Intrinsic value of Envision Healthcare - EVHC

Previous Close

$44.98

  Intrinsic Value

$16.03

stock screener

  Rating & Target

str. sell

-64%

Previous close

$44.98

 
Intrinsic value

$16.03

 
Up/down potential

-64%

 
Rating

str. sell

We calculate the intrinsic value of EVHC 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 2017), $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 5.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  12,510
  19,329
  28,906
  41,941
  59,173
  81,349
  109,194
  143,378
  184,493
  233,030
  289,370
  353,783
  426,427
  507,364
  596,570
  693,954
  799,377
  912,668
  1,033,645
  1,162,123
  1,297,937
  1,440,945
  1,591,037
  1,748,146
  1,912,247
  2,083,363
  2,261,566
  2,446,974
  2,639,757
  2,840,129
Variable operating expenses, $m
  10,625
  15,805
  23,081
  32,984
  46,076
  62,924
  84,078
  110,050
  141,286
  178,161
  219,844
  268,781
  323,971
  385,462
  453,234
  527,220
  607,314
  693,385
  785,294
  882,904
  986,087
  1,094,734
  1,208,764
  1,328,125
  1,452,798
  1,582,801
  1,718,187
  1,859,048
  2,005,512
  2,157,742
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
  10,625
  15,805
  23,081
  32,984
  46,076
  62,924
  84,078
  110,050
  141,286
  178,161
  219,844
  268,781
  323,971
  385,462
  453,234
  527,220
  607,314
  693,385
  785,294
  882,904
  986,087
  1,094,734
  1,208,764
  1,328,125
  1,452,798
  1,582,801
  1,718,187
  1,859,048
  2,005,512
  2,157,742
Operating income, $m
  1,886
  3,524
  5,825
  8,957
  13,097
  18,425
  25,115
  33,329
  43,207
  54,869
  69,526
  85,002
  102,456
  121,903
  143,336
  166,734
  192,063
  219,284
  248,350
  279,219
  311,851
  346,211
  382,273
  420,021
  459,449
  500,562
  543,378
  587,926
  634,245
  682,388
EBITDA, $m
  4,851
  7,495
  11,209
  16,263
  22,945
  31,544
  42,342
  55,597
  71,540
  90,361
  112,208
  137,185
  165,354
  196,739
  231,330
  269,092
  309,972
  353,902
  400,813
  450,632
  503,296
  558,750
  616,951
  677,872
  741,505
  807,858
  876,959
  948,854
  1,023,609
  1,101,307
Interest expense (income), $m
  0
  341
  666
  1,139
  1,803
  2,706
  3,901
  5,439
  7,369
  9,739
  12,590
  15,955
  19,861
  24,327
  29,363
  34,974
  41,159
  47,911
  55,220
  63,074
  71,462
  80,369
  89,785
  99,700
  110,106
  120,998
  132,376
  144,239
  156,594
  169,449
  182,814
Earnings before tax, $m
  1,545
  2,858
  4,686
  7,154
  10,391
  14,524
  19,677
  25,960
  33,468
  42,279
  53,571
  65,141
  78,130
  92,540
  108,361
  125,575
  144,153
  164,064
  185,276
  207,758
  231,482
  256,425
  282,573
  309,915
  338,450
  368,187
  399,139
  431,332
  464,796
  499,573
Tax expense, $m
  417
  772
  1,265
  1,932
  2,805
  3,922
  5,313
  7,009
  9,036
  11,415
  14,464
  17,588
  21,095
  24,986
  29,258
  33,905
  38,921
  44,297
  50,024
  56,095
  62,500
  69,235
  76,295
  83,677
  91,382
  99,410
  107,768
  116,460
  125,495
  134,885
Net income, $m
  1,128
  2,086
  3,421
  5,223
  7,585
  10,603
  14,364
  18,951
  24,432
  30,864
  39,107
  47,553
  57,035
  67,554
  79,104
  91,670
  105,231
  119,767
  135,251
  151,663
  168,982
  187,191
  206,278
  226,238
  247,069
  268,776
  291,371
  314,872
  339,301
  364,689

