BioScrip Remains Neutral - Analyst Blog
24 Août 2012 - 6:15PM
Zacks
We are maintaining our Neutral
recommendation on BioScrip Inc. (BIOS) with a
target price of $8.00.
BioScrip reported a loss of 7 cents
per share from continued operations in the second quarter of fiscal
2012, wider than last year's loss of 3 cents.
Adjusting for certain one-time
items in both periods, the loss per share was 2 cents; considerably
lagging the year-ago adjusted earnings per share (EPS) of 10 cents.
The loss was also a penny wider than the Zacks Consensus
Estimate.
Total revenue was $155.9 million,
up 18.5% year over year and exceeding the Zacks Consensus Estimate
of $154 million.
Earlier in 2010, BioScrip initiated
a strategic assessment of its business and operations. Based on its
findings, the company started focusing on its fast-growing
Infusion/Home Health Services segment. As a result, in 2012,
BioScrip divested certain Pharmacy Services assets, including
pharmacy mail operations and community retail pharmacy stores, to
Walgreen Co. (WAG) for $225 million, including
approximately $161 million in cash and retention.
Based on the huge potential of the
Infusion Services business, which led to BioScrip’s persistent
growth in this segment,, the company has shifted its focus to this
rising sector. It therefore repositioned some of its pharmacy
business assets and redirected the resources of the divested
business to support the existing Infusion Services business.
Moreover, in keeping with its
strategy to expand its Infusion footprint to new places, the
company acquired InfuScience in July this year. InfuScience is a
provider of alternate site infusion pharmacy services.
We are encouraged by the company’s
decision to invest in the Infusion and Home Health industry, where
it has a strong presence and enjoys competitive advantages. Our
optimism is buoyed by the estimates of the National Home Infusion
Association ('NHIA'), which stated that the alternate-site infusion
therapy sector currently represents $9 billion to $11 billion per
year of the total U.S. health care expenditure.
The company is also hopeful about
the continued growth in Pharmacy Benefit Management (PBM) and cash
card businesses. It expects revenue in the range of $100 million to
$105 million for fiscal 2012. We remain optimistic about BioScrip’s
PBM growth and believe that the company is perfectly positioned to
leverage its strong clinical reputation for growth.
However, big players like
CVS Caremark (CVS) and Express
Scripts (ESRX), as well as many other smaller
organizations that operate on a local or regional basis, are
increasing the competition. This makes us cautious about the
stock.
We note that increased competition
has led to lower pricing and increased rebate sharing, thereby
putting severe pressure on margins. Moreover, the Home Health
industry was impacted by the reduction in Medicare and Medicaid
reimbursements, which we think could temper BioScrip’s sales growth
going forward. BioScrip currently maintains a Zacks #4 Rank, which
translates into a short-term ‘Sell’ rating.
BIOSCRIP INC (BIOS): Free Stock Analysis Report
CVS CAREMARK CP (CVS): Free Stock Analysis Report
EXPRESS SCRIPTS (ESRX): Free Stock Analysis Report
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