Intrinsic value of Kadmon Holdings - KDMN

Previous Close

$2.57

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.57

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of KDMN 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 0.3

 

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
  13
  13
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  32
  33
  35
  37
  38
  40
Variable operating expenses, $m
  57
  59
  60
  62
  64
  66
  68
  70
  73
  76
  78
  82
  85
  89
  92
  96
  101
  105
  110
  115
  120
  126
  132
  138
  145
  152
  159
  167
  175
  183
Fixed operating expenses, $m
  28
  28
  29
  29
  30
  31
  31
  32
  33
  34
  34
  35
  36
  37
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
Total operating expenses, $m
  85
  87
  89
  91
  94
  97
  99
  102
  106
  110
  112
  117
  121
  126
  129
  134
  140
  145
  151
  157
  163
  170
  177
  184
  192
  200
  208
  217
  226
  235
Operating income, $m
  -72
  -74
  -76
  -78
  -80
  -82
  -85
  -87
  -90
  -93
  -95
  -99
  -102
  -106
  -109
  -113
  -118
  -122
  -127
  -132
  -137
  -142
  -147
  -153
  -159
  -166
  -173
  -180
  -187
  -195
EBITDA, $m
  -71
  -72
  -74
  -76
  -78
  -80
  -83
  -85
  -88
  -91
  -94
  -97
  -100
  -104
  -107
  -111
  -115
  -119
  -124
  -129
  -134
  -139
  -144
  -150
  -156
  -162
  -169
  -176
  -183
  -190
Interest expense (income), $m
  4
  6
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
Earnings before tax, $m
  -79
  -78
  -80
  -82
  -84
  -87
  -89
  -92
  -95
  -98
  -101
  -105
  -109
  -113
  -117
  -121
  -126
  -131
  -136
  -141
  -147
  -153
  -159
  -165
  -172
  -179
  -187
  -195
  -203
  -212
Tax expense, $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
Net income, $m
  -79
  -78
  -80
  -82
  -84
  -87
  -89
  -92
  -95
  -98
  -101
  -105
  -109
  -113
  -117
  -121
  -126
  -131
  -136
  -141
  -147
  -153
  -159
  -165
  -172
  -179
  -187
  -195
  -203
  -212

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
  39
  40
  41
  43
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  98
  102
  107
  112
  118
  123
Adjusted assets (=assets-cash), $m
  38
  39
  40
  41
  43
  44
  46
  47
  49
  51
  53
  55
  57
  60
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  98
  102
  107
  112
  118
  123
Revenue / Adjusted assets
  0.342
  0.333
  0.325
  0.317
  0.326
  0.318
  0.326
  0.319
  0.327
  0.333
  0.321
  0.327
  0.333
  0.317
  0.323
  0.323
  0.324
  0.324
  0.324
  0.325
  0.321
  0.329
  0.326
  0.323
  0.327
  0.324
  0.327
  0.330
  0.322
  0.325
Average production assets, $m
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
Working capital, $m
  -24
  -24
  -25
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -50
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
Total debt, $m
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  42
  44
  47
  49
  52
  55
  59
  62
  66
  69
  73
  78
  82
  87
  92
  97
Total liabilities, $m
  35
  35
  36
  37
  38
  40
  41
  42
  44
  46
  48
  49
  51
  54
  56
  58
  61
  64
  67
  70
  73
  76
  80
  84
  88
  92
  96
  101
  106
  111
Total equity, $m
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
Total liabilities and equity, $m
  39
  39
  40
  41
  42
  44
  46
  47
  49
  51
  53
  54
  57
  60
  62
  64
  68
  71
  74
  78
  81
  84
  89
  93
  98
  102
  107
  112
  118
  123
Debt-to-equity ratio
  5.250
  5.340
  5.430
  5.530
  5.630
  5.730
  5.840
  5.950
  6.060
  6.170
  6.280
  6.380
  6.490
  6.590
  6.690
  6.790
  6.880
  6.970
  7.060
  7.140
  7.230
  7.310
  7.380
  7.460
  7.530
  7.590
  7.660
  7.720
  7.780
  7.830
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -79
  -78
  -80
  -82
  -84
  -87
  -89
  -92
  -95
  -98
  -101
  -105
  -109
  -113
  -117
  -121
  -126
  -131
  -136
  -141
  -147
  -153
  -159
  -165
  -172
  -179
  -187
  -195
  -203
  -212
Depreciation, amort., depletion, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
Funds from operations, $m
  -77
  -76
  -78
  -80
  -82
  -85
  -87
  -90
  -93
  -96
  -99
  -103
  -107
  -110
  -115
  -119
  -123
  -128
  -133
  -138
  -144
  -150
  -156
  -162
  -169
  -176
  -183
  -191
  -199
  -207
Change in working capital, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
Cash from operations, $m
  -76
  -75
  -77
  -79
  -81
  -84
  -86
  -89
  -92
  -95
  -98
  -102
  -105
  -109
  -113
  -117
  -122
  -126
  -131
  -136
  -142
  -147
  -153
  -160
  -166
  -173
  -180
  -188
  -196
  -204
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
New CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from investing activities, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
Free cash flow, $m
  -78
  -77
  -79
  -81
  -83
  -86
  -88
  -91
  -94
  -97
  -100
  -104
  -108
  -111
  -116
  -120
  -124
  -129
  -134
  -140
  -145
  -151
  -157
  -164
  -170
  -177
  -185
  -192
  -201
  -209
Issuance/(repayment) of debt, $m
  -14
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
Issuance/(repurchase) of shares, $m
  94
  78
  80
  82
  84
  87
  89
  92
  95
  98
  101
  105
  109
  113
  117
  121
  126
  131
  136
  142
  147
  153
  159
  166
  173
  180
  187
  195
  204
  212
Cash from financing (excl. dividends), $m  
  80
  79
  81
  83
  85
  88
  90
  93
  97
  100
  103
  107
  111
  115
  119
  123
  129
  134
  139
  145
  150
  156
  163
  170
  177
  184
  191
  200
  209
  217
Total cash flow (excl. dividends), $m
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
Retained Cash Flow (-), $m
  -94
  -78
  -80
  -82
  -84
  -87
  -89
  -92
  -95
  -98
  -101
  -105
  -109
  -113
  -117
  -121
  -126
  -131
  -136
  -142
  -147
  -153
  -159
  -166
  -173
  -180
  -187
  -195
  -204
  -212
Prev. year cash balance distribution, $m
  13
  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
  -79
  -76
  -78
  -80
  -82
  -84
  -87
  -89
  -92
  -95
  -99
  -102
  -105
  -109
  -113
  -117
  -122
  -127
  -131
  -137
  -142
  -148
  -154
  -160
  -166
  -173
  -180
  -188
  -196
  -204
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  -75
  -70
  -68
  -66
  -64
  -61
  -59
  -56
  -53
  -50
  -47
  -43
  -40
  -37
  -33
  -30
  -27
  -23
  -20
  -17
  -15
  -12
  -10
  -8
  -6
  -5
  -4
  -3
  -2
  -2
Current shareholders' claim on cash, %
  50.0
  16.5
  5.4
  1.8
  0.6
  0.2
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
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Kadmon Holdings, Inc. is an integrated biopharmaceutical company engaged in the discovery, development and commercialization of small molecules and biologics to address disease areas of various unmet medical needs. The Company is developing product candidates in a number of indications within autoimmune and fibrotic disease, oncology and genetic diseases. Its product pipeline consists of KD025, Tesevatinib and KD034. The Company's other products include Ribasphere RibaPak, Ribasphere, Qsymia, Tetrabenazine and Valganciclovir. KD025 is an orally available, selective small molecule inhibitor of Rho-associated coiled-coil kinase 2 (ROCK2), a molecular target in multiple autoimmune, fibrotic and neurodegenerative diseases. Tesevatinib is an oral tyrosine kinase inhibitor (TKI) designed to block key molecular drivers of tumor growth, metastases and drug resistance. KD034 is the Company's portfolio of enhanced formulations of trientine hydrochloride for the treatment of Wilson's disease.

