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BioScrip Grows on CORE Plan, Reimbursement Issues Persist

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On Oct 9, we issued an updated research report on BioScrip, Inc. . Although the company faces reimbursement challenges, its core business continues to grow. The stock has a Zacks Rank #3 (Hold).

BioScrip concluded the second quarter on a mixed note. Although revenues beat the consensus mark, the massive year-over-year decline was a dampener. According to the company, revenues were affected by the impact of higher core product mix, including contract changes with UnitedHealthcare and the impact of implementing ASC 606 in 2018.

Over the past year, BioScrip has underperformed the industry. The stock has increased 13.2% compared with 20.6% rise of the industry.

Nonetheless, we are encouraged by the company’s progress in the second quarter, courtesy of its new multi-faceted CORE plan to improve its financial position.The scheme involves identifying and executing strategies to accelerate core revenue growth, build a favorable product mix, drive operational efficiency, raise revenue collection as well as increase employee effectiveness.

The company expects to earn revenues at Home Solutions and witness core growth. According to BioScrip, it is on track to achieve its goal of 85% core revenue mix (75.1% core mix in the last reported quarter).

With the rapidly-changing healthcare landscape, the company has been growing its Infusion Services platform through a clinically-focused and customer-orientated model. Apart from its intent to drive high growth in core Infusion Services, the company is engaged in aggressive cost control. Currently, the company aims at emerging as a smaller, more focused organization with significant improved profitability, better growth prospects and an improved operating cash flow performance.

However, external challenges like reimbursement cuts pertaining to the 21st  Century Cures Act significantly hampered growth in 2017 and the trend is expected to persist through 2018. 

Key Picks

Some better-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , Amedisys, Inc. (AMED - Free Report) and Masimo Corporation (MASI - Free Report) .

Intuitive Surgical’s long-term expected earnings growth rate is 14.7%. The stock currently carries a Zacks Rank of 2 (Buy).

Amedisys’ long-term expected earnings growth rate is 19.4%. The stock holds a Zacks Rank #2 at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Masimo’s long-term expected earnings growth rate is 14.8%. The stock has a Zacks Rank #2 at present.

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