Intrinsic value of Imprimis Pharmaceuticals - IMMY

Previous Close

$2.43

  Intrinsic Value

$3.61

stock screener

  Rating & Target

buy

+48%

Previous close

$2.43

 
Intrinsic value

$3.61

 
Up/down potential

+48%

 
Rating

buy

We calculate the intrinsic value of IMMY stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  100.00
  34.30
  31.37
  28.73
  26.36
  24.22
  22.30
  20.57
  19.01
  17.61
  16.35
  15.22
  14.19
  13.28
  12.45
  11.70
  11.03
  10.43
  9.89
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
Revenue, $m
  20
  36
  48
  61
  77
  96
  118
  142
  169
  199
  231
  266
  304
  345
  387
  433
  481
  531
  583
  638
  695
  755
  816
  881
  948
  1,017
  1,090
  1,165
  1,243
  1,324
  1,408
Variable operating expenses, $m
 
  16
  21
  27
  34
  42
  51
  61
  73
  86
  100
  114
  131
  148
  166
  186
  206
  228
  250
  274
  298
  324
  351
  378
  407
  437
  468
  500
  534
  569
  605
Fixed operating expenses, $m
 
  29
  29
  30
  31
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  53
  54
Total operating expenses, $m
  38
  45
  50
  57
  65
  73
  83
  94
  106
  120
  135
  150
  167
  185
  204
  225
  246
  269
  291
  316
  341
  368
  396
  424
  454
  485
  517
  550
  585
  622
  659
Operating income, $m
  -18
  -8
  -3
  5
  13
  23
  35
  48
  63
  79
  97
  116
  137
  159
  183
  208
  234
  262
  291
  322
  353
  386
  421
  456
  493
  532
  572
  614
  657
  703
  750
EBITDA, $m
  -17
  -6
  0
  8
  17
  28
  40
  55
  71
  88
  107
  128
  151
  175
  200
  227
  256
  286
  317
  350
  384
  420
  457
  495
  536
  577
  621
  666
  713
  761
  812
Interest expense (income), $m
  1
  3
  5
  7
  9
  12
  15
  18
  22
  27
  32
  37
  43
  49
  56
  63
  71
  79
  87
  96
  105
  114
  124
  135
  145
  157
  168
  180
  193
  206
  219
Earnings before tax, $m
  -19
  -12
  -7
  -2
  4
  11
  20
  29
  40
  52
  65
  79
  94
  110
  127
  145
  164
  183
  204
  226
  248
  272
  296
  322
  348
  376
  404
  434
  465
  497
  531
Tax expense, $m
  0
  0
  0
  0
  1
  3
  5
  8
  11
  14
  17
  21
  25
  30
  34
  39
  44
  50
  55
  61
  67
  73
  80
  87
  94
  101
  109
  117
  126
  134
  143
Net income, $m
  -19
  -12
  -7
  -2
  3
  8
  15
  21
  29
  38
  47
  58
  69
  80
  93
  106
  119
  134
  149
  165
  181
  198
  216
  235
  254
  274
  295
  317
  339
  363
  387

