Hristina Beeva

Rotech Healthcare, Inc. (OTC:ROHI) Sold Off, Awaits Favorable Bankruptcy Decision

by Hristina Beeva March 19, 2013
A lot of small cap companies are in precarious financial situations, but Rotech Healthcare, Inc. (OTC:ROHI, ROHI message board) is the first one to admit bankruptcy outright, causing a not-unseen 24% crash in its shares. But the most remarkable thing is the selling volume, as holders of 8 million stocks quickly abandoned the company. ROHI0319.png

ROHI is a former NASDAQ company that had to move to the OTC markets. There, it did little better, and after four years on the OTC it filed for bankruptcy. This is its latest financial information:

  • $19 million cash
  • $88 million total current liabilities
  • $113 million net revenues
  • $12.8 million quarterly net loss

Capped at a mere $3 million, ROHI is indeed a unique situation, as its large activity provides high enough assets, but the company remains buried under debt and losses. While home medical equipment may be in demand, ROHI seems to be unable to expand sustainably and in the past weeks started talk of settling with creditors and structuring a bankruptcy. The latest large credit came in December, when ROHI received $25 million.

ROHI managed to put a positive spin on its March 15th press release, stating that a favorably structured Chapter 11 bankruptcy would mean a healthier business activity in the future. The plan is to convert a total of 290 million dollars in notes due in 2018 into equity, while repaying a part of the loans in cash, extending other due dates as well.

Servicing 49 states with 410 locations, ROHI is not the typical small cap company, and when it was mentioned in a promotional material, it was most probably for the benefit of the pumper who could show good gains. But the current drop to 14 means ROHI is in a totally different category, offering uncertainty and risk as its bankruptcy decision is still in the making.

This is the second bankruptcy in the history of the business, as Rotech's parent company filed for protection in 2000 and was later spun off. Another entity, Liberty Medical Supply, Inc., filed for protection only a month ago, citing problems with timely tax and Medicare revenues.

Whether ROHI will turn out again a successful and solid business is questionable, and we may expect it won't be on the radar of pumpers like any time soon, given its special situation. As the tale unravels, it is best to decide for yourself if ROHI still holds enough appeal or is only capable of sinking any investment at the moment.

Comments 4

1. Guest
October 14, 2013, 02:29PM

Quotes I'm Butch, and am a location manager for one of Rotech's branches.
No matter what happens, I'll always be here...........

2. Guest
May 29, 2013, 07:25PM

Quotes Maybe Rotech knows there is not going to be an implementation of the competitive bidding? There are things working in Congress right now that could sidetrack it in a big way. Then of course the current equity holders would be told after this "oh, we had not idea"! Ya, right! Why is it so important for them to close the BK before August? Makes a person wonder why.

3. Guest
March 21, 2013, 09:11AM

Quotes How will Rotech repay hundreds of millions in loans when starting in July they will lose another 45% in revenue in 91 metropolitan areas under Medicare's Competitive Bidding Program? That 45% cut in revenue could occur nationally as early as 2015.

4. Guest
March 19, 2013, 09:15PM


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