1. Assuming every business Valeant acquired is worth the same market price today - meaning the asset or earning power at these companies did not depreciate or appreciate
2. Then all we had to do is to do a quick sum of all parts addition and take out the debt to calculate the value to equity holders
| Bausch and Lomb | 8700 |
| Biovail and Valeant | 6000 |
| Sanitas and iNova | 1000 |
| Medicis | 2600 |
| Ora | 450 |
| Dermik | 425 |
| Pharmswiss | 500 |
| Brazilian (Probiotica) | 100 |
| Natur | 163 |
| Eyetech | 22 |
| Solta | 250 |
| Precision Derm | 475 |
| Pedinol | 35 |
| Ora Pharam | 312 |
| Obagi | 344 |
| Nestle | -1400 |
| Brodalumab | 445 |
| Synergetics | 192 |
| Amoun | 800 |
| Sprout | 1000 |
| Dendreon | 495 |
| Salix | 15600 |
| Total | 38508 |
| Debt | -37461 |
| Market Value | 1047 |
*in millions
*They sold rights to their cosmetic business to Nestle for $1.4 billions
*Debt is only accounted for the long term portion. The short term portion was taken out assuming their short term assets can be liquidated at a discount to cover it.
Well, according to this, their business is pretty much worth way less compare to it's current market cap. But they are generating $2 billions a year in cash flow, The question then become, how long can they generate $2 billions of cash per year? Their credit default swap spread is indicating that they are currently shut out from the credit market so their operating cash flow is their only life line.
At the current market cap of $32 billions dollar, they are roughly trading at 15x to 16x operating cash flows. It is quite rich compare to generic drug maker Teva - which is only trading at 10x operating cash flow.
So Valeant is worth somewhere between $1 billion to $20 billions - $1 billion if the cash flow isn't sustainable - or $20 billions is fair given that it is able to proof leverage and binge buying is a business model that is working.
At the current market cap of $32 billions dollar, they are roughly trading at 15x to 16x operating cash flows. It is quite rich compare to generic drug maker Teva - which is only trading at 10x operating cash flow.
So Valeant is worth somewhere between $1 billion to $20 billions - $1 billion if the cash flow isn't sustainable - or $20 billions is fair given that it is able to proof leverage and binge buying is a business model that is working.
Interesting to see where this going to end up.
