On Jul 10, we issued an updated research report on
) - a provider of home infusion and pharmacy benefit management
Yet again, we are disappointed with the poor first-quarter
bottom-line performance at BioScrip. Adjusted net loss from
continuing operations of 17 cents per share was much wider than the
year-ago adjusted loss per share of a penny. The results also
considerably lagged the Zacks Consensus Estimate of a loss of 4
Although year-over-year revenues showed an improvement, the
strong growth in Infusion revenues was offset by a 31.9% slash in
revenues at the PBM Services segment.The decline was due to
termination of a large but low-margin contract with a PBM client in
the first quarter of 2013 and decline in its discount card
Moreover, the company has also revealed its expectations
regarding near-term revenue dissynergies from acquisitions.
According to the company, it may take another two to three quarters
in bringing the out-of-network patients into BioScrip's
On the flip side, margins continue to be under pressure, which
remains a major headwind for the company. Huge gross margin
contraction in the quarter was primarily due to a shift in the
therapy mix in the Infusion Services segment and adverse business
mix as revenues from the high-margin PBM business continue to
Further, reimbursement issues continue to hurt its performance.
The competitive landscape also remains as an overhang.
Nonetheless, we are upbeat about BioScrip's encouraging
performance in the Infusion business. Going forward, the 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 believe the recent acquisitions and sellouts
will be significantly accretive to the top line.
Other Stocks to Consider
BioScrip currently carries a Zacks Rank #5 (Strong Sell).
Although we hold a bearish outlook on the stock at present, some
better-ranked stocks in the broader medical sector that look
promising at the moment are
Intuitive Surgical, Inc.
). While MASI sports aZacks Rank #1 (Strong Buy), the other two
stocks carry a Zacks Rank #2 (Buy).
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