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Biotech / Medical : ROTC:Rotech medical
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To: ML Harper who wrote (14)12/11/1996 5:27:00 PM
From: Roger Weigel   of 161
 
ML,
I just convinced our investment club to buy 50 shares of RoTech Medical. I ran the company through the NAIC's Stock Selection Guide, and the numbers say it's a buy up to about $23. I think we made a great purchase. I've read the annual report and the latest 10Q and 10K reports.
RoTech is agressively expanding into the Midwest and Southwest. In Fiscal 97, it has already acquired 31 locatins and moved into Kansas City and Idaho.
First-quarter 97 earnins are up 39% over last year. Sales also grew by about 100% last year, mostly due to acquisitions.
RoTech does most of its business (44%) from respiratory products and services. Home medial equipment make up 35%, pharmacy products and services make up 15% and primary care physician practices make up 6%.
The company focuses on non-urban areas, where 25% of the US population lives but is only covered by 11% of the physicians.
The only negative I could find is that Medicaid and Medicare may cut back on oxygen reimbursement rates. Depending on when the Health Care Financining Administration acts and by how much they cut back, the cuts could slice into RoTech's earnings.IMO I don't think the Clinton administration will allow deep cuts.
IMO RoTech climbs to 24-26 over the next 12 months.

Roger
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