Option Care Health Inc (OPCH) 2003 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the MIM Corporation fourth quarter 2003 earnings conference call. [OPERATOR INSTRUCTIONS]. I would now like to turn the conference over to Investor Relations representative, Rachel Levine. Please go ahead.

Thank you. Thank you for joining us to discuss MIM's fourth quarter 2003 earnings. If you did not have a copy of our press release that went out earlier this morning, please call the Anne McBride Company at 212-983-1702 extension-207 and we will e-mail or fax you one. Alternatively you may obtain the copy of the release at the Investor Information Section on the company's corporate Web site at www.mimcorporation.com. A replay of today's call may be accessed by dialing in on the numbers provided in this morning's press release or by accessing the Web cast on the Investor Information section on MIM's Web site.

Before we begin I will remind you that during this call, you will hear some statements that may be considered forward-looking statements. These forward-looking statements may include statements relating to financial projections or other statements relating to the company's plans, objectives, expectations or intentions. These matters involve risks and uncertainties and actual results may differ materially from those projected or implied in the forward-looking statements. Factors that could cause actual results to materially differ from the forward-looking statements in this call are set forth in our most recent annual report on Form-10K as such factors may be modified in our quarterly reports on Form-10Q.

During today's call, Richard Friedman, our Chairman and Chief Executive Officer, will comment generally on developments in the quarter and year and then pass the call to Al Carfora, our President to review operations. The call will then be passed to Jim Lusk, our Chief Financial Officer to discuss the financials in detail as well as guidance. Rich will then return to some final comments and open the call for questions and answers. I would like to turn the called over to Richard Friedman.

Thank you, Rachel and good morning everyone. Yesterday MIM acquired Natural Living, Inc., a specialty pharmaceutical provider based in New York City. Natural Living's estimated revenues for 2003 are approximately $40 million. We are extremely excited on this acquisition, which enhances our HIV Oncology and Hepatitis C disease categories. We believe this is a terrific fit for both Natural Living and for MIM.

We are pleased with the continued strong performance of the specialty business, where our focus on serving the needs of payors, patients, physician and manufacturers is driving earnings growth. We have met consensus estimates for operations for the quarter. And as Jim will report, sequential growth is strong. Without TennCare and Synergist, EPS in 2003 would have been 26 cents. We are guiding to 42 cents for 2004. This is a 62% increase. If you annualize our fourth quarter, we are at 32 cents. The estimate for next year of 42 is a 31% increase over current. Our estimates are built on current business trends.

Our results demonstrate the success of our past centric operational model, an ability to leverage existing assets, while taking advantage of accretive opportunities such as Natural Living. Our belief is that gaining access to the chronically ill occurs at the physician level. We will continue to pursue acquisitions like Natural Living. Al Carfora, our President and Chief Operations Officer, will give you a brief overview of the business and then Jim Lusk, our Chief Financial Officer, will review our financial performance. Al.

Thank you, Rich and good morning everyone. I'm very pleased with our performance for 2003. As previously reported, in July of 2003, the state of Tennessee decided to take their PBM service inside. Additionally, during last summer, Metamine restricted us in many of the specialty pharmacies access to their product synergies. We still have approximately $10 million of low margin oncology business, which we continue to manage so as not to impact our profitability. The combination of these events resulted in an annual revenue loss to MIM of approximately $160 million.

At our current fourth quarter run rate of approximately $580 million, which includes our recent acquisition, we have made up all of the loss I just noted. Even more important to me is the sequential growth of our specialty business, which increased 8% in Q4 over Q3. I am also pleased that our mail PBM business has performed well for the year. Each continues to provide growth within its respective category.

Among the positive events in the quarter, Bioscrip was selected as a national distributor of a newly approved treatment for psoriasis. We are very enthusiastic about the opportunity to begin offering this product to our client base of 350 managed care organizations and associated physicians. This disease therapy will become another category of focus for our sales team. For 2004, our focus will remain on specialty, however, now we will become even more focused on each disease state.

