Intrinsic value of Pernix Therapeutics Holdings - PTX

Previous Close

$2.55

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.55

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of PTX 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, %
  -19.89
  3.70
  3.83
  3.95
  4.05
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
Revenue, $m
  141
  151
  157
  163
  170
  177
  185
  193
  201
  210
  219
  229
  240
  251
  263
  275
  288
  302
  316
  331
  347
  364
  382
  400
  420
  441
  462
  485
  509
  534
  560
Variable operating expenses, $m
 
  315
  326
  339
  352
  366
  381
  397
  414
  432
  451
  460
  481
  503
  527
  552
  578
  605
  634
  665
  697
  731
  766
  803
  843
  884
  927
  973
  1,021
  1,071
  1,124
Fixed operating expenses, $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
Total operating expenses, $m
  281
  315
  326
  339
  352
  366
  381
  397
  414
  432
  451
  460
  481
  503
  527
  552
  578
  605
  634
  665
  697
  731
  766
  803
  843
  884
  927
  973
  1,021
  1,071
  1,124
Operating income, $m
  -140
  -163
  -169
  -175
  -182
  -189
  -197
  -205
  -213
  -222
  -232
  -231
  -241
  -253
  -264
  -277
  -290
  -304
  -318
  -333
  -350
  -366
  -384
  -403
  -423
  -443
  -465
  -488
  -512
  -537
  -564
EBITDA, $m
  -53
  -136
  -141
  -147
  -153
  -159
  -166
  -173
  -181
  -189
  -197
  -206
  -216
  -226
  -236
  -247
  -259
  -272
  -285
  -298
  -313
  -328
  -344
  -360
  -378
  -396
  -416
  -436
  -458
  -480
  -504
Interest expense (income), $m
  30
  36
  12
  13
  14
  15
  16
  17
  19
  20
  21
  23
  24
  26
  28
  30
  32
  34
  36
  38
  41
  43
  46
  49
  52
  55
  58
  62
  65
  69
  73
Earnings before tax, $m
  -169
  -199
  -181
  -188
  -196
  -204
  -213
  -222
  -232
  -242
  -253
  -254
  -266
  -279
  -292
  -307
  -322
  -337
  -354
  -372
  -390
  -410
  -430
  -452
  -474
  -498
  -523
  -550
  -577
  -606
  -637
Tax expense, $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
Net income, $m
  -170
  -199
  -181
  -188
  -196
  -204
  -213
  -222
  -232
  -242
  -253
  -254
  -266
  -279
  -292
  -307
  -322
  -337
  -354
  -372
  -390
  -410
  -430
  -452
  -474
  -498
  -523
  -550
  -577
  -606
  -637

