BioReference Laboratories Inc. said downward pressure on reimbursements and increased expenses will adversely affect fourth-quarter and year-end results, though the Elmwood Park commercial laboratory believes long-term fundamentals remain sound.
BioReference, which serves doctor's offices, clinics and hospitals nationwide, issued guidance last week in advance of quarterly earnings that will be reported Dec. 19.
BioReference said changes to Medicare reimbursements as well as tumult caused by shaky rollout of the Affordable Care Act and the three-week shutdown of the federal government in October have pressured its bottom line. The company said it has negotiated contract modifications to reimbursement rates with dozens of health plans over the past year, most of which become effective in the fourth quarter.
"We believe there is a disconnect between the innovative, clinically relevant services our industry offers and the decreasing value placed on them by the payer community as demonstrated by changes in reimbursement rates and conditions," CEO Marc Grodman said in a statement. "I believe this is true for all providers across the health care spectrum."
In addition, BioReference said expenses caused by infrastructure expansions stemming from acquisitions in Florida and California will result in one-time costs. BioReference said it expects the expansions to increase long-term efficiency. The company also plans to report fourth-quarter expenses related to the launch of its inherited cancer program.
BioReference now expects to earn 40 cents a share on about $192 million in the fourth quarter, compared with 46 cents a share on $163.5 million in the year-ago quarter. The company is also projecting annual earnings of $1.65 a share, compared with $1.51 in 2012. BioReference's fourth quarter and fiscal year ended Nov. 30.
Shares of BioReference fell two cents today to $29.18 in midday trading on the Nasdaq. That follows a 22 percent decline last Wednesday.
"Although BioReference is not immune from these pressures, we are continuing to growth and this time and we expect to continue to be a profitable, valuable cutting edge health care enterprise, which will adapt to the changing environment," Grodman said.
BioReference's patient volume is growing. The company expects to report a 15 percent increase in fourth-quarter patient volume compared with last year, or 12 percent when allowing for lost growth caused by Hurricane Sandy.