Intrinsic value of Integra LifeSciences Holdings - IART

Previous Close

$49.99

  Intrinsic Value

$17.85

stock screener

  Rating & Target

str. sell

-64%

Previous close

$49.99

 
Intrinsic value

$17.85

 
Up/down potential

-64%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of IART 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, %
  12.34
  11.60
  10.94
  10.35
  9.81
  9.33
  8.90
  8.51
  8.16
  7.84
  7.56
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
Revenue, $m
  992
  1,107
  1,228
  1,355
  1,488
  1,627
  1,772
  1,923
  2,079
  2,242
  2,412
  2,588
  2,771
  2,961
  3,159
  3,365
  3,579
  3,801
  4,033
  4,275
  4,527
  4,789
  5,063
  5,349
  5,648
  5,960
  6,287
  6,628
  6,984
  7,358
  7,749
Variable operating expenses, $m
 
  837
  922
  1,013
  1,107
  1,205
  1,308
  1,415
  1,526
  1,642
  1,762
  1,836
  1,966
  2,101
  2,241
  2,387
  2,539
  2,697
  2,861
  3,033
  3,212
  3,398
  3,592
  3,795
  4,007
  4,229
  4,460
  4,702
  4,955
  5,220
  5,498
Fixed operating expenses, $m
 
  136
  140
  143
  147
  150
  154
  158
  162
  166
  170
  175
  179
  183
  188
  193
  197
  202
  207
  213
  218
  223
  229
  235
  241
  247
  253
  259
  266
  272
  279
Total operating expenses, $m
  885
  973
  1,062
  1,156
  1,254
  1,355
  1,462
  1,573
  1,688
  1,808
  1,932
  2,011
  2,145
  2,284
  2,429
  2,580
  2,736
  2,899
  3,068
  3,246
  3,430
  3,621
  3,821
  4,030
  4,248
  4,476
  4,713
  4,961
  5,221
  5,492
  5,777
Operating income, $m
  107
  134
  166
  199
  234
  271
  309
  349
  391
  434
  479
  577
  626
  677
  730
  785
  842
  902
  964
  1,029
  1,097
  1,168
  1,242
  1,319
  1,400
  1,485
  1,574
  1,666
  1,764
  1,865
  1,972
EBITDA, $m
  180
  232
  269
  308
  349
  391
  436
  482
  530
  580
  633
  687
  744
  802
  864
  927
  994
  1,063
  1,135
  1,210
  1,289
  1,371
  1,456
  1,546
  1,640
  1,737
  1,840
  1,947
  2,059
  2,177
  2,300
Interest expense (income), $m
  0
  23
  27
  31
  36
  40
  45
  50
  55
  60
  66
  72
  78
  84
  91
  97
  104
  112
  119
  127
  135
  144
  153
  162
  172
  182
  193
  204
  216
  228
  241
Earnings before tax, $m
  90
  111
  139
  168
  199
  231
  264
  299
  336
  374
  413
  506
  548
  593
  639
  688
  738
  790
  845
  902
  962
  1,024
  1,089
  1,157
  1,228
  1,303
  1,381
  1,462
  1,548
  1,637
  1,731
Tax expense, $m
  15
  30
  37
  45
  54
  62
  71
  81
  91
  101
  112
  137
  148
  160
  173
  186
  199
  213
  228
  244
  260
  276
  294
  312
  332
  352
  373
  395
  418
  442
  467
Net income, $m
  75
  81
  101
  123
  145
  169
  193
  219
  245
  273
  302
  369
  400
  433
  467
  502
  539
  577
  617
  659
  702
  747
  795
  845
  897
  951
  1,008
  1,067
  1,130
  1,195
  1,264

