Rotech secures credit, reports huge net loss

Monday, April 30, 2007

ORLANDO, Fla. - Rotech has received its second line of credit in less than six months. The provider received a $160 million line of credit from the Cayman Islands branch of Credit Suisse last month.
Rotech will use the credit to pay off and terminate a previous credit agreement. Late last year, the provider 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 debt and 10% of its stock.)
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, particularly for compounded budesonide.