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robb, there is no lack of home oxygen or durable medical equipment providers and there are few if any barriers to entry for new players. Apria and Lincare are the dominant players, but their real advantage is only in managing the obfuscating world of government and managed care contracts that a lot of the mom and pops do not want to mess with. Rotech is a distant #3 in market share and carries enormous debt which it chose to incur vs. other pathways and now wants to conveniently jettison by sticking it to long-patient shareholders who may just get the shaft. There is some compelling logic to suggest that maybe ROHI should just be left to die, a possibility that has received scant attention on this board.
The CMS bidding process is deeply flawed, IMO, but SOME intervention in controlling exhorbitant reimbursements for very simple medical services is long overdue. There is, to me, full irony that the CMS protocol designed to reduce costs actually favors higher-cost providers who simply have more wherewithal based on dimension to effectively navigate the ridiculous rules and paperwork requirements of bidding these contracts and dealing with VA's stupid rules. These guys make Medicare and Medicaid look simple to deal with by comparison.
Said differently, you don't need Nurse Rached or Doctor Kildare to come to your retirement home to swap out your oxygen tank or show you how to fill up a bottle from a concentrator and hook it up to a breathing tube. This isn't rocket science, or even science at all... it's like the Poland Springs guy that delivers jugs of water for your home cooler. Maybe "Cheap is good" to borrow a bit from Gordon Gecko, and maybe fools that incurred a half billion dollars in debt for the near equivalent of a newspaper delivery route need to be put out of their misery in a CH VII euthanasia.
investor2004, robbay sees a negative outcome and J.T. sees a positive outcome and both positions are polarized and pretty much black and white. Each is entitled to their view and, by the way, both could be wrong. I have posted with robb, on and off, for about ten years and he is no basher. He and I often agree, and he and I often disagree. That is what makes discussion interesting.
I think we will all have a clearer view when the 10-K is belatedly released this coming week. When the BK Trustee is appointed by the court to consider the filing, this will likely be the starting point for a review of options. If the metrics have degraded so precipitously since Q3 that a "going concern" warning has been issued by the auditors, it is likely the Trustee will approve the reorganization, largely as proposed, because the corporate organism is about to perish, otherwise.
Alternatively, if the metrics show ROHI's overall ability to pay its bills and interest expenses, especially since the principle on Tier 2 notes is not due until 2018 (which is the big, hard to digest number), the Trustee could well conclude that the BK lacks balance or fairness and consider the input of the creditors committee and alternative outcomes.
You are correct that an offer could be tendered to simply buy out Rotech, but that leaves the monster debt expense intact and would only make such a deal tenable to a buyer with exceptionally deep pockets. I think this is unlikely.
Another option would be a class action shareholder intervention to force a better deal than 10 cents per share... either via an enhanced offer for common shares or via a partial stake in future ownership of the re-org'd ROHI. This possibility revolves almost solely around Wynnefield and their intentions while snapping up all those cheap shares once the BK cat was let out of the bag.
Watch for that 10-K!
investor2004, I bet that you will have your answer next week, by Friday, latest. The late 10-K must be filed, and it is the metric content of this report that should spell out whether ROHI was legitimately at the precipice of an involuntary CH VII or CH XI, or if the forfebearance/default and pre-arranged cozy BK was more a matter of choice/convenience/opportunity. J.T. is right, the auditors who are quality people will not sugar coat it and risk a shareholder action to taint their brand and reputation.
There is a reason why Wynnefield amassed those shares. Remember that a goodly chunk of them are held by that company's executive compensation fund, meaning their executives personal wealth is in no small way tied to the outcome being somehow positive for common shareholders.
I said earlier that watching this play out is a little like watching The Jerry Springer Show... I'm waiting for the brawl to ensue as the players peel away the facades and reveal their secrets.
