OCA (7)
Question
by: YRdoc 08/31/05 11:39 am
Msg: 37543 of 37781
The "facts" that appear on this board depend a great deal on a poster's point of view. I think OCA management truly believes that their problems are due to greedy, uncoooperative doctors. Many past and present affiliates truly believe that they were getting shafted by OCA. About the only people approaching objectivity are judges and juries, where OCA hasn't done really well as of late.
One item which has been largely ignored was the phase out of corporate allocations over 4 quarters, starting (as I remember) in quarter 4 of 2003. Under the old arrangement, the docs payed OCA's entire cost of running the corporate offices, including salaries, rent, and even corporate income tax. Losing this money has to be a huge hit to their bottom line, which we haven't seen since the end of Sept., 2004. Can they return a profit relying only on their 60/40 split of net operating profits now that they also have to shoulder their corporate overhead? (The arrangements with each office are different, but 60/40 is what they've presented in model contracts in the past.) That, combined with profit enhancing but overly aggressive accounting practices which inflate the paper profits, are going to have have an effect on whether or not they're truly profitable.
Oh, and there's the write down of assets acquired in the OrthAlliance deal which are now presumably at -0- following the settlement. Those who know the details of that settlement can't talk about it. But I'd be willing to bet that OCA's book value on those assets was a lot more than any settlement money received. In any case, there's no way to know until (or even if) they release accounting numbers.
If you believe in OCA, and want to invest, go for it! Personally, I'd be betting on the short side, which I understand isn't possible at present due to low share price.
And the "JMHO" is because OCA likes to sue people who point out negative things - factual or not - on the Yahoo board.
Response
by: chfriend03 08/31/05 12:14 pm
Msg: 37544 of 37781
As I wrote earlier, the phasing out of corporate expenses cost the company $4+ million a year. Remember phasing out of this expense will increase the profitability of affiliates, and doctors got 60% of the new (higher) profit and OCA gets the remainder. From $4+ million figure, you can in fact calculate the rough corporate expense per year ($4+ million divided by 0.60).
I certainly took it into my considerations. You are right, the process (of phasing out) started in late 2003, so it already affected OCA in 2003 and 2004.
When facing these kinds of (unprecedented) lawsuits, nobody can be sure until a verdict is read. OCA spent a lot of money in these lawsuits, and it is much more experienced now on how to deal with these "innactive" practices.
If one knows the outcome of a lawsuit for sure, then it would settle the case. If the law suit is unprecedented, then one would never know the outcome until it goes for trial. In this sense, OCA spent a few millions to learn a lesson.
In other words, the doctors had shouldered 60% of corporate expenses before 2003.
I think the total corporate expense is a little over $7 million a year, and doctors had shouldered $4+ million (in reduced profit at their respective affiliates).
The complete phasing out of this expense cost OCA $4+ million a year.
by: YRdoc 08/31/05 11:39 am
Msg: 37543 of 37781
The "facts" that appear on this board depend a great deal on a poster's point of view. I think OCA management truly believes that their problems are due to greedy, uncoooperative doctors. Many past and present affiliates truly believe that they were getting shafted by OCA. About the only people approaching objectivity are judges and juries, where OCA hasn't done really well as of late.
One item which has been largely ignored was the phase out of corporate allocations over 4 quarters, starting (as I remember) in quarter 4 of 2003. Under the old arrangement, the docs payed OCA's entire cost of running the corporate offices, including salaries, rent, and even corporate income tax. Losing this money has to be a huge hit to their bottom line, which we haven't seen since the end of Sept., 2004. Can they return a profit relying only on their 60/40 split of net operating profits now that they also have to shoulder their corporate overhead? (The arrangements with each office are different, but 60/40 is what they've presented in model contracts in the past.) That, combined with profit enhancing but overly aggressive accounting practices which inflate the paper profits, are going to have have an effect on whether or not they're truly profitable.
Oh, and there's the write down of assets acquired in the OrthAlliance deal which are now presumably at -0- following the settlement. Those who know the details of that settlement can't talk about it. But I'd be willing to bet that OCA's book value on those assets was a lot more than any settlement money received. In any case, there's no way to know until (or even if) they release accounting numbers.
If you believe in OCA, and want to invest, go for it! Personally, I'd be betting on the short side, which I understand isn't possible at present due to low share price.
And the "JMHO" is because OCA likes to sue people who point out negative things - factual or not - on the Yahoo board.
Response
by: chfriend03 08/31/05 12:14 pm
Msg: 37544 of 37781
As I wrote earlier, the phasing out of corporate expenses cost the company $4+ million a year. Remember phasing out of this expense will increase the profitability of affiliates, and doctors got 60% of the new (higher) profit and OCA gets the remainder. From $4+ million figure, you can in fact calculate the rough corporate expense per year ($4+ million divided by 0.60).
I certainly took it into my considerations. You are right, the process (of phasing out) started in late 2003, so it already affected OCA in 2003 and 2004.
When facing these kinds of (unprecedented) lawsuits, nobody can be sure until a verdict is read. OCA spent a lot of money in these lawsuits, and it is much more experienced now on how to deal with these "innactive" practices.
If one knows the outcome of a lawsuit for sure, then it would settle the case. If the law suit is unprecedented, then one would never know the outcome until it goes for trial. In this sense, OCA spent a few millions to learn a lesson.
In other words, the doctors had shouldered 60% of corporate expenses before 2003.
I think the total corporate expense is a little over $7 million a year, and doctors had shouldered $4+ million (in reduced profit at their respective affiliates).
The complete phasing out of this expense cost OCA $4+ million a year.
posted by jajabin at 3:32 PM
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