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
  26,505
  40,950
  61,241
  88,858
  125,366
  172,349
  231,343
  303,768
  390,875
  493,707
  613,072
  749,540
  903,447
  1,074,924
  1,263,920
  1,470,242
  1,693,596
  1,933,620
  2,189,925
  2,462,126
  2,749,867
  3,052,849
  3,370,841
  3,703,699
  4,051,370
  4,413,905
  4,791,452
  5,184,267
  5,592,705
  6,017,223
Adjusted assets (=assets-cash), $m
  26,505
  40,950
  61,241
  88,858
  125,366
  172,349
  231,343
  303,768
  390,875
  493,707
  613,072
  749,540
  903,447
  1,074,924
  1,263,920
  1,470,242
  1,693,596
  1,933,620
  2,189,925
  2,462,126
  2,749,867
  3,052,849
  3,370,841
  3,703,699
  4,051,370
  4,413,905
  4,791,452
  5,184,267
  5,592,705
  6,017,223
Revenue / Adjusted assets
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
  0.472
Average production assets, $m
  18,453
  28,510
  42,636
  61,863
  87,280
  119,989
  161,061
  211,483
  272,127
  343,719
  426,821
  521,830
  628,980
  748,362
  879,941
  1,023,583
  1,179,081
  1,346,186
  1,524,626
  1,714,132
  1,914,458
  2,125,393
  2,346,779
  2,578,515
  2,820,564
  3,072,961
  3,335,809
  3,609,287
  3,893,641
  4,189,191
Working capital, $m
  -63
  -97
  -145
  -210
  -296
  -407
  -546
  -717
  -922
  -1,165
  -1,447
  -1,769
  -2,132
  -2,537
  -2,983
  -3,470
  -3,997
  -4,563
  -5,168
  -5,811
  -6,490
  -7,205
  -7,955
  -8,741
  -9,561
  -10,417
  -11,308
  -12,235
  -13,199
  -14,201
Total debt, $m
  12,332
  21,086
  33,382
  50,118
  72,241
  100,713
  136,464
  180,353
  233,140
  295,456
  367,792
  450,491
  543,759
  647,674
  762,205
  887,237
  1,022,589
  1,168,043
  1,323,364
  1,488,318
  1,662,689
  1,846,296
  2,038,999
  2,240,711
  2,451,400
  2,671,096
  2,899,890
  3,137,936
  3,385,449
  3,642,707
Total liabilities, $m
  16,062
  24,816
  37,112
  53,848
  75,972
  104,444
  140,194
  184,083
  236,870
  299,187
  371,522
  454,221
  547,489
  651,404
  765,935
  890,967
  1,026,319
  1,171,774
  1,327,094
  1,492,048
  1,666,420
  1,850,026
  2,042,730
  2,244,441
  2,455,130
  2,674,826
  2,903,620
  3,141,666
  3,389,179
  3,646,437
Total equity, $m
  10,443
  16,134
  24,129
  35,010
  49,394
  67,906
  91,149
  119,684
  154,005
  194,521
  241,551
  295,319
  355,958
  423,520
  497,984
  579,275
  667,277
  761,846
  862,830
  970,078
  1,083,448
  1,202,822
  1,328,111
  1,459,257
  1,596,240
  1,739,079
  1,887,832
  2,042,601
  2,203,526
  2,370,786
Total liabilities and equity, $m
  26,505
  40,950
  61,241
  88,858
  125,366
  172,350
  231,343
  303,767
  390,875
  493,708
  613,073
  749,540
  903,447
  1,074,924
  1,263,919
  1,470,242
  1,693,596
  1,933,620
  2,189,924
  2,462,126
  2,749,868
  3,052,848
  3,370,841
  3,703,698
  4,051,370
  4,413,905
  4,791,452
  5,184,267
  5,592,705
  6,017,223
Debt-to-equity ratio
  1.180
  1.310
  1.380
  1.430
  1.460
  1.480
  1.500
  1.510
  1.510
  1.520
  1.520
  1.530
  1.530
  1.530
  1.530
  1.530
  1.530
  1.530
  1.530
  1.530
  1.530
  1.530
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
  1.540
Adjusted equity ratio
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,128
  2,086
  3,421
  5,223
  7,585
  10,603
  14,364
  18,951
  24,432
  30,864
  39,107
  47,553
  57,035
  67,554
  79,104
  91,670
  105,231
  119,767
  135,251
  151,663
  168,982
  187,191
  206,278
  226,238
  247,069
  268,776
  291,371
  314,872
  339,301
  364,689
Depreciation, amort., depletion, $m
  2,965
  3,971
  5,384
  7,306
  9,848
  13,119
  17,226
  22,269
  28,333
  35,492
  42,682
  52,183
  62,898
  74,836
  87,994
  102,358
  117,908
  134,619
  152,463
  171,413
  191,446
  212,539
  234,678
  257,851
  282,056
  307,296
  333,581
  360,929
  389,364
  418,919
Funds from operations, $m
  4,093
  6,057
  8,805
  12,529
  17,433
  23,722
  31,590
  41,219
  52,765
  66,356
  81,789
  99,736
  119,933
  142,390
  167,098
  194,028
  223,140
  254,385
  287,714
  323,076
  360,427
  399,730
  440,956
  484,089
  529,125
  576,072
  624,952
  675,801
  728,665
  783,608
Change in working capital, $m
  -23
  -34
  -48
  -65
  -86
  -111
  -139
  -171
  -206
  -243
  -282
  -322
  -363
  -405
  -446
  -487
  -527
