BioScrip Inc. (NASDAQ: BIOS) is the largest independent national provider of infusion and home care management solutions, with approximately 2,500 teammates and nearly 80 service locations across the U.S. BioScrip partners with physicians, hospital systems, pharmaceutical manufacturers, and skilled nursing facilities to provide patients access to post-acute care services.
In July, the US House of Representatives passed HR 3178, the Medicare Part B Improvement Act of 2017. The legislation includes, as Section 101, the Home Infusion Therapy Services Temporary Transitional Payment Act. This provision accelerates the implementation of The CURES Act Section 5014, passed in Congress in December 2016, and will result in Medicare payment for home infusion services beginning in January 2019. The company is looking forward to Senate action on this legislation.
HR-3178 TITLE I–IMPROVEMENTS IN PROVISION OF HOME INFUSION THERAPY
(Sec. 101) This bill amends title XVIII (Medicare) of the Social Security Act to temporarily provide for transitional Medicare payment with respect to certain home infusion services furnished on or after January 1, 2019. Under current law, the Center for Medicare & Medicaid Services (CMS) is required to establish a permanent payment system with respect to such services furnished on or after January 1, 2021. Read the full text here: https://www.congress.gov/bill/115th-congress/house-bill/3178/text#toc-HDEE7CD18DF934C73982771FA627C42FA
The company recently announced its Second Quarter 2017 Financial Results; it reported net revenue of $218.1 million, including core product mix of 73.1% compared to 60.3% in the prior year with an Adjusted EBITDA of $10.0 million, nearly doubling from the first quarter of 2017.
As per management, the second quarter of 2017 marks an important milestone for the Company, as BIOS delivered $10 million of adjusted EBITDA, and a year over year operating cash flow improvement of $23 million, driven by core revenue growth and cost and working capital improvements, positioning it to achieve financial objectives for 2017. The improvements in EBITDA and operating cash flow, despite Cures Act reimbursement pressures, underscore the progress BIOS has made on the turnaround to date.
As far as near to medium term guidance is concerned, the Company is reiterating its prior instance of adjusted EBITDA in the range of $45.0 million to $55.0 million for full-year 2017. The Company is updating its revenue outlook for the year to a range of $815.0 million to $835.0 million, including the impact of the revised UnitedHealthcare contract.
Additionally, it expects to incur restructuring expenses in a range of $11.0 million to $12.0 million, reflecting the ongoing restructuring activity that took place in the second quarter of 2017, and further expenses anticipated in the second half of 2017 primarily related to the impact of the revised UnitedHealthcare contract.
BioScrip Inc. is being covered by a number of analysts. Recently, 3 rated the stock as Buy, 4 rated Outperform, 0 rated Hold, 0 gave an Underperform and 0 rated sell. With the recent developments, we believe the company stock is categorized as ‘BUY’. The company is reflecting reasonable bullish signs and has a medium-term average price target of $3.41 from analysts.
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BioScrip, Inc. is the largest independent national provider of infusion and home care management solutions, with approximately 2,500 teammates and nearly 80 service locations across the U.S. BioScrip partners with physicians, hospital systems, pharmaceutical manufacturers, and skilled nursing facilities to provide patients access to post-acute care services.
BioScrip operates with a commitment to bring customer-focused pharmacy and related healthcare infusion therapy services into the home or alternate-site setting. By collaborating with the full spectrum of healthcare professionals and the patient, BioScrip provides cost-effective care that is driven by clinical excellence, customer service, and values that promote positive outcomes and an enhanced quality of life for those it serves.
Background of the Company:
BioScrip came about in 2005 through a merger between Chromined Inc. and MIM Corporation. Chromined was founded in 1985 turned public in 1992. The company focused on the distribution of infusible medications to patients with special conditions. MIM Corp also focused on enhancing the quality of patient life through pharmacy benefit and healthcare solutions.
Home Infusion Market Overview:
Expanding Home Infusion Market: Attractive Market Growth + Significant Site of Care Opportunity
Global market for Home infusion is estimated at $20B. Out of which, U.S. market is growing organically by 5%-7%. From a competitive landscape perspective; the home infusion market is highly fragmented with 4 large national providers.
Therefore, the industry has significant consolidation opportunities with 800+ individual small-scale infusion companies in the U.S. Hospital systems, physicians, and skilled nursing centers.
BioScrip Footprint and Overview
- Largest independent home infusion provider
- Nearly 80 locations Servicing all 50 states 68 Infusion Pharmacies/ Ambulatory Infusion Suites 10 Reimbursement Centers
- Over 2,000 field personnel
- 500,000 unique visits/year (35,000/month)
- 131,799, patients serviced
Key Stock Influences
- Widespread acceptance of the company’s services could be a catalyst.
- The US Senate passage of HR-3178 could be a catalyst for the company
- Further improvement in company’s operating and market risk profile could be a medium-term catalyst. The full-fledged impact of company’s cost reduction & resource optimization initiatives is yet to be seen.
- Notwithstanding recent improvements, BioScrip’s capital structure is still leveraged, which could indicate a need for additional funding.
- BIOS’ ability to maintain its liquidity and financial flexibility to fund its incremental capital requirements. Also, any additional equity raise is exposed to significant dilution risk.
- The company’s business risk profile is impinged by significant competitive pressure. Although BioScrip is making an effort to improve its operating margin through financial improvement initiatives, it is still facing challenges in achieving a competitive operating margin.
Second Quarter 2017 Financial Results
– Net revenue of $218.1 million, including core product mix of 73.1% compared to 60.3% in the prior year
– Net loss from continuing operations of $28.7 million, compared to $8.3 million in the prior year, reflecting increased non-cash expenses and interest
– Adjusted EBITDA of $10.0 million, nearly doubling from the first quarter of 2017
– Operating Cash Flow of $6.5 million, reflecting $23 million of operational and working capital improvements over the prior year
– Liquidity of $50.5 million, including $40.5 million of cash, compared to $16.0 million at March 31, 2017
– Restructuring expenses of $3.9 million, primarily costs related to the ongoing optimization of the Company’s workforce
– The Company reaffirms EBITDA guidance and updates revenue guidance
On Friday, September 8th, 2017, BIOS shares declined by (4.58%) to $2.71 on an average volume of 1.82 million exchanging hands. Market capitalization is $308.97 Million. The current RSI is 40.92
In the past 52 weeks, shares of BIOS have traded as low as $0.98 and as high as $3.43
At $2.71, shares of BIOS are trading below their 50-day moving average (MA) at $2.88 and above their 200-day MA at $1.96
The present support and resistance levels for the stock are at $2.63 and $2.84 respectively.
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