Shares in prescription delivery service BioScrip (BIOS) tumbled again today amid news that the company is being investigated by the government for potentially committing fraud in its distribution of a Novartis (NVS) drug. BioScrip disclosed that they had been informed of the investigation by the government on September 11, stating in an SEC 8-K filing: "Pursuant to a civil investigative demand issued by the United States Attorney's Office for the Southern District of New York and a subpoena from the New York State Attorney General's Medicaid Fraud Control Unit, the Company has cooperated by producing documents and information regarding the distribution of the Novartis Pharmaceuticals Corporation product Exjade(R) by the Company's legacy specialty pharmacy division that was divested."
Shares continue nosedive
Stock in BioScrip is down almost 16 percent in early trading one day after it dropped almost 6 percent after its disclosure. All told, the company’s lost nearly 21 percent since the end of last week. BioScrip had already had an eventful year, gaining more than 50 percent over the first seven months before shares plummeted nearly 30 percent on a Q2 earnings missing estimates. Shares fell further when the company announced that it would be selling nearly 7 million new shares of stock on August 13.
Adding to concerns about BioScrip is the move by Kohlberg Management V, Llc, at the time the owner of 10 percent of the company, to sell nearly 7 million shares of company stock for close to $90 million, announced on August 21. This was followed by Vice President Patricia Bogusz divesting herself of almost 40,000 shares, something that prompted a 6.39 percent decline for the company’s stock on September 3.
BioScrip remains popular among analysts for the time being, though. Feltl & Co. initiated coverage at a strong buy in April and reiterated it on June 17, rising the price target to $20 a share. And Dougherty & Co. concurred a day later when they reiterated their buy rating and raised their price target from $15 a share to $20 a share.
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