Intrinsic value of Imprimis Pharmaceuticals - IMMY

Previous Close

$4.71

  Intrinsic Value

$15.41

stock screener

  Rating & Target

str. buy

+227%

Previous close

$4.71

 
Intrinsic value

$15.41

 
Up/down potential

+227%

 
Rating

str. buy

We calculate the intrinsic value of IMMY 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 0.1

 

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, %
  51.40
  46.76
  42.58
  38.83
  35.44
  32.40
  29.66
  27.19
  24.97
  22.98
  21.18
  19.56
  18.10
  16.79
  15.61
  14.55
  13.60
  12.74
  11.96
  11.27
  10.64
  10.08
  9.57
  9.11
  8.70
  8.33
  8.00
  7.70
  7.43
  7.19
Revenue, $m
  41
  59
  85
  118
  159
  211
  274
  348
  435
  535
  649
  775
  916
  1,070
  1,237
  1,417
  1,609
  1,814
  2,031
  2,260
  2,501
  2,753
  3,016
  3,291
  3,577
  3,875
  4,185
  4,508
  4,842
  5,190
Variable operating expenses, $m
  18
  26
  37
  51
  68
  90
  117
  149
  185
  228
  276
  330
  389
  455
  526
  602
  684
  771
  863
  961
  1,063
  1,170
  1,282
  1,399
  1,520
  1,647
  1,779
  1,916
  2,058
  2,206
Fixed operating expenses, $m
  29
  29
  30
  31
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  53
  54
Total operating expenses, $m
  47
  55
  67
  82
  99
  122
  150
  182
  219
  263
  312
  366
  426
  493
  565
  642
  725
  812
  905
  1,004
  1,107
  1,215
  1,328
  1,446
  1,568
  1,696
  1,829
  1,967
  2,111
  2,260
Operating income, $m
  -6
  4
  18
  37
  60
  89
  124
  166
  216
  272
  337
  410
  489
  577
  672
  775
  885
  1,002
  1,126
  1,256
  1,394
  1,538
  1,688
  1,845
  2,009
  2,179
  2,356
  2,540
  2,732
  2,931
EBITDA, $m
  -3
  8
  23
  43
  69
  100
  139
  185
  239
  301
  371
  449
  537
  632
  736
  848
  968
  1,095
  1,230
  1,373
  1,522
  1,679
  1,843
  2,015
  2,193
  2,379
  2,572
  2,772
  2,981
  3,198
Interest expense (income), $m
  1
  3
  5
  9
  13
  18
  25
  34
  44
  56
  71
  87
  106
  127
  150
  175
  203
  232
  264
  298
  334
  372
  411
  453
  496
  542
  589
  638
  689
  742
  797
Earnings before tax, $m
  -9
  -1
  10
  24
  42
  64
  91
  122
  159
  202
  250
  304
  363
  427
  497
  572
  652
  738
  828
  923
  1,022
  1,126
  1,235
  1,349
  1,467
  1,590
  1,718
  1,851
  1,989
  2,133
Tax expense, $m
  0
  0
  3
  6
  11
  17
  24
  33
  43
  55
  68
  82
  98
  115
  134
  154
  176
  199
  223
  249
  276
  304
  334
  364
  396
  429
  464
  500
  537
  576
Net income, $m
  -9
  -1
  7
  17
  31
  47
  66
  89
  116
  147
  183
  222
  265
  312
  363
  418
  476
  538
  604
  673
  746
  822
  902
  985
  1,071
  1,161
  1,254
  1,351
  1,452
  1,557

