An entire segment of the healthcare field is undergoing a radical change, namely, hearing
care. For the first time, a medical company has entered into the hearing care business!
The HEARx philosophy and strategy are unique and only just beginning to be understood
by Wall Street. There is no competition: In other words, no other company in the hearing
care business is doing business the way HEARx does. HEARx, rather than marketing
directly to the consumer, negotiates contracts with healthcare providers including
managed care companies (HMOs) through which the health insurance provider refer the
patients to HEARx. Until recently, an individual's medical insurance did pay for
diagnostic tests, but did not cover hearing aids. Moreover, because hearing care is not
regulated, extensive fraud and abuse exist and have been pointed out in the national
media. HEARx has been successful in making hearing care affordable to all patients,
especially those Medicare members who have converted to managed care in areas
serviced by HEARx.
A Fantastic future is in store for HEARx:
The market is tremendous. As the costs of Medicare and
MediGap insurance continue to rise, and as the elderly population
increases, more and more people are switching to managed care
programs, which thanks to HEARx, will be paying for a significant
portion of their hearing care needs. What is now a $2,000,000,000
market ($1.2 billion for hearing aids, $.4 billion for diagnostic tests,
and $.4 billion for batteries and ancillary products) is projected to
become a $10 billion market by 2020. HEARx's goal is to be a
$500 million company.
Superior management is in place. CEO Paul A. Brown, M.D.,
knows how to make things happen. He turned the clinical laboratory
business, a classic cottage industry, into MetPath Inc., the world's
largest medical laboratory company before selling the company to
Corning, Inc. He sees the same challenges and potential with
HEARx. MetPath Inc. was started with $500 in a two-room
apartment and was sold twelve years later to Corning for $140
million. Stephen J. Hansbrough, President and COO, is the former
Chairman and CEO of Dart Drugs, and was also involved in the
start-up of two national chains - Trak Auto and Crown Books.
HEARx's facilities are state-of-the-art, company-owned and
professionally operated by licensed professionals. Only the most up
to date hearing aids and medical diagnostic equipment are used.
Unlike "Miracle Ear" and Beltone, HEARx sells a full range of the
technology available from multiple manufacturers. Each patient
purchasing a hearing aid receives: one year's worth of free batteries,
a no cost 3-year hearing aid warranty, a $200 residual value when
making a future purchase and a complimentary series of educational
classes for the member and spouse.
The concept is being validated. Contracts have already been
signed with such notable managed care companies as AvMed,
Health Options, Oxford, HIP of Florida, Prudential SeniorCare,
United Healthcare and Cigna Health Plans...to name a few.
HEARx has plenty of capital. A recent private placement increaed
the HEARx cash position to more than $20 million (with essentially
no debt). This will allow the expansion of its hearing center network
to more than 250 centers. An earlier private placement of $6 million
included George Soros and certain of his partners and Invemed
Associates, Inc., and certain of its clients, including Home Depot
co-founders, Arthur M. Blank, Kenneth G. Langone and Bernard
Marcus.
HEARx is committed to putting the infrastructure in place today to
effectively manage tomorrow's top line. As a result, the Company
does not expect to become profitable until 1997. Thus, HEARx
stock is for the patient, long-term investor, and not intended to be a
trader's purchase.
In sum, as Wall Street brokerage firms and the institutional
investment community gain exposure to and focus on HEARx unique
niche in the healthcare field, and as earnings materialize in the coming
years, the stock's price could achieve a price per earnings ratio of
about 20. After all, Dr. Brown did it once... with MetPath. (An
original investment of $10,000 in MetPath was worth more than $1
million in just over twelve years.) Thus, the path to future earnings in
unencumbered!
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