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Alias Born | 01/28/2013 |
Wednesday, September 17, 2014 1:24:30 AM
The 12 new states is certainly a much-needed plus.
However, we still have ZERO clue what the heck this relationship entails.
Are the referrals for compounded drugs? Or other Rx types? If compounding, we need to see the impact of the new restrictions on insurance coverage that took effect yesterday, 9/15/14. before getting too excited about this.
And considering that SCRC has no salespeople on its payroll, what exactly is it doing in order to generate its sales commission revenues? I can't imagine that the sales people will be willing to give up any portion of their 40-50% commission to SCRC as they would simply hand their referrals directly to Jungle Jim's or United Apothecary (the TN-based pharmacy that was the subject of the other recent referral partnership announced recently) and bypass SCRC altogether. Is SCRC, then, only getting a nominal "broker fee"-type percentage of the sale for its role in bringing the pharmacy and the sales person together? If so, then this will not amount to much unless they are able to bring an absolute boatload of Rx's to these new pharmacy partners (i.e. not much per Rx but a material cumulative sum due to high volume).
Otherwise, I really hope that SCRC will surprise us in the next Q by somehow having arranged to be the primary sales entity that brings Rx's to the new pharmacy partners. If it does that, then this would be a very lucrative arrangement as simply playing the role of sales person and taking home a 40-50% commission that is 100% pure profit would actually be MORE PROFITABLE than what it currently experiences with running its own pharmacy (Main Ave).
The big unknowns are: (1) What kind of Rx's are being referred to these new pharmacy partners and are they as pricy as compounded drugs? (2) What impact the new restrictions on insurance coverage on compounded drugs will have.
For (1), we will get a glimpse of it in the Q as SEP results will be included and hopefully adequately disclosed in the Notes.
For (2), we will get a partial glimpse via the SEP PR re: Main Ave's "approved orders", and we will get subsequent partial glimpses each month thereafter, but the biggest glimpse will not be available until next FEB'15 as this will be when the JAN'15 "approved orders" are announced -- and since 1/1/15 is the final implementation date for the majority of employers to begin restricting insurance coverage of compounded drugs, the JAN'15 "approved orders" will provide a look at the full impact of these new insurance restrictions.
If SCRC suddenly stops issuing monthly PR's re: Main Ave, then it may be safe to presume that Main Ave "approved orders" have begun declining, as this would be the exact same script that SCRC followed when WRx began experiencing revenue declines earlier this year. I wouldn't blame SCRC for doing this as there is no reason to trumpet bad news unnecessarily.
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