RE:RE:RE:RE:RE:RE:RE:RE:Ryhigh's numbersHi CG,
EBITDA and Adj EBITDA are great for your standard business models. But lets think about it in terms of a) bio tech b) spec pharma c) CXRX.
a) Biotech doesn't actually make money. Name one company that makes consistent money at the stage concordia is in? They all run tremendous losses or are flat. The value is in the pipeline. So P/BV, P/TBV, and Precdence/Comps work well
b) Spec Pharma (like CXRX). Most have consistent C/F, stable revenue, and pipelines. EBITDA works.
c). CXRX. Its a rollup. Its run like a PE firm (well now it is because they got big too quickly). You have to complete your valuation in a unique way and must factor in continious acquisitions and interest (with a sink). I think FCF and levered FCF with an eye on improving solvency ratios (with a keener eye on deteriorating liquidity) is vital. If these improve your underlying yields will improve.
As a shareholder do i want to company to buy back shares? Absolutely! Is it good for the company? Absolutely NOT . The company should tender back debt at distressed levels and realize the gains. They might not be able to do this again.
Can they buy back shares? IMO yes. Its a slap to shareholders but longs shouldve been stronger. But this is speculation, i highly doubt it will ever happen.
To answer your question:
- Relatively speaking everything is falling. Adjusted EBITDA is supported by non cash transactions. i.e change in FV of consideration and stock comp
- No not much errosion. But you realize why they have lower evenue in Q1 right? Plaquenil had supply chain issues and accounts for 32% of NA revenue
- Q1/Q2 Actual adjusted EBITDA from my calculation is 240MM and NOT 280MM that management gives WHY? B/c acquisition expenses and FX loss/gain are standard parts of the business.
- Your last question - why is EBITDA relatively flat - because as revenue decreases your COGS will decrease. CXRX COGS are relatively consistent with its revenue.
As I've illustrated before:
- I expect FCF to be 178MM for 2H
- I expect levered FCF to be 32MM for 2H
I factor in a 59MM debt payment (paid down for upcoming years) as well as the full contingent consideration payment of 220MM