Praxsyn Corp (PXYN)

[DartmouthDan]

Lets take the recent press release at face value. $4 million in "claims." I believe I know why the press release says "claims" and not sales.
If you look at the last 10-Q and in particular note 2 and the Revenue Recognition policy, see below (sorry format not so great) you will see how PXYN reports revenues and how the press release is, well, misleading. Misleading because most of the posters were mislead as they have been saying that the press release was talking about SALES. Note 2 is proof that it is NOT sales.

If you review Note 2, it discloses that for the 9 months ended 9/30/2014, the "revenues" were about $55 million. But the "claims" for that period were $119,622,705 and there were "contractual and other adjustments" of $64 million (about 53%). What that means for the layman is that insurance companies pay providers less than the billed amounts.
What will be the "adjustments" on the "$4 million" in claims?
PXYN is not saying. Could it be 53%? no one knows for sure. You would be speculating if you said you have an answer.
Then, of course, in 2014 TPS took its marketing cut. With the new deal, NHS get 55% of the amount billed (NOT THE AMOUNT PAID, which can and will be less) and 9% of the amount actually paid to PXYN.
In sum, $4 million in claims does not equal $4 million in revenues.
Could be $2 million. Could be $3, could be $1. After that, the 55% cut which would be $2.2 million. $2.2 million off of $3 million and now you have sales of only $800,000.
Then, we do not know the cost of goods for the products which were billed.
What products were they? same as before? or other products?
For all we know, PXYN is losing money on these claims. Any claim to the contrary is 100% speculation.

Revenue Recognition

We sell compounding pharmaceutical products directly through our pharmacy and record the associated revenues using the net method, as required under ASC 954-605-25, Health Care Entities – Revenue Recognition. Compounding prescription revenue is recorded at established billing rates less estimated contractual adjustments with each respective insurance carrier. Net revenues represent the amount each respective insurance company and the California Workers Compensation Fund are expected to pay us. We recognize revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the sales price is fixed or determinable, and collection is probable. Our pharmacy revenues are recognized when both the compounding prescriptions and customer shipment services are performed.

F-7


Net revenues consisted of the following for the three and nine months ended September 30, 2014 and 2013:


Three Months Ended
September 30,

Nine Months Ended
September 30,

2014 2013 2014 2013
Gross billing revenues $ 49,770,675 $ 865,128 $ 119,622,705 $ 8,207,940
Less: estimated contractual and other adjustments (26,874,786 ) (461,813 ) (64,264,544 ) (4,166,340 )
Net billing revenues $ 22,895,889 $ 403,315 $ 55,358,161 $ 4,041,600