This write up was posted February 28, 2000
freedomstocks.com
The find of a lifetime!
Yes, you read right, we believe EDOC is a $10 stock waiting to happen. We think EDOC is quite probably the most undervalued and most promising stock we have ever profiled! This is an undiscovered B2B Meditech Bombshell that isn't "flocking to the B2B train" as can be witnessed with many stocks. EDOC 's business model is as good as it gets, it is a logical, specific B2B e-commerce initiative that addresses an enormous demand in arguably the biggest business that B2B e-commerce could ever serve: global healthcare/medical. In fact, Healthcare Finance Administration reports that the total medical market in the U.S. alone is $1.1 Trillion annually, with physician services accounting for 19% of this, or $209 Billion!
Before we explain exactly what EDOC does, let's begin with some "almost unbelievable" fundamentals. EDOC has 17M(est) shares i/o (and a float of only 7M). Friday's close was 21/32, or about .66 cents. Market cap as at Friday: roughly $11M. EDOC's closest competitor, Total eMed was just bought out by MedicaLogic Inc.(Nasdaq:MDLI) for $405M. Both EDOC and Total eMed offer web-based medical transcription services to ambulatory physicians (doctors). EDOC serves about 1,200 physician clients in 6 states. Total eMed provides similar services to "over 1,000" in 7 states. (We don't have revenues for Total eMed as they are not a public company, but industry observers suggest they are not too far apart). Total eMed was bought out last week for $405M, and EDOC's market cap is roughly $11M! Undervalued with a capital "U". At these valuations, EDOC's .656 cent share price would or should be about $24 a share. Sound interesting? There's a lot more.
MedicaLogic (who bought out Total eMed), saw its market cap exceed $1.5B in the last week of trading and has, amongst others, partnerships with Dell Computers (Nasdaq:DELL) and Lernout & Hauspie (Nasdaq:LHSP). It is of particular interest to us at freedomstocks.com that EDOC ALSO has partnerships with these formidable companies! "e-DOCS has a compelling value proposition for healthcare providers, and it is a good example of an Internet-enabled new business opportunity," said Louise O'Brien, vice president of Dell's Industry Solutions Group. "We believe Dell's broad e-commerce capabilities and strong execution fit well with e-DOC's vertical marketing focus." We at freedomstocks.com believe, and the company confirms that EDOC is also a potential takeover candidate. It should also be noted that only EDOC has been granted two patents in its voice technology, a core component of its transcription technology. The first patent relates to its graphic user interface that may be interpreted in Windows? or Apple? operating systems, with the second patent covering instances where voice recognition is used to correct an error in a type written document.
EDOC's growth is nothing short of alarming. 1999 Q3 revenues were $1,455,195 versus $100,144 for Q3 '98, nearly a 1500 % increase! Gross margin also increased dramatically to $350,571 from $28,162 (nearly 1250 %) for the same year-ago period. Nine month revenues as at Sept. 30, '99 were $3,806,054, versus $475,303 for the same period in the prior year, representing a 700.7 % increase. Gross margin for the nine months ended Sept. 30, '99 was $1,352,948, a 521.8% increase from $217,585 for the same period in the prior year. These are the kind of numbers and growth rates that we associate with phrases like "wildest dreams".
Having said the above (which is probably all that needs to be said), let's look at what EDOC does exactly, and examine its superior business model. EDOC is a medical transcription services provider. Our research has told us that medical transcription is a doctor's "worst nightmare"!. It is to doctors what writing reports are to police officers. It's the time-consuming, tedious yet required part of the profession, that one doesn't really get paid for. It is in fact far worse for physicians as it is a requirement of Medicare prior to any billing or collection on the doctor's end, whereas most police officers have fixed salaries. New documentation requirements from Medicare are driving demand for medical transcription to record levels. Due to reduced patient fees and reimbursements, doctors must now see more patients for less revenue than ever before, further escalating the creation of patient documents to be transcribed, if a physician is to maintain a profitable practice. In fact, physicians are routinely suspended from hospital privileges for being behind in completion of medical transcription records. Medical transcription, liked or not, is now a mission critical function in the practice of medicine, and the relationship between the transcription company and the doctor's office is integral for payment of services. Given that a physician's time is best served in the generation of income, it makes sense to us that any accurate, efficient and cost-effective method of dealing with transcriptions would see great demand from medical practices, which on a global basis add up to one of the largest "businesses" anywhere.
EDOC currently transcribes over 67,000 physician dictated patient encounters per month, that must be produced and placed in the patient permanent medical record before the physician gets paid. e-DOCS.net's VoiceCOMMANDER 99T secure e-commerce medical transcription service utilizes the Internet and proprietary voice recognition technology to preprocess doctor's dictation into written text. It then encrypts and transmits both the doctor's original voice recording and the unedited text via the Internet to the e-DOCS.net server. The editing process is completed and reviewed by e-DOCS.net transcriptionists who return an accurate, re-encrypted, fully edited e-document to the doctor in 24 hours or less. In essence, what this does is it saves physicians a lot of time, and therefore, a lot of money as their time is spent seeing more patients, which generates more revenue, rather than misspent time typing out lengthy patient records. Incidentally, with EDOC's technology, there is also of course no typing or writing involved for the physician, which is probably just as favorable as the enhanced revenue. (not to mention no more suspensions!) This is pure B2B e-commerce in action. EDOC successfully leverages the Internet to provide web-based solutions to a mission critical function of the daily practice, or business, of medicine, saving time, money, and improving accuracy of such important documents. We see enormous growth potential for EDOC's applications in the healthcare sector. The only thing to top this off we would assume, would be in the wireless, remote browser-based enabling of these services, so that physicians, who often work in one office or more, the hospital and even from home, could send in transcriptions via laptops or PDA's (personal digital assistants), thus offering even more freedom, flexibility and use of time. Well you guessed it, the folks at EDOC are addressing this too, through their newly announced, wholly owned subsidiary, Virtual Physician Network! (VPN) The company will release more details regarding VPN soon. may we suggest to fasten your seat belts.
As for EDOC's business model, apart from an already solid footing & head-start in a behemoth marketplace, with cutting edge technology in highly sought after services (that we believe will inevitably become industry standard), EDOC's strong management team, led by Mr. Timothy J. Connolly, has a clear focus of where EDOC is going, and continues to execute rapidly on company strategies. These guys are not sitting around waiting for things to "catch on" -they have already acquired 8 transcription companies to date, and fitted them with successful & profitable EDOC technology, which is part of why EDOC's revenues and earnings have experienced explosive growth. (EDOC also recently spun-off its unprofitable acquisitions, realizing an annual savings of $3.6M, and resulting in a leaner, healthier company.) Further, the medical transcription business is a highly fragmented industry. There are around 1500 "mom & pop" transcription companies in the U.S., who, while profitable are still "bricks & mortar" and with limitations. We think that through VPN, EDOC could offer what might best be referred to as "e-franchise" opportunities to these smaller, capital starved operations who couldn't afford the upfront expense of new Internet based technology, but would enjoy enhanced revenue streams. They could benefit from a percentage of gross flow-through revenues, as well as eliminate their ongoing delivery costs by the use of the browser-based VPN. It is in this idea that EDOC's VPN has huge B2B implications. Clicks and mortar, here we come!
We believe EDOC is a marvelous, unique and deeply undervalued find. We don' t expect it to remain undiscovered much longer, as word gets out, especially in light of the MedicaLogic buyout mentioned previously. We think EDOC is poised for explosive gains in the very short term.
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This write up was posted February 28, 2000 |