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
  36
  53
  75
  104
  141
  187
  243
  308
  385
  474
  574
  687
  811
  947
  1,095
  1,255
  1,425
  1,607
  1,799
  2,002
  2,215
  2,438
  2,672
  2,915
  3,169
  3,433
  3,707
  3,992
  4,289
  4,597
Adjusted assets (=assets-cash), $m
  36
  53
  75
  104
  141
  187
  243
  308
  385
  474
  574
  687
  811
  947
  1,095
  1,255
  1,425
  1,607
  1,799
  2,002
  2,215
  2,438
  2,672
  2,915
  3,169
  3,433
  3,707
  3,992
  4,289
  4,597
Revenue / Adjusted assets
  1.139
  1.113
  1.133
  1.135
  1.128
  1.128
  1.128
  1.130
  1.130
  1.129
  1.131
  1.128
  1.129
  1.130
  1.130
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
  1.129
Average production assets, $m
  14
  21
  29
  41
  55
  73
  94
  120
  150
  185
  224
  268
  316
  369
  427
  489
  555
  626
  701
  780
  863
  950
  1,041
  1,135
  1,234
  1,337
  1,444
  1,555
  1,671
  1,791
Working capital, $m
  -1
  -1
  -2
  -3
  -4
  -5
  -6
  -8
  -10
  -12
  -14
  -17
  -20
  -24
  -27
  -31
  -35
  -40
  -45
  -50
  -55
  -61
  -66
  -72
  -79
  -85
  -92
  -99
  -107
  -114
Total debt, $m
  26
  41
  61
  87
  120
  161
  210
  269
  337
  416
  506
  606
  717
  838
  970
  1,112
  1,264
  1,426
  1,597
  1,778
  1,968
  2,166
  2,374
  2,591
  2,817
  3,052
  3,297
  3,551
  3,816
  4,090
Total liabilities, $m
  32
  47
  67
  93
  126
  167
  216
  275
  343
  422
  512
  612
  723
  844
  976
  1,118
  1,270
  1,432
  1,603
  1,784
  1,974
  2,172
  2,380
  2,597
  2,823
  3,058
  3,303
  3,557
  3,822
  4,096
Total equity, $m
  4
  6
  8
  11
  15
  20
  26
  34
  42
  52
  63
  75
  88
  103
  119
  137
  155
  175
  196
  218
  241
  266
  291
  318
  345
  374
  404
  435
  468
  501
Total liabilities and equity, $m
  36
  53
  75
  104
  141
  187
  242
  309
  385
  474
  575
  687
  811
  947
  1,095
  1,255
  1,425
  1,607
  1,799
  2,002
  2,215
  2,438
  2,671
  2,915
  3,168
  3,432
  3,707
  3,992
  4,290
  4,597
Debt-to-equity ratio
  6.650
  7.130
  7.440
  7.650
  7.790
  7.880
  7.950
  8.000
  8.030
  8.060
  8.080
  8.090
  8.110
  8.120
  8.120
  8.130
  8.140
  8.140
  8.140
  8.150
  8.150
  8.150
  8.150
  8.160
  8.160
  8.160
  8.160
  8.160
  8.160
  8.160
Adjusted equity ratio
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109
  0.109

