d oubtfu l acco unts w as e sta b lis h ed . T he r is k o f c o lle ctio n v arie d b ased u pon t h e p ro duct a n d t h e p ay or. W e e stim ate d t h e a llo w an ce f o r d oubtfu l a cco unts b ased o n s ev era l fa cto rs in clu din g t h e a g e o f t h e o uts ta n din g r e ceiv ab le s, t h e 48 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts his to ric al e xp erie n ce o f c o lle ctio ns, a d ju stin g f o r c u rre n t e co nom ic c o ndit io ns, a n d e v alu atin g s p ecif ic c u sto m er a cco unts f o r t h e a b ilit y t o p ay. W e e v alu ate d t re n ds in co lle ctio ns an d th e effe cts o f sy ste m s an d b usin ess p ro cess ch an ges in d ete rm in in g o ur exp ecte d co lle ctio n ra te s. B ala n ces th at w ere d ete rm in ed to b e unco lle ctib le w ere w rit te n o ff a g ain st t h e e xis tin g a llo w an ce f o r d oubtfu l a cco unts .

C ost o f R even ue Cost o f r e v en ue in clu des t h e c o sts o f p re scrip tio n m ed ic atio ns, s h ip pin g a n d o th er d ir e ct a n d in dir e ct c o sts , a n d n urs in g s erv ic es, o ffs et b y v olu m e a n d p ro m pt pay d is co unts r e ceiv ed f ro m p harm aceu tic al m an ufa ctu re rs a n d d is trib uto rs a n d m an ufa ctu re r r e b ate s, w hic h a re g en era lly v olu m e-b ased in cen tiv es t h at a re r e co rd ed as a r e d uctio n t o t h e c o st o f in ven to ry p urc h ases.

C ash a nd C ash E quiv a le n ts a nd R estr ic te d C ash Hig hly liq uid in vestm en ts w it h a m atu rit y o f t h re e m onth s o r le ss w hen p urc h ased a re c la ssif ie d a s c ash e q uiv ale n ts . R estric te d c ash c o nsis ts o f c ash b ala n ces held b y fin an cia l in stit u tio ns a s c o lla te ra l fo r le tte rs o f c re d it . T hese b ala n ces a re re cla ssif ie d to c ash a n d c ash e q uiv ale n ts w hen th e u nderly in g o blig atio n is satis fie d . R estric te d c ash b ala n ces e xp ecte d to b eco m e u nre stric te d d urin g th e n ext tw elv e m onth s a re re co rd ed a s c u rre n t a ssets . A s o f Decem ber 3 1, 2 018 , th e Com pan y h ad a r e stric te d c ash b ala n ce, in a m oney m ark et a cco unt, o f a p pro xim ate ly $ 4.3 m illio n .

In ven to ry In ven to ry is r e co rd ed a t t h e lo w er o f c o st o r n et r e aliz a b le v alu e.

Cost f o r p re scrip tio n m ed ic atio ns is d ete rm in ed u sin g s p ecif ic it e m id en tif ic atio n a n d s u pplie s are a cco unte d f o r u sin g t h e f ir s t-in , f ir s t-o ut m eth od.

A cq uis itio ns We a cco unt fo r a cq uis it io ns in a cco rd an ce w it h A SC T opic 8 50, Busin ess C om bin atio ns , if th e a cq uir e d a ssets a ssu m ed a n d lia b ilit ie s in cu rre d c o nstit u te a busin ess. W e c o nsid er a cq uir e d c o m pan ie s to c o nstit u te a b usin ess if th e a cq uir e d s et o f a ctiv it ie s a n d a ssets a re c ap ab le o f b ein g m an ag ed fo r th e p urp ose o f pro vid in g a re tu rn to th e C om pan y.

Fo r a cq uir e d c o m pan ie s c o nstit u tin g a b usin ess, w e re co gniz e th e id en tif ia b le a ssets a cq uir e d a n d lia b ilit ie s a ssu m ed a t th eir acq uis it io n-d ate f a ir v alu es a n d r e co gniz e a n y e xc ess o f t o ta l c o nsid era tio n p aid o ver t h e f a ir v alu e o f t h e id en tif ia b le a ssets a s g oodw ill.

Pro perty a nd E quip m en t Pro perty a n d e q uip m en t is s ta te d a t c o st le ss a ccu m ula te d d ep re cia tio n.

Dep re cia tio n is c alc u la te d u sin g t h e s tra ig ht-lin e m eth od o ver t h e e stim ate d u sefu l liv es of a ssets a s f o llo w s:

Usefu l L ife Com pute r h ard w are a n d s o ftw are 3 years - 5 years Offic e e q uip m en t 5 years Veh ic le s 4 years - 5 years M ed ic al e q uip m en t 13 month s - 5 years Furn it u re a n d f ix tu re s 5 years Leaseh old im pro vem en ts a n d a ssets le ased u nder c ap it a l le ases a re d ep re cia te d u sin g a s tra ig ht-lin e b asis o ver t h e le sser o f t h e r e la te d le ase t e rm o r e stim ate d usefu l lif e o f th e a ssets .

So ftw are im ple m en ta tio n c o sts , p rim arily c o nsis tin g o f a p plic atio n d ev elo pm en t a ctiv it ie s, a re c ap it a liz e d a n d in clu ded in p ro perty a n d eq uip m en t.

Costs r e la te d t o t h e p re lim in ary p ro je ct a n d p ost-im ple m en ta tio n s ta g es o f a p ro je ct a re c h arg ed t o e xp en se a s in cu rre d .

Dep re cia tio n o f th e p ro perty a n d e q uip m en t c o m men ces o n th e d ate th e a sset is re ad y fo r it s in te n ded u se.

A g ain o r lo ss is re co rd ed in th e s ta te m en t o f opera tio ns in t h e p erio d in w hic h t h e a sset w as s o ld o r r e tir e d .

Main te n an ce a n d r e p air c o sts a re e xp en sed a s in cu rre d .

The C om pan y e v alu ate s w heth er e v en ts a n d c ir c u m sta n ces h av e o ccu rre d th at in dic ate th e re m ain in g e stim ate d u sefu l lif e o f it s p ro perty a n d e q uip m en t m ay w arra n t r e v is io n o r t h at t h e r e m ain in g b ala n ce o f a n a sset m ay n ot b e r e co vera b le .

The m easu re m en t o f im pair m en t is b ased o n t h e a b ilit y t o r e co ver t h e b ala n ce o f assets f ro m e xp ecte d f u tu re o pera tin g c ash f lo w s o n a n u ndis co unte d b asis .

Im pair m en t lo sses, if a n y, a re d ete rm in ed b ased o n t h e f a ir v alu e o f t h e a sset, w hic h is gen era lly c alc u la te d a s t h e p re sen t 49 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts valu e o f r e la te d c ash f lo w s u sin g d is co unt r a te s t h at r e fle ct t h e in here n t r is k o f t h e u nderly in g b usin ess.

No im pair m en t c h arg es r e la te d t o p ro perty a n d e q uip m en t w ere r e co rd ed d urin g t h e y ears e n ded D ecem ber 3 1, 2 018, 2 017 o r 2 016.

Lea se s Opera tin g le ase e xp en se is r e co rd ed o n a s tra ig ht-lin e b asis o ver t h e e xp ecte d t e rm o f t h e le ase b eg in nin g o n t h e d ate t h e C om pan y g ain s p ossessio n o f le ased pro perty .

The C om pan y in clu des te n an t im pro vem en t a llo w an ces a n d re n t h olid ay s re ceiv ed fro m la n dlo rd s a n d th e e ffe ct o f a n y re n t e scala tio n c la u ses a s ad ju stm en ts t o s tra ig ht-lin e r e n t e xp en se o ver t h e e xp ecte d t e rm o f t h e le ase.

Cap it a l le ases a re r e fle cte d a s a lia b ilit y a t t h e in cep tio n o f t h e le ase b ased o n t h e p re sen t v alu e o f t h e m in im um le ase p ay m en ts o r, if lo w er, t h e f a ir v alu e o f t h e pro perty .

Assets r e co rd ed u nder c ap it a l le ases a re d ep re cia te d in t h e s am e m an ner a s o w ned p ro perty .

G oodw ill In a cco rd an ce w it h A SC T opic 3 50, In ta ngib le s– G oodw ill a nd O th er ( “ A SC 3 50”) , w e e v alu ate g oodw ill f o r p ossib le im pair m en t a n nually o r m ore f re q uen tly if ev en ts o r ch an ges in cir c u m sta n ces in dic ate th at th e carry in g am ount o f su ch assets m ay n ot b e re co vera b le .

We co nclu ded th at th e ch ara cte ris tic s o f all co m ponen ts o f o ur b usin ess a re s im ila r a n d t h ere fo re t h e r e p ortin g u nit f o r o ur g oodw ill a n aly sis is t h e e n tit y a s a w hole .

We u se a t w o-s te p p ro cess t o a ssess t h e re aliz a b ilit y o f g oodw ill. T he f ir s t s te p is a q ualit a tiv e a ssessm en t t h at a n aly ze s c u rre n t e co nom ic in dic ato rs a sso cia te d w it h a p artic u la r r e p ortin g u nit . F o r e xa m ple , w e a n aly ze c h an ges in e co nom ic , m ark et a n d in dustry c o ndit io ns, b usin ess s tra te g y, c o st f a cto rs , a n d f in an cia l p erfo rm an ce, a m ong o th ers , t o d ete rm in e if t h ere a re in dic ato rs o f a s ig nif ic an t d eclin e in th e fa ir v alu e o f a p artic u la r re p ortin g u nit . If th e q ualit a tiv e a ssessm en t in dic ate s a s ta b le o r im pro ved fa ir v alu e, n o fu rth er te stin g is r e q uir e d .

If a q ualit a tiv e a ssessm en t in dic ate s it is m ore lik ely th an n ot th at th e fa ir v alu e o f o ur re p ortin g u nit is le ss th an it s c arry in g a m ount, w e w ill p ro ceed to th e seco nd s te p w here w e e stim ate t h e f a ir v alu e o f t h e r e p ortin g u nit .

We c o nclu ded t h at o ur g oodw ill w as n ot im pair e d a s a r e su lt o f o ur 2 018 a ssessm en t a n d n one o f th e g oodw ill a sso cia te d w it h o ur s in gle r e p ortin g u nit w as c o nsid ere d a t r is k o f im pair m en t a s o f O cto ber 3 1, 2 018.

In ta ngib le A sse ts In ta n gib le a ssets a s o f D ecem ber 3 1, 2 018 c o nsis te d o f m an ag ed c are c o ntra cts a n d n on-c o m pete a g re em en ts . W e a m ortiz e m an ag ed c are c o ntra cts o ver th eir estim ate d u sefu l liv es o f fo ur y ears , a n d n on-c o m pete a g re em en ts o n a s tra ig ht-lin e b asis o ver th eir c o ntra ctu al liv es, w hic h is g en era lly one to fiv e y ears . D urin g 2018, w e e v alu ate d o ur in ta n gib le a ssets f o r in dic ato rs o f im pair m en t a n d d ete rm in ed t h at t h ere h av e b een n o m ate ria l d ev elo pm en ts , e v en ts , c h an ges in o pera tin g perfo rm an ce o r o th er c ir c u m sta n ces t h at w ould c au se m an ag em en t t o b elie v e it is m ore lik ely t h an n ot t h at t h e f a ir v alu e o f o ur in ta n gib le a ssets w ould b e le ss t h an it s c arry in g a m ount.

A m ounts d ue t o P la n S ponso rs Amounts d ue t o p la n s p onso rs r e p re sen t p ay m en ts r e ceiv ed f ro m p la n s p onso rs in e xc ess o f t h e c o ntra ctu ally r e q uir e d r e im burs em en t t h at a re e xp ecte d t o b e re fu nded .

2017 W arra nts The 2 017 W arra n ts a re re co rd ed a t fa ir v alu e a n d a re in clu ded in o th er n on-c u rre n t lia b ilit ie s o n th e a cco m pan yin g C onso lid ate d B ala n ce S h eets .

Fair v alu e is re m easu re d each re p ortin g p erio d an d a m ark -to -m ark et ad ju stm en t is re co rd ed u nder th e cap tio n “C han ge in fa ir v alu e o f eq uit y lin ked lia b ilit ie s” o n th e acco m pan yin g C onso lid ate d S ta te m en ts o f O pera tio ns. T he fa ir v alu e o f th e 2 017 W arra n ts w as $25.3 m illio n a n d $20.5 m illio n a s o f D ecem ber 3 1, 2 018 a n d 2 017, re sp ectiv ely .

Fair v alu e in cre ases o f $4.8 m illio n a n d $3.6 m illio n w ere r e co rd ed d urin g t h e y ears e n ded D ecem ber 3 1, 2 018 a n d 2 017.

The C om pan y e stim ate s th e fa ir v alu e o f th e 2 017 W arra n ts u sin g a v alu atio n m odel th at c o nsid ers a ttrib ute s o f th e C om pan y’s c o m mon s to ck, in clu din g th e num ber o f o uts ta n din g s h are s, s h are p ric e a n d v ola tilit y .

The v alu atio n a ls o c o nsid ers th e e xe rc is e p erio d o f th e w arra n ts a n d th e a ttrib ute s o f o th er c o nvertib le in stru m en ts in e stim atin g t h e n um ber o f s h are s t h at w ill b e is su ed u pon t h e e xe rc is e o f t h e w arra n ts .

See N ote 8 - P re fe rre d S to ck a n d S to ckh old ers ’ D efic it f o r f u rth er d is cu ssio n o f t h e 2 017 W arra n ts .

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts In co m e T axes The C om pan y a cco unts f o r in co m e t a xe s u nder A SC T opic 7 40, I n co m e T axe s. D efe rre d in co m e t a xe s r e fle ct t h e n et t a x e ffe cts o f t e m pora ry d if fe re n ces b etw een th e c arry in g a m ounts o f t h e a ssets a n d lia b ilit ie s f o r f in an cia l r e p ortin g p urp oses a n d t h e a m ounts u sed f o r in co m e t a x p urp oses. D efe rre d t a x a ssets a n d lia b ilit ie s a re m easu re d u sin g c u rre n t e n acte d ta x ra te s in e ffe ct in th e y ears in w hic h th ose te m pora ry d if fe re n ces a re e xp ecte d to re v ers e. A v alu atio n a llo w an ce is re co rd ed ag ain st a d efe rre d ta x a sset if , b ased o n th e w eig ht o f a v aila b le e v id en ce, it is m ore -lik ely -th an -n ot th at s o m e p ortio n, o r a ll, o f th e d efe rre d ta x a sset w ill n ot b e re aliz e d .

Uncerta in t a x p osit io ns a re r e co gniz e d if it is m ore lik ely t h an n ot t h at t h e C om pan y w ill b e a b le t o s u sta in t h e t a x p osit io n t a ken , a n d t h e m easu re m en t o f t h e ben efit is c alc u la te d a s t h e la rg est a m ount t h at is m ore t h an 5 0% lik ely t o b e r e aliz e d u pon r e so lu tio n o f t h e b en efit . T he C om pan y h as a n aly ze d f ilin g p osit io ns in a ll of t h e f e d era l a n d s ta te ju ris d ic tio ns w here it is r e q uir e d t o f ile in co m e t a x r e tu rn s, a s w ell a s a ll o pen t a x y ears in t h ese ju ris d ic tio ns.

There w ere no lia b ilit ie s r e co rd ed fo r u ncerta in t a x p osit io ns a s o f D ecem ber 3 1, 2 018 o r 2 017.

Sto ck -B ase d C om pen sa tio n The C om pan y a cco unts fo r s to ck-b ased c o m pen satio n e xp en se u nder th e p ro vis io ns o f A SC T opic 7 18, Com pen sa tio n – S to ck C om pen sa tio n (“ A SC 7 18”).

Sto ck-b ased c o m pen satio n e xp en se is b ased o n th e g ra n t d ate fa ir v alu e. W e e stim ate th e fa ir v alu e o f s to ck o ptio n a w ard s u sin g a B la ck-S ch ole s o ptio n p ric in g m odel. T he f a ir v alu e o f r e stric te d s to ck u nit a w ard s is g en era lly e stim ate d u sin g t h e c lo se p ric e o f o ur c o m mon s to ck o n t h e g ra n t d ate . W e r e co gniz e e xp en se f o r sh are -b ased p ay m en t a w ard s b ased o n t h eir v estin g c o ndit io ns a s f o llo w s:

• Award s w it h s erv ic e-b ased v estin g c o ndit io ns o nly – E xp en se is r e co gniz e d o n a s tra ig ht-lin e b asis o ver t h e r e q uis it e s erv ic e p erio d o f t h e a w ard .

• Award s w it h p erfo rm an ce-b ased v estin g c o ndit io ns – E xp en se is n ot r e co gniz e d u ntil it is d ete rm in ed t h at it is p ro bab le t h e p erfo rm an ce-b ased c o ndit io ns will b e m et. W hen a ch ie v em en t o f a p erfo rm an ce-b ased c o ndit io n is p ro bab le , a c u m ula tiv e c atc h -u p o f e xp en se w ill b e r e co rd ed a s if t h e a w ard h ad b een vestin g o n a s tra ig ht-lin e b asis f ro m t h e a w ard d ate . T he a w ard w ill c o ntin ue t o b e e xp en sed o n a s tra ig ht-lin e b asis t h ro ugh t h e v estin g p erio d a n d w ill b e update d if t h e p ro bab ilit y o f a ch ie v in g t h e p erfo rm an ce-b ased c o ndit io n c h an ges.

The im pact o f f o rfe it e d a w ard s is r e co rd ed in t h e p erio d in w hic h t h e f o rfe it u re o ccu rs .

F air V alu e M ea su re m en ts ASC T opic 8 20, Fair V a lu e M ea su re m en t ( “ A SC 8 20”), p ro vid es a f ra m ew ork f o r m easu rin g f a ir v alu e a n d d efin es f a ir v alu e a s t h e p ric e t h at w ould b e r e ceiv ed to s ell a n a sset o r p aid to tra n sfe r a lia b ilit y .

Fair v alu e is a m ark et-b ased m easu re m en t th at is d ete rm in ed u sin g a ssu m ptio ns th at m ark et p artic ip an ts w ould u se in pric in g a n a sset o r lia b ilit y .

The s ta n dard e sta b lis h es a v alu atio n h ie ra rc h y f o r in puts u sed in m easu rin g f a ir v alu e t h at m axim iz e s t h e u se o f o bserv ab le in puts a n d m in im iz e s th e u se o f u nobserv ab le in puts b y re q uir in g th at th e m ost o bserv ab le in puts b e u sed w hen a v aila b le .

Observ ab le in puts a re in puts m ark et p artic ip an ts w ould u se in v alu in g th e a sset o r lia b ilit y d ev elo ped b ased o n in dep en den t m ark et d ata s o urc es.

Unobserv ab le in puts a re in puts th at re fle ct th e C om pan y’s assu m ptio ns a b out t h e f a cto rs m ark et p artic ip an ts w ould u se in v alu in g t h e a sset o r lia b ilit y d ev elo ped b ased u pon t h e b est in fo rm atio n a v aila b le .

The v alu atio n h ie ra rc h y is c o m posed o f t h re e c ate g orie s.

The c ate g oriz a tio n w it h in t h e v alu atio n h ie ra rc h y is b ased o n t h e lo w est le v el o f in put t h at is s ig nif ic an t to t h e f a ir v alu e m easu re m en t.

The c ate g orie s w it h in t h e v alu atio n h ie ra rc h y a re d escrib ed a s f o llo w s:

• Lev el 1 - I n puts t o t h e f a ir v alu e m easu re m en t a re q uote d p ric es in a ctiv e m ark ets f o r id en tic al a ssets o r lia b ilit ie s.

• Lev el 2 - I n puts t o t h e f a ir v alu e m easu re m en t in clu de q uote d p ric es in a ctiv e m ark ets f o r s im ila r a ssets o r lia b ilit ie s, q uote d p ric es f o r id en tic al o r s im ila r assets o r lia b ilit ie s in m ark ets t h at a re n ot a ctiv e, a n d in puts o th er t h an q uote d p ric es t h at a re o bserv ab le f o r t h e a sset o r lia b ilit y , e it h er d ir e ctly o r in dir e ctly .

• Lev el 3 - I n puts t o t h e f a ir v alu e m easu re m en t a re u nobserv ab le in puts o r v alu atio n t e ch niq ues.

The C om pan y’s c ash a n d c ash e q uiv ale n ts , r e stric te d c ash , a cco unts r e ceiv ab le , p re p aid e xp en ses a n d o th er c u rre n t a ssets , a cco unts p ay ab le , a m ounts d ue t o pla n s p onso rs , a ccru ed in te re st, a ccru ed e xp en ses a n d o th er c u rre n t lia b ilit ie s a p pro xim ate f a ir v alu e d ue t o t h eir f u lly liq uid o r s h ort-te rm n atu re .

See N ote 1 2 - F air V alu e M easu re m en ts f o r a d dit io nal in fo rm atio n o n t h e f a ir v alu e o f t h e C om pan y’s d eb t f a cilit ie s.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts A cco untin g P ro nouncem en ts R ecen tly A dopte d In A ugust 2 018, t h e F in an cia l A cco untin g S ta n dard s B oard ( “ F A SB ”) is su ed A SU 2 018-1 5 — In te rn al U se S oft w are . A SU 2 018-1 5 a lig ns t h e r e q uir e m en ts f o r cap it a liz a tio n o f im ple m en ta tio n c o sts r e la te d t o h oste d s o ftw are w it h t h e e xis tin g in te rn al- u se s o ftw are g uid an ce. T he e ffe ctiv e d ate f o r A SU 2 018-1 5 is f o r a n nual an d in te rim p erio ds b eg in nin g a fte r D ecem ber 1 5, 2 019. T he C om pan y e arly a d opte d t h is A SU o n O cto ber 1 , 2 018 o n a p ro sp ectiv e b asis . T he a d optio n o f t h is sta n dard d id n ot h av e a m ate ria l im pact o n t h e C om pan y’s c o nso lid ate d f in an cia l s ta te m en ts .

In Ju ly 2 017, th e F A SB is su ed A SU 2 017-1 1— Earn in gs P er S h are ( T o pic 2 60), D is tin guis h in g L ia bilitie s F ro m E quity ( T o pic 4 80), a nd D eriv a tiv es a nd H ed gin g ( T o pic 8 15): I . A cco untin g fo r C erta in F in ancia l I n str u m en ts w ith D ow n R ound F ea tu re s a nd I I. R ep la cem en t o f t h e I n defi n ite D efe rra l fo r M andato rily Red eem able F in ancia l In str u m en ts o f C erta in N onpublic E ntitie s a nd C erta in M andato rily R ed eem able N onco ntr o llin g In te re sts w ith a S co pe E xcep tio n . A SU 2017-1 1 e lim in ate s th e re q uir e m en t th at a d ow n ro und fe atu re p re clu des e q uit y c la ssif ic atio n w hen a ssessin g w heth er a n in stru m en t is in dexe d to a n e n tit y ’s o w n sto ck. A f re esta n din g e q uit y -lin ked f in an cia l in stru m en t n o lo nger w ould b e a cco unte d f o r a s a d eriv ativ e lia b ilit y a t f a ir v alu e a s a r e su lt o f t h e e xis te n ce o f a d ow n ro und fe atu re .