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  102
  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
  1,808
  1,905
  2,114
  2,333
  2,561
  2,800
  3,050
  3,309
  3,579
  3,860
  4,151
  4,454
  4,769
  5,097
  5,437
  5,791
  6,159
  6,543
  6,942
  7,358
  7,791
  8,243
  8,715
  9,207
  9,721
  10,259
  10,820
  11,407
  12,022
  12,664
  13,337
Adjusted assets (=assets-cash), $m
  1,706
  1,905
  2,114
  2,333
  2,561
  2,800
  3,050
  3,309
  3,579
  3,860
  4,151
  4,454
  4,769
  5,097
  5,437
  5,791
  6,159
  6,543
  6,942
  7,358
  7,791
  8,243
  8,715
  9,207
  9,721
  10,259
  10,820
  11,407
  12,022
  12,664
  13,337
Revenue / Adjusted assets
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
  0.581
Average production assets, $m
  694
  774
  859
  947
  1,040
  1,137
  1,239
  1,344
  1,454
  1,567
  1,686
  1,809
  1,937
  2,070
  2,208
  2,352
  2,501
  2,657
  2,819
  2,988
  3,164
  3,348
  3,539
  3,739
  3,948
  4,166
  4,394
  4,633
  4,882
  5,143
  5,416
Working capital, $m
  371
  300
  333
  367
  403
  441
  480
  521
  564
  608
  654
  701
  751
  802
  856
  912
  970
  1,030
  1,093
  1,158
  1,227
  1,298
  1,372
  1,450
  1,531
  1,615
  1,704
  1,796
  1,893
  1,994
  2,100
Total debt, $m
  665
  777
  896
  1,020
  1,149
  1,285
  1,426
  1,573
  1,726
  1,885
  2,051
  2,223
  2,401
  2,587
  2,780
  2,981
  3,189
  3,407
  3,633
  3,869
  4,115
  4,371
  4,638
  4,917
  5,209
  5,514
  5,832
  6,165
  6,513
  6,878
  7,259
Total liabilities, $m
  968
  1,080
  1,199
  1,323
  1,452
  1,588
  1,729
  1,876
  2,029
  2,188
  2,354
  2,526
  2,704
  2,890
  3,083
  3,284
  3,492
  3,710
  3,936
  4,172
  4,418
  4,674
  4,941
  5,220
  5,512
  5,817
  6,135
  6,468
  6,816
  7,181
  7,562
Total equity, $m
  840
  825
  915
  1,010
  1,109
  1,213
  1,320
  1,433
  1,550
  1,671
  1,798
  1,929
  2,065
  2,207
  2,354
  2,508
  2,667
  2,833
  3,006
  3,186
  3,374
  3,569
  3,774
  3,987
  4,209
  4,442
  4,685
  4,939
  5,205
  5,484
  5,775
Total liabilities and equity, $m
  1,808
  1,905
  2,114
  2,333
  2,561
  2,801
  3,049
  3,309
  3,579
  3,859
  4,152
  4,455
  4,769
  5,097
  5,437
  5,792
  6,159
  6,543
  6,942
  7,358
  7,792
  8,243
  8,715
  9,207
  9,721
  10,259
  10,820
  11,407
  12,021
  12,665
  13,337
Debt-to-equity ratio
  0.792
  0.940
  0.980
  1.010
  1.040
  1.060
  1.080
  1.100
  1.110
  1.130
  1.140
  1.150
  1.160
  1.170
  1.180
  1.190
  1.200
  1.200
  1.210
  1.210
  1.220
  1.220
  1.230
  1.230
  1.240
  1.240
  1.240
  1.250
  1.250
  1.250
  1.260
Adjusted equity ratio
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  75
  81
  101
  123
  145
  169
  193
  219
  245
  273
  302
  369
  400
  433
  467
  502
  539
  577
  617
  659
  702
  747
  795
  845
  897
  951
  1,008
  1,067
  1,130
  1,195
  1,264
Depreciation, amort., depletion, $m
  73
  98
  103
  109
  114
  120
  126
  133
  139
  146
  153
  110
  117
  125
  134
  143
  152
  161
  171
  181
  192
  203
  215
  227
  239
  252
  266
  281
  296
  312
  328
Funds from operations, $m
  105
  179
  204
  231
  259
  289
  319
  351
  384
  419
  455
  479
  518
  558
  600
  644
  690
  738
  788
  840
  894
  950
  1,009
  1,071
  1,136
  1,203
  1,274
  1,348
  1,426
  1,507
  1,592
Change in working capital, $m
  -11
  31
  33
  34
  36
  38
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  58
  60
  63
  65
  68
  71
  74
  78
  81
  85
  88
  92
  97
  101
  106
Cash from operations, $m
  116
  148
  172
  197
  223
  251
  280
  310
  342
  375
  409
  431
  468
  507
  547
  589
  632
  678
  725
  774
  826
  879
  935
  994
  1,055
  1,119
  1,186
  1,256
  1,329
  1,406
  1,486
Maintenance CAPEX, $m
  0
  -42
  -47
  -52
  -57
  -63
  -69
  -75
  -81
  -88
  -95
  -102
  -110
  -117
  -125
  -134
  -143
  -152
  -161
  -171
  -181
  -192
  -203
  -215
  -227
  -239
  -252
  -266
  -281
  -296
  -312
New CAPEX, $m
  -47
  -80
  -85
  -89
  -93
  -97
  -101
  -105
  -110
  -114
  -118
  -123
  -128
  -133
  -138
  -144
  -150
  -156
  -162
  -169
  -176
  -184
  -192
  -200
  -209
  -218
  -228
  -238
  -249
  -261
  -273
Cash from investing activities, $m
  -43
  -122
  -132
  -141
  -150
  -160
  -170
  -180
  -191
  -202
  -213
  -225
  -238
  -250
  -263
  -278
  -293
  -308
  -323
  -340
  -357
  -376
  -395
  -415
  -436
  -457
  -480
  -504
  -530
  -557
  -585
Free cash flow, $m
  73
  25
  40
  56
  73
  91
  110
  130
  151
  173
  196
  206
  231
  256
  283
  311
  340
  370
  402
  434
  468
  504
  541
  579
  619
  661
  705
  751
  799
  849
  901
Issuance/(repayment) of debt, $m
  -16
  112
  118
  124
  130
  136
  141
  147
  153
  159
  165
  172
  179
  186
  193
  201
  209
  217
  226
  236
  246
  256
  267
  279
  292
  305
  318
  333
  348
  364
  381
Issuance/(repurchase) of shares, $m
  10
  6
  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  
  -15
  118
  118
  124
  130
  136
  141
  147
  153
  159
  165
  172
  179
  186
  193
  201
  209
  217
  226
  236
  246
  256
  267
  279
  292
  305
  318
  333
  348
  364
  381
Total cash flow (excl. dividends), $m
  54
  144
  158
  180
  203
  226
  251
  277
  304
  332
  361
  378
  409
  442
  476
  512
  549
  588
  628
  670
  714
  760
  808
  858
  911
  966
  1,024
  1,084
  1,147
  1,213
  1,283
Retained Cash Flow (-), $m
  -89
  -87
  -90
  -95
  -99
  -103
  -108
  -112
  -117
  -122
  -126
  -131
  -136
  -142
  -147
  -153
  -159
  -166
  -173
  -180
  -188
  -196
  -204
  -213
  -223
  -233
  -243
  -254
  -266
  -278
  -291
Prev. year cash balance distribution, $m
 
