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Microcap & Penny Stocks : ORTH - Undervalued stock at 17/32? -- Ignore unavailable to you. Want to Upgrade?

To: lac who wrote (74)	3/18/1999 8:54:00 AM
From: Buckey	Respond to of 99

There is no question now that the value of ORTH lies in the value of PEN which is the larger of the two. ORTH will not move on its own anymore unless the PEN deal falls through.

To: lac who wrote (74)	3/18/1999 1:11:00 PM
From: Jill Collins	Respond to of 99

DD on PEN and the MSO industry is definitely the best thing right now. Anything anybody has is welcome.

To: lac who wrote (74)	3/25/1999 12:30:00 AM
From: Jill Collins	Respond to of 99

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. ***********

To: lac who wrote (74)	3/25/1999 12:35:00 AM
From: Jill Collins	Respond to of 99

INTERVIEW WITH ORTH PRESIDENT (PART II) Jolly: Bob, are there any ORTH investors that are negative to this merger? If so why? And What do you tell them? Mr. Schulhof: So far I have gotten nothing but congratulations, but I would imagine that someone would get out their calculator and figure that $1.8M shares of PEN at $2.00 means that we sold the company for $3.6M plus $1.4M in assumed debt, which is below book value, and what we paid for the practices. If that were $3.6M in cash I never would have done it, but we believe those $1.8M shares of PEN are every bit as undervalued as our 5M shares of ORTH are and it is a good swap. Both of us have a price to sales of under .5 and a price per dentist of under $200,000, the greatest bargains in a bargain industry. Jolly: What is the difference in ORTH & PEN compared to other Dental Management Companies? Mr. Schulhof: The first dental management companies were what you would call commercial operations- set up an office in a shopping mall, advertise low fees on TV and hire a dentist to work for you on salary. This is a nice business but it ignores the fact that there is another huge market of 135,000 dentists, most of whom are independent do not want to be someone else's employee, but hate doing management. Another big consideration is that the high tech cosmetic sector of dentistry passed the pain sector back in 1995 and the quality side of the market may be the fastest growing as well as the most profitable. Pentegra, in March of 1998 was the first high quality - owner model dental management company to go public. Because of market conditions it looks like it will be the only one. While they now have about 100 dentists, if they just captured 1% of the available market in the next five years that would be compound growth of over 100% a year. And a lot safer than the Internet. There were actually a number of other owner model management companies that were preparing to go public that are still born and ripe for a pick up. One of these was Liberty Dental. Pentegra acquired Liberty's management and the right to sign it's dentists. It is one of the reasons that Pentegra has grown from $37M last March to $60M one year later and $70M with our merger. Management expects the Liberty Dentists to take PEN to $90M in practice sales. There are other "Liberties" that will see PEN as their best avenue to success. So the growth doesn't have to occur one at a time. ***********

To: lac who wrote (74)	3/25/1999 12:39:00 AM
From: Jill Collins	Read Replies (1) \| Respond to 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. **********************