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Biotech / Medical : SABRATEK CORP (SBTK)
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To: Al's Fun who wrote (92)5/29/1999 8:28:00 AM
From: Mike  Read Replies (2) of 487
 
I got ahold of Herb Greenberg's article on SBTK and not sure what to make of it. It states the following.

"The only question anybody can ask after taking a look at SBTK's balance sheet and the disclosure in the latest 10Q is:Can this company be headed for anywhere but the ICU? With average receivable days outstanding leaping to 178 days (or half a year) from 108 days the prior quarter, and inventories nearly doubling to 406 days,this is an all out code blue......

However,CEO Shan Padda attributes the deterioration in SBTK's vital signs to a bunch of factors all occuring at once.

For example,the FDA put the kibosh on the production of a key product just as there was a shift in sales to mom-and-pop operators from large customers in an industry that,either way, has been historically slow at paying."

So we all know what the build up in inventory is and it is justified. The big question is can we trust managements explanation on the average receivable days outstanding? I have stated that management in my opinion is questionable as far as giving direction. Does anyone have info to explain Herb's concerns or is the company stuffing the channels full of pumps? Is SBTK selling pumps at the end of a quarter to meet numbers with extended terms with no expectation of being paid and possibly taking the pump back? Now remember I have no info on this issue but looking for someone who might be eduated enough to comment.

Does anyone have a way on the balance sheet to record returns of pumps that previously were recorded as sold? I need to develop a comfort with management who I think is showing a very aggressive nature as far as accounting.

Comments and opinions?
Mike
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