  -566
  -605
  -642
  -679
  -715
  -750
  -786
  -821
  -856
  -891
  -927
  -964
  -1,002
Cash from operations, $m
  4,116
  6,092
  8,853
  12,594
  17,519
  23,833
  31,730
  41,390
  52,970
  66,599
  82,071
  100,058
  120,296
  142,795
  167,544
  194,515
  223,667
  254,952
  288,319
  323,719
  361,106
  400,445
  441,706
  484,875
  529,946
  576,928
  625,843
  676,728
  729,629
  784,610
Maintenance CAPEX, $m
  -1,153
  -1,845
  -2,851
  -4,264
  -6,186
  -8,728
  -11,999
  -16,106
  -21,148
  -27,213
  -34,372
  -42,682
  -52,183
  -62,898
  -74,836
  -87,994
  -102,358
  -117,908
  -134,619
  -152,463
  -171,413
  -191,446
  -212,539
  -234,678
  -257,851
  -282,056
  -307,296
  -333,581
  -360,929
  -389,364
New CAPEX, $m
  -6,921
  -10,057
  -14,127
  -19,227
  -25,417
  -32,710
  -41,071
  -50,422
  -60,644
  -71,592
  -83,102
  -95,009
  -107,151
  -119,382
  -131,579
  -143,642
  -155,499
  -167,105
  -178,440
  -189,506
  -200,326
  -210,936
  -221,386
  -231,735
  -242,049
  -252,396
  -262,849
  -273,477
  -284,354
  -295,550
Cash from investing activities, $m
  -8,074
  -11,902
  -16,978
  -23,491
  -31,603
  -41,438
  -53,070
  -66,528
  -81,792
  -98,805
  -117,474
  -137,691
  -159,334
  -182,280
  -206,415
  -231,636
  -257,857
  -285,013
  -313,059
  -341,969
  -371,739
  -402,382
  -433,925
  -466,413
  -499,900
  -534,452
  -570,145
  -607,058
  -645,283
  -684,914
Free cash flow, $m
  -3,957
  -5,811
  -8,125
  -10,896
  -14,084
  -17,605
  -21,341
  -25,138
  -28,822
  -32,206
  -35,403
  -37,632
  -39,038
  -39,485
  -38,871
  -37,121
  -34,190
  -30,061
  -24,740
  -18,250
  -10,633
  -1,937
  7,781
  18,461
  30,045
  42,475
  55,699
  69,669
  84,346
  99,696
Issuance/(repayment) of debt, $m
  6,016
  8,754
  12,296
  16,736
  22,124
  28,472
  35,750
  43,890
  52,787
  62,316
  72,335
  82,699
  93,268
  103,915
  114,531
  125,031
  135,352
  145,455
  155,321
  164,954
  174,371
  183,607
  192,703
  201,712
  210,689
  219,696
  228,794
  238,046
  247,513
  257,258
Issuance/(repurchase) of shares, $m
  2,788
  3,605
  4,574
  5,658
  6,799
  7,909
  8,879
  9,585
  9,889
  9,652
  7,923
  6,215
  3,605
  8
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  8,804
  12,359
  16,870
  22,394
  28,923
  36,381
  44,629
  53,475
  62,676
  71,968
  80,258
  88,914
  96,873
  103,923
  114,531
  125,031
  135,352
  145,455
  155,321
  164,954
  174,371
  183,607
  192,703
  201,712
  210,689
  219,696
  228,794
  238,046
  247,513
  257,258
Total cash flow (excl. dividends), $m
  4,848
  6,548
  8,745
  11,498
  14,839
  18,776
  23,289
  28,336
  33,853
  39,762
  44,855
  51,282
  57,835
  64,438
  75,660
  87,910
  101,162
  115,393
  130,581
  146,703
  163,739
  181,670
  200,484
  220,173
  240,734
  262,171
  284,493
  307,715
  331,860
  356,954
Retained Cash Flow (-), $m
  -3,916
  -5,691
  -7,995
  -10,881
  -14,384
  -18,511
  -23,244
  -28,535
  -34,320
  -40,516
  -47,030
  -53,768
  -60,640
  -67,562
  -74,464
  -81,291
  -88,001
  -94,569
  -100,984
  -107,247
  -113,370
  -119,375
  -125,289
  -131,146
  -136,983
  -142,839
  -148,754
  -154,769
  -160,925
  -167,260
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
  47
  75
  116
  173
  252
  355
  488
  655
  860
  1,107
  1,398
  1,736
  2,123
  2,559
  3,044
  3,579
  4,164
  4,796
  5,476
  6,202
  6,973
  7,788
  8,646
  9,546
  10,489
  11,473
  12,500
  13,569
  14,682
  15,839
Cash available for distribution, $m
  932
  857
  750
  617
  455
  264
  45
  -199
  -467
  -753
  -2,175
  -2,486
  -2,804
  -3,124
  1,196
  6,619
  13,161
  20,824
  29,597
  39,456
  50,369
  62,295
  75,195
  89,027
  103,751
  119,332
  135,739
  152,946
  170,935
  189,694
Discount rate, %
  8.00
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
PV of cash for distribution, $m
  863
  729
  582
  433
  286
  147
  22
  -85
  -171
  -234
  -565
  -534
  -490
  -437
  132
  565
  853
  1,006
  1,043
  993
  884
  745
  597
  456
  334
  234
  158
  102
  63
  37
Current shareholders' claim on cash, %
  65.6
  46.0
  34.1
  26.5
  21.4
  17.9
  15.4
  13.6
  12.4
  11.5
  10.9
  10.6
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4
  10.4

