BioScrip Inc (NASDAQ:BIOS) is a micro-cap home healthcare provider making a strong run up the charts. The U.S. healthcare system may be in a state of flux right now, but that’s opening up huge new opportunities for healthcare providers like BioScrip Inc. In 2017, shares of the company are up 93.27%. That’s an impressive performance turned in by BIOS after shares of the company fell off a cliff around the time of Donald Trump’s presidential victory in early November.
From November 7 to November 9, shares of BioScrip fell from $2.61 to $1.21 on fears that a major healthcare overhaul by a Trump administration might be bad news for the company. In many ways, then, shares of BIOS are regaining their earlier, pre-election levels.
BioScrip Inc (NASDAQ:BIOS) shares are now trading around $1.99, giving the company a market cap of $234.82 million. Over the most recent 52-week period, shares have traded as low as $0.98 and as high as $3.43.
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What has investors excited now is that BioScrip turned in better than expected 4Q results and has given guidance for a strong 2017. That, combined with the growing realization that the Trump administration may not be making moves that impact BIOS significantly, has given legs to the rally. In fact, investment research house Jefferies recently boosted its price target to $3 from $2.50. The median price target for BIOS is now $2.75, given the stock plenty of more room to run.
Denver-based BioScrip Inc is a provider of infusion and home care management solutions. It operates in three key segments: post-acute solutions, infusion services, and respiratory/HME. As part of its infusion services, BIOS helps patients who need antimicrobial therapy, cardiac care, hemophilia treatment, immune deficiency treatment, nutrition support, oncology support, transplant support, and pain/palliative care.
All told, BioScrip operates 70 service locations in 28 states, giving the company a broad national footprint. BIOS is truly a national provider with 30 years of experience in the market. In fact, BIOS is included in the Russell 2000 index of small cap stocks, making it one of the most followed small cap stocks. Inclusion in the Russell 2000 also guarantees that the company will have strong institutional ownership. Currently, institutional owners account for 83% of all shares outstanding.
Going forward, one of the primary questions swirling around BIOS involves the 21st Century Cures Act, which went into effect in January 2017. This act gives a significant reduction in medicine reimbursement costs on certain drugs. For example, the legislation does not enable reimbursement of any services payment for administration of those drugs to patients via home infusion pharmacies.
You can see where the problem is with this – infusion and home care management are a core part of the business at BIOS. In December 2016, however, management at BioScrip came out and said that they only expected a minimal impact on revenue going forward (3-4% of total revenue).
Moreover, to get in front of this issue, the company is now leading a lobbying effort called “Keep My Infusion Care At Home.” These efforts are meant at protecting vulnerable Medicare patients who rely on reimbursement for home infusion treatments.
In terms of technical indicators, the 50-DAY SMA for the stock is $1.45 and the 200-day SMA is $2.20. So it looks like shares of BIOS, currently trading at the $2 mark, could start to find some resistance around the $2.20 mark.
Ultimately, any risks related to BioScrip Inc are more regulatory in nature, and not related to the underlying business of the company. The company has a strong institutional base, and has a 30-year history of delivering results to investors. Based on guidance provided by BIOS and the positive sentiment from Wall Street analysts, it looks like shares of BIOS could be headed even higher in 2017. For more news on BIOS and other fast-moving penny stocks, please subscribe to OracleDispatch.com below.