Intrinsic value of MiMedx Group - MDXG

Previous Close

$3.22

  Intrinsic Value

$7.45

stock screener

  Rating & Target

str. buy

+131%

Previous close

$3.22

 
Intrinsic value

$7.45

 
Up/down potential

+131%

 
Rating

str. buy

We calculate the intrinsic value of MDXG 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 2016), $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
   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, %
  30.80
  28.22
  25.90
  23.81
  21.93
  20.23
  18.71
  17.34
  16.11
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
Revenue, $m
  320
  411
  517
  640
  781
  939
  1,115
  1,308
  1,519
  1,746
  1,991
  2,251
  2,528
  2,820
  3,128
  3,450
  3,788
  4,140
  4,507
  4,890
  5,288
  5,701
  6,131
  6,578
  7,042
  7,525
  8,026
  8,548
  9,091
  9,656
Variable operating expenses, $m
  277
  354
  445
  550
  669
  804
  953
  1,118
  1,297
  1,491
  1,695
  1,917
  2,152
  2,401
  2,663
  2,938
  3,225
  3,525
  3,838
  4,163
  4,502
  4,854
  5,220
  5,601
  5,996
  6,407
  6,834
  7,278
  7,740
  8,221
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
  277
  354
  445
  550
  669
  804
  953
  1,118
  1,297
  1,491
  1,695
  1,917
  2,152
  2,401
  2,663
  2,938
  3,225
  3,525
  3,838
  4,163
  4,502
  4,854
  5,220
  5,601
  5,996
  6,407
  6,834
  7,278
  7,740
  8,221
Operating income, $m
  43
  57
  73
  91
  112
  135
  161
  190
  221
  255
  296
  334
  376
  419
  465
  513
  563
  615
  670
  726
  785
  847
  911
  977
  1,046
  1,118
  1,192
  1,270
  1,350
  1,434
EBITDA, $m
  53
  68
  85
  106
  129
  155
  184
  216
  251
  288
  329
  372
  417
  466
  517
  570
  626
  684
  744
  808
  873
  942
  1,013
  1,086
  1,163
  1,243
  1,326
  1,412
  1,501
  1,595
Interest expense (income), $m
  0
  0
  1
  2
  4
  5
  7
  9
  12
  14
  17
  20
  23
  27
  30
  34
  38
  43
  47
  52
  57
  62
  67
  72
  78
  84
  90
  97
  103
  110
  118
Earnings before tax, $m
  43
  56
  70
  87
  106
  128
  152
  178
  207
  238
  276
  311
  349
  389
  430
  474
  520
  568
  618
  670
  724
  780
  838
  899
  962
  1,027
  1,096
  1,166
  1,240
  1,317
Tax expense, $m
  12
  15
  19
  24
  29
  35
  41
  48
  56
  64
  74
  84
  94
  105
  116
  128
  140
  153
  167
  181
  195
  211
  226
  243
  260
  277
  296
  315
  335
  356
Net income, $m
  32
  41
  51
  64
  78
  93
  111
  130
  151
  174
  201
  227
  255
  284
  314
  346
  380
  415
  451
  489
  528
  569
  612
  656
  702
  750
  800
  851
  905
  961

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
  253
  324
  408
  505
  616
  740
  879
  1,031
  1,198
  1,377
  1,570
  1,775
  1,994
  2,224
  2,467
  2,721
  2,987
  3,265
  3,555
  3,856
  4,170
  4,496
  4,835
  5,188
  5,554
  5,934
  6,330
  6,741
  7,169
  7,615
Adjusted assets (=assets-cash), $m
  253
  324
  408
  505
  616
  740
  879
  1,031
  1,198
  1,377
  1,570
  1,775
  1,994
  2,224
  2,467
  2,721
  2,987
  3,265
  3,555
  3,856
  4,170
  4,496
  4,835
  5,188
  5,554
  5,934
  6,330
  6,741
  7,169
  7,615
Revenue / Adjusted assets
  1.265
  1.269
  1.267
  1.267
  1.268
  1.269
  1.268
  1.269
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
  1.268
Average production assets, $m
  53
  68
  86
  106
  130
  156
  185
  217
  252
  290
  330
  374
  420
  468
  519
  573
  629
  687
  748
  812
  878
  946
  1,018
  1,092
  1,169
  1,249
  1,332
  1,419
  1,509
  1,603
Working capital, $m
  8
  11
  13
  17
  20
  24
  29
  34
  39
  45
  52
  59
  66
  73
  81
  90
  98
  108
  117
  127
  137
  148
  159
  171
  183
  196
  209
  222
  236
  251
Total debt, $m
  19
  41
  67
  97
  132
  171
  214
  262
  313
  369
  430
  494
  562
  634
  709
  789
  872
  958
  1,049
  1,143
  1,241
  1,343
  1,448
  1,558
  1,672
  1,791
  1,915
  2,043
  2,177
  2,316
Total liabilities, $m
  79
  101
  127
  158
  192
  231
  274
  322
  374
  430
  490
  554
  622
  694
  770
  849
  932
  1,019
  1,109
  1,203
  1,301
  1,403
  1,509
  1,619
  1,733
  1,851
  1,975
  2,103
  2,237
  2,376
Total equity, $m
  174
  223
  281
  348
  424
  509
  605
  710
  824
  947
  1,080
  1,222
  1,372
  1,530
  1,697
  1,872
  2,055
  2,246
  2,446
  2,653
  2,869
  3,093
  3,327
  3,569
  3,821
  4,083
  4,355
  4,638
  4,933
  5,239
Total liabilities and equity, $m
  253
  324
  408
  506
  616
  740
  879
  1,032
  1,198
  1,377
  1,570
  1,776
  1,994
  2,224
  2,467
  2,721
  2,987
  3,265
  3,555
  3,856
  4,170
  4,496
  4,836
  5,188
  5,554
  5,934
  6,330
  6,741
  7,170
  7,615
Debt-to-equity ratio
  0.110
  0.180
  0.240
  0.280
  0.310
  0.340
  0.350
  0.370
  0.380
  0.390
  0.400
  0.400
  0.410
  0.410
  0.420
  0.420
  0.420
  0.430
  0.430
  0.430
  0.430
  0.430
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
  0.440
Adjusted equity ratio
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688
  0.688

