Intrinsic value of Opko Health, Inc. - OPK

Previous Close

$2.54

  Intrinsic Value

$0.19

stock screener

  Rating & Target

str. sell

-92%

Previous close

$2.54

 
Intrinsic value

$0.19

 
Up/down potential

-92%

 
Rating

str. sell

We calculate the intrinsic value of OPK 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 1.6

 

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, %
  37.80
  34.52
  31.57
  28.91
  26.52
  24.37
  22.43
  20.69
  19.12
  17.71
  16.44
  15.29
  14.26
  13.34
  12.50
  11.75
  11.08
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.35
  7.12
  6.91
  6.72
  6.54
Revenue, $m
  1,364
  1,835
  2,414
  3,113
  3,938
  4,898
  5,996
  7,237
  8,620
  10,147
  11,814
  13,621
  15,564
  17,640
  19,846
  22,178
  24,635
  27,214
  29,915
  32,736
  35,678
  38,743
  41,931
  45,247
  48,693
  52,274
  55,995
  59,863
  63,884
  68,065
Variable operating expenses, $m
  1,705
  2,248
  2,916
  3,721
  4,673
  5,779
  7,046
  8,477
  10,072
  11,832
  13,624
  15,708
  17,948
  20,342
  22,885
  25,575
  28,408
  31,383
  34,497
  37,750
  41,143
  44,677
  48,354
  52,177
  56,151
  60,281
  64,572
  69,033
  73,669
  78,491
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
  1,705
  2,248
  2,916
  3,721
  4,673
  5,779
  7,046
  8,477
  10,072
  11,832
  13,624
  15,708
  17,948
  20,342
  22,885
  25,575
  28,408
  31,383
  34,497
  37,750
  41,143
  44,677
  48,354
  52,177
  56,151
  60,281
  64,572
  69,033
  73,669
  78,491
Operating income, $m
  -340
  -413
  -501
  -608
  -735
  -882
  -1,050
  -1,240
  -1,452
  -1,686
  -1,810
  -2,086
  -2,384
  -2,702
  -3,040
  -3,397
  -3,773
  -4,168
  -4,582
  -5,014
  -5,465
  -5,934
  -6,423
  -6,930
  -7,458
  -8,007
  -8,577
  -9,169
  -9,785
  -10,426
EBITDA, $m
  -135
  -182
  -239
  -308
  -390
  -485
  -594
  -717
  -854
  -1,005
  -1,171
  -1,350
  -1,542
  -1,748
  -1,966
  -2,197
  -2,441
  -2,696
  -2,964
  -3,244
  -3,535
  -3,839
  -4,155
  -4,483
  -4,825
  -5,179
  -5,548
  -5,931
  -6,330
  -6,744
Interest expense (income), $m
  3
  17
  60
  115
  182
  264
  360
  472
  600
  744
  906
  1,083
  1,278
  1,488
  1,715
  1,957
  2,214
  2,485
  2,772
  3,072
  3,387
  3,716
  4,058
  4,415
  4,787
  5,173
  5,575
  5,992
  6,426
  6,877
  7,345
Earnings before tax, $m
  -357
  -473
  -616
  -791
  -998
  -1,242
  -1,522
  -1,840
  -2,196
  -2,591
  -2,893
  -3,364
  -3,872
  -4,417
  -4,996
  -5,611
  -6,259
  -6,940
  -7,654
  -8,401
  -9,180
  -9,993
  -10,838
  -11,718
  -12,632
  -13,582
  -14,569
  -15,595
  -16,662
  -17,771
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
  -357
  -473
  -616
  -791
  -998
  -1,242
  -1,522
  -1,840
  -2,196
  -2,591
  -2,893
  -3,364
  -3,872
  -4,417
  -4,996
  -5,611
  -6,259
  -6,940
  -7,654
  -8,401
  -9,180
  -9,993
  -10,838
  -11,718
  -12,632
  -13,582
  -14,569
  -15,595
  -16,662
  -17,771

