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[Beginning of
Cramer's
verbatim
comments for
this segment...]
Jim:
I think that we
are right at the
beginning of an
IPO land slide
in this country…
private equity
firms have been
sitting on
companies that
they hope to
take public for
over a year now…
waiting for the
market to
improve enough
to make it worth
their while… and
I think that we
have finally
reached that
point… even
though it is the
middle of
August… you are
going to see a
flood of newly
public
companies… but
not all of these
IPO’s are worth
getting in on…
this week,
though, there is
an IPO coming
that may be the
model for the
kind you want to
buy… the kind
that should
actually make
you money…
because its
private equity
parent has
actually added
value while the
business was not
trading on
public market…
this is a
rarity… usually
they wreck the
value… they tell
you that they
improved it… but
they did not...
I am talking about
Emdeon (EM),
which will trade
under the symbol EM,
when it becomes
public this
Wednesday, this
week… it is the
largest electronic
medical billing
system in this
country… so it fits
perfectly into the
current moment…
where healthcare
cost containment has
become steaming,
sizzling, hot… so
far this year there
have been 7 private
equity backed IPO’s
and all but one of
them has gained
value since coming
public… that is not
bad… Emdeon is owned
by two different
private equity
firms, General
Atlantic and Hellum
& Friedman… and
because General
Atlantic is
involved, you do not
need to worry that
they are just
spinning off a
gutted joke of a
company in order to
profit for
themselves… while
they rob you blind…
this thing is the
real deal… Bill
Ford, who runs
General Atlantic,
knows how to create
value… this is an
instance where he
makes money, and you
get to make money…
where his partners
do well and you
could do well…
especially if this
deal is priced near
where it is expected
to.
Right now the plan
is to offer 21.5m
shares at between
$13.50 and $15.50 a
share… which at the
mid point makes it
so that Emdeon is a
$1.7b company… look,
I think you should
try to get in on
this deal… ask your
broker to try to get
you some shares…
because I think this
one is being priced
very conservatively…
Morgan Stanley,
Goldman Sachs, UBS,
and Barclays are the
lead underwriters…
maybe you want to do
some trades with
them in order to get
in on the Emdeon
IPO.
Alright, let me make
one thing extremely
clear though… if you
can’t get any shares
on the IPO, in other
words, before it
opens… I do not want
you to chase the
stock in the after
market… the
opportunity here is
to catch this one at
too low a price once
it comes public… not
to pay up enormously
once it starts
trading… Emdeon is
not just a hot IPO..
it is also a company
that makes money… we
did not have that
back in 1999 and
2000 when the tech
bubble occurred…
tech, IPO’s to them
were coming hot and
heavy… nobody cared
about the underlying
business… Emdeon is
a healthcare IT
company with a
comprehensive suite
of payment and
processing
solutions… it is the
top electronic
medical billing
system in the
country… sound like
President Obama… and
it has got its
fingers in
e-payment,
electronic
prescriptions,
revenue cycle
management, and data
end analytics.
Emdeon’s platform
helps healthcare
providers control
their administrative
costs… and we all
know that healthcare
cost containment is
one of the fastest
growing parts of the
healthcare economy…
the thing that I
really like Emdeon,
the reason that I
think this could be
better than say
Allscripts, which
you know we like, or
Cerner, which I have
not been that big a
fan of, although it
has done well.. is
that it addresses
the entire
healthcare revenue
cycle… its
competitors have
solutions that only
help at certain
points in the cycle…
that is why I would
pay up to $17.50 for
this one… because it
becomes more
expensive then its
compares above that,
companies like
Allscripts and
Cerner… in other
words, that if you
pay up beyond that,
then the other guys
are cheaper, so you
might like them
more… see that is
the question that
you have to ask
yourself about an
IPO…. how much is
this one worth vs.
others that are in
the same peer group…
because if you
cannot get under
that, then you do
not have a good
entry point… pay
more than that, then
you are trying to
make the hard money…
I say we leave that
for others.
You can’t get hurt
if you buy it at
$17.50 or below… you
could get hurt if
you pay up… and we
believe in first do
no harm in
Cramerica… so Emdeon
ends up getting paid
during each step of
the process…
creating 5 or 6
different revenue
streams every time
someone interacts
with the healthcare
system… and at each
point it is saving
providers and
insurance companies
money… the patient
arrives at a doctors
office, when the
doctor checks the
patients
eligibility… that is
Emdeon… then the
patient receives
care and the doctor
submit’s a bill to
the insurance
company….. Emdeon is
there too… and then
the insurance
company receives the
bill, processes the
payment and sends it
back… Emdeon does
that… and then the
doctor bills the
patient… there is
Emdeon again… and
finally the
insurance company
will also have
information to the
patient… one more
point where Emdeon
makes the system
smoother… and gets
paid for doing it.
Because Emdeon is at
every point in the
process and because
it is connected to
every major system
developed over the
last 25 years… its
customers are
increasingly
consolidating to
Emdeon’s platform
for everything… and
there is still
growth here… because
even though 80% of
bills from doctors
or hospitals are
sent to insurance
companies
electronically… only
10% to 15% coming
from the insurance
company back to the
doctor or hospital
are done
electronically… big
market… Emdeon’s
systems immediately
save money for its
customers…
eliminating paper
claims and stopping
unnecessary or
abusive claims
before they get into
the system.. again,
this is what Obama
wants… and you just
know that when Obama
eventually declares
victory on
healthcare reform…
meaning when he
accomplishes some
cost containment,
some expansion in
coverage… I think
that he will be
giving Emdeon a big
sub-rosa boost,
because it is the
cost control player.
It benefits from
increased electronic
prescribing and
record management
and any increased
demand for cost
comparison data,
that is going to be
important… and
anything that
generates more
claims… like more
receiving
healthcare…one more
unique thing about
Emdeon.. is has
actually had its
value improved by
General Electronic,
the private equity
firm that bought if
from
HLTH Corporation
(HLTH) at the end
of 2006, since
General Atlantic has
bought the business, Emdeon has made a
lot of smart
acquisitions… it has
also been able to
reduce its debt by
1/3 since December
of 2006.. usually
these private equity
firms love to pile
on debt onto the
company before they
spin it out… not
this time though…
General Atlantic
added value to
Emdeon creating what
looks to me like the
ideal healthcare
stock for the ideal
time… it is the best
in the business… it
should have much
better growth than
other companies in
it… and the area is
red hot.
Here is the bottom
line…
▼ ▼
▼ ▼
▼
 The
Bottom Line!:
If you can, try to
get in on the
Emdeon (EM)
IPO… this one is
coming public on
Wednesday, so you do
not have much time…
$13.50 to $15.50 is
a steal… $17.50 is
the highest that I
will let you buy… I
think this one
works… just promise
me that you will not
chase it in the
after market… no
matter what the
price.
[verbatim recap]
[end of segment]
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