BioScrip (BIOS) Reports Loss in Q4, Both Margins Contract

Zacks Equity Research

BioScrip Inc. BIOS reported a loss from continuing operations of 14 cents per share for fourth-quarter 2018, wider than the Zacks Consensus Estimate. The figure deteriorated from the year-ago loss of 3 cents.

At the end of 2018, loss from continuing operations was 49 cents a share, narrower than the year-ago loss of 59 cents.

Revenues

Net revenues of $183.6 million in the fourth quarter rose 0.5% year over year. This figure however missed the Zacks Consensus Estimate of $188 million.

For the full year, net revenues totaled $708.9 million, showing a decline of 13.2% from a year ago.

BioScrip, Inc. Price, Consensus and EPS Surprise

 

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


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

Margins

For the fourth quarter, gross profit declined 11.5% to $62.1 million. Accordingly, gross margin contracted 460 basis points (bps) to 33.9%. On account of a 16.7% increase in general and administrative costs, adjusted operating profit declined 16.9% year over year to $48.9 million. Hence, the adjusted operating margin contracted 559 bps to 26.7%.


Financials

BioScrip exited 2018 with cash and cash equivalents of $14.5 million, compared with $39.4 million at the end of 2017.

OptionCare-Merger Update

BioScrip recently signed a definitive merger agreement with home and alternate site infusion therapy company OptionCare for an undisclosed term. Post-closing of the merger, the combined entity is expected to drive significant growth for BioScrip. Through this merger, the therapies and the preferred partnerships with payers, hospital systems and drug manufacturers will be expanded, thereby helping the company attain better patient outcomes.

OptionCare has a network of more than 70 pharmacies, over 90 alternate treatment sites across the country, over 750 payer relationships, including contracts with all 10 of the top 10 national payers. It is also a contracted provider of Medicare and Medicaid in all 50 states.

Guidance

Based on BioScrip’s recent consolidation announcement with Option Care, the former will not be providing its 2019 financial guidance.

Our Take

BioScrip exited 2018 on a dismal note. However, we are optimistic about its impending merger with OptionCare. The combined entity will have a national reach in more than 150 locations across 46 states and is expected to exceed revenues of $2.6 billion. We are upbeat about the enhanced financial strength and flexibility of BioScrip that will be brought about through an optimized capital structure post the merger.

Zacks Rank & Key Picks

BioScrip has a Zacks Rank of #3 (Hold). A few better-ranked stocks in the broader medical space are ABIOMED, Inc., ABMD, Varian Medical Systems, Inc. VAR and CONMED, Corp. CNMD. Notably, each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


ABIOMED, Inc. reported fourth-quarter fiscal 2018 earnings per share of 80 cents, which beat the Zacks Consensus Estimate by 25%. Revenues in the reported quarter came in at $174.4 million, beating the Zacks Consensus Estimate by 6.3%.


CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million beat the Zacks Consensus Estimate of $229.2 million.

Varian Medical Systems, Inc.’s first-quarter fiscal 2019 adjusted earnings of $1.06 per share were on par with the Zacks Consensus Estimate. Adjusted earnings were in line with the year-ago quarter figure. Revenues totaled $741 million, which outpaced the consensus mark of $717.9 million. On a year-over-year basis, revenues rose 9.2% and 10% at constant currency (cc).

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