Intrinsic value of Bausch Health - BHC

Previous Close

$23.09

  Intrinsic Value

$8.70

stock screener

  Rating & Target

str. sell

-62%

Previous close

$23.09

 
Intrinsic value

$8.70

 
Up/down potential

-62%

 
Rating

str. sell

We calculate the intrinsic value of BHC 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 0001), $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 8.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  8,898
  9,103
  9,337
  9,600
  9,891
  10,210
  10,558
  10,934
  11,340
  11,775
  12,241
  12,737
  13,266
  13,828
  14,425
  15,057
  15,726
  16,434
  17,182
  17,971
  18,804
  19,682
  20,608
  21,584
  22,612
  23,693
  24,832
  26,031
  27,291
  28,617
Variable operating expenses, $m
  9,353
  9,497
  9,662
  9,847
  10,052
  10,278
  10,523
  10,788
  11,074
  11,381
  8,628
  8,979
  9,351
  9,748
  10,168
  10,614
  11,085
  11,584
  12,111
  12,668
  13,255
  13,874
  14,527
  15,215
  15,939
  16,702
  17,504
  18,349
  19,238
  20,172
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
  9,353
  9,497
  9,662
  9,847
  10,052
  10,278
  10,523
  10,788
  11,074
  11,381
  8,628
  8,979
  9,351
  9,748
  10,168
  10,614
  11,085
  11,584
  12,111
  12,668
  13,255
  13,874
  14,527
  15,215
  15,939
  16,702
  17,504
  18,349
  19,238
  20,172
Operating income, $m
  -455
  -394
  -325
  -248
  -162
  -67
  35
  146
  266
  394
  3,612
  3,759
  3,915
  4,081
  4,257
  4,443
  4,641
  4,850
  5,070
  5,303
  5,549
  5,808
  6,081
  6,369
  6,673
  6,992
  7,328
  7,681
  8,053
  8,445
EBITDA, $m
  4,145
  4,241
  4,350
  4,472
  4,608
  4,756
  4,918
  5,094
  5,283
  5,485
  5,702
  5,934
  6,180
  6,442
  6,720
  7,014
  7,326
  7,656
  8,004
  8,372
  8,760
  9,169
  9,600
  10,055
  10,534
  11,038
  11,568
  12,126
  12,714
  13,331
Interest expense (income), $m
  0
  1,705
  1,744
  1,794
  1,850
  1,914
  1,985
  2,062
  2,147
  2,238
  2,336
  2,442
  2,555
  2,676
  2,804
  2,940
  3,085
  3,239
  3,401
  3,573
  3,754
  3,946
  4,148
  4,361
  4,586
  4,823
  5,072
  5,335
  5,611
  5,902
  6,208
Earnings before tax, $m
  -2,159
  -2,138
  -2,119
  -2,098
  -2,076
  -2,052
  -2,027
  -2,000
  -1,972
  -1,942
  1,170
  1,204
  1,239
  1,277
  1,316
  1,358
  1,402
  1,449
  1,497
  1,549
  1,603
  1,660
  1,720
  1,783
  1,850
  1,920
  1,993
  2,070
  2,152
  2,237
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  316
  325
  335
  345
  355
  367
  379
  391
  404
  418
  433
  448
  464
  482
  499
  518
  538
  559
  581
  604
Net income, $m
  -2,159
  -2,138
  -2,119
  -2,098
  -2,076
  -2,052
  -2,027
  -2,000
  -1,972
  -1,942
  854
  879
  905
  932
  961
  991
  1,024
  1,057
  1,093
  1,131
  1,170
  1,212
  1,256
  1,302
  1,350
  1,401
  1,455
  1,511
  1,571
  1,633

