LipoScience Gives Its Shareholders Chest Pains [View article]
Not exactly. I think they will eventually reach a "steady state".
I expect the majority of their business going forward will be through the big labs - it just makes more sense for the hospitals/clinics to outsource their lab functions as opposed to buying the equipment, hiring the techs, etc.
I think the size of the business today is small enough that this conversion issue is a big deal, but it won't (shouldn't?) be an enduring issue.
Can Uroplasty Drive Adoption Of Its Better Mousetrap? [View article]
Thanks for pointing that out Eli. It helps, but one of the big challenges is getting patient compliance ... and unfortunately, most patients don't follow data.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
Fair enough. No apologies needed.
In case I wasn't explicit enough before, I'll say that I think mgmt's synergy goals for the first 18 months are too ambitious. I model 25% EBITDA margin for 2014.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
And I'll say this again, since nobody seems to be acknowledging that I've said this before - I think EHI is on balance a good deal. I just think that the EBITDA expectations are too high in the near-term.
Moreover, I said that my FV estimate for *today* based on 2014 EBITDA is $26 - higher, I believe, than the current sell-side avg price target.
I honestly don't know what you're all so riled up about.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
Companies routinely "drop hundreds of millions on buying a business" that destroys shareholder value, and sometimes almost immediately.
Go back five years and look at the number of homebuilders and/or building supply companies that used debt to make multi-hundred million dollar acquisitions at/near the peak.
Look at the number of oil/gas and mineral companies that spend millions/billions on acquisitions at the peak of the cycle.
Look at CAT's recent purchase of that Chinese mining company and the subsequent writedown of 80%+ of the purchase price (fraud-related in this specific case). You don't think CAT management thought that they "fully vetted" the deal? And we're talking about CAT, a Dow stock, and not a $300M helicopter services company.
Corporate executives routinely make bad deals and then try to sell the Street on the notion that they just made a great deal. That's been going on for decades.
Look, if you think EAC is great, go buy it. I really don't care. This is my analysis and you're free to accept it or reject it as you like. I will continue to maintain that blindly accepting whatever management says is NOT analysis, but if that's what you want to go with, it doesn't cost me a dime. Just don't complain that you weren't warned if/when it blows up in your face.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
And just as a follow-up ... I realize that much of EHI's Afghan business is medevac, but I still believe the volume is going to decline significantly over the next two years.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
indytom01 - Afghanistan is supposedly around 60% of EHI's revenue, and the U.S. pullout is supposed to be complete by 2014. That a huge piece of business to replace, particularly as operations like these encounter large dis-economies of scale as the utilization rates decline.
So, you have the sequester, the probable future cuts in defense spending, particularly in manpower and mobilization, and the Afghan wind-down. Moreover, in past periods of DoD spending cuts, eliminating outsiders has been a common move. I believe that is going to hammer EHI's profitability, and I believe EAC is going to have a difficult time reassigning those aircraft to firefighting, construction, or timber operations at similar levels of net profitability right away.
Long term, it's a not a problem (I think they're buying good assets at a reasonable price). I just think the expectations for 2013/2014 EBITDA are too high. Moreover, the free cash flow outlook (net of debt) just isn't that strong.
No News Becoming Bad News For Lexicon Pharmaceuticals [View article]
If I remember right, AMLN got $100M from LLY upfront, quite a bit more in milestones, and they split costs 50/50 in the US after the first $100M. For that AMLN got additional milestones and a 50/50 operating profit split. That was for a first-in-class drug.
Isis got $45M from JNJ for a two-drug partnership back in 2007. Again, that would have been a first-in-class drug.
Long before that, NKTR got a smaller upfront from Pfizer for Exubera, but that was a weird deal all around.
Normally I'd think $30M to $45M upfront, with most of the costs paid for by the partner would feel about right.
No News Becoming Bad News For Lexicon Pharmaceuticals [View article]
I want to say that LXRX mgmt made it pretty clear at least a year ago that there were looking to partner this one, and didn't intend to go into P3 solo. Now, I'm not sure of that time estimate (don't have my notes in front of me), but that's what's in my memory...
I was referring more specifically to what sell-side analysts were doing insofar as setting a target date, seeing it go by, and then setting a new one. I don't think mgmt has said more than "before we start P3" as the target date.
No News Becoming Bad News For Lexicon Pharmaceuticals [View article]
IALF, that's a reasonable hypothesis. The problem is, analysts have been projecting a partnership for a while now, seeing the estimated deadline go by, and then saying "well, partners are probably waiting for this next piece of data".