Good luck. This is certain to get even more interesting.
robb, I am not a lawyer but in my very limited experience with Defense Department contracts the anti-assignment clause is generally not triggered by a BK, M&A event or change in equity ownership. The clause simply means Rotech can't, as an example, sell its government contracts to Apria or Lincare who will service them through an alternative system. However, Lincare could buy out all of Rotech and simply get what is called a Novation from the Feds, confirming that the contract will continue under new ownership.
This was a hot-button issue when the Viet Nam War wound down and a lot of contractors like Grumman, MacDonell-Douglas, General Dynamics and Northrop went through all kinds of M&A gyrations to cope with curtailed defense spending during the wind down. Shows you how old I am to remember all that ancient history, way back when.
I actually think that the bigger issue may be a Congressional inquiry into whether the CMS contract award was improperly awarded to a contractor without the financial wherewithal to execute it or may have provided unsuitable financials during the bidding process. I have been wondering for weeks if THIS was the actual reason for the FED's raiding Rotech headquarters; maybe it had nothing at all to do with Medicare overcharges.
Hey, feel free to correct me on the contract stuff if you have better information. I am certainly no expert in this area.
Regards.
Hey, JT could be right and I certainly do not claim to have any better insight into the future than he does. Then, again, the company's own PR says the stock is worth 10 cents and will be cancelled with all the equity being transferred to the Tier 2 noteholders. One thing that JT is absolutely correct about is that this won't take long to be determined.
One way to look at it is that the noteholders already won, courtesy of the sweetheart deals management cut them with these ridiculous, high loan % financing deals, and the first in line asset preferences that were given out at the frivolous (?) expense of shareholder value which the B-o-D is supposed to be watching out for. Another way to look at it is that management already won in the sense that this reeks of a "set up" that has matured as a plan over a span of years and the current plan-of-the-day hints at management standing on the brink on a huge chunk of shares in the new, debt-free ROHI worth, perhaps, as much as ten times the 26 million shares about to be cancelled for shareholders for around $2.6 million.
There are a bunch of other options, but few offer a great deal of promise for shareholders, here, IMO. The plan put forward gives EVERYTHING to financiers, creditors and management and virtually NOTHING to shareholders. That's not much different from many other BK's, is it? Why is that unfair? Maybe those stupid shareholders deserve to get screwed and should be happy to take a lousy dime for their shares, even if they rode this piggie down from $4 of even loftier heights in the bygone era when management ran a business venture in HME, not a patronage for cronies and insiders... if that is really what transpired?
I guess I really don't know. After all, I'm just a throwback to the era when people invested in stocks with real fundamentals and workable business plans and didn't trade in the nano-second in gambits that stink of fraud and manipulation and on-the-edge flirtation with illegal rape of shareholders in violation of SEC laws.
All, IMO.
The CMS bidding protocol for HME was announced years ago and comes as no surprise. Everyone knew reimbursement pressures were headed for the lowest common denominator... i.e., the low cost producers... yet management did nothing to lower costs (outlandish SGA), added layer upon layer of debt and bought up all these mom & pop branches. Their own PR including relatively recent investor presentations (please see J.T.'s I-Box) imply that volume will drive a breakeven. With the new contract, do they now have the volume? If so, why are they filing BK and giving the shareholders a dime? Why are Tier 2 noteholders willing to exchange $230M in high-yield notes for common shares that from management valuation are worth $2.6M?
This is like a "Fumble-Rooskie" in football. Maybe the BK Trustee will throw a penalty flag and stop this dimestore rape of shareholders?
All IMO.
Nothing wrong with playing for a surer or better possible gain. That's exactly what I am doing.
This is one to watch, however. Could get interesting and definitely WILL make money for somebody, just not sure who will benefit from it, quite yet.
Looks like most of the rebound dissipated.
It will take either news or the BK to go through before this trades in a linear fashion. Once a stock goes Q, the arbitrageurs set in and play the violent swings in S/P value, as was the case recently with General Motors which closed at $.58 the day before the shares were cancelled as worthless, despite warnings from management to the contrary. SSDD.