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  38,191
  39,069
  40,073
  41,201
  42,450
  43,820
  45,313
  46,928
  48,668
  50,536
  52,534
  54,667
  56,937
  59,349
  61,909
  64,623
  67,494
  70,531
  73,740
  77,129
  80,704
  84,474
  88,448
  92,635
  97,045
  101,689
  106,576
  111,719
  117,129
  122,820
Adjusted assets (=assets-cash), $m
  38,191
  39,069
  40,073
  41,201
  42,450
  43,820
  45,313
  46,928
  48,668
  50,536
  52,534
  54,667
  56,937
  59,349
  61,909
  64,623
  67,494
  70,531
  73,740
  77,129
  80,704
  84,474
  88,448
  92,635
  97,045
  101,689
  106,576
  111,719
  117,129
  122,820
Revenue / Adjusted assets
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
  0.233
Average production assets, $m
  18,082
  18,498
  18,973
  19,507
  20,098
  20,747
  21,454
  22,218
  23,042
  23,927
  24,873
  25,882
  26,957
  28,099
  29,311
  30,596
  31,956
  33,394
  34,913
  36,517
  38,210
  39,995
  41,876
  43,859
  45,947
  48,145
  50,459
  52,894
  55,456
  58,150
Working capital, $m
  -116
  -118
  -121
  -125
  -129
  -133
  -137
  -142
  -147
  -153
  -159
  -166
  -172
  -180
  -188
  -196
  -204
  -214
  -223
  -234
  -244
  -256
  -268
  -281
  -294
  -308
  -323
  -338
  -355
  -372
Total debt, $m
  26,029
  26,770
  27,618
  28,569
  29,624
  30,780
  32,040
  33,403
  34,872
  36,449
  38,135
  39,935
  41,851
  43,887
  46,048
  48,337
  50,761
  53,325
  56,033
  58,893
  61,910
  65,092
  68,446
  71,980
  75,702
  79,621
  83,746
  88,087
  92,653
  97,456
Total liabilities, $m
  32,233
  32,974
  33,822
  34,773
  35,828
  36,984
  38,244
  39,607
  41,076
  42,653
  44,339
  46,139
  48,055
  50,091
  52,252
  54,541
  56,965
  59,529
  62,237
  65,097
  68,114
  71,296
  74,650
  78,184
  81,906
  85,825
  89,950
  94,291
  98,857
  103,660
Total equity, $m
  5,958
  6,095
  6,251
  6,427
  6,622
  6,836
  7,069
  7,321
  7,592
  7,884
  8,195
  8,528
  8,882
  9,258
  9,658
  10,081
  10,529
  11,003
  11,504
  12,032
  12,590
  13,178
  13,798
  14,451
  15,139
  15,863
  16,626
  17,428
  18,272
  19,160
Total liabilities and equity, $m
  38,191
  39,069
  40,073
  41,200
  42,450
  43,820
  45,313
  46,928
  48,668
  50,537
  52,534
  54,667
  56,937
  59,349
  61,910
  64,622
  67,494
  70,532
  73,741
  77,129
  80,704
  84,474
  88,448
  92,635
  97,045
  101,688
  106,576
  111,719
  117,129
  122,820
Debt-to-equity ratio
  4.370
  4.390
  4.420
  4.440
  4.470
  4.500
  4.530
  4.560
  4.590
  4.620
  4.650
  4.680
  4.710
  4.740
  4.770
  4.790
  4.820
  4.850
  4.870
  4.890
  4.920
  4.940
  4.960
  4.980
  5.000
  5.020
  5.040
  5.050
  5.070
  5.090
Adjusted equity ratio
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2,159
  -2,138
  -2,119
  -2,098
  -2,076
  -2,052
  -2,027
  -2,000
  -1,972
  -1,942
  854
  879
  905
  932
  961
  991
  1,024
  1,057
  1,093
  1,131
  1,170
  1,212
  1,256
  1,302
  1,350
  1,401
  1,455
  1,511
  1,571
  1,633
Depreciation, amort., depletion, $m
  4,600
  4,635
  4,675
  4,720
  4,769
  4,824
  4,883
  4,947
  5,017
  5,091
  2,090
  2,175
  2,265
  2,361
  2,463
  2,571
  2,685
  2,806
  2,934
  3,069
  3,211
  3,361
  3,519
  3,686
  3,861
  4,046
  4,240
  4,445
  4,660
  4,887
Funds from operations, $m
  2,441
  2,497
  2,556
  2,622
  2,693
  2,772
  2,856
  2,947
  3,045
  3,149
  2,944
  3,054
  3,170
  3,293
  3,424
  3,562
  3,709
  3,864
  4,027
  4,199
  4,381
  4,573
  4,775
  4,988
  5,211
  5,447
  5,695
  5,956
  6,231
  6,520
Change in working capital, $m
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
Cash from operations, $m
  2,443
  2,499
  2,559
  2,625
  2,697
  2,776
  2,861
  2,952
  3,050
  3,155
  2,950
  3,060
  3,177
  3,301
  3,432
  3,571
  3,718
  3,873
  4,037
  4,210
  4,392
  4,584
  4,787
  5,000
  5,225
  5,461
  5,710
  5,972
  6,247
  6,537
Maintenance CAPEX, $m
  -1,490
  -1,519
  -1,554
  -1,594
  -1,639
  -1,689
  -1,743
  -1,803
  -1,867
  -1,936
  -2,011
  -2,090
  -2,175
  -2,265
  -2,361
  -2,463
  -2,571
  -2,685
  -2,806
  -2,934
  -3,069
  -3,211
  -3,361
  -3,519
  -3,686
  -3,861
  -4,046
  -4,240
  -4,445
  -4,660
New CAPEX, $m
  -354
  -416
  -475
  -534
  -591
  -649
  -707
  -765
  -824
  -884
  -946
  -1,009
  -1,075
  -1,142
  -1,212
  -1,285
  -1,360
  -1,438
  -1,519
  -1,604
  -1,693
  -1,785
  -1,882
  -1,982
  -2,088
  -2,198
