) recently declared its first-quarter 2014 results. Adjusting for
certain one-time expenses, BioScrip reported net loss from
continuing operations of 17 cents per share in the quarter, 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 cents.
Following the announcement on May 8, stock price of BioScrip
slashed nearly 9% to $6.09 till yesterday's
On a reported basis, BioScrip's net loss from continuing
operation was $25.4 million or loss of 37 cents per share - a huge
slash from the year-ago loss of $8.4 million or loss of 15 cents
Revenues in Detail
Total revenues in the reported quarter rose 32.3% year over year
to $239.6 million, beating the Zacks Consensus Estimate of $223
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%).
Segments in Detail
The company reported revenues of $221.4 million in Infusion
Services, recording impressive growth of 43.4% year over year.
Continued strong double-digit organic growth and the acquisitions
of HomeChoice and CarePoint were the major revenue drivers in this
On the other hand, revenues in the PBM Services segment came in
at $18.2 million, reflecting a substantial 31.9% downfall from the
prior-year quarter. 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 revenues.
While the cost of product revenues shot up 43.9% to $215.9
million, the cost of service revenues declined 23.7% to $23.7
million in the quarter.
Gross profit during the quarter increased 16.3% year over year
to $65.1 million. However, gross margin contracted 370 basis points
(bps) to 27.2% owing to decline in the higher-margin PBM Services
segment. The downfall was due to the Infusion Services segment
growing more rapidly than the higher-margin PBM Services
Selling, general and administrative (SG&A) expenses
escalated 26.3% to $59.4 million. The rise in expenditure resulted
in a drag of 255 bps in adjusted operating margin, which settled at
2.4% for the reported quarter.
The company ended the quarter with cash and cash equivalents of
$9.3 million, compared with $1 million at the end of fiscal 2013.
Long-term debt was $418.7 million as on Mar 31, 2014 as against
$435.5 million on Dec 31, 2013.
BioScrip expects to report its 2014 revenues in the range of
$940.0 million to $980.0 million. The current Zacks Consensus
estimate of $919 million remains far below the guided range. 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 Services segment.
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 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 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 forward.
However, we are rather disappointed with the poor first-quarter
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 #3 (Hold). Some of the
better-ranked stocks in the broader healthcare space that warrant a
Mead Johnson Nutrition Company
Natus Medical Inc.
). All three stocks carry a Zacks Rank #2 (Buy).
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