We have or are in the process of updating our clinical support programs for each therapy that we service and are working with our managed care clients to provide useful outcomes data to help measure our success in managing their specialty programs. Our robust data collection and reporting capabilities along with our web-based access provide our customers and manufacturers with realtime information. This valuable information assists everyone in the patient care chain ensuring the highest levels of customer service.

In addition to the exciting prospects in our existing business, I along with everyone in our company, am very pleased with the acquisition we announced last night. Natural Living is a specialty pharmaceutical provider located in New York City. The company's 2003 revenues were approximately $40 million. Bruce Hershfield, the President of Natural Living and his team are a wonderful addition to the MIM family. This acquisition enhances Bioscrip's HIV, oncology and hepatitis C therapies while complementing our overall disease state profile.

Bruce's 20 years in this business, providing exceptional standards of customer service have developed strong and loyal physician relationships that will add to Bioscrip's rapidly growing regional strength in the Northeast and Midwest.

The acquisition of Natural Living demonstrates our commitment to the future of specialty pharmacy and follows our strategy of making accretive acquisitions. I believe we found the right company, the right management team and the right marketplace. Sharing our combined capabilities, we will benefit in increased revenues and profits. Now I'd like to turn the call over to Jim Lusk, our Chief Financial Officer. Jim.

Thank you, Al and Rich. Good morning, everybody. Our fourth quarter results reflect a continued positive momentum in both the specialty and PBM and mail segments. The balance sheet remains strong. Fourth quarter operational results met consensus at 8 cents excluding $600,000 in expenses related to an acquisition effort.

Before I begin my review of results, I'd like to remind you that the press release contains all the reported numbers, in addition to a reconciliation set of tables outlining results for comparative purposes, which would exclude TennCare, Synergist and a couple of other special items. The numbers I will review on the call today are adjusted results from these tables, which most accurately depict results in our existing business going forward.

Fourth quarter revenues increased 26%, to 135.7 million from 107.5 million in the fourth quarter of 2002. Fourth quarter specialty revenues were 47 million compared to 40.6 million for the same period last year. Sequentially, fourth quarter specialty revenues grew 8% from 43.6 million in the third quarter and 16% over the prior year's period. Fourth quarter PBM and mail revenues grew 34% to 87.5 million from 66.5 million for the same period last year.

Operating income grew 2.7 million versus 2.5 million for the prior year's quarter. Net income for the fourth quarter was 1.5 million or 7 cents per diluted share compared to 1.4 million or 6 cents per diluted share for the prior years period. Excluding the acquisition expense, fourth quarter EPS was 8 cents per diluted share. Revenues for 2003 increased 20% to 507.2 million, from 421.8 million in 2002. Selling general and administrative expenses for 2003, increased to 49.7 million from 45.9 million for 2002.

SG&A expenses included 1.5 million business-restructuring expenses, and 500,000 in acquisition related expenses during 2003. These results reflect continued investment in sales and marketing. Specialty revenues for 2003 increased 19% to 175.1 million from a 147.1 million for 2002. Revenues from PBM and mail increased 23% to 327.7 million in 2003 compared to 266.9 million in 2002. Operating income for 2003 was 10.5 million compared to 10.6 million in the prior year; excluding the acquisition expenses 2003 operating income was approximately 11 million.

Net income for 2003 was .5.8 million or 26 cents per diluted share compared to 5.9 million or 25 cents per diluted share for 2002. The company generated 14.3 million in operating cash flow for 2003. Final payments related to the TennCare PBM business will be made in the first and second quarters of 2004. And that's related to rebate payments.

Now for the acquisition. As we announced we acquired Natural Living for 15 million plus an earn out. Natural Living's 2003 revenues were approximately 40 million. And we estimate the initial contribution of the acquisition to be 2 cents in 2004. This brings us to guidance for 2004. As we stated in our press release we are setting earnings guidance for the year at 42 cents including the acquisition. This number is primarily based on strong continued organic growth. This 42 cents represents 62% growth over the 2003 EPS of 26 cents.

