Expect 2nd Quarter to look really good.
I own stock in SRZ and my father lives in one of their facilities.
This month we received our regular bill for last months services, 10
day later we received a bill for next months services. They told us
back in January that this was going to happen so as resident's
familys we accept it and go on.
Until I actually got the bill and looked at what was going on I hadn't
put 2+2 together. They have been billing us after the services and
now they are going to bill us ahead. Their open AR just doubled. Do
the math 55,000 resident that just moved for paying behind to paying
ahead say $3K a month (we pay $5K a month but I think we pay more than
the average), that is $165,000,000 that they just added to their
current assists and cash flow. This will need to be reserved,
however, this maybe why the bank gave them the 30 day extension. By
the end of this month they will show the higher current assist value
and this gives the bank and SRZ a great way to get everything
As a resident, $10K in one month is hard to swollow, but as a stock
holder this is a great move. Our facility also told us that if we
need to spead it out over 2-3 months they would work with us, so I
doubt this will cause too many people to leave, I'm sure we will have
some but "cost" is not the reason people have their family members in
an SRZ facility. They are worth the price and this is a good business
Watch for the refinance by the end of this month and the 2nd quarter
to be profitable. I still hold the refi is worth $2 to stock price
and the firt profitable quarter is worth another $2. I still see
stock price of $4 by summer and $6 by the end of the year.
Oh please don't try and tell me you have an elderly parent and that they are asking you to double up a payment and though "it's hard to swollow" your willing to pay it for the good of the company. They have been charging a month before since my dad was in there......so please don't try to tell me that this announcement will bring in that much capital. When I have been by the facility my dad was in they have a huge desperate sign that talks about a payment plan.
I'm sure they are trying anything to bring in more money but fleecing their customers when the care has been sub-standard is far from being a good business strategy. It sounds more like a desperate last chance.
Interesting! Someone is going to say 'but they aren't creating new money, they are simply getting a temporary boost in income by moving the payment schedule for each resident'
That would be true but near-term cash is what they need. If true, this is nearly too good to be true, assuming a near-term cash infusion serves to prime the pump (and stave off creditors).
Gotta hand it to them, they are certainly making a respectable effort and are thinking smart.
Agree with your points. Positive cash flow is a significant part of the SRZ equation. If they can get "up front" money they are - in the short term, at least - generating cash. Short term is where SRZ lives these days. Every little bit helps. Now, let's get some refi done!
This is amazing step. This is brilliance at work. How much this will help the stock price this coming week is anybody's guess, but its impact on getting the lenders paid and getting the covenants in line and within allowable limits may be significant.