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Alere (ALR) Appeals to Reinstate Medicare Billing Privilege

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Waltham, MA based Alere Inc. , a leading player in rapid diagnostic tests, announced that it has recently appealed to the Administrative Law Judge at the Centers for Medicare & Medicaid Services for reinstatement of Medicare billing privilege.

For the last six months, the stock registered a negative return of almost 6.41%, narrower than the Zacks categorized Medical Products sub-industry’s negative return of 6.94% roughly. Average volume of shares traded over the last six months was remarkable at approximately 729.3K. The stock has a market cap of $3.42 billion.

However, the estimate revision trend does not look promising with three estimates moving south over the past two months. Notably, the current year estimates for the stock decreased by 22 cents to $1.58 per share over the same time frame. Additionally, the stock promises an earnings yield of 3.97% compared to the industry’s yield of only 1.16%.


The Medicare billing privilege for the company was revoked in Nov over issues relating to excess claims submission for deceased patients. This affected the performance of the company as for more than seven years it has provided diabetes testing supplies to Medicare beneficiaries. This accounted for a significant portion of its top line and we are apprehensive of the company’s underperformance in the ongoing quarter.

However, over the long run we are optimistic about the the company’s increasing focus on the diabetes market. According to the International Diabetes Foundation (IDF), about 415 million adults were diagnosed with diabetes in 2015 and the number is expected to increase to around 642 million or one in 10 adults by 2040. Moreover, many people with type II diabetes remain unaware of their condition for a long period of time and this may lead to complications by the time the disease is diagnosed. Meanwhile, as per IDF, global health spending to treat diabetes and manage complications was estimated to be about $673 billion in 2015.

Zacks Rank & Key Picks

Currently, Alere has a Zacks Rank #5 (Strong Sell).

Better-ranked medical stocks are NxStage Medical Inc. , Align Technology, Inc. (ALGN - Free Report) and Haemonetics Corporation (HAE - Free Report) . NxStage Medical and Align Technology sport a Zacks Rank #1 (Strong Buy) while Haemonetics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NxStage Medical gained 14.4% over the last one year compared with the S&P 500’s 9%. The company has a four-quarter average positive earnings surprise of 46.3%.

Align Technology rallied 47% year to date, way better than the S&P 500’s 10.1%. It has a trailing four-quarter average positive earnings surprise of 23%.

Haemonetics recorded a 23.7% gain year to date, better than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 0.82%.

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