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  36
  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
  310
  213
  221
  230
  239
  249
  260
  271
  283
  295
  308
  322
  337
  353
  369
  387
  405
  424
  445
  466
  488
  512
  537
  563
  591
  620
  650
  682
  716
  751
  788
Adjusted assets (=assets-cash), $m
  274
  213
  221
  230
  239
  249
  260
  271
  283
  295
  308
  322
  337
  353
  369
  387
  405
  424
  445
  466
  488
  512
  537
  563
  591
  620
  650
  682
  716
  751
  788
Revenue / Adjusted assets
  0.515
  0.709
  0.710
  0.709
  0.711
  0.711
  0.712
  0.712
  0.710
  0.712
  0.711
  0.711
  0.712
  0.711
  0.713
  0.711
  0.711
  0.712
  0.710
  0.710
  0.711
  0.711
  0.711
  0.710
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
  0.711
Average production assets, $m
  230
  161
  167
  174
  181
  188
  196
  205
  214
  223
  233
  244
  255
  267
  279
  293
  306
  321
  336
  353
  370
  387
  406
  426
  447
  469
  492
  516
  541
  568
  596
Working capital, $m
  -1
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
Total debt, $m
  301
  96
  103
  111
  119
  128
  138
  148
  159
  170
  182
  194
  208
  222
  237
  252
  269
  286
  304
  324
  344
  365
  387
  411
  436
  462
  489
  518
  548
  580
  613
Total liabilities, $m
  425
  192
  199
  207
  215
  224
  234
  244
  254
  266
  278
  290
  304
  318
  332
  348
  365
  382
  400
  419
  440
  461
  483
  507
  532
  558
  585
  614
  644
  676
  709
Total equity, $m
  -114
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
  39
  41
  42
  44
  47
  49
  51
  54
  56
  59
  62
  65
  68
  72
  75
  79
Total liabilities and equity, $m
  311
  213
  221
  230
  239
  249
  260
  271
  282
  296
  309
  322
  338
  353
  369
  387
  406
  424
  444
  466
  489
  512
  537
  563
  591
  620
  650
  682
  716
  751
  788
Debt-to-equity ratio
  -2.640
  4.500
  4.660
  4.830
  4.990
  5.150
  5.310
  5.460
  5.610
  5.750
  5.890
  6.030
  6.160
  6.280
  6.410
  6.520
  6.630
  6.740
  6.840
  6.940
  7.040
  7.130
  7.220
  7.300
  7.380
  7.450
  7.530
  7.590
  7.660
  7.720
  7.780
Adjusted equity ratio
  -0.547
  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
  -170
  -199
  -181
  -188
  -196
  -204
  -213
  -222
  -232
  -242
  -253
  -254
  -266
  -279
  -292
  -307
  -322
  -337
  -354
  -372
  -390
  -410
  -430
  -452
  -474
  -498
  -523
  -550
  -577
  -606
  -637
Depreciation, amort., depletion, $m
  87
  27
  28
  28
  29
  30
  31
  31
  32
  33
  34
  24
  26
  27
  28
  29
  31
  32
  34
  35
  37
  39
  41
  43
  45
  47
  49
  52
  54
  57
  60
Funds from operations, $m
  6
  -172
  -154
  -160
  -167
  -174
  -182
  -191
  -199
  -209
  -219
  -229
  -240
  -252
  -264
  -277
  -291
  -305
  -321
  -337
  -353
  -371
  -390
  -409
  -430
  -451
  -474
  -498
  -523
  -550
  -577
Change in working capital, $m
  23
  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
  -17
  -172
  -153
  -160
  -167
  -174
  -182
  -190
  -199
  -209
  -219
  -229
  -240
  -252
  -264
  -277
  -291
  -305
  -320
  -336
  -353
  -371
  -389
  -409
  -429
  -451
  -474
  -498
  -523
  -549
  -577
Maintenance CAPEX, $m
  0
  -16
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
New CAPEX, $m
  -1
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
Cash from investing activities, $m
  -2
  -22
  -22
  -24
  -24
  -26
  -27
  -28
  -29
  -30
  -32
  -34
  -35
  -38
  -39
  -41
  -43
  -46
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -81
  -85
Free cash flow, $m
  -19
  -193
  -176
  -183
  -191
  -200
  -209
  -219
  -229
  -240
  -251
  -263
  -276
  -289
  -303
  -318
  -334
  -350
  -368
  -386
  -405
  -426
  -447
  -469
  -493
  -518
  -544
  -571
  -600
  -630
  -662
Issuance/(repayment) of debt, $m
  -21
  -188
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  27
  29
  30
  32
  33
Issuance/(repurchase) of shares, $m
  20
  394
  182
  189
  197
  205
  214
  223
  233
  243
  254
  255
  267
  280
  294
  308
  323
  339
  356
  374
  393
  412
  433
  454
  477
  501
  526
  553
  581
  610
  641
Cash from financing (excl. dividends), $m  
  -2
  206
  189
  197
  205
  214
  223
  233
  244
  254
  266
  268
  280
  294
  309
  324
  339
  356
  374
  393
  413
  433
  455
  478
  502
  527
  553
  582
  611
  642
  674
Total cash flow (excl. dividends), $m
  -20
  13
  14
  14
  14
  14
  14
  15
  15
  15
  15
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
Retained Cash Flow (-), $m
  147
  -394
  -182
  -189
  -197
  -205
  -214
  -223
  -233
  -243
  -254
  -255
  -267
  -280
  -294
  -308
  -323
  -339
  -356
  -374
  -393
  -412
  -433
  -454
  -477
  -501
  -526
  -553
  -581
  -610
  -641
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
 
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
Cash available for distribution, $m
 
  -381
  -168
  -175
  -183
  -191
  -199
  -209
  -218
  -228
  -239
  -250
  -262
  -275
  -288
  -303
  -317
  -333
  -350
  -367
  -385
  -404
  -424
  -446
  -468
  -492
  -516
  -542
  -569
  -598
  -628
Discount rate, %
 
  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
  32.85
  34.49
  36.21
  38.02
  39.93
  41.92
  44.02
  46.22
  48.53
  50.96
  53.50
  56.18
  58.99
  61.94
  65.03
PV of cash for distribution, $m
 
