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Non-Tech : Auric Goldfinger's Short List -- Ignore unavailable to you. Want to Upgrade?

To: Dr. Seuss who wrote (45)	8/15/1998 8:05:00 PM
From: Sir Auric Goldfinger	Respond to of 19428

Barron's weighs in:"A Bit Peaked. Envoy's medical claims drop quarter-to-quarter Envoy's shares remained quite healthy after a premature Barron's story looked at the Nashville company's challenges ("Bitter Pill," September 22,1997). Electronic traffic through the medical billing network has been rising at a quarter-to-quarter rate of more than 10% -- until recently. In the June '98 quarter, Envoy saw its first sequential drop in medical claims processed, with a 4% drop to about 69 million. Revenues for that quarter were $43 million, up 33% from a year earlier, but flat with the March '98 quarter. Despite this pause in revenue growth, June '98 earnings grew to $2.8 million, or 11 cents a share, compared with four cents in the year-earlier quarter and nine cents a share in March '98. Extracting an earnings increase from flat revenues is a testimonial to Envoy's efficient management. Save for an unexplained $1.2 million sequential decrease in expenses in its June quarter, earnings would have been more nearly flat with March '98 results. Net income is new to Envoy's financials, which had been presented in a pro forma style that assumes it hadn't spent tens of millions of dollars to acquire other claims networks. Amortizing costs from those acquisitions takes away from future earnings and means that, until recently, Envoy had cash flow but no net income. The amount of amortization burdening Envoy's earnings is largely a judgment call by the firm. Envoy has taken one-time writeoffs for acquired technology that it considers "in-process," leaving only what it deems "developed technology" to hit future income. Since May, the firm has apparently been struggling to explain its accounting to the satisfaction of the Securities and Exchange Commission, with the agency holding up a registration statement for 1.75 million shares. If Envoy has to revise its amortization practices, the earnings impact could be large. When it acquired a claims business last year from Aetna US Healthcare, Envoy got fully $35 million (of the $51 million total price) out of the way in a one-time writeoff. However the numbers are presented, they may suffer a real hit next year, when a large source of Envoy's medical claims goes exclusively to a competitor. That competitor, MedE America, just filed for its IPO and revealed that come July of 1999, it will become the exclusive processor of claims from Medic Computer Systems, through which doctors send a couple of million claims a month." -- Bill Alpert