Intrinsic value of NxStage Medical - NXTM

Previous Close

$29.12

  Intrinsic Value

$0.62

stock screener

  Rating & Target

str. sell

-98%

Previous close

$29.12

 
Intrinsic value

$0.62

 
Up/down potential

-98%

 
Rating

str. sell

We calculate the intrinsic value of NXTM 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 1.9

 

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, %
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.97
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.45
  5.40
  5.36
  5.32
  5.29
Revenue, $m
  438
  484
  533
  584
  637
  692
  749
  809
  871
  935
  1,002
  1,072
  1,144
  1,220
  1,298
  1,379
  1,464
  1,552
  1,644
  1,740
  1,841
  1,945
  2,054
  2,168
  2,287
  2,412
  2,542
  2,678
  2,821
  2,970
Variable operating expenses, $m
  443
  490
  538
  589
  642
  697
  754
  814
  876
  941
  1,002
  1,072
  1,144
  1,220
  1,298
  1,380
  1,464
  1,553
  1,645
  1,741
  1,841
  1,946
  2,055
  2,169
  2,288
  2,412
  2,543
  2,679
  2,822
  2,971
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
  443
  490
  538
  589
  642
  697
  754
  814
  876
  941
  1,002
  1,072
  1,144
  1,220
  1,298
  1,380
  1,464
  1,553
  1,645
  1,741
  1,841
  1,946
  2,055
  2,169
  2,288
  2,412
  2,543
  2,679
  2,822
  2,971
Operating income, $m
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
EBITDA, $m
  24
  27
  30
  32
  35
  38
  42
  45
  48
  52
  56
  60
  64
  68
  72
  77
  81
  86
  91
  97
  102
  108
  114
  121
  127
  134
  141
  149
  157
  165
Interest expense (income), $m
  1
  0
  9
  18
  27
  37
  47
  57
  68
  80
  92
  104
  117
  130
  144
  159
  174
  189
  205
  222
  240
  258
  277
  297
  318
  340
  363
  387
  412
  438
  465
Earnings before tax, $m
  -6
  -14
  -23
  -32
  -42
  -52
  -63
  -74
  -85
  -97
  -104
  -117
  -131
  -144
  -159
  -174
  -189
  -206
  -223
  -240
  -259
  -278
  -298
  -319
  -341
  -364
  -387
  -412
  -438
  -466
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
  -6
  -14
  -23
  -32
  -42
  -52
  -63
  -74
  -85
  -97
  -104
  -117
  -131
  -144
  -159
  -174
  -189
  -206
  -223
  -240
  -259
  -278
  -298
  -319
  -341
  -364
  -387
  -412
  -438
  -466

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
  343
  379
  417
  456
  498
  541
  586
  632
  681
  731
  784
  838
  895
  953
  1,015
  1,078
  1,145
  1,214
  1,286
  1,361
  1,439
  1,521
  1,606
  1,695
  1,788
  1,886
  1,988
  2,094
  2,206
  2,322
Adjusted assets (=assets-cash), $m
  343
  379
  417
  456
  498
  541
  586
  632
  681
  731
  784
  838
  895
  953
  1,015
  1,078
  1,145
  1,214
  1,286
  1,361
  1,439
  1,521
  1,606
  1,695
  1,788
  1,886
  1,988
  2,094
  2,206
  2,322
Revenue / Adjusted assets
  1.277
  1.277
  1.278
  1.281
  1.279
  1.279
  1.278
  1.280
  1.279
  1.279
  1.278
  1.279
  1.278
  1.280
  1.279
  1.279
  1.279
  1.278
  1.278
  1.278
  1.279
  1.279
  1.279
  1.279
  1.279
  1.279
  1.279
  1.279
  1.279
  1.279
Average production assets, $m
  122
  135
  149
  163
  178
  193
  209
  226
  243
  261
  280
  299
  319
  340
  362
  385
  408
  433
  459
  486
  514
  543
  573
  605
  638
  673
  709
  747
  787
  829
Working capital, $m
  46
  50
  55
  61
  66
  72
  78
  84
  91
  97
  104
  111
  119
  127
  135
  143
  152
  161
  171
  181
  191
  202
  214
  225
  238
  251
  264
  279
  293
  309
Total debt, $m
  13
  26
  40
  55
  70
  86
  102
  119
  137
  155
  174
  194
  215
  236
  259
  282
  306
  331
  358
  385
  414
  443
  474
  507
  541
  577
  614
  653
  693
  736
Total liabilities, $m
  125
  138
  152
  167
  182
  197
  214
  231
  249
  267
  286
  306
  327
  348
  370
  394
  418
  443
  469
  497
  525
  555
  586
  619
  653
  688
  725
  764
  805
  848
Total equity, $m
  217
  241
  265
  290
  316
  343
  372
  402
  432
  464
  498
  532
  568
  605
  644
  685
  727
  771
  816
  864
  914
  966
  1,020
  1,076
  1,136
  1,197
  1,262
  1,330
  1,401
  1,475
Total liabilities and equity, $m
  342
  379
  417
  457
  498
  540
  586
  633
  681
  731
  784
  838
  895
  953
  1,014
  1,079
  1,145
  1,214
  1,285
  1,361
  1,439
  1,521
  1,606
  1,695
  1,789
  1,885
  1,987
  2,094
  2,206
  2,323
Debt-to-equity ratio
  0.060
  0.110
  0.150
  0.190
  0.220
  0.250
  0.270
  0.300
  0.320
  0.330
  0.350
  0.360
  0.380
  0.390
  0.400
  0.410
  0.420
  0.430
  0.440
  0.450
  0.450
  0.460
  0.470
  0.470
  0.480
  0.480
  0.490
  0.490
  0.500
  0.500
Adjusted equity ratio
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635
  0.635

