Why Bio-Reference Labs (BRLI) Crashed Wednesday

NEW YORK (TheStreet) -- Shares of Bio-Reference Labs (BRLI) were pounded on Wednesday after the company failed to impress with fourth-quarter and full-year guidance. The stock was slashed 21.7% to $29.55 by market close.

The clinical testing laboratory expects fourth-quarter patient volume to grow 15% (or 12% when adjusted for lost growth associated with Hurricane Sandy). Revenue per patient for non-genetic testing is expected to fall 4% from third-quarter levels. Forecasted revenue of $192 million is 17% higher than the year-ago quarter.

The company anticipates fourth-quarter net income of 46 cents a share, 6 cents lower than a year earlier, and full-year earnings of $1.65 a share, compared to $1.51 in the year-ago quarter. Analysts polled by Thomson Reuters were looking for fourth-quarter earnings of 47 cents a share and full-year at $1.71 a share.

The Elmwood Park, N.J.-based business said it had to negotiate contract modifications to reimbursement rates and payment methods associated with a number of health plans which negatively affected profitability.

"Despite continued strong volume growth, the company believes there is an ongoing recalibration of reimbursement for the industry, which has resulted in substantial downward pressure from many payers regarding reimbursement in FY13," the company said in a statement.

"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," added CEO Marc D. Grodman.

The company is expected to release fourth-quarter earnings on Dec. 2.

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