Question-and-Answer Session
Operator
(Operations Instructions). Our first question comes from the line of Brooks O'Neil – Dougherty & Company.
Brooks O'Neil – Dougherty & Company
So I have a few questions. I'm curious if you would be willing to comment on whether you think the margin trends we've seen in the past few quarters are sustainable going forward?
Stanley Rosenbaum
Brooks, as we've said on the last call we are anticipating our gross margins to normalize in between 10.5 – excuse me, 11.5% and 12%. And we expect that to continue as we go forward.
Brooks O'Neil – Dougherty & Company
How about the operating margin, Stan?
Stanley Rosenbaum
We have also said, Brooks, that our goal is to get to 3% and that continues to be our goal.
Brooks O'Neil – Dougherty & Company
Could you comment just briefly on what specifically drove the increase in bad debt expense and do you feel like a higher percentage relative to revenues going forward is appropriate at this time?
Stanley Rosenbaum
I've always said on our calls, Brooks, that our bad debt expense would normalize between 0.5% and 0.6% it's slightly higher than that this quarter but I still think that it would be between 0.5% and 0.6%. Probably closer to the 0.6% as we do more and more business in the medical side as opposed to the pharmaceutical side.
Brooks O'Neil – Dougherty & Company
And are you feeling at this time any significant pressures from the state budget woes that are so frequently reported in the press or in the impact from the slowing consumer economy?
Stanley Rosenbaum
Brooks, we continue to get payments from the states not as quickly as they have been in the past but they continue to come.
Brooks O'Neil – Dougherty & Company
So they haven't cut reimbursement in any way? They're just being slow at this time?
Stanley Rosenbaum
Other than the changes in AWP there have been no other changes.
Brooks O'Neil – Dougherty & Company
And then one last question, I'm hopeful that perhaps Rick could talk a little bit about the efforts you've made recently to increase your infusion capacity and what you might do going forward to take advantage of that and build further?
Rick Smith
I think we've, as we've talked previously, we are in 23 markets today with owned and managed infusion capabilities. We continue to work our plan and moves and expand our existing community stores to add the infusion capacity to that especially in the United markets with high numbers of members.
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