We are projecting 2004 revenues to be approximately $650 million. As for margins, we are expecting them to remain relatively steady in the 10.5% to 11% range. A slight decrease from 2003 margins, which reflect the continued shift in the specialty product mix as injectables grow at a faster rate than infusion. Rich, I'll turn the call back over to you.

Thank you, Jim. We enter 2004 with momentum as evidenced by our strong sequential growth. We have a strong base for continued growth and in new acquisition. We have significantly expanded our managed care contracts and physician relationships. We are diverse in our product offerings and recognized as a major player in the specialty arena with particular regional strong holds. As Jim pointed out we continue to invest in sales and marketing and added approximately $3 million in 2003. Beyond this, our industry continues to undergo a dynamic evolution.

Consolidation is intensifying and specialty market is evolving as customers better understand the advantages of identifying and managing the spiraling costs. Growth opportunities abound and we are delivering on them. We are comfortable that we can deliver strong earnings growth in 2004 and that the acquisition will be positive and accretive to full year earnings. Our EPS guidance is 42 cents. We're off to a good start and will deliver enhanced shareholder value. With that, we will open the lines to answer any questions that you may have.

Thank you, sir. [OPERATOR INSTRUCTIONS]. Our first question comes from the line of Susan Anderson, AK Capital. Please go ahead.

Yes. Thank you very much. Good morning, gentlemen. I have a few questions, if you don't mind. First of all, with the regard to the acquisition of Natural Living, how did you finance it?

Hi, Susan, this is Jim Lusk. We've an asset-based line with our bank. It's based on AR and all we did was draw some of it off and just came off our bank line.

I presume that's a fairly low cost account.

Yeah, it's around 4% interest thereabouts and we expect to pay this acquisition back during the year from our operating cash flow.

So if it's a 4% cost of capital and accretion of 2 cents to '04 earnings, it looks like you paid, somewhere between 12 times EBIT? Would that be about right?

No, it's a much smaller number than that.

OK. Terrific. And you mentioned that the primary disease categories are HIV, Oncology and HEP-C, which are sales about of evenly split between the three?

Primarily HIV and Oncology would come after that.

OK. And then the other question I had is more -- well, bookkeeping. The acquisition expenses and the reversal of the reserves, how much will they pre-tax? And where would they have booked? I'm assuming most of it booked in G&A? Or would it be cost of operations?

The acquisition expenses are related to -- not related to the acquisition we announced yesterday, because those will be capitalized obviously, but they were sitting in SG&A.

How much were they pre-taxed?

The pre-tax was about $500,000 -- I'm sorry $600,000.

And the reversal of the reserves.

Was about rounded to 100, so net they were 500.

OK. And then lastly, you mentioned that you would be making some final rebate payments to the state of Tennessee.

Yeah. As Al Carfora mentioned in his comments, the contract of PBM piece of the contract we had with TennCare ended on July 1st. We share rebate payments with that program. Rebate payments tend to have about a nine-month lag. We are making some payments in the first quarter. We actually made one about two weeks ago and making some subsequent payments in the second quarter.

How much would that total then?

They will total about $11 million or so.

Eventually split between the first and the second quarter?

The majority we paid in the first quarter. Actually have been paid in the first quarter already. Actually made the payment already.

OK. Terrific. And then just one last question. When I'm looking at your metrics for adjusted scrip's, what is the formula that you're using for just the scrip's? Would it be the PBM network times Mill time three?

Roughly. The average expense in mail is typically 90 days, so you multiply by three in order to get equil ant with the specialty scrip's.

OK. Perhaps we can take this off-line, but I mean when I do that, I'm coming up with somewhat different numbers for revenue per adjusted scrip's and gross profit.

Yes. We are glad to take it off-line, Susan, that's fine.

OK. Terrific. Thank you very much.

Thank you. Be there.

Our next question comes from the line of Arnold Ursaner of CJS securities. Please go ahead.

On Natural Living, you've given us the 2003 expected revenue of about 40 million. Can you give us the 2002 actual? And can you give us your best guess of the estimate for revenue in 2004 from Natural Living?

