In a bid to expand its home infusion business,
) inked a definitive agreement to take over Ohio-based CarePoint
Partners Holdings and its subsidiaries for cash payment of $223
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This lucrative acquisition is expected to leverage BioScrip's
top-line. It should also boost the company's return on capital
(ROC) going forward. Moreover, post integration (12-15 months),
the acquisition is expected to improve the long-term growth
prospects of the company.
For its latest acquisition, BioScrip envisages tax benefit of $45
million, yielding a net purchase price of $178 million. The
acquisition is expected to close in the third quarter of 2013,
subject to standard closing conditions.
CarePoint Partners is a provider of home and alternate-site
infusion therapy for complex, acute and chronic illness across
the U.S. It has 28 service sites in nine states, concentrated in
the Gulf Coast and East Coast regions. As a leading national
provider of infusion therapy to about 20,500 patients on an
annual basis, CarePoint Partners expects to generate annual
revenues of $160 million.
Following the acquisition, BioScrip will serve over 0.1 million
patients across the U.S. with its home infusion services. The
company also expects to improve standards of patient care. As per
management, the deal will support BioScrip in achieving its
growth targets in the long term.
BioScrip continues to expand its Infusion services business via
inorganic means. Expected for closure later this year, the buyout
will seamlessly strengthen the company's foothold in the U.S.
On the tepid side, BioScrip failed to trim losses in the last
quarter. Although the company's Infusion services segment and
Home Health segment is doing well, weakness in the PBM services
segment remains an overhang.
Further, reimbursement cuts and adverse business mix leading to
margin pressure continues to drag the financial results for
BioScrip. Also worth mentioning is the tough competitive
landscape with larger players and deeper resources.
The stock carries a Zacks Rank #4 (Sell). With optimism over the
recently announced acquisition we expect analysts to pull
estimates upward providing upward directional pressure on the
Zacks Rank. Also, shares gained 5.3% to close at $15.79 on
While we avoid this medical sector stock at present, other stocks
GNC Holdings Inc.
Rite Aid Corporation
), carrying a Zacks Rank #2 (Buy) are expected to do well.