Very concerned about headline risk re this Q release. If they take the writeoff in Q4, loss per share could be several bucks per share. Will reevaluate after they report. Still think cf will be positive, but knee jerk could still be down with a big loss per share.
On last conf call they specified this date, but with all the activity this Q, I wonder if that date still holds. Let me know!
Sentiment: Strong Buy
Barber, you are right here and I was wrong. That said, the only reason I even mentioned revenues was in response to issues you raised. I am aware of Japanese loss and HSN issues so less concerned about top line. For me, it is all about CF. I still xpect it to be positive. Do you n=have any basis for saying cash fell to 10mm at year end? Also do you know if the 2mm put in escrow came out before or after they said debt was 40mm. These are the two biggest issues in determining if Q was cf positive. That said, even if it isn't it is only mildly red, which is a vast improvement from lst Q. The stock is going higher!
Stick with the facts, not some wild eyed ridiculous speculation based on absolutely nothing. They bought significant time to right the ship in recent forebearance and will use it before bailing. Your latest tact is simply absurd!
They sold at $15, not anywhere near here. Also, the $3 you note is more than 50% higher than prevailing. If stock moves there, you will have more than enough shorts buying to offset any selling. If they sell, and I don't anticipate it (there may even be handcuffs), then I am out. But that is an unrealistic expectation.
Barber, Barber , Barber .. that nearly year old news is already 100% in the stock. It isn’t new or actionable news. It is fully in the market already. If someone wanted to sell based on this, they already would have done so! It won’t impact near term stock supply. It is yesterday’s news! The same crowd that harps on this proclaims BK is near, yet Dolev’s selling has absolutely nothing to do with a potential BK. Nothing. Dolev is a slimeball, but that is already reflected in prevailing stock price. I am not excusing his behavior, but right now, the improving fundamentals (improving CF, improving earnings potential, additional time extended by banks to work through issues) and improving technicals (ceiling breakout, positive outside days, etc) will carry the day, not something that happened a year ago. There are lots of CEO slimeballs out there, perhaps even half of them. However, that has nothing to do with the current risk/reward paradigm or a company’s ability to show operating improvements. But for now, stock is going higher! Hope they confirm reporting date of the 12th today! LLAP
two last points for the day (I'm sure you are relieved).. First, I hear you on the margins, but that is why I get very excited in my expectation for positive cf in Q (or as I have admitted, just vast improvement and near cf positive). Fact is the op cf was negatiive 12mm last q I am expecting to see improvement in the higher margin products this q or we wouldn't see such a dramatic op cf improvement. Secondly, Nov 3 sales totaled $4.8mm. In one single day, they sold what you estimate to be 20% of an entire Q's worth. One day, simply by adding flashy colors. wow, hardly a death knell.
Total sales were higher in q2 vs q1, and higher again in q3 vs q2. Some biz units have suffered, but others are doing well.. thus the overall rise. That is a fact. Just look at the quarterly numbers here on yahoo under Income Statement. The YOY numbers were well off given loss of Japanese distributor and less HSN spend (at least that is what co said). Oddly, both our facts here are correct, but I read them differently. I don't see material sales declines continuing and "no demand" (as pundits proclaim). Looks like overall demand is stable to mildly good based on recent Q's. Your referenced declines may not be indicative of a continuing trend. We'll see
Barber, appreciate your thoughts.. guess that's what makes a market! I do disagree with you near term with stock though. Bias is up not down, and I think much more likely to see 3 before it sees 1. Shorts may be right LT, but miy position is a trading one. I have no idea why someone would face a 50% retracement before this goes down.. That is nonsensical. Couple points of clarification:
1) From proforma, looks like LCA loss was around $5mm thorugh 9 months, so perhaps its elimination helps bottom line by $7mm annually (just a guess, but not a bad one). However, it doesn't matter whether this elimination is huge or not... it is the elimination of a negative! Both cf and earnings will benefit going forward from the elimination. Also the lower carry cost of the $40mm lower debt will help (I don't think this is double counting, but could be wrong).
