RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:The bottom priceFair enough. Non enduring, yes. But a drug is not exactly a shale oil well either. There should be enough cash flow to pay the debt down and grow the company. They claim to be rolling out 50 new drugs over the next little while so they should be able to grow while putting most free cash towards debt, because that does need to be lowered.
Lattice wrote: Wallop, Drugs are not enduring assets - and there is a question of who owns the tail end. Anyways, I don't want to argue with you on a public board, particularly a straw man argument. I have reviewed forensic reports on the name and I have done my due diligence. The CEO claims to have a CEO of a comopany "firing on all cyliners" but yet has people walking away after getting let in to their data room. And if the "business has never been better" [Thompson quote form Q1 call] then why put yourself up for sale in the first place? This is what the windshield looks like from stressed to distressed. Papa Valeant & Baby Valeant hand in hand.
wallop13 wrote: Lattice, that seems like standard practice. The better way to value the assets is by using the cash flow from operations. Forget about what they tell you the assets are worth. The value is in the cash those assets produce, not what was originally paid to acquire that cash flow.
Lattice wrote: wallop13, The intangible assets are amortized on a straight line basis over 15 to 30 years representing management's estimate of their useful lives. The problem becomes if you have an asset disappear, such as Donnatal, and you are left with the debt all of a sudden become "real" on the balance sheet, plus the added kick of the interest on that debt.
Use of non-GAAP is only one part of the short thesis, btw. There is a storm brewing in England.
wallop13 wrote: I don't understand what you are saying. Do you mean to say they amortize the expense of a drug acquisition over.... say 10 years? What is wrong with that? Doesn't the law prevent them from writing down the whole expense in year 1???
Lattice wrote: Me and a
select few? You may want to review the short interest on this gem, which by the way, increased after Q1. glta.
CNInvesting wrote: Lattice, just want your take on why there are so many funds buying CXR if it's so plain obvious that this company will implode on itself ? I respect your opinion but I'm quite curious as to why you and a select few seem to be the only ones seeing this calamity.
Lattice wrote: donaldspice wrote: A company that just bought 4 new products doesn't seem to be anywhere close to having to divest anything. This is short rhetoric that has been imagined. The company would not continue to but products if they felt they were anywhere close to meeting their debt obligations
Yes they can, and this is how. They report higher EBITDA expensing these items as amortization, which is then dutifully added back into "adjusted EPS". This is the number that sell-side analysts use to give the nice and shiny targets (which is why targets for Valeant and Concordia are so to the moon). Higher EBITDA supports higher leverage but if the drugs suffer erosion you either have to continue to prop up EBITDA with new acquisitions. A company can only do this to a point where the balance sheet can only expand so much until you have onc that is ready to explode. Concordia's balance sheet is horrific (look at amortization, goodwill, and those unexplained receivables). Going down is the only thing you can count with this financial engineered marvel. The drugs are not enduring assets. The high short interest is counting on the fact that there will be a liquidity crunch against its annual interest obligation and two year contingent paper. In "short," the assets are not worth the debt.