Got an interesting question via PM today. The question posed to me was what SEP numbers I thought SCRC would PR during the first week of OCT. The question was specifically asking what would be PR'd -- and NOT what the revenues would be or what the "approved orders" would be... ...but very specifically what SCRC would PR.
That is a very interesting question indeed.
Let's start with what we know:
(1)
We know that SCRC has a history of PR'ing numbers that DO NOT BELONG TO IT.
Case in point: WRx.
For those who have been around since Q4'13, you may recall that SCRC regularly PR'd "record-breaking revenues for WRx" and PR'd several hundred thousand dollars in WRx revenues each month. But what SCRC did not disclose in the PR's is that WRx is an unrelated 3rd party entity that SCRC does NOT own, and that the agreement SCRC has in place w/WRx stipulates that SCRC will only receive a commission that amounts to only 14% of GROSS PROFITS -- not even 14% of revenues, but 14% of GROSS PROFITS.
And what SCRC ultimately was forced to disclose in its Q's is the fact that it really only took in between $10k-$30k per month, and thru Q'142 has only realized approx $150k in total commission revenues SINCE THIS AGREEMENT w/WRx TOOK EFFECT 13 MONTHS AGO.
And what the most recent Q has shown us is that WRx revenues are not only no longer growing, but they are also not even plateauing/flatlining -- rather they are steadily declining.
(2)
We know that SCRC will sneakily change the language/wording of its PR's and subtly switch out one metric for another w/o telling its audience that it has done so.
Case in point: Main Ave
During Q2, although SCRC continued to faithfully PR the Main Ave financial results almost immediately following the conclusion of each and every month, it very subtly altered the language in describing the reported numbers from "Revenues" to "Approved Orders". In hindsight, once the Q2 Q came out, it became apparent that the reason for this was the growing backlog at Main Ave. Why is this important? Because for orders that are backlogged, if Main Ave can't get them shipped out by month-end, they cannot bill the insurance companies for the Rx's and CANNOT RECORD THE "APPROVED ORDERS" AS REVENUES.
So, instead of reporting declining revenues due to the growing backlog holding things up, SCRC simply reported "Approved Orders". Again, this is something yu can verify for yourself by going back thru the Q2 PR's and comparing the PR'd numbers to the Q2 revenues reported in the Q. You will find that SCRC PR'd Q2 "Approved Orders" of $5.3M but only recognized $3.5M as revenues.
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So, knowing the above as being deceptive tactics that SCRC has employed previously, what does that tell us about what SCRC will PR for SEP numbers?
IMO, there are several potential scenarios:
(A)
SCRC can continue to simply PR Main Ave "Approved Orders" only.
(B)
SCRC can begin reporting numbers for "Specialty Pharmacy Operations" in aggregate to capture not only Main Ave but also United Apothecary and Jungle Jim's.
BUT, if SCRC does this, be careful because SCRC effectively owns Main Ave and plays the role of pharmacist there and gets to recognize the full Rx insurance payment as revenues; however, for UA and JJ, SCRC is merely some type of sales rep or broker that will receive an unspecified commission-like % of the Rx insurance payment.
So, SCRC may mix apples and oranges by PR'ing some combination of the following:
* Main Ave RX Revenues
* Main Ave Rx Approved Orders
* UA/JJ Rx Revenues (which belong to UA/JJ and NOT to SCRC)
* UA/JJ Rx Approved Orders (which belong to UA/JJ and NOT to SCRC)
* UA/JJ Earned Commissions based on Rx Revenues
* UA/JJ Earned Commissions based on Rx Approved Orders
And let's not forget about PIMD. Per the Q, SCRC will receive a Mgmt Fee equal to 45% of some unknwon "Calculation Basis". So will SCRC PR anything re: PIMD? If so, will it be
* The Mgmt Fee SCRC receives(i.e. 45% of the Calc Basis based on actual "revenues")?
* Or the Mgmt Fee SCRC receives (but 45% of the Calc Basis based on "Total PIMD Orders Received")?
* Or will it be simply the gross "Total PIMD revenues"?
* Or will it be the gross "Total PIMD Orders Received"?
So if we think back to the mathematical concepts of combinations/permutations, we can see that with the 10 different variables here that it will be impossible to know what/how SCRC will PR. All we can do is wait or the PR to come out and then be very diligent in vetting it, paying special attention to the words utilized.
Hope this helps...
