A Financial Analysis of a Publicly Traded Health Care Company| |
In this paper, I will use financial data and research of a publicly traded healthcare company to give an analysis of the selected company’s financial status.|
The company I selected to analyze is a Biotech and a Cell Therapy healthcare company aptly named NeoStem, inc.. A History of NeoStem
On January 19, 2011, NeoStem acquired Progenitor Cell Therapy, a cell therapy contract manufacturing company serving the industry from licensed, state-of-the art facilities in New Jersey and California. This event added to NeoStem over 100 years of collective experience in the business and science of cell therapy and its development. PCT has performed over 30,000 cell therapy procedures and processed and stored over 18,000 cell therapy products and arranged the logistics and transportation for over 14,000 cell therapy products for clinical use by over 5,000 patients. The PCT acquisition puts NeoStem in an excellent position as it transitions to cell-based therapeutics. AMR-001 is an autologous stem cell treatment designed to prevent adverse cardiac events following acute myocardial infarction. A Phase II trial for Amorcyte began enrolling patients in January 2012. Through the PCT acquisition, NeoStem also owns 80% of Athelos Corporation, a company developing a T-cell therapeutic with potential in a range of auto-immune conditions such as graft versus host disease, asthma and diabetes.
NeoStem had a foothold in China since 2009, when the company acquired a controlling interest in Suzhou Erye Pharmaceuticals Ltd., or Erye. Erye has recently built and validated a new manufacturing facility, doubling its capacity and creating capacity within its existing production lines for higher margin products. With the objective of fully focusing its efforts and resources on cell therapeutics, NeoStem divested its 51% ownership of Erye in November 2012. In 2007, NeoStem began its development activities for diagnostic and therapeutic applications of autologous adult stem cells with the acquisition of a worldwide exclusive license to VSELTM Technology, very small embryonic-like stem cells, licensed from the University of Louisville. Since that time, NeoStem has entered into partnerships, sponsored research agreements, or grant-funded studies for VSELTM Technology highlighting the potential range for these regenerative cells, including studies targeting osteoporosis and bone health improvement (received over $1.7 million in Department of Defense funding), bone regeneration (over $100,000 in NIH funding), macular degeneration and glaucoma, liver regeneration, chronic wound healing, and motor neurons. (www.neostem.com/histoy)
Quick Stock Facts ( http://www.neostem.com/NeoStem_Fact_Sheet.pdf) Name: NeoStem, Inc.
Industry: Biotech/Cell Therapy
Ticker: NBS (NYSE MKT)
Stock Price: $0.67
52 Week Range: $0.30 – 0.90
Market Cap: $107 million
Average Volume (3 mos): 1.0 million
Shares Outstanding: 159.4 million**
*All figures as of November 27, 2012 unless otherwise noted **As of November 13, 2012
As I enjoy reading The Motley Fool, they provide an excellent insight (the Guru Score) as to the financial health of this company. Their take: PROFIT MARGIN: [FAIL]
This methodology seeks companies with a minimum trailing 12 month after tax profit margin of 7%. The companies that pass this criterion have strong positions within their respective industries and offer greater shareholder returns. A true test of the quality of a company is that they can sustain this margin. NBS's profit margin of -179.29% fails this test.
RELATIVE STRENGTH: [PASS]
The investor must look at the relative strength of the company in question. Companies whose relative strength is 90 or above (that is, the company outperforms 90% or more of the market for the past year), are considered attractive. Companies whose price has been...