from smallcapsonline.com:
Since initiating coverage on Medix Resources, Inc. ("MXR") on December 1st, the Company has achieved some significant milestones. MXR has divested itself of all its non-iHealth related businesses, completed the acquisition of a boutique Internet hosting and development firm, moved off the OTC Bulletin Board onto AMEX and broadened its experienced management team focused on the iHealth strategy. We recently met with MXR’s senior management team and discussed the significance of recent corporate developments and the Company’s strategy going forward. We felt that it would be beneficial to our audience to review these events at this time and discuss their significance.
iHealth Pure Play: On February 23, 2000 MXR announced that it had divested itself of the remaining balance of its medical staffing business. In 1998, upon the acquisition of the Cymedix.com software line, MXR stated that it was going to refocus the Company’s efforts on the development and commercialization of its iHealth software products. MXR is targeting a $3-$6 billion annual market opportunity within the $1.3 trillion healthcare industry (15% of GDP). The Company’s solutions are geared towards eliminating hundreds of billions of dollars worth of administrative waste and sub-optimal medical outcomes through the replacement of inefficient manual processes with high value-added Internet transaction services. For example, processing an eligibility check or a referral for a patient typically costs the healthcare industry up to $20 and can take hours or days. In contrast, this is accomplished for less than $0.50 and within hours or minutes using the Company’s patented solution.
The Company’s strategy centers around aligning with the largest and most influential healthcare entities (e.g., Wellpoint) and creating a dominant concentration of users within key geographic regions (e.g., Southern California).
Experienced Management Team: During the month of March, the Company announced a series of senior management hires and promotions. On March 1, John Prufeta became the President and permanent CEO of MXR. Prufeta had been serving as interim CEO since October 1999. One of his first moves was the hiring of Michael Knepper on March 2nd, as Senior Vice President and Director of mergers and acquisitions. Knepper previously served as Vice President of health technology research at Punk Ziegel & Company. On March 15th, Patricia Minicucci was named Executive Vice President of Operations and Brian Ellacott was named Senior Vice President and National Director of Corporate Development. Both Minicucci and Ellacott have extensive experience in the healthcare industry. Minicucci has over 20 years of managed care experience including senior management positions with Cigna, Washington National, and Empire Blue Cross/Blue Shield. David Pfeil will continue in his role as COO of Cymedix.com. We believe that MXR now has the management in place to execute its strategy and become a leader in the emerging iHealth software industry.
Acquisition Strategy: One of management’s first moves was the acquisition of Automated Design Concepts (ADC) on March 16th. ADC is an iHealth and e-commerce strategy development firm. ADC and MXR had been working together closely on the development of the second generation Cymedix.com application. Improvements on the product will enable Cymedix.com to run as a thin-client application while taking advantage of the data extraction capabilities of the Universal Interface. We expect the Company to continue to identify key strategic acquisition candidates and to take advantage of its stock currency. MXR was ADC’s largest client and we feel that this merger was synergistic and should expedite the development of future generations and improvements of Cymedix.com.
Liquidity: On April 3rd, MXR began trading on the American Stock Exchange. We believe that this is a positive technical factor for MXR because it improves the liquidity of the security and should attract larger institutional investors who are sometimes restricted from trading OTC Bulletin Board stocks. Additionally, we believe that the AMEX listing will create a more orderly secondary market, with tighter bid/ask spreads. Listing on AMEX should also enable MXR more flexibility in its financing and equity-based acquisition strategy.
Brand Name Investment Bankers: MXR announced on March 28th that it had retained Warburg Dillion Read LLC as its investment banker. We believe that with its retail network of brokers and its quality institutional research department, Warbug Dillion Read will be helpful in raising MXR’s profile and executing its financing and acquisition strategy.
