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Rennova Health Inc (OTCMKTS:RNVA) is Determined to Turn its Performance Around

Rennova Health Inc (OTCMKTS:RNVA) is Determined to Turn its Performance Around
Written by
Ryan Mitchell
Published on
March 11, 2018
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Rennova Health Inc (OTCMKTS:RNVA) has been in a sorry state for a while now. Over the past year, the price has dramatically plummeted and management has been at a loss as to how to stop the fall.Recent news of its acquisition of a new hospital has improved the firm’s outlook and it is anticipated that its performance might just be on the way back up. Take a look at the price action below: RNVA Daily ChartCompany ProfileRennova Health, Inc. was established in December 1989 and its head office is situated in West Palm Beach, Florida.The firm operates in the delivery of supportive and diagnostics software technology to healthcare institutions. Its operations are carried out through the following segments: Supportive Software Solutions, Decision Support Informatics and Clinical Laboratory Operation. The Supportive Software Solutions segment provides user customizable revenue cycle management and Electronic Health Record (EHR) systems and services delivering a complete set of billing services for behavioral health and substance abuse operators, it also offers a dictation-based ambulatory Electronic Health Record for advanced transcription services and medical practitioner operations. The Clinical Lab Operations segment delivers urine medicine toxicology testing to rehabilitation facilities, clinics, and physicians.To get more information about the company, visit our previous post here.Recent DevelopmentsVery recently, the firm announced that it had gone into another issuance contract with some of the already existing institutional investors of the firm. As stated in the agreement, the firm is expected to give out an additional $2.48 million total principal payment of the September 2017 high priority secured initial issue Discount Convertible Debentures which will mature by September 2019. The total amount raised from the deal is projected to be $2 million. The offering is expected to be closed before or by 5th of March, 2018 and it is required, among other things that it obtains particular approval and meets outlined regulatory closing prerequisites.The securities given up for sale in the private placement are yet to be registered as required by the Securities Act of 1933, as it was amended, or other any state securities laws. Hence, it is not to be offered for sale or acquired in the United States without registration, or the proper exemption from the registration requirements as required by the Securities Act and applicable state securities laws.In March 2018, the firm made public its acquisition of a second rural hospital, and then announced the interview of Seamus Lagan its Chief Executive Officer, through the “Stock Day” podcast offered by Uptick Newswire with Everett Jolly.Everett Jolly outlined that Rennova Health has been successful in negotiating through a number of very tough years. Hence, it would be likely that by opening another hospital in in August 2017 at Oneida and agreeing subsequent contract to acquire another hospital which is larger and located only thirty-eight miles away in Jamestown, the firm is recreating its successful past and generating fresh revenue from new revenue streams.RNVA’s acquisition of two hospitals within close proximity in the rural section of Tennessee has created an opportunity for a likely inflow of revenue, growth, and development in the future. The firm anticipates the development of this model will bring in benefits for the firm and its shareholders while it is considerable enhancements in revenue inflow and shareholders’ value all through this year.Seamus Lagan outlined that its hospital in Oneida has already begun to benefit from the rising number of patients as well as its billing each month since it commenced its operations. The acquisition of an additional hospital much larger and just an one hour’s drive from the first is likely to bring in opportunities for efficiency in operations for both facilities and allow the firm to increase its client base rather send them to be treated at other hospitals for major procedures such as surgery or serious treatments as was done in the past.Financial PerformanceIn 2016, revenue amounted to $5.25 million, a drop of 71% from $18.4 million the previous year. With the acquisition of the new hospital, it is expected that in years to come, the firm will record higher sales figures.In the same period, cost of sales fell by a much higher 82%, a pointer that the firm was able to retain its efficiency in spite of declining revenues. However, it is expected that cost of sales will grow along with revenue over the next few years. Investors will be looking forward to the firm's return to its revenues of 2014 which was as high as $57.9 millionGross margin for the financial year was $3.55 million, dropping from $9 million in the previous period. This trend of results continued all the way to selling, general and admin expenses which fell by a miserly 15% to $26.1 million in the period.The net loss from operations amounted to $32.5 million and the same amount as the net loss (as there were no additional expenses) respectively for the period.The statement of financial position reveals that the firm is very highly geared. On its books, its total debt is worth just $21.4 million, resulting in a high debt-to-equity ratio. Worryingly enough, it also has a low liquidity ratio of 0.16ConclusionRenova clearly has the wherewithal to turn its fortunes around. Its management now needs to prove that it can maximize this ability to generate revenues.Disclosure: We have no position in RNVA and have not been compensated for this article.

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