Intrinsic value of Tabula Rasa HealthCare, Inc. - TRHC

Previous Close

$58.91

  Intrinsic Value

$39.33

stock screener

  Rating & Target

sell

-33%

Previous close

$58.91

 
Intrinsic value

$39.33

 
Up/down potential

-33%

 
Rating

sell

We calculate the intrinsic value of TRHC 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 1.2

 

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, %
  32.20
  29.48
  27.03
  24.83
  22.85
  21.06
  19.46
  18.01
  16.71
  15.54
  14.48
  13.54
  12.68
  11.91
  11.22
  10.60
  10.04
  9.54
  9.08
  8.67
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
Revenue, $m
  270
  349
  444
  554
  680
  823
  984
  1,161
  1,355
  1,565
  1,792
  2,035
  2,293
  2,566
  2,854
  3,156
  3,473
  3,804
  4,150
  4,510
  4,885
  5,274
  5,679
  6,100
  6,537
  6,992
  7,464
  7,956
  8,467
  8,998
Variable operating expenses, $m
  258
  328
  412
  509
  621
  748
  890
  1,047
  1,218
  1,405
  1,586
  1,800
  2,029
  2,270
  2,525
  2,793
  3,073
  3,366
  3,672
  3,991
  4,322
  4,667
  5,025
  5,398
  5,785
  6,187
  6,605
  7,040
  7,492
  7,963
Fixed operating expenses, $m
  5
  5
  5
  5
  6
  6
  6
  6
  6
  6
  6
  6
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  10
Total operating expenses, $m
  263
  333
  417
  514
  627
  754
  896
  1,053
  1,224
  1,411
  1,592
  1,806
  2,036
  2,277
  2,532
  2,800
  3,080
  3,373
  3,680
  3,999
  4,330
  4,675
  5,033
  5,406
  5,794
  6,196
  6,614
  7,049
  7,501
  7,973
Operating income, $m
  7
  16
  26
  39
  53
  70
  88
  108
  130
  155
  200
  228
  257
  289
  322
  356
  393
  430
  470
  511
  554
  599
  645
  694
  744
  796
  850
  906
  965
  1,026
EBITDA, $m
  38
  50
  65
  83
  102
  125
  150
  178
  209
  242
  278
  317
  358
  401
  446
  494
  545
  597
  652
  709
  768
  830
  894
  961
  1,030
  1,102
  1,177
  1,255
  1,336
  1,420
Interest expense (income), $m
  8
  2
  5
  8
  11
  15
  19
  24
  30
  36
  43
  50
  58
  66
  75
  85
  95
  106
  117
  128
  140
  153
  166
  180
  194
  208
  224
  240
  256
  273
  291
Earnings before tax, $m
  4
  11
  19
  28
  39
  51
  64
  79
  95
  112
  150
  170
  191
  213
  237
  261
  287
  314
  342
  371
  401
  433
  466
  500
  535
  572
  611
  650
  692
  735
Tax expense, $m
  1
  3
  5
  8
  10
  14
  17
  21
  26
  30
  40
  46
  52
  58
  64
  71
  77
  85
  92
  100
  108
  117
  126
  135
  145
  155
  165
  176
  187
  198
Net income, $m
  3
  8
  14
  20
  28
  37
  47
  57
  69
  82
  109
  124
  139
  156
  173
  191
  209
  229
  250
  271
  293
  316
  340
  365
  391
  418
  446
  475
  505
  537