The C om pan y a d opte d th e n ew s ta n dard o n Ja n uary 1 , 2 019. T he a d optio n o f th is s ta n dard d id n ot h av e a m ate ria l im pact o n th e C om pan y’s co nso lid ate d f in an cia l s ta te m en ts .

In M ay 2 017, th e F A SB is su ed A SU 2 017-0 9— Com pen sa tio n– Sto ck C om pen sa tio n ( T o pic 7 18): S co pe o f M odifi c a tio n A cco untin g.

A SU 2 017-0 9 m odif ie s w hen a c h an ge to th e te rm s o r c o ndit io ns o f a s h are -b ased p ay m en t a w ard m ust b e a cco unte d fo r a s a m odif ic atio n. T he n ew g uid an ce re q uir e s m odif ic atio n acco untin g if t h e f a ir v alu e, v estin g c o ndit io n o r t h e c la ssif ic atio n o f t h e a w ard is n ot t h e s am e im med ia te ly b efo re a n d a fte r a c h an ge t o t h e t e rm s a n d c o ndit io ns o f th e a w ard . T he e ffe ctiv e d ate f o r A SU 2 017-0 9 is f o r a n nual o r a n y in te rim p erio ds b eg in nin g a fte r D ecem ber 1 5, 2 017. T he C om pan y a d opte d t h is A SU o n J a n uary 1 , 2018. T he a d optio n o f t h is s ta n dard d id n ot m ate ria lly im pact t h e C om pan y’s c o nso lid ate d f in an cia l s ta te m en ts .

In N ovem ber 2 016, t h e F A SB is su ed A SU 2 016-1 8— Sta te m en t o f C ash F lo w s ( T opic 2 30): R estr ic te d C ash . A SU 2 016-1 8 r e q uir e s t h at a s ta te m en t o f c ash f lo w s exp la in th e c h an ge d urin g th e p erio d in th e to ta l o f c ash , c ash e q uiv ale n ts , a n d a m ounts g en era lly d escrib ed a s re stric te d c ash o r re stric te d c ash e q uiv ale n ts .

There fo re , a m ounts g en era lly d escrib ed a s r e stric te d c ash a n d r e stric te d c ash e q uiv ale n ts s h ould b e in clu ded w it h c ash a n d c ash e q uiv ale n ts w hen r e co ncilin g t h e beg in nin g-o f-p erio d a n d e n d-o f-p erio d t o ta l a m ounts s h ow n o n t h e s ta te m en t o f c ash f lo w s. T he e ffe ctiv e d ate f o r A SU 2 016-1 8 is f o r a n nual o r a n y in te rim p erio ds beg in nin g a fte r D ecem ber 1 5, 2 017. T he C om pan y a d opte d th is A SU o n J a n uary 1 , 2 018. T he a d optio n o f th is s ta n dard d id n ot m ate ria lly im pact th e C om pan y’s co nso lid ate d f in an cia l s ta te m en ts .

In A ugust 2 016, th e F A SB is su ed A SU 2 016-1 5— Sta te m en t o f C ash F lo w s ( T o pic 2 30): C la ssifi c a tio n o f C erta in C ash R eceip ts a nd C ash P aym en ts .

A SU 2016-1 5 p ro vid es g uid an ce fo r e ig ht s p ecif ic c ash flo w is su es w it h re sp ect to h ow c ash re ceip ts a n d c ash p ay m en ts a re c la ssif ie d in th e s ta te m en ts o f c ash flo w s, w it h t h e o bje ctiv e o f r e d ucin g d iv ers it y in p ra ctic e. T he e ffe ctiv e d ate f o r A SU 2 016-1 5 is f o r a n nual p erio ds b eg in nin g a fte r D ecem ber 1 5, 2 017, a n d in te rim p erio ds w it h in t h ose f is cal y ears . T he C om pan y a d opte d t h is A SU o n J a n uary 1 , 2 018. T he a d optio n o f t h is s ta n dard d id n ot m ate ria lly im pact t h e C om pan y’s c o nso lid ate d fin an cia l s ta te m en ts .

In M ay 2 014, t h e F A SB is su ed A SU N o. 2 014-0 9, Reven ue fr o m C ontr a cts w ith C usto m ers ( A SC 6 06) .

The s ta n dard p ro vid es c o m pan ie s w it h a s in gle m odel f o r use in a cco untin g fo r re v en ue a ris in g fro m c o ntra cts w it h c u sto m ers a n d re p la ced m ost o f th e e xis tin g re v en ue re co gnit io n g uid an ce in U .S . G A AP.

On J a n uary 1 , 2018, w e a d opte d A SC 6 06 u sin g t h e m odif ie d r e tro sp ectiv e t ra n sit io n m eth od w hic h a llo w ed f o r t h e a p plic atio n o f t h e n ew g uid an ce o nly t o c o ntra cts t h at w ere n ot co m ple te d a t t h e a d optio n d ate .

Prio r p erio ds h av e n ot b een r e sta te d a n d c o ntin ue t o b e r e p orte d u nder a cco untin g s ta n dard s t h at w ere in p la ce a t t h e t im e.

Prio r to th e a d optio n o f A SC 6 06, e stim ate s o f im plic it p ric e c o ncessio ns a n d re tro activ e p ric e a d ju stm en ts w ere re co rd ed a s b ad d eb t e xp en se a n d a re la te d a llo w an ce fo r doubtfu l a cco unts w as e sta b lis h ed .

Su bseq uen t to th e a d optio n o f A SC 6 06, a cco unts re ceiv ab le a re re co rd ed n et o f e stim ate d im plic it p ric e c o ncessio ns a n d re tro activ e p ric e a d ju stm en ts a n d a n a llo w an ce f o r d oubtfu l a cco unts is e sta b lis h ed o nly a s a r e su lt o f a n a d vers e c h an ge in t h e C om pan y’s p ay ors ’ a b ilit y t o p ay outs ta n din g b illin gs.

Upon a d optio n, t h e C om pan y c o nclu ded t h at t h e a llo w an ce f o r d oubtfu l a cco unts a t D ecem ber 3 1, 2 017 c o nsis te d e n tir e ly o f e stim ate d im plic it pric e c o ncessio ns a n d re tro activ e p ric e a d ju stm en ts .

As a re su lt , th e a llo w an ce fo r d oubtfu l a cco unts w as e lim in ate d a n d a cco unts re ceiv ab le w ere re sta te d n et o f estim ate d im plic it p ric e c o ncessio ns a n d r e tro activ e p ric e a d ju stm en ts a s o f J a n uary 1 , 2 018. A doptio n o f A SC 6 06 d id n ot r e su lt in a n o pen in g a ccu m ula te d d efic it ad ju stm en t.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts R ecen tly I ssu ed A cco untin g P ro nouncem en ts In A ugust 2 018, t h e F A SB is su ed A SU 2 018-1 3— Fair V alu e M ea su re m en t ( T opic 8 20): D is c lo su re F ra m ew ork — C hanges t o t h e D is c lo su re R eq uir e m en ts fo r Fair V alu e M ea su re m en ts . A SU 2 018-1 3 m odif ie s f a ir v alu e m easu re m en t d is clo su re r e q uir e m en ts . T he e ffe ctiv e d ate f o r A SU 2 018-1 3 is f o r a n nual a n d in te rim perio ds b eg in nin g a fte r D ecem ber 1 5, 2 019. E arly a d optio n is p erm it te d . T he a d optio n o f t h is s ta n dard is n ot e xp ecte d t o h av e a m ate ria l im pact o n t h e C om pan y’s dis clo su re s t o t h e c o nso lid ate d f in an cia l s ta te m en ts .

In J u ne 2 016, th e F A SB is su ed A SU 2 016-1 3— Fin ancia l In str u m en ts — Cre d it L o sse s ( T o pic 3 26): M ea su re m en t o f C re d it L o sse s o n F in ancia l In str u m en ts , w hic h r e q uir e s m easu re m en t a n d r e co gnit io n o f e xp ecte d c re d it lo sses f o r f in an cia l a ssets h eld . T he a m en dm en ts in A SU 2 016-1 3 e lim in ate t h e p ro bab le t h re sh old f o r in it ia l r e co gnit io n o f a c re d it lo ss in c u rre n t G A AP a n d r e fle ct a n e n tit y ’s c u rre n t e stim ate o f a ll e xp ecte d c re d it lo sses. A SU 2 016-1 3 is e ffe ctiv e f o r in te rim a n d a n nual re p ortin g p erio ds b eg in nin g J a n uary 1 , 2 020, a n d is t o b e a p plie d u sin g a m odif ie d r e tro sp ectiv e t ra n sit io n m eth od. E arlie r a d optio n is p erm it te d . T he a d optio n o f t h is sta n dard is n ot e xp ecte d t o h av e a m ate ria l im pact o n t h e C om pan y’s c o nso lid ate d f in an cia l s ta te m en ts .

In Feb ru ary 2016, FA SB is su ed A SU 2016-0 2, Lea se s (“ A SU 2016-0 2”) an d is su ed ad dit io nal cla rif ic atio ns an d im pro vem en ts th ro ughout 2018. T he pro nouncem en t r e q uir e s le ssees t o r e co gniz e a lia b ilit y f o r le ase o blig atio ns, w hic h r e p re sen ts t h e d is co unte d o blig atio n t o m ake f u tu re m in im um le ase p ay m en ts , a n d a c o rre sp ondin g rig ht-o f-u se a sset o n th e b ala n ce s h eet. T he g uid an ce re q uir e s d is clo su re o f k ey in fo rm atio n a b out le asin g a rra n gem en ts th at is in te n ded to g iv e fin an cia l s ta te m en t u sers t h e a b ilit y t o a ssess t h e a m ount, t im in g, a n d p ote n tia l u ncerta in ty o f c ash f lo w s r e la te d t o le ases. A SU 2 016-0 2 is e ffe ctiv e f o r in te rim a n d an nual r e p ortin g p erio ds b eg in nin g J a n uary 1 , 2 019. W e w ill e le ct t h e o ptio nal t ra n sit io n m eth od t o a p ply t h e s ta n dard a s o f t h e e ffe ctiv e d ate a n d t h ere fo re , w e w ill not a p ply t h e s ta n dard t o t h e c o m para tiv e p erio ds p re sen te d in o ur f in an cia l s ta te m en ts . W e w ill e le ct t h e t ra n sit io n p ackag e o f t h re e p ra ctic al e xp ed ie n ts p erm it te d w it h in t h e s ta n dard , w hic h e lim in ate s t h e r e q uir e m en ts t o r e assess p rio r c o nclu sio ns a b out le ase id en tif ic atio n, le ase c la ssif ic atio n a n d in it ia l d ir e ct c o sts . W e w ill n ot ele ct t h e h in dsig ht p ra ctic al e xp ed ie n t, w hic h p erm it s t h e u se o f h in dsig ht w hen d ete rm in in g le ase t e rm a n d im pair m en t o f r ig ht-o f-u se a ssets . F u rth er, w e w ill e le ct a sh ort-te rm le ase e xc ep tio n p olic y, p erm it tin g u s t o n ot a p ply t h e r e co gnit io n r e q uir e m en ts o f t h is s ta n dard t o s h ort-te rm le ases ( i.e . le ases w it h t e rm s o f 1 2 m onth s o r le ss) a n d a n a cco untin g p olic y t o a cco unt f o r le ase a n d n on-le ase c o m ponen ts a s a s in gle c o m ponen t f o r c erta in c la sses o f a ssets . W e a re f in aliz in g t h e im pact o f t h e sta n dard t o o ur a cco untin g p olic ie s, p ro cesses, d is clo su re s, a n d in te rn al c o ntro l o ver f in an cia l r e p ortin g a n d h av e im ple m en te d n ecessary u pgra d es t o o ur e xis tin g le ase s y ste m .

N O TE 3 - N ET R EV EN UE A ND A CCO UN TS R EC EIV ABLE The f o llo w in g t a b le p re sen ts o ur d is ag gre g ate d n et r e v en ue f o r e ach a sso cia te d p ay or c la ss ( in t h ousan ds). S ale s a n d u sag e-b ased t a xe s a re e xc lu ded f ro m n et re v en ue.

Year E nded D ecem ber 3 1, 2018 2017 2016 C om merc ia l $ 575,5 66 $ 677,5 36 $ 771,2 78 G overn m en t 127,3 01 131,4 59 158,4 50 P atie n t 6,0 36 8,1 95 5,8 61 Net R ev en ue $ 708,9 03 $ 817,1 90 $ 935,5 89 Absen t im ple m en ta tio n o f A SC 6 06, t h e C om pan y w ould h av e r e p orte d r e v en ue o f $738.8 m illio n , g ro ss p ro fit o f $272.9 m illio n , b ad d eb t e xp en se o f $29.9 m illio n fo r t h e y ear e n ded D ecem ber 3 1, 2 018, r e sp ectiv ely , a n d a n a llo w an ce f o r d oubtfu l a cco unts o f $41.2 m illio n a t D ecem ber 3 1, 2 018.

N et R even ue C oncen tr a tio n Durin g t h e y ear e n ded D ecem ber 3 1, 2 018, A etn a H ealt h M an ag em en t, L LC a cco unte d f o r a p pro xim ate ly 10% o f n et r e v en ue. D urin g t h e y ears e n ded D ecem ber 31, 2 017 a n d 2 016, U nit e d H ealt h care I n su ra n ce C om pan y a cco unte d f o r a p pro xim ate ly 18% a n d 24% o f n et r e v en ue, r e sp ectiv ely .

53 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts C olle cta bility o f A cco unts R eceiv a ble The f o llo w in g t a b le s ets f o rth t h e a g in g o f o ur a cco unts r e ceiv ab le , a g ed b ased o n d ate o f s erv ic e a n d c ate g oriz e d b ased o n t h e t h re e p rim ary p ay or g ro ups ( in th ousan ds):

Decem ber 3 1, 2 018 Decem ber 3 1, 2 017 0 - 1 80 d ays Ove r 1 80 days Tota l % o f T ota l 0 - 1 80 d ays Ove r 1 80 days Tota l % o f T ota l Govern m en t $ 17,8 49 $ 6,0 98 $ 23,9 47 $ 20,6 02 $ 10,0 82 $ 30,6 84 Com merc ia l 67,2 88 14,7 40 82,0 28 63,7 67 18,7 79 82,5 46 Patie n t 2,0 92 6,7 97 8,8 89 2,5 77 7,6 27 10,2 04 Gross a ccou nts r eceiv a ble $ 87,2 29 $ 27,6 35 114,8 64 $ 86,9 46 $ 36,4 88 123,4 34 Allo w an ce f o r d oubtfu l a cco unts — — % (3 7,9 12 ) 30.7 % Accou nts r eceiv a ble , n et $ 114,8 64 $ 85,5 22 N O TE 4 – A CQ UIS IT IO N On S ep te m ber 9 , 2 016, t h e C om pan y a cq uir e d s u bsta n tia lly a ll o f t h e a ssets a n d a ssu m ed c erta in lia b ilit ie s o f H om e S o lu tio ns, I n c. f o r c o nsid era tio n t o ta lin g 93.2 m illio n , c o m pris ed o f: (i) $67.5 m illio n in c ash ; (ii) 7.1 m illio n re stric te d s h are s o f th e C om pan y’s c o m mon s to ck v alu ed a t $15.4 m illio n ; (iii) 3,7 50,0 00 s h are s o f th e Com pan y’s c o m mon s to ck v alu ed a t $9.9 m illio n , a n d (iv ) th e a ssu m ptio n o f $0.3 m illio n o f c ap it a l le ase o blig atio ns.

Hom e S o lu tio ns, a p riv ate ly h eld c o m pan y, pro vid ed h om e in fu sio n a n d h om e n urs in g p ro ducts a n d s erv ic es t o p atie n ts s u ffe rin g f ro m c h ro nic a n d a cu te m ed ic al c o ndit io ns.

The e xc ess o f th e p urc h ase p ric e o ver th e fa ir v alu e o f th e ta n gib le a n d id en tif ia b le in ta n gib le a ssets a cq uir e d a n d lia b ilit ie s a ssu m ed in th e a cq uis it io n w as allo cate d t o g oodw ill in t h e a m ount o f $58.5 m illio n . A cq uis it io n a n d in te g ra tio n e xp en ses t o ta le d $10.1 m illio n f o r t h e y ear e n ded D ecem ber 3 1, 2 016 a n d a re in clu ded in r e stru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er e xp en ses in t h e a cco m pan yin g C onso lid ate d S ta te m en ts o f O pera tio ns.

N O TE 5 – G O ODW IL L A ND I N TA NGIB LE A SSET S Goodw ill, a n d t h e c h an ges in t h e c arry in g a m ount o f g oodw ill f o r t h e y ears e n ded Decem ber 3 1, 2 018 a n d 2017 , a re a s f o llo w s ( in t h ousan ds):

Bala n ce a t D ecem ber 3 1, 2 016 $ 365,9 47 Adju stm en ts a sso cia te d w it h t h e a cq uis it io n o f H om e S olu tio ns 1,2 51 Bala n ce a t D ecem ber 3 1, 2 017 $ 367,1 98 Adju stm en ts — Bala n ce a t D ecem ber 3 1, 2 018 $ 367,1 98 In ta n gib le a ssets c o nsis te d o f t h e f o llo w in g ( in t h ousan ds):

Decem ber 3 1, 2 018 Decem ber 3 1, 2 017 Gro ss C arry in g Am ou nt Accu m ula te d Am ortiz atio n Net C arry in g Am ou nt Gro ss C arry in g Am ou nt Accu m ula te d Am ortiz atio n Net C arry in g Am ou nt In fu sio n c u sto m er r e la tio nsh ip s $ 25,6 50 $ (2 5,6 50 ) $ — $ 25,6 50 $ (2 5,6 50 ) $ — Man ag ed c are c o ntra cts 25,0 00 (1 4,5 76 ) 10,4 24 25,0 00 (8 ,4 03 ) 16,5 97 Lic en ses 5,4 00 (5 ,4 00 ) — 5,4 00 (3 ,6 81 ) 1,7 19 Tra d e n am e 1,8 00 (1 ,8 00 ) — 1,8 00 (1 ,1 81 ) 619 Non-c o m pete a g re em en ts 1,7 00 (1 ,6 54 ) 46 1,7 00 (1 ,5 21 ) 179 $ 59,5 50 $ (4 9,0 80 ) $ 10,4 70 $ 59,5 50 $ (4 0,4 36 ) $ 19,1 14 54 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts In ta n gib le a ssets a re a m ortiz e d o n a s tra ig ht-lin e b asis o ver t h eir e stim ate d u sefu l liv es a s f o llo w s:

Estim ate d U sefu l L ife In fu sio n c u sto m er r e la tio nsh ip s 5 month s - 4 years M an ag ed c are c o ntra cts 4 years Lic en ses 2 years Tra d e n am e 2 years Non-c o m pete a g re em en ts 1 year - 5 years Tota l a m ortiz a tio n e xp en se o f in ta n gib le a ssets w as $8.6 m illio n , $11.8 m illio n , a n d $6.2 m illio n f o r t h e y ears e n ded Decem ber 3 1, 2 018 , 2017 a n d 2016 , re sp ectiv ely .

A mortiz a tio n e xp en se is e xp ecte d t o b e t h e f o llo w in g ( in t h ousan ds):

Year e n din g D ecem ber 3 1, Estim ate d A m ortiz atio n 2019 $ 6,2 18 2020 4,2 52 Tota l e stim ate d a m ortiz atio n e xpen se $ 10,4 70 N O TE 6 – P R O PER TY A ND E Q UIP M EN T Pro perty a n d e q uip m en t c o nsis te d o f t h e f o llo w in g ( in t h ousan ds):

Decem ber 3 1, 2018 2017 Com pute r a n d o ffic e e q uip m en t $ 32,4 52 $ 31,3 71 Softw are c ap it a liz e d f o r in te rn al u se 17,6 25 17,4 70 Veh ic le s 2,2 87 2,3 79 M ed ic al e q uip m en t 42,6 00 36,2 30 W ork in p ro gre ss 1,7 33 2,4 78 Furn it u re a n d f ix tu re s 5,9 30 5,5 34 Leaseh old im pro vem en ts 27,0 12 19,8 09 Property a n d e qu ip m en t, g ross 129,6 39 115,2 71 Less: A ccu m ula te d d ep re cia tio n (1 00,8 51 ) (8 8,2 98 ) Property a n d e qu ip m en t, n et $ 28,7 88 $ 26,9 73 Dep re cia tio n e xp en se, in clu din g e xp en se re la te d to a ssets u nder c ap it a l le ase, fo r th e y ears e n ded Decem ber 3 1, 2 018 , 2017 an d 2016 w as $15.0 m illio n , $15.9 m illio n , a n d $15.8 m illio n , r e sp ectiv ely .

55 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts N O TE 7 – D EB T Deb t c o nsis te d o f t h e f o llo w in g ( in t h ousan ds):

Decem ber 3 1, 2018 2017 Fir s t L ie n N ote F acilit y , n et o f u nam ortiz e d d is co unt $ 198,9 62 $ 198,3 24 Seco nd L ie n N ote F acilit y , n et o f u nam ortiz e d d is co unt 108,9 31 85,6 94 2021 N ote s, n et o f u nam ortiz e d d is co unt 198,1 25 197,3 63 Cap it a l le ases 990 2,8 63 Less: D efe rre d f in an cin g c o sts (2 ,3 34 ) (3 ,6 56 ) Tota l d ebt 504,6 74 480,5 88 Less: C urre n t p ortio n o f lo ng-te rm d eb t (3 ,1 79 ) (1 ,7 22 ) Lon g-te rm d ebt, n et o f c u rren t p ortio n $ 501,4 95 $ 478,8 66 Prio r D eb t F acilitie s The C om pan y w as p re v io usly o blig ate d u nder (i) a s en io r s ecu re d fir s t-lie n re v olv in g c re d it fa cilit y in a n a g gre g ate p rin cip al a m ount o f $75.0 m illio n (th e “R ev olv in g C re d it F acilit y ”), ( ii) a s en io r s ecu re d f ir s t-lie n t e rm lo an B in a n a g gre g ate p rin cip al a m ount o f $250.0 m illio n ( th e “ T erm L o an B F acilit y ”) a n d ( iii) a s en io r secu re d fir s t-lie n d ela y ed d ra w te rm lo an B in a n a g gre g ate p rin cip al a m ount o f $150.0 m illio n (th e “ D ela y ed D ra w T erm L o an F acilit y ” a n d, to geth er w it h th e Rev olv in g C re d it F acilit y a n d t h e T erm L o an B F acilit y , t h e “ S en io r C re d it F acilit ie s”) w it h S u n T ru st B an k, J e ffe rie s F in an ce L LC a n d M org an S ta n le y S en io r F u ndin g, In c., o rig in ally e n te re d o n J u ly 3 1, 2 013 a n d a m en ded f ro m t im e t o t im e. T he b orro w in gs u nder t h ese f a cilit ie s w ere f u lly r e p aid d urin g 2 017.

On J a n uary 6 , 2 017, t h e C om pan y e n te re d in to a c re d it a g re em en t ( th e “ P rim in g C re d it A gre em en t” a n d, t o geth er w it h t h e S en io r C re d it F acilit ie s, t h e “ P rio r C re d it A gre em en ts ”) w it h c erta in e xis tin g le n ders u nder t h e S en io r C re d it F acilit ie s a n d S u n T ru st B an k, a s a d m in is tra tiv e a g en t f o r it s elf a n d t h e le n ders . T he P rim in g C re d it A gre em en t p ro vid ed a n a g gre g ate b orro w in g c o m mit m en t o f $25.0 m illio n , w hic h w as fu lly d ra w n a t c lo sin g.