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  9
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  27
  32
  43
  55
  69
  86
  105
  127
  151
  178
  207
  238
  272
  308
  346
  387
  429
  474
  521
  570
  621
  674
  730
  787
  847
  909
  974
  1,041
  1,111
  1,183
  1,259
Adjusted assets (=assets-cash), $m
  18
  32
  43
  55
  69
  86
  105
  127
  151
  178
  207
  238
  272
  308
  346
  387
  429
  474
  521
  570
  621
  674
  730
  787
  847
  909
  974
  1,041
  1,111
  1,183
  1,259
Revenue / Adjusted assets
  1.111
  1.125
  1.116
  1.109
  1.116
  1.116
  1.124
  1.118
  1.119
  1.118
  1.116
  1.118
  1.118
  1.120
  1.118
  1.119
  1.121
  1.120
  1.119
  1.119
  1.119
  1.120
  1.118
  1.119
  1.119
  1.119
  1.119
  1.119
  1.119
  1.119
  1.118
Average production assets, $m
  3
  16
  21
  27
  34
  43
  52
  63
  75
  88
  103
  118
  135
  153
  172
  192
  213
  236
  259
  283
  309
  335
  362
  391
  421
  452
  484
  517
  552
  588
  625
Working capital, $m
  5
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -10
  -12
  -14
  -16
  -19
  -21
  -24
  -26
  -29
  -32
  -36
  -39
  -42
  -46
  -50
  -54
  -58
  -62
  -66
  -71
  -76
  -81
  -86
Total debt, $m
  14
  23
  32
  43
  56
  71
  88
  107
  129
  153
  178
  206
  237
  269
  303
  339
  377
  417
  459
  502
  548
  595
  644
  696
  749
  804
  862
  922
  984
  1,049
  1,116
Total liabilities, $m
  21
  29
  38
  49
  62
  77
  94
  113
  135
  158
  184
  212
  242
  274
  308
  345
  383
  423
  464
  508
  553
  601
  650
  701
  755
  810
  868
  927
  990
  1,054
  1,121
Total equity, $m
  6
  4
  5
  6
  8
  9
  11
  14
  16
  19
  23
  26
  30
  34
  38
  42
  47
  52
  57
  62
  68
  73
  80
  86
  92
  99
  106
  113
  121
  129
  137
Total liabilities and equity, $m
  27
  33
  43
  55
  70
  86
  105
  127
  151
  177
  207
  238
  272
  308
  346
  387
  430
  475
  521
  570
  621
  674
  730
  787
  847
  909
  974
  1,040
  1,111
  1,183
  1,258
Debt-to-equity ratio
  2.333
  6.590
  6.970
  7.240
  7.430
  7.580
  7.690
  7.770
  7.830
  7.890
  7.930
  7.960
  7.990
  8.010
  8.030
  8.040
  8.050
  8.070
  8.080
  8.080
  8.090
  8.100
  8.100
  8.110
  8.110
  8.120
  8.120
  8.130
  8.130
  8.130
  8.130
Adjusted equity ratio
  -0.167
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -19
  -12
  -7
  -2
  3
  8
  15
  21
  29
  38
  47
  58
  69
  80
  93
  106
  119
  134
  149
  165
  181
  198
  216
  235
  254
  274
  295
  317
  339
  363
  387
Depreciation, amort., depletion, $m
  1
  2
  3
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  15
  17
  19
  21
  24
  26
  28
  31
  34
  36
  39
  42
  45
  48
  52
  55
  59
  63
Funds from operations, $m
  -12
  -10
  -5
  1
  7
  13
  20
  28
  37
  47
  58
  70
  82
  96
  110
  125
  141
  157
  175
  193
  212
  232
  252
  274
  296
  319
  343
  368
  395
  422
  450
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Cash from operations, $m
  -11
  -9
  -4
  2
  8
  14
  22
  30
  39
  49
  60
  72
  84
  98
  112
  128
  144
  160
  178
  196
  216
  236
  256
  278
  300
  324
  348
  373
  399
  427
  455
Maintenance CAPEX, $m
  0
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -8
  -9
  -10
  -12
  -14
  -15
  -17
  -19
  -21
  -24
  -26
  -28
  -31
  -34
  -36
  -39
  -42
  -45
  -48
  -52
  -55
  -59
New CAPEX, $m
  -7
  -4
  -5
  -6
  -7
  -8
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
Cash from investing activities, $m
  -7
  -5
  -7
  -8
  -10
  -11
  -14
  -16
  -18
  -21
  -23
  -26
  -29
  -32
  -34
  -37
  -40
  -43
  -47
  -50
  -53
  -57
  -61
  -65
  -69
  -73
  -77
  -81
  -87
  -91
  -97
Free cash flow, $m
  -18
  -14
  -11
  -6
  -2
  3
  8
  14
  21
  28
  37
  46
  56
  67
  78
  90
  103
  117
  131
  146
  162
  178
  195
  213
  231
  251
  271
  291
  313
  335
  359
Issuance/(repayment) of debt, $m
  3
  8
  9
  11
  13
  15
  17
  19
  21
  24
  26
  28
  30
  32
  34
  36
  38
  40
  42
  44
  45
  47
  49
  51
  53
  55
  58
  60
  62
  65
  67
Issuance/(repurchase) of shares, $m
  9
  12
  9
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  25
  20
  18
  14
  13
  15
  17
  19
  21
  24
  26
  28
  30
  32
  34
  36
  38
  40
  42
  44
  45
  47
  49
  51
  53
  55
  58
  60
  62
  65
  67
Total cash flow (excl. dividends), $m
  6
  6
  7
  8
  11
  17
  25
  33
  42
  52
  63
  74
  86
  99
  112
  126
  141
  157
  173
  190
  207
  226
  245
  264
  285
  306
  328
  351
  375
  400
  426
Retained Cash Flow (-), $m
  -7
  -12
  -9
  -3
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  3
  4
  5
  7
  9
  11
  13
  16
  19
  22
  25
  29
  33
  38
  43
  48
  53
  58
  64
  70
  76
  83
  90
  97
  104
  112
  120
  128
  137
  146
Cash available for distribution, $m
 
  -6
  -2
  5
  9
  16
  23
  31
  39
  49
  59
  70
  82
  95
  108
  122
  137
  152
  168
  185
  202
  220
  239
  258
  278
  299
  321
  344
  367
  392
  418
Discount rate, %
 
  10.80
  11.34
  11.91
  12.50
  13.13
  13.78
  14.47
  15.20
  15.96
  16.75
  17.59
  18.47
  19.40
  20.37
  21.38
  22.45
  23.58
  24.75
  25.99
  27.29
  28.66
  30.09
  31.59
  33.17
  34.83
  36.57
  38.40
  40.32
  42.34
  44.45
PV of cash for distribution, $m
 
