It has been about a month since the last earnings report for BioScrip (BIOS - Free Report) . Shares have added about 4.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is BioScrip due for a pullback? 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 catalysts.
BioScrip incurred net loss of 14 cents per share from continuing operations in the second quarter of 2018 compared with net loss of 26 cents a year ago. The quarterly loss was wider than the Zacks Consensus Estimate of a loss of 10 cents per share.
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 $175.8 million, reflecting a 19.4% decline year over year. Per management, a shift in strategy to focus on growing BioScrip's core revenue mix including contract changes with the UnitedHealthcare (effective Sep 30, 2017) and the impact of implementing ASC 606 in 2018 caused this downside. However, the top line surpassed the Zacks Consensus Estimate of $169 million.
Notably, net revenues in the second quarter included core product mix of 75.1%, showing an improvement from 73.6% in the prior-year quarter.
Gross profit in the reported quarter was $59.9 million, down 11.3% year over year. However, gross margin expanded 311 basis points (bps) to 34.1%. General and administrative expenses were $10.9 million, representing a 13.2% rise from the amount incurred in second-quarter 2017. Adjusted operating income was $49 million, marking a 15.4% year-over-year fall. However, adjusted operating margin grew 132 bps year over year to 27.9%.
BioScrip exited second-quarter 2018 with cash and cash equivalents of $20.8 million compared with $30.4 million recorded at the end of the first quarter.
For 2018, the company has reiterated its earlier-provided revenue view of $688-$698 million. Per the company, the revenue projection has been adjusted for the implementation of ASC 606. The Zacks Consensus Estimate of $694.2 million lies within the company’s guided range.
Additionally, BioScrip still expects to incur restructuring expenses of $5-$6 million in 2018, primarily depicting costs related to redesigning and optimization of its revenue cycle management process.
The company currently expects 2018 net loss per share in the band of 34-40 cents, comparing favorably with the earlier prediction of a loss of 34-41 cents a share. The Zacks Consensus Estimate is pegged at a loss of 31 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -10.53% due to these changes.
At this time, BioScrip has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise BioScrip has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.