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BioScrip (BIOS) Stock Declines on Dull Q1 EBITDA Outlook
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Elmsford NY-based pure-play Infusion Service provider, Bioscrip, Inc.'s shares witnessed a 2.2% fall in yesterday’s trading session, closing at $1.78. The company’s revelation of bearish EBITDA (Earnings before interest, tax, depreciation and amortization) outlook for the to-be-reported quarter led to the fall.
The company expects its first-quarter fiscal 2017 adjusted EBITDA to decline year-over-year due to the rollout by the Company of Cures Act legislation mitigation measures, which was fully implemented by Jan 2017.
Notably, this legislation resulted in significant and immediate reduction in Medicare reimbursement rates on certain drugs. Moreover, reimbursement for the administration of these drugs will not be available until 2021. This will result in a four-year gap without reimbursement for such services. BioScrip earlier apprehended the impact of the Cures Act legislation to be $24 million to its 2017 EBITDA.
The company plans to take several steps to mitigate the unfavorable impact of this legislation on its business. These initiatives include working with the National Home Infusion industry (NHIA) to propose an amendment to the legislation for infusion benefit and increase awareness of its negative implications on patients who are relying on life-saving therapies.
Additionally, the company is an active member of Keep My Infusion Care at Home, a newly established coalition of patients, caregivers, healthcare providers and related industry organizations. Hence, it is working on increasing awareness with Congress and CMS on the unintended consequences of the legislation on the home infusion industry and the critically ill patients depending on the home infusion industry.
BioScrip is optimistic that these increasing awareness initiatives will lead to an improvement in the reimbursement scenario for the clinical services component within the home infusions services space before 2021.
The company, however, has an optimistic view about its full-year 2017 adjusted EBITDA outlook. Despite a bearish outlook for the first quarter, management has reiterated its 2017 adjusted EBITDA forecast of $45.0 million to $55.0 million.
According to BioScrip, this reflects positive effect of the termination of its contract with UnitedHealthcare, effective Sep 30, 2017. UnitedHealthcare was the company’s largest payor, accounting for 24% revenues last year. However, the contract was not profitable and its termination is expected to prove beneficial for BioScrip, boosting its adjusted EBITDA outlook. This contract exit is in fact consistent with the company’s ‘CORE’ initiative that includes growth acceleration of the company’s profitable business segments and improvement in operational efficiencies throughout the organization.
For the last three months, BioScrip traded above the Zacks categorized Medical - Outpatient and Home Healthcare industry. The stock returned a stellar 71.84% to date, higher than 3.66% gain of the broader industry. We are encouraged by the company’s progress with its new CORE plan, which has been adopted to improve its financial position. Further, the recent integration of Home Solutions will improve BioScrip’s focus on its infusion services business.
Zacks Rank and Key Picks
BioScrip currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader medical sector include Inogen Inc. (INGN - Free Report) , Avinger, Inc. (AVGR - Free Report) and Fluidigm Corporation . Inogen sports a Zacks Rank #1 (Strong Buy) while Fluidigm and Avinger carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen has a long-term expected earnings growth rate of 17.50%. Notably, the stock has an impressive one-year return of 89.4%.
Avinger projects sales growth of 30.63% for the current year. Additionally, the company has a projected earnings per share growth rate of 39.53%, for the current year.
Fluidigm has a long-term expected earnings growth rate of 25%. The stock posted a positive earnings surprise of 1.6% in the last reported quarter.
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BioScrip (BIOS) Stock Declines on Dull Q1 EBITDA Outlook
Elmsford NY-based pure-play Infusion Service provider, Bioscrip, Inc.'s shares witnessed a 2.2% fall in yesterday’s trading session, closing at $1.78. The company’s revelation of bearish EBITDA (Earnings before interest, tax, depreciation and amortization) outlook for the to-be-reported quarter led to the fall.
The company expects its first-quarter fiscal 2017 adjusted EBITDA to decline year-over-year due to the rollout by the Company of Cures Act legislation mitigation measures, which was fully implemented by Jan 2017.
Notably, this legislation resulted in significant and immediate reduction in Medicare reimbursement rates on certain drugs. Moreover, reimbursement for the administration of these drugs will not be available until 2021. This will result in a four-year gap without reimbursement for such services. BioScrip earlier apprehended the impact of the Cures Act legislation to be $24 million to its 2017 EBITDA.
The company plans to take several steps to mitigate the unfavorable impact of this legislation on its business. These initiatives include working with the National Home Infusion industry (NHIA) to propose an amendment to the legislation for infusion benefit and increase awareness of its negative implications on patients who are relying on life-saving therapies.
Additionally, the company is an active member of Keep My Infusion Care at Home, a newly established coalition of patients, caregivers, healthcare providers and related industry organizations. Hence, it is working on increasing awareness with Congress and CMS on the unintended consequences of the legislation on the home infusion industry and the critically ill patients depending on the home infusion industry.
BioScrip is optimistic that these increasing awareness initiatives will lead to an improvement in the reimbursement scenario for the clinical services component within the home infusions services space before 2021.
The company, however, has an optimistic view about its full-year 2017 adjusted EBITDA outlook. Despite a bearish outlook for the first quarter, management has reiterated its 2017 adjusted EBITDA forecast of $45.0 million to $55.0 million.
According to BioScrip, this reflects positive effect of the termination of its contract with UnitedHealthcare, effective Sep 30, 2017. UnitedHealthcare was the company’s largest payor, accounting for 24% revenues last year. However, the contract was not profitable and its termination is expected to prove beneficial for BioScrip, boosting its adjusted EBITDA outlook. This contract exit is in fact consistent with the company’s ‘CORE’ initiative that includes growth acceleration of the company’s profitable business segments and improvement in operational efficiencies throughout the organization.
For the last three months, BioScrip traded above the Zacks categorized Medical - Outpatient and Home Healthcare industry. The stock returned a stellar 71.84% to date, higher than 3.66% gain of the broader industry. We are encouraged by the company’s progress with its new CORE plan, which has been adopted to improve its financial position. Further, the recent integration of Home Solutions will improve BioScrip’s focus on its infusion services business.
Zacks Rank and Key Picks
BioScrip currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader medical sector include Inogen Inc. (INGN - Free Report) , Avinger, Inc. (AVGR - Free Report) and Fluidigm Corporation . Inogen sports a Zacks Rank #1 (Strong Buy) while Fluidigm and Avinger carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen has a long-term expected earnings growth rate of 17.50%. Notably, the stock has an impressive one-year return of 89.4%.
Avinger projects sales growth of 30.63% for the current year. Additionally, the company has a projected earnings per share growth rate of 39.53%, for the current year.
Fluidigm has a long-term expected earnings growth rate of 25%. The stock posted a positive earnings surprise of 1.6% in the last reported quarter.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging
phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>