Robbins tried to buy the Gov't Managed Care division earlier this year for $10M, right? If PHP sells it to him, it'll enhance their margins, without affecting their gross profit much. With sale of interests in CHE and VCH, and recent partial DC settlement, they'll have raised a total of $25M to pay down the $30M+ medical claims payable outstanding, while simultaneously approaching breakeven ops in Oct Q or Jan Q. All they have to do is cut direct costs 10% and their gross profit will rise from $7M in July Q to $17M. That would make them EBITDA-neutral.
They might pull it off, especially if PHP and NationsBank renegotiate the credit facility to lower the quarterly principal payments that begin in April 99.
Remember Kmart back in 1995/96? People insisted they'd file Chapter 11, but they didn't, and stock went from the gutter to $18+ on solid turnaround. I know PHP isn't Kmart, but it's a matter of getting things up to speed. Personally, I doubt BK. I think Oct Q numbers will be VERY much improved from July Q.
But I've been VERY wrong in the past, so don't count on it. |