I would not have sold shares at this point since there remain positive outcomes, albeit every passing day increases the odds of "one, thin dime and then cancel"! The noteholders have the leverage, but the shareholders DO have the right to petition the court and I am 50/50% on whether I think they will or won't.
So far, ROHI has been like watching the first half of The Jerry Springer Show... we just haven't gotten to the second half where chairs and punches fly and the bleeping of expletives of those pimped, cheated and screwed rises to a crescendo.
Stay tuned. We may see a Bobby Knight moment, or we may see the whole thing just go dark and the common shares cancelled for 10 cents and a lot of regrets. Whatever elso, do not change the channel, just yet.
As for the new contract, haven't we been there before?
In the 8-K just out, a "going concern" statement is made regarding the DIP financing backstop. Anyone see that? Anybody think the 10-K will contain an auditors qualification that could be used as a defense tool to justify the debt for equity swap, cancelling the common shares after the ten cent/one-time payment?
investor, I think Wynnefield's stake is over 80% if you aggregate the 10% ownership recap for all their holdings and thoses by Obus and his partner. I think J.T. reported this properly yesterday or the day before.
investor, I find it most interesting and perhaps not simply coincidental that this huge S/P action arose within an hour of my prior post. This was trading with minimal action, prior.
My ONLY point was/is to offer an opinion that a different endgame might be in play than had been previously discussed, either here or elsewhere.
You and I are actually only slightly at odds on viewpoints, excluding your occasional tendency to assume I am somebody else or have some secret agenda. By now you should have figured out that I really do know quite a bit about this company, this sector and investment dynamics. I just shy away from J.T.'s assumptions that "live and die" by the minute where I tend to think in the abstract and invest for the future. No slight intended, J.T., I am only pointing out something you earlier stated which is the difference between trading and investing, which sometimes are the same thing and sometimes not.
I think that the next meaningful move is the roster of the Creditor's Committee. Today's PR is all just horseshi+, J.T., not the "smoking gun" you conveniently trumpet as the start of the victory march. Be careful, guys. There is still a strong scent lingering over this one!
Everyone is right, everyone is wrong and everyone is missing the point. You have to connect the dots. Tier 1 noteholders have lottsa paper paying 10.75% per year and are first-in-line creditors. Their debt is fully secured by assets. Tier 2 noteholders hold even more paper paying 10.5% per year and are, by ROHI's own admission, basically the same lenders. The Tier 2 team... not to be confused with Navy Seal Team 6... have agreed to swap around $260M in notes due in 2018 (not exactly just around the default corner) for all the 26M common shares. So they agree that the common shares are worth $260M, but are only willing to give Wynnefield & Sons $2.6M. Doesn't anybody see a disconnect there? I do.
Go back to the starting point. Tier 1 noteholders are also Tier 2 noteholders and get 10.75%. Where do you get 10.75% on money in this zero interest environment? Cyprus?
In my mind this entire "friendly" BK is like a gang rape of common shareholders and it is quite possible that the Bankruptcy Court will conclude similarly, either by deduction or by Wynnefield petitioning the court. For a crumby 10 cents per share, suppose Obus offers to forego ANY compensation at all and just keep fractional company ownership, like on a one for ten offer? He paid barely over a dime for the shares. They are probably worth $10 per share if the Tier 2 notes are retired. On a one-for-ten swap, he would still make $.80-$.90 cents/share, or potentially more if the new ROHI stock starts to ignite.
I am NOT a buyer, here, but I would like to explode a few more heads with alternative views that elevate Pinky/Pennyland to the real realm of Engulf & Devour, Big Board-style.
J.T., this deal smells a lot like the Harry & David's pre-arranged BK except they didn't raid the employee retirement fund and H&D shares were privately held, but just as painfully "gifted" to noteholders.