Sure, hi, good morning. In terms of the expectations of Natural Living, they continue to grow in a 10 to 15% range year-over-year. And you'll find that going back 2001, 2002, and 2003. We anticipate actually right now the same thing for 2004. We look at this as a great opportunity, because there was heavy concentration in actually three disease states. The HEP C, The oncology and HIV. So had giving the team there, Bruce and Randy and David, the ability to add more clinical expertise and to give them more disease states to market, you know, we believe down the road it will be much more accretive than what we're looking at for 2004.

Have you structured the deal with earn-outs?

yes. There is an earn out on top of the 15 million based on EBITDA performance and that could be anywhere between 2 and $4 million, depending upon their performance.

Analyst: Got it. Follow-on question for me, if I could. On synergist you mentioned that you've lost roughly 13, 14 million of annual revenues, about 8.7 or so in Q4. Should we assume that the balance of 5 million generally would occur in Q1?

Yeah. That is absolutely right. As you know, synergist was a drug for six to nine months. And yeah, as a matter of fact when you look at the forecast going forward, it excludes synergist.

Jim, you gave us some pro formulas on a full year basis kind of in a chart at the bottom of your press release.

Yes.

Would you have any view or thought to releasing an 8-K looking at the same numbers by quarter so that people can model out kind of on a current state basis, if you will?

Yeah. I'll take a look at that, Arne.

I think I'll let someone else go and get back in queue. Thanks.

Thank you.

And our next question comes from the line of Anne Barlow with Southwest securities, please go ahead.

Yeah. A couple of questions. First, I assume the -- or are the Tennessee payments, the rebate payments included in your guidance of 42 cents?

Yes. They will not impact EPS at all they just impact operating cash.

Great.

That was already accrued, Anne.

OK. Just wanted to double-check on that. And on the guidance, Jim, on the margins, quite a bit of difference from where you were for '03. Could you kind of talk to that and the reasons why we're seeing such a change?

Sure. For the 2003, we end up roughly at 12% when you kind of do the apples to apples comparison I had. We are given a range of 10.5 to 11. And the main driver in that is on the specialty side where the injectables are growing at a much faster rate than the injection drugs carry you know basically a 3 to 4 X type of margin differentials. So, that is an overall main driver.

OK. Great. Thanks.

And our next question comes from the line of Harvey Stober with Goldsmith and Harris. Please go ahead.

Good morning folks. First question just relating to what you just mentioned you're not seeing any significant rate of deterioration in the margins for the individual projects to arrive at that '04 estimate?

Good morning, Harvey. We do see in one particular line -- and that happens to be in the growth hormone area, somewhat more competition in that line. Overall for our injectable line, it seems to be holding steady. There are obviously new products coming out all the time and those new ones will generally have a higher margin. But for the injectable line, it's pretty much been stable. The infusion line has been down a little.

OK. All right.

It's strictly the mix situation as Jim was pointing out.

OK. Thank you for that clarification. Other questions related to debt. How much is that currently after the acquisition and the payment that you just made and what is the projection for year-end? I imagine even though you're going to pay out the acquisition out of cash flow, you'll have residual debt because of the 10-K payments.

Given our run rate on operating cash, hardly I expect the acquisition to be paid off sometime during the third quarter most likely.

And what's the current debt level and what's the year-end projection?

Our debt level at the end of December was zero. And right now, obviously we had to draw the line down for the acquisition, which we did yesterday. And we had a little bit in there for the TennCare payments. By year-end, we'll be back down to zero for sure.

OK. And that's after both of those?

Correct.

So you're talking about a total of 25 million that's going to be paid in various ways.

Yes. By year-end.

Very good. And the last one is the revised efforts in the sale force is now about a year since the new program was implemented. Can you give us some sort of update as to how that's come along and if there are any metrics related to the success of the sales force, if you could share those with me?

Yeah. I'm going to turn it over to Al in a second, Harvey. I think what you're going to find is just demonstrating of the fourth quarter over the third quarter, the 8% growth in specialty quarter-over-quarter is pretty significant. As you know, we invested probably close to $3 million last year in the new sales organization. And many of those people are now here four to five months and we're starting to see the fruits of that effort. And, you know, so we're pretty pleased with where we are right now in terms of the organic growth. Al.