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  32
  41
  51
  64
  78
  93
  111
  130
  151
  174
  201
  227
  255
  284
  314
  346
  380
  415
  451
  489
  528
  569
  612
  656
  702
  750
  800
  851
  905
  961
Depreciation, amort., depletion, $m
  10
  11
  13
  15
  17
  20
  23
  26
  30
  33
  33
  37
  42
  47
  52
  57
  63
  69
  75
  81
  88
  95
  102
  109
  117
  125
  133
  142
  151
  160
Funds from operations, $m
  41
  52
  64
  79
  95
  113
  134
  156
  181
  207
  234
  265
  297
  330
  366
  403
  443
  483
  526
  570
  616
  664
  714
  765
  819
  875
  933
  993
  1,056
  1,122
Change in working capital, $m
  2
  2
  3
  3
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
Cash from operations, $m
  39
  49
  61
  75
  91
  109
  129
  151
  175
  201
  228
  258
  289
  323
  358
  395
  434
  474
  516
  560
  606
  653
  703
  754
  807
  862
  920
  980
  1,042
  1,107
Maintenance CAPEX, $m
  -4
  -5
  -7
  -9
  -11
  -13
  -16
  -19
  -22
  -25
  -29
  -33
  -37
  -42
  -47
  -52
  -57
  -63
  -69
  -75
  -81
  -88
  -95
  -102
  -109
  -117
  -125
  -133
  -142
  -151
New CAPEX, $m
  -12
  -15
  -18
  -20
  -23
  -26
  -29
  -32
  -35
  -38
  -41
  -43
  -46
  -49
  -51
  -54
  -56
  -58
  -61
  -63
  -66
  -69
  -71
  -74
  -77
  -80
  -83
  -87
  -90
  -94
Cash from investing activities, $m
  -16
  -20
  -25
  -29
  -34
  -39
  -45
  -51
  -57
  -63
  -70
  -76
  -83
  -91
  -98
  -106
  -113
  -121
  -130
  -138
  -147
  -157
  -166
  -176
  -186
  -197
  -208
  -220
  -232
  -245
Free cash flow, $m
  23
  29
  37
  46
  57
  70
  84
  101
  119
  138
  158
  181
  206
  232
  260
  290
  320
  353
  387
  422
  459
  497
  537
  578
  621
  665
  712
  760
  810
  862
Issuance/(repayment) of debt, $m
  19
  22
  26
  30
  35
  39
  43
  48
  52
  56
  60
  64
  68
  72
  76
  79
  83
  87
  90
  94
  98
  102
  106
  110
  114
  119
  123
  128
  134
  139
Issuance/(repurchase) of shares, $m
  9
  8
  6
  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
Cash from financing (excl. dividends), $m  
  28
  30
  32
  33
  35
  39
  43
  48
  52
  56
  60
  64
  68
  72
  76
  79
  83
  87
  90
  94
  98
  102
  106
  110
  114
  119
  123
  128
  134
  139
Total cash flow (excl. dividends), $m
  51
  60
  70
  80
  92
  109
  128
  148
  170
  194
  219
  246
  274
  304
  336
  369
  403
  439
  477
  516
  556
  599
  642
  688
  735
  784
  835
  888
  944
  1,001
Retained Cash Flow (-), $m
  -41
  -49
  -58
  -67
  -76
  -86
  -95
  -105
  -114
  -124
  -133
  -141
  -150
  -159
  -167
  -175
  -183
  -191
  -199
  -208
  -216
  -224
  -233
  -242
  -252
  -262
  -272
  -283
  -295
  -307
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
  18
  23
  30
  38
  47
  57
  69
  81
  95
  111
  127
  145
  164
  185
  206
  228
  252
  276
  302
  329
  357
  386
  416
  448
  480
  514
  549
  586
  624
  664
Cash available for distribution, $m
  10
  11
  12
  13
  16
  23
  32
  43
  56
  71
  86
  104
  124
  146
  169
  194
  220
  248
  278
  308
  341
  374
  409
  445
  483
  522
  563
  605
  649
  695
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
  9
  10
  10
  11
  12
  17
  22
  27
  32
  37
  41
  44
  47
  49
  50
  49
  48
  46
  43
  39
  35
  31
  27
  23
  19
  15
  12
  9
  7
  5
Current shareholders' claim on cash, %
  97.4
  95.6
  94.5
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1
  94.1

