INTERVIEW WITH ORTH PRESIDENT TODAY. Can be found at jstocks.com. (Because it is so long I have to use multiple posts).
START:
With the DOW at 10,000 Where can you find a 10:1 stock with a 100% growth rate?
Interview with Robert Schulhof, President of Omega, 3/24/99
#1Jolly: Bob, I have been with you since you went public. Your Press Release March 16, 1999: Omega Orthodontics, Inc. (Nasdaq:ORTH - news) announced today that its Board of Directors has approved the signing of a definitive agreement to merge with Pentegra Dental Group, Inc., (Amex:PEN - news). Under the terms of the agreement, Omega shareholders will receive 1.8 million shares of Pentegra
Common in a stock for stock transaction, which includes the assumption of approximately $1.4 million in debt by Pentegra. The transaction, which is subject to approval by shareholders of both companies, government approval and other customary conditions is expected to close in June 1999 What were the reason you went with PEN?
Mr Schulhof: As you are aware Omega is an orthodontic management company that
focuses on high quality, high profit care rather than the low fee HMO's and
PPO's that got the medical side of the business into trouble.
When the market for MSO's dropped we found ourselves too small to overcome our
fixed overhead and we needed a merger to effect economy of scale. We considered
merger with other orthodontic companies as well as general dental companies. We
decided that because of the cross referral possibilities that we would have a
competitive advantage working with a company that included general dentists,
while if we merged with an orthodontic company we would be just another
orthodontic company, only larger.
Jolly: I just went to "Yahoo quote" Pulled up a P/E for AOL it said P/E 527.84.
I the Old school and stable investing. They said the lower the P/E the better
the stock. What would you say the P/E of ORTH and PEN are approximately at the
time you are answering this?(Investors Price can change by the time you read
this so it might not be the same).
Mr. Schulhof:
ORTH has lost money so far this year so it's P/E is infinite. PEN requires a
little analysis. If your strip away the one time charges and tax credits and
read the announcements carefully you will find that for the first 3 quarters
they have earned about $.17/share. A reasonable man would therefore project at
least $.20 for their first full year. They are selling at around $2 which makes
them about 10:1 stock, not 524. Additionally the merger will strip away a great
amount of our administrative cost and ORTH should be nicely accretive to PEN
and boost earnings more.
So it was a great deal. Our stockholders get real earnings per share now
instead of "wait till next year", and theirs should get more earnings per share
too. Everyone is better off.
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