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Why BioScrip Stock Popped and Then Dropped Today

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

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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.

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Stocks Mentioned

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

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