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BioScrip (BIOS): Q3 Loss Narrows Y/Y, Sales Beat Estimates
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BioScrip, Inc. reported net loss from continuing operations of $11.1 million or loss of 12 cents per share in the third quarter of 2016, much narrower than the year-ago net loss of $24.5 million or loss of 39 cents a share. The Zacks Consensus Estimate for the quarter was a loss of 6 cents per share.
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 fell 9.2% year over year to $224.5 million, but exceeded the Zacks Consensus Estimate of $223 million. The year-over-year decline was due to the planned shift in revenue mix to greater core infusion revenue business composition from lower margin chronic infusion revenue and lower-than-expected core sales volumes in the reported quarter.
Gross profit during the third quarter was $62.6 million, down 3.9% year over year. However, gross margin expanded 150 basis points (bps) to 27.9% as a result of the improved revenue mix on a year-over-year basis. Adjusted operating income was $9.9 million, marking a 31.7% fall from the year-ago adjusted number of $14.5 million due to a 3.9% rise in adjusted operating expenses to $52.7 million. Adjusted operating margin contracted 147 bps year over year to 4.4%.
Financials
BioScrip exited the third quarter of 2016 with cash and cash equivalents of $2.83 million, significantly down from $51.4 million at the end of the second quarter. In addition, the company currently has $31.4 million of undrawn capacity available on its revolving credit facility.
Guidance
Based on unimpressive third-quarter results and considering the ongoing integration work associated with the Home Solutions acquisition, and the company’s latest upper management churn, BioScrip decided to lower its earlier provided full-year 2016 guidance.
The company’s EBITDA guidance is $27–$29 million (a decline from the earlier estimate of $45–$50 million). Revenue expectation for 2016 has been lowered to a new range of $928–$934 million from $940–$960 million expected earlier.
The company has also provided its preliminary guidance for full-year 2017. While revenues are expected in the band of $940−$980 million, adjusted EBITDA should range from $50−$60 million.
Our Take
BioScrip posted a better-than-expected revenue performance in the third quarter of 2016. However, a year-over-year drop in revenues, partly due to lower-than-expected core sales volumes, continues to worry us. Nonetheless, 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 improve BioScrip’s focus on its core business. The company expects the core revenues of Home Solutions and its continued core growth to be accretive on a go forward basis.
Zacks Rank & Key Picks
BioScrip currently has a Zacks Rank #3 (Hold). Better-ranked medical stocks are GW Pharmaceuticals plc , Baxter International Inc. (BAX - Free Report) and Bovie Medical Corporation . GW Pharmaceuticals and Baxter sport a Zacks Rank #1 (Strong Buy), while Bovie Medical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GW Pharmaceuticals surged 71.6% year to date compared to the S&P 500’s 4.3% over the same period. The company has a four-quarter average positive earnings surprise of 41.6%.
Baxter international rallied 26.5% in the past one year, which compares favorably with the S&P 500’s 2.6% gain. It has a trailing four-quarter average positive earnings surprise of 27%.
Bovie Medical recorded a 153.5% gain in the past one year, way better than the S&P 500’s 2.6%. The company has a trailing four-quarter average positive earnings surprise of 28.7%.
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BioScrip (BIOS): Q3 Loss Narrows Y/Y, Sales Beat Estimates
BioScrip, Inc. reported net loss from continuing operations of $11.1 million or loss of 12 cents per share in the third quarter of 2016, much narrower than the year-ago net loss of $24.5 million or loss of 39 cents a share. The Zacks Consensus Estimate for the quarter was a loss of 6 cents per share.
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 fell 9.2% year over year to $224.5 million, but exceeded the Zacks Consensus Estimate of $223 million. The year-over-year decline was due to the planned shift in revenue mix to greater core infusion revenue business composition from lower margin chronic infusion revenue and lower-than-expected core sales volumes in the reported quarter.
BIOSCRIP INC Price, Consensus and EPS Surprise
BIOSCRIP INC Price, Consensus and EPS Surprise | BIOSCRIP INC Quote
Gross profit during the third quarter was $62.6 million, down 3.9% year over year. However, gross margin expanded 150 basis points (bps) to 27.9% as a result of the improved revenue mix on a year-over-year basis. Adjusted operating income was $9.9 million, marking a 31.7% fall from the year-ago adjusted number of $14.5 million due to a 3.9% rise in adjusted operating expenses to $52.7 million. Adjusted operating margin contracted 147 bps year over year to 4.4%.
Financials
BioScrip exited the third quarter of 2016 with cash and cash equivalents of $2.83 million, significantly down from $51.4 million at the end of the second quarter. In addition, the company currently has $31.4 million of undrawn capacity available on its revolving credit facility.
Guidance
Based on unimpressive third-quarter results and considering the ongoing integration work associated with the Home Solutions acquisition, and the company’s latest upper management churn, BioScrip decided to lower its earlier provided full-year 2016 guidance.
The company’s EBITDA guidance is $27–$29 million (a decline from the earlier estimate of $45–$50 million). Revenue expectation for 2016 has been lowered to a new range of $928–$934 million from $940–$960 million expected earlier.
The company has also provided its preliminary guidance for full-year 2017. While revenues are expected in the band of $940−$980 million, adjusted EBITDA should range from $50−$60 million.
Our Take
BioScrip posted a better-than-expected revenue performance in the third quarter of 2016. However, a year-over-year drop in revenues, partly due to lower-than-expected core sales volumes, continues to worry us. Nonetheless, 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 improve BioScrip’s focus on its core business. The company expects the core revenues of Home Solutions and its continued core growth to be accretive on a go forward basis.
Zacks Rank & Key Picks
BioScrip currently has a Zacks Rank #3 (Hold). Better-ranked medical stocks are GW Pharmaceuticals plc , Baxter International Inc. (BAX - Free Report) and Bovie Medical Corporation . GW Pharmaceuticals and Baxter sport a Zacks Rank #1 (Strong Buy), while Bovie Medical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GW Pharmaceuticals surged 71.6% year to date compared to the S&P 500’s 4.3% over the same period. The company has a four-quarter average positive earnings surprise of 41.6%.
Baxter international rallied 26.5% in the past one year, which compares favorably with the S&P 500’s 2.6% gain. It has a trailing four-quarter average positive earnings surprise of 27%.
Bovie Medical recorded a 153.5% gain in the past one year, way better than the S&P 500’s 2.6%. The company has a trailing four-quarter average positive earnings surprise of 28.7%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>