BioScrip Beats, Margins Weak - Analyst Blog
09 Novembre 2011 - 11:45AM
Zacks
Specialty pharmacy services
provider, BioScrip Inc. (BIOS) reported EPS of 1
cent in the third quarter of fiscal 2011, down 75% year over year.
However, after deducting the impact of restructuring charges,
severance and other employee costs, adjusted EPS came in at 10
cents during the quarter, surpassing the Zacks Consensus Estimate
of 9 cents.
BioScrip primarily operates through
two segments – Infusion and Home Health Services and Pharmacy
Services. Total revenue in the quarter stood at $454 million, up
2.9% year over year and above the Zacks Consensus Estimate of $445
million. This was attributable to a 4.6% rise in Pharmacy Services
revenue to $344.5 million, partially offset by a 2.1% fall in
Infusion/Home Health Services revenue to $109.6 million.
Despite gross profit increasing
2.2% to $77.1 million during the quarter, the company’s gross
margin contracted 10 basis points (bps) to 17.0% due to a 3.1% rise
in cost of revenues in the quarter. In addition, higher selling,
general and administrative expenses (up 8.6% year over year to
$60.7 million) led to an 80 bps contraction in adjusted operating
margin (excluding the impact of certain one-time expenses) to 3.6%
during the quarter.
BioScrip’s operating cash flow of
$39.5 million in the third quarter of 2011 compared favorably with
$5.9 in the prior-year quarter. Further, at the end of
September 2011, the company’s total borrowings under revolving
credit facility declined to $49.9 million compared with $81.2
million at the end of December 2010.
The company faces significant
competition in the pharmaceutical healthcare services industry from
the likes of CVS Caremark (CVS) and
Express Script (ESRX) as well as from smaller
organizations that operate on a local or regional basis.
However, the company has adopted a
new strategic assessment policy for its business in order to
improve its present position. Also, the success of the CHS business
is expected to improve BioScrip’s competitive position by boosting
its Infusion and Home Health Services going forward.
Presently, BioScrip retains a short-term Zacks#2 Rank (Buy).
However, over the longer term, we remain ‘Neutral’ on the
stock.
BIOSCRIP INC (BIOS): Free Stock Analysis Report
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