This is yet another rape of shareholders without advocacy. My favorite part of today's "logic" is Alsene's dialog where he blames the debt on exiting from the prior BK, comfortably excusing himself and mgmt/bod glitterati from any responsibility for the business's abject failure over a 10 year window of reinvention. It's always someone else's fault, except the management team which includes Alsene did numerous refinancing deals upto and including Q4 of 2012 and FAILED to react to a changing reimbursement climate that is the same level playing field that Lincare, Apria and numerous other competitors have already adjusted to with some finesse.
You are correctamente. This one sucks!
And, just to think... management is getting cut in for a huge stock incentive in the new ROHI while current shareholders get a dime. Imagine that!
The Sitrick connection is not to be minimized, and I am not saying you did so. But these are the same people/company that "guided" AIG, Conseco, Skilling & Lay @ Enron, Martha Stewart, Worldcom, Tyco and even Phil Spector... not to mention The Donald during times of crisis.
Why would some BK-pending nitwit penny like Rotech be engaging huge hitters like this unless:
1. Something really huge was pending?
2. Something really terrible was pending?
3. Some BIGGIE is in trouble for something?
There are both positive and negative outcomes possible, here. However, it does not appear that this one is going to go quietly, if you get my drift.
See, there is at least some value to applying big board DD to thinly traded stocks like this!
JMHO! All comments welcome and encouraged.
There is Due Diligence and there are Double D's. I like both.
I liked the earlier comments on looking at the quality and reputation of a firm's auditors. I actually think this provides a valuable clue into management's integrity because a quality house like Ernst can do incalculable damage to its reputation and brand by aligning itself with a shady player and cooked books.
One of the "clues" I have long looked at is who is handling PR for the firm. There are a gazillion spin doctors out there, most are just ad agencies with a PR wannabe and some media contacts garnered via their media purchasing role on the advertising side. Then, many firms simply go it alone with an in-house contact, usually in the adjacent office to the IR guy/gal. The red flag is when a floundering company or individual seeks out a real MOGUL who gets paid huge bucks to help sway public opinion. When one of these guru's shows up, especially unannounced and as nothing more than a byline to contact for further information, I smell huge TROUBLE brewing.
If ROHI's restructuring was so straightforward, I doubt they would have engaged Mike Sitrick, Sitrick & Company, to take over PR for the deal. This is a very costly firm who normally represents Celebrities like Michael Jackson or Kim Bassinger, or companies with life-threatening nightmares on their hands. I am familiar with many of their BK clients, like Collins and Aikman, a multi-billion automotive parts manufacturer.
This is a great PR house, and I am taking nothing away from their experience, reputation or expertise in such matters. But somebody is paying out the WAZOO to hire such a heavyweight and that tells me there is an unrevealed bombshell in all likelihood. ROHI does not have the cash on hand to justify this very expensive investment unless more "stuff" has yet to hit the fan.
Caveat emptor. That's Latin for "Be afraid, be very afraid."
Please J.T., don't change your name from DD... that reminds me of my favorite breast size and you can almost never get too much of that. You trade whatever way you wish... by all means... but there are still a few of us that want to explore the possibility that just maybe ROHI is not an irreversable POS and may only be visiting Dante's Inferno for a brief interim.
I have said, several times that this could be headed for burial OR it could be the Phoenix rising from the ashes, depending on the play and eventual outcome. Since you are playing for a short term uptick and bail kind of deal, we are actually somewhat aligned in strategy, just in it for different durations.
The delayed financials and the extent of restatement will tell a lot about the future. Up to this point, all I know for certain is that the common shares are most likely worth $.10. If the deal with noteholders goes through as management hopes, the better play for me might be to buy shares in the new ROHI after the debt/equity swap, assuming that the company remains public (which probably would return ROHI's listing back to the NASDAQ, which is important since many mutuals and hedge funds will not own OTC-grade investments).
Cheers! DD forever!
