DYII Going to $20: Here is the DYII DD I was referring to. In essence, a January court ruling means insurance companies must compensate at the higher rate DYII was charging. DYII will be able to collect a huge portion of past receivables that Insurance companies did not pay, and is in advanced settlement negotiations right now. I expect the settlement to be in the range of $50 million. This ruling also means insurance companies ARE paying the higher rate going forward, hence the improvement in DYII earnings last quarter. Because theDYII billing methodology applies on a 12 month lag, only PART of the higher billing rates were seen in the last quarter.. the next quarter will see higher billing for the ENTIRE quarter, so I see $.30 EPS.
PLEASE no more posts saying last quarter DYII earnings were a Fluke. This company is a GOLD MINE.. it will eventually have $5 per share cash after settling old insurance claims and have a $1.2 annualized EPS PLUS the China IPO.. DYII could go to $25.
Why DYII is worth between $16 and $20 per share (4 Ratings) 18-Jul-07 09:34 am 1. Dynacq is in a transition phase on two fronts as its core base of business is increasing (as evidenced by an increase in gross billings from $21MM to $26MM) due to the recruitment of additional doctors at its Garland surgical center. I have no opinion on this as I don't know whether bariatric (weight loss) related cases are increasing or decreasing but I would guess is increasing as Texas just keeps getting older and fatter.
2. Dynacq has traditionally been recording a large allowance against its billed revenues (of over 50%) as its ability to collect cash from insurance companies has been at this rate. Which is why net revenues (the revenues we see) are less than half of gross revenues. Recently, state legislation changes have allowed for Dynacq to start collecting on its old billings to the insurance companies (at a rate of recovery of about 70% of billings as opposed to the net revenue estimate of 40%). This change that has allowed them to collect more of their gross billings has begun to decrease the allowance rate as the methodology has been to use the trailing 12 months of actual collections versus billings as an estimate for how much of the gross billings in this quarter will be actually collected. We have just begun to see this in the most recent quarter as the allowance has decreased from 63% to 52%. This is HUGE! Dynacq is actually collecting about 70% of its gross billings (management estimate) but because of accounting methodology lag, only recorded 48% in the most recent quarter as net revenues. THAT MEANS THAT OF THE $26MM IN GROSS REVENUES RECORDED, IT WILL COLLECT 70% OF THAT OR $18.2MM VERSUS ITS NET REVENUES OF $13.7, which all falls to the BOTTOM LINE. It increases its bottom line from $2.6MM (or 16 cents per share) to over $7MM. Tax adjusted, that yields about 30 cents per share per quarter. At 15x earnings, that results in $18 per share in value.
3. There is another $4 per share in value from collecting on old receivables not reflected on the balance sheet.
WOW.
AI
