GEO Investing

Bio Reference Laboratories (BRLI) continues to show an issue in collecting on its bills.  Back in December of last year, GeoInvesting wrote an article that was cautious on Bio-Reference Laboratories, taking a critical view on some undisclosed litigation, BRLI’s corporate culture and the company’s slowing cash flow. Following up on our previous note about BRLI earnings, we wanted to offer a little more color into the company’s last earnings miss.

Bio Reference Laboratories May Have Done Unnecessary Testing

This situation falls in line with our suggestion that BRLI may be pushing unnecessary testing and having trouble collecting from insurers. Some additional metrics that we believe are worth pointing out are: 

  • Arguably most importantly…the company’s DSO continues to hit all-time highs, helping suggest that the company has a continued growing bill collection problem
  • Esoteric revenue was 70% of total revenues, but growth slowed
  • Accounts receivable were up sequentially as revenue was down sequentially
  • Patient volume growth has slowed
  • Many “per patient” metrics were lower sequentially, including revenue per patient

BRLI has risen sharply since our critical article in the beginning of December 2014, but these metrics below the surface of an unimpressive report which missed on both lines tell us that our thesis could be close to playing out in the coming quarters. We will keep a close watch on BRLI moving forward.

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