Ya mean like all those insider buys at Enron before Skilling went to jail? Same thing happened at Conseco and Worldcom, if my memory is accurate.
This is NOT a pennyflipper crapshoot. They were NASDAQ and stated they were headed back there, less than a year ago. You can't assume that this is the same kind of garbage as the rest of the pinkie trash-to-steam crap you love to follow. Strip out the debt, re-do the business plan with lowered SGA, sell of the loser DME contracts and harvest 02. You just have to resolve the latest Fed's issue and assure that it doesn't happen again.
IMO it is derelict to treat ROHI as a daytrade. There are better places to trade in such fashion.
IMO.
The window to L/T Cap Gains on shares bought, held and later sold in 2015 as Sabine Pass comes on stream is getting near. Anyone else loading up before the price goes nuts?
Trains #1 and #2 are about sold out. The expansion looks to be assured. Buyers are lining up to get in the queue for available LNG.
Guys, this is no ethanol play. Real business. Real production. Real contracts. Real demand. Real metrics, even with the ocean-going freight.
I continue to add and reinvest the divvy. This is like the next AAPL, GOOG or AMZN... IMO.
J.T., don't you think you also have to look at the inherent volume and which cannibals are posting the bid and ask, especially when it is notorious houses like NITE & VERT?
If both the bid and the ask are from MM's inventory, the upswing is immaterial to actual trades, IMO.
What did you make of Obus' small trades exposed in today's Form 4 at $.12, a sale price that is missing from this week's daily ticker?
If 30K shares trade up one cent tomorrow, some "big hitter" pocketed diddly squat. Who cares? It doesn't move the needle of reality for anyone with a serious investment or investment dream in ROHI.
The PR window for the "new contract" ran out days ago in 8-Kland.
There IS news that could impact S/P but I think the only "action" will be from the arbitrageurs as we near the 4/15 deadline date. Yea, "arbitrageurs" is a French word that means hedgies eat Canard a l'Gran Marnier while penny players eat horsemeat with road apples.
This one can play many ways, but tomorrow I expect the share momentum to be at recess for the entire session. However, J.T., I am not betting with you after your last offer on New Years in Times Square. You need to know that I am adamantly holding out for Jessica Simpson, not your sorry puckering up in front of so many witnesses.
Good luck!
Hi robb,
All input welcome. I think this one is more like watching a bad traffic accident than viewing the future of home healthcare, but I'll reserve judgement until things gain clarity. There is a huge future in the sector, if not in this specific issue.
Yank
J.T., one follow up point... you are smart to track the Form 4's to see where the shifts in equity float repose. But you can't track the debt ownership the same way and, in fact, the exchanging of debt between financial houses is like The Holy Grail of Big Money, from G-S to Morgan-Stanley to all the big overseas Pound & Euro Houses. When a debt for equity swap is on the "menu d'hote" (that's French for shareholders get eaten) DD becomes largely irrelevent and knowing how the big guys think matters, IMO.
Your competition for gain on this trading position may not be Bubba the Small Cap Lovesponge.
I'm just sayin'...
But J.T., it IS simple. Wynnefield strikes a deal to buy a mess of the 2nd tier notes that get converted into equity in a swap. That's the real money. The pocket change is in the outstanding float in common shares. You buy them up for <15 cents, cash 'em out for a dime and lose next to nothing. Remember, the max shareholder payout proposed is $2.6M... that's peanuts. By scooping up over 50% of the common float, Wynnefield could block any disruptive shareholder action to stop the deal.
I am not saying that this is the outcome. I do not know. I am saying that such a deal is not impossible, it would not be unethical or illegal and this kind of horsetrade is not all that unusual in an over-leveraged mid-cap that is trading in pennyland for reasons beyond its immediate ability to control... such as Medicare changing up reimbursements as which recently sent Freedom Healthcare into liquidation.
Sometimes simple is good. Sometimes simple is just SIMPLE!