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
  358
  464
  589
  735
  903
  1,094
  1,306
  1,542
  1,799
  2,079
  2,380
  2,702
  3,045
  3,407
  3,790
  4,192
  4,612
  5,052
  5,511
  5,989
  6,487
  7,004
  7,542
  8,101
  8,682
  9,285
  9,913
  10,565
  11,244
  11,950
Adjusted assets (=assets-cash), $m
  358
  464
  589
  735
  903
  1,094
  1,306
  1,542
  1,799
  2,079
  2,380
  2,702
  3,045
  3,407
  3,790
  4,192
  4,612
  5,052
  5,511
  5,989
  6,487
  7,004
  7,542
  8,101
  8,682
  9,285
  9,913
  10,565
  11,244
  11,950
Revenue / Adjusted assets
  0.754
  0.752
  0.754
  0.754
  0.753
  0.752
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
  0.753
Average production assets, $m
  125
  162
  206
  257
  316
  382
  456
  539
  629
  726
  832
  944
  1,064
  1,191
  1,324
  1,465
  1,612
  1,765
  1,926
  2,093
  2,266
  2,447
  2,635
  2,830
  3,033
  3,244
  3,463
  3,691
  3,928
  4,175
Working capital, $m
  -48
  -63
  -79
  -99
  -122
  -147
  -176
  -208
  -243
  -280
  -321
  -364
  -410
  -459
  -511
  -565
  -622
  -681
  -743
  -807
  -874
  -944
  -1,017
  -1,092
  -1,170
  -1,252
  -1,336
  -1,424
  -1,516
  -1,611
Total debt, $m
  89
  140
  201
  272
  354
  447
  550
  665
  790
  927
  1,073
  1,230
  1,397
  1,574
  1,760
  1,955
  2,160
  2,375
  2,598
  2,831
  3,073
  3,325
  3,587
  3,859
  4,142
  4,436
  4,742
  5,059
  5,390
  5,734
Total liabilities, $m
  174
  226
  287
  358
  440
  533
  636
  751
  876
  1,012
  1,159
  1,316
  1,483
  1,659
  1,846
  2,041
  2,246
  2,460
  2,684
  2,917
  3,159
  3,411
  3,673
  3,945
  4,228
  4,522
  4,827
  5,145
  5,476
  5,820
Total equity, $m
  184
  238
  302
  377
  463
  561
  670
  791
  923
  1,066
  1,221
  1,386
  1,562
  1,748
  1,944
  2,150
  2,366
  2,592
  2,827
  3,072
  3,328
  3,593
  3,869
  4,156
  4,454
  4,763
  5,085
  5,420
  5,768
  6,130
Total liabilities and equity, $m
  358
  464
  589
  735
  903
  1,094
  1,306
  1,542
  1,799
  2,078
  2,380
  2,702
  3,045
  3,407
  3,790
  4,191
  4,612
  5,052
  5,511
  5,989
  6,487
  7,004
  7,542
  8,101
  8,682
  9,285
  9,912
  10,565
  11,244
  11,950
Debt-to-equity ratio
  0.480
  0.590
  0.670
  0.720
  0.760
  0.800
  0.820
  0.840
  0.860
  0.870
  0.880
  0.890
  0.890
  0.900
  0.910
  0.910
  0.910
  0.920
  0.920
  0.920
  0.920
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
  0.940
Adjusted equity ratio
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3
  8
  14
  20
  28
  37
  47
  57
  69
  82
  109
  124
  139
  156
  173
  191
  209
  229
  250
  271
  293
  316
  340
  365
  391
  418
  446
  475
  505
  537
Depreciation, amort., depletion, $m
  31
  35
  39
  44
  49
  55
  62
  70
  79
  88
  78
  89
  100
  112
  125
  138
  152
  167
  182
  197
  214
  231
  249
  267
  286
  306
  327
  348
  371
  394
Funds from operations, $m
  34
  43
  53
  64
  77
  92
  109
  128
  148
  170
  188
  213
  240
  268
  298
  329
  361
  396
  431
  468
  507
  547
  589
  632
  677
  724
  772
  823
  876
  930
Change in working capital, $m
  -12
  -14
  -17
  -20
  -23
  -26
  -29
  -32
  -35
  -38
  -41
  -43
  -46
  -49
  -52
  -54
  -57
  -59
  -62
  -64
  -67
  -70
  -72
  -75
  -78
  -81
  -85
  -88
  -91
  -95
Cash from operations, $m
  46
  57
  69
  84
  100
  118
  138
  159
  182
  207
  228
  256
  286
  317
  349
  383
  418
  455
  493
  533
  574
  617
  661
  707
  755
  805
  857
  911
  967
  1,026
Maintenance CAPEX, $m
  -9
  -12
  -15
  -19
  -24
  -30
  -36
  -43
  -51
  -59
  -69
  -78
  -89
  -100
  -112
  -125
  -138
  -152
  -167
  -182
  -197
  -214
  -231
  -249
  -267
  -286
  -306
  -327
  -348
  -371
New CAPEX, $m
  -31
  -37
  -44
  -51
  -59
  -66
  -74
  -82
  -90
  -98
  -105
  -113
  -120
  -127
  -134
  -140
  -147
  -154
  -160
  -167
  -174
  -181
  -188
  -195
  -203
  -211
  -219
  -228
  -237
  -247
Cash from investing activities, $m
  -40
  -49
  -59
  -70
  -83
  -96
  -110
  -125
  -141
  -157
  -174
  -191
  -209
  -227
  -246
  -265
  -285
  -306
  -327
  -349
  -371
  -395
  -419
  -444
  -470
  -497
  -525
  -555
  -585
  -618
Free cash flow, $m
  6
  8
  10
  13
  17
  22
  27
  34
  42
  50
  55
  65
  77
  90
  103
  118
  133
  149
  166
  184
  203
  222
  242
  263
  285
  308
  332
  356
  382
  408
Issuance/(repayment) of debt, $m
  42
  51
  61
  71
  82
  93
  104
  115
  125
  136
  147
  157
  167
  177
  186
  196
  205
  214
  223
  233
  242
  252
  262
  272
  283
  294
  306
  318
  331
  344
Issuance/(repurchase) of shares, $m
  42
  46
  51
  55
  58
  61
  63
  63
  63
  62
  45
  41
  36
  31
  23
  15
  6
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  84
  97
  112
  126
  140
  154
  167
  178
  188
  198
  192
  198
  203
  208
  209
  211
  211
  214
  223
  233
  242
  252
  262
  272
  283
  294
  306
  318
  331
  344
Total cash flow (excl. dividends), $m
  91
  106
  122
  139
  157
  175
  194
  212
  230
  248
  246
  264
  280
  297
  313
  329
  344
  363
  390
  417
  445
  474
  504
  536
  568
  602
  637
  674
  712
  752
Retained Cash Flow (-), $m
  -45
  -54
  -64
  -75
  -86
  -98
  -109
  -121
  -132
  -143
  -154
  -165
  -176
  -186
  -196
  -206
  -216
  -226
  -235
  -245
  -255
  -265
  -276
  -287
  -298
  -310
  -322
  -335
  -348
  -362
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
  46
  52
  58
  64
  71
  77
  84
  91
  98
  105
  92
  98
  105
  111
  117
  123
  129
  138
  154
  172
  190
  209
  228
  249
  270
  292
  315
  339
  364
  390
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
  44
  47
  50
  53
  55
  56
  57
  57
  56
  55
  44
  42
  40
  37
  34
  31
  28
  25
  24
  22
  20
  17
  15
  13
  11
  9
  7
  5
  4
  3
Current shareholders' claim on cash, %
  96.8
  94.1
  91.9
  90.1
  88.6
  87.3
  86.2
  85.3
  84.6
  83.9
  83.6
  83.2
  83.0
  82.8
  82.7
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6
  82.6

