Opioid addiction and heroin overdoses have reached alarming levels, yet the crisis isn’t minting millionaires, at least not among those who test addicts’ blood and urine for drugs.
Case in point: West Palm Beach-based Rennova Health. The company saw revenue plunge to $5.2 million in 2016 from $18.4 million in 2015 amid a sharp decline in revenues from drug treatment clinics.
In recent months, Rennova was sued by its landlord, missed payroll, saw shares plunge so severely that the company was forced to approve a 1-for-30 reverse stock split to stay listed on the Nasdaq and attempted to diversify by buying a failed hospital in rural Tennessee.
During a call with analysts on Wednesday, Rennova Chief Executive Seamus Lagan offered an explanation of why a public health crisis hasn’t proven profitable:
“There is an epidemic. It is a massive sector. It’s a sector that we do see first of all a large opportunity for growth. We see a need for our services, but the other side of that, it’s a fragmented sector with regards to a unified solution. In other words, there is no unified approach. You have a medical necessity, a need on one side. You have various treatment plans being applied, and you have payers seeing significant costs to maintain these treatment plans and diagnostics and payers trying to — I’m not going to suggest trying to get out of paying claims, but I will suggest that they have become much more focused on trying to understand what is medically necessary and what is medically beneficial to the patient, and that has created over the last couple of years a lot of confusion.”
“And we’ve been focused on the sector. We have a good product in the sector. We provide an excellent service in the sector, but the facilities themselves, our customers, have undergone a lot of scrutiny as has the medical necessity of a lot of tests that they use to treat their patients. So we see a lot of benefit in the future from what we are trying to achieve …”
“So it’s become a difficult sector with a lot of opportunity. I think that last sentence — a difficult sector with a lot of opportunity is a fair description of what’s going on.”