Friday, June 27, 1997

MIM Corporation
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Phone: 914-735-3555
Price (6/27/97): $14 3/4

HOW DID IT DOUBLE?

Like the late Elvis Presley, MIM has found success beyond its Tennessee roots. From a troublesome IPO last year to a 1997 high-flier, the company has prescribed solid gains this year on the heels of solid profitability and expansion beyond the Volunteer State.

Looking at the stock chart one see the resemblance to another Tennessee landmark, the Great Smoky Mountains. It was rough going as shares fell from their August debut at $13 and found a valley at $4 a few months later. Since then it's been a pleasant uphill climb back to and beyond its IPO price.

BUSINESS DESCRIPTION

MIM Corp. is a pharmacy management organization. It works with sponsors of health plans, retail pharmacies, and pharmaceutical companies to design and manage pharmacy benefit plans. Until last year, nearly all of the company's revenues came from TennCare, a Medicaid waiver program.

Despite the initial concentration in Tennessee, the company is actually located in Pearl River, N.Y.

FINANCIAL FACTS

Income Statement

      12-month sales: $286.4 million
      12-month income: ($5.8 million)
      12-month EPS: ($0.38)
      Profit Margin: N/A
      Market Cap: $222.7 million

      Balance Sheet
      Cash: $7.9 million
      Current Assets: $44.8 million
      Current Liabilities: $29.7 million
      Long-term Debt: $0.3 million

      Ratios
      Price-to-earnings: N/A
      Price-to-sales: 0.8

HOW COULD YOU HAVE FOUND THIS DOUBLE?

While the company had spent 1996 exclusively servicing Tennessee-area contracts, on January 9 it announced ventures into Georgia and Louisiana. The stock rose $1 3/8 that day to $6 3/4, giving ample opportunity to latch on for the double. However, financial performance was spotty. A profitable third quarter was more than offset by a $7 million loss in the fourth.

Still, every month brought about deeper expansion into the South as well as new contracts closer to its Northeast base. In March it restructured a money-losing contract with Blue Cross/Blue Shield of Tennessee.

Yet by the time earnings rolled around in late April, the stock was only up to $8 1/2 with some heady days ahead.

WHERE TO FROM HERE?

The first quarter was solid, with a $0.05 a share gain on a slight uptick in sales replacing a loss of $0.04 in the prior year's first quarter. While expenses at the corporate level almost doubled, margins on its contract work had improved to the point of starting the new year on a positive earnings note.

A month later it announced its entry into the Midwest followed by a June announcement of a venture in Florida. With its aggressive expansion and the politically favorable nature of its business of trimming healthcare costs, the future seems ripe for a refill. Analysts seem to think so too, as estimates call for earnings to grow from $0.46 per share this year to $1.11 per share in 1998.

If that proves to be the case, there could be more good things in store for MIM shareholders. With all due respect to The King, MIM seems to have checked out of last year's Heartbreak Hotel for good.

-Rick Aristotle Munarriz ([email protected])

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