Please ensure Javascript is enabled for purposes of website accessibility

Why BioScrip Stock Popped and Then Dropped Today

By George Budwell – Updated Apr 13, 2019 at 1:07PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

BioScrip's fourth-quarter results and merger with Option Care Enterprises aren't sitting well with shareholders.

What happened

Shares of the home infusion services giant BioScrip (OPCH -1.30%) jumped by almost 40% in premarket trading today. Once the market opened, however, the company's stock abruptly reversed course, dropping by more than 30% at its lowest point in early-morning trading.

BioScrip's shares have remained under pressure as the day's trading session has unfolded, with its stock falling by 30.3% as of 1:48 p.m. EDT.

A green chalkboard chart showing a positive trend turning negative.

Image Source: Getty Images.

So what

What's causing investors to hit the exits? BioScrip released two major business updates prior to market open this morning:

  • BioScrip announced its fourth-quarter results ahead of the bell. The company missed Wall Street's revenue consensus estimate for the quarter by $4.8 million, and it posted an unsightly $15.4 million net loss for the three-month period.
  • In a separate press release, BioScrip also announced that it had agreed to merge with Option Care Enterprises via an all-share transaction. To complete the merger, BioScrip will dole out new shares to Option Care's shareholders -- a group of investment funds associated with Madison Dearborn Partners and Walgreens Boots Alliance (WBA -4.97%). Once the transaction closes, Madison Dearborn Partners and Walgreens Boots Alliance will reportedly own 80% of the combined entity, with BioScrip's shareholders owning the remaining 20%.

Based on the stock's rise and fall, investors clearly aren't thrilled with either of these developments.

Check out the latest earnings call transcript for BioScrip.

Now what

Is this dip a buying opportunity? That's a tough question to answer right now. The combined company should result in a leaner, more efficient operation. At the same time, mergers like this one can take awhile to hammer out the kinks. So while the backing of a major player like Walgreens is a reassuring sign, investors may still want to take a cautious approach with this struggling home infusion services company for the time being.

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Option Care Health, Inc. Stock Quote
Option Care Health, Inc.
$31.98 (-1.30%) $0.42
Walgreens Boots Alliance, Inc. Stock Quote
Walgreens Boots Alliance, Inc.
$31.55 (-4.97%) $-1.65

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.