Accretive Health: Restatements coming?

Accretive Health (ACHI) has been a quietly working on the financial restatements. This process has taken a very long time and has seen the company go through multiple CEO and CFOs in the process. In a recent SEC filing they company said they are looking at getting the restatements done by mid December.

“The Company is in the process of preparing an Annual Report on Form 10-K (the “Comprehensive Form 10-K”) that includes the following financial information: (1) audited consolidated balance sheets as of December 31, 2011 (as restated), 2012 and 2013; (2) audited statements of operations, cash flows and stockholders’ equity (or deficit) for the years ended December 31, 2011 (as restated), 2012 and 2013; (3) unaudited quarterly financial data for the eight quarterly periods ended December 31, 2013; and (4) selected annual financial data for the years ended December 31, 2009, 2010 and 2011 (each as restated), 2012 and 2013, of which 2011, 2012 and 2013 would be audited. The Company anticipates filing the Comprehensive Form 10-K by the middle of December 2014; however, the Company cannot provide any assurances that it will be able to do so.

First of all, the company had in the past publicly stated when they would get their financials done and them went on to miss the deadline. So we should take the December deadline with a grain of salt. Although you have a new CEO and CFO at the helm and the company has gone through a lot of management changes to get to this point.

Although the restatement will show lower revenue, we will also see a large cash balance. The company has publicly stated they have around 220M in cash. I wouldn’t be surprised if the cash balance has increased. Also, the company’s revenue contracts are structured in a way where there is a lower margins initially and the margins improve over time. So even using the “net revenue” method will decrease revenues, I think going forward we should see better margins. Finally, the restatement will have a big impact in having more eyes seeing and buying the stock.

The company is in a sweet spot in the healthcare industry. Also, you have a CEO, CFO, and Chairman that have history at creating huge value for shareholders. So you have tailwinds from the industry and great operators running this company. I think 2015 will be a huge year for this company. I’ve recently been buying up many more shares.


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