Southern Home Medical Inc (SHOM)

[stock_peeker]

IMHO the biggest problem with small medical services companies like SHOM is they tend to be low margin at best, particularly since healthcare is a hot political issue. As a result healthcare regulations have been changing over time, and insurance reimbursements have been changing so much year to year, especially Medicare reimbursements (which often pertains to home healthcare and nursing home care).

ApneaRX is focused on servicing people with sleep apnea, which is probably a growing business, but the per unit revenue is low (machine rentals and filters, etc.). It's not a highly skilled service, and there are lots of companies that do this work, so it remains very cost competitive.

I remain very long SHOM, and I hope the merger works out great for everybody, but as an investor (who has been disappointed with SHOM before), IMHO there is a relatively low probability that there will be an amazing, overly generous merger agreement that makes SHOM shares go thru the roof (at least with the announcement of a merger).

That said, it would be great if SHOM does merge with another group to ensure faster growth in the future, followed by higher stock valuations.

'stockpeeker'