Intrinsic value of MTBC, Inc. - MTBC

Previous Close

$4.79

  Intrinsic Value

$291.22

stock screener

  Rating & Target

str. buy

+999%

Previous close

$4.79

 
Intrinsic value

$291.22

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of MTBC 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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  51
  79
  118
  172
  242
  333
  447
  587
  755
  954
  1,184
  1,448
  1,745
  2,076
  2,442
  2,840
  3,272
  3,735
  4,230
  4,756
  5,312
  5,897
  6,511
  7,154
  7,826
  8,526
  9,256
  10,014
  10,803
  11,623
Variable operating expenses, $m
  20
  30
  44
  63
  88
  121
  162
  212
  273
  344
  425
  520
  627
  746
  877
  1,020
  1,175
  1,341
  1,519
  1,708
  1,908
  2,118
  2,338
  2,569
  2,811
  3,062
  3,324
  3,596
  3,880
  4,174
Fixed operating expenses, $m
  25
  25
  26
  26
  27
  27
  28
  29
  29
  30
  30
  31
  32
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  40
  41
  42
  43
  44
  45
  46
Total operating expenses, $m
  45
  55
  70
  89
  115
  148
  190
  241
  302
  374
  455
  551
  659
  779
  910
  1,054
  1,210
  1,377
  1,555
  1,745
  1,946
  2,157
  2,378
  2,609
  2,852
  3,104
  3,367
  3,640
  3,925
  4,220
Operating income, $m
  7
  24
  49
  82
  127
  185
  257
  346
  453
  580
  728
  897
  1,087
  1,298
  1,531
  1,786
  2,062
  2,358
  2,675
  3,011
  3,366
  3,741
  4,133
  4,545
  4,974
  5,422
  5,889
  6,374
  6,879
  7,403
EBITDA, $m
  11
  30
  57
  94
  143
  206
  286
  383
  500
  639
  800
  984
  1,192
  1,424
  1,679
  1,958
  2,260
  2,585
  2,931
  3,299
  3,688
  4,098
  4,528
  4,978
  5,448
  5,939
  6,449
  6,981
  7,533
  8,107
Interest expense (income), $m
  0
  0
  1
  1
  3
  4
  6
  9
  12
  16
  21
  27
  34
  42
  51
  60
  71
  83
  96
  110
  124
  140
  156
  173
  192
  211
  230
  251
  273
  295
  319
Earnings before tax, $m
  7
  24
  47
  80
  123
  178
  248
  334
  437
  558
  701
  863
  1,045
  1,247
  1,471
  1,715
  1,979
  2,262
  2,565
  2,887
  3,227
  3,584
  3,960
  4,353
  4,764
  5,192
  5,637
  6,101
  6,583
  7,085
Tax expense, $m
  2
  6
  13
  22
  33
  48
  67
  90
  118
  151
  189
  233
  282
  337
  397
  463
  534
  611
  693
  779
  871
  968
  1,069
  1,175
  1,286
  1,402
  1,522
  1,647
  1,778
  1,913
Net income, $m
  5
  17
  34
  58
  90
  130
  181
  244
  319
  408
  512
  630
  763
  911
  1,074
  1,252
  1,445
  1,652
  1,873
  2,107
  2,355
  2,617
  2,891
  3,178
  3,477
  3,790
  4,115
  4,454
  4,806
  5,172

