What FBI raid? Rotech’s stock sizzles

ORLANDO, Fla. - Rotech Healthcare may be in the midst of an FBI investigation, but you'd never know it by looking at the company's stock. As of June 10, Rotech's stock was trading at $22.85 per share, within pennies of its 52-week high of $23 achieved the day before. The company's 52-week low: $4.05. The elevated share price follows a May 2 statement by the Standard & Poor's Ratings Services that revised its rating outlook on Rotech from stable to negative. The degraded rating reflects the possibility the FBI investigation could impede Rotech's ability to perform as expected, according to the statement. “I'm mystified,” said one HME CEO, regarding Rotech's ballooning stock price. “What's going on?” Could be out-of-site, out-of-mind, said one industry watcher. A company's stock usually drops during the initial phases of an investigation, but that typically lasts only a week or two. “When the story falls off the front page, analysts don't forget it, but the story's not out there constantly hammering the stock,” the source said. Additionally, the government is most likely not looking at what the company is doing today but what it did in the past, said a healthcare analyst. “I think it is not surprising,” he said of the company's stock price. “You've got a management team at the helm that is used to this stuff. People are looking and saying, ‘(CEO Phil Carter) made it work at Apria. He'll make it work here.”' Rotech officials did not return phone calls for this story. In other news, an ex-Rotech Healthcare employee is moving ahead with his lawsuit against the company. On May 23, Mike Rogers and his attorney kicked off the discovery phase of the suit that, among other things, claims Rotech officials allegedly used company money and employees to set up independent HMEs (“set asides”) in a scheme to win VA business. Rogers alleges Rotech management recruited him to run a “set aside” in 2001 and assured him the practice was legal. Rogers, who lost his job, claims Rotech officials lied when they told him the VA contract was a near certainty and that he'd get his job back if the venture failed, which it did.