Perspectives from the Front Line
“When written in Chinese, the word crisis is composed of two characters. One represents danger and the other represents opportunity. In a crisis be aware of the danger – but recognize the opportunity”.John. F. Kennedy
Your HPA management team has experienced four major market or economic downturns and recoveries over the past four decades. Those cycles were all sparked from different embers in a relatively short while, ranging from six to 18 months, yet things have always ended up the same, with prosperity and new highs.
A company’s valuation, public or private, is measured and affected by three things: (1) The success, profitability, and growth of the company itself (2) It’s Industry (3) The economy and market psychology in general.
What we have control over is the industry we choose to be in, the business model within that industry, how we operate the business, and the leaders, partners, and people we affiliate with. We are in the most economically immune industry, healthcare.
Within healthcare, we designed HPA very conservatively so it could weather any storm. We did this by creating a portfolio of notes to medical and dental practices with fixed monthly payments, together with monthly membership fees. Unlike most companies, our model is debt-free. This creates a high-quality fixed income stream of cash flow that, unlike most stock companies, does not deteriorate with weak economic demand or supply disruptions. That is important in times like these when stocks are declining. You may have noticed that 10-year fixed income U.S. Treasury Bonds have increased in value almost as much as stocks have fallen in value. Because of the structure of HPA, our value is closely linked with fixed income in a declining interest-rate environment, therefore our value increases. But, unlike U.S. Treasury Bonds, HPA has increasing income as our company grows, allowing our shares to increase in value over the long term rather than staying flat. This is because each added member is adding to the note portfolio, creating profits.
Likewise, with your HPA stock position, you aren’t joining to sell today, or even in a year. Our business model was built on HPA members paying only a fraction of the market multiples displayed by other healthcare subscription-based public and private companies. In other words, we feel that HPA shares are still valued at a large discount to the market, even after this decline. This works in our favor today as a private company. As public company values decline, we can take advantage of our increasing value to reduce dilution to our shareholders when we do go public. That means a higher ultimate share value for you.
What’s important now:
- We are adding HPA members weekly.
- HPA’s Service Division, powered by DataDx, has hundreds of healthcare clients. The division is growing despite the general economy’s near-term direction. Recently, DataDx was awarded a valuable position on Microsoft Market Place.
- HPA has access to institutional financing to help grow our model as we see opportunities arise for both the company, benefiting member shareholders, and for its members in their practices.
- As an HPA member, you have access to a palate of services that can reduce your practice expenses, increase your revenue, and smooth operations in any environment.
- As an HPA member and shareholder, you have taken a further step toward safety through diversification of specialty, geography, and age of other members.
- As an HPA shareholder, you’ve set yourself up to diversify your retirement timing and exit strategy regardless of what you do with your practice.
- You still have your traditional practice that you own, manage and control.
- With your HPA stock, you will have a multitude of fractional or full exit opportunities before and after retirement. In other words, you can diversify your exit based on market conditions, time of life, and personal needs. You don’t have that luxury with your practice alone.
You should also take comfort in knowing that the HPA management team has a significant portion of our personal assets in HPA stock, alongside you.
HPA Management Team’s pragmatic and diverse Financial Markets, Accounting, Data Analytics, and Health Advisory experience is creating a pathway to success – seizing opportunities and growing exponentially regardless of today’s environment.