Interesting. While your logic is reasonable, I don't think it is necessarily correct. There could simply be a lag in factoring leading you to conclude that the in-house collection rate is higher than it actually is. From the last 10Q:
"During the six months ended June 30, 2014, the Company factored $10.1 million of 2013 accounts receivable for 20% and $44.5 million of 2014 prescription sales to a factor for 20% of the gross amount resulting in net proceeds of $10.9 million. In connection with these sales, the Company recorded financing costs of $14.2 million during the six months ended June 30, 2014 within interest expense on the accompanying condensed consolidated statement of operations.
During the six months ended June 30, 2013, the Company factored $4.7 million of accounts receivable for 25-30% of the gross amount resulting in net proceeds of approximately $1.3 million. In connection with these sales, the Company recorded financing costs of approximately $851,000 during the six months ended June 30, 2013 within interest expense on the accompanying condensed consolidated statement of operations."
If they factored 2013 receivables in 2014, they obviously could factor Q1/Q2 2014 receivables in Q3 2014 or later.
On the other hand, your conclusion COULD be correct. I've previously expressed concern (no one else seemed to care) over the fact that the factoring rate dropped from 30% in 2013 to 20% in 2012. One possible explanation for this is foul play - i.e., selling the receivables to Garbino or someone else for far less than they're worth.
But another reasonable explanation is that they've started collecting the "best" receivables in-house and are factoring the "lower quality" receivables. Factorers would obviously pay a higher percentage for a mixture of "good" and "less good" receivables than for all "less good" receivables.
The flip side of this is that if they are already keeping a decent chunk of receivables in-house, they will not gain as much by eliminating factoring as people expect (since they've ALREADY eliminated factoring on a decent chunk).
This is particularly true if they're already keeping a decent chunk of receivables in-house, AND they're only keeping the "best" receivables. That would mean that the remaining receivables to be moved in-house are the lower quality receivables that will have lower recovery rates and/or higher collection costs.
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