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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of BioScrip (NASDAQ: BIOS ) , a home infusion and home health-care services provider, vaulted higher by as much as 26% after drugstore CVS (NYSE: CVS ) announced it was buying the Coram division of privately held Apria Healthcare, a peer of BioScrip.
So what: According to the deal announced by CVS, it'll be paying $2.1 billion for Coram to get its hands on a home infusion business, which has seen costs move steadily higher as more specialty drugs make it to market. The deal is viewed as having quite the premium, which led to today's surge from BioScrip that it, too, could be next on the buyout block. Although the chatter on Wall Street would indicate no near-term deal for BioScrip, estimates for a buyout price, if one were to materialize, are practically double the price of yesterday's closing price for the company.
Now what: This is one of those days where shareholders are thrilled to be lumped in with Coram, but unfortunately, I'm not seeing many catalysts that will keep this rally moving. While on paper, BioScrip looks as if it should be a big success story, with baby boomers aging and likely in need of in-home therapies beginning sometime in the next decade. BioScrip has also missed earnings estimates badly in four straight quarters, and has little current earnings visibility due to the rollout of Obamacare and its effects on Medicare reimbursements. With that in mind, I'll gladly stay on the sidelines following today's action.
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