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BioScrip Sees Wider Loss, Misses Estimates

Zacks Equity Research

In the second quarter of 2013, BioScrip Inc. (BIOS) posted adjusted loss per share of 2 cents, flat year over year. However, the result was worse than the Zacks Consensus Estimate of earnings of 3 cents per share.

On a reported basis, BioScrip’s net loss from continuing operations of $8.3 million or 13 cents per share was wider than the net loss of $4.3 million or 7 cents per share in the year-ago quarter.

Total revenue rose 22.3% year over year to $190.7 million in the second quarter, trailing well behind the Zacks Consensus Estimate of $206 million. In the second quarter, solid revenue growth was attributable to higher contributions from Infusion Services and Home Health Services business.

The company recorded a robust hike of 40.7% in Infusion Services revenues to $156.2 million on the back of organic volume growth and accretive acquisitions. Revenues from the Home Health Services segment rose 8.1% to $18.2 million, led by volume growth from private duty nursing activity. Lastly, revenues from the PBM Services segment were $16.3 million, down 42% from the prior-year quarter. The decline was due to lower sales volume of discount cards, loss of a client and decrease in funded PBM business.

While the cost of product revenues shot up 36.7% to $102.7 million, the cost of service revenues declined 17.1% to $23 million in the quarter. Gross profit during the quarter rose 22.6% to $65 million with 10 basis points (bps) expansion in gross margin to 34.1%.

Selling, general and administrative (SG&A) expenses increased 27% to $56 million. The surging SG&A resulted in a 50 bps drag in adjusted operating margin in the quarter to 2.8%.

Exiting the quarter, BioScrip had cash balance of $81.6 million compared with $62.1 million at the end of 2012. The company’s long-term debt was $225.5 million compared with $226.4 million at the end of 2012.


For 2013, BioScrip continues to expect revenues of $830–$865 million, reflecting growth in the range of 25%-30%. The current Zacks Consensus Estimate is pegged at $838 million.

Our Take

BioScrip reported a disappointing quarter missing the Zacks Consensus Estimate on both fronts by a sizeable margin. Further, losses worsened in the quarter. PBM business also continued to decline.

On the bright side, another quarter of strong top-line growth, with most of the upside from the Infusion business, was encouraging. We also look forward to accretion from recent acquisitions.

Currently, the stock carries a Zacks Rank #3 (Hold). While we remain on the sidelines for BioScrip, other stocks such as McKesson Corporation (MCK), Herbalife Ltd. (HLF) and GNC Holdings Inc. (GNC) warrant a look. These stocks carry a Zacks Rank #2 (Buy).

Read the Full Research Report on MCK

Read the Full Research Report on BIOS

Read the Full Research Report on GNC

Read the Full Research Report on HLF

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