Mr. Pink's Picks: selected event-driven value investments Message Board

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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments

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To: Mr. Pink who wrote (811)	1/17/1998 10:38:00 AM
From: Arthur Radley	Read Replies (2) of 18998

Morning Mr. Pink: I would like you and your "flocks" opinion on PolyMedica(PM) on the Amex. First a little background on the stock. Pm is a diabetic supply company that provides over 200 products through mail-order distribution, mainly to Medicare clients. This market is huge when you consider that treating this condition consumes 15% of every health-care dollar and 30% of the Medicare budget. There are 650,000 new diabetics each year in the US. Currently only 10% of the eligible Medicare patients take advantage of this mail-order service but with PM they are adding over 10,000 new clients a quarter. In little over one year(August,1996) when they bought Liberty Medical, they have grown their client base from under 20,000 to currently over 60,000 clients. Needless to say, in the first 6 months of fiscal 1998(Ending March 98), PM has exceeded revenue for the prior 12 months and earnings are growing at a comparable rate. Earnings are projected at .45 for this year and .68 for next year, but all these numbers are probably outdated because of the rapid growth in clients currently PLUS on July 1, 1998, Medicare will start paying for diabetic testing for non-insulin dependent diabetics. This alone will increase the number of potential PM clients by approximately 1 to 2 million individuals. With PM expected to report blowout numbers on January 21, the interest in their stock has apparrently drawn interest as it increased by 2.00 this past week but is still trading under the 52 week high of approximately 15.00. PM has acheived this growth with an effective national TV campaign outlining their services which includes handling the insurance claim forms and filing for their Medicare benefits and mailing future supplies to the client on a scheduled basis. I would appreciate your thoughts on this stock.

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