  -329
  -124
  -108
  -93
  -79
  -66
  -54
  -44
  -35
  -27
  -20
  -15
  -11
  -7
  -5
  -3
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  5.2
  0.5
  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
  0.0
  0.0
  0.0
  0.0

Pernix Therapeutics Holdings, Inc. is a specialty pharmaceutical company. The Company focuses on identifying, developing and commercializing differentiated products that address unmet medical needs. It focuses on underserved therapeutic areas, such as central nervous system (CNS), including neurology and psychiatry, as well as other specialty therapeutic areas. Its products include Treximet, indicated for acute migraine; Zohydro ER with BeadTek, an extended-release opioid agonist indicated for the management of pain severe; Silenor for the treatment of insomnia characterized by difficulty with sleep maintenance, and Khedezla for major depressive disorder. It promotes selected non-core branded products, such as its cough and cold products, through co-promotion arrangements with third-party sales organizations, and distributes its generic products through its subsidiaries, Macoven Pharmaceuticals, LLC (Macoven) and Cypress Pharmaceuticals, Inc.

FINANCIAL RATIOS  of  Pernix Therapeutics Holdings (PTX)

Valuation Ratios
P/E Ratio -0.2
Price to Sales 0.2
Price to Book -0.2
Price to Tangible Book
Price to Cash Flow -1.5
Price to Free Cash Flow -1.4
Growth Rates
Sales Growth Rate -19.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity -254.4%
Total Debt to Equity -264%
Interest Coverage -5
Management Effectiveness
Return On Assets -34.6%
Ret/ On Assets - 3 Yr. Avg. -22.4%
Return On Total Capital -63.3%
Ret/ On T. Cap. - 3 Yr. Avg. -39.3%
Return On Equity 419.8%
Return On Equity - 3 Yr. Avg. 43.6%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 69.5%
Gross Margin - 3 Yr. Avg. 67.7%
EBITDA Margin -36.9%
EBITDA Margin - 3 Yr. Avg. -18.2%
Operating Margin -99.3%
Oper. Margin - 3 Yr. Avg. -60.6%
Pre-Tax Margin -119.9%
Pre-Tax Margin - 3 Yr. Avg. -80%
Net Profit Margin -120.6%
Net Profit Margin - 3 Yr. Avg. -77.8%
Effective Tax Rate -0.6%
Eff/ Tax Rate - 3 Yr. Avg. 7.7%
Payout Ratio 0%

PTX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PTX stock intrinsic value calculation we used $146 million for the last fiscal year's total revenue generated by Pernix Therapeutics Holdings. The default revenue input number comes from 2016 income statement of Pernix Therapeutics Holdings. 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 PTX stock valuation model: a) initial revenue growth rate of 3.7% 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 15.8%, whose default value for PTX is calculated based on our internal credit rating of Pernix Therapeutics Holdings, 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 Pernix Therapeutics Holdings.
    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 PTX stock the variable cost ratio is equal to 208.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for PTX 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 12.6% for Pernix Therapeutics Holdings.

Corporate tax rate of 27% is the nominal tax rate for Pernix Therapeutics Holdings. 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 PTX stock is equal to 1.7%.

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 PTX are equal to 106.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Pernix Therapeutics Holdings 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 PTX is equal to -1.7%. 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 - $-174 million for Pernix Therapeutics Holdings - 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 11 million for Pernix Therapeutics Holdings 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 Pernix Therapeutics Holdings at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Pernix Therapeutics Announces Sale of Non-Core Product   [Nov-06-17 04:01PM  GlobeNewswire]
▶ Pernix Therapeutics Added to Russell Microcap® Index   [Jun-28-17 04:01PM  GlobeNewswire]
▶ Platinex Inc.-Proposed Private Placement   [Apr-18-17 04:00PM  Marketwired]
▶ Pernix: An Investor's Rationale to Staying Long   [Mar-23-17 04:44PM  GuruFocus.com]
▶ Webcast-Q4 Earnings Call for Pernix Therapeutics Holdings, Inc.   [Mar-16-17 12:14AM  at Company Spotlight]
▶ Pernix Therapeutics Provides Update on Arbitration   [Feb-03-17 08:00AM  GlobeNewswire]
▶ Drugmakers Turn Cheap Generics Into Expensive Pills   [12:31AM  at The Wall Street Journal]
▶ Drugmakers Turn Cheap Generics Into Expensive Pills   [Oct-30-16 01:42PM  at The Wall Street Journal]
Financial statements of PTX
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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