Progressive Care Inc (RXMD)

[ArmoredDragon]

Why the argument about gross margins is meaningless, especially since those arguments seem to neglect industry averages (which is the real benchmark in any stock, and that omission is probably deliberate on the part of those making the argument.) RXMD is currently above its industry for gross margins (at least, according to Q1 financials, we'll need to wait for Q2 financials to be certain; expect them around mid august.) During the period that keeps getting cited of around 31%, RXMD was far above the industry average at that time, the only difference now is that it returned to be somewhere between at average, or slightly above, depending how much the rest of the industry felt the squeeze (and if RXMD remains above, that is a sign of strength.)

So long as they don't deviate too far below their current margin (5%ish) they'll be fine in this regard. There is no indication of this so far. If they can raise that to 25% consistently, which is generally considered to be a good place for a pharmacy, then there is no question about it. In the Q1 financials, RXMD was at a 26.74%. It was only the June numbers that were 23%. Calling out June margins alone is pretty meaningless in the long term (yes, there is such a thing as having a bad month.) But, let's go ahead and use them anyways: That just means that RXMD fell to the industry average, meanwhile, the industry itself probably (I don't have numbers yet) declined as well, and if that is the case, then RXMD still remains above average.

With this considered, they still don't have a whole lot of net income. This is fine, RXMD is on a very consistent (and strong) growth trend in overall sales. Given they are typically above average in margins, and if they can retain that growth (all indications right now are that their sales will grow faster) then there is no problem now, or any time soon. I anticipate that their net income will grow quite well as a result of this.

http://www.ncpa.co/pdf/digest/2016/2016-ncpa-digest-spon-cardinal.pdf