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Why Is BioScrip (BIOS) Down 2% Since its Last Earnings Report?

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A month has gone by since the last earnings report for BioScrip, Inc. (BIOS - Free Report) . Shares have lost about 2% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is BIOS due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Recent Earnings

BioScrip reported net loss from continuing operations of 12 cents per share in the first quarter of 2018 compared with net loss of 18 cents a year ago. However, net loss was wider than the Zacks Consensus Estimate by a penny.

Revenues

With the completion of the non-core PBM business divestment, BioScrip now has a simplified business structure focused on core Infusion Services.

Net revenues in the quarter under review totaled $168.6 million, reflecting a 22.6% decline year over year. Per management, temporary supply deficit along with shutdown of some of the company’s branches due to severe winter weather conditions led to the downside. Further, the company’s shift in strategy to focus on growing core revenue mix was a major deterrent. However, the top line surpassed the Zacks Consensus Estimate of $167 million.

Notably, net revenues in the first quarter included core product mix of 75.4%, showing an improvement from 71.9% in the prior-year quarter.
Gross profit in the first quarter was $55 million, down 15.3% year over year. However, gross margin expanded 290 basis points (bps) to 32.7%.

General and administrative expenses were $10.7 million, reflecting a 15.1% rise from first-quarter 2017. Adjusted operating income was $44.3 million, marking a 20.3% year-over-year decline. However, adjusted operating margin expanded 80 bps year over year to 26.3%.

Financials

BioScrip exited first-quarter 2018 with cash and cash equivalents of $30.4 million, compared with $39.5 million recorded at the end of the 2017.

2018 Guidance

For 2018, the company has updated the revenue view to $688-$698 million from the previous $710-$720 million. Per the company, the revenue guidance has been adjusted for the implementation of ASC 606. The Zacks Consensus Estimate of $710 million lies above the company’s guided range.

Additionally, BioScrip expects to incur restructuring expenses of $5-$6 million in 2018, primarily reflecting costs related to redesigning and optimizing of its revenue cycle management process.

The company continues to expect 2018 net loss per share in the band of 34-41 cents. Our consensus estimate of 28 cents for the same falls below the company’s guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 19.2% due to these changes.

BioScrip, Inc. Price and Consensus

VGM Scores

At this time, BIOS has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than momentum investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, BIOS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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