The b orro w in gs u nder th is fa cilit y w ere fu lly re p aid durin g 2 017.

F ir st L ie n a nd S eco nd L ie n N ote F acilitie s On J u ne 2 9, 2 017 ( th e “ C lo sin g D ate ”), t h e C om pan y e n te re d in to ( i) a f ir s t lie n n ote p urc h ase a g re em en t ( th e “ F ir s t L ie n N ote F acilit y ”), a m ong t h e C om pan y, w hic h is t h e is su er u nder t h e a g re em en t, t h e f in an cia l in stit u tio ns a n d n ote p urc h asers f ro m t im e t o t im e p arty t o t h e a g re em en t ( th e “ F ir s t L ie n N ote P u rc h asers ”), an d W ells F arg o B an k, N atio nal A sso cia tio n, in it s c ap acit y a s c o lla te ra l a g en t fo r it s elf a n d th e F ir s t L ie n N ote P u rc h asers (th e “ F ir s t L ie n C olla te ra l A gen t” ), purs u an t t o w hic h t h e C om pan y is su ed f ir s t lie n s en io r s ecu re d n ote s in a n a g gre g ate p rin cip al a m ount o f $200.0 m illio n ( th e “ F ir s t L ie n N ote s”); a n d ( ii) a s eco nd lie n note p urc h ase a g re em en t ( th e “ S eco nd L ie n N ote F acilit y ” a n d, t o geth er w it h t h e F ir s t L ie n N ote F acilit y , t h e “ N ote s F acilit ie s”) a m ong t h e C om pan y, w hic h is t h e is su er u nder t h e a g re em en t, t h e f in an cia l in stit u tio ns a n d n ote p urc h asers f ro m t im e t o t im e p arty t o t h e a g re em en t ( th e “ S eco nd L ie n N ote P u rc h asers ”), a n d W ells Farg o B an k, N atio nal A sso cia tio n, in it s c ap acit y a s c o lla te ra l a g en t f o r it s elf a n d t h e S eco nd L ie n N ote P u rc h asers ( th e “ S eco nd L ie n C olla te ra l A gen t” a n d, t o geth er w it h th e F ir s t L ie n C olla te ra l A gen t, th e “ C olla te ra l A gen t” ), p urs u an t to w hic h th e C om pan y (a ) is su ed s eco nd lie n s en io r s ecu re d n ote s in a n a g gre g ate in it ia l prin cip al a m ount o f $100.0 m illio n ( th e “ In it ia l S eco nd L ie n N ote s”) a n d ( b ) h ad t h e a b ilit y t o d ra w u pon t h e S eco nd L ie n N ote F acilit y a n d is su e s eco nd lie n d ela y ed dra w s en io r s ecu re d n ote s, w hic h w as e xe rc is ed o n J u ne 2 1, 2 018, in a n a g gre g ate in it ia l p rin cip al a m ount o f $10.0 m illio n , re p re sen tin g th e m axim um b orro w in gs allo w ed o n t h is f a cilit y ( th e “ S eco nd L ie n D ela y ed D ra w N ote s” a n d, t o geth er w it h t h e In it ia l S eco nd L ie n N ote s, t h e “ S eco nd L ie n N ote s”; t h e S eco nd L ie n n ote s, to geth er w it h t h e F ir s t L ie n N ote s, t h e “ N ote s”). F unds m an ag ed b y A re s M an ag em en t L .P . a re a ctin g a s le ad p urc h asers f o r t h e N ote s F acilit ie s.

The C om pan y u sed t h e p ro ceed s o f t h e s ale o f t h e F ir s t L ie n N ote s a n d t h e I n it ia l S eco nd L ie n N ote s p urs u an t t o t h e N ote s F acilit ie s t o r e p ay in f u ll a ll a m ounts outs ta n din g u nder th e P rio r C re d it A gre em en ts a n d e xtin guis h ed th e lia b ilit y . E ach o f th e P rio r C re d it A gre em en ts w as te rm in ate d fo llo w in g s u ch re p ay m en t. T he Com pan y u sed t h e r e m ain in g p ro ceed s o f $15.9 m illio n o f t h e N ote s F acilit ie s, n et o f $0.2 m illio n in is su an ce c o sts , f ro m t h e N ote s F acilit ie s a n d t h e S eco nd Q uarte r 2017 P riv ate P la cem en t f o r w ork in g c ap it a l a n d g en era l c o rp ora te p urp oses.

The F ir s t L ie n N ote s a ccru e in te re st, p ay ab le m onth ly in a rre ars , a t a f lo atin g r a te o r r a te s e q ual t o , a t t h e o ptio n o f t h e C om pan y, ( i) t h e b ase r a te ( d efin ed a s t h e hig hest o f t h e F ed era l F unds R ate p lu s 0.5 % p er a n num , t h e P rim e R ate a s p ublis h ed 56 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts by T he W all S tre et Jo urn al a n d th e o ne-m onth L o ndon In te rb an k O ffe re d R ate (“ L IB O R”) (s u bje ct to a 1.0 % flo or) p lu s 1.0 % ), o r (ii) th e o ne-m onth L IB O R ra te (s u bje ct t o a 1.0 % f lo or), p lu s a m arg in o f 6.0 % if t h e b ase r a te is s ele cte d o r 7.0 % if t h e L IB O R O ptio n is s ele cte d . T he F ir s t L ie n N ote s m atu re o n A ugust 1 5, 2 020, pro vid ed t h at if t h e C om pan y’s e xis tin g 8.8 75% S en io r N ote s d ue 2 021 ( th e “ 2021 N ote s”) a re r e fin an ced p rio r t o A ugust 1 5, 2 020, t h en t h e s ch ed ule d m atu rit y d ate o f th e F ir s t L ie n N ote s s h all b e J u ne 3 0, 2 022.

The F ir s t L ie n N ote s a m ortiz e in e q ual q uarte rly in sta llm en ts e q ual t o 0.6 25% o f t h e a g gre g ate p rin cip al a m ount o f t h e F ir s t L ie n N ote F acilit y , c o m men cin g o n Sep te m ber 3 0, 2 019, a n d o n t h e la st d ay o f e ach t h ir d m onth t h ere afte r, w it h t h e b ala n ce p ay ab le a t m atu rit y . T he F ir s t L ie n N ote s a re p re -p ay ab le a t t h e C om pan y’s optio n a t s p ecif ie d p re m iu m s to th e p rin cip al a m ount th at w ill d eclin e o ver th e te rm o f th e F ir s t L ie n N ote F acilit y . If th e F ir s t L ie n N ote s a re p re p aid p rio r to th e seco nd a n niv ers ary o f t h e C lo sin g D ate , t h e C om pan y w ill b e r e q uir e d t o p ay a m ake-w hole p re m iu m b ased o n t h e p re sen t v alu e ( u sin g a d is co unt r a te b ased o n t h e sp ecif ie d t re asu ry r a te p lu s 50 b asis p oin ts ) o f a ll r e m ain in g in te re st p ay m en ts o n t h e F ir s t L ie n N ote s b ein g p re p aid p rio r t o t h e s eco nd a n niv ers ary o f t h e C lo sin g D ate , p lu s 4.0 % o f t h e p rin cip al a m ount o f F ir s t L ie n N ote s b ein g p re p aid . O n o r a fte r t h e s eco nd a n niv ers ary o f t h e C lo sin g D ate , t h e p re p ay m en t p re m iu m is 4.0 % , w hic h d eclin es t o 2.0 % o n o r a fte r t h e t h ir d a n niv ers ary o f t h e C lo sin g D ate , a n d d eclin es t o 0.0 % o n o r a fte r t h e f o urth a n niv ers ary o f t h e C lo sin g D ate . A t a n y t im e, th e C om pan y m ay p re -p ay u p t o $50.0 m illio n in a g gre g ate p rin cip al a m ount o f t h e F ir s t L ie n N ote s f ro m in te rn ally g en era te d c ash w it h out in cu rrin g a n y m ake-w hole or p re p ay m en t p re m iu m . T he o ccu rre n ce o f c erta in e v en ts o f d efa u lt m ay in cre ase t h e a p plic ab le r a te o f in te re st b y 2.0 % a n d c o uld r e su lt in t h e a ccele ra tio n o f t h e Com pan y’s o blig atio ns u nder t h e F ir s t L ie n N ote F acilit y p rio r t o s ta te d m atu rit y a n d a n o blig atio n o f t h e C om pan y t o p ay t h e f u ll a m ount o f it s o blig atio ns u nder t h e Fir s t L ie n N ote F acilit y .

The F ir s t L ie n N ote F acilit y c o nta in s c u sto m ary e v en ts o f d efa u lt t h at in clu de, a m ong o th ers , n on-p ay m en t o f p rin cip al, in te re st o r f e es, v io la tio n o f c o ven an ts , in accu ra cy of re p re sen ta tio ns an d w arra n tie s, ban kru ptc y an d in so lv en cy ev en ts , m ate ria l ju dgm en ts , cro ss-d efa u lt s to m ate ria l in deb te d ness an d ev en ts co nstit u tin g a c h an ge o f c o ntro l. In a d dit io n, t h e o blig atio ns u nder t h e F ir s t L ie n N ote F acilit y a re g uara n te ed b y jo in t a n d s ev era l g uara n te es f ro m t h e C om pan y’s su bsid ia rie s.

In c o nnectio n w it h t h e F ir s t L ie n N ote F acilit y , t h e C om pan y, it s s u bsid ia rie s a n d t h e F ir s t L ie n C olla te ra l A gen t e n te re d in to a F ir s t L ie n G uara n ty a n d S ecu rit y A gre em en t, d ate d a s o f Ju ne 2 9, 2 017 (th e “ F ir s t L ie n G uara n ty a n d S ecu rit y A gre em en t” ). P u rs u an t to th e F ir s t L ie n G uara n ty a n d S ecu rit y A gre em en t, th e oblig atio ns u nder th e F ir s t L ie n N ote s a re s ecu re d b y fir s t p rio rit y lie n s o n, a n d s ecu rit y in te re sts in , s u bsta n tia lly a ll o f th e a ssets o f th e C om pan y a n d it s su bsid ia rie s.

The S eco nd L ie n N ote s a ccru e in te re st, p ay ab le m onth ly in a rre ars , a t a flo atin g ra te o r ra te s e q ual to , a t th e o ptio n o f th e C om pan y, (i) o ne-m onth L IB O R (s u bje ct t o a 1.2 5% f lo or) p lu s 9.2 5% p er a n num in c ash , ( ii) o ne-m onth L IB O R ( s u bje ct t o a 1.2 5% f lo or) p lu s 11.2 5% p er a n num , w hic h a m ount w ill b e c ap it a liz e d o n each in te re st p ay m en t d ate , o r (iii) o ne-m onth L IB O R (s u bje ct to a 1.2 5% flo or) p lu s 10.2 5% p er a n num , o f w hic h o ne-h alf L IB O R p lu s 4.6 25% p er a n num w ill b e pay ab le in c ash a n d o ne-h alf L IB O R p lu s 5.6 25% p er a n num w ill b e c ap it a liz e d o n e ach in te re st p ay m en t d ate , p ro vid ed t h at, in e ach c ase, if a n y p erm it te d r e fin an cin g in deb te d ness w it h w hic h t h e 2 021 N ote s a re r e fin an ced r e q uir e s o r p erm it s t h e p ay m en t o f c ash in te re st, a ll o f t h e in te re st o n t h e S eco nd L ie n N ote s s h all b e p aid in cash . T he C om pan y e le cte d t o c ap it a liz e $7.8 m illio n o f in te re st d urin g t h e y ear e n ded D ecem ber 3 1, 2 018.

No in te re st w as c ap it a liz e d d urin g t h e y ear e n ded D ecem ber 31, 2 017. T he S eco nd L ie n N ote s m atu re o n A ugust 1 5, 2 020, p ro vid ed t h at if t h e 2 021 N ote s a re r e fin an ced p rio r t o A ugust 1 5, 2 020, t h en t h e s ch ed ule d m atu rit y d ate of t h e S eco nd L ie n N ote s s h all b e J u ne 3 0, 2 022.

The S eco nd L ie n N ote s a re n ot s u bje ct to s ch ed ule d a m ortiz a tio n in sta llm en ts . T he S eco nd L ie n N ote s a re p re -p ay ab le a t th e C om pan y’s o ptio n a t s p ecif ie d pre m iu m s t o t h e p rin cip al a m ount t h at w ill d eclin e o ver t h e t e rm o f t h e S eco nd L ie n N ote F acilit y . I f t h e S eco nd L ie n N ote s a re p re p aid p rio r t o t h e t h ir d a n niv ers ary o f th e C lo sin g D ate , t h e C om pan y w ill n eed t o p ay a m ake-w hole p re m iu m b ased o n t h e p re sen t v alu e ( u sin g a d is co unt r a te b ased o n t h e s p ecif ie d t re asu ry r a te p lu s 50 basis p oin ts ) o f a ll r e m ain in g in te re st p ay m en ts o n t h e S eco nd L ie n N ote s b ein g p re p aid p rio r t o t h e t h ir d a n niv ers ary o f t h e C lo sin g D ate , p lu s 4.0 % o f t h e p rin cip al am ount o f S eco nd L ie n N ote s b ein g p re p aid . O n o r a fte r th e th ir d a n niv ers ary o f th e C lo sin g D ate , th e p re p ay m en t p re m iu m is 4.0 % , w hic h d eclin es to 2.0 % o n o r afte r t h e f o urth a n niv ers ary o f t h e C lo sin g D ate , a n d d eclin es t o 0.0 % o n o r a fte r t h e f if th a n niv ers ary o f t h e C lo sin g D ate . T he o ccu rre n ce o f c erta in e v en ts o f d efa u lt m ay in cre ase t h e a p plic ab le r a te o f in te re st b y 2.0 % a n d c o uld r e su lt in t h e a ccele ra tio n o f t h e C om pan y’s o blig atio ns u nder t h e S eco nd L ie n N ote F acilit y p rio r t o sta te d m atu rit y a n d a n o blig atio n o f t h e C om pan y t o p ay t h e f u ll a m ount o f it s o blig atio ns u nder t h e S eco nd L ie n N ote F acilit y .

The S eco nd L ie n N ote F acilit y c o nta in s c u sto m ary e v en ts o f d efa u lt th at in clu de, a m ong o th ers , n on-p ay m en t o f p rin cip al, in te re st o r fe es, v io la tio n o f co ven an ts , in accu ra cy o f r e p re sen ta tio ns a n d w arra n tie s, b an kru ptc y a n d in so lv en cy e v en ts , m ate ria l ju dgm en ts , c ro ss-d efa u lt s t o m ate ria l in deb te d ness a n d e v en ts co nstit u tin g a c h an ge o f c o ntro l. I n a d dit io n, t h e o blig atio ns u nder t h e S eco nd L ie n N ote F acilit y a re g uara n te ed b y jo in t a n d s ev era l g uara n te es f ro m t h e C om pan y’s su bsid ia rie s.

In c o nnectio n w it h t h e S eco nd L ie n N ote F acilit y , t h e C om pan y, it s s u bsid ia rie s a n d t h e S eco nd L ie n C olla te ra l A gen t e n te re d in to a S eco nd L ie n G uara n ty a n d Secu rit y A gre em en t, d ate d a s o f J u ne 2 9, 2 017 ( th e “ S eco nd L ie n G uara n ty a n d S ecu rit y 57 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts A gre em en t” ). P u rs u an t t o t h e S eco nd L ie n G uara n ty a n d S ecu rit y A gre em en t, t h e o blig atio ns u nder t h e S eco nd L ie n N ote s a re s ecu re d b y s eco nd p rio rit y lie n s o n, an d s ecu rit y in te re sts in , s u bsta n tia lly a ll o f t h e a ssets o f t h e C om pan y a n d it s s u bsid ie s.

In c o nnectio n w it h t h e F ir s t L ie n N ote F acilit y a n d t h e S eco nd L ie n N ote F acilit y , t h e C om pan y, t h e F ir s t L ie n C olla te ra l A gen t a n d t h e S eco nd L ie n C olla te ra l A gen t, e n te re d in to a n in te rc re d it o r a g re em en t c o nta in in g c u sto m ary p ro vis io ns t o , a m ong o th er t h in gs, s u bord in ate t h e lie n p rio rit y o f t h e lie n s g ra n te d u nder t h e Seco nd L ie n N ote F acilit y t o t h e lie n s g ra n te d u nder t h e F ir s t L ie n N ote F acilit y .

2021 N ote s On F eb ru ary 1 1, 2 014, t h e C om pan y is su ed $200.0 m illio n a g gre g ate p rin cip al a m ount o f t h e 2 021 N ote s.

The 2 021 N ote s a re s en io r u nsecu re d o blig atio ns o f t h e Com pan y a n d a re f u lly a n d u nco ndit io nally g uara n te ed b y a ll e xis tin g a n d f u tu re s u bsid ia rie s o f t h e C om pan y.

The 2 021 N ote s w ere o ffe re d in t h e U nit e d S ta te s t o qualif ie d in stit u tio nal b uyers in r e lia n ce o n R ule 1 44 A u nder t h e S ecu rit ie s A ct o f 1 933, a s a m en ded ( th e “ S ecu rit ie s A ct” ), a n d o uts id e t h e U nit e d S ta te s t o n on-U .S .

pers o ns in re lia n ce o n R eg ula tio n S u nder th e S ecu rit ie s A ct p urs u an t to a n In den tu re (th e “ 2021 N ote s In den tu re ”), d ate d F eb ru ary 1 1, 2 014, b y a n d a m ong th e Com pan y, t h e g uara n to rs n am ed t h ere in a n d U .S . B an k N atio nal A sso cia tio n, a s t ru ste e.

In te re st o n t h e 2 021 N ote s a ccru es a t a f ix e d r a te o f 8.8 75% p er a n num a n d is p ay ab le in c ash s em i- a n nually , in a rre ars , o n F eb ru ary 1 5 a n d A ugust 1 5 o f e ach year, c o m men cin g o n A ugust 1 5, 2 014.

The d eb t d is co unt o f $5.0 m illio n a t is su an ce is b ein g a m ortiz e d a s in te re st e xp en se t h ro ugh m atu rit y w hic h w ill r e su lt in t h e accre tio n o ver tim e o f th e o uts ta n din g d eb t b ala n ce to th e p rin cip al a m ount.

The 2 021 N ote s a re th e C om pan y’s s en io r u nsecu re d o blig atio ns a n d ra n k e q ually in rig ht o f p ay m en t w it h a ll o f it s o th er e xis tin g a n d f u tu re s en io r u nsecu re d in deb te d ness a n d s en io r in r ig ht o f p ay m en t t o a ll o f it s e xis tin g a n d f u tu re s u bord in ate d in deb te d ness.

The 2 021 N ote s a re g uara n te ed o n a f u ll, jo in t a n d s ev era l b asis b y e ach o f t h e C om pan y’s e xis tin g a n d f u tu re d om estic r e stric te d s u bsid ia rie s t h at is a b orro w er under a n y o f t h e C om pan y’s c re d it f a cilit ie s o r t h at g uara n te es a n y o f t h e C om pan y’s d eb t o r t h at o f a n y o f it s r e stric te d s u bsid ia rie s, in e ach c ase in cu rre d u nder t h e Com pan y’s c re d it fa cilit ie s.

As o f Decem ber 3 1, 2 018 , th e C om pan y d oes n ot h av e a n y in dep en den t a ssets o r o pera tio ns, a n d a s a re su lt , it s d ir e ct a n d in dir e ct su bsid ia rie s ( o th er t h an m in or s u bsid ia rie s), e ach b ein g 1 00% o w ned b y t h e C om pan y, a re f u lly a n d u nco ndit io nally , jo in tly a n d s ev era lly , p ro vid in g g uara n te es o n a sen io r u nsecu re d b asis t o t h e 2 021 N ote s.

The 2 021 N ote s I n den tu re c o nta in s c o ven an ts t h at, a m ong o th er t h in gs, lim it t h e C om pan y’s a b ilit y a n d t h e a b ilit y o f c erta in o f t h e C om pan y’s s u bsid ia rie s t o ( i) gra n t lie n s o n it s a ssets , ( ii) m ake d iv id en d p ay m en ts , o th er d is trib utio ns o r o th er r e stric te d p ay m en ts , ( iii) in cu r r e stric tio ns o n t h e a b ilit y o f t h e C om pan y’s r e stric te d su bsid ia rie s t o p ay d iv id en ds o r m ake o th er p ay m en ts , ( iv ) e n te r in to s ale a n d le aseb ack t ra n sactio ns, ( v ) m erg e, c o nso lid ate , t ra n sfe r o r d is p ose o f s u bsta n tia lly a ll of t h eir a ssets , ( v i) in cu r a d dit io nal in deb te d ness, ( v ii) m ake in vestm en ts , ( v iii) s ell a ssets , in clu din g c ap it a l s to ck o f s u bsid ia rie s, ( ix ) u se t h e p ro ceed s f ro m s ale s o f assets , in clu din g c ap it a l s to ck o f re stric te d s u bsid ia rie s, a n d (x ) e n te r in to tra n sactio ns w it h a ffilia te s.

In a d dit io n, th e 2 021 N ote s In den tu re re q uir e s, a m ong o th er th in gs, th e C om pan y to p ro vid e fin an cia l a n d c u rre n t re p orts to h old ers o f th e 2 021 N ote s o r file s u ch re p orts e le ctro nic ally w it h th e U .S . S ecu rit ie s a n d E xc h an ge Com mis sio n ( th e “ S EC ”).

These c o ven an ts a re s u bje ct t o a n um ber o f e xc ep tio ns, lim it a tio ns a n d q ualif ic atio ns s et f o rth in t h e 2 021 N ote s I n den tu re .

Pu rs u an t t o t h e t e rm s o f t h e S eco nd A men dm en t t o t h e S en io r C re d it F acilit ie s, t h e C om pan y u sed t h e n et p ro ceed s o f t h e 2 021 N ote s o f a p pro xim ate ly $194.5 m illio n t o r e p ay e xis tin g d eb t.

F air V alu e o f D eb t F acilitie s See N ote 1 2 - F air V alu e M easu re m en ts , f o r in fo rm atio n r e la te d t o t h e e stim ate d f a ir v alu e o f t h e C om pan y’s d eb t f a cilit ie s.

D efe rre d F in ancin g C osts In c o nnectio n w it h t h e N ote F acilit ie s a n d t h e 2 021 N ote s, t h e C om pan y in cu rre d u nderw rit in g f e es, a g en t f e es, le g al f e es a n d o th er e xp en ses o f a p pro xim ate ly $4.1 m illio n a n d $0.5 m illio n , re sp ectiv ely .

The d efe rre d f in an cin g c o sts a re r e fle cte d a s a d dit io nal is su an ce c o sts a n d a m ortiz e d a s a c o m ponen t o f in te re st e xp en se over t h e r e m ain in g t e rm o f t h e N ote F acilit ie s u sin g t h e e ffe ctiv e in te re st m eth od.

