Back to top

Image: Bigstock

BioScrip (BIOS) Posts Strong Q2, Strategic Plans on Track

Read MoreHide Full Article

On Aug 12, 2016, we issued an updated research report on BioScrip, Inc. – a provider of home infusion and pharmacy benefit management (PBM) services.

BioScrip posted a better-than-expected second quarter with net loss narrower than the Zacks Consensus Estimate and revenues ahead of the same. BioScrip has recently acquired Home Solutions - the home infusion and nursing products business of HS Infusion Holdings. The combined company is anticipated to generate revenues of more than $1 billion.

We are encouraged by BioSrip’s progress with its multi-faceted strategic plan, which was adopted to improve its financial position and position itself as a pure play infusion services company focused on high-growth services.

In fact, we are encouraged to note that in the second quarter, BioScrip delivered its strongest adjusted EBITDA results since 2013, and the quarter’s performance exhibits significant progress it has made since the implementation of the financial improvement plan a year back. Operating workflow efficiency has improved; there was increase in cash collections as well as reductions in bad debt and overhead costs.

With the new initiatives likely to enhance the company’s overall business, we expect the company to overcome its loss scenario as well, on the account of these steps. Meanwhile, management has authorized a process to concurrently explore a range of strategic alternatives, including transitioning chronic therapies to alliance partners or a potential sale or merger of the company.

On Aug 27, 2015, BioScrip divested its entire PBM Services segment to ProCare Pharmacy Benefit Manager Inc. for a total cash consideration of approximately $24.6 million, including an adjustment for estimated closing date net working capital. Following the divestment of PBM Services, Infusion Services remains as the only operating segment at the company.

We also note, BioScrip has been recording persistent growth in its core Infusion Services business, the sole operating segment at the company. The company has been building a strong core Infusion platform through organic growth and acquisitions. Management forecasts BioScrip’s focus on the higher growth core Infusion business will drive increased profitability.

On the flip side, reimbursement issues continue to strain BioScrip’s performance. Over the last several years, increased Medicaid spending, combined with slow state revenue growth, led many states to institute measures aimed at control in spending, subsequently taking a toll on operating performances of companies like BioScrip. Besides, the competitive landscape also remains as overhang headwind.

Currently, BioScrip carries a Zacks Rank #3 (Hold).

Key Picks in the Sector

Some of the stocks worth a look in the broader medical space are Almost Family Inc. , RadNet, Inc. (RDNT - Free Report) and US Physical Therapy Inc. (USPH - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


RadNet, Inc. (RDNT) - free report >>

U.S. Physical Therapy, Inc. (USPH) - free report >>

Published in