Concordia Healthcare Corp. T.CXR.R

Ryhigh's numbers

[cg16]

Ry I appreciate the work you have done on analyzing the numbers. I understand that you don't like adj ebitda but the company's guidance is only provided in Revenue and adj ebitda. I'm probably not alone in saying that the bottom line for investing in this company now is heavily dependent on whether they can meet their Q3 guidance. Based on your ebitda estimates of Q3 $112mm and Q4 $106mm, is it safe to say that your numbers (if shown in adj ebitda) show them beating their high adj ebitda number of $540mm?

[ryehigh2014]

Well I modeled out the firms financial statements from inception based on public record.  So i have more flexbility in terms of getting down to the nitty gritty ratios and other metrics. To be upfront you have to treat this company differently than a normal pharma company. They are a roll up no question about it and therefore liquidity, and solvency needs to be scrutizined.  To answer

[ryehigh2014]

To followup however. Even if they do not beat they will be OK. A 1.10 GBP/USD Q4 rate and -10% revenue growth rate q/q is a pretty 'worst case possible'  assumption

[PROtrading]

Like the numbers disagree on worst case! Worst case is Notes owner pushing for liquidation and with a tangible book value of -98$ per share, stockholders get ZIP, NADA,  just a DELIST and a tax write off on non-registered accounts.

[Lumberfeverlong]

Pro, the notes were oversubscribed in a matter of days  to a large number of investors. There is an agent appointed for the note holders. That agent cannot accelerate the notes without there being a default. How in heavens name will the company default anytime soon with all that cash in the bank?even Moody's recognized that they have enough cash to get to 2018. I would submit they have

[PROtrading]

Lumber, We have a few critical dates coming up.  Q3 is one of them and the first payment to Cinven due in December.  If either of these fail, you can bet this stock will hit pennies. On the upside, if there is credible management that take the helm, this thing will fly up.   You have to admit that Thompson has lost credibility here?  Moving these shares offshore and now

[Lumberfeverlong]

Ok, Pro.  So please explain how you see the approximate $480M in cash on hand already committed?  A lot of us have done a lot of work projecting forward.  Why don't you expend some brain power to do the same rather than making outlandish statements about the company imminently going to run out of money.  I'll give you a head start.  At today's F/X rate for USD

[PROtrading]

Lumber, I've already told the other "extremist" here not to get nasty. I'll tell you the same thing. Can you add the interest payments on that?  You seem to have forgotten those. Be less pumpy and you might have an ounce of credibility here. As well, you discard the $72M finders fee on the 4 drugs that have had no NR on on whether they are triggered or not.  You

[Lumberfeverlong]

Again, refusing to use your own brian power.  The $480M is calculated by adding $145M cash at end of Q2 plus $330M net proceeds of note issuance.  Interest would be baked in into FFC for Q3 and Q4.  You can come up with that yourself becuase anything I provide will obviously be too rosey for you. Stop with the alleged finders fee of $72M on a 28 GBP transaction.  That is the

[cg16]

What is your estimate for Q3 and FY revenue and adj ebida? Because it seems as though your ebitda number is similar to the run rate of Q1/Q2? thanks again. 

[ryehigh2014]

Yes expense forecasts are based n Q1/Q2 run rates however revenues are not. Revenue ~880MM, Q3 Revenue 223MM - haircut on CXRX NA and International revenues of -6% and -4%. Finally Adj EBITDA  is 476MM simply by adding by non-cash charges as well as share comps. EBITDA less impairment is 451MM.    Thanks Hamza

[cg16]

Thanks again. So International grew 8% q o q last quarter and you now have them -4%? My prediction is that US drop is bigger than 6% but lets hope not. it looks like you have them meeting top end of revenue guidance which is $888m for the year but missing adj ebitda lower end of guidance (which $510m) by $34m or 6.7%..  wasn't ebitda for Q1 $109m? 

[ryehigh2014]

Yup Q1 107MM. I think a -10% drop of top of the line revenue is reasonable.  Revenue assumption is the backbone of all of this For revenue vs. EBITDA its hard to project. The issue is that the cost structure for management is unknown..  margins for NA increased slightly and International businesses increased considerably in Q1 and Q2 (depsite the GBPUSD drop).

[cg16]

Rye, so Ebitda is actually not falling much at all but adj ebitda is? just comparing your projected Q3/Q4 ($112m/$106m) ebitda to Q1 ($107m). No growth but not eroding much either. Q1/Q2 actual adj ebitda was ~$280m so why if ebitda stays similar for H2 do you project only $196m in adj ebitda vs the actual ~$280m in H1?

[SteadyHandsStan]

cg16:  Something that I learned on this bullboard is that ebitda is BS earnings and I think Rye said something about wanting to avoid talking about EBITDA. I actually printed this quote off that someone had posted on this site last week.  Thanks.   Warren Buffett on EBITDA "We’ll (Berkshire Hathaway) never buy a company when the managers talk about EBITDA. There are

[ryehigh2014]

Hi 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

[ryehigh2014]

Also. Please expect these numbers to change when Q3 numbers come out. Just wait would be my suggestion.  But yes I expect the company to delever to 4x by 2020.  They will absolutely be able to refinance