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Praxsyn Corp (OTCMKTS:PXYN) Runs Up, A Sign Of Things To Come?

Praxsyn Corp (OTCMKTS:PXYN) Runs Up, A Sign Of Things To Come?
Written by
Chris Sandburg
Published on
December 7, 2016
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Between September 1, 2016, and November 15, 2016, Praxsyn Corp (OTCMKTS:PXYN) ran up to the tune of 850%. The company has waited over a year for its PPS to get out of the $0.00X bracket, and the run will have come as a welcome relief to shareholders that have sat through what is essentially eighteen months of uncertainty. With numerous filing delays, very little shareholder and communication and practically no material updates as to the operations of the company, Praxysn shareholders will no doubt see the latest run as a vindication of their resolve to stick out a pretty dark patch. With that said, however, and even with the latest upside revaluation, there's still very little clarity as to what's going on behind the scenes.The obvious question here, then, is should these holders take this run as an opportunity to unload (some have done just this, it seems, the company is down a little over 40% off the above mentioned highs), or should they hold on the assumption that this run is the start of a longer term reversal in fortunes?This one's got a pretty interesting story.To summarize, Praxsyn is a California based entity that provides direct to patient pharmaceutical products, with a primary focus on non-opioid pain management. It operates primarily through a subsidiary called Mesa Pharmacy, at which it formulates the products either for collection, or for delivery to the patient in question.Here's the problem: the company hasn’t filed any financials since third quarter 2015, and this means that – simply put – nobody outside of management has any idea what's going on behind the scenes.From the latest available information, we know this: the company generated $20.4 million net revenues during the third quarter 2015, and $52.2 million for the nine months to September 30, again 2015. These revenues translated to a net income of $2.9 million and $6.9 million respectively. Gross profit for the periods was $17 million and $46 million. Keep in mind that even with the recent gains taken into consideration, Praxsyn has a market cap of just $7.2 million. So the balance sheet must be a mess, right? Well, it's not great, but for a company with this degree of earnings potential, it's not terrible. Cash is weak, at just over $650K, but net accounts receivable at September 30 2015 came in at $11.3 million, with total current assets hitting $12.6 million. Total assets current and non (of which the vast majority derive from non current receivables of $24.6 million) came in at $37.9 million. Total liabilities was $29.3 million at that date.What this comes down to, then, is that nobody can put an accurate value on Praxsyn because it won't release its financials. As such, markets are siding with caution, and selling off. Why might the company be struggling to meet its filing requirements? Well, its model leads to a lot of uncertainty when it comes to revenues recognition. Around 75% of its revenues derive from sales not pre-approved by insurance companies. This means, after it dispenses the product to customers, it's got to go through a raft of negotiation, litigation, and more, just to collect. This can take up to twelve months, and is a core risk factor in the company's reports. We suspect, and it's speculative, but reasonable, that the company hasn’t filed because it has some degree of uncertainty over the difference between gross ant net revs for the periods against which it owes filings.Bottom line is this: if the company can get anywhere near replicating its 2015 financials this year, then it's due a dramatic revaluation. There's risk in the uncertainty of the situation, but it's a complicated recognition model, and while that's no excuse for lack of reporting, it at least provides a potential explanation.We will be updating our subscribers as soon as we know more. For the latest updates on PXYN, sign up below!Disclosure: We have no position in PXYN and have not been compensated for this article.

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