Repro Med Systems Inc (REPR)

[quilix]

Sales were more or less the same as last quarter but net income dropped 220K. Income before taxes dropped ~265K. Approximately one-third of that was due to increased cost of goods sold, one half due to increased SG&A and the rest - about one-sixth to increased R&D. Disappointing - Yes. Surprising? Not terribly. I really hope the SG&A comes back down to under a million going forward. And hopefully the gross margin recovers as well.

I think this is a good company that has a chance to be worth more on a standalone basis. SG&A has always been way too high though. As others have said this company would make a lot of sense as a buyout candidate. Roll them up into a bigger company where they can just take up a fraction of corporate SG&A activities and you are looking at ALOT more money to the bottom line making the company worth a lot more than $10 million to an acquirer.

The stock is reasonably valued today meaning I think there is a decent return to be made from these levels. But a GREAT return will only come if SG&A stops increasing so much with revenue (I think that is still possible - hopefully current SG&A is a highwater mark like Q3 of 2013 was) or the company gets bought.