GSIEF comment
In previous discussions the revenues possible for GSI have always been finally determined by what would appear as GSI revenue as a result of funded receivable packages.
(Revenue is income to GSI from the funding packages and before any expenses incurred by GSI itself.)
GSI has very modest internal expenses compared to most public companies, they have expenses of course - but keep in mind that there are minimal sales and office expenses relatively. As the company grows, the internal expenses will grow, but not without the corresponding increase in revenue that would result from increased marketing/office costs.
As a general rule, GSI puts 3% minimum to top line revenue for every dollar funded.
There are three types of funding to consider:
1. Ongoing receivable securitization for hospital facility: GSI funds all receivables under a three year agreement. The funding is carried out every quarter in "traunches".
Example: 120 million receivable funding needed by hospital facility;
GSI commits to fund 100 million m/l to accomodate risk present and adjust to uncollectible accounts within the subject package. The facility receives 25 million each quarter.
In this example, GSI receives at least 3% of each funded traunch. Under this agreement GSI top line revenue is 3 million dollars minimum in each year of the subject agreement.
If more than 100 million is collected,GSI/Processor/Funder/Hospital splits the amount collected over and above the 100m, this is additional income.
2. Facility has patient pay accounts that they wish to have securitized. These are accounts that are left over after the hospital/clinic has done insurance claim billing and attempted to collect from patient.
Example: Facility has two years of patient payments due that total 100 million. This is money due from patients after all insurance has been billed. This is called "Patient Pay" in the industry.
GSI commits 2 million to securitize the accounts, this is done in one package, not quarterly traunching.
GSI contracts with outside billing/collection firm and splits dollars collected 1/3-1/3-1/3 with funder/collector.
GSI top line receives 500k-800k at closing and then 1/3 of all dollars collected over the funded amount of 2 million.
Micro example: After 2 million(2%)is collected from the 100 million total, all dollars are split 3 ways. If 6 million is collected in the first year after securitization, the extra 4 million is split 3 ways. In this example, GSI received 500-800 k up front, then 1/3 of 4 million the first year.
Conclusion:
Total to GSI first year using low end 500k upfront fee: 1.7 million, or about 1.7 percent of the 100 million securitized. Keep in mind that is is very likely that more than 6% will be collected from the 100 million package. These are conservative numbers that are being presented and much more revenue may be realized from the huge receivable base. The collection firm/biller has incentive to perform as you can see.
3. GSI closes contract under their joint venture (JV) agreement with MediCredit.
GSI and Medicredit are 50/50 partners in the arrangement.
Medicredit provides clients and marketing, GSI provides processor and funding.
These accounts are smaller per client dollarwise, but there are more of them out there.
Example: Medicredit brings MRI clinic to GSI, MRI does 10 million/year.
GSI/funder traunches 5 million for 10 million securitized receivables per year to MRI. GSI/Processor does all insurance claims billing/negotiations.
GSI receives 3% of original funded amount, plus a part (around 25%) of all amounts finally collected between the 5 million and 10 million.
In this example GSI receives 150k up front, then 1/3 of all collections over and above the funded amount. It is my understanding that a 6-8 % overall number back to GSI is reasonable to expect on these accounts. In this example, GSI would eventually end up with 600-800k on this one 10 m client MRI example.
I am not going to get into discussion of forward looking pe's or how they may be applied to eps and the like.
The number presented are reasonable and gives one an idea of what is possible here in this business.
These folks are not big spenders, they have proven time and time again that they consider every move carefully. (recall the decision not to enter the otcbb shell as it had strings, was much more expensive - and required shareholders to give up an unacceptable percent of the company)
This is what will finally make this issue a huge success, significant revenues derived from each client, and mindful-responsible management.
