Replies to post #16448 on Praxsyn Corp (PXYN)

[OhManIDied]

I was operating under the assumption that the particular balance sheet (at the top of the 10-Q for Q2) was specific to the three months ended June 30th, as I stated in my post. This makes sense because the "interest payments" section, just below, would have to be significantly larger if this was for Q1+Q2. If it were otherwise, the lower bound (of in-house collections) I computed (of 25%) would have to be much higher - as less of the net ARs would have been factored.

Good insights though, for sure, and it can go either way. Alternatively, it could be true that even more than 37% the Q2 ARs were collected in-house if the interest expense for Q2 includes the factoring expense of ARs from Q1 for which, for cash-flow reasons, the initial intention to collect them in-house was abandoned. We would have to look at the overall balance sheet for more insight into how this effects what I am assuming is Q2-specific balance sheet.

You are correct: if there was a high in-house collection rate for Q2, it could reflect negatively on the strength of the company since it would adversely affect the perceived benefits of resolving the factoring issue, namely, the overall profitability of the fully-mature business model. I was aware of this but not concerned since the pie is already so large that it puts the current share price to shame. Additionally, I have recently done the calculation to speculate on the profitability of the business when it's factoring only 30% of ARs (at 20%) which indicates that the "Earnings" will be 15% of gross revenue. I think this is more than enough profit considering the clear growth rate and the potential to expand the business further in a variety of ways which include (but are not limited to): selling the current product in other states (perhaps other countries as well), adding a department which performs toxicology/genetics testing, adding in-office systems to allow doctors to directly provide "physician-dispensend drugs" (assuming this is not already done), and becoming a factor for outside pharmaceutical businesses.

Finally, I concur that it's definitely likely that the reduction in factoring rate has been due to the fact that the company now keeps the short-term turnover ARs and only factors the long-term ARs which demand a less-than-ideal premium, particularly when the company does not have the freedom to walk away (as it's no secret that they're backed up to a wall and needs the cash-flow). We could end up seeing the "less-desirable" (long-term turnover) ARs factored at higher rates now that Praxsyn can take the time to shop around and has more ground to stand on when negotiating if not only because they can relax and outlast their counterpart instead of rushing to a conclusion. Lastly, the company will increasingly emanate legitimacy as they build a proven track record to prove the value of their ARs as a long-term asset. In today's investment world, big money will buy almost anything that is nearly guaranteed to give a return (at all) that is better than the industry-standard negative real interest rate (lol). Take a look at the bond market, vulture housing market, or the ECB for an example.

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