1. So the District lost 316k in December. Stebbins described that as over a 50% improvement at the finance meeting which is true but only in the same sense that being unable to pay 1/2 your mortgage would be a 50% improvement over not being able to pay any of it. The bank is still going to foreclose at some point.
2. Bank of Alameda “listened politely” in a meeting with Management. Bob Anderson suggested a new 2 million dollar long-term loan would do the trick. Perhaps this is revealing too much, but if you ever had a friend or a relative who is truly in need but has a history of bad decision-making ask you for a loan (after not repaying back other money you already loaned) I suspect you know how those bankers felt.
3. Needless to say financing is not yet in place for the wound care center construction. Payments to the landlord of about 14k per month begin in April whether it is generating revenue or not.
4. Due to personnel issues (someone’s on vacation) the soonest California can approve the license transfer for Waters Edge is 2/13 according to Stebbins. I worry that the representations that the District made with respect to working capital are no longer applicable.
5. If you want to understand the zero balance accounts (ZBA) method for adjustment to patient accounts then this presentation might be useful. One of the reasons that November was so bad was that reimbursement rate (net/gross ratio) was down significantly. At first Management thought that this might be an anomaly (and not altogether real) because of the way ZBA is used to calculate this number. At this point, I think the November loss was very real (even if it might not repeat).
6. January is running stronger than November or December, maybe even enough to have a positive number. Every 1,000,000 of additional gross revenue is another about 225,000 of net. I can make a SWAG that the contribution margin for that additional revenue is probably around 80% so a back-of-the-envelope estimate of January’s results suggest that if gross is 10% above December (about 1.5 million additional) then net increases by 1,500,000 x 22.4% x 0.8 = 268,800 which compared to the 316k loss for December is close enough to suggest that January could be break even. If I had to take the over/under on $0 loss/gain, I’d take the under.
7. Average pay period includes payroll so that is the discrepancy between that number (74.3)and “AP days” reported as 150. I think payroll should be excluded from the calculation, but I will defer to Bob Anderson to decide whether to continue the present reporting method.