Yes. To elaborate on that, as you know, although we have a sales force concentration on different aspects of our business, we have an absolute coordination of all of their efforts. We have the sales force, of course, that calls on managed care organizations, to secure for us contracts and the ability to be on a pay or panel. But more importantly to a degree are the physician sales team that are on the ground calling on physician's offices and as well as our call center of physician sales members that call on specific offices.

And they have been extremely effective over the course of the past year. We've been able to concentrate specifically on disease phase by coordinating the efforts of these people. And for example as I mentioned during my presentation the new products that are available to us in the therapy of psoriasis will become a focus of our sales team. They will implement the clinical program and as well will be calling on each of the dermatologists within the regions that we do business. The ability to have them direct market on a specific disease state we believe will be very effective for us.

We've seen across all of our disease states an increase in revenue year-over-year, with the exception of oncology. And we expect to be able to continue to influence the sales of each of the therapies.

Is there anything you can share with us in terms of the numbers of sales force or programs in terms of how long it takes them to get up to speed or average amount of revenue per salesmen or any metrics like that?

We have in our sales organization 25 individuals throughout the market that we operate in. We have individuals in Michigan and Tennessee, New York, New Jersey, Pennsylvania, Connecticut. If we look in terms of training, it takes approximately three months for us to train a detailed physician salesperson to be become effective. Our goal is to see, according to which line of business it is we're selling, our goal is to see after a period of 6 to 12 months approximately a $3 million sales rate per representative.

OK. Thank you.

And our next call or question comes from Glenn Garmont of First Albany, please go ahead.

Thanks and good morning. Thanks well for the '04 outlook. Just a couple of questions. Number one you know, can you elaborate a little bit more on the sales season, the specialty sales season for 2004? You know, your guidance is based on current business trends. Are there any significant opportunities remaining in the pipeline that could positively affect your results for the year? Or can we pretty much expect that all of the business that you're going to, you know, win for 2004 is already under contract?

And then secondarily, I was having a tough time trying to find a lot of detail on this Natural Living Company. Can you tell us, you know, whom does this company market to? Is there any sort of overlap between, you know, who they are selling their services to and who you guys target? I'm trying to get a sense for how complementary the two organizations are.

Hi, Glen, it's Rich. Let's go through Natural Living and look at the pipeline a little bit. Natural Living is a company that's been in New York City for over 20 years and they've gone into specialty business a number of years ago. Primarily their market is the New York City area. And their philosophy has been relationship building on the local level. And they've been extremely successful in that arena. They do a lot of business in medicated arena as well. And as it exactly what our philosophy as its wealth.

We believe that growth in specialty comes from referral sources. You need to be on the payer contract, which is why we have the managed care force. But the referrals come from the local level, the physician referring. And Natural Living has done an incredible job in their geographic area of bringing $40 plus million of revenues. And we expect that to continue. This is absolutely the type of acquisition that we like, that we're going to be looking for, because it builds upon the local relationships. And yeah, it's a private company, so I wouldn't think that you would be able to find really anything on them at this point.

In terms of our pipeline, what we have done in our forecasting for this year is really look at the business that we have in place and did our forecasting based on there. Obviously, you know, hopeful that there will be additional contracts coming through. But what we try to do, when we put this forecast together, which is what Jim and Al have worked on, is to see what is there and to really put together a reasonable and responsible forecast that we really feel that we could hit and exceed. And that is what we have in place today.

Thanks a lot, Rich. That's very helpful. Is it safe to say there are other Natural Living type companies out there that you could potentially look at on a go forward basis?

Yeah. If you step back a minute and look at the industry, and whatever number, 15 billion or 20 billion and you look at the potential pipeline under the estimates of another 20 billion over the next few years. And if you add up the major players in this market, if you take care market, advance and express and accretive and the cure tiffs and everyone else out there and add up all the combined revenue, it's probably somewhere in the 25% range of the entire marketplace, which means people are getting their drugs from -- 75% of the drugs are coming from companies much like the Natural Living out there.