  102
  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
 
  159
  68
  85
  104
  123
  143
  165
  187
  210
  235
  246
  273
  300
  329
  359
  390
  422
  455
  490
  526
  564
  604
  645
  688
  733
  780
  830
  881
  935
  992
Discount rate, %
 
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
 
  149
  59
  69
  76
  83
  87
  89
  90
  89
  86
  78
  73
  67
  61
  54
  47
  40
  34
  28
  22
  17
  13
  10
  7
  5
  4
  2
  2
  1
  1
Current shareholders' claim on cash, %
  100
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8

Integra LifeSciences Holdings Corporation is a medical technology company. The Company focuses on the development, manufacturing, and marketing of surgical implants and medical instruments. Its segments include Specialty Surgical Solutions, which offers specialty surgical instrumentation for a range of specialties, including product portfolio used in the neurosurgery operating suite and critical care unit, and Orthopedics and Tissue Technologies, which includes differentiated soft tissue repair and tissue regeneration products, and small bone fixation and joint replacement solutions. It sells products and solutions for dural repair, precision tools and instruments, tissue ablation and neuro critical care. It also sells regenerative technology products for treating acute wounds, such as burns, and chronic wounds, including diabetic foot ulcers and surgical tissue repair. Its products are used in neurosurgery, extremity reconstruction, orthopedics and general surgery.

