BioScrip Inc. (BIOS), a specialty pharmacy services provider, reported an EPS of 5 cents in the first-quarter of fiscal 2011 compared with the year-ago quarter’s loss per share of 18 cents. According to the Zacks Consensus Estimate, the company was expected to report break even results during the quarter.
BioScrip operates through two segments – Infusion and Home Health Services and Pharmacy Services. Total revenue for the quarter was $439.3 million, marginally missing the Zacks Consensus Estimate of $440 million. However it increased 31.1% year over year to $439.3 million, favorably impacted by the CHS acquisition (CHS revenue was $63.3 million). This led toa robust 139.6% increase in Infusion and Home Health Services revenue to $110.5 million. Also there was a 13.8% rise in pharmacy revenues to $328.8 million during the quarter driven primarily by organic growth.
Sound revenue growth across the two segments of BioScrip led to margin expansion during the quarter. Gross profit increased 98% to $77.2 million resulting in 600 basis points (bps) expansion in gross margin specify the fig. However, expenses related tothe CHS business and higher labor costs associated with the patient care management in the Infusion and Home Health, pushed up the selling, general and administrative expenses of BioScrip by 62.5% year over year to $59.1 million. Consequently, adjusted operating margin (excluding the impact of certain one-time expenses) increased by 334 bps to 4.1% during the quarter.
Bioscrip exited the quarter with cash and cash equivalents of $204.4 million compared to $193.7 million at the end of December 2010. Net cash generated from operating activities was 31.7 million compared to $21.3 million in the year-ago quarter. In addition, the company’s total borrowings under revolving credit facility declined from $81.2 million at the end of December 2010 to $52.4 million as of March 31, 2011.
The company faces significant competition in the pharmaceutical healthcare services industry from players like CVS Caremark (CVS) and Medco Health Solutions (MHS) as well as many 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 at CHS business is expected to improve BioScrip’s competitive position by boosting its Infusion and Home Health Services over time.
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