AHTC Corp (AHTC)-formerly Advanced Health (ADVH) Message Board

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Biotech / Medical : AHTC Corp (AHTC)-formerly Advanced Health (ADVH)

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To: LightPen who wrote (140)	5/15/1998 11:00:00 AM
From: Tom D	Read Replies (2) of 371

Why H&Q downgraded... (I posted this on the Yahoo thread. Thought it might be of interest to people here. Incidentally, that thread got contaminated by some people who tried to destroy it by posting dozens of disgusting vulgar posts. Although SI costs some money to join, it does have its benefits. Such activity wouldn't happen here.) I tape recorded the conference call. Listened to Richard Lee's questions. I can't read his mind, but I think (from his questions) he had two concerns. First, Richard Lee had projected earnings of $1.50 in 1999 and mgmt's guidance during the conference call was $1.43. Second was probably the receivables. ADVH booked some orders near the end of Q1 and didn't get a chance to collect them yet. By the conference call on 5/12 ADVH had collected about half of that increment (i.e. they collected $2.7M of the roughly $5.4M increment in receivables). As I have listened to the conference call a few times, it stikes me that mgmt was not well-prepared to prove to skeptics how the IMM acquisition would be beneficial to future earnings. IMM lost a little under $1M in 1997. Early in the call mgmt claimed there would be huge synergies. Richard Lee asked them to quantitate how the synergies would occur. They couldn't. Of course they couldn;t. The acquistion was just closed this week. But just because mgmt is unwilling to make hasty promises does not mean it was a poor acquisition. I am a practicing internist who does global risk contracting. My life's work is in the business that ADVH does. The IMM acquisition was inspired. It has awesome potential. Even if they make $1.43 instead of $1.55 in 1999, so what? We are looking at a sustainable earnings growth rate of over 30%. I would not hesitate to buy this stock under $20 per share, assuming that the investment time horizon is 12 months or more. This stock has been the object of a massive short-selling campaign. It is probably connected the the two New York Observer articles, each coming out just after strong earnings reports. I am disappointed by Mr. Lee's actions. H&Q is a class outfit. I would have expected Mr. Lee to have the courage to stick by a $12 stock that has a 30% annual growth rate and current year EPS of $1 per share. Even if it was getting beaten up by short sellers. I tried to buy his downgrade report from Ivestools but it was not available. Thanks to Louis Riley, I think Mr. Lee will be proven wrong by the market, and that this will reflect poorly on his character. Tom D12345

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