Stephens retains BUY as of yesterday 8/15/2000
This report has been prepared solely for informative purposes and is not a solicitation, or an offer, to buy or sell any security. It does not purport to be a complete description of the securities, markets or developments referred to in the material. All expressions of opinion are subject to change without notice. The information is obtained from internal and external sources which we consider reliable but we have not independently verified such information and we do not guarantee that it is accurate or complete. We do not undertake to advise you to any change in figures or our views. We, our employees, and/or our officers and directors, may from time to time have a long or short position in the securities mentioned and may sell or buy such securities. Additional information available upon request.
Stephens Inc., 111 Center Street, Little Rock, Arkansas 72201, (501) 374-4361, FAX (501) 377-2666, Member NYSE, NASD, SIPC
Stephens Inc. Research Bulletin
August 15, 2000
HEALTHAXIS FYDec. Rev (mil.) Prior Est.
HAXS – $3.00
Rating: BUY 99A $43.0
Price Target (12 mo.): $15 00E U.R.* N.C.
Nik Fisken, CFA, Analyst (501) 377-6335 01E U.R. N.C.
Barry McCarver, Associate, (501) 377-8131
* Under review
2Q00 Results
Summary. HealthAxis made numerous announcements yesterday along with 2Q00 results. Altogether,
we believe the announcements will result in further downward price pressure, and we don’t expect
investor sentiment to improve until HAXS announces a significant new customer. Management noted
that its new customer pipeline continues to grow, but this has been the case for quite some time. We are
maintaining our BUY rating based on our assumption that new customers will be announced over
the next year and that HAXS has plenty of cash to get to that point. In the meantime, we expect
continued volatility for the common. It is important to point out that the lack of carrier signings is an
industry-wide issue and not a company-specific problem, since no competitors appear to be signing
contracts.
New Merger Information. Due to HAXS’ depressed price levels for the past several weeks, the
exchange ratio for the merger between HealthAxis Inc. and HealthAxis.com is currently being evaluated
for adjustment from an exchange of 1.12 to 1 to a range of 1.37 - 1.3 to 1. If the ratio were adjusted, it
would be dilutive to HAXS shareholders.
2Q00 Results. Sales for the quarter were $10.4 million. Before suspending our estimates due to the
company’s reorganization, we forecast $12.2 million in sales. EPS came in at ($0.35), excluding one-time
charges. In conjunction with the sale of its retail Web site to Digital Insurance, HAXS wrote down
$255.8 million in goodwill as a discontinued operation. The Company expects that its cash burn rate for
the last half of the year will total approximately $9 million. As of June 30, HAXS had $31.5 million in
cash and marketable securities.
Stephens Inc. maintains a market in the common stock of HealthAxis Inc. and may act as principal in these transactions.
Stephens Inc. has acted as private placement agent for HealthAxis Inc.
LTM=last 12 months; NTM=next 12 months; STM=second 12 months
BUY—one-year price appreciation expected to be greater than 20%; MARKET OUTPERFORMER—one-year price
appreciation expected to be between 10% and 20%; NEUTRAL—one-year price appreciation expected to be less than 10%;
SELL—whenever warranted. |
