RNVA moving forward, Shareholders - Risks and Rewards
A) RNVA will close June 1st on Jamestown Hospital significantly improving revenues which (for shareholders) IMO significantly will improve price action although not immediately.
B) Way to much focus on the AS increase as being a negative. Lets be realistic here. The assets and revenues of RNVA after June 1st are worth significantly more then the current PPS.
C) The short term effect of the fully diluted AS increase by 6X. If (rounding up) calculating .03/6 = .005 (when fully diluted). The market overreacted in that current PPS reflects a fully diluted PPS when the June 1st Jamestown hospital SIGNIFICANTLY INCREASES REVENUES/ASSETS AGAINST EXPENDITURES/LIABILITIES which has not yet been adjusted nor has FUTURE EARNINGS.
So WHY is this happening?
When AS was increased retail shareholders tended to over react since they often focus primarily on the short term price action. Add in that MM's now have more shares available to sell into the market due to various conversions, exchange agreements, follow on financing rounds, etc., Market absorption by retail buyers along with market makers (liquidity) at this point is mostly perceived as a negative by retail buyers and are looking for an absolute bottom and many are waiting on the sidelines for the 10Q and the June 1st closing.
The Sabby Master agreement along with exchange and warrants give Sabby essentially a first right of refusal for up to 50% of follow on financing rounds. This means any financing above 50% of the original financing can be secured elsewhere. The warrants give lenders the right to purchase additional shares at a predetermined price. The 90 day extension timeframe allows lenders (warrant holders) to wait for PPS appreciation caused by events such as the 10Q, June 1st closing, etc.,
IMO the current pricing reflects the AS dilutive impact and follow on financing but has not adjusted for events such as the 10Q or June 1st closing. With cash at hand RNVA has the potential to stabilize cash flow and possibly make additional acquisitions. The market timing by lenders will continue in the shorter term to keep pricing under market value as they exit their positions for follow on financing. Terms of follow on financing should improve for the RNVA as cash flow stabilizes and better financing comes into play.
