Maxicare stock given clean bill of health by Wall Street brokerage.Maxicare stock given clean bill of health by Wall Street brokerage Maxicare Health Plans Inc., the big Los Angeles-based health maintenance organization that declared Chapter 11 in March 1989, is now a healthy bet on Wall Street, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a report issued by the New York-based Furman Selz brokerage house on July 1. Last week, Maxicare traded on the over-the-counter markets over-the-counter market Trading in stocks and bonds that does not take place on stock exchanges. Such trading occurs most often in the U.S., where requirements for listing stocks on the exchanges are strict. in the $8-a-share range; with about 10 million shares outstanding that makes a market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. of about $80 million. Furman Selz' analyst Randall Huyser, based in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , praised Maxicare management, including Peter Ratican Peter Joseph Ratican (born April 13, 1887 - died November 20, 1922) was an American amateur football (soccer) player who competed in the 1904 Summer Olympics. In 1904 he was a member of the Christian Brothers College team, which won the silver medal in the football , chairman and chief executive, for its turnaround efforts of the last past two years. "Top management has been in place for over two years and has done an impressive job executing the bankruptcy plan and restoring the company to profitability. Now that the financial viability of the company is no longer in doubt, management can again focus on internal growth. Its growth strategy is very nuts-and-bolts; paying attention Noun 1. paying attention - paying particular notice (as to children or helpless people); "his attentiveness to her wishes"; "he spends without heed to the consequences" attentiveness, heed, regard to operating fundamentals and rebuilding the client base," said analyst Huyser. Maxicare, under former Chairman Fred Wasserman, went on an ill-fated acquisition binge in the 1980s, in particular buying two large HMOs in 1986, with a combined 1.5 million members. Wesserman borrowed a total $450 million to finance the buy-binge, and Maxicare membership surged to 2.3 million, in 26 states. But the acquired HMOs were money-losers, and Maxicare couldn't pay its IOUs to banks, bondholders, doctors, hospitals and other vendors. Wasserman was ousted, Ratican brought in, bankruptcy declared. More than $800 million of vendor and financial debt was erased, and company ownership was largely transferred from shareholders to creditors. New stock was issued. Cutting to the bone to survive, Ratican has pared Maxicare membership back to 281,000 enrollees, about one-half of whom are in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, . Maxicare is a contract-model HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, . Generally, it does not employ doctors or have its own hospitals. Rather, it inks contracts with doctors and hospitals to provide health care to its members. Maxicare enrollees are employees of companies that have selected Maxicare as a health plan option. Largely free of debt payments and having cut many money-losing operations, Maxicare should net $6.3 million on revenues of $389.2 million in 1991, or about 38 cents a share, and that should rise to a net of $12.7 million on revenues of $481.0 million, or about 75 cents a share, estimated Furman Selz analyst Huyser. Maxicare has about $250 million worth of net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carry-forwards, which can be applied against future profits - such a large amount, that there is speculation Maxicare may be seeking a merger partner. A large profitable California HMO could apply the tax-loss carry-forwards against profits to hold down taxes. Among other items, Huyer noted that Maxicare is trading on Wall Street for about $390 a member, far less than the $950-a-member average of other HMOs. Viewed from another perspective, Maxicare's market capitalization of $80 million is about 28 percent of revenues, while other HMOs trade for an average of 75 percent of revenues. Huyser also noted that HMO industry giant Kaiser Permanente Kaiser Permanente is an integrated managed care organization, based in Oakland, California, founded in 1945 by industrialist Henry J. Kaiser and physician Sidney R. Garfield. , with 6 million members in the state, is raising prices 15 percent to 20 percent a year in order to finance a huge capital expansion program. This could mean less competition for Maxicare. Chriss Street, a financier in the Reorganized Securities Group of downtown Los Angeles-based Seidler Amdec Securities Inc., is a key investor in Maxicare. |
|
||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion