Intrinsic value of Imprimis Pharmaceuticals - IMMY

Previous Close

$1.85

  Intrinsic Value

$0.05

stock screener

  Rating & Target

str. sell

-97%

Previous close

$1.85

 
Intrinsic value

$0.05

 
Up/down potential

-97%

 
Rating

str. sell

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

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.0

 

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
  40.00
  36.50
  33.35
  30.52
  27.96
  25.67
  23.60
  21.74
  20.07
  18.56
  17.20
  15.98
  14.89
  13.90
  13.01
  12.21
  11.49
  10.84
  10.25
  9.73
  9.26
  8.83
  8.45
  8.10
  7.79
  7.51
  7.26
  7.04
  6.83
  6.65
Revenue, $m
  20
  28
  38
  51
  67
  85
  107
  132
  161
  193
  229
  269
  311
  358
  408
  461
  517
  576
  639
  704
  773
  844
  919
  996
  1,077
  1,161
  1,248
  1,339
  1,433
  1,531
  1,632
Variable operating expenses, $m
 
  36
  50
  66
  86
  110
  138
  171
  208
  249
  296
  346
  402
  462
  526
  594
  667
  743
  824
  908
  997
  1,089
  1,185
  1,285
  1,389
  1,497
  1,610
  1,727
  1,848
  1,974
  2,106
Fixed operating expenses, $m
 
  12
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  17
  17
  17
  18
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  25
  25
Total operating expenses, $m
  38
  48
  63
  79
  99
  124
  152
  185
  223
  264
  311
  362
  418
  479
  543
  611
  685
  761
  843
  927
  1,017
  1,109
  1,206
  1,306
  1,411
  1,519
  1,633
  1,750
  1,872
  1,999
  2,131
Operating income, $m
  -18
  -21
  -24
  -28
  -33
  -38
  -45
  -53
  -61
  -71
  -82
  -94
  -106
  -120
  -135
  -151
  -168
  -185
  -204
  -223
  -244
  -265
  -287
  -310
  -334
  -359
  -385
  -412
  -439
  -468
  -499
EBITDA, $m
  -17
  -20
  -23
  -26
  -31
  -36
  -42
  -49
  -56
  -65
  -75
  -86
  -97
  -110
  -123
  -137
  -152
  -168
  -185
  -202
  -221
  -240
  -259
  -280
  -302
  -324
  -347
  -371
  -396
  -423
  -450
Interest expense (income), $m
  1
  1
  1
  2
  3
  4
  5
  7
  9
  11
  13
  16
  18
  21
  25
  28
  32
  36
  40
  44
  49
  54
  59
  64
  70
  75
  81
  87
  94
  100
  107
Earnings before tax, $m
  -19
  -21
  -25
  -30
  -36
  -43
  -51
  -60
  -70
  -82
  -95
  -109
  -125
  -142
  -160
  -179
  -200
  -221
  -244
  -268
  -293
  -319
  -346
  -374
  -404
  -434
  -466
  -499
  -533
  -569
  -606
Tax expense, $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
  0
Net income, $m
  -19
  -21
  -25
  -30
  -36
  -43
  -51
  -60
  -70
  -82
  -95
  -109
  -125
  -142
  -160
  -179
  -200
  -221
  -244
  -268
  -293
  -319
  -346
  -374
  -404
  -434
  -466
  -499
  -533
  -569
  -606

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
  25
  34
  46
  60
  77
  96
  119
  145
  174
  206
  242
  280
  322
  367
  415
  465
  519
  575
  634
  695
  760
  827
  897
  969
  1,045
  1,123
  1,205
  1,290
  1,378
  1,469
Adjusted assets (=assets-cash), $m
  18
  25
  34
  46
  60
  77
  96
  119
  145
  174
  206
  242
  280
  322
  367
  415
  465
  519
  575
  634
  695
  760
  827
  897
  969
  1,045
  1,123
  1,205
  1,290
  1,378
  1,469
Revenue / Adjusted assets
  1.111
  1.120
  1.118
  1.109
  1.117
  1.104
  1.115
  1.109
  1.110
  1.109
  1.112
  1.112
  1.111
  1.112
  1.112
  1.111
  1.112
  1.110
  1.111
  1.110
  1.112
  1.111
  1.111
  1.110
  1.111
  1.111
  1.111
  1.111
  1.111
  1.111
  1.111
Average production assets, $m
  3
  4
  6
  8
  10
  13
  16
  20
  24
  29
  34
  40
  47
  54
  61
  69
  78
  86
  96
  106
  116
  127
  138
  149
  162
  174
  187
  201
  215
  230
  245
Working capital, $m
  5
  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 debt, $m
  14
  16
  24
  34
  47
  62
  80
  100
  123
  150
  179
  211
  245
  283
  323
  366
  412
  460
  510
  563
  619
  677
  737
  800
  865
  933
  1,004
  1,077
  1,154
  1,233
  1,315
Total liabilities, $m
  21
  23
  31
  41
  54
  69
  87
  107
  130
  157
  186
  218
  252
  290
  330
  373
  419
  467
  517
  570
  626
  684
  744
  807
  872
  940
  1,011
  1,084
  1,161
  1,240
  1,322
Total equity, $m
  6
  3
  3
  5
  6
  8
  10
  12
  14
  17
  21
  24
  28
  32
  37
  41
  47
  52
  57
  63
  70
  76
  83
  90
  97
  104
  112
  120
  129
  138
  147
Total liabilities and equity, $m
  27
  26
  34
  46
  60
  77
  97
  119
  144
  174
  207
  242
  280
  322
  367
  414
  466
  519
  574
  633
  696
  760
  827
  897
  969
  1,044
  1,123
  1,204
  1,290
  1,378
  1,469
Debt-to-equity ratio
  2.333
  6.220
  6.970
  7.470
  7.830
  8.090
  8.270
  8.410
  8.520
  8.600
  8.660
  8.710
  8.750
  8.780
  8.810
  8.830
  8.850
  8.870
  8.880
  8.890
  8.900
  8.910
  8.920
  8.920
  8.930
  8.930
  8.940
  8.940
  8.950
  8.950
  8.950
Adjusted equity ratio
  -0.167
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -19
  -21
  -25
  -30
  -36
  -43
  -51
  -60
  -70
  -82
  -95
  -109
  -125
  -142
  -160
  -179
  -200
  -221
  -244
  -268
  -293
  -319
  -346
  -374
  -404
  -434
  -466
  -499
  -533
  -569
  -606
Depreciation, amort., depletion, $m
  1
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  8
  9
  11
  12
  14
  16
  17
  19
  21
  23
  25
  28
  30
  32
  35
  37
  40
  43
  46
  49
Funds from operations, $m
  -12
  -20
  -24
  -28
  -34
  -40
  -47
  -56
  -65
  -76
  -88
  -101
  -115
  -131
  -148
  -165
  -184
  -204
  -225
  -247
  -270
  -293
  -318
  -344
  -371
  -399
  -428
  -459
  -490
  -523
  -557
Change in working capital, $m
  -1
  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 from operations, $m
  -11
  -20
  -24
  -28
  -34
  -40
  -47
  -56
  -65
  -76
  -88
  -101
  -115
  -131
  -148
  -165
  -184
  -204
  -225
  -247
  -270
  -293
  -318
  -344
  -371
  -399
  -428
  -459
  -490
  -523
  -557
Maintenance CAPEX, $m
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -11
  -12
  -14
  -16
  -17
  -19
  -21
  -23
  -25
  -28
  -30
  -32
  -35
  -37
  -40
  -43
  -46
New CAPEX, $m
  -7
  -1
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
Cash from investing activities, $m
  -7
  -2
  -3
  -3
  -4
  -5
  -6
  -7
  -8
  -10
  -11
  -13
  -14
  -16
  -18
  -20
  -22
  -25
  -26
  -29
  -31
  -34
  -36
  -40
  -42
  -45
  -48
  -51
  -54
  -58
  -61
Free cash flow, $m
  -18
  -22
  -26
  -31
  -37
  -45
  -53
  -63
  -73
  -86
  -99
  -114
  -130
  -147
  -166
  -185
  -206
  -228
  -251
  -276
  -301
  -327
  -355
  -383
  -413
  -444
  -476
  -510
  -544
  -581
  -618
Issuance/(repayment) of debt, $m
  3
  6
  8
  10
  13
  15
  18
  20
  23
  26
  29
  32
  35
  38
  40
  43
  46
  48
  51
  53
  55
  58
  60
  63
  65
  68
  71
  73
  76
  79
  82
Issuance/(repurchase) of shares, $m
  9
  23
  26
  31
  37
  44
  52
  62
  73
  85
  98
  113
  129
  146
  164
  184
  205
  226
  250
  274
  299
  325
  353
  381
  411
  442
  474
  507
  542
  578
  615
Cash from financing (excl. dividends), $m  
  25
  29
  34
  41
  50
  59
  70
  82
  96
  111
  127
  145
  164
  184
  204
  227
  251
  274
  301
  327
  354
  383
  413
  444
  476
  510
  545
  580
  618
  657
  697
Total cash flow (excl. dividends), $m
  6
  6
  8
  10
  12
  15
  17
  20
  23
  25
  28
  31
  33
  36
  39
  41
  44
  46
  49
  51
  53
  56
  58
  61
  63
  65
  68
  71
  73
  76
  79
Retained Cash Flow (-), $m
  -7
  -23
  -26
  -31
  -37
  -44
  -52
  -62
  -73
  -85
  -98
  -113
  -129
  -146
  -164
  -184
  -205
  -226
  -250
  -274
  -299
  -325
  -353
  -381
  -411
  -442
  -474
  -507
  -542
  -578
  -615
Prev. year cash balance distribution, $m
 
  5
  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
 
  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 available for distribution, $m
 
  -12
  -18
  -21
  -25
  -30
  -35
  -42
  -50
  -59
  -70
  -82
  -95
  -110
  -125
  -142
  -161
  -180
  -201
  -223
  -245
  -269
  -294
  -321
  -348
  -376
  -406
  -436
  -468
  -501
  -536
Discount rate, %
 
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
PV of cash for distribution, $m
 
  -11
  -15
  -16
  -18
  -19
  -20
  -21
  -22
  -23
  -23
  -23
  -22
  -21
  -19
  -17
  -15
  -13
  -11
  -9
  -7
  -6
  -4
  -3
  -2
  -2
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  21.2
  7.9
  3.2
  1.4
  0.6
  0.3
  0.1
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

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 -1.8
Price to Sales 1.7
Price to Book 5.7
Price to Tangible Book
Price to Cash Flow -3.1
Price to Free Cash Flow -1.9
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 $20 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 40% 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 7.6%, 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 130%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $12 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 8.7% 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 0%.

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 15%.

Life of production assets of 5 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 0%. 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 - $6 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 20.065 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
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COMPANY NEWS

▶ 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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