J.T., on a short term trading basis you may be correct and I hope for your sake that this occurs. But I think the more important question reposes in the long term future as viewed by major investors and major lenders because it is their actions that will shape the near term S/P response to the BK "announcement" (to whatever extent the PR on this might be consider as really announcing anything concrete). Said another way, the affect on short term traders will be huge based on the actions of long term investors during this transitional period of extreme change for Rotech. For longer term investors like me, their actions are everything because at my tax rate I need to hold my investments for more than a year to avoid ordinary income tax rates and my blood pressure won't take the elevated adrenalin levels common to daytrading.
I am troubled by the commentary in the 8-K that new CMS bidding procedures have reduced Oyxgen gross billing rates by 41% and CPAP by 47%. That is a huge hit both to topline AND bottom line on over half of ROHI's total business. If you shed about half the interest expense of $60M, you still have a net loss of over $30M with competitive bidding only having affected a modest percent of CMS-reimbursed geography. What happens when the CMS bidding protocol is expanded to new markets?
There is some discussion in this sector that Congress may intercede and pare back these Draconian cuts in reimbursement. I am very skeptical as these cuts are one underpinning to the Affordable Care Act. But even more ominous is the fact that changes to the bidding protocol would severely limit the future of new patients covered by CMS. Just look at the horrific impact on ROHI when Medicare limited home oxygen care to 90 days. If the bidding protocol is redacted, there will be no growth in homecare markets because there will be no funding for the patients. It would turn the "Baby Boom' into a business BUST for Rotech.
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