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6
  -14
  -23
  -32
  -42
  -52
  -63
  -74
  -85
  -97
  -104
  -117
  -131
  -144
  -159
  -174
  -189
  -206
  -223
  -240
  -259
  -278
  -298
  -319
  -341
  -364
  -387
  -412
  -438
  -466
Depreciation, amort., depletion, $m
  29
  32
  35
  38
  41
  44
  47
  50
  54
  57
  56
  60
  64
  68
  72
  77
  82
  87
  92
  97
  103
  109
  115
  121
  128
  135
  142
  149
  157
  166
Funds from operations, $m
  24
  18
  12
  5
  -1
  -8
  -16
  -24
  -31
  -40
  -48
  -57
  -67
  -76
  -86
  -97
  -108
  -119
  -131
  -143
  -156
  -169
  -183
  -198
  -213
  -229
  -246
  -263
  -281
  -300
Change in working capital, $m
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
Cash from operations, $m
  19
  13
  7
  0
  -7
  -14
  -22
  -30
  -38
  -46
  -55
  -65
  -74
  -84
  -95
  -105
  -117
  -128
  -140
  -153
  -166
  -180
  -195
  -210
  -225
  -242
  -259
  -277
  -296
  -316
Maintenance CAPEX, $m
  -22
  -24
  -27
  -30
  -33
  -36
  -39
  -42
  -45
  -49
  -52
  -56
  -60
  -64
  -68
  -72
  -77
  -82
  -87
  -92
  -97
  -103
  -109
  -115
  -121
  -128
  -135
  -142
  -149
  -157
New CAPEX, $m
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
Cash from investing activities, $m
  -34
  -37
  -41
  -44
  -48
  -51
  -55
  -59
  -62
  -67
  -71
  -75
  -80
  -85
  -90
  -95
  -101
  -107
  -113
  -119
  -125
  -132
  -139
  -147
  -154
  -163
  -171
  -180
  -189
  -199
Free cash flow, $m
  -15
  -24
  -34
  -44
  -54
  -65
  -76
  -88
  -100
  -113
  -126
  -140
  -154
  -169
  -184
  -200
  -217
  -235
  -253
  -272
  -291
  -312
  -334
  -356
  -380
  -404
  -430
  -457
  -485
  -515
Issuance/(repayment) of debt, $m
  13
  13
  14
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  37
  39
  41
  43
Issuance/(repurchase) of shares, $m
  27
  37
  47
  57
  68
  79
  91
  103
  116
  129
  138
  152
  166
  182
  198
  214
  232
  250
  268
  288
  308
  330
  352
  375
  400
  425
  452
  480
  509
  540
Cash from financing (excl. dividends), $m  
  40
  50
  61
  71
  83
  95
  107
  120
  134
  147
  157
  172
  187
  203
  220
  237
  256
  275
  294
  315
  337
  360
  383
  408
  434
  461
  489
  519
  550
  583
Total cash flow (excl. dividends), $m
  26
  26
  27
  28
  29
  30
  31
  32
  33
  34
  30
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  68
Retained Cash Flow (-), $m
  -27
  -37
  -47
  -57
  -68
  -79
  -91
  -103
  -116
  -129
  -138
  -152
  -166
  -182
  -198
  -214
  -232
  -250
  -268
  -288
  -308
  -330
  -352
  -375
  -400
  -425
  -452
  -480
  -509
  -540
Prev. year cash balance distribution, $m
  17
  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
  15
  -11
  -20
  -29
  -39
  -49
  -60
  -71
  -83
  -95
  -107
  -120
  -134
  -148
  -162
  -177
  -193
  -209
  -226
  -244
  -263
  -282
  -302
  -324
  -346
  -369
  -393
  -418
  -444
  -472
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
  15
  -10
  -17
  -24
  -30
  -36
  -41
  -44
  -47
  -50
  -51
  -51
  -51
  -50
  -48
  -45
  -42
  -39
  -35
  -31
  -27
  -23
  -20
  -16
  -13
  -11
  -8
  -6
  -5
  -4
Current shareholders' claim on cash, %
  98.5
  96.6
  94.6
  92.3
  90.0
  87.5
  85.0
  82.4
  79.9
  77.3
  74.8
  72.3
  69.9
  67.5
  65.1
  62.8
  60.5
  58.3
  56.1
  54.0
  51.9
  49.9
  47.9
  46.1
  44.2
  42.4
  40.7
  39.1
  37.5
  35.9