  -6
  -1
  3
  6
  8
  10
  12
  13
  13
  13
  12
  11
  9
  8
  7
  5
  4
  3
  2
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  71.2
  57.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
  53.3
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Imprimis Pharmaceuticals, Inc. (Imprimis) is engaged in the development, production and dispensing of compounded pharmaceuticals. The Company operates through the business of developing drug therapies and providing such therapies through sterile and non-sterile pharmaceutical compounding services segment. The Company, through its Imprimis Cares program, owns, markets and dispenses a portfolio of compounded therapeutic in several therapeutic areas, including ophthalmology, urology, otolaryngology and infectious diseases. The Company is also developing Custom Compounding Choice business, which is focused on developing and dispensing a portfolio of non-proprietary compounded drugs for humans and animals in therapeutic areas that may be overlooked by commercial pharmaceutical companies. The Company also offers customizable compounding products that consist of sterile injectable and non-sterile integrative medicine therapies that are used in various therapeutic areas.

FINANCIAL RATIOS  of  Imprimis Pharmaceuticals (IMMY)

Valuation Ratios
P/E Ratio -2.4
Price to Sales 2.3
Price to Book 7.5
Price to Tangible Book
Price to Cash Flow -4.1
Price to Free Cash Flow -2.5
Growth Rates
Sales Growth Rate 100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 600%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 166.7%
Total Debt to Equity 233.3%
Interest Coverage -18
Management Effectiveness
Return On Assets -87.8%
Ret/ On Assets - 3 Yr. Avg. -96.6%
Return On Total Capital -135.7%
Ret/ On T. Cap. - 3 Yr. Avg. -140.9%
Return On Equity -760%
Return On Equity - 3 Yr. Avg. -434.7%
Asset Turnover 1
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 50%
EBITDA Margin -85%
EBITDA Margin - 3 Yr. Avg. -245%
Operating Margin -90%
Oper. Margin - 3 Yr. Avg. -246.7%
Pre-Tax Margin -95%
Pre-Tax Margin - 3 Yr. Avg. -251.7%
Net Profit Margin -95%
Net Profit Margin - 3 Yr. Avg. -251.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IMMY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IMMY stock intrinsic value calculation we used $27 million for the last fiscal year's total revenue generated by Imprimis Pharmaceuticals. The default revenue input number comes from 2016 income statement of Imprimis Pharmaceuticals. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our IMMY stock valuation model: a) initial revenue growth rate of 34.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 10.8%, whose default value for IMMY is calculated based on our internal credit rating of Imprimis Pharmaceuticals, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Imprimis Pharmaceuticals.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of IMMY stock the variable cost ratio is equal to 44.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $28 million in the base year in the intrinsic value calculation for IMMY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 20.9% for Imprimis Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Imprimis Pharmaceuticals. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the IMMY stock is equal to 11%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for IMMY are equal to 44.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Imprimis Pharmaceuticals operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for IMMY is equal to -6.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3 million for Imprimis Pharmaceuticals - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 20 million for Imprimis Pharmaceuticals is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Imprimis Pharmaceuticals at the current share price and the inputted number of shares is $0.0 billion.

RELATED COMPANIES Price Int.Val. Rating
RTRX Retrophin 30.35 11.68  sell
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COMPANY NEWS

▶ Imprimis: 1Q Earnings Snapshot   [May-15-18 07:22PM  Associated Press]
▶ Imprimis reports 4Q loss   [Mar-08-18 05:14PM  Associated Press]
▶ Who Owns Imprimis Pharmaceuticals Inc (NASDAQ:IMMY)?   [Jan-30-18 07:21PM  Simply Wall St.]
▶ Imprimis reports 3Q loss   [Nov-16-17 05:14AM  Associated Press]
▶ Imprimis Launches Surface Pharmaceuticals Subsidiary   [Oct-24-17 07:30AM  PR Newswire]
▶ FDA Curcumin Investigation Supports Imprimis Statement   [Sep-14-17 08:00AM  PR Newswire]
▶ Imprimis Releases Statement Regarding Allergan Lawsuit   [Sep-11-17 07:30AM  PR Newswire]
▶ Imprimis posts 2Q profit   [Aug-10-17 10:11PM  Associated Press]
▶ Imprimis reports 1Q loss   [May-10-17 04:22PM  Associated Press]
▶ Imprimis reports 4Q loss   [Mar-21-17 04:31PM  Associated Press]
▶ Webcast-Q4 Earnings Call for Imprimis Pharmaceuticals, Inc.   [Mar-08-17 11:11PM  at Company Spotlight]
▶ Webcast-Q4 Earnings Call for Imprimis Pharmaceuticals, Inc.   [Mar-07-17 11:11PM  at Company Spotlight]
Financial statements of IMMY
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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