Rotech secures credit, reports big loss

Sunday, April 1, 2007

ORLANDO, Fla. - Rotech has received its second line of credit in less than six months. The provider will receive a $160 million line of credit from the Cayman Islands branch of Credit Suisse, it announced in an SEC filing last week.

Rotech will use the credit to pay off and terminate a previous credit agreement. Late last year, Rotech received a $120 million line of credit from Highland Financial Corp. (Highland Financial is an affiliate of Highland Capital Management, a Dallas-based firm that owns about 80% of American HomePatient's secured debt and 10% of its stock.)

Additionally, Rotech will also use its new line of credit, which matures Sept. 26, 2011, for general working-capital purposes.

On March 23, Rotech also announced financials for the year ended Dec. 31, 2006. Total revenues were $498.8 million for 2006 compared to $533.2 million for 2005. Net loss was $534 million for 2006 compared to a net income of $5.5 million for 2005.

No explanation accompanied Rotech's year-ending financials. When it reported financials for the quarter ended June 30, 2006, however, the provider stated that revenues were negatively impacted by a $17.5 million set-aside to cover a slowdown in accounts receivable; a $449 million non-cash impairment charge that was recorded as an operating expense; and a $28.5 million reduction due to Medicare reimbursement cuts, especially for compounded budesonide.