I've been here since $6 split adjusted, and have watched plenty of wild swings along the way. It has always bounced back from the "medicare reimbursement scares".
I just want to know if that's what it is this time.
From the recent Value Line:
Respiratory products and services represents a growing portion of revenue. This category, mainly the rental of oxygen dispensing equipment, has grown steadily from 42% of revenue six months ago to 48% currently, with similar growth in profit contribution. While this augurs well for RoTech's profitability, it also increases it's exposure to the looming cut in reimbursement rates for oxygen services. However, recent indications suggest that the rate cut will likely be closer to 10%, rather than the originally proposed 40%. Also, note that such a rate cut would only affect just the 22% of RoTechs's respiratory revenues that is reimbursed by Medicare.
22% of respiratory revenue = ~10.5% of total revenue, if Respiratory is 48% of total revenue.
Each time it sells off on this threat, it represents both long and short term trading opportunities, in my opinion. |
