Pumpers Help Millennium Healthcare Inc (OTCMKTS:MHCC) Draw Attention to Itself
As you might have guessed already, Millennium Healthcare Inc (OTCMKTS:MHCC) is a healthcare company and the people who have been around penny stocks for a while know that this sector can be particularly harsh on small startups. They also know that investing in development stage companies in this industry can be quite risky because there are many healthcare OTC enterprises set up with the sole purpose of pumping up their share prices. MHCC isn’t one of them.
In fact, they have managed to do quite a lot over the years. Revenues started flowing a while ago and up until Q2 of 2014, they were growing at a steady pace. MHCC have been current with their reporting obligations, they have been updating their shareholders on a regular basis, and they’ve been hard at work trying to convince investors that they really are moving forward.
Yet, once you take a look at the chart, you’ll see that the market wasn’t impressed. In fact, MHCC experienced a truly diabolical crash between April 1 and October 24 when it managed to drop from its 52-week high of $1.50 all the way to under $0.24. It should also be noted that MHCC has failed at sparking any sort of significant interest among investors which means that volumes have been, for the most part, negligible. But what’s the reason for this?
While there’s little doubt in anyone’s mind that MHCC is a working entity, things are far from perfect. Here, for example, is what the latest 10-Q looks like:
- cash: $522 thousand
- current assets: $3.6 million
- current liabilities: $10.8 million
- quarterly revenues: $552 thousand
- quarterly net loss: $1.3 million
As you can see, there’s no shortage of problems. They do have some money in the bank, but the report says that it won’t be enough. The liabilities are absolutely colossal and profitability is still a mirage. The question now is: “Is there anything that could solve all these issues?”.
Apparently, many people think that a massive revenue boost should do the trick. On Wednesday, the company announced just that.
MHCC said that due to the commercial introduction of their medical devices (a brand new source of revenues for the company), they expect to register around $6 million in Q3 sales. For the numerologists among you, that’s 1,049% increase quarter over quarter and a 1,127% leap year over year.
The figures meant that investors were all over MHCC on Wednesday. In a matter of six and a half hours, they traded more than $730 thousand worth of shares while the ticker gained 43%. Yesterday, the pumpers decided to join the party and they sent out a few no-compensation emails. As a result, the dollar volume at the end of the day stood at nearly $3 million and although MHCC finished the session about 3% below its previous close, it hit an intraday high of $0.68 for the first time since July. It’s currently sitting at $0.40 per share.
So, the pumpers appear to be convinced that the quantum leap in MHCC‘s revenues will be enough to sort out the balance sheet and bring the company to profitability. Many investors are ready to believe them, but should you? It’s up to you to decide.
A thing that you must bear in mind, however, is the threat of potential dilution. During the first half of the year, the company printed a total of 18,410,000 new shares. 12.1 million of them were issued to some unnamed parties in exchange for services, 5.7 million were sold during a private placement, and 575 thousand saw the light of day as a conversion of a promissory note.
If the printing press continues working at full steam, MHCC might find itself under a lot of pressure which means that doing your due diligence and thinking about all the risks before jumping in is absolutely essential.