Why Sabratek's Balance Sheet May Need Some Infusion of Its Own

Also, more on CustomTracks, Party City, Select Comfort, Carnegie (last time, I hope) and more.
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The only question anybody can ask after taking a look at Sabratek's (SBTK) balance sheet and the disclosure in its latest 10-Q is: Can this company be headed anywhere but the ICU? With average receivable days outstanding leaping to 178 days (or half a year) from 108 days the prior quarter, and inventories nearly doubling to 406 days, this is an all-out code blue.

And just in case there's any confusion about the numbers, this maker of home-infusion pumps and disposables, which gets an "A" for candor, added this doozy in its recent 10-Q: "Cash used in operations is primarily attributable to reduced cash receipts resulting from extended payment terms offered to specific international and domestic customers. Payment terms with customers range from net 30 days to more than one year in some cases."

In other words, if the trend continues, this company will be in need of life support. Or so it would seem. It's rarely good when a company needs to extend terms. It's even worse when those terms extend more than a year. However, CEO Shan Padda attributes the deterioration in Sabratek's vital signs to a bunch of factors all occurring at once.

For example, the

FDA

put the kibosh on the production of a key product just as there was a shift in sales to mom-and-pop operators from large customers in an industry that, either way, has been historically slow at paying. The company responded by creating a direct sales force of its own, and that resulted in a few quarters during which many of the sales occurred at or near the last minute.

Why, then, has the stock come to life in the past two weeks? Yep, even this company has an Internet angle. It is part owner, and in July will be total owner, of a medical Web portal site known as

Moon Communications

, which pulls together such items as reimbursement, eligibility and clinical data for long-term care facilities. It doesn't hurt that the company has been saying that, by the third or fourth quarter, all of the profits from its Internet operations, including Moon, will exceed the profits from its traditional business. All the fuss over

Healtheon

(HLTH)

, which has doubled in the past few weeks, hasn't hurt, either.

Or didn't hurt. Seen Healtheon lately? Lost 13% Monday as it got caught up (or down) in the Internet meltdown.

Put another way, if the Internet doesn't rebound soon, Sabratek's balance sheet may matter.

Short Positions

Toot, toot:

The first anybody ever heard of

CustomTracks

(CUST)

was in

this column, when it was trading at 8 7/8. (The jury is still out regarding whether that'll be something to be proud of.) Monday it zoomed 15 1/16 to close at 76 on no news. Must be all of those chartists influenced by the col by

G.B. Freud

, er,

Smith

last week on CUST. Or maybe it's day-traders influenced by the

Joseph Charles & Associates

report yesterday that part of the company is worth $230 per share. (Sorry, G.B., you lose!)

Either way, what goes up fast often comes down faster. There's only black and white with this company, based on my connections and reporting: Either it's destined to be the next

Microsoft

(MSFT) - Get Report

or the victim of the next stock market massacre. No in-between.

Hold the confetti:

Party City's

(PCTYE:Nasdaq) CFO David Lauber quit yesterday. Hard to say if he was pushed or jumped.

Don't these guys ever learn?:

Select Comfort

(AIRB)

, better known on Wall Street as "airbag," put out yet another self-sponsored study yesterday that said (surprise, surprise) that sleeping on its mattresses is better than sleeping on an inner-spring mattress. (And to think they had the gall to say that this study supports claims made in an earlier study done "at

Stanford

." As this column recently

pointed out, the study may have been done on Stanford's campus, but Stanford DIDN'T DO THE STUDY. And you call that a study? Only eight people participated!)

Alas, poor Carnegie ...:

In answer to all, and I do mean ALL, of your questions: No, I don't have a clue about the status of

Carnegie International

(CGY)

, so STOP ASKING ABOUT IT! (Yep, that's the company whose stock has been halted for almost a month -- ever since it switched to the

Amex

from the over-the-counter bulletin board. Based on my emails, it's unbelievable and unfortunate the amount of folks who sank their life savings into this beaut.)

Live from Nasdaq:

It's my daily reports for KRON-TV, the

NBC

affil in San Fran. That makes KRON the country's first local station to have its daily morning biz reports originate directly from Nasdaq (and by a

TSC

staffer, no less!). The KRON reports formerly were beamed from

CNBC

. See

last week's item for more info on why they no longer are.

Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

herb@thestreet.com. Greenberg also writes a monthly column for Fortune.