Intrinsic value of Nobilis Health - HLTH

Previous Close

$1.15

  Intrinsic Value

$7.72

stock screener

  Rating & Target

str. buy

+571%

Previous close

$1.15

 
Intrinsic value

$7.72

 
Up/down potential

+571%

 
Rating

str. buy

We calculate the intrinsic value of HLTH 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 0.1

 

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, %
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
  4.98
  4.98
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  5.00
Revenue, $m
  315
  330
  346
  363
  381
  400
  420
  441
  463
  486
  510
  535
  562
  590
  619
  650
  682
  716
  752
  789
  829
  870
  913
  959
  1,007
  1,057
  1,110
  1,165
  1,224
  1,285
Variable operating expenses, $m
  60
  62
  64
  67
  69
  72
  74
  77
  80
  83
  68
  71
  75
  79
  83
  87
  91
  95
  100
  105
  110
  116
  122
  128
  134
  141
  148
  155
  163
  171
Fixed operating expenses, $m
  231
  236
  241
  247
  252
  258
  263
  269
  275
  281
  287
  293
  300
  306
  313
  320
  327
  334
  342
  349
  357
  365
  373
  381
  389
  398
  407
  416
  425
  434
Total operating expenses, $m
  291
  298
  305
  314
  321
  330
  337
  346
  355
  364
  355
  364
  375
  385
  396
  407
  418
  429
  442
  454
  467
  481
  495
  509
  523
  539
  555
  571
  588
  605
Operating income, $m
  24
  32
  41
  50
  60
  71
  83
  95
  108
  122
  155
  170
  187
  205
  223
  243
  264
  286
  310
  335
  361
  389
  419
  450
  483
  518
  555
  594
  636
  679
EBITDA, $m
  60
  69
  79
  90
  101
  113
  126
  139
  153
  168
  185
  202
  220
  239
  260
  281
  304
  328
  354
  381
  410
  440
  473
  507
  542
  580
  620
  663
  708
  755
Interest expense (income), $m
  0
  7
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  20
  21
  22
  24
  25
  26
  28
  30
  31
  33
  35
  37
  39
  42
  44
  46
Earnings before tax, $m
  16
  24
  32
  41
  50
  60
  71
  82
  95
  107
  139
  154
  170
  186
  204
  222
  242
  263
  285
  308
  333
  360
  387
  417
  448
  481
  516
  553
  592
  633
Tax expense, $m
  4
  6
  9
  11
  14
  16
  19
  22
  26
  29
  38
  42
  46
  50
  55
  60
  65
  71
  77
  83
  90
  97
  105
  113
  121
  130
  139
  149
  160
  171
Net income, $m
  12
  17
  23
  30
  37
  44
  52
  60
  69
  78
  102
  112
  124
  136
  149
  162
  177
  192
  208
  225
  243
  262
  283
  304
  327
  351
  377
  404
  432
  462

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
  453
  475
  498
  523
  549
  576
  604
  634
  666
  699
  733
  770
  808
  848
  891
  935
  982
  1,030
  1,082
  1,136
  1,192
  1,252
  1,314
  1,380
  1,449
  1,521
  1,597
  1,677
  1,761
  1,849
Adjusted assets (=assets-cash), $m
  453
  475
  498
  523
  549
  576
  604
  634
  666
  699
  733
  770
  808
  848
  891
  935
  982
  1,030
  1,082
  1,136
  1,192
  1,252
  1,314
  1,380
  1,449
  1,521
  1,597
  1,677
  1,761
  1,849
Revenue / Adjusted assets
  0.695
  0.695
  0.695
  0.694
  0.694
  0.694
  0.695
  0.696
  0.695
  0.695
  0.696
  0.695
  0.696
  0.696
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
  0.695
Average production assets, $m
  185
  194
  203
  213
  224
  235
  247
  259
  272
  285
  299
  314
  330
  346
  363
  381
  400
  420
  441
  463
  486
  511
  536
  563
  591
  621
  652
  684
  718
  754
Working capital, $m
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -74
  -78
  -82
  -86
  -90
Total debt, $m
  149
  161
  174
  187
  201
  216
  231
  248
  265
  282
  301
  321
  342
  364
  386
  411
  436
  462
  490
  519
  550
  582
  616
  652
  689
  728
  769
  813
  858
  906
Total liabilities, $m
  245
  257
  270
  283
  297
  312
  328
  344
  361
  379
  398
  417
  438
  460
  483
  507
  532
  559
  586
  616
  646
  679
  712
  748
  785
  824
  866
  909
  954
  1,002
Total equity, $m
  207
  218
  228
  240
  251
  264
  277
  291
  305
  320
  336
  353
  370
  389
  408
  428
  450
  472
  495
  520
  546
  573
  602
  632
  664
  697
  732
  768
  806
  847
Total liabilities and equity, $m
  452
  475
  498
  523
  548
  576
  605
  635
  666
  699
  734
  770
  808
  849
  891
  935
  982
  1,031
  1,081
  1,136
  1,192
  1,252
  1,314
  1,380
  1,449
  1,521
  1,598
  1,677
  1,760
  1,849
Debt-to-equity ratio
  0.720
  0.740
  0.760
  0.780
  0.800
  0.820
  0.840
  0.850
  0.870
  0.880
  0.900
  0.910
  0.920
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.010
  1.020
  1.020
  1.030
  1.040
  1.050
  1.050
  1.060
  1.060
  1.070
Adjusted equity ratio
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458
  0.458

