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We see a 35% chance that HVR will produce >$600 million of cash over the long term, and a 10% chance it makes >$2.8 billion
Analysis
View above about Model Issue: HVR Equity Value
- Supporting Evidence below from Oct 13, 2020 by Winston Minor, Bullet Point Network, L.P.
- Posted on Oct 14, 2020 by John Albright, Bullet Point Network, L.P.
With our judgments for key drivers, together we produce many scenarios for long-term cash flows. For example, we see a ~35% chance this company will produce more than $600 million of cash over the long-term, which it could do if it’s One of a Few alternatives in its first three target markets. To read the table below on a smartphone, flipping to landscape may help. Then drag the dot at the top to the 90th percentile to see why we see a 10% chance it makes more than $2.8 billion!
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We see a 90% chance HVR's forward revenue multiple in 2 years is higher than Healthstream's and a 75% chance it is higher than Vocera's
Analysis
View above about Model Issue: HVR Equity Value
Research Category:
Valuation for HVR, Inc.
- Supporting Evidence below from Oct 13, 2020 by Winston Minor, Bullet Point Network, L.P.
- Posted on Oct 14, 2020 by John Albright, Bullet Point Network, L.P.
We can even produce scenarios for expectations for those long-term cash flows by other investors in the future, such as in 2 years. Here we see 100 scenarios for those expectations for cash balance. Those expectations in 2 years will influence multiples in 2 years, and our odds for the expectations enable us to handicap odds for multiples. In 2 years, we see an >90% chance that HVR’s revenue multiple is above 2.5x, Healthstream’s multiple today. We see a >75% chance that investors will pay a multiple greater than Vocera, which currently trades at 4.4x. By hovering dots around a chosen multiple, we can see investor expectations for Growth, Profitability & Scale. By estimating odds of those stories, we can estimate odds of exit multiples, which is much more useful than just looking at a wide range of multiples in a data table with no explicit odds for either end of the range.
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We see a 10% chance of a > 25x return on HVR and a roughly 50% chance of losing money over 5 years
Analysis
View above about Model Issue: HVR Equity Value
Research Category:
Valuation for HVR, Inc.
- Supporting Evidence below from Oct 13, 2020 by Winston Minor, Bullet Point Network, L.P.
- Posted on Oct 14, 2020 by John Albright, Bullet Point Network, L.P.
Our story-driven odds for investors’ outlook for this company at various future horizons help us produce odds for its valuation at various future horizons. We see a 10% chance it is more than 25x today’s value in 5 years, with an equity value around $700 million. On the other hand, we see about a 50% chance of losing money and almost that much chance of losing more than 50%. If we had diversified investments like this in a portfolio, we would expect it to return the mean of ~6.7x over 5 years. These odds can help us weigh better whether and how much to invest in this company, and with what deal structure.
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Our odds for HVR are driven by judgments for peak economics influenced by different levels of differentiation in different addressable markets
Research
View above about Model Issue: HVR Equity Value
Research Category:
Input Table for HVR, Inc.
- Supporting Evidence below from Oct 13, 2020 by Winston Minor, Bullet Point Network, L.P.
- Posted on Oct 14, 2020 by John Albright, Bullet Point Network, L.P.
The table below summarizes the main judgments driving our odds of future HVR financial results and investor returns. Each of these judgments is supported by research attached directly to it, and you can view that research in the posts that follow. If you have a log-in to BPN Writer, our research and modeling software environment, you can click the table below to open it in BPN Writer. Then you can open the research supporting each cell, and you can change any of the cells yourself and recalculate the odds for financial results and returns, which you can then explore in tens of interactive charts, each with a different perspective on your updated cases for the future.
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