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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (6715)	4/13/1999 7:05:00 PM
From: LauA	Read Replies (1) \| Respond to of 78615

Can someone offer insight into CURE? This is was a highflyer a couple of months ago. If you look at their numbers as posted, they're wonderful: Cash ~$5/share, no long-term debt, PE 3.5, PSR .59, $100 million revenue run rate, growth slowing, but still in the teens, ROE of 20%, AND a stock price of $4.50. They run and manage wound care clinics in concert with hospitals. So what's wrong? Plenty: 1/4 of the business is with Columbia/HCA, all of which they might lose. Further COL and CURE have been served with Medicare Subpoenae alleging fraud, etc. Further, their most profitable product is Procuron which is a non-FDA approved biologic which is made from the patient's own white cells, and then applied to the wounds regularly. Reimbursement for this product has been denied by Medicare. Furthermore there are biotech generated substitutes that are approved for payment. The science is actually decent, but so what? Their wound care results are said to be decent, but so what? After the stock had been cratered to $9-10/share, I listened to the CC in Feb 99. The CEO said that Columbia/HCA contracts were being revised to achieve uniformity. He said that he expected growth to slow (not stop or reverse, just slow) in 1999. He implied that wound care itself was not very profitable, but the advantage to a medical center was that such a facility drew patients that would not otherwise come there, and these patients were very profitable to the institution at large. He said that it was becoming difficult to sell that concept to hospitals. (My sense at the time was that problems were much deeper. Management had the company buy back several million shares of stock which bounced the price. And then the Feds served papers.) At this point I see it as a break-even business, that may be saddled with a lot of payback, and a management lacking credibility. So My Question is: Do you think that there is inherent value in this situation despite massive uncertainty?