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BioScrip's Infusion Business Strong, Dull 2017 View a Drag (Revised)

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On Aug 21, we issued an updated research report on Denver, CO-based BioScrip, Inc. (BIOS - Free Report) . The company is a leading Infusion Service provider and strives to deliver cost-effective programs to patients. The stock currently has a Zacks Rank #3 (Hold).

Over the past month, BioScrip has been trading above the broader industry. The stock has gained 3.7% in this period, as against the industry’s 9% loss. The market is upbeat about the company’s announcement to continue to offer certain core product lines to UnitedHealthcare. This deal should be significantly accretive to BioScrip’s top line.

The company’s progress for new multi-faceted CORE plan to improve financial position is also encouraging. The plan involves identifying and executing strategies to accelerate core revenue growth, favorable product mix, drive operational efficiency, improve revenue collection and increase employee effectiveness.

Further, BioScrip had successfully completed the Home Solutions’ integration earlier this year. The company expects core revenues as well as continued growth from this acquired asset to prove accretive, going forward.

Notably, BioScrip has been recording persistent growth in its core Infusion Services business with strong presence as well as a competitive advantage. The company witnessed a consistent rise in this business, primarily on account of strong organic growth in chronic, nutrition and other therapies. It has been building a robust core Infusion platform through organic development and acquisitions.

Management expects BioScrip’s focus on the fast-growing core Infusion business to drive an increased profitability. The company is currently on track to achieve the previously announced $17 million in Home Solutions synergies and other incremental annualized cost-reductions of $23-$25 million by 2017-end.

On the flip side, BioScrip’s 2017 guidance is lackluster with the inclusion of an estimated negative impact of the Cures Act legislation. A large portion of the company’s revenues used to come directly from Medicare, state Medicaid programs or other government payers. However, the new Cures Act bill does not reimburse any service payments for administration of certain drugs to patients via home infusion pharmacies.

The healthcare industry is also highly competitive. BioScrip’s competitors include large and well-established companies with higher financial, marketing and technological resources.

Key Picks

A few better-ranked medical stocks are IDEXX Laboratories, Inc. (IDXX - Free Report) , Lantheus Holdings, Inc. (LNTH - Free Report) and Align Technology, Inc. (ALGN - Free Report) . While Align Technology sports a Zacks Rank #1 (Strong Buy), Lantheus Holdings and IDEXX Laboratories carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has gained around 6.8% over the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has surged 70.4% over the last six months.

Align Technology has a long-term expected earnings growth rate of 26.6%. The stock has rallied roughly 22.3% over the last three months.

(We are reissuing this article to correct a mistake. The original article, issued on Aug 21, 2017, should no longer be relied upon.)



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