MiMedx Group, Inc. is an integrated developer, processor and marketer of regenerative biomaterial products and bioimplants human placental tissue, skin and bone. The Company's Regenerative Biomaterials segment includes the design, manufacture, and marketing of products and tissue processing services for the Wound Care, Surgical, Sports Medicine, Ophthalmic and Dental market categories. Its biomaterial platform technologies include AmnioFix, EpiFix, OrthoFlo, Physio, AlloBurn, and CollaFix. AmnioFix and EpiFix are its tissue technologies processed from human amniotic membrane derived from donated placentas. OrthoFlo is amniotic fluid-derived allograft for homologous use. Physio is a bone grafting material consists of bone tissue with no added carrier. CollaFix, its new brand, is its collagen fiber technology designed to mimic the natural composition, structure and mechanical properties of musculoskeletal tissues in order to augment their repair.

FINANCIAL RATIOS  of  MiMedx Group (MDXG)

Valuation Ratios
P/E Ratio 29.5
Price to Sales 1.4
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 13.6
Price to Free Cash Flow 18.6
Growth Rates
Sales Growth Rate 31%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 18.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 7.3%
Ret/ On Assets - 3 Yr. Avg. 12.4%
Return On Total Capital 10%
Ret/ On T. Cap. - 3 Yr. Avg. 15.6%
Return On Equity 10%
Return On Equity - 3 Yr. Avg. 15.6%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 86.9%
Gross Margin - 3 Yr. Avg. 88.7%
EBITDA Margin 9.4%
EBITDA Margin - 3 Yr. Avg. 10.5%
Operating Margin 7.3%
Oper. Margin - 3 Yr. Avg. 8.7%
Pre-Tax Margin 7.3%
Pre-Tax Margin - 3 Yr. Avg. 8.7%
Net Profit Margin 4.9%
Net Profit Margin - 3 Yr. Avg. 8.5%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. 8.9%
Payout Ratio 0%

MDXG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MDXG stock intrinsic value calculation we used $245 million for the last fiscal year's total revenue generated by MiMedx Group. The default revenue input number comes from 2016 income statement of MiMedx Group. 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 MDXG stock valuation model: a) initial revenue growth rate of 30.8% 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 MDXG is calculated based on our internal credit rating of MiMedx Group, 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 MiMedx Group.
    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 MDXG stock the variable cost ratio is equal to 86.9%.

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 MDXG 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 MiMedx Group.

Corporate tax rate of 27% is the nominal tax rate for MiMedx Group. 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 MDXG stock is equal to 7.3%.

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 MDXG are equal to 16.6%.

Life of production assets of 10 years is the average useful life of capital assets used in MiMedx Group 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 MDXG is equal to 2.6%. 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 - $133 million for MiMedx Group - 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 106 million for MiMedx Group 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 MiMedx Group at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ 2 Biotech Stocks at New Lows. Can They Recover?   [Jul-05-18 09:47AM  Motley Fool]
▶ Pete Petit out as MiMedx CEO, company's COO also resigns   [12:01PM  American City Business Journals]
▶ Should You Be Holding MiMedx Group Inc (NASDAQ:MDXG)?   [Jun-19-18 01:33PM  Simply Wall St.]
▶ MiMedx to Restate Years of Financial Statements   [Jun-07-18 02:38PM  The Wall Street Journal]
▶ Hedge Fund Sues MiMedx Over Short-Selling Claims   [Jun-04-18 03:47PM  Bloomberg]
▶ Why MiMedx Group Shares Rallied as Much as 24% Today   [May-23-18 04:44PM  Motley Fool]
▶ MiMedx Receives NASDAQ Notice of Late Form 10-Q Filing   [May-18-18 04:30PM  PR Newswire]
▶ Why MiMedx Group Inc. Stock Fell Today   [May-09-18 04:32PM  Motley Fool]
▶ Wolf Haldenstein: Mimedx Investor Reminder   [Apr-17-18 04:25PM  ACCESSWIRE]
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