In the fourth quarter of 2012,
) reported net loss from continuing operations of $1.4 million or
3 cents per share, vis-à-vis a net income of $2.6 million or 5
cents per share in the year-ago quarter. Excluding certain
one-time items and stock based compensation, adjusted EPS came in
at 2 cents, lower than the year-ago adjusted EPS of 5 cents.
However, the result beat the Zacks Consensus Estimate of a penny
per share in the fourth quarter.
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In 2012, adjusted loss per share was 1 cent, down from the
adjusted EPS of 12 cents in 2011. However, the 2012 result was
better than the Zacks Consensus Estimate of a loss of 9 cents.
Total revenue rose 14.2% year over year to $180.7 million in the
fourth quarter, exceeding the Zacks Consensus Estimate of $173
million. Total revenue in 2012 was $662.6 million, up 19.5% from
the prior year, surpassing the corresponding Zacks Consensus
Estimate of $654 million.
In the fourth quarter, solid revenue growth was attributable to
contributions from Infusion Services and Home Health Services
business. The company recorded a 32.4% rise in Infusion Services
revenues to $135.6 million on the back of volume growth and
Revenues from the Home Health Services segment rose 6.5% to $17.2
million, led by volume growth. However, reimbursement reductions
from Medicare and the state of Tennessee TennCare program dragged
the franchise sales growth. Lastly, revenues from the PBM
Services segment were $26.8 million, down 30.6% from the
prior-year quarter. The decline was due to lower revenues from
discount cards and decreased funded PBM business.
While the cost of product revenues shot up 39.7% to $92.2
million, the cost of service revenues declined 16.4% to $28.1
million in the quarter. Also, a shift in the therapy mix in the
Infusion Services franchise, as well as a lower reimbursement
rates for home health from certain government payers led to a
considerable 360 basis points (bps) contraction in gross margin
to 33.4% in the quarter. Selling, general and administrative
expenses increased 14.2% to $49.2 million resulting in a 360 bps
drag in adjusted operating margin for the quarter to 6.3%.
BioScrip exited 2012 with $62.1 million of cash and cash
equivalents. Annual net cash from operating activities came in at
$49.9 million compared with $3.1 million in the prior year. The
improvement was led by collection of accounts receivable retained
after the sale of Pharmacy Services, net of accounts payable paid
related to those businesses.
In Feb 2013, BioScrip completed the acquisition of DaVita's
majority-owned subsidiary HomeChoice Partners, an alternate-site
infusion pharmacy service provider for $70 million in cash. The
terms of the deal, which is expected to be closed in the first
quarter of 2013, also include a potential additional
consideration based on the post purchase operating performance of
For 2013, BioScrip expects revenues of $830-$865 million,
reflecting growth in the range of 25% to 30%. The current Zacks
Consensus Estimate is pegged at $770 million. However, currently
the company is evaluating hurricane Sandy's impact on the
performance of its Northeast region for the first quarter of
While the higher-than-expected results are encouraging, BioScrip
continues to suffer loss. The company's recent acquisitions
should leverage top line in the future. Although BioScrip has
several positive catalysts to drive growth over the long haul,
looming concerns such as reimbursement cuts, integration risks
and margin pressure keep us on the sidelines for this pharmacy
benefit manager and infusion service provider.
Accordingly, the stock carries a Zacks Rank #3 (Hold). While we
have a neutral disposition on BioScrip, other stocks such as
) warrant a look. These stocks carry a Zacks Rank #2 (Buy).