Tabula Rasa HealthCare, Inc. (Tabula Rasa), formerly CareKinesis, Inc., is a provider of patient-specific, data-driven technology and solutions that enable healthcare organizations to optimize medication regimens to improve patient outcomes, reduce hospitalizations and manage risk. The Company delivers its solutions through a suite of technology-enabled products and services for medication risk management, which includes bundled prescription fulfillment and adherence packaging services for client populations with complex prescription needs. It also provides risk adjustment services, which help its clients to properly characterize a patient's acuity, or severity of health condition, and optimize the associated payments for care. The Company serves approximately 100 healthcare organizations that focus on populations with complex healthcare needs and extensive medication requirements. Its products and services are built around the Medication Risk Mitigation Matrix, or MRM Matrix.

FINANCIAL RATIOS  of  Tabula Rasa HealthCare, Inc. (TRHC)

Valuation Ratios
P/E Ratio -163.3
Price to Sales 10.4
Price to Book 17.5
Price to Tangible Book
Price to Cash Flow 140
Price to Free Cash Flow 979.7
Growth Rates
Sales Growth Rate 34.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 500%
Cap. Spend. - 3 Yr. Gr. Rate 43.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 3.6%
Total Debt to Equity 8.9%
Interest Coverage 0
Management Effectiveness
Return On Assets 3%
Ret/ On Assets - 3 Yr. Avg. -0%
Return On Total Capital -11.7%
Ret/ On T. Cap. - 3 Yr. Avg. -7.2%
Return On Equity -22.6%
Return On Equity - 3 Yr. Avg. 75.8%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 30.9%
Gross Margin - 3 Yr. Avg. 27.9%
EBITDA Margin 7.4%
EBITDA Margin - 3 Yr. Avg. 4.6%
Operating Margin -2.1%
Oper. Margin - 3 Yr. Avg. 2.1%
Pre-Tax Margin -6.4%
Pre-Tax Margin - 3 Yr. Avg. -4.9%
Net Profit Margin -6.4%
Net Profit Margin - 3 Yr. Avg. -4.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 16.7%
Payout Ratio 0%

TRHC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TRHC stock intrinsic value calculation we used $204 million for the last fiscal year's total revenue generated by Tabula Rasa HealthCare, Inc.. The default revenue input number comes from 0001 income statement of Tabula Rasa HealthCare, 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 TRHC stock valuation model: a) initial revenue growth rate of 32.2% 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 TRHC is calculated based on our internal credit rating of Tabula Rasa HealthCare, 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 Tabula Rasa HealthCare, 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 TRHC stock the variable cost ratio is equal to 98%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $5 million in the base year in the intrinsic value calculation for TRHC 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 Tabula Rasa HealthCare, Inc..

Corporate tax rate of 27% is the nominal tax rate for Tabula Rasa HealthCare, 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 TRHC 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 TRHC are equal to 46.4%.

Life of production assets of 10.6 years is the average useful life of capital assets used in Tabula Rasa HealthCare, 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 TRHC is equal to -17.9%. 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 - $139.009 million for Tabula Rasa HealthCare, 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 21.127 million for Tabula Rasa HealthCare, 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 Tabula Rasa HealthCare, Inc. at the current share price and the inputted number of shares is $1.2 billion.

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