FINANCIAL RATIOS  of  Kadmon Holdings (KDMN)

Valuation Ratios
P/E Ratio -0.6
Price to Sales 4.5
Price to Book -4.6
Price to Tangible Book
Price to Cash Flow -2.2
Price to Free Cash Flow -2.1
Growth Rates
Sales Growth Rate -27.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 18
Current Ratio 0
LT Debt to Equity -116%
Total Debt to Equity -124%
Interest Coverage -51
Management Effectiveness
Return On Assets -278.9%
Ret/ On Assets - 3 Yr. Avg. -149.3%
Return On Total Capital -4644.4%
Ret/ On T. Cap. - 3 Yr. Avg. -1777%
Return On Equity 176.4%
Return On Equity - 3 Yr. Avg. 107.9%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 84.6%
Gross Margin - 3 Yr. Avg. 85.5%
EBITDA Margin -719.2%
EBITDA Margin - 3 Yr. Avg. -351.1%
Operating Margin -488.5%
Oper. Margin - 3 Yr. Avg. -288.1%
Pre-Tax Margin -800%
Pre-Tax Margin - 3 Yr. Avg. -425.2%
Net Profit Margin -803.8%
Net Profit Margin - 3 Yr. Avg. -426.5%
Effective Tax Rate -0.5%
Eff/ Tax Rate - 3 Yr. Avg. -0.2%
Payout Ratio 0%

KDMN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KDMN stock intrinsic value calculation we used $12.264 million for the last fiscal year's total revenue generated by Kadmon Holdings. The default revenue input number comes from 0001 income statement of Kadmon 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 KDMN 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 4.3%, whose default value for KDMN is calculated based on our internal credit rating of Kadmon 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 Kadmon 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 KDMN stock the variable cost ratio is equal to 458.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $27 million in the base year in the intrinsic value calculation for KDMN 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 18.5% for Kadmon Holdings.

Corporate tax rate of 27% is the nominal tax rate for Kadmon 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 KDMN 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 KDMN are equal to 55.4%.

Life of production assets of 4.6 years is the average useful life of capital assets used in Kadmon 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 KDMN is equal to -188%. 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 - $1.758 million for Kadmon 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 113.102 million for Kadmon 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 Kadmon Holdings at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Kadmon Announces CFO Transition and Other Updates   [Oct-24-18 04:15PM  GlobeNewswire]
▶ 7 Cheap Biotech Stocks to Buy Now   [Aug-23-18 11:39AM  InvestorPlace]
▶ Here's Why Kadmon Shot Higher Today   [Jun-12-18 12:45PM  Motley Fool]
▶ Kadmon Announces Pricing of Offerings of Common Stock   [Jun-11-18 07:55PM  Business Wire]
▶ Kadmon Holdings (KDMN) Jumps: Stock Rises 9.3%   [Jan-15-18 08:41AM  Zacks]
▶ Kadmon Announces Approximately $23 Million Equity Financing   [Mar-08-17 09:06AM  Business Wire]
▶ Hedge Funds Are Buying Kadmon Holdings LLC (KDMN)   [Dec-13-16 04:23AM  Insider Monkey]
▶ Hedge Funds Are Buying Kadmon Holdings LLC (KDMN)   [04:23AM  at Insider Monkey]

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