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BioScrip's (BIOS) Q2 Loss Narrower than Expected, Sales Top

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BioScrip, Inc. reported an adjusted net loss from continuing operations of 8 cents per share in the second quarter of 2016, wider than the year-ago adjusted net loss of 2 cents a share. The Zacks Consensus Estimate for the quarter was a loss of 9 cents, a penny wider than the company’s quarterly number. 

Revenues

With the completion of the company’s non-core PBM business divestment (treated as discontinued operation in the previous quarter), BioScrip currently has a simplified business structure focused on core Infusion Services.

Revenues from continuing operations in the reported quarter dropped 5.8% year over year to $232.5 million, but exceeded the Zacks Consensus Estimate of $230 million. The year-over-year decline was due to the planned shift in the revenue mix to greater core infusion revenue business composition from lower margin chronic infusion revenue.

Gross profit during the second quarter was $64.2 million, up 15.9% year over year. Gross margin expanded 519 basis points (bps) year over year to 27.6%. Adjusted operating income was $14.1 million, a considerable surge from the year-ago adjusted number of $0.15 million on the back of a 9.3% drop in adjusted operating expenses to $50 million. Adjusted operating margin expanded a massive 9,579 bps to 14.1% year over year.

BIOSCRIP INC Price and EPS Surprise

BIOSCRIP INC Price and EPS Surprise | BIOSCRIP INC Quote

Financials

BioScrip exited the second quarter of 2016 with cash and cash equivalents of $51.4 million, up from $8.1 million at the end of the first quarter. In addition, the company currently has $70.4 million of undrawn capacity available on its revolving credit facility.

Guidance

BioScrip has updated its 2016 guidance. The company’s EBITDA guidance is $45–$50 million (a decline from the earlier band of $50–$60). Revenue expectation for 2016 has, however, been raised to a new range of $940–$960 million ($730 million–$760 million). Diluted loss per share for 2016 is anticipated in the range of 48–38 cents (loss of 39–19 cents).

Our Take

BioScrip posted a better-than-expected performance in the second quarter of 2016. We are encouraged by the company’s progress with its multi-faceted strategic plan, which was adopted to improve its financial position. This enabled it to emerge as a major player in the infusion services space. BioScrip’s divestment of its non-profitable PBM business comes across as a prudent move. Further, the recent acquisition of Home Solutions will make BioScrip more focused on its core business.

Zacks Rank

Currently, BioScrip holds a Zacks Rank #2 (Buy). Some similarly ranked stocks in the medical sector are Almost Family Inc. , American Renal Associates Holdings, Inc. and US Physical Therapy Inc. (USPH - Free Report) . All three stocks hold the same Zacks Rank as BioScrip.

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