58 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts F utu re M atu ritie s The e stim ate d f u tu re m atu rit ie s o f t h e C om pan y’s lo ng-te rm d eb t, e xc lu siv e o f d efe rre d f in an cin g c o sts a n d u nam ortiz e d d is co unts , a s o f Decem ber 3 1, 2 018 , a re as f o llo w s ( in t h ousan ds):

Year E ndin g D ecem ber 3 1, Am ou nt 2019 $ 3,1 79 2020 315,5 98 2021 200,0 00 Tota l f u tu re m atu ritie s $ 518,7 77 Less: D efe rre d f in an cin g c o sts (2 ,3 34 ) Less: U nam ortiz e d d is co unts (1 1,7 69 ) Tota l d ebt $ 504,6 74 N O TE 8 – P R EFER RED S TO CK A ND S TO CKHO LD ER S’ D EFIC IT Serie s A P re fe rre d S to ck As o f Decem ber 3 1, 2 018 , t h e c arry in g v alu e o f S erie s A P re fe rre d S to ck in clu ded a ccru ed d iv id en ds a t 11.5 % a n d d is co unt a ccre tio n f ro m t h e d ate o f is su an ce.

D iv id en ds a n d d is co unt a ccre tio n t o ta le d $0.3 m illio n a n d $0.1 m illio n , r e sp ectiv ely , f o r e ach o f t h e y ears e n ded D ecem ber 3 1, 2 018 a n d 2 017 a n d w ere r e co rd ed a s a re d uctio n t o a d dit io nal p aid -in c ap it a l.

The f o llo w in g t a b le s ets f o rth t h e a ctiv it y r e co rd ed d urin g t h e y ears e n ded Decem ber 3 1, 2 018 a n d 2 017 r e la te d t o t h e S erie s A Pre fe rre d S to ck ( in t h ousan ds):

Serie s A P refe rred S to ck c arryin g v a lu e a t D ecem ber 3 1, 2 016 $ 2,4 62 Div id en ds a n d d is co unt a ccre tio n t h ro ugh D ecem ber 3 1, 2 017 1 365 Serie s A P refe rred S to ck c arryin g v a lu e a t D ecem ber 3 1, 2 017 $ 2,8 27 Div id en ds a n d d is co unt a ccre tio n t h ro ugh D ecem ber 3 1, 2 018 1 404 Serie s A P refe rred S to ck c arryin g v a lu e a t D ecem ber 3 1, 2 018 $ 3,2 31 1 Div id en ds r e co rd ed r e fle ct t h e in cre ase in t h e L iq uid atio n P re fe re n ce a sso cia te d w it h u npaid d iv id en ds.

Serie s C P re fe rre d S to ck As o f Decem ber 3 1, 2 018 , t h e c arry in g v alu e o f S erie s C P re fe rre d S to ck in clu ded a ccru ed d iv id en ds a t 11.5 % a n d d is co unt a ccre tio n f ro m t h e d ate o f is su an ce.

D iv id en ds an d d is co unt accre tio n to ta le d $10.1 m illio n an d $0.7 m illio n , re sp ectiv ely , fo r th e y ear en ded D ecem ber 31, 2018 an d $9.1 m illio n an d $0.6 m illio n , re sp ectiv ely , f o r t h e y ear e n ded D ecem ber 3 1, 2 017 a n d w ere r e co rd ed a s a r e d uctio n t o a d dit io nal p aid -in c ap it a l.

The f o llo w in g t a b le s ets f o rth t h e a ctiv it y r e co rd ed durin g t h e y ears e n ded Decem ber 3 1, 2 018 a n d 2 017 r e la te d t o t h e S erie s C P re fe rre d S to ck ( in t h ousan ds):

Serie s C P refe rred S to ck c arryin g v a lu e a t D ecem ber 3 1, 2 016 $ 69,5 40 Div id en ds a n d d is co unt a ccre tio n t h ro ugh D ecem ber 3 1, 2 017 1 9,7 12 Serie s C P refe rred S to ck c arryin g v a lu e a t D ecem ber 3 1, 2 017 $ 79,2 52 Div id en ds a n d d is co unt a ccre tio n t h ro ugh D ecem ber 3 1, 2 018 1 10,8 06 Serie s C P refe rred S to ck c arryin g v a lu e a t D ecem ber 3 1, 2 018 $ 90,0 58 1 Div id en ds r e co rd ed r e fle ct t h e in cre ase in t h e L iq uid atio n P re fe re n ce a sso cia te d w it h u npaid d iv id en ds.

F ir st Q uarte r 2 017 P riv a te P la cem en t On M arc h 1 , 2 017, t h e C om pan y e n te re d in to a S to ck P u rc h ase A gre em en t ( th e “ F ir s t Q uarte r S to ck P u rc h ase A gre em en t” ) w it h V en or C ap it a l M aste r F u nd L td ., M ap 1 39 S eg re g ate d P o rtfo lio o f L M A S PC , V en or S p ecia l S it u atio ns F u nd I I L P a n d T re v it h ic k L P ( th e “ F ir s t Q uarte r S to ckh old ers ”). P u rs u an t t o t h e F ir s t Q uarte r Sto ck P u rc h ase A gre em en t, t h e C om pan y s o ld a n a g gre g ate o f 3.3 m illio n s h are s o f it s c o m mon s to ck (th e “ F ir s t Q uarte r S h are s”) fo r a g gre g ate g ro ss p ro ceed s o f ap pro xim ate ly $5.1 m illio n in a p riv ate p la cem en t t ra n sactio n ( th e “ F ir s t Q uarte r 2 017 P riv ate P la cem en t” ). T he p urc h ase p ric e f o r e ach S hare 59 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts w as $1.5 366 , w hic h w as n eg otia te d b etw een t h e C om pan y a n d t h e F ir s t Q uarte r S to ckh old ers b ased o n t h e v olu m e-w eig hte d a v era g e p ric e o f t h e C om pan y's c o m mon sto ck o n t h e N asd aq G lo bal M ark et o n M arc h 1 , 2 017.

Seco nd Q uarte r 2 017 P riv a te P la cem en t On J u ne 2 9, 2 017, th e C om pan y e n te re d in to a S to ck P u rc h ase A gre em en t (th e “ S eco nd Q uarte r S to ck P u rc h ase A gre em en t” ) w it h a fu nd m an ag ed b y A re s M an ag em en t L .P . ( “ A re s” o r t h e “ S eco nd Q uarte r S to ck P u rc h aser” ). P u rs u an t t o t h e t e rm s o f t h e S eco nd Q uarte r S to ck P u rc h ase A gre em en t, t h e C om pan y is su ed an d s o ld to th e S eco nd Q uarte r S to ck P u rc h aser in a p riv ate p la cem en t (th e “ S eco nd Q uarte r 2 017 P riv ate P la cem en t” ) 6,3 59,3 50 s h are s o f C om mon S to ck (th e “S eco nd Q uarte r S hare s”) a t a p ric e o f $2.5 0 p er s h are , f o r p ro ceed s o f a p pro xim ate ly $15.9 m illio n , n et o f $0.2 m illio n in a sso cia te d c o sts .

Seco nd Q uarte r R eg is tr a tio n R ig hts A gre em en t In c o nnectio n w it h t h e 2 017 W arra n ts a n d t h e S eco nd Q uarte r 2 017 P riv ate P la cem en t, t h e C om pan y e n te re d in to a R eg is tra tio n R ig hts A gre em en t ( th e “ S eco nd Q uarte r 2 017 R eg is tra tio n R ig hts A gre em en t” ) w it h t h e h old ers o f t h e 2 017 W arra n ts a n d t h e S eco nd Q uarte r S to ck P u rc h aser. P u rs u an t t o t h e S eco nd Q uarte r 2 017 Reg is tra tio n R ig hts A gre em en t, s u bje ct t o c erta in e xc ep tio ns, t h e C om pan y is r e q uir e d , u pon t h e r e q uest o f t h e S eco nd Q uarte r S to ck P u rc h aser a n d h old ers o f t h e 2017 W arra n ts , to re g is te r th e re sale o f th e S eco nd Q uarte r S h are s a n d th e s h are s o f C om mon S to ck is su ab le u pon e xe rc is e o f th e 2 017 W arra n ts . P u rs u an t to th e te rm s o f t h e S eco nd Q uarte r 2 017 R eg is tra tio n R ig hts A gre em en t, t h ese r e g is tra tio n r ig hts w ill n ot b eco m e e ffe ctiv e u ntil t w elv e m onth s a fte r t h e C lo sin g D ate , a n d th e c o sts in cu rre d in c o nnectio n w it h s u ch r e g is tra tio ns w ill b e b orn e b y t h e C om pan y.

2017 W arra nts In c o nnectio n w it h t h e S eco nd L ie n N ote F acilit y ( a s d efin ed a b ove), t h e C om pan y is su ed w arra n ts ( th e “ 2017 W arra n ts ”) t o t h e p urc h asers o f t h e S eco nd L ie n N ote s ( a s d efin ed b elo w ) p urs u an t t o a W arra n t P u rc h ase A gre em en t d ate d a s o f J u ne 2 9, 2 017 ( th e “ W arra n t P u rc h ase A gre em en t” ). T he 2 017 W arra n ts e n tit le t h e purc h asers o f t h e W arra n ts t o p urc h ase s h are s o f C om mon S to ck, r e p re sen tin g a t t h e t im e o f a n y e xe rc is e o f t h e 2 017 W arra n ts a n e q uiv ale n t n um ber o f s h are s e q ual to 4.9 9% o f t h e C om mon S to ck o f t h e C om pan y o n a f u lly d ilu te d b asis , s u bje ct t o t h e t e rm s o f t h e W arra n t A gre em en t g overn in g t h e 2 017 W arra n ts , d ate d a s o f J u ne 29, 2 017 (th e “ W arra n t A gre em en t” ); p ro vid ed , h ow ev er, th e 2 017 W arra n ts m ay n ot b e c o nverte d to th e e xte n t th at, a fte r g iv in g e ffe ct to s u ch c o nvers io n, th e hold ers o f t h e 2 017 W arra n ts w ould b en efic ia lly o w n, in t h e a g gre g ate , in e xc ess o f ( i) 19.9 9% o f t h e s h are s o f C om mon S to ck o uts ta n din g a s o f J u ne 2 9, 2 017 ( th e “C lo sin g D ate ”) m in us ( ii) t h e s h are s o f C om mon S to ck t h at w ere s o ld p urs u an t t o t h e S eco nd Q uarte r 2 017 P riv ate P la cem en t ( a s d efin ed b elo w ) ( th e “ C onvers io n Cap ”). T he C onvers io n C ap w ill n ot a p ply t o t h e 2 017 W arra n ts if t h e C om pan y o bta in s t h e a p pro val o f it s s to ckh old ers f o r t h e r e m oval o f t h e C onvers io n C ap , w hic h th e C om pan y is r e q uir e d t o t a ke c erta in s te p s t o a tte m pt t o o bta in , s u bje ct t o t h e t e rm s o f t h e W arra n t A gre em en t.

The 2 017 W arra n ts h av e a 10 -y ear t e rm a n d a n in it ia l e xe rc is e p ric e o f $2.0 0 p er s h are , a n d m ay b e e xe rc is ed b y p ay m en t o f t h e e xe rc is e p ric e in c ash o r s u rre n der of s h are s o f C om mon S to ck in to w hic h t h e 2 017 W arra n ts a re b ein g c o nverte d in a n a g gre g ate a m ount s u ffic ie n t t o p ay t h e e xe rc is e p ric e. T he e xe rc is e p ric e a n d t h e num ber o f s h are s th at m ay b e a cq uir e d u pon e xe rc is e o f th e 2 017 W arra n ts a re s u bje ct to a d ju stm en t in c erta in s it u atio ns, in clu din g p ric e b ased a n ti- d ilu tio n pro te ctio n w here b y, s u bje ct to c erta in e xc ep tio ns, if th e C om pan y la te r is su es C om mon S to ck o r c erta in C om mon S to ck E q uiv ale n ts (a s d efin ed in th e W arra n t A gre em en t) a t a p ric e le ss t h an e it h er t h e t h en -c u rre n t m ark et p ric e p er s h are o r e xe rc is e p ric e o f t h e 2 017 W arra n ts , t h en t h e e xe rc is e p ric e w ill b e d ecre ased a n d t h e perc en ta g e o f s h are s o f C om mon S to ck is su ab le u pon e xe rc is e o f th e 2 017 W arra n ts w ill re m ain th e s am e, g iv in g e ffe ct to s u ch is su an ce. A ddit io nally , th e 2 017 W arra n ts h av e s ta n dard a n ti- d ilu tio n p ro te ctio ns if th e C om pan y e ffe cts a s to ck s p lit , s u bdiv is io n, re cla ssif ic atio n o r c o m bin atio n o f it s C om mon S to ck o r fix e s a re co rd d ate f o r t h e m akin g o f a d iv id en d o r d is trib utio n t o s to ckh old ers o f c ash o r c erta in a ssets . U pon t h e o ccu rre n ce o f c erta in b usin ess c o m bin atio ns, t h e 2 017 W arra n ts w ill b e c o nverte d in to t h e r ig ht t o a cq uir e s h are s o f s to ck o r o th er s ecu rit ie s o r p ro perty ( in clu din g c ash ) o f t h e s u ccesso r e n tit y .

See 2017 W arra nts w it h in N ote 2 - S um mary o f S ig nif ic an t A cco untin g P olic ie s f o r a d dit io nal in fo rm atio n r e la te d t o t h e e stim ate d f a ir v alu e o f t h e 2 017 W arra n ts .

Tre a su ry S to ck Durin g th e y ears e n ded Decem ber 3 1, 2 018 an d 2017, 51,3 94 an d 5,1 06 s h are s, re sp ectiv ely , w ere s u rre n dere d to s atis fy ta x w it h hold in g o blig atio ns o n th e exe rc is e o f s to ck o ptio ns a n d t h e v estin g o f r e stric te d s to ck a w ard s.

Durin g t h e y ear e n ded D ecem ber 3 1, 2 018, a n a d dit io nal 257,3 05 s h are s w ere s u rre n dere d in n et settle m en t o f o ptio n e xe rc is es. T he C om pan y d id not h old a n y s h are s o f t re asu ry s to ck a t Decem ber 3 1, 2 016 a s t h e b ala n ce w as u tiliz e d t o is su e s h are s, r e fle cte d a s co nsid era tio n, in t h e H om e S olu tio ns a cq uis it io n.

60 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts N O TE 9 – S TO CK-B ASED C O M PEN SA TIO N A ND E M PLO YEE B EN EFIT P LA NS B io S crip E qu ity I n cen tiv e P la n s Under th e C om pan y’s A men ded a n d R esta te d 2 008 E q uit y In cen tiv e P la n (th e “ 2008 P la n ”), th e C om pan y m ay is su e, a m ong o th er th in gs, in cen tiv e s to ck optio ns, n on-q ualif ie d s to ck o ptio ns, s to ck a p pre cia tio n rig hts , re stric te d s to ck g ra n ts , re stric te d s to ck u nit s , p erfo rm an ce s h are s a n d p erfo rm an ce u nit s to k ey em plo yees a n d d ir e cto rs . W hile s to ck a p pre cia tio n rig hts a re a u th oriz e d u nder th e 2 008 P la n , th ey m ay a ls o b e is su ed o uts id e o f th e p la n . T he 2 008 P la n is ad m in is te re d b y th e C om pan y’s M an ag em en t D ev elo pm en t a n d C om pen satio n C om mit te e (th e “ C om pen satio n C om mit te e”), a s ta n din g c o m mit te e o f th e B oard o f D ir e cto rs .

On N ovem ber 3 0, 2 016, a t a s p ecia l m eetin g, t h e s to ckh old ers a p pro ved a n a m en dm en t t o t h e 2 008 P la n t o ( a ) in cre ase t h e n um ber o f s h are s o f C om mon S to ck in th e a g gre g ate th at m ay b e s u bje ct to a w ard s b y 5,2 50,0 00 s h are s, fro m 9,3 55,0 00 to 14,6 05,0 00 s h are s a n d (b ) in cre ase th e a n nual g ra n t c ap s u nder th e C om pan y’s 2008 P la n f ro m 500,0 00 O ptio ns, 500,0 00 S to ck A ppre cia tio n R ig hts a n d 350,0 00 S to ck G ra n ts a n d R estric te d S to ck U nit s t o a c ap o f n o m ore t h an a t o ta l o f 3,0 00,0 00 O ptio ns, S to ck A ppre cia tio n R ig hts , S to ck G ra n ts a n d R estric te d S to ck U nit s c o m bin ed t h at a re in te n ded t o c o m ply w it h t h e r e q uir e m en ts o f S ectio n 1 62(m ) o f t h e Code.

On M ay 3 , 2 018, a t t h e a n nual m eetin g o f s to ckh old ers , t h e B oard o f D ir e cto rs a n d s to ckh old ers a p pro ved t h e 2 018 E q uit y In cen tiv e P la n ( th e “ 2018 P la n ”) t o re p la ce t h e e xp ir in g 2 008 P la n .

The 2 018 P la n c o nta in s t e rm s a n d c o ndit io ns s u bsta n tia lly s im ila r t o t h e 2 008 P la n .

A t o ta l o f 16,4 06,9 39 s h are s o f C om mon S to ck w ere in it ia lly a u th oriz e d fo r is su an ce u nder th e 2 018 P la n , w hic h in clu ded th e s h are s th at re m ain ed a v aila b le u nder th e 2 008 P la n .

The 2 018 P la n w ill te rm in ate te n y ears afte r it s a d optio n, u nle ss te rm in ate d e arlie r b y th e B oard o f d ir e cto rs .

As o f Decem ber 3 1, 2 018 , th ere w ere 12,9 87,3 51 s h are s o f C om mon S to ck a v aila b le fo r fu tu re gra n t u nder t h e 2 018 P la n .

Sto ck O ptio n s Optio ns g ra n te d u nder t h e 2 008 P la n o r t h e 2 018 P la n : ( a ) t y pic ally v est o ver a th re e -y ear p erio d a n d, in c erta in in sta n ces, f u lly v est u pon a c h an ge in c o ntro l o f th e C om pan y, ( b ) h av e a n e xe rc is e p ric e t h at m ay n ot b e le ss t h an 100% o f it s f a ir m ark et v alu e o n t h e d ate o f g ra n t a n d ( c ) a re e xe rc is ab le f o r sev en t o te n y ears a fte r th e d ate o f g ra n t, s u bje ct t o e arlie r t e rm in atio n in c erta in c ir c u m sta n ces.

Optio n e xp en se is a m ortiz e d o n a s tra ig ht-lin e b asis o ver t h e r e q uis it e s erv ic e p erio d.

The C om pan y r e co gniz e d c o m pen satio n e xp en se r e la te d t o s to ck o ptio ns o f $1.0 m illio n , $1.0 m illio n , a n d $3.4 m illio n , in t h e y ears e n ded Decem ber 3 1, 2 018 , 2017 a n d 2016 , r e sp ectiv ely .

The w eig hte d -a v era g e, g ra n t-d ate fa ir v alu e o f o ptio ns g ra n te d d urin g th e y ears en din g Decem ber 31, 2018 , 2017 an d 2016 was $1.6 9 , $1.2 2 , an d $0.7 2 , re sp ectiv ely .

The fa ir v alu e o f s to ck o ptio ns g ra n te d w as e stim ate d o n th e d ate o f g ra n t u sin g a B la ck-S ch ole s o ptio n-p ric in g m odel.

The a ssu m ptio ns u sed to co m pute t h e f a ir v alu e o f o ptio ns f o r t h e y ears e n din g Decem ber 3 1, 2 018 , 2017 a n d 2016 w ere :

2018 2017 2016 Exp ecte d v ola tilit y 71.0 % 73.2 % 68.1 % Ris k-fre e in te re st r a te 2.7 1 % 2.0 4 % 1.9 8 % Exp ecte d lif e o f o ptio ns 6.0 y ears 5.7 y ears 4.8 y ears Div id en d r a te — — — 61 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts A s u m mary o f s to ck o ptio n a ctiv it y f o r t h e 2 008 P la n a n d t h e 2 018 P la n t h ro ugh Decem ber 3 1, 2 018 w as a s f o llo w s:

Optio n s Weig hte d Ave rag e Exercis e P ric e Aggreg ate In tr in sic V alu e (th ou san ds) Weig hte d A ve rag e Rem ain in g Con tr actu al L ife Bala n ce a t D ecem ber 3 1, 2 017 4,3 98,2 00 $ 3.9 8 $ 2,6 39 5.5 y ears Gra n te d 1,0 47,6 42 $ 2.6 1 $ 990 Exe rc is ed (4 27,9 77 ) $ 2.1 4 $ 382 Forfe it e d a n d e xp ir e d (1 ,3 20,1 40 ) $ 4.7 8 $ 904 Bala n ce a t D ecem ber 3 1, 2 018 3,6 97,7 25 $ 3.5 2 $ 3,9 74 5.9 y ears Exe rc is ab le a t D ecem ber 3 1, 2 018 2,1 32,0 90 $ 4.4 6 $ 1,8 75 4.1 y ears Cash r e ceiv ed f ro m o ptio n e xe rc is es u nder s h are -b ased p ay m en t a rra n gem en ts w as $0.1 m illio n , 0.4 m illio n a n d n om in al fo r th e years e n ded D ecem ber 3 1, 2 018, 2017 a n d 2 016 , r e sp ectiv ely .

The m axim um t e rm o f s to ck o ptio ns u nder t h ese p la n s is te n y ears .

Optio ns o uts ta n din g a s o f Decem ber 3 1, 2 018 e xp ir e o n v ario us d ate s r a n gin g f ro m F eb ru ary 2019 t h ro ugh N ovem ber 2 028.

The f o llo w in g t a b le o utlin es o ur o uts ta n din g a n d e xe rc is ab le s to ck o ptio ns a s o f Decem ber 3 1, 2 018 :

Optio n s O uts ta n din g Optio n s E xercis able Ran ge o f O ptio n Exercis e P ric e Outs ta n din g O ptio n s Weig hte d A ve rag e Exercis e P ric e Weig hte d A ve rag e Rem ain in g C on tr actu al Life Optio n s E xercis able Weig hte d A ve rag e E xercis e Pric e $0.0 0 - $ 2.0 6 921,0 94 $ 1.3 5 6.4 y ears 471,1 39 $ 0.7 6 $2.0 6 - $ 4.1 3 1,8 12,7 98 $ 2.5 0 7.2 y ears 697,1 18 $ 1.9 0 $4.1 3 - $ 6.1 9 179,0 00 $ 5.1 3 3.0 y ears 179,0 00 $ 2.7 4 $6.1 9 - $ 8.2 5 633,3 33 $ 7.1 6 2.8 y ears 633,3 33 $ 4.1 5 $10.3 1 - $ 12.3 8 125,0 00 $ 11.0 4 2.6 y ears 125,0 00 $ 5.9 7 $12.3 8 - $ 14.4 4 21,5 00 $ 14.0 6 4.3 y ears 21,5 00 $ 7.3 0 $16.5 0 - $ 18.5 7 5,0 00 $ 16.6 3 4.6 y ears 5,0 00 $ 8.9 6 All o ptio n s 3,6 97,7 25 2,1 32,0 90 As o f Decem ber 3 1, 2 018 t h ere w as $1.7 m illio n o f u nre co gniz e d c o m pen satio n e xp en se r e la te d t o u nveste d o ptio n g ra n ts t h at is e xp ecte d t o b e r e co gniz e d o ver a w eig hte d -a v era g e p erio d o f 2.1 y ears .

