The Sum Of Mediq's Partsby
Health-care companies aren't too hot these days, but some pros are snapping up Mediq shares. Why? A few investors believe President and CEO Bernard Korman will continue to sell Mediq assets, which they figure are worth a lot more than the stock's current price of 4.
Mediq rents out life-support equipment, such as infusion pumps and portable X-rays, to 3,500 hospitals, nursing homes, and home health-care providers. "The value of Mediq's various assets are worth a combined $9 to $10 a share," says a New York manager who has accumulated nearly 4% of Mediq's stock. He expects that in two years, when Korman completes plans to enhance shareholder value, Mediq's stock will have hit about 13 a share.
Korman says that, indeed, is his objective. "We will continue to monetize the value of Mediq's various pieces," he says. "We're trying to identify the value of the assets to be able to get the full value of our stock," Korman explains. Mediq's next move will be the tax-free spin-off of the shares of its mental-health management unit.
Money manager Charlie Ganz notes that, fundamentally, Mediq has turned around after a loss two years ago. It earned 27 a share in 1992, and this year, Ganz sees the company topping that number. But Mediq's assets are the reason to own the stock, he adds. They include a 49% stake in NutraMax Products, a health-care-products company, believed worth $2 a share in Mediq stock, and a 46% stake in PCI Services, a pharmaceutical packaging company, also worth $2. Mediq's diagnostic-imaging services unit is valued at $2.50, its PRN life-support division at $3, and the mental-health unit at $1.