Envision Healthcare Corporation, through its subsidiaries, provides physician-led, ambulatory surgery center management, post-acute care, and medical transportation services in the United States. Its physician-led services encompass providers at 780 hospitals in 45 states that include emergency department and hospitalist services, anesthesiology, radiology, and womenÂ’s/childrenÂ’s services, as well as general surgery and office-based medicine services. The company also offers ambulatory surgical care services with medical specialties ranging from gastroenterology to ophthalmology and orthopedics. As of December 5, 2016, it owned and operated 260 surgery centers and 1 surgical hospital in 35 states and the District of Columbia. In addition, the company provides post-acute care services through an array of clinical professionals and integrated technologies. Further, it offers healthcare transportation services in 39 states and the District of Columbia. The company offers its clinical solutions for health systems, payors, providers, and patients. Envision Healthcare Corporation was founded in 1992 and is headquartered in Nashville, Tennessee.

FINANCIAL RATIOS  of  Envision Healthcare (EVHC)

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%

EVHC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EVHC stock intrinsic value calculation we used $7819 million for the last fiscal year's total revenue generated by Envision Healthcare. The default revenue input number comes from 2017 income statement of Envision Healthcare. 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 EVHC stock valuation model: a) initial revenue growth rate of 60% 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 8%, whose default value for EVHC is calculated based on our internal credit rating of Envision Healthcare, 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 Envision Healthcare.
    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 EVHC stock the variable cost ratio is equal to 90.3%.

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 EVHC 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 5.4% for Envision Healthcare.

Corporate tax rate of 27% is the nominal tax rate for Envision Healthcare. 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 EVHC stock is equal to 0.6%.

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 EVHC are equal to 147.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Envision Healthcare 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 EVHC is equal to -0.5%. 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 - $6527 million for Envision Healthcare - 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 118 million for Envision Healthcare 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 Envision Healthcare at the current share price and the inputted number of shares is $5.3 billion.

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COMPANY NEWS

▶ Envision Healthcare: 2Q Earnings Snapshot   [06:14PM  Associated Press]
▶ HCA's Milton Johnson: 'I dont feel compelled' to make a big acquisition   [Jul-25-18 03:33PM  American City Business Journals]
▶ Should You Buy Envision Healthcare Corporation (NYSE:EVHC)?   [Jun-25-18 10:30AM  Simply Wall St.]
▶ Company News For Jun 12, 2018   [09:56AM  Zacks]
▶ [$$] KKR to Acquire Envision Healthcare for $5.5 Billion   [08:41PM  The Wall Street Journal]
▶ [$$] KKR to Acquire Envision Healthcare for $5.5 Billion   [08:09AM  The Wall Street Journal]
▶ KKR to buy Envision for $5.57 bln   [07:07AM  Reuters]
▶ [$$] KKR Nears Deal to Buy Envision Healthcare   [Jun-10-18 07:43PM  The Wall Street Journal]
▶ Report: HCA makes final bid to buy Envision   [Jun-06-18 03:43PM  American City Business Journals]
▶ Envision CEO again takes aim at insurance companies   [Jun-04-18 08:52AM  American City Business Journals]
▶ [$$] Why It Is Harder to Diagnose Hospital Stocks   [May-28-18 11:52PM  The Wall Street Journal]
▶ [$$] Why It Is Harder to Diagnose Hospital Stocks   [05:51AM  The Wall Street Journal]
▶ Why a deal between HCA and Envision makes sense   [May-24-18 09:00AM  American City Business Journals]
▶ Report: HCA makes offer to buy Envision   [May-21-18 09:05AM  American City Business Journals]
▶ Envision accuses insurers of 'tactics that fuel conflict'   [May-08-18 03:53PM  American City Business Journals]
▶ Envision Healthcare: 1Q Earnings Snapshot   [May-07-18 04:22PM  Associated Press]
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