R estr ic te d S to ck Restric te d s to ck g ra n ts s u bje ct s o le ly to a n e m plo yee’s o r d ir e cto r’s c o ntin ued s erv ic e w it h th e C om pan y g en era lly w ill b eco m e fu lly v este d w it h in (a ) o ne to th re e y ears f ro m t h e d ate o f g ra n t t o e m plo yees a n d, in c erta in in sta n ces, m ay f u lly v est u pon a c h an ge in c o ntro l o f t h e C om pan y, a n d ( b ) one y ear f ro m t h e d ate o f gra n t f o r d ir e cto rs .

Sto ck g ra n ts s u bje ct t o t h e a ch ie v em en t o f p erfo rm an ce c o ndit io ns w ill n ot v est le ss t h an one y ear f ro m t h e d ate o f g ra n t.

The C om pan y r e co gniz e d c o m pen satio n e xp en se r e la te d t o r e stric te d s to ck a w ard s o f $2.6 m illio n , $1.1 m illio n , a n d $0.5 m illio n f o r t h e y ears e n ded Decem ber 3 1, 2018 , 2017 a n d 2016 , r e sp ectiv ely .

62 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts A s u m mary o f r e stric te d s to ck a w ard a ctiv it y t h ro ugh Decem ber 3 1, 2 018 w as a s f o llo w s:

Restr ic te d Sto ck Weig hte d A ve rag e Gran t Date F air V alu e Bala n ce a t D ecem ber 3 1, 2 017 1,8 82,3 63 $ 1.8 2 Gra n te d 3,2 84,1 97 $ 2.5 5 Award s V este d (3 72,1 16 ) $ 2.0 9 Can cele d (3 92,2 56 ) $ 2.2 9 Bala n ce a t D ecem ber 3 1, 2 018 4,4 02,1 88 $ 1.8 7 As of Decem ber 3 1, 2 018 , th ere w as $3.5 m illio n in u nre co gniz e d c o m pen satio n e xp en se re la te d to u nveste d re stric te d s to ck a w ard s th at is e xp ecte d to b e re co gniz e d o ver a w eig hte d -a v era g e p erio d o f 1.8 y ears .

The t o ta l f a ir v alu e o f r e stric te d s to ck a w ard s v este d d urin g t h e y ears Decem ber 3 1, 2 018 , 2017 a n d 2016 w as $0.4 m illio n , $0.4 m illio n , a n d $0.2 m illio n , r e sp ectiv ely .

Em plo yee S to ck P urch ase P la n The C om pan y’s E m plo yee S to ck P u rc h ase P la n (th e “ E SPP”) is a d m in is te re d b y th e C om pen satio n C om mit te e. T he E SPP p ro vid es a ll e lig ib le e m plo yees, a s defin ed u nder th e E SPP, th e o pportu nit y to p urc h ase u p to a m axim um n um ber o f s h are s o f C om mon S to ck o f th e C om pan y a s d ete rm in ed b y th e C om pen satio n Com mit te e. P artic ip an ts in th e E SPP m ay a cq uir e th e C om mon S to ck a t a c o st o f 8 5% o f th e lo w er o f th e fa ir m ark et v alu e o n th e fir s t o r la st d ay o f th e q uarte rly offe rin g p erio d.

On M ay 8 , 2 018, th e B oard o f D ir e cto rs a n d s to ckh old ers a p pro ved a n a m en dm en t to th e E SPP to in cre ase th e n um ber o f s h are s a v aila b le fo r is su an ce fro m 750,0 00 s h are s t o 2,2 50,0 00 s h are s.

As o f D ecem ber 3 1, 2 018, t h ere w ere 1,3 79,9 43 r e m ain in g s h are s a v aila b le f o r is su an ce.

Durin g t h e y ears e n ded Decem ber 3 1, 2 018 , 2017 a n d 2 016, 173,5 19 , 265,6 08 a n d 245,3 71 s h are s w ere p urc h ased u nder t h is p la n , r e sp ectiv ely . T he C om pan y r e co gniz e d $0.1 m illio n o f e xp en se r e la te d t o t h e E SPP durin g t h e y ears e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016.

401(k ) P la n The C om pan y m ain ta in s a d efe rre d c o m pen satio n p la n u nder S ectio n 4 01(k ) o f t h e In te rn al R ev en ue C ode.

Under t h e P la n , e m plo yees m ay e le ct t o d efe r u p t o 100% o f t h eir s ala ry , s u bje ct t o I n te rn al R ev en ue S erv ic e lim it s , a n d t h e C om pan y m ay m ake a d is cre tio nary m atc h in g c o ntrib utio n.

Durin g t h e y ear e n ded D ecem ber 31, 2 018, m an ag em en t a p pro ved d is cre tio nary m atc h in g c o ntrib utio ns to ta lin g a p pro xim ate ly $0.3 m illio n e ffe ctiv e Ju ly 1 , 2 018.

The C om pan y e le cte d to fo rg o a m atc h in g c o ntrib utio n d urin g t h e y ears e n ded D ecem ber 3 1, 2 017 a n d 2 016.

N O TE 1 0 – L O SS P ER S H ARE The C om pan y p re sen ts b asic a n d d ilu te d lo ss p er s h are f o r it s c o m mon s to ck, p ar v alu e $.0 001 p er s h are ( “ C om mon S to ck”).

Basic lo ss p er s h are is c alc u la te d b y div id in g th e n et lo ss a ttrib uta b le to c o m mon s to ckh old ers o f th e C om pan y b y th e w eig hte d a v era g e n um ber o f s h are s o f C om mon S to ck o uts ta n din g d urin g th e perio d.

Dilu te d lo ss p er s h are is d ete rm in ed b y a d ju stin g t h e p ro fit o r lo ss a ttrib uta b le t o s to ckh old ers a n d t h e w eig hte d a v era g e n um ber o f s h are s o f C om mon S to ck outs ta n din g a d ju ste d f o r t h e e ffe cts o f a ll d ilu tiv e p ote n tia l c o m mon s h are s c o m pris ed o f o ptio ns g ra n te d , u nveste d r e stric te d s to ck, s to ck a p pre cia tio n r ig hts , t h e 2017 W arra n ts a n d S erie s A a n d S erie s C C onvertib le P re fe rre d S to ck.

Po te n tia l C om mon S to ck e q uiv ale n ts th at h av e b een is su ed b y th e C om pan y re la te d to outs ta n din g s to ck o ptio ns, u nveste d r e stric te d s to ck a n d w arra n ts a re d ete rm in ed u sin g t h e t re asu ry s to ck m eth od, w hile p ote n tia l c o m mon s h are s r e la te d t o S erie s A a n d S erie s C C onvertib le P re fe rre d S to ck a re d ete rm in ed u sin g t h e “ if c o nverte d ” m eth od.

The C om pan y's S erie s A a n d S erie s C C onvertib le P re fe rre d S to ck, p ar v alu e $.0 001 p er s h are (to geth er, th e “ P re fe rre d S to ck”), is c o nsid ere d a p artic ip atin g secu rit y , w hic h m ean s th e s ecu rit y m ay p artic ip ate in u ndis trib ute d e arn in gs w it h C om mon S to ck.

The h old ers o f th e P re fe rre d S to ck w ould b e e n tit le d to s h are in div id en ds, o n a n a s-c o nverte d b asis , if th e h old ers o f C om mon S to ck w ere to re ceiv e d iv id en ds.

The C om pan y is re q uir e d to u se th e tw o-c la ss m eth od w hen co m putin g lo ss p er s h are w hen it h as a s ecu rit y t h at q ualif ie s a s a p artic ip atin g s ecu rit y .

The t w o-c la ss m eth od is a n e arn in gs a llo catio n f o rm ula t h at d ete rm in es lo ss per s h are fo r e ach c la ss o f c o m mon s to ck a n d p artic ip atin g s ecu rit y a cco rd in g to d iv id en ds d ecla re d (o r a ccu m ula te d ) a n d p artic ip atio n rig hts in u ndis trib ute d earn in gs.

In d ete rm in in g t h e a m ount o f n et e arn in gs t o a llo cate t o c o m mon s to ckh old ers , e arn in gs a re a llo cate d t o b oth c o m mon a n d p artic ip atin g s ecu rit ie s b ased o n th eir re sp ectiv e w eig hte d -a v era g e s h are s o uts ta n din g d urin g th e p erio d.

Dilu te d lo ss p er s h are fo r th e C om pan y’s C om mon S to ck is c o m pute d u sin g th e m ore dilu tiv e o f t h e t w o-c la ss m eth od o r t h e if -c o nverte d m eth od.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts The f o llo w in g t a b le s ets f o rth t h e c o m puta tio n o f b asic a n d d ilu te d lo ss p er c o m mon s h are ( in t h ousan ds, e xc ep t p er s h are a m ounts ):

Year E nded D ecem ber 3 1, 2018 2017 2016 Num erato r:

Loss f ro m c o ntin uin g o pera tio ns $ (5 1,5 92 ) $ (6 3,3 03 ) $ (3 6,1 72 ) Loss f ro m d is co ntin ued o pera tio ns, n et o f in co m e t a xe s (1 01 ) (8 93 ) (6 ,5 93 ) Net l o ss (5 1,6 93 ) (6 4,1 96 ) (4 2,7 65 ) Accru ed d iv id en ds o n p re fe rre d s to ck (1 1,2 10 ) (1 0,0 77 ) (9 ,0 84 ) Loss a ttr ib u ta ble t o c om mon s to ck hold ers $ (6 2,9 03 ) $ (7 4,2 73 ) $ (5 1,8 49 ) Den om in ato r - B asic a n d D ilu te d:

W eig hte d a v era g e n um ber o f c o m mon s h are s o uts ta n din g 127,9 42 123,7 91 93,7 40 Loss P er C om mon S hare:

Loss f ro m c o ntin uin g o pera tio ns, b asic a n d d ilu te d $ (0 .4 9 ) $ (0 .5 9 ) $ (0 .4 8 ) Loss f ro m d is co ntin ued o pera tio ns, b asic a n d d ilu te d — (0 .0 1 ) (0 .0 7 ) Loss p er c om mon s h are, b asic a n d d ilu te d $ (0 .4 9 ) $ (0 .6 0 ) $ (0 .5 5 ) The lo ss a ttrib uta b le to c o m mon s to ckh old ers is u sed a s th e b asis o f d ete rm in in g w heth er th e in clu sio n o f c o m mon s to ck e q uiv ale n ts w ould b e a n ti- d ilu tiv e.

A cco rd in gly , th e c o m puta tio n o f d ilu te d s h are s fo r th e years e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016 e xc lu des th e e ffe ct o f s h are s th at w ould b e is su ed in co nnectio n w it h t h e P IP E T ra n sactio n, t h e R ig hts O ffe rin g, 2 017 W arra n ts , s to ck o ptio ns, a n d r e stric te d s to ck a w ard s, a s t h eir in clu sio n w ould b e a n ti- d ilu tiv e t o lo ss attrib uta b le t o c o m mon s to ckh old ers .

N O TE 1 1 – I N CO M E T A XES The f e d era l a n d s ta te in co m e t a x b en efit ( e xp en se) f ro m c o ntin uin g o pera tio ns c o nsis te d o f t h e f o llo w in g ( in t h ousan ds):

Year E nded D ecem ber 3 1, 2018 2017 2016 Curre n t Fed era l $ — $ 925 $ — Sta te (5 02 ) (1 74 ) 30 Tota l c u rre n t (5 02 ) 751 30 Defe rre d Fed era l — 1,9 51 (1 ,7 44 ) Sta te (6 6 ) 1,4 28 (3 01 ) Tota l d efe rre d (6 6 ) 3,3 79 (2 ,0 45 ) Tota l t a x b en efit ( e xpen se) $ (5 68 ) $ 4,1 30 $ (2 ,0 15 ) 64 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts The e ffe ct o f t e m pora ry d if fe re n ces t h at g iv e r is e t o a s ig nif ic an t p ortio n o f d efe rre d t a xe s is a s f o llo w s ( in t h ousan ds):

Decem ber 3 1, 2018 2017 Defe rred t a x a ssets :

Reserv es n ot c u rre n tly d ed uctib le $ 6,6 34 $ 10,7 07 Net o pera tin g lo ss c arry fo rw ard s 128,8 19 110,7 73 Goodw ill a n d in ta n gib le s ( ta x d ed uctib le ) 7,8 53 12,7 57 Accru ed e xp en ses 641 95 Pro perty b asis d if fe re n ces 3,6 79 2,8 13 Sto ck b ased c o m pen satio n 2,1 80 2,3 71 Tota l d efe rre d t a x a ssets 149,8 06 139,5 16 Defe rred t a x l ia bilitie s:

Oth er (3 09 ) (1 80 ) Less: v alu atio n a llo w an ce (1 48,4 65 ) (1 38,2 38 ) Net d efe rred t a x a sset $ 1,0 32 $ 1,0 98 The C om pan y c o ntin ually a ssesses t h e n ecessit y o f a v alu atio n a llo w an ce.

Based o n t h is a ssessm en t, t h e C om pan y c o nclu ded t h at a v alu atio n a llo w an ce, in t h e am ount o f $148.5 m illio n a n d $138.2 m illio n , w as r e q uir e d a s o f Decem ber 3 1, 2 018 a n d 2017 , re sp ectiv ely .

If t h e C om pan y d ete rm in es in a f u tu re p erio d t h at it is m ore lik ely t h an n ot t h at p art o r a ll o f t h e d efe rre d t a x a ssets w ill b e r e aliz e d , t h e C om pan y w ill r e v ers e p art o r a ll o f t h e v alu atio n a llo w an ce.

At Decem ber 3 1, 2 018 , t h e C om pan y h ad f e d era l n et o pera tin g lo ss c arry fo rw ard s o f a p pro xim ate ly $429.8 m illio n , o f w hic h $11.9 m illio n is s u bje ct to a n a n nual lim it a tio n, w hic h w ill b eg in e xp ir in g in 2 026 a n d la te r.

The C om pan y a ls o h as a c arry fo rw ard o f a p pro xim ate ly $49.2 m illio n re la te d to th e in te re st e xp en se lim it a tio n, w hic h is n ot s u bje ct t o a n e xp ir a tio n p erio d. T he C om pan y h as p ost-a p portio ned s ta te n et o pera tin g lo ss c arry fo rw ard s o f a p pro xim ate ly $479.7 m illio n , th e m ajo rit y of w hic h w ill b eg in e xp ir in g in 2 019 a n d la te r.

A r e co ncilia tio n o f t h e f e d era l s ta tu to ry r a te t o t h e e ffe ctiv e in co m e t a x r a te f ro m c o ntin uin g o pera tio ns is a s f o llo w s ( in t h ousan ds):

Year E nded D ecem ber 3 1, 2018 2017 2016 Tax b en efit a t s ta tu to ry r a te $ 10,7 15 $ 23,6 54 $ 11,9 07 Sta te t a x b en efit , n et o f f e d era l t a xe s 1,5 10 4,5 87 1,3 98 Chan ge in v alu atio n a llo w an ce (1 0,2 27 ) 41,5 50 (1 4,7 25 ) Chan ge in t a x c o ntin gen cie s — 10 66 Alt e rn ativ e m in im um t a x r e ceiv ab le — 925 — Corp ora te t a x r a te c h an ges — (6 7,7 07 ) — Oth er (2 ,5 66 ) 1,1 11 (6 61 ) Tax b en efit ( e xpen se) $ (5 68 ) $ 4,1 30 $ (2 ,0 15 ) As o f Decem ber 3 1, 2 018 , th e C om pan y h ad $1.0 m illio n o f g ro ss u nre co gniz e d ta x b en efit s . A re co ncilia tio n o f th e b eg in nin g a n d e n din g a m ount o f g ro ss unre co gniz e d t a x b en efit s is a s f o llo w s ( in t h ousan ds):

Year E nded D ecem ber 3 1, 2018 2017 2016 Unrecog niz ed t a x b en efits b ala n ce a t J an uary 1 , $ 1,0 14 $ 1,0 21 $ 1,0 67 Lap se o f s ta tu te o f lim it a tio ns — (7 ) (4 6 ) Unrecog niz ed t a x b en efits b ala n ce a t D ecem ber 3 1, $ 1,0 14 $ 1,0 14 $ 1,0 21 The C om pan y’s p olic y f o r r e co rd in g in te re st a n d p en alt ie s a sso cia te d w it h u ncerta in t a x p osit io ns is t o r e co rd s u ch it e m s a s a c o m ponen t o f in co m e t a x e xp en se in th e C onso lid ate d S ta te m en ts o f O pera tio ns.

As o f Decem ber 3 1, 2 018 a n d Decem ber 3 1, 2 017 , th e C om pan y h ad a n om in al a m ount o f a ccru ed in te re st re la te d to uncerta in t a x p osit io ns.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts The C om pan y f ile s in co m e t a x r e tu rn s, in clu din g r e tu rn s f o r it s s u bsid ia rie s, w it h f e d era l, s ta te a n d lo cal ju ris d ic tio ns.

The C om pan y’s u ncerta in t a x p osit io ns a re re la te d to ta x y ears th at re m ain s u bje ct to e xa m in atio n.

As o f Decem ber 3 1, 2 018 , U .S . ta x re tu rn s fo r th e y ears 2 015 th ro ugh 2 018 re m ain s u bje ct to e xa m in atio n b y fe d era l ta x a u th orit ie s.

Tax re tu rn s fo r th e y ears 2 014 th ro ugh 2 018 re m ain s u bje ct to e xa m in atio n b y s ta te a n d lo cal ta x a u th orit ie s fo r a m ajo rit y o f th e C om pan y's sta te a n d lo cal f ilin gs.

On D ecem ber 2 2, 2 017, th e P re sid en t o f th e U nit e d S ta te s s ig ned in to la w th e T ax C uts a n d Jo bs A ct o f 2 017 (“ T CJA ”).

The e n actm en t in clu ded b ro ad ta x ch an ges t h at a re a p plic ab le t o B io Scrip , I n c.

Most n ota b ly , t h e T CJA h as e sta b lis h ed t h e U .S . c o rp ora te t a x r a te d ecre ase f ro m a h ig h o f 3 5% t o a f la t 2 1% in co m e t a x ra te e ffe ctiv e J a n uary 1 , 2 018.

These c h an ges re q uir e B io Scrip , In c. to re -m easu re d efe rre d ta x a ssets a n d lia b ilit ie s.

The C om pan y u ses th e a sset a n d lia b ilit y a p pro ach fo r a cco untin g fo r in co m e t a xe s.

Under t h at m eth od, a ssets a n d lia b ilit ie s a re r e co rd ed f o r f u tu re t a x c o nseq uen ces a ttrib uta b le t o t h e d if fe re n ce b etw een f in an cia l s ta te m en t b ala n ces o f assets a n d lia b ilit ie s a n d t h eir r e sp ectiv e t a x b asis .

Defe rre d t a x a ssets a n d lia b ilit ie s a re m easu re d u sin g t h e e n acte d t a x r a te s a t w hic h t h e t e m pora ry d if fe re n ces a re exp ecte d t o r e v ers e.

As a r e su lt o f t h e d ecre ased U .S . c o rp ora te in co m e t a x r a te f ro m 3 5% t o 2 1% , t h e C om pan y h as r e v alu ed it s e n din g n et d efe rre d t a x a ssets a s o f D ecem ber 3 1, 2 017.

Due t o t h e f u ll v alu atio n a llo w an ce a g ain st s u bsta n tia lly a ll n et d efe rre d t a x a ssets , t h e c h an ge in d efe rre d t a x r a te t o 2 1% d oes n ot h av e a n im pact on t h e C om pan y’s f in an cia l s ta te m en ts .

N O TE 1 2 – F A IR V ALUE M EA SUR M EN TS The e stim ate d fa ir v alu es o f th e C om pan y’s fin an cia l in stru m en ts e it h er re co rd ed o r d is clo sed o n a re cu rrin g b asis a s o f D ecem ber 3 1, 2 018 a re a s fo llo w s (in th ousan ds):

Fin an cia l I n str u m en t Carryin g V alu e a s o f Decem ber 3 1, 2 018 Mark ets f o r I d en tic al I te m (L eve l 1 ) Sig nific an t O th er Observa ble I n pu ts ( L eve l 2) Sig nific an t U nobserva ble In pu ts ( L eve l 3 ) Fir s t L ie n N ote F acilit y (1 ) $ 198,9 62 $ — $ — $ 203,4 62 Seco nd L ie n N ote F acilit y (1 ) 108,9 31 — — 121,6 22 2021 N ote s (2 ) 198,1 25 — 186,5 00 — Tota l d eb t in stru m en ts $ 506,0 18 $ — $ 186,5 00 $ 325,0 84 2017 W arra n ts ( 3 ) $ 25,3 31 $ — $ 25,3 31 $ — (1 ) The e stim ate d f a ir v alu es o f t h e F ir s t a n d S eco nd L ie n N ote s w ere b ased o n c ash f lo w m odels d is co unte d a t m ark et in te re st r a te s t h at c o nsid ere d t h e underly in g r is ks o f t h e n ote .

(2 ) The e stim ate d f a ir v alu e o f t h e 2 021 N ote s in co rp ora te d r e cen t t ra d in g a ctiv it y in p ublic m ark ets .

(3 ) See 2017 W arra nts w it h in N ote 2 - S um mary o f S ig nif ic an t A cco untin g P olic ie s.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts N O TE 1 3 – R ES TR UC TUR IN G, A CQ UIS IT IO N, I N TEG RATIO N, A ND O TH ER E X PEN SES Restru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er e xp en ses in clu de n on-re cu rrin g c o sts a sso cia te d w it h r e stru ctu rin g, a cq uis it io n a n d in te g ra tio n in it ia tiv es s u ch as em plo yee sev era n ce co sts , certa in le g al an d p ro fe ssio nal fe es, tra in in g co sts , re d undan t w ag e co sts , im pacts re co rd ed fro m th e ch an ge in co ntin gen t co nsid era tio n o blig atio ns, a n d o th er c o sts r e la te d t o c o ntra ct t e rm in atio ns a n d c lo sed b ra n ch es/o ffic es.