Strong Corporate Partners: Through aggressive marketing of its Cymedix product, MXR has formed agreements with several strategic sponsors, who have agreed to implement the Cymedix.com software suite. MXR’s most comprehensive agreement has been with WellPoint Pharmacy Management. WLP has entered into a definitive agreement with MXR for an enhanced pilot project which was announced on January 13, 2000, as well as a system wide introduction for Cymedix’s Internet pharmacy products. The Cymedix Internet pharmacy software product will be privately labeled to WellPoint as Rx.net. Wellpoint has been issued an incentive warrants to purchase up to 6 million shares of MXR stock based on its ability to meet certain milestones. WellPoint Pharmacy Management, an indirect subsidiary of Wellpoint Health Networks (NYSE:WLP), is the nation’s leading health-plan owned pharmacy benefit management company, serving approximately 20 million people. Wellpoint Health Networks is one of the nation’s largest publicly traded managed care companies, serving the health-care needs of 7 million people with over 30 million specialty members nationally. This agreement gives MXR a solid core of doctors that will be using its software.
On April 20, 2000, WLP and MXR further solidified their relationship when Joan Herman was elected to MXR’s board of directors. Herman serves as the Group President of the Senior, Specialty, and State Sponsored Programs division of WLP and is one of only a handful of people who reports directly to WLP’s Chairman Leonard Schafer.
On January 5, 2000, MXR announced that it had entered into a definitive agreement with Advanced Paradigm, Inc. to develop and execute a pilot program which will provide its network physicians with patient specific pharmacy information. Physicians participating in the plan will be able to access drug information on a patient, check for potential drug to drug interactions of drugs they may prescribe and prescribe drugs electronically all through the Cymedix.com system. The evaluation of the pilot program should be completed by 2Q00 and we feel that the Cymedix.com software will be widely available to Advanced Paradigm’s physicians by 3Q00.
MXR has also signed an agreement with Advica Health Resources to enable its affiliated healthcare providers to implement the Company’s Cymedix.com software to perform iHealth transactions and to link practice management systems to the Advica Web Suite. The agreement calls for a 60 day testing phase after which full implementation of the Cymedix.com system will begin. The system will mainly be used for claims processing, claims status reporting, and electronic remittance notification. Full implementation is expected in 1H 00.
On March 9, 2000, MXR announced that it had extended its partnership agreement with Loyola University Medical Center of Chicago. Under the agreement Cymedix.com subscribing physicians are able to access patient data as well as receive lab results electronically. We believe this is but one in a series of partnerships MXR will form with hospitals around the country, enabling physicians access to Cymedix.com.
We believe that in the coming months MXR will continue to add to its strong list of corporate partners and that more doctors will begin using Cymedix.com for their online transactions, thus ramping revenues. We are reiterating our 12-month price target of $8 to $10 per share and recommend purchase of MXR for investors tolerant of risks associated small and micro-cap securities.
Reprint from January 20, 2000 Report
Company Overview
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Cymedix.com is a patented B2B online medical management software package that provides physicians, payors and healthcare intermediaries with an Internet based communications and information management product. The Cymedix.com software is designed to link physicians, outpatient service providers, hospitals, insurance companies, labs, pharmacies, and patients through a secure medical communications product, which sends encrypted data over the Internet. The Company has already started to market and distribute its software to medical professionals nationwide. Typically, MXR distributes its product to physicians for free, and generates revenues by charging its "sponsors" a fee for each Internet transaction executed.
The Company’s strategy differs from other Internet information management firms in that it charges its "sponsors," typically a healthcare provider or payor, a per-transaction fee for each time a "Cymedix enabled" transaction takes place over the Internet. This allows MXR to distribute its product to doctors, pharmacies, hospitals, and labs at minimal cost. In addition, the Company does not store its information on a central server; instead it sends the required information directly from the data source to the recipient via an encrypted email. This feature helps to cut cost and increase the Company’s profit margin while also allowing a patient’s information to be accessed without a time-consuming "re-keying" of a patient’s data and is conducive to the overwhelming majority of physician practices. The patented Cymedix.com Universal Interface affords the physician’s practice the ability to perform internet healthcare transactions in a non-invasive, efficient manner with limited hardware requirements and low bandwidth Internet connectivity. |
