I posted this on Yahoo: From 10k issued 3/30/00 <<The second contract was with the Bulgarian National Health Insurance Fund, commonly referred to as the NHIF, in connection with automating the Bulgarian nationwide healthcare system. The contract is structured in multiple phases and we anticipate recognizing revenues from the contract over a three year period from the day of signing, with the later phases subject to the availability of approximately $20 million in third party lease financing made available to Bulgaria's general practitioners for the purchase of equipment and software to be installed in their offices. The estimated value of all phases under the contract is approximately $37.5 million, with later phases contingent upon acceptance by the NHIF of the earlier phases and other conditions relating to our performance. Under the contract, we will install a comprehensive suite of our Internet-enabled healthcare products to provide financial, patient and clinical information management and a communications network to link hospitals, pharmacies, laboratories and general practitioners with the NHIF headquarters and some regional centers. Initially, we will provide our products to approximately 5,000 of Bulgaria's 12,000 general practitioners, 500 of its 1,000 pharmacies and 30 of its 250 hospitals. The NHIF has agreed to cooperate with us in processing third party lease financing and has offered the possibility of a financial guarantee for the lease obligations of their general practitioners. >>
Am I the only one that gets the impression that a big chunk of the revenue from this comes not from the NHIF, but from the "to approximately 5,000 of Bulgaria's 12,000 general practitioners, 500 of its 1,000 pharmacies and 30 of its 250 hospitals" with the ministry helping facilitate and possibly guaranteeing leases?
I suspect the $37mm is shorthand for the *estimated* value of the total package, while the locked in 1st phase directly with NHIF may be the lesser ammount. I suspect we look back in 5 years and the 'contract' will have delivered pretty close these estimated revenues.
Every long term contract has elements of risk. What expected value [probability * estimated value] would one put on the Bulgarian project?
100%* 37.5mm? Nope, but 80% * 37.5mm = $30mm is probably low. And what about additional possibilities that could result from good performance on Bulgarian project? I suspect that would more than cover the 'at-risk' element of the Bulgarian project. |
