ScripsAmerica Inc. (SCRCQ)

[coolerheadsprevail]

Sometimes you are better off with several small to medium sized accounts rather than the one huge one. Just my opinion.

In principle, this is a valid point.

Companies starting up oftentimes find themselves in a position where a huge chunk of their business is tied to one or a small number of customers, so the loss of even one customer results in a big hit.

But the corollary is also true. When a company is starting out, if it has an overpaid sales force like SCRC, which included gobs of middle-men, then if they were able to justify their commissions and actually sign-up new accounts, then each NEW customer would result in a significant INCREASE to the top and bottom lines as well. This argument cuts both ways.

This is why the Street likes to see diversification and a large customer base, because it means numbers are materially predictable and -- barring catastrophic news -- the ebbs and flows should be moderate like a calm sea and NOT violent like a Category 5 hurricane.

This is also why auditors look at what they call "concentration" and require companies to disclose this in their SEC filings, to make the Street aware if a company has a material amount of its business exposed to either one sector, one customer, or a small handful of customers, etc.

That all being said, does this mean that SCRC is not worth investing in? Of course not. As stated above, this is simply part of the growing pains and risks that startup companies find themselves exposed to. It's unavoidable.

But this simply lends further credence to the fact that it has been foolish and dangerous for anyone to take a straight "buy/hold/add/hold" strategy to SCRC -- and it speaks volumes about those who have been urging others to follow such a fatal strategy.


NOW, as this point relates to SCRC, it is important to keep in mind that there are only so many insurance companies and pharmacy benefits managers (PBM) out there, so every compounding pharmacy will be facing the same issues Main Ave faces.

In addition, when it comes to something like insurance coverage, it is very very rare for one insurance company/PBM to stand alone on an island. If one decides to alter coverage for something, it will not be long before all the others follow suit. We all see this ourselves when we shop for our own insurance and compare plans, right? The nature of the coverage and the types of stuff and the amounts covered are all pretty consistent from one insurer to the other.

IMO, CVS/Caremark is likely just the first, and others will follow...