Restru ctu rin g, a cq uis it io n, in te g ra tio n, a n d o th er e xp en ses in t h e C onso lid ate d S ta te m en ts o f O pera tio ns c o nsis te d o f t h e f o llo w in g ( in t h ousan ds):

Year E nded D ecem ber 3 1, 2018 2017 2016 Restru ctu rin g a n d o th er e xp en se $ 4,9 34 $ 12,1 34 $ 10,3 34 Acq uis it io n a n d in te g ra tio n e xp en ses 1,5 23 528 10,1 22 Chan ge in f a ir v alu e o f c o ntin gen t c o nsid era tio n — — (4 ,5 97 ) Tota l r estr u ctu rin g, a cqu is itio n , i n te g ratio n , a n d o th er e xpen ses $ 6,4 57 $ 12,6 62 $ 15,8 59 N O TE 1 4 – C O M MIT M EN TS A ND C O NTIN GEN CIE S Leg al P roceedin gs The C om pan y is a p arty t o v ario us le g al, r e g ula to ry a n d g overn m en ta l p ro ceed in gs in cid en ta l t o it s b usin ess. B ased o n c u rre n t k n ow le d ge, m an ag em en t d oes not b elie v e th at lo ss c o ntin gen cie s a ris in g fro m p en din g le g al, re g ula to ry a n d g overn m en ta l m atte rs , in clu din g th e m atte rs d escrib ed h ere in , w ill h av e a m ate ria l ad vers e e ffe ct o n t h e c o nso lid ate d f in an cia l p osit io n o r liq uid it y o f t h e C om pan y. H ow ev er, in lig ht o f t h e in here n t u ncerta in tie s in volv ed in p en din g le g al, r e g ula to ry an d g overn m en ta l m atte rs , s o m e o f w hic h a re b ey ond t h e C om pan y’s c o ntro l, a n d t h e in dete rm in ate d am ag es s o ught in s o m e o f t h ese m atte rs , a n a d vers e o utc o m e in one o r m ore o f t h ese m atte rs c o uld b e m ate ria l t o t h e C om pan y’s r e su lt s o f o pera tio ns o r c ash f lo w s f o r a n y p artic u la r r e p ortin g p erio d.

Wit h r e sp ect t o a ll le g al, r e g ula to ry a n d g overn m en ta l p ro ceed in gs, t h e C om pan y c o nsid ers t h e lik elih ood o f a n eg ativ e o utc o m e. I f t h e C om pan y d ete rm in es t h e lik elih ood o f a n eg ativ e o utc o m e w it h re sp ect to a n y s u ch m atte r is p ro bab le a n d th e a m ount o f th e lo ss c an b e re aso nab ly e stim ate d , th e C om pan y re co rd s a n accru al f o r t h e e stim ate d lo ss f o r t h e e xp ecte d o utc o m e o f t h e m atte r. If t h e lik elih ood o f a n eg ativ e o utc o m e w it h r e sp ect t o m ate ria l m atte rs is r e aso nab ly p ossib le an d t h e C om pan y is a b le t o d ete rm in e a n e stim ate o f t h e p ossib le lo ss o r a r a n ge o f lo ss, w heth er in e xc ess o f a r e la te d a ccru ed lia b ilit y o r w here t h ere is n o a ccru ed lia b ilit y , t h e C om pan y d is clo ses t h e e stim ate o f t h e p ossib le lo ss o r r a n ge o f lo ss. H ow ev er, t h e C om pan y is u nab le t o e stim ate a p ossib le lo ss o r r a n ge o f lo ss in so m e in sta n ces b ased o n t h e s ig nif ic an t u ncerta in tie s in volv ed in , a n d/o r t h e p re lim in ary n atu re o f, c erta in le g al, r e g ula to ry a n d g overn m en ta l m atte rs .

On D ecem ber 1 8, 2 017, a c o m merc ia l p ay or o f t h e C om pan y s en t a le tte r t h at c la im ed a n a lle g ed b re ach o f t h e C om pan y’s o blig atio n u nder it s p ro vid er c o ntra cts .

N o le g al p ro ceed in g h as b een file d . T he C om pan y is n ot a b le to e stim ate th e a m ount o f a n y p ossib le lo ss. T he C om pan y b elie v es th is c la im is w it h out m erit a n d in te n ds t o v ig oro usly d efe n d a g ain st t h is c la im if a n y s u ch le g al p ro ceed in g is c o m men ced .

G overn m en t R eg ula tio n Vario us fe d era l a n d s ta te la w s a n d re g ula tio ns a ffe ctin g th e h ealt h care in dustry d o o r m ay im pact th e C om pan y’s c u rre n t a n d p la n ned o pera tio ns, in clu din g, w it h out lim it a tio n, fe d era l a n d s ta te la w s p ro hib it in g k ic kb acks in g overn m en t h ealt h p ro gra m s, fe d era l a n d s ta te a n tit ru st a n d d ru g d is trib utio n la w s, a n d a w id e varie ty o f c o nsu m er p ro te ctio n, in su ra n ce a n d o th er s ta te la w s a n d re g ula tio ns. W hile m an ag em en t b elie v es th e C om pan y is in s u bsta n tia l c o m plia n ce w it h a ll exis tin g la w s a n d r e g ula tio ns m ate ria l t o t h e o pera tio n o f it s b usin ess, s u ch la w s a n d r e g ula tio ns a re o fte n u ncerta in in t h eir a p plic atio n t o o ur b usin ess p ra ctic es a s th ey e v olv e a n d a re s u bje ct t o r a p id c h an ge. A s c o ntro vers ie s c o ntin ue t o a ris e in t h e h ealt h care in dustry , f e d era l a n d s ta te r e g ula tio n a n d e n fo rc em en t p rio rit ie s in th is a re a c an b e e xp ecte d t o in cre ase, t h e im pact o f w hic h c an not b e p re d ic te d .

Fro m tim e to tim e, th e C om pan y re sp onds to in vestig ato ry s u bpoen as a n d re q uests fo r in fo rm atio n fro m g overn m en ta l a g en cie s a n d p riv ate p artie s. T he Com pan y c an not p re d ic t w it h c erta in ty w hat t h e o utc o m e o f a n y o f t h e f o re g oin g m ig ht b e. W hile t h e C om pan y b elie v es it is in s u bsta n tia l c o m plia n ce w it h a ll la w s, ru le s a n d r e g ula tio ns t h at a ffe cts it s b usin ess a n d o pera tio ns, t h ere c an b e n o a ssu ra n ce t h at t h e C om pan y w ill n ot b e s u bje ct t o s cru tin y o r c h alle n ge u nder o ne o r m ore e xis tin g la w s o r t h at a n y 67 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts su ch c h alle n ge w ould n ot b e s u ccessfu l. A ny s u ch c h alle n ge, w heth er o r n ot s u ccessfu l, c o uld h av e a m ate ria l e ffe ct u pon t h e C om pan y’s C onso lid ate d F in an cia l Sta te m en ts . A v io la tio n o f th e fe d era l A nti- K ic kb ack S ta tu te , fo r e xa m ple , m ay re su lt in s u bsta n tia l c rim in al p en alt ie s, a s w ell a s s u sp en sio n o r e xc lu sio n fro m th e M ed ic are a n d M ed ic aid p ro gra m s. M ore o ver, th e c o sts a n d e xp en ses a sso cia te d w it h d efe n din g th ese a ctio ns, e v en w here s u ccessfu l, c an b e s ig nif ic an t.

Furth er, th ere c an b e n o a ssu ra n ce t h e C om pan y w ill b e a b le t o o bta in o r m ain ta in a n y o f t h e r e g ula to ry a p pro vals t h at m ay b e r e q uir e d t o o pera te it s b usin ess, a n d t h e f a ilu re to d o s o c o uld h av e a m ate ria l e ffe ct o n t h e C om pan y’s C onso lid ate d F in an cia l S ta te m en ts .

Leases The C om pan y le ases it s f a cilit ie s a n d c erta in e q uip m en t u nder v ario us o pera tin g le ases w it h t h ir d p artie s.

The m ajo rit y o f t h ese le ases c o nta in e scala tio n c la u ses th at in cre ase b ase r e n t p ay m en ts b ased u pon e it h er t h e C onsu m er P ric e I n dex o r a n a g re ed u pon s ch ed ule .

In a d dit io n, t h e C om pan y u tiliz e s c ap it a l le ases a g re em en ts w it h t h ir d p artie s t o o bta in c erta in p ro perty a n d e q uip m en t.

In te re st r a te s o n c ap it a l le ases a re b oth fix e d a n d v aria b le a n d r a n ge f ro m 3% t o 7% .

As o f Decem ber 3 1, 2 018 , f u tu re m in im um le ase p ay m en ts u nder o pera tin g a n d c ap it a l le ases w ere a s f o llo w s ( in t h ousan ds):

Operatin g L eases Capita l L eases Tota l 2019 $ 8,9 34 $ 679 $ 9,6 13 2020 7,1 43 311 7,4 54 2021 6,2 52 — 6,2 52 2022 4,7 97 — 4,7 97 2023 3,3 20 — 3,3 20 2024 a n d T here afte r 7,4 70 — 7,4 70 Tota l F utu re M in im um L ease P aym en ts $ 37,9 16 $ 990 $ 38,9 06 Ren t e xp en se fo r le ased fa cilit ie s a n d e q uip m en t w as a p pro xim ate ly $8.1 m illio n , $7.7 m illio n a n d $7.3 m illio n fo r th e years e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2016 , r e sp ectiv ely .

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts N O TE 1 5 – S EL EC TED Q UA RTER LY F IN ANCIA L D ATA ( U N AUD IT ED ) A s u m mary o f u nau dit e d q uarte rly f in an cia l in fo rm atio n f o r t h e y ears e n ded Decem ber 3 1, 2 018 a n d 2017 is a s f o llo w s ( in t h ousan ds, e xc ep t p er s h are a m ounts ).

Fir st Q uarte r Secon d Q uarte r Thir d Q uarte r Fou rth Q uarte r Year e n ded D ecem ber 3 1, 2 018 Net r e v en ue $ 168,5 84 $ 175,7 89 $ 180,9 62 $ 183,5 68 Gro ss p ro fit 55,0 48 59,9 57 65,9 11 62,1 22 Loss f ro m c o ntin uin g o pera tio ns, b efo re in co m e t a xe s (1 2,9 39 ) (1 5,0 81 ) (8 ,0 01 ) (1 5,0 03 ) In co m e ( lo ss) f ro m d is co ntin ued o pera tio ns, n et o f in co m e t a xe s (3 0 ) (1 5 ) (7 1 ) 15 Net lo ss $ (1 3,0 17 ) $ (1 5,1 39 ) $ (8 ,1 74 ) $ (1 5,3 63 ) Loss p er s h are f ro m c o ntin uin g o pera tio ns, b asic a n d d ilu te d $ (0 .1 2 ) $ (0 .1 4 ) $ (0 .0 9 ) $ (0 .1 4 ) In co m e ( lo ss) p er s h are f ro m d is co ntin ued o pera tio ns, b asic a n d d ilu te d — — — — Loss p er s h are , b asic a n d d ilu te d $ (0 .1 2 ) $ (0 .1 4 ) $ (0 .0 9 ) $ (0 .1 4 ) Year e n ded D ecem ber 3 1, 2 017 Net r e v en ue $ 217,8 10 $ 218,1 06 $ 198,6 92 $ 182,5 82 Gro ss p ro fit 64,8 74 67,6 11 66,5 63 70,1 94 Loss f ro m c o ntin uin g o pera tio ns, b efo re in co m e t a xe s (1 8,8 01 ) (2 8,4 32 ) (1 2,9 98 ) (7 ,2 02 ) In co m e ( lo ss) f ro m d is co ntin ued o pera tio ns, n et o f in co m e t a xe s (2 99 ) (3 73 ) 66 (2 87 ) Net lo ss $ (1 9,7 19 ) $ (2 9,5 23 ) $ (1 2,9 92 ) $ (1 ,9 62 ) Loss p er s h are f ro m c o ntin uin g o pera tio ns, b asic a n d d ilu te d $ (0 .1 8 ) $ (0 .2 6 ) $ (0 .1 2 ) $ (0 .0 3 ) In co m e ( lo ss) p er s h are f ro m d is co ntin ued o pera tio ns, b asic a n d d ilu te d — — — (0 .0 1 ) Loss p er s h are , b asic a n d d ilu te d $ (0 .1 8 ) $ (0 .2 6 ) $ (0 .1 2 ) $ (0 .0 4 ) N O TE 1 6 – S UB SEQ UEN T E V EN TS On M arc h 1 4, 2 019 w e e n te re d in to a d efin it iv e m erg er a g re em en t w it h th e s h are h old er o f O ptio n C are E n te rp ris es, In c. (“ O ptio n C are ”), th e n atio n’s la rg est in dep en den t p ro vid er o f h om e a n d a lt e rn ate t re atm en t s it e in fu sio n t h era p y s erv ic es. U nder t h e t e rm s o f t h e m erg er a g re em en t, t h e C om pan y w ill is su e n ew s h are s o f it s c o m mon s to ck to O ptio n C are ’s s h are h old er in a n on-ta xa b le e xc h an ge, w hic h w ill re su lt in B io Scrip s h are h old ers h old in g a p pro xim ate ly 20% o f th e c o m bin ed co m pan y. T he s h are h old er o f O ptio n C are h as s ecu re d c o m mit te d fin an cin g, th e p ro ceed s o f w hic h w ill b e u sed to re tir e th e C om pan y’s F ir s t L ie n N ote F acilit y , Seco nd L ie n N ote F acilit y a n d 2 021 N ote s a t t h e c lo se o f t h e t ra n sactio n. F o llo w in g t h e c lo se o f t h e t ra n sactio n, t h e c o m bin ed c o m pan y c o m mon s to ck w ill c o ntin ue to b e lis te d o n t h e N asd aq N atio nal M ark et. T he t ra n sactio n is c u rre n tly e xp ecte d t o c lo se b y t h e e n d o f 2 019.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Ite m 9 .

Changes i n a nd D is a gre em en ts w ith A cco unta nts o n A cco untin g a nd F in ancia l D is c lo su re None.

Ite m 9 A .

Contr o ls a nd P ro ced ure s Eva lu atio n o f D is clo su re C on tr ols a n d P rocedu res An e v alu atio n o f t h e e ffe ctiv en ess o f t h e d esig n a n d o pera tio n o f o ur d is clo su re c o ntro ls a n d p ro ced ure s w as p erfo rm ed u nder t h e s u perv is io n, a n d w it h t h e partic ip atio n, o f o ur m an ag em en t, in clu din g t h e p rin cip al e xe cu tiv e o ffic er a n d t h e p rin cip al f in an cia l o ffic er to e n su re t h at in fo rm atio n r e q uir e d t o b e d is clo sed in o ur re p orts t h at w e f ile o r s u bm it u nder t h e S ecu rit ie s A ct is r e co rd ed , p ro cessed , s u m mariz e d a n d r e p orte d , w it h in t h e t im e p erio ds s p ecif ie d in t h e S EC ’s r u le s a n d f o rm s.

Based o n t h at e v alu atio n, o ur m an ag em en t, in clu din g t h e p rin cip al e xe cu tiv e o ffic er a n d p rin cip al f in an cia l o ffic er, c o nclu ded t h at o ur d is clo su re c o ntro ls a n d pro ced ure s w ere e ffe ctiv e a s o f t h e e n d o f t h e p erio d c o vere d b y t h is r e p ort.

M an ag em en t R eport o n I n te rn al C on tr ol o ve r F in an cia l R eportin g Man ag em en t is r e sp onsib le f o r e sta b lis h in g a n d m ain ta in in g a d eq uate in te rn al c o ntro l o ver f in an cia l r e p ortin g. U nder t h e s u perv is io n a n d w it h t h e p artic ip atio n of o ur m an ag em en t, in clu din g t h e p rin cip al e xe cu tiv e o ffic er a n d t h e p rin cip al f in an cia l o ffic er, w e c o nducte d a n e v alu atio n o f t h e e ffe ctiv en ess o f o ur in te rn al c o ntro l over fin an cia l re p ortin g b ased o n th e fra m ew ork in th e In te rn al C ontr o l- In te g ra te d F ra m ew ork (2 013 fra m ew ork ) is su ed b y th e C om mit te e o f Sp onso rin g O rg an iz a tio ns o f t h e T re ad w ay C om mis sio n. B ased o n o ur e v alu atio n u nder t h is f ra m ew ork , m an ag em en t c o nclu ded t h at o ur in te rn al c o ntro l o ver f in an cia l r e p ortin g w as e ffe ctiv e a t D ecem ber 3 1, 2 018.

KPM G L LP, t h e in dep en den t r e g is te re d p ublic a cco untin g f ir m t h at a u dit e d t h e c o nso lid ate d f in an cia l s ta te m en ts in clu ded in t h is a n nual r e p ort o n F o rm 1 0-K , has is su ed a n a tte sta tio n r e p ort o n o ur in te rn al c o ntro l o ver f in an cia l r e p ortin g, w hic h is in clu ded h ere in .

C han ges i n I n te rn al C on tr ol o ve r F in an cia l R eportin g Durin g 2 018, w e d ev elo ped a n d im ple m en te d r e m ed ia tio n p la n s t o a d dre ss t h e m ate ria l w eakn ess w e id en tif ie d d urin g 2 017. S pecif ic ally , o ur r e m ed ia tio n p la n s in clu ded ( i) e n han cin g r is k a ssessm en t p ro cesses a n d m onit o rin g a ctiv it ie s t o e n su re t h e C om pan y d esig ns, im ple m en ts , a n d o pera te s e ffe ctiv e c o ntro ls t h at a re re sp onsiv e t o id en tif ie d r is ks; ( ii) im ple m en tin g c o ntro ls t o v alid ate k ey in puts a n d c alc u la tio ns u sed in s p re ad sh eets u sed t o d ete rm in e f in an cia l s ta te m en t a m ounts an d d is clo su re s; ( iii) im ple m en tin g c o ntro ls t o id en tif y a n d c le ar u nm atc h ed t ra n sactio ns in s u sp en se a cco unts ; ( iv ) im ple m en tin g m onit o rin g c o ntro ls t o b e o pera te d by a c en tra liz e d r e so urc e t o e n su re p erio dic c o unts o f in ven to ry a n d f ix e d a ssets a re c o m ple te d a n d d if fe re n ces a re t im ely p ro cessed b y o ur a cco untin g s y ste m s, a n d; (v ) e n han cin g c o ntro ls s u rro undin g t h e t im ely a n d a ccu ra te r e co gnit io n o f f ix e d a sset d is p osals a n d a b an donm en ts .

To e ffe ctiv ely e xe cu te o n o ur p la n , w e h ir e d ad dit io nal r e so urc es w it h s ig nif ic an t e xp erie n ce w it h in te rn al c o ntro ls o ver f in an cia l r e p ortin g t o o ur a cco untin g t e am , a n d in veste d in a m ore r o bust in te rn al a u dit fu nctio n.

As a r e su lt o f im ple m en tin g o ur r e m ed ia tio n p la n s, a s o f D ecem ber 3 1, 2 018, w e b elie v e w e h av e r e m ed ia te d t h e m ate ria l w eakn ess.

Exc ep t a s d is cu ssed a b ove, t h ere w ere n o c h an ges d urin g t h e f o urth q uarte r o f 2 018 in o ur in te rn al c o ntro l o ver f in an cia l r e p ortin g t h at h av e m ate ria lly a ffe cte d or a re r e aso nab ly lik ely t o m ate ria lly a ffe ct o ur in te rn al c o ntro l o ver f in an cia l r e p ortin g.

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http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Report o f I n depen den t R eg is te red P ublic A ccou ntin g F ir m To t h e S to ckh old ers a n d B oard o f D ir e cto rs Bio Scrip , I n c.:

O pin io n o n I n te rn al C ontr o l O ver F in ancia l R ep ortin g W e h av e a u dit e d B io Scrip , In c. a n d s u bsid ia rie s’ (th e C om pan y) in te rn al c o ntro l o ver fin an cia l re p ortin g a s o f D ecem ber 3 1, 2 018, b ased o n c rit e ria e sta b lis h ed in In te rn al C ontr o l - I n te g ra te d F ra m ew ork ( 2 013) is su ed b y t h e C om mit te e o f S p onso rin g O rg an iz a tio ns o f t h e T re ad w ay C om mis sio n. I n o ur o pin io n, t h e C om pan y m ain ta in ed , in a ll m ate ria l re sp ects , e ffe ctiv e in te rn al c o ntro l o ver fin an cia l re p ortin g a s o f D ecem ber 3 1, 2 018, b ased o n c rit e ria e sta b lis h ed in In te rn al C ontr o l - In te g ra te d F ra m ew ork ( 2 013) is su ed b y t h e C om mit te e o f S ponso rin g O rg an iz a tio ns o f t h e T re ad w ay C om mis sio n.

W e a ls o h av e a u dit e d , in a cco rd an ce w it h th e s ta n dard s o f th e P u blic C om pan y A cco untin g O vers ig ht B oard ( U nit e d S ta te s) ( P C A OB), th e c o nso lid ate d b ala n ce sh eets o f th e C om pan y a s o f D ecem ber 3 1, 2 018 a n d 2 017, th e re la te d c o nso lid ate d s ta te m en ts o f o pera tio ns, s to ckh old ers ’ d efic it , a n d c ash flo w s fo r e ach o f th e years in t h e t h re e‑y ear p erio d e n ded D ecem ber 3 1, 2 018, a n d t h e r e la te d n ote s a n d f in an cia l s ta te m en t s ch ed ule ( c o lle ctiv ely , t h e c o nso lid ate d f in an cia l s ta te m en ts ), an d o ur r e p ort d ate d M arc h 1 5, 2 019 e xp re ssed a n u nqualif ie d o pin io n o n t h ose c o nso lid ate d f in an cia l s ta te m en ts .

Basis fo r O pin io n The C om pan y’s m an ag em en t is r e sp onsib le f o r m ain ta in in g e ffe ctiv e in te rn al c o ntro l o ver f in an cia l r e p ortin g a n d f o r it s a ssessm en t o f t h e e ffe ctiv en ess o f in te rn al co ntro l o ver f in an cia l r e p ortin g, in clu ded in t h e a cco m pan yin g Managem en t R ep ort o n In te rn al C ontr o l o ver F in ancia l R ep ortin g . O ur r e sp onsib ilit y is t o e xp re ss an o pin io n o n th e C om pan y’s in te rn al c o ntro l o ver fin an cia l re p ortin g b ased o n o ur a u dit . W e a re a p ublic a cco untin g fir m re g is te re d w it h th e P C A OB a n d a re re q uir e d t o b e in dep en den t w it h r e sp ect t o t h e C om pan y in a cco rd an ce w it h t h e U .S . f e d era l s ecu rit ie s la w s a n d t h e a p plic ab le r u le s a n d r e g ula tio ns o f t h e S ecu rit ie s an d E xc h an ge C om mis sio n a n d t h e P C A OB.

W e c o nducte d o ur a u dit in a cco rd an ce w it h t h e s ta n dard s o f t h e P C A OB. T hose s ta n dard s r e q uir e t h at w e p la n a n d p erfo rm t h e a u dit t o o bta in r e aso nab le a ssu ra n ce ab out w heth er e ffe ctiv e in te rn al c o ntro l o ver f in an cia l r e p ortin g w as m ain ta in ed in a ll m ate ria l r e sp ects . O ur a u dit o f in te rn al c o ntro l o ver f in an cia l r e p ortin g in clu ded obta in in g a n u nders ta n din g o f in te rn al c o ntro l o ver f in an cia l r e p ortin g, a ssessin g t h e r is k t h at a m ate ria l w eakn ess e xis ts , a n d t e stin g a n d e v alu atin g t h e d esig n a n d opera tin g e ffe ctiv en ess o f in te rn al c o ntro l b ased o n t h e a ssessed r is k. O ur a u dit a ls o in clu ded p erfo rm in g s u ch o th er p ro ced ure s a s w e c o nsid ere d n ecessary in t h e cir c u m sta n ces. W e b elie v e t h at o ur a u dit p ro vid es a r e aso nab le b asis f o r o ur o pin io n.

