BioScrip, Inc. (BIOS): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Once again, in the first quarter of 2014, BioScrip delivered a poor bottom-line. Adjusted net loss from continuing operations of $0.17 per share was much wider than the year-ago adjusted loss per share of $0.01. The results also considerably lagged the Zacks Consensus Estimate of a loss of $0.04. The high-margin PBM business witnessed another quarter of massive downfall, impacted by lower discount cards revenue and the termination of a large contract. This also resulted in a decline in gross profit margin. Growing SG&A expenses following the company's effort to consolidate recent takeovers adds to our concerns. Meanwhile, reimbursement pressure looms as a potent cause of worry. The competitive landscape is also tough with the presence of larger players. With the dearth of any major near-term catalyst, we downgrade the stock to Underperform.

Overview:

Bioscrip, Inc. (BIOS), based in Elmsford N.Y., is a provider of home infusion, home healthcare and pharmacy benefit management (PBM) services. The company provides condition-specific clinical management programs for individuals suffering from chronic and acute healthcare conditions. BioScrip, in partnership with healthcare payors, pharmaceutical manufacturers, government agencies and physicians strives to deliver cost-effective programs to patients.

As of Mar 31, 2014, BioScrip operated from 81 locations in 29 states.

Earlier in 2010, BioScrip had initiated a strategic assessment of its business and operations based on which the company started focusing on the growth of its fast growing Infusion/Home Health Services segment. As a result, on May 4, 2012 BioScrip sold certain Pharmacy Services assets including pharmacy mail operations and community retail pharmacy stores to Walgreens for $225 million.

With the asset divestment, BioScrip restructured its operating segments from Infusion/Home Health Services and Pharmacy Services to three new operating divisions: Infusion Services, Home Health Services and PBM Services.

With the spin-off of substantially all of the company's Home Health business Deaconess HomeCare, to LHC Group, Inc. Last April, currently BioScrip operates through two main segments, viz. Infusion Services (92% of total revenue in the fourth quarter) and PBM Services (8%).

Infusion Services: This segment provides services consisting of home infusion therapy, respiratory therapy and the provision of durable medical equipment, products and services. Infusion services include the dispensing and administering of infusion-based drugs, which typically require additional nursing and clinical management services, equipment to administer the correct dosage and patient training designed to improve patient outcomes. Home infusion services also include dispensing self-injectable therapies.

On Jul 31, 2012, BioScrip acquired Illinois-based privately held InfuScience, a provider of alternate site infusion pharmacy services for $38.0 million in cash. On Feb 4, 2013, BioScrip acquired DaVita's majority-owned subsidiary HomeChoice Partners, an alternate-site infusion pharmacy service provider for $70 million in cash. The terms of the deal also include a potential additional consideration based on the post purchase operating performance of HomeChoice. BioScrip expects to realize an estimated $3.9 million of future tax benefit as a result of this transaction. Moreover, post integration (expected in 9-12 months), the company expects HomeChoice to generate annual revenues of around $70 million.

Pharmacy Benefit Management (PBM) Services: This segment provides integrated PBM services, which primarily consists of discount cash card programs. The discount cash card programs provide a cost effective alternative for individuals who may be uninsured, underinsured or may have restrictive coverage that disallows reimbursement for certain medications.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: BIOS , PBM

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