Despite the bashers and naysayers attacking the 10K, there were many good nuggets to help us project future revenues and profit. Though I have only skimmed the report due to time constraints, based on what I've read so far, ScripsAmerica still has at least seven potential revenue streams (excluding the DOD revs). At least three of these revenue streams will be generating revenues in May -- Main Ave Pharmacy, WholesaleRx, and RapiMeds Hong Kong. Below are my projected May revenues and NET PROFIT for each (yes, I'm predicting the company will turn a profit and prove all the iHub bashers wrong once and for all):
1. Main Ave Pharmacy - $750,000 ($353,400 to SCRC per disclosure in today's 10K -- $750K Xs 97% Xs 20% estimated sales commission based on industry norms Xs 30% for all Main Ave expenses identified in the agreement that Flyers posted on iHub (thanks, Flyers for posting details, very helpful!) - minus $54K monthly payment to Mr. Fox based on $30 Xs 250 scripts in April -- I do not know how much to include for the "Finance Fee" that is to be paid to SCRC per the agreement, so I will ignore it to be conservative. I understand that it in the compounding pharmacy industry, the profit margins are "extremely favorable" per the core's research and the company's Q&A. So the 70% profit margin that I have assumed here, in my humble opinion, is conservative.)
2. WholesaleRx - $400,000 ($56,000 - 70% gross margin, 20% of gross margin to SCRC -- This is based on prior filings and appears to be pure profit. I was slightly disappointed the company did not make the last payment of $125K.)
3. PIMD - $0 (unfortunately, this promising revenue stream has been quite the disappointment -- despite that SCRC is entitled to 90% of revenues, unfortunately, it is earning $0 per the 10K; this was my biggest disappointment from the 10K, hopefully, the company can get moving with this in June as stated in the 10K.)
4. RapiMed Hong Kong -$200,000 ($200,000 to SCRC, assumes no more orders in May; I will assume 30% profit margin, so $60,000 to the bottom line. This is another revenue stream that has been much slower to develop than initially anticipated. Perhaps it will ignite in 2H FY14.)
5. RapiMed Mainland China - $0 (product approval possibly as early as June, same comments as Hong Kong)
6. RapiMed Canada - $0 (no updates, probably nothing until the second half of 2014)
7. RapiMed US - $0 (not my favorite potential stream of revenue)
An eighth potential revenue stream is the Global Pharma Hub, but I'll ignore that one as well.
So in May, excluding the DOD revenues and the "financing fees" from Main Ave, I am projecting revenues of $609,000 to SCRC and $469,400 of gross profit. I'll further assume $200K for SG&A, which translates to about $269,400 in NET PROFIT. Assuming no further increases, my net profit/earnings estimate would equate to $3,232,800 through April 30, 2015. I will further assume the total shares outstanding increases to 150,000,000, so eps of $0.02, and a PE of 20 (which is uber conservative for such explosive growth). If I am correct, May's earnings would support a pps of at least $0.40. I do not, however, expect the status quo. I expect much more growth.
Indeed, I believe May will be the tip of the iceberg as Scrips continues to grow and fill in all seven of its potential revenue streams (again, excluding the DOD revenues, Main Ave "financing fee", and Global Pharma Hub). For example, if Scrips was able to grow only the Main Ave Pharmacy monthly revenues to $2,000,000 based on 700 scripts (as the Atlanta compounding pharmacy monthly revenues that Guts discovered last week), SCRC's monthly revenues would be $1,342,400, its gross profit about $1,202,400, and net profit of about $1M -- or $12M in net profit over 12 months. (This is pre-tax, and I'll have to find the NOL carry forward to determine a more accurate net earnings.) Applying the same numbers as above (e.g., 150M OS, 20 PE), would yield an eps of $0.08 and a corresponding stock price of $1.60.
Remember also that per D44's post this week, that SCRC has only one more toxic note, which it intends to pay off in May, further supporting my opinion that Scrips is very close to being cash flow positive. Despite the ugly 2013 10K, these are exciting times to be a Scrips shareholder. Hang in there everyone, we will soon have ignition and liftoff!
BSAV
1. Main Ave Pharmacy - $750,000 ($353,400 to SCRC per disclosure in today's 10K -- $750K Xs 97% Xs 20% estimated sales commission based on industry norms Xs 30% for all Main Ave expenses identified in the agreement that Flyers posted on iHub (thanks, Flyers for posting details, very helpful!) - minus $54K monthly payment to Mr. Fox based on $30 Xs 250 scripts in April -- I do not know how much to include for the "Finance Fee" that is to be paid to SCRC per the agreement, so I will ignore it to be conservative. I understand that it in the compounding pharmacy industry, the profit margins are "extremely favorable" per the core's research and the company's Q&A. So the 70% profit margin that I have assumed here, in my humble opinion, is conservative.)
2. WholesaleRx - $400,000 ($56,000 - 70% gross margin, 20% of gross margin to SCRC -- This is based on prior filings and appears to be pure profit. I was slightly disappointed the company did not make the last payment of $125K.)
3. PIMD - $0 (unfortunately, this promising revenue stream has been quite the disappointment -- despite that SCRC is entitled to 90% of revenues, unfortunately, it is earning $0 per the 10K; this was my biggest disappointment from the 10K, hopefully, the company can get moving with this in June as stated in the 10K.)
4. RapiMed Hong Kong -$200,000 ($200,000 to SCRC, assumes no more orders in May; I will assume 30% profit margin, so $60,000 to the bottom line. This is another revenue stream that has been much slower to develop than initially anticipated. Perhaps it will ignite in 2H FY14.)
5. RapiMed Mainland China - $0 (product approval possibly as early as June, same comments as Hong Kong)
6. RapiMed Canada - $0 (no updates, probably nothing until the second half of 2014)
7. RapiMed US - $0 (not my favorite potential stream of revenue)
An eighth potential revenue stream is the Global Pharma Hub, but I'll ignore that one as well.
So in May, excluding the DOD revenues and the "financing fees" from Main Ave, I am projecting revenues of $609,000 to SCRC and $469,400 of gross profit. I'll further assume $200K for SG&A, which translates to about $269,400 in NET PROFIT. Assuming no further increases, my net profit/earnings estimate would equate to $3,232,800 through April 30, 2015. I will further assume the total shares outstanding increases to 150,000,000, so eps of $0.02, and a PE of 20 (which is uber conservative for such explosive growth). If I am correct, May's earnings would support a pps of at least $0.40. I do not, however, expect the status quo. I expect much more growth.
Indeed, I believe May will be the tip of the iceberg as Scrips continues to grow and fill in all seven of its potential revenue streams (again, excluding the DOD revenues, Main Ave "financing fee", and Global Pharma Hub). For example, if Scrips was able to grow only the Main Ave Pharmacy monthly revenues to $2,000,000 based on 700 scripts (as the Atlanta compounding pharmacy monthly revenues that Guts discovered last week), SCRC's monthly revenues would be $1,342,400, its gross profit about $1,202,400, and net profit of about $1M -- or $12M in net profit over 12 months. (This is pre-tax, and I'll have to find the NOL carry forward to determine a more accurate net earnings.) Applying the same numbers as above (e.g., 150M OS, 20 PE), would yield an eps of $0.08 and a corresponding stock price of $1.60.
Remember also that per D44's post this week, that SCRC has only one more toxic note, which it intends to pay off in May, further supporting my opinion that Scrips is very close to being cash flow positive. Despite the ugly 2013 10K, these are exciting times to be a Scrips shareholder. Hang in there everyone, we will soon have ignition and liftoff!
BSAV
