Beacon Report Excerpt on Medicare Reimbursement Cut"What Does This Mean? The Math As indicated above, PHM pre-announced its Q1/FY16 (December) results of ~$40 million in revenue and $8 million in EBITDA. On an annualized basis, this becomes $160/$32 million. The average FX rate during this period was $1.3361. This becomes our starting point.
Assuming the vents represented ~20% of Q1 revenues and considering a 40% price cut, that would represent a pro-forma revenue decline of $3 million in the quarter. Adjusted revenue then becomes $37 million or $148 million on an annualized basis. The C$ is now ~7% weaker (@ $1.43) than the average FX rate that prevailed in Q1. Therefore, we can multiple such annualized pro-forma revenue of $148 million by 7% to arrive at revenue of $158 million. In other words, the weakness in the C$ should offset the loss of revenue from the reimbursement cuts. Note that this is without any material internal growth. Given the market conditions and the current valuation of the company, we have conservatively removed any internal growth rate assumptions and thus have re-set revenue expectations at a low base, leaving any such internal growth as upside."
$1.00 price target for zero organic growth or acquistions. This is as meaningless as the original $3.20 target, which assumed maxed out, debt-fuelled growth.