PMCO Report From R.S.
Those of you interested in the file in .PDF format E-Mail your request to Loafyloaf@aol.com
The information contained herein is not a complete analysis of every material fact respecting any company, industry or security. Although opinions and estimates expressed herein reflect the
current judgment of the Firm, the information upon which such opinions and estimates are based is not necessarily updated on a regular basis; when they are, the date of the change in
estimate will be noted. In addition, opinions and estimates are subject to change without notice. This Report contains forward-looking statements, which involve risks and uncertainties. The
Company's actual results may differ significantly from the results described in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those
discussed in "Investment Risks." Robertson, Stephens & Company LLC. from time to time performs corporate finance services for some companies described herein and may occasionally
possess material, nonpublic information regarding such companies. This information is not used in the preparation of the opinions and estimates herein. Facts and other information
discussed have been obtained from sources considered reliable but are not guaranteed. Robertson, Stephens & Company LLC, its managing directors, its affiliates, and/or its employees
may have an interest in the securities of the issue(s) described and may make purchases or sales while this report is in circulation. Robertson, Stephens International Ltd. is regulated by the
Securities and Futures Authority in the United Kingdom. This publication is not meant for private customers.
Copyright O 1997 Robertson, Stephens & Company LLC.
ROBERTSON, STEPHENS & CO. ROBERTSON, STEPHENS & CO.
PROMEDCO PMCO $10.00 9/24/97
Industry: Health Care
Change in... Yes/No Was Is Thomas E. Hodapp 415 693-3337
Rating: No BUY
EPS 1996: No ($0.07) FY DEC 1996 1997E 1998E
EPS 1997E: No $0.37 EPS*: 1Q ($0.03) $0.04 A ----
EPS 1998E: No $0.65 2Q ($0.03) $0.07 A ----
52-Week Range: $10-6 3Q ($0.03) $0.10 ----
Shares Outstanding(MM) 14.7 4Q $0.01 $0.15 ----
Market Capitalization (MM) $147.0 Year ($0.07) $0.37 $0.65
Avg Daily Trading Vol (000) 29.0 P/E 27.2x 15.3x
Bk Value/Share $4.57 REVS($M) 1996 1997E 1998E
Tot Debt/Tot Cap 20.4% 1Q $7.1 $20.7 A ----
C1997E ROE 10.3% 2Q $10.0 $25.7 A ----
Price/Book Value: 2.2x 3Q $12.6 $38.1 ----
Net Cash/Share $1.32 4Q $17.2 $55.2 ----
Div/Yld: 0.00% Year $47.0 $139.8 $293.8
3-Yr Sec Growth Rate: 40% EqtyMktVal/Revs: 105% 50%
RECENT MANAGEMENT UPDATE SUGGESTS IMPROVING VISIBILITY ON ACQUISITION PIPELINE;
VALUATION OFFERS COMPELLING RISK-REWARD DYNAMICS; BUY FOR 12-18 MONTH $18-20 PRICE
TARGET
KEY POINTS:
ú Recent conversations with management support our growing confidence that the acquisition pipeline
continues to strengthen and that in contrast to earlier quarters this year, it appears that there are
multiple "A" level candidates, any of which if closed would be sufficient to meet our near-term
forecasts. Our Q3:C97 estimate anticipates one more deal of scale - about 50 physicians - closing effective
during the quarter, implying a $0.45-0.50 per share run rate, with an additional 85 physicians closing during
Q4:C97. In recent investor presentations, management has indicated late stage discussions with several
multi-specialty groups in excess of 50 physicians. Perhaps most impressive to us is the increasing level of
enthusiasm and confidence voiced by management about the quality of their negotiations discussions as the
company has gained nearly another year of experience consolidating practices.
ú Investor buying momentum and Street sponsorship building - we note that trading volume has increased
considerably since the Q2:C97 earnings report, when we first sensed improving acquisition conditions for
PMCO (see First Call, August 15, 1997), followed by the September 9 announcement of a letter of intent to
acquire a 25-physician Sarasota, Florida group (First Call September 4, 1997), and most recently with a
number of management presentations to investor groups around the country. Noting limited float, we observe
that the stock has just traded above its May 1997 IPO price for the first time, clearing a significant hurdle, on
above-average volume. We expect the momentum to continue as the company (1) demonstrates it can meet
earnings expectations by closing an additional 2-3 acquisitions by year end, (2) management continues to
appear at a full schedule of investor meetings in the next three months, and (3) as Street sponsorship
continues to build. |