Hey, I thought it was you that described this trading arena as the Netherworld of "Gypsies, Tramps & Thieves." I agree with you. Maybe you should try thinking like them? LOL.
Good luck!
i/2004, I don't think lower level types hold many shares. There was an award program in the proxy awhile back as I recall, and I seem to remember that it largely or perhaps only contained awards for corporate officers and board members.
If there is a shareholder action I agree that management could face some difficult questions and potentially criminal challenges. However Wynnefield plays will determine the likelihood of such an event because of the share of float they now hold. Did they buy all those shares to facilitate a legal challenge, or did they buy them to block one? Or was there another motive yet to be made clear?
Stay tuned. The drama is just beginning.
If ROHI is a momentum play, I fail to see any MO, today.
I asked about GTIV because they faced similar pressure on CMS medicare reimbursement reductions and declared a triggering event which precipitated a $600M write off in 2011. I asked about KADR because they, too, were untenably over-capitalized (like ROHI) and had a day or reckoning, first with their auditors and then with their noteholders. By the way, Arcadia did not cease operations, they continue under privately held Arcadia Healthcare which former shareholders enjoy no stake in. The old corporate shell remains with no functioning businesses, but its shares even continue to trade to some small extent. Millions of Arcadia shares traded for weeks or months after their final 8-K which stated their common shares had no value. Today those shares trade at an average of $.0001.
Freedon Healthcare's BK was a kaliedoscopic future view into the entitlement-funded home healthcare sector, IMO, and I see a lot more, similar activity, just around the corner. What interests me is that the home care strategy, over time, actually makes tremendous sense and offers massive cost savings and lifestyle benefits, compared to nursing home care and its onerous and excessive cost structure. However, these businesses need some good, old-fashioned cost/SGA management discipline or they will never deliver to patients or investors.
I have NO investment skin in this game, but I have huge interest in the future opportunities, here. Someone is going to make a killing in some of these businesses and that AAPL-type opportunity is worth my interest and the considerable DD I perform to try and identify the eventual winners.
investor2004, I am curious about your HME portfolio since most players in it are privately held. Who do you own in this sector? By the way, are you familiar with Arcadia Resources and Gentiva?
J.T., I actually changed my mind and stayed on because I thought you were promoting an outcome here, became moderator and then had my posts deleted and my posting priviledges curtailed to preserve your position. Your earlier post clarified that, although the question remains who did that, and why? And who deleted your posts, and why? I will stay as long as it is interesting or useful to investment discussion, or until the games become just too much to tolerate.
Nothing strange about my returning, here, I was invited to do so by J.T..
And nothing strange about my changing positions as more data becomes available. The 8-K and earnings was an eye-opener. Did you read any of it?
I have made NO prediction on the outcome, here. I opined earlier on a half-dozen possibilities, plus one more that I declined to share. However, I am more negative than positive on the fate of shareholders, here, and felt compelled to address the risk side of a buy or hold here as J.T. (per his prerogative) continued to predict all is well.
I do not believe that Rotech will cease to exist as a company. In fact, my opinion would be precisely the opposite. However, I still contend that it is likely ROHI will only exist after being taken private and that present shareholders will be LUCKY to get a dime for their shares.
My opinion. Nothing more. Nothing less. I have a LOT of experience in this sector and as an investor. And I am not a believer in instant judgements, fast trades or the posting of so-called due diligence that you have really never read or properly comprehended. That, to me, is neither trading nor investing... it is simply gambling. Hey, I go to Vegas, too, so I am not averse to a gamble, but the website is "Investor's Hub", not "Gambler's Hub" and I don't buy the concept that everyone here is a penny flipper.
ROHI should not be a penny stock, nor should it have had to file for yet another bankruptcy if its management understood the healthcare landscape and had responded intuitively and intelligently instead of just convenient, reactionary rape of the shareholders.
"...not a real Q..."? That is pretty presumptuous since the papers haven't even been filed, yet. You could be right, or, you could be dead wrong. Or a bunch of trainstops inbetween.
