I have lots of mdpa. Think it has a lot more room to run due to recently approved Medicare legislation. Mdpa CEO, Mike Earley, say Humana is running print ads and a 30 minute informercial in Florida to promote Medicare Advantage.
Says in 10K that current Medicare enrollment in Fla is 10.8%. California is 20% already and goal for new program is 30% of seniors. That would mean big increase in revs but enrollment goal could take till end of decade to achieve.
Company has solved all near term problems. There will be dilution from all the debt to stock exchanges that have been done. I calculate that after everything is considered they will need to use almost 53 million shares for diluted eps.
They will issue q1 in May but since 7 million shares were issued during q1, the average shares outstanding for diluted calc will be closer to 50 million.
Also did calculation that debt converted to equity will save company 220K for 2004. Might be less because again didn't convert till part way thru q1 2004.
That savings should help compensate for the extra shares outstanding.
Key to Mdpa price increase will be increased top line revs.
They have successfully cut costs and are actively paying down debt. They need top line rev growth to justify higher p/e. They finished 2003 at .10 eps fully diluted but w/o tax. If they had a decent p/e, they would be at $2 right now. Instead they are at $1. Won't get higher p/e unless they show top line growth.
Humana ads may bring growth that mdpa is looking for without a lot of risk taking on their part. CEO says they will be very cautious about any new ventures due to problems they just got fixed. Expecting new Medicare revs to show up in q2/q3. Bobwins
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