ORTH - Undervalued stock at 17/32? Message Board

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Microcap & Penny Stocks : ORTH - Undervalued stock at 17/32?

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To: lac who wrote (74)	3/25/1999 12:39:00 AM
From: Jill Collins	Read Replies (1) of 99

INTERVIEW WITH ORTH PRESIDENT (Final part) Jolly: How are the all Dental Management groups stocks doing? Mr. Schulhof: The Dental stocks rode in on the coat tails of the great Health Care Management Boom of 1996, even though they were very different. The Crisis Health Care companies came in with the story that the doctors needed to join an MSO to get a piece of the PPO business which was becoming the only game in town. They were going to have to learn to be in the wholesale medical business. The Dental management companies were actually a pure retail play, teeth aren't anyone's right yet. The problem was that acquiring docs was easier than changing them and the crisis medical MSO's did not re-engineer the delivery of healthcare to earn a profit at lower prices. Then this year the doctors learned that they could not provide services at a hefty discount and still make a profit and the industry is filled with red ink. The dental companies are making money quite nicely and growing but their stocks are swept downward by association. It is a case of mistaken identity. All the funds want to dump their healthcare companies and don't differentiate the Dental ones from the medical to keep their portfolios looking successful. The one negative that the dental companies share with the physician companies is that with your stock selling at a 15 multiple and declining in value, it is harder to make accretive deals and many companies in our industry have had to reduce their projected growth from the lofty expectations of last year. In a small cap environment where just not exceeding your previous projections can cut your stock price in half, announcing lowered expectations can really hit you. I think that the hit was way too hard and possibly one man's refuse is another's jewel. I would say that with the DOW at 10,000 that some of the greatest bargains in the market are in the Dental Practice Management Sector. Coast Dental has a past revenue growth rate of 74%, a P/E of 10 and has over half it's stock price in cash. Orthodontic Centers of America has a 51% growth rate and is selling where it was three years ago. PEN as we have stated is a 10:1 company that has grown 100%. Where else do you find this? How long will it last with the DOW at 10,000, e-bay at 400 and so few real values left in the market? Jolly: Are there e any analyst reporting on ORTH and PEN? If so what do they say? Are there any Internet sites (Address) that people might go to see their comments? Mr. Schulhof: Since the two companies have shot up from nowhere and merged there are as yet few analysts following them. We will need a few quarters to prove how our model works and establish a trend of earnings. Then the analysts will have something to analyze and when we get to $100M in sales we would be noticed. Management is certainly not anxious to have analysts make projections prematurely that the company can't equal or exceed. Until then you can do your own analysis. For those who are serious front runners you may contact the Sherlock Company at www.sherlockco.com/ and order their In-Dent Newsletter. It gives complete monthly analysis of all the dental stocks. Jolly: Thank you Bob for taking time for answering these questions. **********************

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