RE: Bad Debt Expense in 1Q/2009Loopae and GMS, I never know for sure what is going on in this company. They treat disclosure like a black box to protect their bargaining position with NPI. If that helps me recover some of my money (I too am under water big-time) then I guess I will live with it. We could have asked the company to clarify, but on the conference call, only one person asked questions.
I don't know what "direct-bill" means. It could mean invoicing the insurance company. Or it could mean invoicing the patient and letting them invoice their insurance company, much like when I visit my dentist.
Here's the accountant in me: If they were invoicing the insurance company, why is it not recorded as revenue and reserved against 100%? Reported volumes are also way down. That's why I think NPI has been cut off.
I think volumes really are down at Palladium and the nursing teams are mostly idle. Costs happen whether or not you invoice revenue. Keeping their nursing teams together is a critical success factor. When the nursing teams have experience operating together, I'll bet your cost per procedure drops quickly. The management team is likely agonizing about how to keep the staff together while the volumes are down. If they lay them off for 6 months, they may not be available when things pick up again. But they will do what they have to in order to protect cash and survive.
Anyway, if you think my forecast needs a long-run bad debt expense, deduct your guess on the amount from my cash flow, after reducing the impact by about 40% (current taxes plus non-controlling interest). Similarly, if you disagree with my dilution assumptions, adjust NCI which I also gave you. I have no idea what will really happen. I tried to lay out a range of outcomes hoping that the worst one was still better than 66 cents.
By the way GMS, if the company is headed for bankruptcy, why didn't the 2008 financial statement contain a "Going Concern" Qualification? I think they can solve this.