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -9
  -1
  7
  17
  31
  47
  66
  89
  116
  147
  183
  222
  265
  312
  363
  418
  476
  538
  604
  673
  746
  822
  902
  985
  1,071
  1,161
  1,254
  1,351
  1,452
  1,557
Depreciation, amort., depletion, $m
  3
  4
  5
  7
  9
  11
  15
  18
  23
  28
  33
  40
  47
  55
  64
  73
  83
  93
  105
  116
  129
  142
  155
  169
  184
  200
  216
  232
  249
  267
Funds from operations, $m
  -6
  3
  12
  24
  39
  58
  81
  108
  139
  175
  216
  262
  312
  367
  427
  491
  559
  632
  709
  790
  875
  964
  1,057
  1,154
  1,255
  1,360
  1,470
  1,584
  1,702
  1,824
Change in working capital, $m
  0
  0
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
Cash from operations, $m
  -6
  3
  13
  25
  40
  59
  82
  110
  141
  178
  219
  264
  315
  370
  430
  495
  563
  636
  714
  795
  880
  970
  1,063
  1,160
  1,262
  1,367
  1,477
  1,591
  1,709
  1,832
Maintenance CAPEX, $m
  -1
  -2
  -3
  -4
  -6
  -8
  -11
  -14
  -18
  -22
  -28
  -33
  -40
  -47
  -55
  -64
  -73
  -83
  -93
  -105
  -116
  -129
  -142
  -155
  -169
  -184
  -200
  -216
  -232
  -249
New CAPEX, $m
  -5
  -7
  -9
  -11
  -14
  -18
  -22
  -26
  -30
  -34
  -39
  -44
  -48
  -53
  -58
  -62
  -66
  -71
  -75
  -79
  -83
  -87
  -91
  -95
  -99
  -103
  -107
  -111
  -116
  -120
Cash from investing activities, $m
  -6
  -9
  -12
  -15
  -20
  -26
  -33
  -40
  -48
  -56
  -67
  -77
  -88
  -100
  -113
  -126
  -139
  -154
  -168
  -184
  -199
  -216
  -233
  -250
  -268
  -287
  -307
  -327
  -348
  -369
Free cash flow, $m
  -12
  -6
  1
  9
  20
  33
  50
  70
  93
  121
  152
  187
  227
  270
  318
  369
  424
  483
  545
  611
  681
  754
  830
  910
  993
  1,080
  1,170
  1,264
  1,361
  1,463
Issuance/(repayment) of debt, $m
  11
  15
  20
  26
  33
  41
  49
  59
  69
  79
  89
  100
  111
  121
  132
  142
  152
  162
  171
  181
  190
  199
  208
  217
  226
  235
  245
  254
  264
  275
Issuance/(repurchase) of shares, $m
  10
  3
  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  
  21
  18
  20
  26
  33
  41
  49
  59
  69
  79
  89
  100
  111
  121
  132
  142
  152
  162
  171
  181
  190
  199
  208
  217
  226
  235
  245
  254
  264
  275
Total cash flow (excl. dividends), $m
  9
  12
  21
  35
  53
  74
  99
  128
  162
  200
  241
  287
  338
  392
  449
  511
  576
  645
  717
  792
  871
  953
  1,038
  1,127
  1,219
  1,315
  1,415
  1,518
  1,626
  1,737
Retained Cash Flow (-), $m
  -10
  -3
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -10
  -11
  -12
  -14
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -31
  -32
  -34
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
  9
  18
  32
  49
  69
  93
  121
  154
  190
  230
  275
  324
  377
  433
  493
  557
  625
  696
  770
  847
  928
  1,013
  1,100
  1,192
  1,286
  1,385
  1,487
  1,593
  1,704
Discount rate, %
  10.80
  11.34
  11.91
  12.50
  13.13
  13.78
  14.47
  15.20
  15.96
  16.75
  17.59
  18.47
  19.40
  20.37
  21.38
  22.45
  23.58
  24.75
  25.99
  27.29
  28.66
  30.09
  31.59
  33.17
  34.83
  36.57
  38.40
  40.32
  42.34
  44.45
PV of cash for distribution, $m
  -1
  8
  13
  20
  26
  32
  36
  39
  41
  40
  39
  36
  32
  28
  24
  19
  15
  12
  9
  6
  4
  3
  2
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  71.7
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9
  66.9

Imprimis Pharmaceuticals, Inc. (Imprimis) is engaged in the development, production and dispensing of compounded pharmaceuticals. The Company operates through the business of developing drug therapies and providing such therapies through sterile and non-sterile pharmaceutical compounding services segment. The Company, through its Imprimis Cares program, owns, markets and dispenses a portfolio of compounded therapeutic in several therapeutic areas, including ophthalmology, urology, otolaryngology and infectious diseases. The Company is also developing Custom Compounding Choice business, which is focused on developing and dispensing a portfolio of non-proprietary compounded drugs for humans and animals in therapeutic areas that may be overlooked by commercial pharmaceutical companies. The Company also offers customizable compounding products that consist of sterile injectable and non-sterile integrative medicine therapies that are used in various therapeutic areas.

