Reviewing BioScrip (BIOS) & AAC Holdings (AAC)

AAC Holdings (NYSE: AAC) and BioScrip (NASDAQ:BIOS) are both small-cap medical companies, but which is the superior business? We will contrast the two companies based on the strength of their institutional ownership, risk, dividends, profitabiliy, analyst recommendations, earnings and valuation.

Analyst Ratings

This is a breakdown of current recommendations and price targets for AAC Holdings and BioScrip, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AAC Holdings 0 2 0 1 2.67
BioScrip 0 0 3 0 3.00

AAC Holdings presently has a consensus target price of $21.33, indicating a potential upside of 227.20%. BioScrip has a consensus target price of $3.67, indicating a potential upside of 30.95%. Given AAC Holdings’ higher probable upside, equities research analysts clearly believe AAC Holdings is more favorable than BioScrip.

Earnings & Valuation

This table compares AAC Holdings and BioScrip’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AAC Holdings $264.87 million 0.59 $27.46 million ($0.08) -81.50
BioScrip $914.94 million 0.37 $25.34 million ($0.56) -5.00

AAC Holdings has higher revenue, but lower earnings than BioScrip. AAC Holdings is trading at a lower price-to-earnings ratio than BioScrip, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

48.0% of AAC Holdings shares are owned by institutional investors. Comparatively, 83.1% of BioScrip shares are owned by institutional investors. 37.3% of AAC Holdings shares are owned by company insiders. Comparatively, 2.3% of BioScrip shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares AAC Holdings and BioScrip’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AAC Holdings -0.62% 9.40% 3.84%
BioScrip -5.62% N/A -6.39%

Volatility & Risk

AAC Holdings has a beta of 2.09, indicating that its stock price is 109% more volatile than the S&P 500. Comparatively, BioScrip has a beta of 0.35, indicating that its stock price is 65% less volatile than the S&P 500.

Summary

AAC Holdings beats BioScrip on 10 of the 14 factors compared between the two stocks.

About AAC Holdings

AAC Holdings, Inc. is a provider of inpatient and outpatient substance abuse treatment services for individuals with drug and alcohol addiction. The Company performs drug testing and diagnostics laboratory services and provides physician services to its clients. As of June 30, 2016, the Company operated 12 residential substance abuse treatment facilities located throughout the United States, focused on delivering clinical care and treatment solutions across 1,139 beds, which includes 636 licensed detoxification beds, and 18 standalone outpatient centers. In addition, the Company focuses on expanding The Oxford Centre facility. As of June 30, 2016, the Company’s capacity at its Forterus treatment facility was 14 beds. The Company is engaged in deploying research-based treatment programs with structured curricula for detoxification, residential treatment, partial hospitalization and intensive outpatient care. The Company is also an Internet marketer in the addiction treatment industry.

About BioScrip

BioScrip, Inc. is engaged in providing infusion solutions. The Company partners with physicians, hospital systems, skilled nursing facilities, healthcare payors and pharmaceutical manufacturers to provide patients access to post-acute care services. The Company operates through Infusion Services segment. The Company operates through approximately 70 service locations in over 30 states. The Company offers home infusion services to provide clinical management services and the delivery of prescription medications. The Company provides services in coordination with, and under the direction of, the patient’s physician. The Company’s multidisciplinary team of clinicians, including pharmacists, nurses, dietitians and respiratory therapists, work with the physician to develop a plan of care suited to the patient’s specific needs. Its platform provides service capabilities to deliver clinical management services that offer patients a community-based and home-based care environment.

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