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As expected, BioReference posts 13 percent drop

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Elmwood Park-based BioReference Laboratories Inc. posted a 13 percent drop in quarterly profit Thursday, a trend the company partly blames on declining reimbursements from insurers, and signaled expense reductions ahead in 2014.

The Bergen County commercial laboratory reported earnings one day after it sued Horizon Blue Cross Blue Shield, alleging the insurer owes BioReference $20 million in fees for testing services provided to thousands of state employees, according to northjersey.com

BioReference's bottom line is consistent with an earlier warning Dec.2 that projected earnings and revenue would be lower than previously expected because of downward pressure on reimbursements. The company cited changes to Medicare reimbursements and tumult associated with the rollout of the Affordable Care Act among reasons.

BioReference earned $11.1 million, or 40 cents a share, in the quarter ended Nov. 30. That compares with $12.9 million, or 46 cents a share, in the fiscal fourth quarter of 2012, resulting in a 13 percent drop on a per-share basis.

Despite the headwinds, revenue is still increasing, aided by higher patient volume.
The company reported $192.2 million in fourth-quarter revenue, up 18 percent from $163.5 million in the year-ago quarter.

CEO Marc Grodman said BioReference, which provides lab testing services to health care providers, remains "more than ever a growth company, grounded in innovation."

"Nonetheless, over the past year, specifically during the fourth quarter, we identified a significant reduction in reimbursement, particularly from commercial payers," Grodman said in a statement.

"The reduction in reimbursement from payers is an industrywide issue that we believe has been observed by many companies in our space," Grodman said.

Madison-based Quest Diagnostics in October reported a 1.9 percent drop in quarterly operating revenue, partly because of reimbursement pressures including Medicare cuts.

Grodman said BioReference also reported fourth-quarter expenses relating to acquisitions in Florida and California and rollout of the company's Inherited Cancers program through its GeneDx subsidiary.

Grodman said BioReference will begin implementing expense reductions that are expected to improve 2014 results though few details were disclosed in a news release.

"We need to adjust to the changing reimbursement landscape by intelligently and efficiently identifying areas where we can reduce expenses without affecting customer service and support or innovation," Grodman said. "We have already identified several such areas and have begun implementing such expense reductions. These steps will take some time to produce improved results, but we anticipate gains progressively throughout 2014 as a result of these changes."

The company employs about 2,900 in New Jersey and 4,000 nationwide on $715.3 million in annual revenue.

Shares of BioReference fell $1.18 cents, or 4.4 percent, to $25.77 in Nasdaq trading Thursday morning.

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