And, again, you know, these are the type of acquisitions that we want to look at. They are accretive. And what we really believe in is the local relationships that have been built by Bruce and Randy and his team. And that's what we believe and that's the type of acquisition we're going to continue to look at.

That's very helpful. Thanks again, Rich.

Welcome Glenn.

Next question comes from the line of Grant Jackson, First Analysis. Please go ahead.

Good morning, gentlemen. A couple of questions first of all, when you look at the January 1 implementations or contract changes, you can just comment on what you're seeing with regard to payer contracts? Are they excluding retailers more, trying to make people go more to the mail? Are they excluding or making their provider networks narrower in the specialty arena? Could you comment on that and I've got a follow-up.

This is Al. Clearly the payers are driving business to mail. It's obviously less expensive for them and more efficient. And it also creates a sense of -- or stronger sense of compliance. So we're seeing that our under contract business within the mail arena grows organically. We have been challenged which I believe I mentioned on the last call by one of our major accounts to increase by 3 percentage-points their penetration of mail to overall pharmacy, which we were able to accomplish over the past year. And we intend to continue working to that end.

Also we're seeing that the payers recognized the fact that in the mail arena, there is a more likelihood of converting from branded to generic product. We have the ability to work with them in that regard. So mail business continues to grow for us.

And just with regard to contracting, what are you seeing from payers standpoint as to with the PBMs focusing on this area a little bit more, are they getting into more contracts? Were they already in the contracts but they are now just having more success selling with feet on the street? Or what?

I think what you're seeing, Grant is that the managed care organizations are looking at specialty companies. They are looking at companies that could provide them with reporting clinical analysis, compliance, cost savings ability. And quite frankly, it is separated from PBM. We believe that look, you know, the PBMs have been out there. They are going to be out there. There's competition in this area.

And again, a lot of this you're going to be a preferred player in this arena. There may be a few exclusives out there but the managed care organizations are going to have a number of preferred, whether two, three, four, five, which is why it's extremely important for us on the local level to get the referrals.

As every specialty player knows, once you have a contract doesn't mean you're going to get the lives. And you're going to be fighting for the lives on a lot basis, which is why we've employed the strategy on the local level. And I still think you'll see the trend of going from major medical more to the PBM side. But as long as you're able to bill it, you won't participate in there and I think that trend will continue.

And then just lastly, if you can comment on when you with the acquisition of natural living, it looks like you're continuing to focus on this New York area being a strong regional player, rather than really going, you know, further a field. Is that accurate?

It just happened to be that this one was in our back yard and. Look, if you look in the New York and the tri state area, as a matter of fact if you take the northeast corridor and look at the population, there's one place you want to be and that's here. In terms of the hospitals and the care that you receive, New York is absolutely a great place to operate out of. And that is not to say that we will not look hard at acquisitions in other geographic areas that fit Natural Living. We will do that and will continue to do that.

This one happened to be here and we took advantage of that fact. As a matter of fact, when you speak with when we spoke with Bruce, we have a pretty good reputation in that area. We've made two other acquisitions here. And people approach us in this area as well. And I think we have a strong reputation here. But we will be doing similar acquisitions in other areas of the country and will grow nationally through those acquisitions.

Great, in follow-up, this is Al again. I wanted to add one point. It's really becoming much more compelling in the managed care organizations to find a specialty provider. The new biotech drugs that are coming out, as you are aware, are extremely expensive therapies. As a result the managed care organizations are looking for assistance in managing their program and their most important question today is what is the outcome, what are the outcomes of using these relatively expensive biotech drugs. How can you demonstrate to me that my population of members is getting not only great service but we're getting it at an economical value? So I think that the MCOs are going to be looking even more closely as their programs, which will afford us greater opportunity in the future.

Thanks.

Our next question is from the line of Arnold Ursaner with CJS securities.

A couple of follow-up questions, if I can. Can you give us some color on the failed deal? It seems like a relatively high expense as an outsider it seems like you were hopefully going after a relatively large target?

