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BioScrip (BIOS) Q3 Loss Wider Than Expected, Revenues Beat

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BioScrip, Inc. (BIOS - Free Report) incurred net loss of 9 cents per share from continuing operations in the third quarter of 2018. The figure is narrower than the net loss of 12 cents a year ago but wider than the Zacks Consensus Estimate of a loss of 7 cents per share.

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 $180.9 million, reflecting an 8.9% decline year over year. Per BioScrip, a shift in strategy to focus on growing its core revenue mix including contract changes with the UnitedHealthcare (effective Sep 30, 2017) caused this downside. However, excluding the revenue contribution from the exited UnitedHealthcare therapy line during the prior-year quarter, net revenues increased approximately 5% year over year. Also, the top line exceeded the Zacks Consensus Estimate by 5.8%.

BioScrip, Inc. Price, Consensus and EPS Surprise

BioScrip, Inc. Price, Consensus and EPS Surprise | BioScrip, Inc. Quote

Notably, net revenues in the third quarter included core product mix of 75.7%, showing a 10-basis point improvement from the year-ago period.

Gross profit in the reported quarter was $65.9 million, down 0.9% year over year. However, gross margin expanded 292 basis points (bps) to 36.4%. General and administrative expenses were $12.5 million, representing a 32.7% surge from the amount incurred in third-quarter 2017. Other expenses were $38.2 million in the quarter under review, implying a 0.2% rise on a year-over-year basis. Adjusted operating income was $15.2 million, inducing a year-over-year fall of 19.9%. Adjusted operating margin contracted 116 bps year over year to 8.4%.

Financials

BioScrip exited third-quarter 2018 with cash and cash equivalents of $18.9 million as compared to $20.8 million recorded at the end of the second quarter.

2018 Guidance

For 2018, the company has raised its revenue projection to a new band of $710-$720 million (earlier provided revenue view was $688-$698 million). The Zacks Consensus Estimate of $696.1 million lies below the company’s guided range.

The company currently expects 2018 net loss per share within 26-32 cents, comparing favorably with the past prediction of a loss of 34-40 cents a share. The Zacks Consensus Estimate is pegged at a loss of 32 cents.

Our Take

BioScrip concluded the third quarter on a mixed note. Although revenues beat the consensus mark, the massive year-over-year decrease was a dampener. Additionally, the quarterly loss was wider than the Zacks Consensus Estimate.

Nonetheless, we are encouraged by the company’s progress in the third quarter, courtesy of its new multi-faceted CORE plan to improve its financial position. The company also anticipates to earn core revenues at its Home Solutions and also witness continued core growth, which in turn, might prove to be accretive to its portfolio. It also took certain rigorous steps to revitalize its sales force in the quarter. These developments should further drive its business growth going forward.

Zacks Rank & Key Picks

BioScrip currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the broader medical space, which already reported solid earnings this season, are Intuitive Surgical (ISRG - Free Report) , Stryker Corporation (SYK - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intuitive Surgical reported third-quarter 2018 adjusted EPS of $2.83, which beat the Zacks Consensus Estimate of $2.65. Revenues totaled $920.9 million, also surpassing the consensus estimate of $918.6 million.

Stryker posted third-quarter 2018 adjusted EPS of $1.69, outpacing the Zacks Consensus Estimate of $1.68. Operating margin was 17.8%, up 30 bps.

Merit Medical delivered third-quarter 2018 adjusted EPS of 47 cents, which trumped the Zacks Consensus Estimate of 42 cents. Revenues of $221.6 million edged past the consensus mark of $218 million.

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