Wednesday, February 08, 2006 11:49:21 PM
MLTO: Just listened to the call. Lots of info. If you have not listened, you should to get a feel for this company.
Background of MEDirect Latino, target demographics:
http://medirectlatino.org/pdf/MEDirect%20Latino%20Fast%20Facts.pdf
Highlights of what I heard:
Products:
Medicare reimbursed medical products including diabetic monitoring equipment and supplies, COPD, and other chronic diseases.
Medicare pays 80%, customer 20%.
Customer orders quarterly.
Currently sells about $1300-1400 per year per customer with current products.
Introduced accessories (heating pads, seat lift assists, canes & walkers) and are seeing 80% penetration into database of customers. 11,000 other Medicare reimbursable products.
Future products include pharmaceuticals.
Number of Customers:
Currently: 20,000
by FY 06/2006: 53-54,000
by YE 12/2006: 87-88,000
by FY 06/2007: 144,000
Customers order about 1300-1400 per year.
Current customer retention rate is 98-99%. Industry is 85%-87%. MLTO has projected 3-4% in its estimates.
Marketing:
No other diabetic direct marketer targets the Latino market.
MLTO target markets the Latino market by advertising on TV with Univision and Telemundo, both Spanish language channels along with Spot TV, cable, print ads, billboards, etc.
Will soon be making more educational commercials and commercials with a female latin celebrity. (I think it will be Rita Moreno.) http://www.allamericanspeakers.com/newspeakerbio/1381/index.php
Current TV budget is 10.6 million for 2006. Will be able to spread these costs over 3 years, due to accounting ruling. This will significantly boost EPS, but not taking the full hit up front.
Customer Service:
Good customer service is responsible for enrolling and retaining customers. Reorders are far less expensive than initial acquisition costs. Good quality, Spanish-speaking customer service representatives are a big advantage.
Expanding into closed-door pharmacies. One in California; letter of intent already signed. This will give MLTO access to Medi-Cal (A California state Medicare) Another state pharmacy not finalized yet. (could it be NY?)
Currently working two shifts Monday-Friday in 6000 sqft Plantation warehouse/office. Will be signing lease for 23,600 sqft office location on 02/09/06.
Hired 32 customer service reps in Jan and continue to hire.
Second shift accounting for 750 sales per week (3000 per month)
Two people in Puerto Rico for direct marketing to 1500-1800 doctors offices.
Moving to a seven day work week, not just M-F. This means more TV spots for Sat/Sun.
Management:
Current management has been working very hard for the past two years, some wearing two-three hats. Need to add upper management as company grows. Actively seeking candidates.
MLTO started selling in Puerto Rico in March 05. Went national in Sept 05.
Already approached by 3rd parties for acquisition or mergers. Not willing to sell cheap, so early in development cycle.
Management's goal is to be committed to enhance shareholder value
Will be hiring investment banker to enhance shareholder value.
Currently MLTO is debt free.
MLTO was looking at additional financing (selling shares, etc) around $10mm, but reduced that to $6.5mm, and now may consider a far smaller number due to the tremendous cash flow being generated by current business. May not even need such additional financing.
Currently there are 17mm fully diluted shares, with 60% owned by management and insiders.
MLTO recently in January increased the estimated guidance for 2006 and are getting ready to increase estimates again.
Valuing MEDirect Latino
Ron Williams of TBeck Capital, an initial investor of MLTO spoke on valuation of the company.
Using PE valuation: Estimated share count of 18mm (1mm more than actual), and using a comparitive PE of a competitor, PolyMedica, of 39.
Current revenue and earnings projection for FY2006(06/06) is 21mm rev and 4.6mm net income. So 4.6mm net income / 18mm shares x 39 = $10
Current revenue and earnings projection for FY2007(06/07) is 124mm rev and 59mm net income. Using a forward PE of 20. So 59mm net income / 18mm shares x 20 = $65.
Remember that MLTO is going to up guidance for FE2006.
MLTO is worth far more than $10 and something less that $65, as FY2007 is a long way way.
Using Value per client: Industry practice is value based on 3-4 year revenue from customer. Industry is usually 3000-3500. MLTO thinks their customer is valued at 5000.
FY2006 customer count of 52,000 gives a market cap of 260mm. 260mm/18mm = $12.50
YE2006 (12/06) customer count of 72,000 gives a market cap of 360mm. 360mm/18mm = $20
FY2007 (06/07) customer count of 144,000 gives a market cap of 720mm. 720mm/18mm = $40
Market Share
At FY2006, looking to see 3%.
Mgmt and shareholders should expect 8-10% (400,000)
Reserve for doubtful accounts
Currently allocating 7% of revenue to doubtful accounts, but actually less than that.
Initital figures were very high because auditors requested all copay (20%) be allocated as doubtful, as given in the early numbers from June-Sept 2005.
