On Mar 4, 2014, Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
BioScrip witnessed downward estimate revisions since it
reported disappointing fourth-quarter 2013 earnings results on
In the fourth quarter, BioScrip's net loss from continuing
operations of 7 cents per share witnessed a massive decline from
the year-ago adjusted earnings per share (EPS) of 2 cents. The
results also considerably lagged the Zacks Consensus Estimate of
earnings of 2 cents. Notably, the company delivered negative
earnings surprises in 3 of the last 4 quarters with an average
miss of 116.67%.
BioScrip is still battling margin headwinds as the high-margin
PBM business continues to decline. Although the company is
working toward margin improvement, any near-term improvement is
Reimbursement pressure remains an overhang for the company's
home health franchise. Although Infusion Services business
continues to grow at a healthy pace, the poor performance at the
PBM Services segment is weighing on the margin. The dearth of any
major near-term catalyst might make it difficult for BioScrip to
overcome these challenges in the near future, which is also
reflected in the company's unimpressive guidance for fiscal
According to the company, in 2014, its Infusion Services
segment is expected to grow at a rate of 20% with double-digit
organic growth. However, similar to this recently completed
fiscal, even in 2014, growth in Infusion Services revenues will
be offset by a decline in the PBM Services segment and the sale
of the Home Health Services business. Total gross margin is
anticipated to suffer due to the sale of Home Health, growth in
the low-margin Infusion business and decline in the high-margin
PBM Services segment's gross margin.
Other Stocks to Consider
Not all healthcare stocks carry an unfavorable Zacks Rank like
BioScrip. Stocks like
Rite Aid Corp.
CVS Caremark Corp.
) are likely to perform well in the near term and hence, warrant
a look. All these stocks carry a Zacks Rank #2 (Buy).
BIOSCRIP INC (BIOS): Free Stock Analysis
CVS CAREMARK CP (CVS): Free Stock Analysis
HERBALIFE LTD (HLF): Free Stock Analysis
RITE AID CORP (RAD): Free Stock Analysis
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