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BioReference shares plunge on weak outlook

ELMWOOD PARK, N.J. (AP) -- BioReference Laboratories Inc. offered earnings estimates for the fourth quarter and the full year that are far short of market expectations, sending its shares sharply lower in afternoon trading Wednesday.

The clinical laboratory testing company blamed changes in reimbursement for its services. It said that it believes there is an "ongoing recalibration of reimbursement" for the industry, which is causing payers to push for lower payments. At the same time, the company is facing added expenses related to acquisitions and the launch of a cancer program.

BioReference pointed to the government shutdown, proposed changes to a number of government-run medical programs and the tumult created by the Affordable Care Act as possible drivers for the industry changes.

The company said that it has had to negotiate contracts with a number of health plans and those changes became effective largely in its fourth quarter. As a result, while the company expects patient volume for the fourth quarter will increase 15 percent, but that its revenue per patient for non-genetic tests will fall about 4 percent.

BioReference expects to report earnings of 40 cents per share for the fourth quarter and $1.65 for the year. That is well below the earnings of 55 cents per share for the quarter and $1.79 per share for the year that analysts surveyed by FactSet expect.

"We believe there is a disconnect between the innovative, clinically relevant services our industry offers and the decreasing value placed on them by the payer community as demonstrated by changes in reimbursement rates and conditions," CEO Mark Grodman said in a statement. "I believe this is true for all providers across the healthcare spectrum."

The company expects revenue of $192 million for the fourth quarter, topping the $189 million that analysts expect.

BioReference is expected to report its full fourth quarter and year-end results on Dec. 19.

The Elmwood Park, N.J., company's shares fell $7.73, or 20.5 percent, to $30 in afternoon trading. As of Tuesday's close, its stock price was up nearly 32 percent for the year.