Replies to post #17654 on ScripsAmerica Inc. (SCRCQ)

[coolerheadsprevail]

In December, two more deals were announced. Arseus, a Rotterdam-based medical supplier, said it would buy B&B Pharmaceuticals, an Aurora, Colo.-based supplier of controlled substances and raw materials used in compounding. Pharmagen, a publicly traded distributor of specialty and scarce drugs, spent $1.1. million to acquire Bryce Rx Laboratories, a Stamford, Conn.-based compounder.

Pharmagen, formerly Sunpeaks Ventures, aims to serve as the primary backup supplier of drugs in short supply to U.S. hospitals, said Mackie Barch, Pharmagen president and CEO. It bills itself as the first integrated company that is working actively on the sterile drug shortage.

@Alleyba,

This was actually a very interesting article. Thank you for posting it for everyone here to read. I have been trying to do some research on publicly traded compounding companies in order to perform some comps against SCRC as well as obtain a glimpse into what we may be able to expect from SCRC as SCRC continues to grow its new compounding business (either organically within Main Ave or via expansion into other brick and mortar locations) and they are very difficult to find. Most are privately held, so financials are next to impossible to obtain.

For those who are interested, Pharmagen's most recent 10K can be reviewed here:

http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001477932-14-001427%2Etxt&FilePath=%5C2014%5C03%5C31%5C&CoName=PHARMAGEN%2C+INC%2E&FormType=10-K&RcvdDate=3%2F31%2F2014&pdf=

Compounding is not PHRX's only source of revenues and the 10K and financials do not disclose segment breakouts, so we have no idea how much of their business is attributable to compounding. However, I do feel that their financial metrics may be a good comp for SCRC for reasons I'll explain below. But, before doing so, here are the financial metrics that I think are worth noting:

PHRX reported 2013 revenues of $4.8M, and from this earned gross margins of 63%. So this is encouraging. They had a net loss, however, due to high SG&A expenses as well as an obscene amount of interest expense. That would explain why, in spite of $4.8M in revenues, they have been trading for less than a penny for the entire year -- at least up until today, when the sp gained over 50% to close at .012 (more on this later).

PHRX is in many ways a mirror image of SCRC. They both have wholesale distribution businesses. They both have a proprietary product that is based upon a reformulation of existing active ingredients (SCRC has RapiMeds and PHRX has Clotamin, a multivitamin), but Clotamin is actually already on the market and generating revenues. And they both are in the compounding business, but PHRX is already licensed in 39 states.

So... ...because of this similarity, at least on the surface, it would appear that the margins PHRX experienced may be a reasonable surrogate for what we can expect for SCRC on an entity-wide basis. This margin looks quite healthy -- the key will be whether SCRC can keep a lid on its SG&A costs as well as its "Other Expenses". Once the revenue streams begin coming online consistently, the Street will be looking at net income (i.e. earnings) and won't give a crap about simply topline revenues. If SCRC continues to pull in anywhere close to $1M/mo in compounding revenues, then it should be able to get into the black and report positive rolling-12 month earnings by 2Q15 (with positive stand-alone quarter earnings by 4Q14, IMO, and possibly even as early as 3Q14). Compounding by itself generates more revenues for SCRC than what PHRX generated from all sources last year, so clearly sp comparisons can't be made between SCRC and PHRX.

One thing that PHRX has going on that SCRC doesn't -- yet -- is a slew of lawsuits, one of which involves the involvement of the company and its execs in a P&D scheme that was conducted against its own shareholders.

PHRX used to be Sunpeaks Ventures (SNPK) and it went thru a P&D similar to SCRC's where the sp surged over $2 before falling all the way to sub-penny levels. The promoters are currently fugitives who operated "AwesomePennyStocks", a distributor of numerous pennystock promotional newsletters of different names. See here:

http://www.awesomepennyscams.com/

I'm not sure what is currently going on, but over the past couple of months, the sp has been on fire, going from the .002x leves to the .012 it closed at today.

I wouldn't mind SCRC making a move of similar magnitude over the next few months, but hopefully folks will be smarter and less trusting of strangers this time around when it comes to believing any touts predicting how high the sp will go, how fast it will get there, and whether or not to sell/trade any shares. There is plenty of money to be made trading SCRC -- and there always has been. There is plenty to go around w/o the need to stick hands into other people's pockets.

GLTA...