BioScrip Inc.'s net income fell by two-thirds in the third quarter, the pharmacy benefits manager said Tuesday, on a surge in operating expenses following the buyout of Critical Homecare Solutions in March.

Meanwhile, the company said Richard M. Smith will replace Richard H. Friedman as CEO on Jan. 1. Friedman will remain non-executive chairman of the board of directors. Smith is currently the president and chief operating officer.

BioScrip also said it is withdrawing its 2010 guidance. The company had previously said it expected revenue between $1.67 billion and $1.72 billion in 2010.

Shares plummeted 26.5 percent in midday trading, losing $1.49 to $4.14, off an earlier 52-week low of $4.07.

Profit fell to just under $2 million, or 4 cents per share, from $5.7 million, or 14 cents per share, during the same period a year prior. Revenue surged 32 percent to $441.2 million from $333.5 million.

Analysts polled by Thomson Reuters expected profit of 9 cents per share on $434.7 million in revenue.

The cost of revenue jumped 25 percent to $365.8 million while operating expenses surged 81 percent to $63.2 million on general costs.

"We are examining all aspects of our business model and we intend to improve the quality of our revenue stream and reduce our overhead structure," Smith said in a statement. "As a result of the Company not meeting its expectations, we have accelerated a strategic assessment of our business lines and our operating cost structure."