2)I am guessing on cf, but doubt I am wrong. Key here though is the turn. Going from negative $12mm op cf to positive or near breakeven is decided improvement. This trend is my friend!
3)Sales cut by a third, not half given sale.
4)Re "declining sales" Q2 was higher than Q1, and Q3 was higher than Q2. I don't see any calamity there and certainly no need for chicken little statements
5)The co's press release on the Nov 3 event states record units. Perhaps the May sales were on a weekend, I have no idea, but a record is still a record!
Lastly, consider the technicals: last 4 outside days have all been positive! Yesterday was a sharp breakout to the upside and it had significant volume supporting it. 200 day average is over 200% higher. Also given thin trading, any good news will goose the stock. Co may go BK longer term, but for now they have bought time with recent deals..Stock is going higher near term
• In Feb, co sold off a money losing stupid acq for a big loss. Sale greatly improves both forward earnings potential and cashflow
• Doing so, halved debt load
• Proformas indicate current ratio swung from negative to positive
• CF looks decidedly positive in Q4 versus negative in Q3. Swing is $15-$17mm positive from red to black Q:Q
• Nov 3 had biggest weekday unit sales in history of company, which reflects ongoing demand for key product
• On Mar 3, the banks greatly extended the forebearance agreement by 13 months (to April 2016) to allow co time to continue turnaround, reflecting recent balance sheet and cf improvements
• Short interest is high, but likely began to fall yesterday with forebearance. Best bet is 20% of short positions were covered, but significantly more to go (this is greatest source of demand likely to shift supply/demand dynamics near term)
Now, despite all the above…all the facts from above…Enterprise Value here is still well below what it was before the good news began to flow. I doubt that remains the case for long and truly wonder why anyone would feel comfortable on the short side going into the next earnings release (expected within a couple weeks). I am long and strong!
Sentiment: Strong Buy
Cash flow positive is cash flow positive. Barber, you keep trying to slice things down to immateriality, but that doesn't fly. Here is the fact... between 9/30/14 and early Feb, debt fell $5.5mm, in addition to the LCA sale proceeds. This money comes from operations, and internally derived cash flow. Juxtipose that with negative CF from ops in last year's third q ... a negative $12.2mm cash from ops. We've gone from red to black. I am not saying they were profitable, only that they may have been. We'll see. Tough to short a stock which is seeing a $16-17mm positive swing in internal cf q over q. I know being long won't cause for any loss of sleep, can the shorts honestly say that right now?
Barber.. where do you think the prepayments come from? All I'm saying is they were cash flow positivie, which is different from what I expected. I know they made the payments and couldn't care less if they were in equal or unequal installments... but it came from positive operating CF. Depending on the cf composition, and timing of noncash writeoffs, they may have been profitable in Q4. That's the math!!! Lastly, I have no idea that the escrow was closed out by $40mm time, but that is splitting hairs. Cash was positive unless they extended payables to no end and given how they had previously been stretched, I doubt that was the likely source. When they announce the date of earnings release, the stock will begin to climb. I go long and short at different times with different stocks and have nothing against shorting (in fact, I love it), but I honestly have difficulty understanding who would want to stay short ahead of this potentially profitalbe and likely cf positive release. As said before... a whole new ballgame here right now!!!! Stock is going higher!!
BTW, I used to be in investment banking, have and accounting and finance background, have written an investment book and don't take this stuff casually. I was a seller early today, and a buyer late. Full position right now, though readily admit have no idea what tomorrow holds, but nor do I really care.
stock is up over 8% on over 2mm shares. This is over 10% of outstandings. That is very very bullish, esp against a bloody day on the Street. What exactly did you "Tell" us???