FINANCIAL RATIOS  of  Integra LifeSciences Holdings (IART)

Valuation Ratios
P/E Ratio 49.8
Price to Sales 3.8
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 32.2
Price to Free Cash Flow 54.1
Growth Rates
Sales Growth Rate 12.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 42.4%
Cap. Spend. - 3 Yr. Gr. Rate -0.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 79.2%
Total Debt to Equity 79.2%
Interest Coverage 0
Management Effectiveness
Return On Assets 4.2%
Ret/ On Assets - 3 Yr. Avg. 2.3%
Return On Total Capital 5.1%
Ret/ On T. Cap. - 3 Yr. Avg. 2.5%
Return On Equity 9.4%
Return On Equity - 3 Yr. Avg. 4.6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 66.7%
Gross Margin - 3 Yr. Avg. 65.3%
EBITDA Margin 16.4%
EBITDA Margin - 3 Yr. Avg. 14.3%
Operating Margin 10.8%
Oper. Margin - 3 Yr. Avg. 9.5%
Pre-Tax Margin 9.1%
Pre-Tax Margin - 3 Yr. Avg. 7.3%
Net Profit Margin 7.6%
Net Profit Margin - 3 Yr. Avg. 3.8%
Effective Tax Rate 16.7%
Eff/ Tax Rate - 3 Yr. Avg. 42.3%
Payout Ratio 0%

IART stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IART stock intrinsic value calculation we used $992 million for the last fiscal year's total revenue generated by Integra LifeSciences Holdings. The default revenue input number comes from 2016 income statement of Integra LifeSciences 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 IART stock valuation model: a) initial revenue growth rate of 11.6% 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 6.8%, whose default value for IART is calculated based on our internal credit rating of Integra LifeSciences 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 Integra LifeSciences 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 IART stock the variable cost ratio is equal to 76.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $133 million in the base year in the intrinsic value calculation for IART 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 3.5% for Integra LifeSciences Holdings.

Corporate tax rate of 27% is the nominal tax rate for Integra LifeSciences 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 IART 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 IART are equal to 69.9%.

Life of production assets of 16.5 years is the average useful life of capital assets used in Integra LifeSciences 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 IART is equal to 27.1%. 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 - $840 million for Integra LifeSciences 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 80.652 million for Integra LifeSciences 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 Integra LifeSciences Holdings at the current share price and the inputted number of shares is $4.0 billion.

RELATED COMPANIES Price Int.Val. Rating
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SPNE SeaSpine Holdi 10.40 2.08  str.sell
WMGI Wright Medical 22.70 0.43  str.sell
ZBH Zimmer Biomet 122.49 46.72  str.sell
RTIX RTI Surgical 4.45 1.98  str.sell
SNN Smith&Nephew A 34.98 15.69  str.sell
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CNMD CONMED 56.01 15.42  str.sell

COMPANY NEWS

▶ Integra LifeSciences Hosts Investor Day 2017 New York City   [Dec-11-17 07:12AM  GlobeNewswire]
▶ Integra misses Street 3Q forecasts   [06:35AM  Associated Press]
▶ Integra Lifesciences Earns RS Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ J&J Completed the Divestiture of Its Neurosurgery Business   [Oct-17-17 07:37AM  Market Realist]
▶ Oppenheimer Presents New Menu Of Top Picks   [Sep-01-17 11:59AM  Benzinga]
▶ Integra meets 2Q profit forecasts   [Jul-26-17 09:58PM  Associated Press]
▶ Integra misses 1Q profit forecasts   [Apr-26-17 06:08AM  Associated Press]
Financial statements of IART
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