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
  3,377
  4,542
  5,976
  7,704
  9,747
  12,123
  14,842
  17,912
  21,337
  25,116
  29,244
  33,716
  38,525
  43,663
  49,123
  54,896
  60,978
  67,362
  74,046
  81,030
  88,312
  95,897
  103,790
  111,996
  120,526
  129,391
  138,602
  148,176
  158,129
  168,478
Adjusted assets (=assets-cash), $m
  3,377
  4,542
  5,976
  7,704
  9,747
  12,123
  14,842
  17,912
  21,337
  25,116
  29,244
  33,716
  38,525
  43,663
  49,123
  54,896
  60,978
  67,362
  74,046
  81,030
  88,312
  95,897
  103,790
  111,996
  120,526
  129,391
  138,602
  148,176
  158,129
  168,478
Revenue / Adjusted assets
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
  0.404
Average production assets, $m
  1,136
  1,529
  2,011
  2,593
  3,280
  4,080
  4,995
  6,028
  7,181
  8,452
  9,841
  11,346
  12,965
  14,694
  16,531
  18,474
  20,521
  22,669
  24,919
  27,269
  29,720
  32,273
  34,929
  37,690
  40,561
  43,544
  46,644
  49,866
  53,215
  56,698
Working capital, $m
  -41
  -55
  -72
  -93
  -118
  -147
  -180
  -217
  -259
  -304
  -354
  -409
  -467
  -529
  -595
  -665
  -739
  -816
  -897
  -982
  -1,070
  -1,162
  -1,258
  -1,357
  -1,461
  -1,568
  -1,680
  -1,796
  -1,917
  -2,042
Total debt, $m
  343
  657
  1,043
  1,507
  2,057
  2,696
  3,427
  4,253
  5,175
  6,191
  7,301
  8,505
  9,798
  11,180
  12,649
  14,202
  15,838
  17,555
  19,353
  21,232
  23,191
  25,231
  27,354
  29,562
  31,857
  34,241
  36,719
  39,294
  41,972
  44,755
Total liabilities, $m
  908
  1,222
  1,608
  2,072
  2,622
  3,261
  3,992
  4,818
  5,740
  6,756
  7,867
  9,070
  10,363
  11,745
  13,214
  14,767
  16,403
  18,120
  19,918
  21,797
  23,756
  25,796
  27,919
  30,127
  32,422
  34,806
  37,284
  39,859
  42,537
  45,321
Total equity, $m
  2,468
  3,321
  4,369
  5,632
  7,125
  8,862
  10,849
  13,094
  15,598
  18,359
  21,377
  24,646
  28,162
  31,918
  35,909
  40,129
  44,575
  49,242
  54,128
  59,233
  64,556
  70,101
  75,870
  81,869
  88,105
  94,585
  101,318
  108,317
  115,592
  123,157
Total liabilities and equity, $m
  3,376
  4,543
  5,977
  7,704
  9,747
  12,123
  14,841
  17,912
  21,338
  25,115
  29,244
  33,716
  38,525
  43,663
  49,123
  54,896
  60,978
  67,362
  74,046
  81,030
  88,312
  95,897
  103,789
  111,996
  120,527
  129,391
  138,602
  148,176
  158,129
  168,478
Debt-to-equity ratio
  0.140
  0.200
  0.240
  0.270
  0.290
  0.300
  0.320
  0.320
  0.330
  0.340
  0.340
  0.350
  0.350
  0.350
  0.350
  0.350
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
  0.360
Adjusted equity ratio
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731
  0.731