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
  41
  63
  94
  136
  192
  263
  354
  464
  597
  755
  937
  1,145
  1,381
  1,643
  1,932
  2,247
  2,588
  2,955
  3,347
  3,763
  4,202
  4,666
  5,151
  5,660
  6,191
  6,746
  7,323
  7,923
  8,547
  9,196
Adjusted assets (=assets-cash), $m
  41
  63
  94
  136
  192
  263
  354
  464
  597
  755
  937
  1,145
  1,381
  1,643
  1,932
  2,247
  2,588
  2,955
  3,347
  3,763
  4,202
  4,666
  5,151
  5,660
  6,191
  6,746
  7,323
  7,923
  8,547
  9,196
Revenue / Adjusted assets
  1.244
  1.254
  1.255
  1.265
  1.260
  1.266
  1.263
  1.265
  1.265
  1.264
  1.264
  1.265
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
  1.264
Average production assets, $m
  16
  24
  36
  52
  73
  101
  135
  178
  229
  289
  359
  439
  529
  629
  740
  861
  991
  1,132
  1,282
  1,441
  1,610
  1,787
  1,973
  2,168
  2,371
  2,583
  2,804
  3,034
  3,273
  3,522
Working capital, $m
  1
  1
  2
  2
  3
  4
  6
  8
  10
  12
  15
  19
  23
  27
  32
  37
  43
  49
  55
  62
  69
  77
  85
  93
  102
  111
  120
  130
  140
  151
Total debt, $m
  3
  8
  14
  23
  34
  48
  67
  89
  116
  148
  184
  227
  274
  327
  385
  449
  518
  592
  671
  755
  844
  938
  1,036
  1,139
  1,246
  1,358
  1,474
  1,596
  1,722
  1,853
Total liabilities, $m
  8
  13
  19
  27
  39
  53
  71
  94
  121
  152
  189
  231
  279
  332
  390
  454
  523
  597
  676
  760
  849
  942
  1,041
  1,143
  1,251
  1,363
  1,479
  1,600
  1,727
  1,858
Total equity, $m
  32
  50
  75
  108
  153
  210
  282
  370
  477
  602
  748
  914
  1,102
  1,311
  1,541
  1,793
  2,065
  2,358
  2,671
  3,003
  3,354
  3,723
  4,111
  4,517
  4,941
  5,383
  5,843
  6,322
  6,821
  7,338
Total liabilities and equity, $m
  40
  63
  94
  135
  192
  263
  353
  464
  598
  754
  937
  1,145
  1,381
  1,643
  1,931
  2,247
  2,588
  2,955
  3,347
  3,763
  4,203
  4,665
  5,152
  5,660
  6,192
  6,746
  7,322
  7,922
  8,548
  9,196
Debt-to-equity ratio
  0.100
  0.160
  0.190
  0.210
  0.220
  0.230
  0.240
  0.240
  0.240
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
  0.250
Adjusted equity ratio
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798
  0.798

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  17
  34
  58
  90
  130
  181
  244
  319
  408
  512
  630
  763
  911
  1,074
  1,252
  1,445
  1,652
  1,873
  2,107
  2,355
  2,617
  2,891
  3,178
  3,477
  3,790
  4,115
  4,454
  4,806
  5,172
Depreciation, amort., depletion, $m
  5
  6
  9
  12
  16
  22
  29
  37
  47
  59
  72
  88
  106
  126
  148
  172
  198
  226
  256
  288
  322
  357
  395
  434
  474
  517
  561
  607
  655
  704
Funds from operations, $m
  10
  23
  43
  70
  106
  152
  210
  281
  366
  467
  584
  717
  868
  1,036
  1,222
  1,424
  1,643
  1,878
  2,129
  2,396
  2,677
  2,974
  3,285
  3,611
  3,952
  4,307
  4,676
  5,061
  5,461
  5,876
Change in working capital, $m
  0
  0
  1
  1
  1
  1
  1
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
Cash from operations, $m
  9
  23
  43
  69
  105
  151
  208
  279
  364
  464
  581
  714
  865
  1,032
  1,217
  1,419
  1,637
  1,872
  2,123
  2,389
  2,670
  2,966
  3,277
  3,603
  3,943
  4,297
  4,667
  5,051
  5,450
  5,865
Maintenance CAPEX, $m
  -2
  -3
  -5
  -7
  -10
  -15
  -20
  -27
  -36
  -46
  -58
  -72
  -88
  -106
  -126
  -148
  -172
  -198
  -226
  -256
  -288
  -322
  -357
  -395
  -434
  -474
  -517
  -561
  -607
  -655
New CAPEX, $m
  -6
  -8
  -12
  -16
  -21
  -27
  -35
  -42
  -51
  -60
  -70
  -80
  -90
  -100
  -111
  -121
  -131
  -140
  -150
  -159
  -168
  -177
  -186
  -195
  -203
  -212
  -221
  -230
  -239
  -248
Cash from investing activities, $m
  -8
  -11
  -17
  -23
  -31
  -42
  -55
  -69
  -87
  -106
  -128
  -152
  -178
  -206
  -237
  -269
  -303
  -338
  -376
  -415
  -456
  -499
  -543
  -590
  -637
  -686
  -738
  -791
  -846
  -903
Free cash flow, $m
  2
  12
  26
  46
  73
  108
  153
  209
  277
  358
  453
  562
  687
  826
  981
  1,150
  1,334
  1,533
  1,746
  1,973
  2,214
  2,467
  2,734
  3,013
  3,306
  3,611
  3,929
  4,260
  4,604
  4,962
Issuance/(repayment) of debt, $m
  3
  4
  6
  9
  11
  15
  18
  22
  27
  32
  37
  42
  48
  53
  58
  64
  69
  74
  79
  84
  89
  94
  98
  103
  107
  112
  117
  121
  126
  131
Issuance/(repurchase) of shares, $m
  7
  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  
  10
  4
  6
  9
  11
  15
  18
  22
  27
  32
  37
  42
  48
  53
  58
  64
  69
  74
  79
  84
  89
  94
  98
  103
  107
  112
  117
  121
  126
  131
Total cash flow (excl. dividends), $m
  12
  16
  32
  55
  84
  123
  172
  232
  304
  390
  490
  605
  734
  879
  1,039
  1,214
  1,403
  1,607
  1,825
  2,057
  2,302
  2,561
  2,832
  3,116
  3,413
  3,723
  4,046
  4,381
  4,730
  5,093
Retained Cash Flow (-), $m
  -12
  -18
  -25
  -34
  -45
  -57
  -72
  -88
  -106
  -125
  -146
  -166
  -188
  -209
  -230
  -252
  -272
  -293
  -313
  -332
  -351
  -369
  -388
  -406
  -424
  -442
  -460
  -479
  -498
  -518
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
  0
  -1
  7
  21
  40
  66
  100
  143
  198
  265
  344
  438
  547
  670
  808
  962
  1,131
  1,315
  1,513
  1,725
  1,951
  2,191
  2,444
  2,710
  2,989
  3,281
  3,585
  3,902
  4,232
  4,576
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
  0
  -1
  7
  17
  31
  48
  67
  90
  114
  139
  163
  187
  208
  225
  237
  244
  246
  242
  233
  219
  202
  182
  160
  138
  116
  96
  77
  60
  46
  34
Current shareholders' claim on cash, %
  88.7
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3
  88.3