So, I'm not mocking you at all, nor arguing with you. Rather, just offering up that others have said that before about other incremental datapoints.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
Analysis means doing something more than just regurgitating the company's numbers. Moreover, if you think a business that gets such a large piece of its revenue and EBITDA from U.S. DoD activity (particularly in Afghanistan) isn't going to see some significant changes in 2013 and 2014, then I really don't know what to say to you.
MJNA: Seeking Alpha Writers Litigation Is Misguided [View instapost]
Alan,
I love it when lousy companies start throwing around allegations of misrepresentation, defamation, and so on. While it plays well to their crowd (credulous retail investors), I think they'd find the discovery process of an actual lawsuit to be quite adverse to their own interests.
LipoScience Gives Its Shareholders Chest Pains [View article]
I expect the majority of their business going forward will be through the big labs - it just makes more sense for the hospitals/clinics to outsource their lab functions as opposed to buying the equipment, hiring the techs, etc.
I think the size of the business today is small enough that this conversion issue is a big deal, but it won't (shouldn't?) be an enduring issue.
Can Uroplasty Drive Adoption Of Its Better Mousetrap? [View article]
It helps, but one of the big challenges is getting patient compliance ... and unfortunately, most patients don't follow data.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
In case I wasn't explicit enough before, I'll say that I think mgmt's synergy goals for the first 18 months are too ambitious. I model 25% EBITDA margin for 2014.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
Moreover, I said that my FV estimate for *today* based on 2014 EBITDA is $26 - higher, I believe, than the current sell-side avg price target.
I honestly don't know what you're all so riled up about.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
Go back five years and look at the number of homebuilders and/or building supply companies that used debt to make multi-hundred million dollar acquisitions at/near the peak.
Look at the number of oil/gas and mineral companies that spend millions/billions on acquisitions at the peak of the cycle.
Look at CAT's recent purchase of that Chinese mining company and the subsequent writedown of 80%+ of the purchase price (fraud-related in this specific case). You don't think CAT management thought that they "fully vetted" the deal? And we're talking about CAT, a Dow stock, and not a $300M helicopter services company.
Corporate executives routinely make bad deals and then try to sell the Street on the notion that they just made a great deal. That's been going on for decades.
Look, if you think EAC is great, go buy it. I really don't care. This is my analysis and you're free to accept it or reject it as you like. I will continue to maintain that blindly accepting whatever management says is NOT analysis, but if that's what you want to go with, it doesn't cost me a dime. Just don't complain that you weren't warned if/when it blows up in your face.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
So, you have the sequester, the probable future cuts in defense spending, particularly in manpower and mobilization, and the Afghan wind-down. Moreover, in past periods of DoD spending cuts, eliminating outsiders has been a common move. I believe that is going to hammer EHI's profitability, and I believe EAC is going to have a difficult time reassigning those aircraft to firefighting, construction, or timber operations at similar levels of net profitability right away.
Long term, it's a not a problem (I think they're buying good assets at a reasonable price). I just think the expectations for 2013/2014 EBITDA are too high. Moreover, the free cash flow outlook (net of debt) just isn't that strong.
No News Becoming Bad News For Lexicon Pharmaceuticals [View article]
Isis got $45M from JNJ for a two-drug partnership back in 2007. Again, that would have been a first-in-class drug.
Long before that, NKTR got a smaller upfront from Pfizer for Exubera, but that was a weird deal all around.
Normally I'd think $30M to $45M upfront, with most of the costs paid for by the partner would feel about right.
No News Becoming Bad News For Lexicon Pharmaceuticals [View article]
I was referring more specifically to what sell-side analysts were doing insofar as setting a target date, seeing it go by, and then setting a new one. I don't think mgmt has said more than "before we start P3" as the target date.
No News Becoming Bad News For Lexicon Pharmaceuticals [View article]
So, I'm not mocking you at all, nor arguing with you. Rather, just offering up that others have said that before about other incremental datapoints.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
No News Becoming Bad News For Lexicon Pharmaceuticals [View article]
Then again, who knows? Maybe that explains why the P3 partnership announcement is so long in coming.
Erickson Air-Crane Has Scarcity, But Value Is Difficult To Judge [View article]
MJNA: Seeking Alpha Writers Litigation Is Misguided [View instapost]
I love it when lousy companies start throwing around allegations of misrepresentation, defamation, and so on. While it plays well to their crowd (credulous retail investors), I think they'd find the discovery process of an actual lawsuit to be quite adverse to their own interests.
The Haze Lifts: 96% Of Medical Marijuana Inc. Q4 Sales From Questionable Transaction [View article]