D efi n itio n a nd L im ita tio ns o f I n te rn al C ontr o l O ver F in ancia l R ep ortin g A c o m pan y’s in te rn al c o ntro l o ver f in an cia l r e p ortin g is a p ro cess d esig ned t o p ro vid e r e aso nab le a ssu ra n ce r e g ard in g t h e r e lia b ilit y o f f in an cia l r e p ortin g a n d t h e pre p ara tio n o f fin an cia l s ta te m en ts fo r e xte rn al p urp oses in a cco rd an ce w it h g en era lly a ccep te d a cco untin g p rin cip le s. A c o m pan y’s in te rn al c o ntro l o ver fin an cia l re p ortin g in clu des t h ose p olic ie s a n d p ro ced ure s t h at ( 1 ) p erta in t o t h e m ain te n an ce o f r e co rd s t h at, in r e aso nab le d eta il, a ccu ra te ly a n d f a ir ly r e fle ct t h e t ra n sactio ns an d d is p osit io ns o f th e a ssets o f th e c o m pan y; (2 ) p ro vid e re aso nab le a ssu ra n ce th at tra n sactio ns a re re co rd ed a s n ecessary to p erm it p re p ara tio n o f fin an cia l sta te m en ts in a cco rd an ce w it h g en era lly a ccep te d a cco untin g p rin cip le s, a n d t h at r e ceip ts a n d e xp en dit u re s o f t h e c o m pan y a re b ein g m ad e o nly in a cco rd an ce w it h au th oriz a tio ns o f m an ag em en t a n d d ir e cto rs o f th e c o m pan y; a n d (3 ) p ro vid e re aso nab le a ssu ra n ce re g ard in g p re v en tio n o r tim ely d ete ctio n o f u nau th oriz e d acq uis it io n, u se, o r d is p osit io n o f t h e c o m pan y’s a ssets t h at c o uld h av e a m ate ria l e ffe ct o n t h e f in an cia l s ta te m en ts .

Becau se o f it s in here n t lim it a tio ns, in te rn al c o ntro l o ver fin an cia l re p ortin g m ay n ot p re v en t o r d ete ct m is sta te m en ts . A ls o , p ro je ctio ns o f a n y e v alu atio n o f effe ctiv en ess t o f u tu re p erio ds a re s u bje ct t o t h e r is k t h at c o ntro ls m ay b eco m e in ad eq uate b ecau se o f c h an ges in c o ndit io ns, o r t h at t h e d eg re e o f c o m plia n ce w it h th e p olic ie s o r p ro ced ure s m ay d ete rio ra te .

/s / K PM G L LP D en ver, C olo ra d o M arc h 1 5, 2 019 71 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Ite m 9 B .

Oth er I n fo rm atio n None.

PA RT I II Ite m 10.

Dir e cto rs, E xecu tiv e O ffic ers a nd C orp ora te G overn ance We h av e a d opte d a C ode o f E th ic s t h at a p plie s t o a ll o f o ur d ir e cto rs , o ffic ers a n d e m plo yees, in clu din g o ur p rin cip al e xe cu tiv e, p rin cip al f in an cia l a n d p rin cip al acco untin g o ffic ers , o r p ers o ns p erfo rm in g s im ila r f u nctio ns. O ur C ode o f E th ic s is p oste d o n o ur w eb sit e lo cate d a t h ttp :/ /w ww.b io scrip .c o m /c o rp ora te -g overn an ce.

W e in te n d t o d is clo se f u tu re a m en dm en ts t o c erta in p ro vis io ns o f t h e C ode o f E th ic s, a n d w aiv ers o f t h e C ode o f E th ic s g ra n te d t o e xe cu tiv e o ffic ers a n d d ir e cto rs .

The o th er in fo rm atio n r e q uir e d b y t h is it e m is in co rp ora te d b y r e fe re n ce f ro m t h e in fo rm atio n c o nta in ed in o ur 2 019 P ro xy S ta te m en t.

Ite m 1 1.

Execu tiv e C om pen sa tio n The in fo rm atio n r e q uir e d b y t h is it e m is in co rp ora te d b y r e fe re n ce f ro m t h e in fo rm atio n c o nta in ed in o ur 2 019 P ro xy S ta te m en t.

Ite m 1 2.

Secu rity O wnersh ip o f C erta in B en efic ia l O wners a nd M anagem en t a nd R ela te d S to ck hold er M atte rs The in fo rm atio n r e q uir e d b y t h is it e m is in co rp ora te d b y r e fe re n ce f ro m t h e in fo rm atio n c o nta in ed in o ur 2 019 P ro xy S ta te m en t.

Ite m 1 3.

Certa in R ela tio nsh ip s a nd R ela te d T ra nsa ctio ns, a nd D ir e cto r I n dep en den ce The in fo rm atio n r e q uir e d b y t h is it e m is in co rp ora te d b y r e fe re n ce f ro m t h e in fo rm atio n c o nta in ed in o ur 2 019 P ro xy S ta te m en t.

Ite m 1 4.

Prin cip al A cco unta nt F ees a nd S erv ic es The in fo rm atio n r e q uir e d b y t h is it e m is in co rp ora te d b y r e fe re n ce f ro m t h e in fo rm atio n c o nta in ed in o ur 2 019 P ro xy S ta te m en t.

72 Vie w O nlin e a t:

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Exhib its , F in ancia l S ta te m en t S ch ed ule s Pag e (a )(1 ) F in an cia l S ta te m en ts .

The f o llo w in g f in an cia l s ta te m en ts a p pear in P art I I, I te m 8 :

Rep ort o f I n dep en den t R eg is te re d P ublic A cco untin g F ir m 42 Conso lid ate d B ala n ce S heets a s o f D ecem ber 3 1, 2 018 a n d 2 017 43 Conso lid ate d S ta te m en ts o f O pera tio ns f o r t h e y ears e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016 44 Conso lid ate d S ta te m en ts o f S to ckh old ers ’ D efic it f o r t h e y ears e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016 45 Conso lid ate d S ta te m en ts o f C ash F lo w s f o r t h e y ears e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016 46 Note s t o C onso lid ate d F in an cia l S ta te m en ts 47 (a )(2 ) F in an cia l S ta te m en t S ch edu le :

Valu atio n a n d Q ualif y in g A cco unts f o r t h e y ears e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016 81 All o th er s ch ed ule s n ot lis te d a b ove h av e b een o m it te d s in ce t h ey a re n ot a p plic ab le o r a re n ot r e q uir e d .

(a )(3 ) E xh ib its .

In dex t o E xh ib its Exh ib it N um ber Descrip tio n 2.1 * * Agre em en t a n d P la n o f M erg er, d ate d a s o f J a n uary 2 4, 2 010, b y a n d a m ong B io Scrip , In c. (th e “ C om pan y”), an d t h e p artie s s et f o rth o n t h e s ig natu re p ag e ( In co rp ora te d b y r e fe re n ce t o E xh ib it 2 .1 t o t h e C om pan y’s F o rm 8-K f ile d o n J a n uary 2 7, 2 010) 2.2 * * Sto ck P u rc h ase A gre em en t, d ate d a s o f D ecem ber 1 2, 2 012, b y a n d a m ong H om eC hoic e P artn ers , In c., D aV it a Healt h C are P artn ers I n c., M ary A nn C ope, R .P h ., K ath y F . P u glis e, R N , C RN I, J o sep h W . B oyd, R .P h ., B arb ara J. E xu m , P h arm D a n d t h e C om pan y.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 2 .1 t o t h e C om pan y’s F o rm 8 -K f ile d on F eb ru ary 4 , 2 013) 2.3 * * Asset P u rc h ase A gre em en t, d ate d a s o f J u ne 1 6, 2 013, a m ong t h e C om pan y, C are P o in t P artn ers H old in gs L LC (“ C are P oin t” ), t h e d ir e ct a n d in dir e ct s u bsid ia rie s o f C are P oin t, a n d t h e m em bers o f C are P oin t.

( In co rp ora te d b y re fe re n ce t o E xh ib it 2 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n J u ne 1 8, 2 013) 2.4 * * Sto ck P u rc h ase A gre em en t, d ate d a s o f F eb ru ary 1 , 2 014, b y a n d a m ong E lk V alle y P ro fe ssio nal A ffilia te s, I n c., So uth M is sis sip pi H om e H ealt h , In c., D eaco ness H om ecare , L LC , a n d th e B uyers id en tif ie d o n th e s ig natu re pag es th ere to , th e C om pan y an d L H C G ro up, In c . (th e “S to ck Pu rc h ase A gre em en t” ). (In co rp ora te d b y re fe re n ce t o E xh ib it 2 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n F eb ru ary 3 , 2 014) 2.5 * * Amen dm en t, d ate d a s o f M arc h 3 1, 2 014, to th e S to ck P u rc h ase A gre em en t.

(In co rp ora te d b y re fe re n ce to Exh ib it 2 .2 t o t h e C om pan y's F orm 8 -K f ile d o n A pril 1 , 2 014) 2.6 Asset P u rc h ase A gre em en t, d ate d A ugust 9 , 2 015, b y a n d a m ong t h e C om pan y, B io Scrip P B M S erv ic es, L LC an d P ro C are P harm acy B en efit M an ag er I n c.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 2 .1 t o t h e C om pan y’s F orm 8 - K f ile d o n A ugust 1 0, 2 015) 2.7 Asset P u rc h ase A gre em en t, d ate d Ju ne 1 1, 2 016, b y a n d a m ong H S In fu sio n H old in gs, In c., th e d ir e ct a n d in dir e ct su bsid ia rie s o f H S In fu sio n H old in gs, In c. set fo rth o n th e sig natu re p ag es, th e C om pan y an d Hom eC hoic e P artn ers , In c. ( th e “ H om e S o lu tio ns A gre em en t” ).

(In co rp ora te d b y r e fe re n ce t o E xh ib it 2 .1 t o t h e Com pan y’s F orm 8 -K f ile d o n J u ne 1 3, 2 016) 2.8 Fir s t A men dm en t, d ate d J u ne 1 6, 2 016, t o t h e H om e S o lu tio ns A gre em en t.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 2.1 t o t h e C om pan y’s F orm 8 -K /A f ile d o n J u ne 2 0, 2 016) 73 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts 2.9 Seco nd A men dm en t, d ate d S ep te m ber 2 , 2 016, t o t h e H om e S olu tio ns A gre em en t.

( In co rp ora te d b y r e fe re n ce t o Exh ib it 2 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n S ep te m ber 7 , 2 016) 2.1 0 Thir d A men dm en t, d ate d S ep te m ber 9 , 2 016, t o t h e H om e S o lu tio ns A gre em en t.

( In co rp ora te d b y re fe re n ce to Exh ib it 2 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n S ep te m ber 1 2, 2 016) 3.1 Seco nd A men ded a n d R esta te d C ertif ic ate o f In co rp ora tio n.

(In co rp ora te d b y re fe re n ce to E xh ib it 4 .1 to th e Com pan y’s F orm 8 -K f ile d o n M arc h 1 7, 2 005) 3.2 Amen dm en t to th e S eco nd A men ded a n d R esta te d C ertif ic ate o f In co rp ora tio n.

( In co rp ora te d b y re fe re n ce to Exh ib it 3 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n J u ne 1 0, 2 010) 3.3 Certif ic ate o f A men dm en t o f th e S eco nd A men ded a n d R esta te d C ertif ic ate o f In co rp ora tio n o f B io scrip , In c.

date d N ovem ber 3 0, 2 016.

(In co rp ora te d b y re fe re n ce to E xh ib it 3.1 to th e C om pan y’s F o rm 8-K file d o n Decem ber 2 , 2 016) 3.4 Certif ic ate o f D esig natio ns f o r S erie s A C onvertib le P re fe rre d S to ck.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 3 .1 t o th e C om pan y’s F orm 8 -K f ile d o n M arc h 1 0, 2 015) 3.5 Amen ded a n d R esta te d B y-L aw s.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 3 .2 t o t h e C om pan y’s F o rm 8 -K f ile d o n April 2 8, 2 011) 3.6 Certif ic ate o f D esig natio ns f o r S erie s B C onvertib le P re fe rre d S to ck.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 3 .1 t o th e C om pan y’s F orm 8 -K f ile d o n J u ne 1 3, 2 016) 3.7 Certif ic ate o f D esig natio ns f o r S erie s C C onvertib le P re fe rre d S to ck.

(In co rp ora te d b y r e fe re n ce t o E xh ib it 3 .1 t o th e C om pan y’s F orm 8 -K f ile d o n J u ne 1 4, 2 016) 3.8 Certif ic ate of Desig natio ns, Pre fe re n ces, an d Rig hts fo r Serie s D Ju nio r Partic ip atin g Pre fe rre d Sto ck.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 3 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n A ugust 1 2, 2 016) 4.1 Specim en C om mon S to ck C ertif ic ate .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 4 .1 t o t h e C om pan y’s F orm 1 0-K f ile d on M arc h 3 1, 2 006) 4.2 Fo rm o f C ash -O nly S to ck A ppre cia tio n R ig ht A gre em en t.

(In co rp ora te d b y re fe re n ce to E xh ib it 1 0.4 0 to th e Com pan y’s F orm 1 0-K f ile d o n M arc h 1 6, 2 011) 4.3 In den tu re , d ate d a s o f F eb ru ary 1 1, 2 014, b y a n d a m ong th e C om pan y, th e G uara n to rs p arty th ere to a n d U .S .

Ban k N atio nal A sso cia tio n, a s T ru ste e.

(In co rp ora te d b y re fe re n ce to E xh ib it 4 .1 to th e C om pan y’s F o rm 8 -K file d o n F eb ru ary 1 1, 2 014) 4.4 Specim en o f 8 .8 75% N ote s d ue 2 021 ( in clu ded in E xh ib it 4 .4 ) 4.5 Reg is tra tio n R ig hts A gre em en t, d ate d a s o f M arc h 9 , 2 015, b y a n d a m ong th e C om pan y, C olis eu m C ap it a l Partn ers , L .P ., C olis eu m C ap it a l P artn ers II, L .P ., an d B la ckw ell P artn ers , L LC , S erie s A .

(In co rp ora te d b y re fe re n ce t o E xh ib it 4 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n M arc h 1 0, 2 015) 4.6 Amen dm en t N o. 1 to th e R eg is tra tio n R ig hts A gre em en t d ate d Ju ne 1 0, 2 016, b y a n d a m ong th e C om pan y, Colis eu m Cap it a l Partn ers , L.P ., Colis eu m Cap it a l Partn ers II, L.P . an d Bla ckw ell Partn ers , LLC Serie s A.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 4 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n J u ne 1 3, 2 016) 4.7 Amen dm en t N o. 2 t o t h e R eg is tra tio n R ig hts A gre em en t d ate d J u ne 1 4, 2 016, b y a n d a m ong t h e C om pan y a n d th e P IP E I n vesto rs .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 4 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n J u ne 1 4, 2 016) 4.8 Form o f S ubscrip tio n R ig hts C ertif ic ate .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 4 .1 t o t h e C om pan y’s R eg is tra tio n Sta te m en t o n F orm S -3 /A f ile d o n M ay 2 9, 2 015) 4.9 Fo rm o f C ertif ic ate R ep re sen tin g S erie s A C onvertib le P re fe rre d S to ck.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 4 .3 to t h e C om pan y’s R eg is tra tio n S ta te m en t o n F orm S -3 f ile d o n M arc h 1 0, 2 015) 4.1 0 Com mon S to ck W arra n t A gre em en t, d ate d J u ly 2 8, 2 015, b y a n d b etw een t h e C om pan y a n d t h e A meric an S to ck Tra n sfe r & T ru st C om pan y, L LC .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 4 .1 t o t h e C om pan y’s F o rm 8 -K f ile d o n Ju ly 2 8, 2 015) 4.1 1 Tax A sset P ro te ctio n P la n d ate d a s o f A ugust 1 1, 2 016, b y a n d b etw een th e C om pan y a n d A meric an S to ck Tra n sfe r & Tru st Com pan y, LLC , as rig hts ag en t, w hic h in clu des as Exh ib it B th e Fo rm of Rig hts Certif ic ate .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 4 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n A ugust 1 2, 2 016) 4.1 2 Fo rm o f C ertif ic ate R ep re sen tin g S erie s C C onvertib le P re fe rre d S to ck.

(In co rp ora te d b y r e fe re n ce t o E xh ib it 3 .1 to t h e C om pan y’s F orm 8 -K f ile d o n J u ne 1 4, 2 016) 74 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts 4.1 3 Reg is tra tio n R ig hts A gre em en t, d ate d M arc h 1 , 2 017, b y a n d a m ong th e C om pan y a n d th e in vesto rs n am ed th ere in .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 4 .1 t o t h e C om pan y’s F orm 8 -K f ile d o n M arc h 2 , 2 017) 4.1 4 Reg is tra tio n R ig hts A gre em en t, d ate d Ju ne 2 9, 2 017, b y a n d a m ong th e C om pan y a n d th e p artie s s ig nato ry th ere to (In co rp ora te d b y r e fe re n ce t o E xh ib it 4 .2 t o t h e C om pan y’s C urre n t R ep ort o n F orm 8 -K f ile d o n J u ne 2 9, 2017) 4.1 5 Warra n t A gre em en t, date d Ju ne 29, 2017, by an d am ong th e C om pan y an d th e su bscrib ers sig nato ry th ere to ( In co rp ora te d b y r e fe re n ce t o E xh ib it 4 .1 t o t h e C om pan y’s C urre n t R ep ort o n F orm 8 -K f ile d o n J u ne 2 9, 2017) 10.1 † MIM C orp ora tio n A men ded an d R esta te d 2001 In cen tiv e Sto ck Pla n .

(In co rp ora te d b y re fe re n ce to th e defin it iv e p ro xy s ta te m en t f ile d o n A pril 3 0, 2 003) 10.2 † Amen dm en t to B io Scrip , In c. 2001 In cen tiv e S to ck P la n .

(In co rp ora te d b y re fe re n ce to E xh ib it 1 0.1 to th e Com pan y’s F orm 8 -K f ile d o n A ugust 1 0, 2 011) 10.3 † Amen ded a n d R esta te d B io Scrip , In c. 2 008 E q uit y In cen tiv e P la n .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o th e C om pan y’s F orm 8 -K f ile d o n M ay 1 4, 2 014) 10.4 † Amen dm en t to Bio Scrip , In c. A men ded an d Resta te d 2008 Eq uit y In cen tiv e Pla n , date d Ju ne 1, 2016.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n J u ne 2 , 2 016) 10.5 † Seco nd A men dm en t to B io scrip , In c. 2 008 E q uit y In cen tiv e P la n d ate d N ovem ber 2 8, 2 016.

(In co rp ora te d b y re fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n D ecem ber 2 , 2 016) 10.6 † BIO SC RIP /C H S 2 006 E q uit y In cen tiv e P la n , a s A men ded a n d R esta te d .

(In co rp ora te d b y re fe re n ce to E xh ib it 10.3 t o t h e C om pan y’s F orm 8 -K f ile d o n M ay 2 , 2 011) 10.7 † Amen dm en t O ne to th e S to ck G ra n t C ertif ic ate u nder th e B io Scrip /C H S 2 006 E q uit y In cen tiv e P la n fro m th e Com pan y t o B ria n S tiv er, d ate d S ep te m ber 8 , 2 016.

(In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.3 t o t h e C om pan y’s Form 8 -K f ile d o n S ep te m ber 1 2, 2 016) 10.8 † Em plo yee S to ck P u rc h ase P la n .

(In co rp ora te d b y re fe re n ce to th e d efin it iv e p ro xy s ta te m en t file d o n A pril 2 , 2013) 10.9 † Fir s t A men dm en t to Em plo yee Sto ck Pu rc h ase Pla n .

(In co rp ora te d by re fe re n ce to Exh ib it 10.5 to th e Com pan y’s F orm 1 0-Q f ile d o n A ugust 1 0, 2 015) 10.1 0† Fo rm o f R estric te d Sto ck G ra n t C ertif ic ate .

(In co rp ora te d b y re fe re n ce to Exh ib it 99.3 to th e C om pan y's Reg is tra tio n S ta te m en t o n F orm S -8 f ile d o n f ile d o n M ay 1 6, 2 008) 10.1 1† Fo rm o f N on-Q ualif ie d S to ck O ptio n A gre em en t 2 008 E q uit y In cen tiv e P la n .

(In co rp ora te d b y re fe re n ce to Exh ib it 1 0.7 t o t h e C om pan y’s F orm 1 0-K f ile d o n M arc h 2 , 2 015) 10.1 2† Fo rm o f A men dm en t O ne to N on-Q ualif ie d S to ck O ptio n A gre em en t 2 008 E q uit y In cen tiv e P la n (e n te re d w it h Messrs . K re g er, E v an s a n d S tiv er). ( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.2 t o t h e C om pan y’s F o rm 8 -K f ile d on S ep te m ber 1 2, 2 016) 10.1 3† Fo rm o f M ark et- B ased C ash A w ard A gre em en t.

(In co rp ora te d b y re fe re n ce to E xh ib it 1 0.4 to th e C om pan y’s Form 1 0-Q f ile d o n A ugust 1 0, 2 015) 10.1 4† Em plo ym en t Offe r Lette r, date d Ja n uary 30, 2009, by an d betw een th e Com pan y an d Dav id Evan s.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.2 3 t o t h e C om pan y’s F orm 1 0-K /A f ile d o n D ecem ber 1 6, 2 013) 10.1 5† Amen ded a n d R esta te d E m plo ym en t A gre em en t, d ate d a s o f N ovem ber 2 5, 2 013, b y a n d b etw een t h e C om pan y an d R ic h ard M . S m it h .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F o rm 8 -K f ile d o n N ovem ber 27, 2 013) 10.1 6† Fir s t A men dm en t to A men ded an d R esta te d E m plo ym en t A gre em en t, d ate d S ep te m ber 9, 2016, b etw een Ric h ard M . S m it h a n d t h e C om pan y.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F o rm 8 -K f ile d on S ep te m ber 1 2, 2 016) 10.1 7† Em plo ym en t O ffe r L ette r, d ate d M arc h 1 0, 2 009, b y a n d b etw een t h e C om pan y a n d B ria n S tiv er.

(In co rp ora te d by r e fe re n ce t o E xh ib it 1 0.2 4 t o t h e C om pan y’s F orm 1 0-K /A f ile d o n J u ne 6 , 2 014) 10.1 8† Em plo ym en t O ffe r L ette r, d ate d J u ly 3 0, 2 012, b y a n d b etw een t h e C om pan y a n d B ria n S tiv er.

( In co rp ora te d b y re fe re n ce t o E xh ib it 1 0.2 5 t o t h e C om pan y’s F orm 1 0-K /A f ile d o n J u ne 6 , 2 014) 10.1 9† Amen dm en t, d ate d A pril 2 , 2 015, to th e E m plo ym en t O ffe r L ette r b y a n d b etw een th e C om pan y a n d B ria n Stiv er.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.6 t o t h e C om pan y’s F orm 1 0-Q f ile d o n M ay 8 , 2 015) 75 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts 10.2 0† Em plo ym en t O ffe r L ette r, d ate d D ecem ber 1 , 2 013, b y a n d b etw een t h e C om pan y a n d K are n C ain .

( In co rp ora te d by r e fe re n ce t o E xh ib it 1 0.1 7 t o t h e C om pan y’s F orm 1 0-K f ile d o n M arc h 2 , 2 015) 10.2 1† Em plo ym en t O ffe r Lette r, date d as of A pril 26, 2015, by an d betw een th e Com pan y an d Je ffre y M .

