RE:RE:Q2 NumbersCraigbad, first let me address the inaccuracies in your post. Weighted average interest rate on the debt is 7.25% and not 8.5%. Both the shares and the debt are not trading at levels which have any connection with the earnings potential and future cash flow of this business. I grant that much of the disconnect isattrobutable to very poor IR and disclosure by the company in recent months, but a large part of the disconnect is the unrelenting short attack orchestrated by some members on this board, as well as very unscrupulous hedge funds. Once the company releases a couple of consecutive quarters showing that the company ha stabilized, both SP and bond prices will rally big time. Both are trading as if the company on the brick, which both oxel and I have shown is not the case. Finally, you say EVERYTHING has to go right for the company tow of bankruptcy. That is also untrue. The company would have to lose over $200M annual EBITDA to have liquidity issues. Pretty much EVERYTHING would have to go wrong for that to happen.
quote=Craigbad]You look like your questioning if they can survive.....maybe, if EVERYTHING goes right and there are no more cockroaches. Can they thrive, grow earnings to attract new money to make you money is the question. Lets say they make it to 2021 when the debt comes due, will they have made enough to pay down a big chunk of it? They issued debt in good times at 8.5% and that debt is now trading at around 14% i believe. If the bond market is that sketchy on holding the paper now, do you think they would trade that paper in for a lower yield in a rising rate environment if they want to re-finance? What would Cxr look like if they actually had to pay what the bonds are yielding currently when the debt comes due. ALL they would be doing is directing nearly every penny they make at paying interest. Of course they would feed the market "adjusted earnings" garbage to make it look good, but most people have caught on and that ship has sailed. Is it really something any self respecting fund manager would buy and hold for a long term investment at this point or are there better places to put money to work. Anyone who is honest with themselves knows there is only one clear answer.
oexel wrote: I was trying to reevaluate my long position last night so I decided to comb through Q2 financials again. Impairment aside, the company lost 8M. During the same Q, there was a one time legal expense of 13M and of course 3.5M for the dividend. Assuming revenues stay flat, and no one time expenses, that nets 8.5M profit all things equal. Not sure what the legal fees for dealing with all these future lawsuits is gonna cost.
Now, the paragraph below taken from Q2 2015, implies Donnatal revenue was at most (52.9 - 38.7) = 14.2M. That's asuming Zonegran revenue equaled the revenue declines mentioned. Q2 2016 saw Donnatal sales decline 33% which implies that for Q2 2016, Donnatal accounted for at most, 9.5M revenue. Applying the 77% gross margin, that translates to 7.3M proft generated in Q2 by Donnatal. So even if Donnatal sales were to decline, say 20% q over q, that would allow the company to put 7M in the bank.
Legacy Pharmaceuticals Division revenue for the three months ended June 30, 2015 was $72.4 million, compared to $19.5 million in the same quarter of the prior year, an increase of $52.9 million. The addition of the Portfolio acquired from Covis on April 21, 2015 drove an increase in revenue of approximately $38.7 million. The remainder of the increase over the prior year is driven by the addition of Donnatal® and Zonegran®, partially offset by revenue declines in Kapvay®, Orapred® and Ulesfia®. The second quarter of 2014 included a half quarter of Donnatal® revenue. Zonegran® was acquired at the end of the third quarter of 2014.
Now there are obvsiously a host of problems with Concordia and the only reason I even got trapped in this garbage is becasue I was making a killing selling call options for $1.50 a piece, beieving I could continue to do that if the shares dropped but then the premiums disappeared. I just dont see how they can go flat out broke though, for at least several quarters given their cash and cash equivalents of about 300M, and their revolver.
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