Options abound, here. Some are good. Some are dire. Based on the facts in play, I believe that the "dire" outcome is the most likely, even for short term traders. The 10K and auditors report is being delayed until around mid-April. If it contains a "Going Concern" admonition, the debt-for-equity swap could implode (and probably should do so). That leads to noteholders forcing an involuntary CHXI once the forebearance agreement expires. Then there is the question of the Feds raiding HDQ again, and what did they find in terms of over-billings and, potentially, fraud in a Federal climate that is disinclined to forgive and forget, yet again, for Rotech with prior "convictions" for possibly the same crime?
You say "not to worry" but my advice is to worry LOTS because this one is poised on the brink of disappearance, IMO.
Be careful, here, guys. As another poster said well, only risk what you can afford to lose.
GLTA.
LOL. I enjoyed the reply, J.T.. I actually already knew your style after reviewing your blog. The reason I thought you might want to deep dive a little on ROHI is that the players that are calling the shots, here, are in fact big money/big board-type players and these are the questions that Deutsche Bank, Linde, Wynnefield and Nelson Obus are asking. And potentially answering, which will determine the immediate fate of ROHI. The window is about 30 days, here, not 30 years, and I do not believe the pace will be all that lethargic. Both the rewards and losses can be staggering depending on your play and the company's fate.
The options I see run the gamut from Voluntary CHXI, Involuntary CHXI, CHVII, buyout by Lincare, buyout and taken private or shareholder's suit and proxy battle for control. I have one more that I won't share, just yet.
You don't need a calculator to comprehend the financials... I almost never use one... and I certainly didn't need one yesterday to discern that ROHI had NO CASH with which to make its bond payments, putting it in default and a candidate for an involuntary CHXI. The impact of CMS rollbacks poses an enormous threat to any recovery and has already had a wizzening effect on ROHI's possible survival in the forward market. It would challenge any potential financial backer thinking about taking on all or even a portion of $600M in debt, or a portion of same in the form of an equity swap.
I actually enjoy tracking pinkies and pennies. And I have found much, strategically, that is pertinent to big board trading... like Worldcom, Tyco, Gateway... this arena is like the birthplace of Bernie Madoff, Hank Kozlowski, Bernard Ebbers, et. al.
Good luck, DFW. Short term and swing trading are drivers in today's frenetic market. I don't see CQP doing much until 2015 gets close and the scent of LNG exports gets stronger. I am using this interim period to reinvest divvies and buy on dips.
J.T., on a short term trading basis you may be correct and I hope for your sake that this occurs. But I think the more important question reposes in the long term future as viewed by major investors and major lenders because it is their actions that will shape the near term S/P response to the BK "announcement" (to whatever extent the PR on this might be consider as really announcing anything concrete). Said another way, the affect on short term traders will be huge based on the actions of long term investors during this transitional period of extreme change for Rotech. For longer term investors like me, their actions are everything because at my tax rate I need to hold my investments for more than a year to avoid ordinary income tax rates and my blood pressure won't take the elevated adrenalin levels common to daytrading.
I am troubled by the commentary in the 8-K that new CMS bidding procedures have reduced Oyxgen gross billing rates by 41% and CPAP by 47%. That is a huge hit both to topline AND bottom line on over half of ROHI's total business. If you shed about half the interest expense of $60M, you still have a net loss of over $30M with competitive bidding only having affected a modest percent of CMS-reimbursed geography. What happens when the CMS bidding protocol is expanded to new markets?
There is some discussion in this sector that Congress may intercede and pare back these Draconian cuts in reimbursement. I am very skeptical as these cuts are one underpinning to the Affordable Care Act. But even more ominous is the fact that changes to the bidding protocol would severely limit the future of new patients covered by CMS. Just look at the horrific impact on ROHI when Medicare limited home oxygen care to 90 days. If the bidding protocol is redacted, there will be no growth in homecare markets because there will be no funding for the patients. It would turn the "Baby Boom' into a business BUST for Rotech.
