Some of BioScrip Inc (NASDAQ:BIOS)’s recent woes are partly due to a kickback scheme they were implicated in, which involved Swiss drug maker Novartis AG (ADR) (NYSE:NVS) and their iron-reduction drug Exjade. In January, 2014 BioScrip agreed to pay $15 million in a settlement with the Department of Justice to cover costs related to the excessive Exjade prescriptions. Novartis suffered little ill effects from the revelation, rising 25% in 2014.
Those legal woes seem to be surfacing again for BioScrip, as it was announced yesterday that The Shuman Law Firm was launching an investigation on behalf of shareholders relating to the Novartis case and settlement. That follows an announcement last week that Robbins Arroyo LLP was also launching an investigation into certain officers and directors of BioScrip. It’s unclear whether the two investigations are related in any way.
Analysts are mixed on Bioscrip’s prospects going forward. While their revenue gains were solid, their margins were drastically slashed, and the pharmacy landscape is a difficult one, with many larger players. Zacks has a ‘Neutral’ rating on the stock, and a $7.25 price target. Barrington Research initiated coverage last week and gave the stock an $8 price target and ‘Outperform’ rating. First Call Corporation has rated them a ‘Strong Buy’.
Likewise, hedge fund activity from the funds we track has been relatively split on BioScrip, aside from GAMCO’s bullishness. A handful of funds opened and closed positions on BioScrip during the third quarter of 2014, while there was a good deal of both increasing and decreasing of positions. Brian Taylor’s Pine River Capital Management and Israel Englander’s Millennium Management were the most bullish on the stock, obtaining over 200,000 shares each during the quarter, while Mitchell Blutt’s Consonance Capital Management, one of BioScrip’s largest shareholders, sold off nearly 800,000 of their shares.
It was announced on December 30 that joint activist investors Cloud Gate Capital and Delaware Street Capital (DSC Advisors), which collectively own 3.9 million shares, giving them a 6.1% stake in the company, would seek seats on BioScrip’s board at their 2015 annual meeting, which is expected to be held sometime during the spring.