BioScrip's Core Business Strong Despite Reimbursement Issues

On May 14, we issued an updated research report on BioScrip, Inc. (NASDAQ:BIOS) . Although the company struggles with reimbursement challenges, its core business continues to grow. The stock has a Zacks Rank #3 (Hold).

BioScrip exited the first quarter of 2018 on a dismal note with lower-than-expected earnings performance. Although, revenues were above the consensus mark, the huge year-over-year decline was a disappointment. This downside was due to a shift in the company’s strategy to focus on growing core revenue mix including contract changes with United Healthcare in September 2017.

Also, external challenges like reimbursement cuts pertaining to the 21st century Cures Act hampered growth in 2017 and the trend is expected to persist in 2018 as well. In the past three months, shares of BioScrip have underperformed the industry. The stock has lost 15.4% against the 1% gain of the broader industry.

On a positive note, this Denver, CO-based leading Infusion Service provider has continued to progress with its multi-faceted CORE plan to improve the finances. The scheme involves identifying and executing strategies to accelerate core revenue growth, build a favorable product mix, drive operational efficiency, raise revenue collection as well as increase employee effectiveness.

Additionally, the company made a significant advancement in the first quarter by implementing its single repeatable model, which enforces operating cost reduction on the back of solid synergies drawn, supply chain rationalization, growth in nursing productivity, enhanced shipping utilization and improving patient on-boarding times.

With the rapidly-changing healthcare landscape, the company has of late remained alert on growing its core Infusion Services platform through a clinically-focused and customer-orientated model. Apart from BioScrip’s intent to drive high growth in core Infusion Services, the company is engaged in aggressive cost control. Currently, the company aims at emerging as a smaller, more focused organization with significant improved profitability, better growth prospects and an improved operating cash flow performance.

Key Picks

Some better-ranked stocks in the broader medical sector are Intuitive Surgical (NASDAQ:ISRG) , Align Technology, Inc. (NASDAQ:ALGN) and Baxter International Inc. (NYSE:BAX) . While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Align Technology and Baxter carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical has a long-term expected earnings growth rate of 12.1%.

Align Technology has a long-term expected earnings growth rate of 29.2%.

Baxter International has a long-term expected earnings growth rate of 13.4%.

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