BioScrip's Dull 2017 Earnings A Woe, Core Business Robust

On Mar 14, we issued an updated research report on BioScrip, Inc. (NYSE:BIO) . Although the company struggles with reimbursement challenges, its core business continues to grow. The stock has a Zacks Rank #4 (Sell).

BioScrip exited the fourth quarter of 2017 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 solely focus on growing core revenue mix including contract changes with United Healthcare, which were completed as of September 30, 2017.

Also, external challenges like reimbursement cuts persisting throughout 2017 pertaining to the 21st century Cures Act hampered growth. Full-year result was thus discouraging as a result of the catastrophic disruption from hurricanes Irma and Harvey in the third quarter besides the Cures Act reimbursement cuts.

In the past three months, shares of BioScrip have underperformed the broader industry. The stock has gained 2.6% compared with the 9.1% rise of the broader industry.

The healthcare industry also wades through a highly competitive scenario. In fact BioScrip’s rivals include large and well-established companies equipped with higher financial, marketing and technological resources.

On a positive note, this Denver, CO-based leading Infusion Service provider has continued to progress with its new multi-faceted CORE plan to improve the financial position. 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, in the fourth quarter, the company made a significant advancement 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.

Key Picks

Some better-ranked stocks in the broader medical sector are Bio-Rad Laboratories (NYSE:BIO) , athenahealth, Inc. (NASDAQ:ATHN) and PerkinElmer (NYSE:PKI) .

Bio-Rad Laboratories sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company has a long-term expected earnings growth rate of 20%.

athenahealth is a Zacks #1 Ranked player. The company has a long-term expected earnings growth rate of 21.5%.

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2 (Buy).

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