ScripsAmerica Inc. (SCRCQ)

[coolerheadsprevail]

Lost several business days due to holiday, 5.2 mill is incredible.

I’m not convinced of that.

(1)
Pharmacies are consumer product retail businesses and do NOT close unless absolutely necessary. In fact, all the pharmacies in my area (whether major chains like CVS or Walgreens, or independent small local outlets) were all open every day the past two weeks except for solely Xmas Day and New Years Day.

(2)
Even if the sales force all decided to take time off at the same time and take lots of days off, it is important to recognize that the bulk of each month’s sales/orders should be recurring based off of previous sales (i.e. refills), so the sales force is not really involved in this at all.

(3)
The sales force does NOT secure actual “orders”. Rather, they help secure entity-wide agreements with hospital networks and physician networks to try to be the “compounding pharmacy of choice” for when the actual physicians at those facilities decide that they need to prescribe a compounded Rx for their patients.

These agreements are not easy to get, and do not happen everyday. Given this, it would make ZERO sense for a 1099 salesperson to have invested so much time and effort on cultivating a relationship and inching closer and closer to sealing the deal to suddenly say to a potential new hospital/physician network who may have decided on 12/24 or 12/26 to move to Main Ave for the upcoming 2015 year: “Oh, sorry, but I’m not going to talk to you now to seal this deal because I’m not vacation”.

EVERY commission-based salesperson that I have ever met in ANY sector would make absolutely certain that if there was a sale to be made, that he/she would trample over their own mothers to get that deal signed before the client changes their mind and signs with someone else.

After all, these individual agreements with physician/hospital networks are the key to each salesperson’s commissions: Once signed, the salesperson just has to sit back and collect commissions each time a physician from the network refers a patient to Main Ave.

(4)
In light of (3), as I stated previously, patients do NOT stop ordering Rx’s or refills on existing Rx’s just because it is holiday season.

(5)
In addition, NOV only had 30 days while DEC had 31 days. NOV had 5 Sundays that they closed where DEC only had 4 Sundays. So already, we are at 25 days for NOV and 27 days for DEC. NOV had Veteran’s Day and Thanksgiving. So NOV is now down to 23 days. DEC only had Xmas day, so DEC is down to 26 days, still 3 more business days than NOV.

Now, if you are going to say that extra days were taken off for Xmas, then you must do the same for Thanksgiving as the logic is the same – and if anything, studies show that more families take time off and travel to be together on Thanksgiving week than during Xmas week. So these should be a wash for both NOV and DEC that offset each other.

(6)
Bottom line, when you look back on the approved orders reported for SEP ($5.5M), OCT ($5.6M), NOV ($5.3M), and DEC ($5.3M), even after adjusting for holidays in NOV & DEC, it is apparent that revenues have flattened out and are stabilizing. AND THIS ISN’T A BAD THING. Especially in light of the new insurance coverage restrictions that have been taking effect in JUL’14, SEP’14, and again currently in JAN’15.

$15M-$16M per quarter is very good. BUT, it is important for investors to understand what is happening and not fall victim to the pumps trying to convince you that each month is still a record-setting month. The smart money on the Street understands the numbers, and so should you.

The hard part, as discussed above, is getting new physician/hospital networks signed up. And that is where the salesforce needs to step up their game and earn the ridiculous 65% that SCRC is collectively doling out to them and all the middlemen that have their paws stuck inside the SCRC kitty (at shareholder expense, of course).

We retail joes will know when the salesforce earns their keep by whether the monthly numbers shoot up in any given month – because that will be the signal that new deals have been signed. After all, refills will only represent recurring flat revenues, and physicians will only refer a small number of “new” patients each month as not every patient will have a condition that requires a compounding pain cream. Meaningful quantities of new Rx’s can only come with new hospital/physician networks climbing on board the Main Ave bandwagon...

...and if you don't think continuing to relentlessly grow topline revenues is important, just look around the Street during earnings season and look at all the stocks that get punished in spite of great profitability -- but they get punished simply because growth is not as high as it was the prior quarter/year.

Continuing to show GROWTH is what will result in the Street awarding a handsome multiple to SCRC's sp. And that is the shareholder value that BS Schneiderman and his over-paid sales force need to figure out a way to unlock...