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Air Methods Corp. Message Board

  • TJSymms TJSymms Jun 22, 1998 4:52 PM Flag

    Price Target???

    Is there a price target that anyone is shooting for?
    And who are the 'similar' companies out there? TIA.

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    • Thanks for the link but what I was hoping for was
      a search string that I could use within the
      document. But at any rate I found what I needed and you are
      correct. Looks like the bad debt expense is just a part of
      the way Mercy does business. Just seems odd that a
      company would write off 21% of their revenues each year,
      but if they aren't going to collect them it's better
      to write 'em off rather than carry the
      uncollectibles on the books like the bad loans the Japanese
      banks carry.

      The section that explains the bad
      debt was in the 10-k and it is just what ecl61 has
      been saying. "Bad debt expense is estimated during the
      period the related services are performed based on
      historical experience for Mercy's operations. The
      provision
      is adjusted as required based on actual collections
      in subsequent periods. Bad debt expense increased in
      1997 compared to an immaterial amount in 1996 because
      Mercy bills patients and their insurers directly for
      services rendered rather than billing hospital
      customers."

      The 6 cent estimate still looks like an accurate
      estimate although I could see it come in as high as 8
      cents.

    • I guess gizzardj beat me to the answer. You might also look at the latest 10Q in the management discussion of results for an explanation of how bad debt expense is handled.

    • Go to this link to read the
      8K.
      http://www.sec.gov/Archives/edgar/data/816159/0000932384-97-000241.txt
      Somewhere in there it explains about the way Mercy records
      revenue and the corresponding bad debt expense.
      Also
      look at the proforma near the end. It shows that Mercy
      had $1.5M bad debt expense in the first 6 months of
      1997. That would be about $750,000 per quarter - so
      last quarter was a GOOD quarter with less than
      $500,000 bad debt expense.Let's hope that's a trend.

    • I couldn't find what you referred to about the
      bad debt expense. If you could provide a search
      string I'd appreciate it. It appears to me that the
      money to be paid to the sellers of Mercy will be
      reduced by the amount of the receivables that AIRM cannot
      collect. That seems logical to me, if Mercy has $3 million
      in Accounts Receivable but $2 million of it is
      uncollectible then they shouldn't be paid for it. I was
      assuming that this is why these numbers are showing up as
      a non-operating expense and I also assumed that
      these numbers would shrink to close to zero as the
      company wrote off all the uncollectibles, and that's why
      I was adjusting the figures to find the actual EPS.


      But, I could be wrong about this and if I am then it
      will be even harder for AIRM to post decent numbers
      because I was sending that half million straight to the
      bottom line. Damn, I really like this company. I guess
      we'll just have to wait for the numbers to come out.
      Earnings estimates for small companies like this are
      really tricky. A little bit more Revenue here and a bit
      more control over expenses there could throw off the
      EPS by 25% or more.

    • I think we said the same thing but you did it more eloquently and perhaps with a little more optimism.

    • The bad debt allowance for Mercy has little to do
      with the earnings projections. Air Methods earned .21
      last year. The earnings were AFTER the allowance and
      there was not a one time credit. Mercy bills directly
      so what they put on the books is more than they
      actually collect, hence the allowance. As the collections
      come in, the allowance is decreased, but as more
      billings are added, the allowance grows. So after a time
      the allowance becomes a stable number.

      Zack's
      only lists the Brous predictions for Air Methods and
      they are out of date. The numbers Air Methods releases
      are very conservative as has been discussed
      previously on this board. The company depreciates their
      flying stock, which generates value in excess of that
      carried on the books.

      Last January, they
      recaptured the depreciation on the helicopter that was
      unfortunately lost, generating a credit which appears on their
      statements.

      Last year without Mercy, the company posted earnings
      of 5 cents. Mercy continues to be a profitable
      operation. So I think that 6 cents is probably
      low.

      The Red Chip analyst is new to the company. She may
      not be used to the low-key responses from this
      management. I know they are disappointed at not having the
      contracts for the first 7 Sikorsky helicopter interiors in
      hand. But they will get them some time soon and
      manufacturing will eventually add significant growth to the
      bottom line. In the Red Chip revision the analyst refers
      to that possibility as a wild card. Well, that card
      will fall; the question is exactly when.

      With
      the stock back to near $4, we are back in the
      excellent value range, irrespective of the earnings in the
      current quarter.

      I know some people who are
      delighted to see the current weakness. They are picking up
      the stock dumped by the paniced traders.


      Follow your investment plan and don't do something
      emotional and stupid.

      Elliot

    • Actually, if you go back to the 8K filing
      concerning the merger you will find that the bad debt
      expense is not a one-time write-off but an ongoing
      expense related to the way Mercy is paid. I think this is
      why they did not adjust earnings for this item. This
      means that they are forecasting a .21 for 1998 vs. the
      same amount for 1997. Don't get me wrong - I like
      AIRM, but until they can prove that they can increase
      earnings above this level it will be slow going.

    • It has been interesting watching the stock
      movement of AIRM the last day or two. Just yesterday I
      read an article regarding stock price volatility and
      the role of the Market Makers on the NASDAQ exchange
      and the difference between NASDAQ, where we have
      middle men and the NYSE which is a true Auction,
      matching buyers and sellers. I found this article posted
      on the CLST board and really appreciated the
      information they had passed on, so I wanted to make you aware
      of the info as well. I think if you trade stocks on
      the NASDAQ, you will find this to be of great
      interest...


      http://www.forbes.com/forbes/072996/5803072a.htm

    • Now the bid is down at a pathetic 3 7/8.
      It
      doesn't seem hard for me to understand. After 7 cents in
      the 3rd quarter last year and 8 cents in the 4th
      quarter, then coming in at 6 cents in the 2nd quarter
      which is normally seasonally stronger than the 4th
      quarter is disappointing.
      It doesn't matter that it's
      up one cent from 2nd quarter last year.
      6 cents
      would be quite disappointing.
      Hopefully ecl61 is
      correct and Red Chip is way off base.

    • Thanks Elliot,

      I just read it wrong. Just
      a little nervous as there seems to be a lot of
      weakness in the stock. Bid is at 4 1/8 and we haven't been
      down in this range for along time. No reason it should
      be doing this....

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