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  12
  17
  23
  30
  37
  44
  52
  60
  69
  78
  102
  112
  124
  136
  149
  162
  177
  192
  208
  225
  243
  262
  283
  304
  327
  351
  377
  404
  432
  462
Depreciation, amort., depletion, $m
  37
  38
  39
  40
  41
  42
  43
  44
  45
  47
  30
  31
  33
  35
  36
  38
  40
  42
  44
  46
  49
  51
  54
  56
  59
  62
  65
  68
  72
  75
Funds from operations, $m
  48
  55
  62
  69
  77
  86
  95
  104
  114
  125
  132
  144
  157
  170
  185
  200
  217
  234
  252
  271
  292
  314
  336
  361
  386
  413
  442
  472
  504
  538
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
Cash from operations, $m
  50
  56
  63
  71
  79
  87
  96
  106
  116
  127
  133
  146
  159
  172
  187
  202
  219
  236
  255
  274
  295
  316
  339
  364
  390
  417
  446
  476
  508
  542
Maintenance CAPEX, $m
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
New CAPEX, $m
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -34
  -36
Cash from investing activities, $m
  -27
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -39
  -40
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -81
  -84
  -89
  -93
  -98
  -102
  -108
Free cash flow, $m
  23
  29
  34
  40
  47
  54
  61
  69
  77
  86
  91
  101
  112
  123
  135
  148
  162
  176
  192
  208
  225
  244
  263
  283
  305
  328
  352
  378
  405
  434
Issuance/(repayment) of debt, $m
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  48
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
  32
  34
  36
  37
  39
  41
  43
  45
  48
Total cash flow (excl. dividends), $m
  36
  41
  47
  54
  61
  68
  76
  85
  94
  104
  110
  121
  132
  145
  158
  172
  187
  203
  219
  237
  256
  276
  297
  319
  343
  367
  394
  421
  451
  482
Retained Cash Flow (-), $m
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
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
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  10
  11
Cash available for distribution, $m
  26
  30
  36
  42
  49
  56
  63
  71
  80
  89
  94
  104
  115
  126
  139
  152
  166
  180
  196
  212
  230
  249
  268
  289
  311
  334
  359
  385
  412
  441
Discount rate, %
  6.10
  6.41
  6.73
  7.06
  7.41
  7.79
  8.17
  8.58
  9.01
  9.46
  9.94
  10.43
  10.95
  11.50
  12.08
  12.68
  13.32
  13.98
  14.68
  15.41
  16.19
  16.99
  17.84
  18.74
  19.67
  20.66
  21.69
  22.77
  23.91
  25.11
PV of cash for distribution, $m
  25
  27
  30
  32
  34
  36
  37
  37
  37
  36
  33
  32
  30
  28
  25
  22
  20
  17
  15
  12
  10
  8
  6
  5
  3
  3
  2
  1
  1
  1
Current shareholders' claim on cash, %
  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
  100.0

Nobilis Health Corp. (Nobilis) owns and manages healthcare facilities in the States of Texas and Arizona, consisting primarily of ambulatory surgery centers (ASCs) and acute-care and surgical hospitals. The Company's segments include Medical Services, Marketing Services and Corporate. The Medical Services segment owns and manages approximately nine healthcare facilities in Texas and Arizona; over four hospitals, and approximately five ambulatory surgery centers. The Marketing Services segment provides marketing services, patient education services and patient care co-ordination management services. The Company provides care across a range of specialties in its facilities, including orthopedic surgery, podiatric surgery, pain management, gastro-intestinal, gynecology, and general surgery. Many of its surgical patients require additional complementary healthcare services, and its suite of ancillary services, including surgical assist, intraoperative neuromonitoring and anesthesia.

FINANCIAL RATIOS  of  Nobilis Health (HLTH)

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%

HLTH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HLTH stock intrinsic value calculation we used $300 million for the last fiscal year's total revenue generated by Nobilis Health. The default revenue input number comes from 2017 income statement of Nobilis 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 HLTH stock valuation model: a) initial revenue growth rate of 4.9% 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 6.1%, whose default value for HLTH is calculated based on our internal credit rating of Nobilis 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 Nobilis 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 HLTH stock the variable cost ratio is equal to 19.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $226 million in the base year in the intrinsic value calculation for HLTH 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 Nobilis Health.

Corporate tax rate of 27% is the nominal tax rate for Nobilis 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 HLTH stock is equal to 0.9%.

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 HLTH are equal to 58.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Nobilis 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 HLTH is equal to -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 - $198 million for Nobilis 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 78 million for Nobilis 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 Nobilis Health at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ Nobilis Health: 1Q Earnings Snapshot   [May-08-18 06:17AM  Associated Press]
▶ Nobilis Health Opens NEO   [Apr-03-18 11:51AM  Business Wire]
▶ Nobilis Health posts 4Q profit   [Mar-08-18 06:19AM  Associated Press]
▶ 5 HMO Stocks to Continue Rewarding Investors   [Jan-22-18 02:35PM  InvestorPlace]
▶ Nobilis Health Appoints New Board Member   [06:00AM  PR Newswire]
▶ Nobilis Health Expands Footprint to El Paso, TX   [Dec-04-17 06:00AM  PR Newswire]
▶ Nobilis Health posts 3Q profit   [Nov-06-17 06:11AM  Associated Press]
▶ Nobilis Health to Present at The MicroCap Conference   [Sep-28-17 04:54PM  PR Newswire]
▶ Nobilis Health Corp. Issues Hurricane Harvey Update   [Sep-05-17 06:30AM  PR Newswire]
▶ Nobilis Health posts 2Q profit   [Aug-04-17 01:35AM  Associated Press]
▶ LD Micro Index Reconstitution as of August 1, 2017   [Aug-01-17 09:40AM  ACCESSWIRE]
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▶ Nobilis Health reports 1Q loss   [May-02-17 06:23AM  Associated Press]
▶ ETFs with exposure to Nobilis Health Corp. : May 1, 2017   [May-01-17 03:58PM  Capital Cube]
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