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Why Is BioScrip (BIOS) Up 18.7% Since Last Earnings Report?

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A month has gone by since the last earnings report for BioScrip (BIOS - Free Report) . Shares have added about 18.7% 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 Q3 Loss Wider Than Expected, Revenues Beat

BioScrip 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%.

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.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -33.33% due to these changes.

VGM Scores

At this time, BioScrip has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

BioScrip has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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