Rotech outlines plans for revenue growth in 2005

Sunday, April 17, 2005

ORLANDO, Fla. -- After cutting employees and other expenses over the past several years, Rotech now believes it has a "competitive cost structure" and can direct its efforts away from turnaround activities and toward growing revenue and patient care, the company announced last week.

The company has coined the new slogan, "We Care About Patient Care", and expects revenue growth to come from the following initiatives:

Revenue growth is expected to come from a combination of the following initiatives.

1. Internal growth: The sales force of approximately 400 employees has largely been restructured and now commits more time to selling and less time to hiring and training new employees.

2. New clinical programs: The clinical group has been refocused towards patient care. The company continues to expand its base of respiratory therapists. The respiratory therapists will spend more time revisiting existing patients to help determine there are no gaps in their treatment plan, and that they are receiving the correct care.

3. Medicare part B Drugs: A new state of the art pharmacy has been opened in Kentucky with modern dispensing, distribution and telecommunication systems. This facility is responsible for the efficient dispensing and distribution of all of our drug reorders, as well as contacting all of our patients on a monthly basis to ensure they are receiving their drugs in a timely manner.

4. Acquisitions: An experienced acquisition team has been assembled to pursue small acquisitions in 2005. Plans call for spending approximately $30 million in acquisitions for the year, subject to identifying desirable companies to acquire. Funding for these acquisitions is expected to come from internally generated cash. The year has started well with three small acquisitions being closed in the first quarter.

5. New branches: A modest number of new branches are expected to be opened in 2005. While these new branches will not provide meaningful revenue in 2005, a consistent program of opening new branches is expected to contribute to growth in future years. Capital expenditure and costs for these branches in 2005 is expected to be minimal.

6. Managed Care: More resources are being put into developing the company's managed care business. Working off a low base the company expects to grow this part of the business at a higher rate than its Medicare business.