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POLYMEDICA CORPORATION (A) Case Solution & Answer

Polymedica Corporation (A) Case Study Help

Introduction:

PolyMedica Corporation is a leading Business to Consumer (B to C) provider of medical products. It is operating in a medical business through its three well known segments, which are:

  1. Liberty Diabetes.
  2. Liberty Respiratory.
  3. And Pharmaceutical.

The Liberty Diabetes segment of the company provides the diabetes testing supplies directly to its ultimate consumers and other related products provided to those customers who are eligible for the Medicare treatment, because they are suffering from diabetes and other relevant chronic diseases. The Liberty Respiratory segment provides the respiratory medications directly to its ultimate consumers and primarily supplies its respiratory medications to the eligible customers for the Medicare treatment,because they are suffering from chronic obstructive pulmonary diseases (COPD). The last segment of the company, the pharmaceutical segment provides medications for oral prescriptions that are not covered by the Medicare departments of the company for the purpose of directly serving the customers and selling them the prescription relatedto the urology and suppository products. Along with that, the pharmaceutical segment of the company delivers the products through over the counter market to those females who require urinary discomfort products and home medical diagnostic kits(Cohen, 2007).

PolyMedica has approximately 545,000 customers in its active diabetes database softwareat the end of the financial year 31st march, 2003 as compared to the end of the financial year 31st march, 2002, in which PolyMedica has approximately 440,000 customers in its active diabetes database software. Currently, the company is meeting the requirements of the customers who are suffering from diabetes by providing them an immediate delivery of the supplies, directly through mail order to its ultimate customers. Along with that, the company is also providing 24 hour telephonic supports to its ultimate customers. By using the sophisticated software and advanced order fulfilment systems, the company is providing Medicare billing facilities to the private insurance companies for the supplies that are delivered to the private insurance company’scustomers for reimbursements of the delivered product’s amount.

In addition to this, PolyMedica has approximately 63,000 customers in its active prescription respiratory medications and supplies database software at the end of the financial year 31st march, 2003 as compared to the end of the financial year 31st march, 2002, in which PolyMedica has approximately 46,000 customers in its active prescription respiratory medications and supplies database software. Currently, the ultimate customers of this segment are served in the same manner as the diabetic product customers served by the company.

The Case Dilemma:

On 30th June 2003, PolyMedica Corporation in its 10 K form (the audited report on the company’s financial statements) disclosed the financial year ended report for the year ended 31st march, 2003. After the publication of its 10 k form filling, the company had been in discussion with the Securities and Exchange Commission’s(SEC) staff for the capitalization of its direct response advertising expenditures for its diabetic and respiratory products. PolyMedica Corporation wants to resolve this issue as soon as possible, which isregarding what would be the treatment of its direct response advertising expenditures for its diabetic and respiratory products in its annual audited financial statements report.

PolyMedica’s Business Model:

The business model and strategy of the PolyMedica Corporation is to expand its business by providing leverage to its operating platform and compliance with its management policies. PolyMedica Corporation is pursuing the continued growth of its business directly to its ultimate consumers by expanding the company’s customer base. In order to increase the customer base for the company, the company has invested in its ongoing program in order to have a direct response fromthe television advertising expenditures for the purpose of influencing the large portion of the eligible Medicare patient market of the country…………………………

 

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