RE:RE:Risk quantificationThanks lscfa, good to see some hard analysis. The table estimates the increase in patients required to offset the negative impact of rate cuts on the reported gross profit value, using the Q3 period results as the basis.
Looking at the 10% cut, the average number of patients needs to increase by 1,153 or 16%. Using your logic, this means that the patient count would increase from 7,130 at 06/30/19 to 9,728 at 09/30/19 an increase of 36% during the quarter. This compares with the actual increase in Q3 to 7,421, or 4%. Is this achievable?
My other concern is that your table does not address the impact of more patients on net profit/earnings. SGA would increase very substantially with an increase in patients because of higher bad debts and equipment amortisation costs.
I suggest that CB will cause short-term pain (as identified by Max and ignored by Casey) but will cause long term gain (as stated by Casey). Any comments?
lscfa wrote: Corrected table......
| | Q3 2019 | 10% rate cut | 20% rate cut |
| Avg. Patients | 7,276 | 8,429 | 10,015 |
| Monthly rev | 1,078 | 970 | 862 |
| Cost/patient | 289 | 289 | 289 |
| Revenue | 23,525,000 | 24,527,625 | 25,904,659 |
| Cost of rev | 6,318,000 | 7,319,189 | 8,696,368 |
| Gross profit | 17,207,000 | 17,208,436 | 17,208,292 |
| Gross margin | 73% | 70% | 66% |
| Patient increase | | 1,153 | 2,739 |
lscfa wrote:
The bashers are deceitful idiots. Their warnings about the competitive bidding process are overblown BS. If reimbursement rates do get cut they will easily be offset by increased patient volumes due to CMS limiting the number of approved suppliers to the winning bidders (minimum of 5). Many small operators will be shut out. This is what Hoyt is talking about.
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March 27/19 webinar
Casey Hoyt
"The person who loses in this environment, you know, Viemed is going to be fine. We’ll capture market share with our size and scale and the way that we’re under-leveraged. We predict the competitive bidding environment is going to be an opportunity for our bottom line. However, it’s the patient that really stands to lose in this type of setting if we don’t have minimum requirements on how to service these folks."
May 7/19 CC
Casey Hoyt
"The announcement to include vents into competitive bidding in 2021 came in the first quarter as well. We have been very vocal with our investor base on how the Company views the competitive bidding environment as one that we will accelerate—that will accelerate our growth even faster."
"We feel pretty bullish about being up—our ability to win these bids. Then even if we receive some pricing pressure in those specific areas, the volume that we'll generate will be the ultimate opportunity for growth for our business."
| | Q3 2019 | 10% rate cut | 20% rate cut |
| Avg. Patients | 7,276 | 8,084 | 9,095 |
| Monthly rev | 1,078 | 970 | 862 |
| Revenue | 23,525,000 | 23,525,000 | 23,525,000 |
| Cost of rev | 6,318,000 | 6,318,000 | 6,318,000 |
| Gross profit | 17,207,000 | 17,207,000 | 17,207,000 |
| Gross margin | 73% | 73% | 73% |
| Patient increase | | 808 | 1,819 |