) recently declared its second-quarter 2014 results. Adjusting for
certain one-time expenses, BioScrip reported net loss from
continuing operations of 10 cents per share, much wider than the
year-ago adjusted loss per share of 4 cents. The results also
considerably lagged the Zacks Consensus Estimate of a loss of 5
On a reported basis, BioScrip's net loss from continuing
operations was $18.6 million or loss of 27 cents per share - a huge
slash from the year-ago loss of $8.9 million or loss of 14 cents
Revenues in Detail
Total revenue in the reported quarter rose 43.8% year over year
to $247.1 million, breezing past the Zacks Consensus Estimate of
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 (93% of total revenue in the second quarter) and
PBM Services (contributing for the rest).
Segments in Detail
The company reported revenues of $230.5 million in Infusion
Services, recording impressive growth of 47.8% year over year.
Continued strong double-digit organic growth and the acquisition of
CarePoint Partners were the major revenue drivers in this
segment.On the other hand, revenues in the PBM Services segment
came in at $16.6 million, reflecting a marginal 1.8% increase from
the prior-year quarter.
While the cost of product revenues shot up 57.4% to $161.7
million, the cost of service revenues surged 70.1% to $20.1 million
in the quarter.
Although gross profit during the quarter increased 13.1% year
over year to $65.4 million, gross margin contracted 708 basis
points (bps) to 26.4%. The increase in gross profit was the result
of organic growth and the acquisition of CarePoint Partners, offset
by a decline in the PBM Services segment. On the other hand, the
downside in margin was due to the Infusion Services segment growing
more rapidly than the higher-margin PBM Services segment.
Selling, general and administrative (SG&A) expenses
escalated 13.8% to $57.2 million. The rise in expenditure resulted
in a drag of 106 bps in adjusted operating margin, which settled at
3.3% for the reported quarter.
The company ended the quarter with cash and cash equivalents of
$1.5 million, compared with $1 million at the end of fiscal 2013.
Long-term debt was $418.7 million as on Jun 30, 2014 as against
$435.6 million on Dec 31, 2013.
BioScrip provided an update to its fiscal 2014 revenue guidance.
The company expects to report its 2014 revenues at the upper end of
its earlier projected range of $940.0 million to $980.0 million.
The current Zacks Consensus estimate of $964 million remains below
the current projection. The company expects revenues at its
Infusion Services segment to continue with double-digit organic
growth. The company also expects continued stability in its PBM
We believe Bioscrip's Infusion franchise should continue to grow
via organic and inorganic means. We are encouraged to note that the
company has been taking several steps to emphasize more on areas
with long-term growth potential and high returns.
We further believe that the recent acquisitions and sellouts
will be significantly accretive to Bioscrip's top line. In this
regard, we are highly optimistic about the CarePoint Partners
buyout that should improve BioScrip's long-term growth profile.
Also, the divestment of its Home Health business reinforces the
company's strategy to strengthen its Infusion Services business.
The company has significant opportunities for growth in these two
operating areas with several catalysts to accelerate growth going
However, we are rather disappointed with another poor
bottom-line performance at BioScrip. Although Infusion Services
business continues to grow at a healthy pace, poor performance at
the PBM Services segment is weighing on the margin.
Currently, the stock carries a Zacks Rank #5 (Strong Sell).
Although we hold a bearish sentiment for BioScrip at the moment,
some of the better-ranked stocks in the broader medical space that
warrant a look are Abaxis, Inc. (
), Alere Inc. (
) and Hospira Inc. (
). All the three stocks carry a Zacks Rank #2 (Buy).
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