Barber, barber, barber... I speak in facts and you speak in hyperbole. Fact is debt levels are lower than anyone would have reasonable expected. This comes from operations! Every number I shared is taken directly from recent SEC filings made by PHMD.
I don’t know the CF composition, but I do know that it is positive (unless it all came in January.. very unlikely) in this seasonally strong 4Q. The stock is undervalued based on the recent changes and soon to be reported 4th. Arguing here reminds me of Bill Clinton during the last DNC, or the cool actor doing the Cree light bulb ads … “If you argue with math, you will lose!”
Everyone is entitled to one’s opinion, and I am sure you can yell louder than me… but the course to making money with PHMD is on the long side right now. Good luck with your short!
Important info can be gleaned from SEC filings intraQ. In PHMD’s case, I now suspect that cashflow was positive in the 4th Q. INHO, this will shock most of the Street and enable another solid leg up.
We know following:
Starting debt (9/30/14) $80,310,000
Private Placement (1,000,000)
Effective Start $79,300,000
Net Proceeds on Sale (35,300,000)
Cash Held in Escrow 2,000,000
Net Before Opps $46,000,000
Actual Debt post LCA sale $40,568,000 this is per yesterday’s SEC filing
As such, CF will be positive by either $5.5 or $3.5 (if escrow closed out) million!!!!!
There is possibility co reports profit in the 4th Q too, but it depends when they take the noncash writedown from sale. Remember that on 11/6 they announced the largest single selling week day ($4.8mm) in history of company.
This is HUGE and unknown in market!!! Yes, perhaps cash was used, but it ain’t like the banks would have allowed for excess cash to be on balance sheet at end of third anyway, so this is not likely an issue. IMHO, CF was distinctly positive in Q4 based on all the co’s recent SEC filings.
Got good news for you.. according to recent filing debt is already down 5mm from your number: "The balance of the principle indebtedness has been reduced to $40,568,203, following the sale of the Company's subsidiary, LCA-Vision, Inc". 40 not 45... boy they are paying down faster than thought huh?
Just takin one step at a time here Johnny! They aren't debt free, and that isn't likely without selling another product line. Also be prepared for a frontlal assault from the shorts... just watch what comes in from Seeking Alpha in the next week. As such, this baby will remain exceptionally volatile (as a trader, something I actually like). If this co were debt free, stock would be above $12 now or 1.5-2x revenue. But it ain;t there yet. Baby steps Johnny, baby steps!!
Sentiment: Strong Buy
I really liked the extension.. not just that it happened, as expected, but that the duration of the new agreement is significantly longer than even I expected. April 1, 2016 is a long way away and gives the company great flexibility to take the steps necessary to right the ship. As previously discussed, on a parity basis this stock should trade at $3 alone based on Enterprise value from the date the sale was announced. Yesterday's news should extend that even further. The 200 day here is just over $6 and that isn't unrealistic. With today's breakout, and it is substantive, note first Fib pullback has already been achieved (around $2.29), it could pull back near $2.10 (50% retracement, 2nd Fib), though I doubt it will. Best bet is now just 10% of shorts have covered, if one assumes 50% coverage and 50% new buyers. As such, I'd be surprised if we see 2nd Fib point. BTW, this thing will fly further tomorrow morning if shorts bought on margin... and many do!
thanks, I was referring to advance product sales to sanofi, but didn't make that clear. But the gist of question related to emotional impact when no sales can be shown either for 4th q, or in 1st q (even after launch). Are people aware of how bookings work or not with this co?
I understand that sales/costs/income/losses only impact the balance sheet given some goofy accounting issues I , frankly, don't understand (and I majored in accounting a zillion years ago). I have heard in past that until Afrezza is profitable, this will continue, but am not clear there. Question I have is what will be the emotional impact tomorow when sales are zero. I know they will be irrespctive of actual sales levels, but will folks still be surprised? Will the shorts (and I am neither short nor long right now) use this to notch up the fear factor? Is the accounting goofiness known in the market?