Another excellent day for mdpa. Humana reported their earnings, did well and had several positive comments on issues that also affect Mdpa.
1. Humana earned .52eps. They are guiding for .23 to .26 for q4 because they intend to spend a lot on advertising for Medicare Advantage. Enrollment is up 46K this year to 300K+ but most(32K) was from members of an acquired insurer. So Humana looks like they are serious about increasing enrollment.
2. Hurricane damage was not significant according to Humana. Less clinic visits and lower expenses were offset by patients having to be admitted to higher cost emergency room treatment during the hurricane period. Based on this commentary, impact to Mdpa should be minimal.
3. Humana had 11 to 14% gains in per patient revenues in 2004 as Medicare increased per patient fees for HMO's. Humana projects further increases of 5 to 7% in 2005.
Based on this positive info, Mdpa had a strong rally, +.18 to 1.71. If they repeat eps of .08 or more, we could challenge $2 by yearend. .08X4=.32 or about a 5.3 fwd p/e. Mdpa is still very undervalued. Balance sheet is in excellent shape with good cash, high current ratio and equity. Delinquent taxes are all paid, past due payables caught up and no major problems on the balance sheet.
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