Debt and interest - NOT a concern... Here is what the experts accomplished last quarter..
Interest expense for the second quarter of 2015 was $134,324 which predominantly resulted from interest on notes payable – no factoring was done in this period. For the comparable period of 2014, interest expense was $9,558,629 and consisted of factoring-related interest of $9,188,446 and other interest of $370,183.
Ok... so no factoring.... but there were WORK COMP revenues of.....
$17,566,329
So, the logical question is.... Where is that cash?
In August 2014, we formed a subsidiary named NexGen Med Solutions, LLC, which we expect will allow us to expand our accounts receivable collection effort, both internally and externally. We believe this will allow us to improve our collections, increase the net realizable value of our gross billing revenues, and reduce our dependency on factoring. In addition we continue to seek more conventional financing which will allow us to move away from factoring and reduce our interest expense.
Our operating results have historically been influenced, in an adverse way, by two significant factors. First, as noted above, our revenue recognition is based on our estimate of the net realizable value of our customer billings. For billings which are not pre-approved, which are typically workers compensation billings, we invoice insurance companies at amounts permitted under various states’ fee schedules. Given the nature of our industry and the reimbursement environment in which we operate, our estimate of the net realizable value of our billings is often less than the gross billing we are allowed to charge. We have recorded our revenues based on historical collection trends. Second, we have had to finance our non-pre-approved operations by selling our accounts receivable (recorded at net realizable value) to a number of factors. The cost of factoring, which we record as interest expense, can be quite high – anywhere from 70% to 75% of the gross accounts receivable billing.
So.... This 17 million dollars is $MONEY IN THE BANK folks... NEXGEN collects and PXYN keeps the 70 to 75% they previously paid factors which we saw as interest charges... NICE!