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -357
  -473
  -616
  -791
  -998
  -1,242
  -1,522
  -1,840
  -2,196
  -2,591
  -2,893
  -3,364
  -3,872
  -4,417
  -4,996
  -5,611
  -6,259
  -6,940
  -7,654
  -8,401
  -9,180
  -9,993
  -10,838
  -11,718
  -12,632
  -13,582
  -14,569
  -15,595
  -16,662
  -17,771
Depreciation, amort., depletion, $m
  205
  231
  262
  300
  345
  396
  456
  523
  598
  680
  639
  737
  842
  954
  1,073
  1,200
  1,333
  1,472
  1,618
  1,771
  1,930
  2,096
  2,268
  2,447
  2,634
  2,828
  3,029
  3,238
  3,456
  3,682
Funds from operations, $m
  -152
  -242
  -354
  -491
  -654
  -845
  -1,066
  -1,317
  -1,598
  -1,911
  -2,254
  -2,627
  -3,030
  -3,462
  -3,923
  -4,411
  -4,926
  -5,468
  -6,036
  -6,630
  -7,251
  -7,897
  -8,570
  -9,270
  -9,998
  -10,754
  -11,540
  -12,357
  -13,206
  -14,089
Change in working capital, $m
  -11
  -14
  -17
  -21
  -25
  -29
  -33
  -37
  -42
  -46
  -50
  -54
  -58
  -62
  -66
  -70
  -74
  -77
  -81
  -85
  -88
  -92
  -96
  -99
  -103
  -107
  -112
  -116
  -121
  -125
Cash from operations, $m
  -141
  -228
  -337
  -470
  -629
  -816
  -1,033
  -1,280
  -1,557
  -1,865
  -2,204
  -2,573
  -2,972
  -3,400
  -3,857
  -4,341
  -4,852
  -5,391
  -5,955
  -6,546
  -7,162
  -7,805
  -8,474
  -9,171
  -9,894
  -10,647
  -11,429
  -12,241
  -13,086
  -13,964
Maintenance CAPEX, $m
  -54
  -74
  -99
  -131
  -168
  -213
  -265
  -324
  -391
  -466
  -549
  -639
  -737
  -842
  -954
  -1,073
  -1,200
  -1,333
  -1,472
  -1,618
  -1,771
  -1,930
  -2,096
  -2,268
  -2,447
  -2,634
  -2,828
  -3,029
  -3,238
  -3,456
New CAPEX, $m
  -312
  -392
  -483
  -581
  -688
  -799
  -915
  -1,033
  -1,153
  -1,272
  -1,389
  -1,505
  -1,618
  -1,729
  -1,837
  -1,943
  -2,047
  -2,149
  -2,250
  -2,350
  -2,451
  -2,553
  -2,656
  -2,762
  -2,871
  -2,983
  -3,100
  -3,222
  -3,349
  -3,483
Cash from investing activities, $m
  -366
  -466
  -582
  -712
  -856
  -1,012
  -1,180
  -1,357
  -1,544
  -1,738
  -1,938
  -2,144
  -2,355
  -2,571
  -2,791
  -3,016
  -3,247
  -3,482
  -3,722
  -3,968
  -4,222
  -4,483
  -4,752
  -5,030
  -5,318
  -5,617
  -5,928
  -6,251
  -6,587
  -6,939
Free cash flow, $m
  -506
  -694
  -919
  -1,182
  -1,485
  -1,829
  -2,213
  -2,637
  -3,101
  -3,603
  -4,142
  -4,717
  -5,327
  -5,971
  -6,648
  -7,357
  -8,099
  -8,872
  -9,677
  -10,514
  -11,384
  -12,288
  -13,226
  -14,201
  -15,213
  -16,264
  -17,356
  -18,492
  -19,673
  -20,902
Issuance/(repayment) of debt, $m
  249
  314
  386
  465
  550
  639
  731
  826
  921
  1,016
  1,110
  1,203
  1,294
  1,382
  1,469
  1,553
  1,636
  1,717
  1,798
  1,878
  1,959
  2,040
  2,123
  2,208
  2,295
  2,385
  2,478
  2,575
  2,677
  2,784
Issuance/(repurchase) of shares, $m
  1,034
  1,325
  1,665
  2,054
  2,492
  2,978
  3,510
  4,084
  4,700
  5,353
  5,911
  6,633
  7,388
  8,173
  8,987
  9,831
  10,704
  11,607
  12,541
  13,506
  14,504
  15,537
  16,607
  17,717
  18,867
  20,062
  21,303
  22,594
  23,937
  25,336
Cash from financing (excl. dividends), $m  
  1,283
  1,639
  2,051
  2,519
  3,042
  3,617
  4,241
  4,910
  5,621
  6,369
  7,021
  7,836
  8,682
  9,555
  10,456
  11,384
  12,340
  13,324
  14,339
  15,384
  16,463
  17,577
  18,730
  19,925
  21,162
  22,447
  23,781
  25,169
  26,614
  28,120
Total cash flow (excl. dividends), $m
  777
  944
  1,132
  1,337
  1,556
  1,788
  2,028
  2,273
  2,520
  2,767
  2,879
  3,119
  3,354
  3,584
  3,808
  4,027
  4,241
  4,453
  4,662
  4,870
  5,079
  5,290
  5,504
  5,724
  5,949
  6,182
  6,425
  6,677
  6,941
  7,218
Retained Cash Flow (-), $m
  -1,034
  -1,325
  -1,665
  -2,054
  -2,492
  -2,978
  -3,510
  -4,084
  -4,700
  -5,353
  -5,911
  -6,633
  -7,388
  -8,173
  -8,987
  -9,831
  -10,704
  -11,607
  -12,541
  -13,506
  -14,504
  -15,537
  -16,607
  -17,717
  -18,867
  -20,062
  -21,303
  -22,594
  -23,937
  -25,336
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
  -257
  -380
  -533
  -717
  -936
  -1,190
  -1,481
  -1,811
  -2,180
  -2,587
  -3,032
  -3,514
  -4,034
  -4,589
  -5,180
  -5,804
  -6,463
  -7,154
  -7,879
  -8,635
  -9,425
  -10,247
  -11,103
  -11,993
  -12,918
  -13,879
  -14,878
  -15,916
  -16,996
  -18,118
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
  -247
  -348
  -464
  -591
  -725
  -864
  -1,001
  -1,132
  -1,252
  -1,356
  -1,440
  -1,500
  -1,534
  -1,541
  -1,521
  -1,475
  -1,406
  -1,318
  -1,213
  -1,097
  -975
  -850
  -728
  -611
  -503
  -405
  -319
  -246
  -186
  -136
Current shareholders' claim on cash, %
  60.3
  37.4
  23.8
  15.5
  10.3
  7.0
  4.8
  3.3
  2.4
  1.7
  1.2
  0.9
  0.7
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

