Bob, CNU also have one time item of $500K gain on debt extinguishment and also revenue increase (as you also mentioned)
Here's what I post in the MDF board (the content very similar to what you posted earlier)
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Q: the question was will MDF Q4 performance similar to CNU which just post strong Q4
If I rephrase the question: If CNU net income increase $1M sequentially (from $1.5M to $2.5M which is up 66%, will MDF have strong Q4 too. either increase about $1M or probably even the same proportion (66% sequential net income growth) for MDPA Q404
A: CNU net income gain of $1M is because CNU has a non-recurring (and nor operational) gain on extinguishment of debt for $500K.
And their Q4 revenue increase by $736K sequentially.
Though these 2 items above don’t explain all the $1M net income increase (as not all revenue increase goes to profit), therefore I conclude some of the net income increase must be contributed by lower claims and/or direct medical cost. (I’m lazy to pull this number from their Q3 and Q4 10Q and calculate the percentage to confirm this statement).
It’s definitely a phenomenal occurrence in my opinion (to have the direct medical cost as a percentage of revenue flat, let alone drop in Q4).
I do hope MDF Q4 has similar trend with CNU Q4. But I wouldn’t bank on it yet though. The company told me that’s how their business is (cyclical where Q4 and Q1 are generally weaker. Weaker means direct medical cost % of sales is higher compare to the non-weaker quarter) and right now there’s not enough conclusive evidence that I should think otherwise. (CNU is not MDF)
If MDF make $1M more ($4.6M), than what they make in Q3, just like CNU net income increase, then I will be ecstatic and you can verbally slam/trash me anyway you want (because I was wrong for predicting Q4 as weaker quarter compare to Q2 and Q3). :)
In my opinion MDF Q404 bottom line will still be lower than their Q304 bottom line :)
Long and strong…