Medical Transcription Billing, Corp. is a healthcare information technology company that provides an integrated suite of Web-based solutions, together with related business services, to healthcare providers practicing in ambulatory care settings. The Company's offering, PracticePro, allows healthcare practices with the core software and business services on Software-as-a-Service (SaaS) platform. PracticePro includes practice management software and related tools, which facilitate the day-to-day operation of a medical practice; electronic health records (EHR), which allow its customers to qualify for government incentives; revenue cycle management (RCM) services, which include medical billing, analytics and related services, and mobile Health (mHealth) solutions, including smartphone applications that assist patients and healthcare providers in the provision of healthcare services. The Company offers a clearinghouse service, which allows clients to track claim status.

FINANCIAL RATIOS  of  MTBC, Inc. (MTBC)

Valuation Ratios
P/E Ratio -5.3
Price to Sales 2
Price to Book 6.9
Price to Tangible Book
Price to Cash Flow -48.1
Price to Free Cash Flow -48.1
Growth Rates
Sales Growth Rate 4.3%
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 0
Current Ratio 0
LT Debt to Equity 57.1%
Total Debt to Equity 200%
Interest Coverage 0
Management Effectiveness
Return On Assets -32.7%
Ret/ On Assets - 3 Yr. Avg. -29.1%
Return On Total Capital -40.9%
Ret/ On T. Cap. - 3 Yr. Avg. -38.9%
Return On Equity -81.8%
Return On Equity - 3 Yr. Avg. -62.6%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 45.8%
Gross Margin - 3 Yr. Avg. 46%
EBITDA Margin -16.7%
EBITDA Margin - 3 Yr. Avg. -7.4%
Operating Margin -33.3%
Oper. Margin - 3 Yr. Avg. -25.8%
Pre-Tax Margin -37.5%
Pre-Tax Margin - 3 Yr. Avg. -27.2%
Net Profit Margin -37.5%
Net Profit Margin - 3 Yr. Avg. -29%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -8.3%
Payout Ratio -11.1%

MTBC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTBC stock intrinsic value calculation we used $32 million for the last fiscal year's total revenue generated by MTBC, Inc.. The default revenue input number comes from 0001 income statement of MTBC, Inc.. 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 MTBC stock valuation model: a) initial revenue growth rate of 60% 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 MTBC is calculated based on our internal credit rating of MTBC, Inc., 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 MTBC, Inc..
    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 MTBC stock the variable cost ratio is equal to 40.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $24 million in the base year in the intrinsic value calculation for MTBC 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 MTBC, Inc..

Corporate tax rate of 27% is the nominal tax rate for MTBC, Inc.. 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 MTBC 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 MTBC are equal to 30.3%.

Life of production assets of 4.2 years is the average useful life of capital assets used in MTBC, Inc. 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 MTBC is equal to 1.3%. 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 - $20.25042 million for MTBC, Inc. - 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 11.830 million for MTBC, Inc. 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 MTBC, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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