That is correct, Arne. It was one.

And on the business note on your PBM side, it would seem the more you utilize your mail order business, shouldn't we get a pretty good incremental margin on that in the up coming --

We haven't spent a lot of time on PBM but it continues to grow for us. Obviously there is a lot more competition out there in the PBM roles our mail volume is up significantly as Al and Jim have both pointed out. But PBM remains a focus. PBM -- being able to offer PBM service mail and specialty we still believe is beneficial to our clients. And, you know, PBM is still a major contributor. We're still looking for opportunities in the PBM arena. And by having PBM, hopefully you can bring in specialty by having specialty and hopefully bring in some PBM business. That's how we look at the market.

Question for Jim on the guidance in '04 of 650 of revenue and you've given a broad range of margin. Can you give us better mix of the margin between PBM and specialty in the out coming year?

Like to say hardly here you know, PBM and mail will be roughly 400 of the 650. And specialty will be roughly 250. And then the margins on mail and PBM, you know, are in the 7% range roughly. And then, you know, specialty would be roughly 17%, some where in that range. That will give you the weighted average.

Got it. Thank you.

[OPERATOR INSRUCTIONS] Next is from Glenn Garmont, First Albany, please go ahead.

Thanks, a real quick follow up. You guys are you're growing earns quite nicely '04 over '03. But, Rich, what do you believe to be the sustainable long-term earnings growth rate of this company?

That's a good question, Glenn. I wish I could tell you and have a crystal ball, which we don't. All I can tell you is that this is a dynamic business. The pipeline at the FDA is incredible. The potential in this industry is absolutely incredible. There's only a small percentage of this population that's being managed. You know, there's no reason that any of the companies can sustain a 20% growth year-over-year for quite a long period of time.

You know, we still believe, as you all see out there, it is major consolidations going on. That's going to continue. But when you are looking at strictly organic growth, I think the new product pipeline in addition to doing getting more involved in the managed care arena will have significant growth for years to come. And that's excluding price increases.

When you look at, you know, much of the pharmaceutical business today, a lot of growth are based upon increasing utilization as well as increases in drug prices. We're not experiencing that in the specialty arena. In that arena, utilization is utilization. These chronically ill patients are taking their drugs on a regular basis. You don't get increase buys additional advertising on TV to take more of the product. These people have to take it. You're seeing real growth and you know, it's not artificial of any thing else going on. I think this is sustainable for a long period of time.

Thanks. Rich.

And our next question is from the line of Richard Ravitz with Ravitz Investments. Please go ahead.

Good morning, I'd like to know the new Government programs being talked of, how does that affect you? And the acquisition, what was the price paid?

Sure, good morning, Richard.

And one other, what is your projection for cash flow per share for '04?

Sure. Let's go through. The government program that is proposed today that are going to be implemented over the next few years we believe benefits us overall. I think it benefits all the PBMs that are going to participate. We believe giving access in the Medicare arena, which will also include specialty, as well as the drug discount type cards is something this company does.

We've had cards out there for a number of years. We're a major provider for a number of affinity type organizations and we believe hopefully overall we'll benefit by the program. We paid $15 million to Natural Living plus, an earn out that could be anywhere between $2 and $4 million. And I'm going to pass the cash flow on a per share basis -- Jim do you have that?

I did the EBITDA. The EBITDA per share is roughly a dollar and the cash flow because of the TennCare stuff that I mentioned will cut that about in half. It will be probably about 45 cents. I haven't done the actual calculation.

But on an EBITDA basis - you probably talked EBITDA is about a dollar. And if you take out the TennCare payments, it's probably around the 50cent mark.

OK. Are you still buying back shares? Is that still in the offing? Or has that dropped?

We still have money available, approximately $5 million to go do that. And if opportunities present itself at certain times, we will take a hard look at it.

Thank you.

And there are no further questions in queue.

Well, all of us would like to thank you for participating and we expect exciting times for MIM. And we will keep you informed. Thank you very much and have a great day.