Thoughts?
Hey guys, maybe it is just time to connect the dots? 85% of ROHI's biz is home oxygen as will be all the new VA contract. "Someone" could spin off the 15% DME volume and probably tranquilize more than 15% of the outstanding debt and virtually no profits. That leaves ROHI exclusively in the home respiratory market.
Apria is #1 in this huge, growing, entitlement funded arena. Lincare is #2. Rotech is #3. Interesting to do the math and determine that Lincare and Rotech, combined, just surpass Apria in volume, market share and, most important, market coverage. Remember that ROHI embarked on a strategic initiative to cover non-metro markets a few years back.
Lincare is owned by the German enterprise Linde. Who financially bankrolls Linde? Deutsche Bank? Who recently was a major player in the financial doings of Rotech? Deutsche Bank?
I don't know anything more than you guys do but I find this game very interesting.
Looks like Wynnefield Capital and its principles, Nelson Obus and Joshua Landes, now own most if not all of Rotech's common shares.
Looks to me like all the "insider purchases" referenced and posted earlier in the day are part of this scenario.
I have previously posted what I think is occurring.
Where are the 4th Quarter SEC numbers?
To all my friends... See Ya!
I will miss you guys. But IHub has become too much like Yahoo Finance. Messages that disappear, arcane TOS rubbish, message board control that favors moderators with an agenda...
Bye-Bye!
GLTA,
Yank
What do the shareholders get? Ten cents per share, then get their shares cancelled. There are a lot of shareholders invested in ROHI at over $4 per share. Their stock is being stripped and the equity given to the noteholders. Do you think these investors like this BK?
JT, why would you say that BK is a fantastic stroke of luck for anyone that bought shares, this week? Come Monday, their shares are now worth ten cents. If you bought at $.32, earlier this week, and discovered you just lost 2/3's of your investment, why would you be celebrating? If you bought at 19 cents at market close, today, would you feel real good about losing almost 50%?
Do you just like to lose money?
Chapter XI just announced.
Any further questions, there, Ace?
All the filings, but one, were virtually simultaneous. This was a pre-arranged, multi-part transaction. Period. A major trading influenece orchestrated this action, IMO. There is ZERO chance that all this action was coincidental.
How often have you EVER seen a thinly traded equity like ROHI suddenly trade almost 1 million shares in the last 15 minutes of a single trading session. Rotech normally traded in the range of 150K shares per session. No wonder the share price moved, earlier this week! Just like on December 23rd when over 2 million shares miraculously traded in a single session, just before year end "mark to market". Then the share price subsequently collapsed under more normal volume parameters, not once but twice.
"Fishy, fishy!" Smells like a hedgie or whale manipulation, to me. Or an internally orchestrated and to-date uncommunicated (no PR) change of course that shareholders were not given warning of or information about. Somebody made and somebody lost a lot of $$$ on these aberrational trading days. That much is an indisputable fact. Follow the money. Small caps like this and other "pinkies and pennies" are easier to "play" because no class action attorney will litigate because the settlement is peanuts. But the reward to maniupulators can be considerable as there is a flock of sheep to be thinned out.
JMHO. Be careful. Somebody is watching!
Where are the Earnings results for Q4 and the year which ended 12/31/12? March is half over and there is not even an announced future date for metrics?
Didn't this happen last year, as well?
There is definitely something "up" with Rotech. Very strange trading patterns, first on 12/23 and then, again, this week where huge chunks of the modest float suddenly traded... this week just south of 1 million shares in the last 15 minutes of the session.
As earlier pointed out, major ownership/voting rights changes occurred in February with NO explanatory PR from ROHI. New CEO just took over. Old CEO remains on B-o-D. New financing imposes covenants.
As the current McDonald's advertisement on television offers: "Fishy, fishy!"