Wow. Lots of stuff to digest.
Hope this helps. It sure helped me. :)
Background of MEDirect Latino, target demographics:
http://medirectlatino.org/pdf/MEDirect%20Latino%20Fast%20Facts.pdf
Highlights of what I heard:
Products:
Medicare reimbursed medical products including diabetic monitoring equipment and supplies, COPD, and other chronic diseases.
Medicare pays 80%, customer 20%.
Customer orders quarterly.
Currently sells about $1300-1400 per year per customer with current products.
Introduced accessories (heating pads, seat lift assists, canes & walkers) and are seeing 80% penetration into database of customers. 11,000 other Medicare reimbursable products.
Future products include pharmaceuticals.
Number of Customers:
Currently: 20,000
by FY 06/2006: 53-54,000
by YE 12/2006: 87-88,000
by FY 06/2007: 144,000
Customers order about 1300-1400 per year.
Current customer retention rate is 98-99%. Industry is 85%-87%. MLTO has projected 3-4% in its estimates.
Marketing:
No other diabetic direct marketer targets the Latino market.
MLTO target markets the Latino market by advertising on TV with Univision and Telemundo, both Spanish language channels along with Spot TV, cable, print ads, billboards, etc.
Will soon be making more educational commercials and commercials with a female latin celebrity. (I think it will be Rita Moreno.) http://www.allamericanspeakers.com/newspeakerbio/1381/index.php
Current TV budget is 10.6 million for 2006. Will be able to spread these costs over 3 years, due to accounting ruling. This will significantly boost EPS, but not taking the full hit up front.
Customer Service:
Good customer service is responsible for enrolling and retaining customers. Reorders are far less expensive than initial acquisition costs. Good quality, Spanish-speaking customer service representatives are a big advantage.
Expanding into closed-door pharmacies. One in California; letter of intent already signed. This will give MLTO access to Medi-Cal (A California state Medicare) Another state pharmacy not finalized yet. (could it be NY?)
Currently working two shifts Monday-Friday in 6000 sqft Plantation warehouse/office. Will be signing lease for 23,600 sqft office location on 02/09/06.
Hired 32 customer service reps in Jan and continue to hire.
Second shift accounting for 750 sales per week (3000 per month)
Two people in Puerto Rico for direct marketing to 1500-1800 doctors offices.
Moving to a seven day work week, not just M-F. This means more TV spots for Sat/Sun.
Management:
Current management has been working very hard for the past two years, some wearing two-three hats. Need to add upper management as company grows. Actively seeking candidates.
MLTO started selling in Puerto Rico in March 05. Went national in Sept 05.
Already approached by 3rd parties for acquisition or mergers. Not willing to sell cheap, so early in development cycle.
Management's goal is to be committed to enhance shareholder value
Will be hiring investment banker to enhance shareholder value.
Currently MLTO is debt free.
MLTO was looking at additional financing (selling shares, etc) around $10mm, but reduced that to $6.5mm, and now may consider a far smaller number due to the tremendous cash flow being generated by current business. May not even need such additional financing.
Currently there are 17mm fully diluted shares, with 60% owned by management and insiders.
MLTO recently in January increased the estimated guidance for 2006 and are getting ready to increase estimates again.
Valuing MEDirect Latino
Ron Williams of TBeck Capital, an initial investor of MLTO spoke on valuation of the company.
Using PE valuation: Estimated share count of 18mm (1mm more than actual), and using a comparitive PE of a competitor, PolyMedica, of 39.
Current revenue and earnings projection for FY2006(06/06) is 21mm rev and 4.6mm net income. So 4.6mm net income / 18mm shares x 39 = $10
Current revenue and earnings projection for FY2007(06/07) is 124mm rev and 59mm net income. Using a forward PE of 20. So 59mm net income / 18mm shares x 20 = $65.
Remember that MLTO is going to up guidance for FE2006.
MLTO is worth far more than $10 and something less that $65, as FY2007 is a long way way.
Using Value per client: Industry practice is value based on 3-4 year revenue from customer. Industry is usually 3000-3500. MLTO thinks their customer is valued at 5000.
FY2006 customer count of 52,000 gives a market cap of 260mm. 260mm/18mm = $12.50
YE2006 (12/06) customer count of 72,000 gives a market cap of 360mm. 360mm/18mm = $20
FY2007 (06/07) customer count of 144,000 gives a market cap of 720mm. 720mm/18mm = $40
Market Share
At FY2006, looking to see 3%.
Mgmt and shareholders should expect 8-10% (400,000)
Reserve for doubtful accounts
Currently allocating 7% of revenue to doubtful accounts, but actually less than that.
Initital figures were very high because auditors requested all copay (20%) be allocated as doubtful, as given in the early numbers from June-Sept 2005.
Wow. Lots of stuff to digest.
Hope this helps. It sure helped me. :)
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