Kre g er.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n A pril 2 8, 2 015) 10.2 2† Offe r L ette r, d ate d a s o f A pril 1 0, 2 017, b y a n d b etw een B io Scrip , In c. a n d S te p hen M . D eit s ch .

( In co rp ora te d by r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n A pril 2 0, 2 017) 10.2 3† Offe r L ette r, d ate d a s o f N ovem ber 2 1, 2 017, b y a n d b etw een B io Scrip , In c. a n d H arrie t B ooker.

( In co rp ora te d by r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d N ovem ber 2 8, 2 017) 10.2 4† Offe r L ette r, d ate d a s o f N ovem ber 2 9, 2 017, b y a n d b etw een B io Scrip , I n c. a n d A nth ony “ T ony” L opez.

(In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d D ecem ber 1 , 2 017) 10.2 5 Form o f I n dem nif ic atio n A gre em en t.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F o rm 8 -K f ile d on M arc h 1 4, 2 013) 10.2 6 Cre d it A gre em en t, d ate d J u ly 3 1, 2 013, 1 0.2 10. a n d a m ong t h e C om pan y, t h e s ev era l b an ks a n d o th er f in an cia l in stit u tio ns a n d le n ders fro m tim e to tim e p arty th ere to , a n d S u n T ru st B an k, in it s c ap acit y a s a d m in is tra tiv e ag en t.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n A ugust 1 , 2 013) 10.2 7 Fir s t A men dm en t t o C re d it A gre em en t, d ate d a s o f D ecem ber 2 3, 2 013, b y a n d a m ong t h e C om pan y, e ach o f t h e Su bsid ia rie s o f th e C om pan y id en tif ie d o n th e s ig natu re p ag es th ere to , th e L en ders p arty th ere to , a n d th e Adm in is tra tiv e A gen t.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 9 9.1 t o t h e C om pan y’s F o rm 8 -K f ile d o n F eb ru ary 3, 2 014) 10.2 8 Seco nd A men dm en t to C re d it A gre em en t, d ate d a s o f J a n uary 3 1, 2 014, b y a n d a m ong th e C om pan y, e ach o f th e S u bsid ia rie s o f t h e C om pan y id en tif ie d o n t h e s ig natu re p ag es t h ere to , t h e L en ders p arty t h ere to , a n d t h e Adm in is tra tiv e A gen t.

(In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F o rm 8 -K f ile d o n F eb ru ary 3, 2 014) 10.2 9 Thir d A men dm en t to C re d it A gre em en t, d ate d a s o f M arc h 1 , 2 015, b y a n d a m ong th e C om pan y, e ach o f th e Su bsid ia rie s o f th e C om pan y id en tif ie d o n th e s ig natu re p ag es th ere to , th e L en ders p arty th ere to , a n d th e Adm in is tra tiv e A gen t.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F o rm 8 -K f ile d o n M arc h 2 , 2015) 10.3 0 Fo urth A men dm en t t o C re d it A gre em en t, d ate d a s o f A ugust 6 , 2 015, b y a n d a m ong t h e C om pan y, e ach o f t h e Su bsid ia rie s o f th e C om pan y id en tif ie d o n th e s ig natu re p ag es th ere to , th e L en ders p arty th ere to , a n d th e Adm in is tra tiv e A gen t.

( In co rp ora te d b y re fe re n ce to E xh ib it 1 0.1 to th e C om pan y’s F o rm 8 -K file d o n A ugust 10, 2 015) 10.3 1 Fif th A men dm en t t o C re d it A gre em en t, d ate d a s o f O cto ber 9 , 2 015, b y a n d a m ong t h e C om pan y, e ach o f t h e Su bsid ia rie s o f th e C om pan y id en tif ie d o n th e s ig natu re p ag es th ere to , th e L en ders p arty th ere to , a n d th e Adm in is tra tiv e A gen t.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F o rm 8 -K f ile d o n O cto ber 15, 2 015) 10.3 2 Six th A men dm en t t o C re d it A gre em en t, d ate d a s o f J a n uary 6 , 2 017, b y a n d a m ong t h e C om pan y, e ach o f t h e Su bsid ia rie s o f th e C om pan y id en tif ie d o n th e s ig natu re p ag es th ere to , th e L en ders p arty th ere to , a n d th e Adm in is tra tiv e A gen t.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F o rm 8 -K f ile d o n J a n uary 9 , 2017) 10.3 3 Prim in g C re d it A gre em en t d ate d a s o f J a n uary 6 , 2 017 a m ong t h e C om pan y a s b orro w er, t h e L en ders f ro m t im e to t im e p arty t h ere to , a n d S u n T ru st B an k, a s A dm in is tra tiv e A gen t.

( In co rp ora te d b y re fe re n ce to E xh ib it 1 0.2 to t h e C om pan y’s F orm 8 -K f ile d o n J a n uary 9 , 2 017) 10.3 4 Guara n ty a n d S ecu rit y A gre em en t, d ate d J u ly 3 1, 2 013, m ad e b y t h e C om pan y a n d t h e G uara n to rs id en tif ie d o n th e s ig natu re p ag es t h ere to , in f a v or o f t h e A dm in is tra tiv e A gen t.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.2 t o th e C om pan y’s F orm 8 -K f ile d o n A ugust 1 , 2 013 10.3 5# Prim e Ven dor A gre em en t date d as of Ju ly 1, 2009, betw een A meris o urc e B erg en D ru g C orp ora tio n, th e Com pan y a n d t h e o th er p artie s t h ere to ( th e “ P rim e V en dor A gre em en t” ).

( In co rp ora te d b y r e fe re n ce t o E xh ib it 10.1 t o t h e C om pan y’s F orm 1 0-Q /A f ile d o n D ecem ber 2 , 2 009) 10.3 6 Fir s t A men dm en t, d ate d a s o f M arc h 2 5, 2 010, to th e P rim e V en dor A gre em en t.

(In co rp ora te d b y re fe re n ce to Exh ib it 1 0.3 t o t h e C om pan y’s F orm 8 -K f ile d o n M arc h 3 1, 2 010) 76 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts 10.3 7# Seco nd A men dm en t, d ate d a s o f J u ne 1 , 2 010 to th e P rim e V en dor A gre em en t.

(In co rp ora te d b y re fe re n ce to Exh ib it 1 0.1 t o t h e C om pan y’s F orm 1 0-Q f ile d o n A ugust 3 , 2 010) 10.3 8# Thir d A men dm en t, d ate d a s o f A ugust 1 , 2 010, t o t h e P rim e V en dor A gre em en t.

( In co rp ora te d b y r e fe re n ce t o Exh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n M ay 2 , 2 011) 10.3 9# Fo urth A men dm en t, d ate d a s o f M ay 1 , 2 011, to th e P rim e V en dor A gre em en t.

(In co rp ora te d b y re fe re n ce to Exh ib it 1 0.2 t o t h e C om pan y’s F orm 8 -K f ile d o n M ay 2 , 2 011) 10.4 0# Fif th A men dm en t, d ate d a s o f J a n uary 1 , 2 012, t o t h e P rim e V en dor A gre em en t.

( In co rp ora te d b y re fe re n ce to Exh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n J a n uary 2 6, 2 012) 10.4 1 Sto ckh old ers ’ A gre em en t, d ate d a s o f J a n uary 2 4, 2 010, b y a n d a m ong th e C om pan y, th e K ohlb erg E n tit ie s, Robert C ucu el, M ary J a n e G ra v es, N it in P ate l, J o ey R yan , C olle en L ed ere r, t h e B la cksto ne E n tit ie s a n d S .A .C .

(th e “ S to ckh old ers ’ A gre em en t” ).

( In co rp ora te d b y re fe re n ce to E xh ib it 1 0.1 to th e C om pan y’s F o rm 8 -K file d on J a n uary 2 7, 2 010) 10.4 2 Amen dm en t N o. 1 t o t h e S to ckh old ers ’ A gre em en t, d ate d a s o f M arc h 8 , 2 013, b y a n d b etw een t h e C om pan y an d K ohlb erg I n vesto rs .

(In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F o rm 1 0-Q f ile d o n M ay 9 , 2013) 10.4 3 Amen dm en t N o. 2 t o t h e S to ckh old ers ’ A gre em en t, d ate d a s o f M arc h 1 4, 2 013, b y a n d b etw een t h e C om pan y an d K ohlb erg I n vesto rs .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.2 t o t h e C om pan y’s F o rm 1 0-Q f ile d o n M ay 9 , 2013) 10.4 4 Amen dm en t N o. 3 & W aiv er t o t h e S to ckh old ers ’ A gre em en t, d ate d a s o f A ugust 1 3, 2 013, b y a n d b etw een t h e Com pan y a n d K ohlb erg In vesto rs .

(In co rp ora te d b y re fe re n ce to E xh ib it 1 .2 to th e C om pan y’s F o rm 8 -K file d on A ugust 1 9, 2 013) 10.4 5 Amen dm en t N o. 4 & W aiv er t o t h e S to ckh old ers ’ A gre em en t, d ate d a s o f M arc h 2 6, 2 014, b y a n d b etw een t h e Com pan y a n d K ohlb erg In vesto rs .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F o rm 8 -K f ile d on A pril 1 , 2 014) 10.4 6 In dem nif ic atio n A gre em en t, d ate d a s o f A pril 3 , 2 013, b y a n d a m ong t h e C om pan y a n d t h e K ohlb erg E n tit ie s, Robert C ucu el, M ary Ja n e G ra v es, N it in Pate l, Jo ey R yan , C olle en Led ere r, th e B la cksto ne En tit ie s an d S.A .C .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n A pril 5 , 2 013) 10.4 7 Stip ula tio n a n d O rd er o f S ettle m en t a n d D is m is sal, e ffe ctiv e J a n uary 8 , 2 014, b y a n d a m ong t h e C om pan y, t h e Unit e d S ta te s o f A meric a, actin g th ro ugh th e U .S . D ep artm en t o f Ju stic e an d o n b eh alf o f th e O ffic e o f In sp ecto r G en era l o f t h e D ep artm en t o f H ealt h a n d H um an S erv ic es, a n d r e la to r D av id K este r.

(In co rp ora te d b y re fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n J a n uary 8 , 2 014) 10.4 8 In vesto r A gre em en t, d ate d a s o f F eb ru ary 6 , 2 015, b y a n d a m ong th e C om pan y, C lo ud G ate C ap it a l L LC a n d DSC A dvis o rs , L LC .

(In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F o rm 8 -K f ile d o n F eb ru ary 9 , 2015) 10.4 9 Secu rit ie s Pu rc h ase A gre em en t, d ate d as o f M arc h 9, 2015, b y an d am ong th e C om pan y an d th e P IP E In vesto rs .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n M arc h 1 0, 2 015) 10.5 0 Warra n t Agre em en t, date d as of M arc h 9, 2015, by an d am ong th e Com pan y an d th e PIP E In vesto rs .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.2 t o t h e C om pan y’s F orm 8 -K f ile d o n M arc h 1 0, 2 015) 10.5 1 Adden dum t o t h e W arra n t A gre em en t, d ate d a s o f M arc h 2 3, 2 015, b y a n d a m ong t h e C om pan y a n d t h e P IP E In vesto rs .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.3 t o t h e C om pan y’s F orm 8 -K /A f ile d o n M arc h 2 4, 2 015) 10.5 2 Exc h an ge A gre em en t, d ate d a s o f J u ne 1 0, 2 016, e n te re d in to b y a n d a m ong t h e C om pan y a n d e ach o f t h e P IP E In vesto rs s ig nato ry t h ere to .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n J u ne 13, 2 016) 10.5 3 Exc h an ge A gre em en t, d ate d a s o f J u ne 1 4, 2 016, e n te re d in to b y a n d a m ong t h e C om pan y a n d e ach o f t h e P IP E In vesto rs s ig nato ry t h ere to .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n J u ne 14, 2 016) 10.5 4 Mem ora n dum o f U nders ta n din g, d ate d a s o f A pril 3 0, 2 015, b y a n d a m ong t h e C om pan y a n d t h e p artie s t o I n r e Bio scrip , I n c. S to ckh old er L it ig atio n.

(In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d on M ay 1 , 2 015) 77 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts 10.5 5 Em plo ym en t Agre em en t, date d Octo ber 31, 2016, by an d betw een th e Com pan y an d Dan ie l E.

Gre en le af.

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n N ovem ber 3 , 2 016) 10.5 6 Sto ck P u rc h ase A gre em en t, d ate d M arc h 1, 2017, b y an d am ong th e C om pan y an d th e in vesto rs n am ed th ere in .

( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s F orm 8 -K f ile d o n M arc h 2 , 2 017) 10.5 7 Fir s t L ie n N ote P u rc h ase A gre em en t, d ate d a s o f Ju ne 2 9, 2 017, b y a n d a m ong th e C om pan y, th e fin an cia l in stit u tio ns a n d n ote p urc h asers f ro m t im e t o t im e p arty t h ere to , a n d W ells F arg o B an k, N atio nal A sso cia tio n, as C olla te ra l A gen t ( In co rp ora te d b y re fe re n ce to E xh ib it 1 0.1 to th e C om pan y’s C urre n t R ep ort o n F o rm 8 -K file d o n J u ne 2 9, 2 017) 10.5 8 Fir s t L ie n G uara n ty a n d S ecu rit y A gre em en t, d ate d a s o f J u ne 2 9, 2 017, b y a n d t h e C om pan y, t h e s u bsid ia rie s of th e Com pan y sig nato ry th ere to an d Wells Farg o Ban k, Natio nal Asso cia tio n as Colla te ra l Agen t ( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.2 t o t h e C om pan y’s C urre n t R ep ort o n F o rm 8 -K f ile d o n J u ne 29, 2 017) 10.5 9 Seco nd L ie n N ote P u rc h ase A gre em en t, d ate d a s o f J u ne 2 9, 2 017, b y a n d a m ong th e C om pan y, th e fin an cia l in stit u tio ns a n d n ote p urc h asers f ro m t im e t o t im e p arty t h ere to , a n d W ells F arg o B an k, N atio nal A sso cia tio n as C olla te ra l A gen t ( In co rp ora te d b y re fe re n ce to E xh ib it 1 0.3 to th e C om pan y’s C urre n t R ep ort o n F o rm 8 -K file d o n J u ne 2 9, 2 017) 10.6 0 Seco nd Lie n G uara n ty an d Secu rit y A gre em en t, date d as of Ju ne 29, 2017, by an d th e C om pan y, th e su bsid ia rie s o f th e C om pan y s ig nato ry th ere to a n d W ells F arg o B an k, N atio nal A sso cia tio n a s C olla te ra l Agen t ( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.4 t o t h e C om pan y’s C urre n t R ep ort o n F o rm 8 -K f ile d o n J u ne 29, 2 017) 10.6 1 Warra n t P u rc h ase A gre em en t, d ate d a s o f Ju ne 2 9, 2 017, b y a n d a m ong th e C om pan y a n d th e s u bscrib ers sig nato ry t h ere to ( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.5 t o t h e C om pan y’s C urre n t R ep ort o n F o rm 8 -K f ile d on J u ne 2 9, 2 017) 10.6 2 Sto ck P u rc h ase A gre em en t, d ate d a s o f J u ne 2 9, 2 017, b y a n d a m ong t h e C om pan y a n d t h e p urc h aser s ig nato ry th ere to ( In co rp ora te d b y r e fe re n ce t o E xh ib it 1 0.6 t o t h e C om pan y’s C urre n t R ep ort o n F o rm 8 -K f ile d o n J u ne 29, 2 017) 10.6 3† Bio Scrip , In c. 2 018 E q uit y In cen tiv e P la n .

(In co rp ora te d b y re fe re n ce to A ppen dix A to th e d efin it iv e p ro xy sta te m en t f ile d o n A pril 4 , 2 018) 10.6 4† Seco nd A men dm en t to E m plo yee S to ck P u rc h ase P la n .

(In co rp ora te d b y re fe re n ce to A ppen dix B to th e defin it iv e p ro xy s ta te m en t f ile d o n A pril 4 , 2 018) 10.6 5† Offe r L ette r, d ate d O cto ber 1 2, 2 018, b y a n d b etw een th e C om pan y a n d Jo hn M cM ah on (In co rp ora te d b y re fe re n ce t o E xh ib it 1 0.1 t o t h e C om pan y’s C urre n t R ep ort o n F orm 8 -K f ile d o n O cto ber 2 2, 2 018) 21.1 * Lis t o f S ubsid ia rie s o f t h e C om pan y.

23.1 * Consen t o f I n dep en den t R eg is te re d P ublic A cco untin g F ir m .

31.1 * Certif ic atio n o f C hie f E xe cu tiv e O ffic er p urs u an t t o R ule 1 3a-1 4(a ) p ro m ulg ate d u nder t h e E xc h an ge A ct.

31.2 * Certif ic atio n o f C hie f F in an cia l O ffic er p urs u an t t o R ule 1 3a-1 4(a ) p ro m ulg ate d u nder t h e E xc h an ge A ct.

32.1 * Certif ic atio n o f C hie f E xe cu tiv e O ffic er p urs u an t t o 1 8 U .S .C . S ectio n 1 350, a s a d opte d p urs u an t t o S ectio n 9 06 of t h e S arb an es-O xle y A ct o f 2 002.

32.2 * Certif ic atio n o f C hie f F in an cia l O ffic er p urs u an t t o 1 8 U .S .C . S ectio n 1 350, a s a d opte d p urs u an t t o S ectio n 9 06 of t h e S arb an es-O xle y A ct o f 2 002.

101 The f o llo w in g f in an cia l in fo rm atio n f ro m t h e C om pan y’s F o rm 1 0-K f o r t h e f is cal y ear e n ded D ecem ber 3 1, 2 018, fo rm atte d in X BRL (E xte n sib le B usin ess R ep ortin g L an guag e): (i) C onso lid ate d S ta te m en ts o f O pera tio ns fo r th e f is cal y ears e n ded D ecem ber 3 1, 2 018, 2 017 a n d 2 016, ( ii) C onso lid ate d B ala n ce S h eets a s o f D ecem ber 3 1, 2018 a n d 2 017, (iii) C onso lid ate d S ta te m en ts o f S to ckh old ers ’ E q uit y fo r th e fis cal y ears e n ded D ecem ber 3 1, 2018, 2 017 a n d 2 016, ( iv ) C onso lid ate d S ta te m en ts o f C ash F lo w s f o r t h e f is cal y ears e n ded D ecem ber 3 1, 2 018, 2017 a n d 2 016, a n d ( v ) N ote s t o C onso lid ate d F in an cia l S ta te m en ts .

78 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts * File d h ere w it h .

** Purs u an t t o I te m 6 01(b )(2 ) o f R eg ula tio n S -K , c erta in s ch ed ule s a n d e xh ib it s a re o m it te d f ro m s o m e e xh ib it s .

The C om pan y a g re es t o f u rn is h su pple m en ta lly a c o py o f a n y o m it te d s ch ed ule o r e xh ib it t o t h e S EC u pon r e q uest.

† Desig nate s t h e C om pan y’s m an ag em en t c o ntra cts o r c o m pen sato ry p la n o r a rra n gem en t.

# The S EC h as g ra n te d c o nfid en tia l t re atm en t o f c erta in p ro vis io ns o f t h ese e xh ib it s . O mit te d m ate ria l f o r w hic h c o nfid en tia l t re atm en t h as b een g ra n te d has b een f ile d s ep ara te ly w it h t h e S EC .

79 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Ite m 1 6.

Form 1 0-K S um mary None SIG NATUR ES Purs u an t t o t h e r e q uir e m en ts o f S ectio n 1 3 o r 1 5(d ) o f t h e S ecu rit ie s E xc h an ge A ct o f 1 934, t h e r e g is tra n t h as d uly c au sed t h is r e p ort t o b e s ig ned o n it s b eh alf by t h e u nders ig ned , t h ere u nto d uly a u th oriz e d , o n Marc h 1 5, 2 019 .

B IO SC RIP , I N C.

/s / J o hn M cM ah on Jo hn M cM ah on Vic e P re sid en t, C ontro lle r a n d C hie f A cco untin g O ffic er ( P rin cip al A cco untin g O ffic er) Pu rs u an t t o t h e r e q uir e m en ts o f t h e S ecu rit ie s E xc h an ge A ct o f 1 934, t h is r e p ort h as b een s ig ned b elo w b y t h e f o llo w in g p ers o ns o n b eh alf o f t h e r e g is tra n t a n d in t h e c ap acit ie s a n d o n t h e d ate s in dic ate d .

Sig natu re Title (s ) Date / s/ D an ie l E . G re en le af Dan ie l E . G re en le af Chie f E xe cu tiv e O ffic er, P re sid en t a n d D ir e cto r ( P rin cip al E xe cu tiv e O ffic er) Marc h 1 5, 2 019 /s / S te p hen D eit s ch Ste p hen D eit s ch Chie f F in an cia l O ffic er a n d T re asu re r (P rin cip al F in an cia l O ffic er) Marc h 1 5, 2 019 /s / J o hn M cM ah on Jo hn M cM ah on Vic e P re sid en t, C ontro lle r a n d C hie f A cco untin g O ffic er (P rin cip al A cco untin g O ffic er) Marc h 1 5, 2 019 /s / R . C arte r P ate R. C arte r P ate Non-E xe cu tiv e C hair m an o f t h e B oard Marc h 1 5, 2 019 /s / D av id G old in g Dav id G old in g Dir e cto r Marc h 1 5, 2 019 /s / M ic h ael G old ste in M ic h ael G old ste in Dir e cto r Marc h 1 5, 2 019 /s / C hris to pher S hackelt o n Chris to pher S hackelt o n Dir e cto r Marc h 1 5, 2 019 /s / M ic h ael G . B ro nfe in M ic h ael G . B ro nfe in Dir e cto r Marc h 1 5, 2 019 /s / S te v en N eu m an n Ste v en N eu m an n Dir e cto r Marc h 1 5, 2 019 80 Vie w O nlin e a t:

http s:/ /la st1 0k.c o m /s e c-filin gs/1 014739/0 001014739-1 9-0 00012.h tm Table o f C onte n ts Bio S crip , I n c. a n d S ubsid ia rie s Sch edu le I I-- V alu atio n a n d Q ualify in g A ccou nts (in t h ou san ds) Bala n ce a t Beg in nin g o f Perio d Write -O ff of Receiv a ble s Charg ed t o Costs an d E xpen ses Bala n ce a t End o f P erio d Year e n ded D ecem ber 3 1, 2 016 Allo w an ce f o r d oubtfu l a cco unts $ 59,6 89 $ (4 1,5 67 ) $ 26,6 08 $ 44,7 30 Year e n ded D ecem ber 3 1, 2 017 Allo w an ce f o r d oubtfu l a cco unts $ 44,7 30 $ (3 0,5 15 ) $ 23,6 97 $ 37,9 12 Year e n ded D ecem ber 3 1, 2 018 Allo w an ce f o r d oubtfu l a cco unts ( 1 ) $ — $ — $ — $ — (1 ) S ubseq uen t t o a d optio n o f A SC 6 06, a n a llo w an ce f o r d oubtfu l a cco unts is e sta b lis h ed o nly a s a r e su lt o f a n a d vers e c h an ge in t h e C om pan y’s p ay ors ’ a b ilit y t o pay o uts ta n din g b illin gs.

81 Vie w O nlin e a t:

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