I hope everyone had a nice Thanksgiving! Now that we are all back to work after a good long turkey coma, we thought we would start the week off with coverage on one of our long term, pressure cookers.

And it looks like there is a very bright future in store for Union Dental Holdings Inc. (OTCBB: UDHI). After turning a third quarter profit and growing revenues by nearly 22% during the first nine months of the year, UDHI has kicked things up a notch with its most recent move.

UDHI Designs Its System

Union Dental announced today that they have entered into a purchase agreement to acquire a 7,000 sq ft dental building in Charlotte, NC. Representing the dawn of what could be a new era of growth for the company, UDHI plans to use the facility to house its newly acquired Jakubek Dental subsidiary. The new building will be the "cookie cutter" model for Union Dental's future expansion and will allow the company to generate revenue from a few new streams.

By owning and operating dental practices, UDHI is able to cash in on its proven ability to produce dental prosthetics 20%-30% cheaper than the competitors. Ownership also provides access to a wider pool of sales opportunities than what was previously available when the company functioned simply as a middleman between practices and labor unions. In addition to prosthetic sales, UDHI can now generate revenues from actual dental procedures which we all know can cost a pretty penny.

Calling All Unions
Now leveraging its exclusive contract with the Association of Flight Attendants - Communications Workers of America (AFA-CWA) and using Charlotte as its springboard, UDHI aspires to take a multi-pronged approach to becoming the premium provider of dental coverage to America's labor union workers.

Following the precedent set by the newly acquired Charlotte facility, Union Dental has stated plans to establish additional practices in areas heavily trafficked by labor union members (prong 1). The company will also continue to sell rights to areas of exclusivity to leading dental practices in regions where a physical presence is not yet sustainable (prong 2).

Strategy Ensures Growth

This approach to expansion makes the most sense for UDHI going forward. The way that I see it, the company can now "test the waters" by offering areas of exclusivity to practices in key markets.

For example, UDHI could sell rights to a practice in Los Angeles, monitor and evaluate its performance over a period of time, and then decide whether or not to acquire it or another facility in the area and establish their own practice. This eliminates a lot of guess work and ensures that UDHI follows the most profitable path to growth. A+ to management on their strategic mission!

As I've mentioned in previous editions, UDHI's CWA relationship holds enough potential in itself to propel the company to new heights. Exhibiting UDHI's extensive growth potential, a corporate profile issued by the company in September of 2006, states "Assuming Union Dental achieved 25% adoption among CWA members alone and that each union worker has three additional covered family members, UDHI would coordinate more than $1.1 billion in dental services each year".

Contrary to company progress, UDHI shares are trading at close to a 500% discount from one year ago. The company is exponentially more established now that it was a year ago and more properly positioned for future growth. Even looking through the string of press releases and earning report since 11/27/06 - which is a must for all with their eyes on this company- one has to wonder why UDHI still trades as the bargain basement price of under a penny.

Labels: OTCBB: UDHI, UDHI, UDHI.ob, Union Dental Holdings, Union Dental Holdings Inc.