OPKO Health, Inc. is a healthcare company. Its segments include Pharmaceutical, Diagnostics and Corporate. Pharmaceutical consists of the pharmaceutical operations in Chile, Mexico, Ireland, Israel and Spain and its pharmaceutical research and development operations. Diagnostics consists of the clinical laboratory operations in Bio-Reference Laboratories (Bio-Reference) and its point-of-care operations. Through Bio-Reference, it operates laboratory divisions, such as Bio-Reference, GenPath (Oncology), GenPath (Women's Health), GeneDx and Laboratorio Bueno Salud. As of December 31, 2016, it had one commercial stage pharmaceutical product and several pharmaceutical compounds and technologies in various stages of research and development for a range of indications and conditions, including Renal Products, Biologics, hGH-CTP, Factor VII, Oxyntomodulin, active pharmaceutical ingredients, Oligonucleotide Therapeutics, NK-1 Program, Asthma and chronic obstructive pulmonary disease.

FINANCIAL RATIOS  of  Opko Health, Inc. (OPK)

Valuation Ratios
P/E Ratio -56.7
Price to Sales 1.2
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 44.3
Price to Free Cash Flow 177.2
Growth Rates
Sales Growth Rate 148.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate 43.1%
Financial Strength
Quick Ratio 11
Current Ratio 0
LT Debt to Equity 3.5%
Total Debt to Equity 4.3%
Interest Coverage -24
Management Effectiveness
Return On Assets -0.9%
Ret/ On Assets - 3 Yr. Avg. -4.9%
Return On Total Capital -1.2%
Ret/ On T. Cap. - 3 Yr. Avg. -7%
Return On Equity -1.2%
Return On Equity - 3 Yr. Avg. -7.8%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 49.9%
Gross Margin - 3 Yr. Avg. 49.8%
EBITDA Margin 2.1%
EBITDA Margin - 3 Yr. Avg. -60.4%
Operating Margin -6%
Oper. Margin - 3 Yr. Avg. -62.1%
Pre-Tax Margin -6.1%
Pre-Tax Margin - 3 Yr. Avg. -74%
Net Profit Margin -2%
Net Profit Margin - 3 Yr. Avg. -65.7%
Effective Tax Rate 77%
Eff/ Tax Rate - 3 Yr. Avg. 53.2%
Payout Ratio 0%

OPK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OPK stock intrinsic value calculation we used $990 million for the last fiscal year's total revenue generated by Opko Health, Inc.. The default revenue input number comes from 0001 income statement of Opko Health, 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 OPK stock valuation model: a) initial revenue growth rate of 37.8% 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 OPK is calculated based on our internal credit rating of Opko Health, 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 Opko Health, 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 OPK stock the variable cost ratio is equal to 128.6%.

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 OPK 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 17.5% for Opko Health, Inc..

Corporate tax rate of 27% is the nominal tax rate for Opko Health, 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 OPK 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 OPK are equal to 83.3%.

Life of production assets of 15.4 years is the average useful life of capital assets used in Opko Health, 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 OPK is equal to -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 - $1791.291 million for Opko Health, 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 617.530 million for Opko Health, 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 Opko Health, Inc. at the current share price and the inputted number of shares is $1.6 billion.

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