What have you done for me lately, PolyMedica (NASDAQ:PLMD)?

Isn't it fun to be a publicly traded company? You build a solid cash-generating business, a business that's far larger than its competition, and Wall Street comes back at you like some twisted Dickens character asking for "more."

First, a quick look at the recent past. PolyMedica's results for the fourth quarter were OK. Lower Medicare reimbursement levels wreaked their expected havoc and the company posted 5% revenue growth and a 7% net income decline.

While the respiratory business continues to evaporate -- sales were down 42% -- diabetes was up 7% (71% of the total) and the pharmaceutical business grew over 48% from an admittedly smaller base. Within the diabetes business, PolyMedica saw the active patient count climb more than 12%, retention stayed steady at about 84%, and revenue per patient (net of reimbursement cuts) remains more or less firm.

PolyMedica also announced a large one-time event to return capital to shareholders. The company will be executing a $150 million modified Dutch auction tender that will begin on May 26 and end on June 23. The company has laid out a price range of $30.75 to $34.50 per share and will pay for much of this with a credit facility.

Now for the future.

PolyMedica continues to move forward with plans for a private-label blood-glucose testing meter and testing strip. The company is still in the process of talking to potential partners/manufacturers and expects progress throughout the year. While this is something of a risk for the company, it could certainly make customers "stickier" and boost profitability for the diabetes business.

What's more, the company continues to understand the importance of entering the commercial insurance market. While management acknowledges that some changes will be needed to execute this plan -- building the brand and expanding the breadth of services offered -- it seems committed to the plan.

Finally, management also talked about its perspective that PolyMedica has an under-leveraged balance sheet and its plans to increase the company's borrowings. Although I agree with this to a point (debt is almost always cheaper than equity and has certain tax benefits), investors will need to keep a close eye on the balance sheet. PolyMedica is rather aggressive with respect to capitalizing advertising expenses that most companies treat as a straight expense, and so the debt-to-equity ratio is not going to be exactly as it seems.

No doubt PolyMedica is on the cusp of some meaningful changes. Despite a history of sound acquisitions, organic growth in the core business looks to have flattened out to some degree. Consequently, new ventures like private-label products and expansion into the commercial insurance market will be vital to reigniting growth.

I'm not a tremendous fan of this company. I don't like the aggressive accounting treatment of advertising expense, and there's the shadow of past compliance problems. That said, the company has delivered solid results on the bottom line and in the market. Should management succeed with these new concepts, that whole process could be repeated, much to long-term shareholders' benefit.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).