Glad to provide a laugh.
Jones, I like your explanation, but let me toss out this possibilty. With the change in how business will report shares outstanding, meaning to exclude stock options, is it possible that the total for the quarter was different from the year in that the difference was stock options unused thus far? In that sense, it may be on target.
I have close contact with a family/internal/pediatric practice located in a rural area. Of the many things explained to me, I understood the margins to be low at first since there are so many fixed costs. As time goes on a more physicians are added and so forth, those fixed expenses become more dissolved across the board and profits become greater. See. However, the profits are not so great for this type of practice. In a typical year, a good arm of the practice will do 500,000 in revenues and eek out gain or loss of 0-10,000. I can not speak for this cardiology, etc. practice in Florida, but the earnings seem too good to be true at this point in time. We will have to wait and see in 10-Q, but 400,000+ seems like a huge margin on 1,200,000+ revenues. This is why I am so excited for more acquisitions, that is where MIOA will begin to see major gains. Also, cath procedures have a greater margin.
I have been reviewing MCTH's history. Very interesting that for the first two years all they did was cath diagnostics and took revenues to over 25 million annualized before getting involved with physician practice management. I am amazed that they have done so much and only have 11 million shares outstanding. I hope MIOA will do as well. Now of course MCTH is into for-profit hospitals which is in a lot of hot water as you guys know from Columbia HCA fiasco. Nevertheless, they were upgraded by Piper Jaffray to Strong Buy a not too long ago and the stock went up about 25%, but that rating has just been downgraded to buy, so there has been some selling. MCTH has followed a path to earnings that is interesting. Even with that 25 million+ revenues, they only raked in about 2 million in earnings. I say only. See. How could MIOA do so well on 1.2 million, when MCTH did "so little" on 25 million. Hense, my concern that this quarter is again bogus. However, it is noteworthy that MCTH did about 7 million in revenues their first year(recall that they did not go public till fall 1994(i think 1994 maybe 1995)), and lost 6 cents per share for the year on about 5 million shares outstanding. This what I think: This first year, they are going to lose money from strictly operations , and they knew that may be the case, so they lucked out buy having one time gains for the last two quarters to bail themselves out. I am sure they did not want to settle with Tula to do it, but if not that then they would have either sold more cath units or pressured Westmark for payments to cover. The earnings thus far are real in the sense that it is money in the pocket, but not money that is reproducible from this quarter on. In the third quarter, they will hopefully add revenues from cath lab 3 and 4 and the fixed site with damadian and maybe some money from the latest acquisition that will provide earnings. Otherwise I look for another one time gain. This is a reasonable scenario to consider and I am sure people like Swiss group know it. However, if you pattern MCTH a little, it should slowly climb to teens over the next year. I cannot see any significant jumps until then.
Today's news only tell us that management is surprised too and want to crack down on the reg s guys. I thought we cleared them up in the spring. Another settlement in the works?.....I hope not! No doubt that shorts are going to kill a little if the 10-Q shows "bogus results".
Miller |