FINANCIAL RATIOS  of  Imprimis Pharmaceuticals (IMMY)

Valuation Ratios
P/E Ratio -4.6
Price to Sales 4.4
Price to Book 14.6
Price to Tangible Book
Price to Cash Flow -8
Price to Free Cash Flow -4.9
Growth Rates
Sales Growth Rate 100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 600%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 166.7%
Total Debt to Equity 233.3%
Interest Coverage -18
Management Effectiveness
Return On Assets -87.8%
Ret/ On Assets - 3 Yr. Avg. -96.6%
Return On Total Capital -135.7%
Ret/ On T. Cap. - 3 Yr. Avg. -140.9%
Return On Equity -760%
Return On Equity - 3 Yr. Avg. -434.7%
Asset Turnover 1
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 50%
EBITDA Margin -85%
EBITDA Margin - 3 Yr. Avg. -245%
Operating Margin -90%
Oper. Margin - 3 Yr. Avg. -246.7%
Pre-Tax Margin -95%
Pre-Tax Margin - 3 Yr. Avg. -251.7%
Net Profit Margin -95%
Net Profit Margin - 3 Yr. Avg. -251.7%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IMMY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IMMY stock intrinsic value calculation we used $26.774 million for the last fiscal year's total revenue generated by Imprimis Pharmaceuticals. The default revenue input number comes from 0001 income statement of Imprimis Pharmaceuticals. 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 IMMY stock valuation model: a) initial revenue growth rate of 51.4% 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 10.8%, whose default value for IMMY is calculated based on our internal credit rating of Imprimis Pharmaceuticals, 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 Imprimis Pharmaceuticals.
    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 IMMY stock the variable cost ratio is equal to 44.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $28 million in the base year in the intrinsic value calculation for IMMY 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 20.9% for Imprimis Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Imprimis Pharmaceuticals. 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 IMMY 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 IMMY are equal to 34.5%.

Life of production assets of 6.7 years is the average useful life of capital assets used in Imprimis Pharmaceuticals 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 IMMY is equal to -2.2%. 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 - $2.615 million for Imprimis Pharmaceuticals - 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 21.049 million for Imprimis Pharmaceuticals 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 Imprimis Pharmaceuticals at the current share price and the inputted number of shares is $0.1 billion.

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COMPANY NEWS

▶ 4 Healthcare Stocks Investors Should Get Familiar With   [Nov-14-18 10:25AM  ACCESSWIRE]
▶ Imprimis: 3Q Earnings Snapshot   [Nov-13-18 04:15PM  Associated Press]
▶ 10 Small-Caps With Straight-A Potential   [Oct-12-18 03:17PM  InvestorPlace]
▶ Imprimis: 2Q Earnings Snapshot   [Aug-06-18 04:29PM  Associated Press]
▶ Imprimis: 1Q Earnings Snapshot   [May-15-18 07:22PM  Associated Press]
▶ Imprimis reports 4Q loss   [Mar-08-18 05:14PM  Associated Press]
▶ Who Owns Imprimis Pharmaceuticals Inc (NASDAQ:IMMY)?   [Jan-30-18 07:21PM  Simply Wall St.]
▶ Imprimis reports 3Q loss   [Nov-16-17 05:14AM  Associated Press]
▶ Imprimis Launches Surface Pharmaceuticals Subsidiary   [Oct-24-17 07:30AM  PR Newswire]
▶ FDA Curcumin Investigation Supports Imprimis Statement   [Sep-14-17 08:00AM  PR Newswire]
▶ Imprimis Releases Statement Regarding Allergan Lawsuit   [Sep-11-17 07:30AM  PR Newswire]
▶ Imprimis posts 2Q profit   [Aug-10-17 10:11PM  Associated Press]
▶ Imprimis reports 1Q loss   [May-10-17 04:22PM  Associated Press]

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