CASH IS KINGAll but $180 million of the debt is "termed-out". The remaining $180 million is "Bridge" financing, with a two year maturity. Mark estimates that they will pay down approximately $45 million of this bridge financing by the end of this year, with free cash flow. Although the company's goal is to reduce its debt level to approximately 4 to 5 X EBIT-DA (currently 6X) it is contemplating using some of its free cash flow to make one or two "Tuck-in Acquisitions", each generating in the range of $30 to $40 million of EBIT-DA, and priced at 4 to 5 X EBIT-DA. If structured appropriately, the company believes that it can effectively "de-lever" with these acquisitions.
The company is well within its debt covenants, with very limited operational risk from competition. Revenue generation and cash-flow generation is KEY. So many companies in so many industries are struggling to maintain or increase the top line. Companies in other sectors have been and continue to try to improve the "Bottome Line" EPS by cutting costs, buying back shares, etc. This does NOTHING to maximize shareholder wealth, in the long term. At some point, you have to increase revenue. The problem is that you have X number of companies running around and chasing a fixed amount of demand. People will only buy so many shoes, cars, houses, and yes, even smart phones and i-pads. In addition, there is a difference between NEEDS and WANTS. The world population is aging, but we are also living longer, thanks in part to medicine, in general, and pharmaceuticals. Say what you want, but Healthcare is a great place to invest in, from the standpoint of overall global growth outolook, and cash flow generation ability. In the end, these metrics will rule. As they say: "Cash is King".