  -2,314
  -2,435
  -2,562
  -2,694
Cash from investing activities, $m
  -1,844
  -1,935
  -2,029
  -2,128
  -2,230
  -2,338
  -2,450
  -2,568
  -2,691
  -2,820
  -2,957
  -3,099
  -3,250
  -3,407
  -3,573
  -3,748
  -3,931
  -4,123
  -4,325
  -4,538
  -4,762
  -4,996
  -5,243
  -5,501
  -5,774
  -6,059
  -6,360
  -6,675
  -7,007
  -7,354
Free cash flow, $m
  599
  564
  529
  497
  467
  438
  411
  384
  359
  334
  -6
  -40
  -73
  -107
  -142
  -177
  -213
  -250
  -289
  -328
  -369
  -412
  -456
  -501
  -549
  -598
  -650
  -703
  -759
  -818
Issuance/(repayment) of debt, $m
  585
  741
  847
  951
  1,054
  1,157
  1,260
  1,363
  1,469
  1,576
  1,686
  1,800
  1,916
  2,036
  2,161
  2,290
  2,424
  2,563
  2,708
  2,860
  3,017
  3,182
  3,354
  3,534
  3,722
  3,919
  4,125
  4,341
  4,566
  4,803
Issuance/(repurchase) of shares, $m
  2,268
  2,275
  2,275
  2,274
  2,271
  2,266
  2,260
  2,252
  2,244
  2,233
  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  
  2,853
  3,016
  3,122
  3,225
  3,325
  3,423
  3,520
  3,615
  3,713
  3,809
  1,686
  1,800
  1,916
  2,036
  2,161
  2,290
  2,424
  2,563
  2,708
  2,860
  3,017
  3,182
  3,354
  3,534
  3,722
  3,919
  4,125
  4,341
  4,566
  4,803
Total cash flow (excl. dividends), $m
  3,453
  3,581
  3,652
  3,722
  3,792
  3,861
  3,930
  4,000
  4,071
  4,144
  1,680
  1,760
  1,843
  1,929
  2,019
  2,113
  2,211
  2,313
  2,420
  2,531
  2,648
  2,770
  2,899
  3,033
  3,173
  3,321
  3,475
  3,637
  3,807
  3,985
Retained Cash Flow (-), $m
  -2,268
  -2,275
  -2,275
  -2,274
  -2,271
  -2,266
  -2,260
  -2,252
  -2,244
  -2,233
  -312
  -333
  -354
  -376
  -399
  -423
  -448
  -474
  -501
  -529
  -558
  -588
  -620
  -653
  -688
  -724
  -762
  -802
  -844
  -888
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
  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
  1,185
  1,305
  1,377
  1,448
  1,521
  1,595
  1,670
  1,748
  1,828
  1,910
  1,368
  1,427
  1,489
  1,553
  1,620
  1,690
  1,763
  1,839
  1,919
  2,003
  2,090
  2,182
  2,279
  2,380
  2,485
  2,596
  2,713
  2,835
  2,963
  3,098
Discount rate, %
  11.70
  12.29
  12.90
  13.54
  14.22
  14.93
  15.68
  16.46
  17.29
  18.15
  19.06
  20.01
  21.01
  22.06
  23.17
  24.32
  25.54
  26.82
  28.16
  29.57
  31.04
  32.60
  34.23
  35.94
  37.73
  39.62
  41.60
  43.68
  45.87
  48.16
PV of cash for distribution, $m
  1,060
  1,035
  957
  871
  782
  692
  603
  516
  435
  360
  201
  160
  125
  95
  71
  52
  37
  26
  17
  11
  7
  4
  3
  2
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  78.1
  61.1
  48.1
  38.1
  30.3
  24.3
  19.6
  15.9
  13.0
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7
  10.7

FINANCIAL RATIOS  of  Bausch Health (BHC)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

BHC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BHC stock intrinsic value calculation we used $8724 million for the last fiscal year's total revenue generated by Bausch Health. The default revenue input number comes from 0001 income statement of Bausch Health. 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 BHC stock valuation model: a) initial revenue growth rate of 2% 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 11.7%, whose default value for BHC is calculated based on our internal credit rating of Bausch Health, 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 Bausch Health.
    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 BHC stock the variable cost ratio is equal to 105.8%.

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 BHC 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 6.7% for Bausch Health.

Corporate tax rate of 27% is the nominal tax rate for Bausch Health. 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 BHC 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 BHC are equal to 203.2%.

Life of production assets of 11.9 years is the average useful life of capital assets used in Bausch Health 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 BHC is equal to -1.3%. 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 - $5849 million for Bausch Health - 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 349.612 million for Bausch Health 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 Bausch Health at the current share price and the inputted number of shares is $8.1 billion.