NxStage Medical, Inc. is a medical technology company. The Company develops, manufactures and markets products and services for patients suffering from chronic or acute kidney failure. It operates through three segments. The System One segment includes revenues from the sale and rental of the System One and PureFlow SL dialysate preparation equipment and the sale of disposable products in the home and critical care markets. The In-Center segment includes revenues from the sale of blood tubing sets and needles for hemodialysis, primarily for the treatment of end-stage renal disease patients at dialysis clinics, and needles for apheresis. It markets extracorporeal disposable products under the Medisystems brand. The Services segment includes revenues from dialysis services provided to patients at its NxStage Kidney Care dialysis centers. Its product offerings include Home Dialysis, Next-Generation Hemodialysis System, Critical Care, Next-Generation Critical Care System and In-Center.

FINANCIAL RATIOS  of  NxStage Medical (NXTM)

Valuation Ratios
P/E Ratio -378.3
Price to Sales 5.2
Price to Book 9.4
Price to Tangible Book
Price to Cash Flow 378.3
Price to Free Cash Flow -472.8
Growth Rates
Sales Growth Rate 8.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25%
Cap. Spend. - 3 Yr. Gr. Rate -10.9%
Financial Strength
Quick Ratio 30
Current Ratio 0
LT Debt to Equity 5.5%
Total Debt to Equity 6.5%
Interest Coverage -5
Management Effectiveness
Return On Assets -1.2%
Ret/ On Assets - 3 Yr. Avg. -4.4%
Return On Total Capital -2.4%
Ret/ On T. Cap. - 3 Yr. Avg. -7.3%
Return On Equity -2.5%
Return On Equity - 3 Yr. Avg. -7.6%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 41.5%
Gross Margin - 3 Yr. Avg. 39.6%
EBITDA Margin 7.7%
EBITDA Margin - 3 Yr. Avg. 4.9%
Operating Margin -1.4%
Oper. Margin - 3 Yr. Avg. -4.4%
Pre-Tax Margin -1.6%
Pre-Tax Margin - 3 Yr. Avg. -4.6%
Net Profit Margin -1.4%
Net Profit Margin - 3 Yr. Avg. -4.6%
Effective Tax Rate -16.7%
Eff/ Tax Rate - 3 Yr. Avg. -9.2%
Payout Ratio 0%

NXTM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NXTM stock intrinsic value calculation we used $393.941 million for the last fiscal year's total revenue generated by NxStage Medical. The default revenue input number comes from 0001 income statement of NxStage Medical. 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 NXTM stock valuation model: a) initial revenue growth rate of 11.2% 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 NXTM is calculated based on our internal credit rating of NxStage Medical, 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 NxStage Medical.
    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 NXTM stock the variable cost ratio is equal to 101.3%.

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 NXTM 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 67.1% for NxStage Medical.

Corporate tax rate of 27% is the nominal tax rate for NxStage Medical. 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 NXTM 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 NXTM are equal to 27.9%.

Life of production assets of 4 years is the average useful life of capital assets used in NxStage Medical 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 NXTM is equal to 10.4%. 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 - $213.158 million for NxStage Medical - 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 65.577 million for NxStage Medical 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 NxStage Medical at the current share price and the inputted number of shares is $1.9 billion.

RELATED COMPANIES Price Int.Val. Rating
FMS Fresenius Medi 40.18 1,471.29  str.buy
RMTI Rockwell Medic 3.89 0.15  str.sell
BAX Baxter Interna 65.83 13.73  str.sell

COMPANY NEWS

▶ NxStage Is Back to Making Money   [Nov-08-18 10:43AM  Motley Fool]
▶ NxStage Just Got This Vital Lifeline   [Aug-10-18 02:04PM  Motley Fool]
▶ NxStage Keeps Losing Money as Key Deadline Grows Nearer   [May-14-18 10:04AM  Motley Fool]
▶ Medisystems Announces US Release of MasterGuard® Plus   [Apr-13-18 08:00AM  PR Newswire]
▶ Wider Losses Worry NxStage Medical Shareholders   [Feb-26-18 10:37AM  Motley Fool]
▶ [$$] Big Stock Buys: Bluebird, Walgreens, Mallinckrodt   [Feb-20-18 05:00AM  Barrons.com]
▶ The Market In 5 Minutes   [Aug-22-17 09:02AM  Benzinga]
▶ Company News For August 08, 2017   [09:35AM  Zacks]
▶ NxStage reports 2Q loss   [12:00AM  Associated Press]
▶ Fresenius to buy Lawrence-based NxStage Medical for $2B   [03:11PM  American City Business Journals]
▶ [$$] Fresenius/NxStage: dialysis analysis   [11:26AM  Financial Times]

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