Enterprise Value to FCFF (EV/FCFF)
Free Cash Flow to The Firm (FCFF)
Abiomed Inc., FCFF calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
The financial performance between March 31, 2017, and March 31, 2022, is characterized by a period of rapid expansion in cash generation followed by a period of stabilization. Both net cash provided by operating activities and free cash flow to the firm (FCFF) exhibit a strong positive correlation, with a synchronized peak occurring in 2020 before experiencing a correction in 2021 and a subsequent recovery in 2022.
- Net Cash Provided by Operating Activities
- Operating cash flows demonstrated consistent growth for the first four years of the period, rising from 115,116 thousand US dollars in 2017 to a peak of 314,920 thousand US dollars in 2020. This represents a total increase of approximately 173% over that timeframe. A contraction occurred in 2021, where cash provided by operating activities fell to 274,578 thousand US dollars, followed by a modest recovery to 285,390 thousand US dollars by March 31, 2022.
- Free Cash Flow to the Firm (FCFF)
- FCFF exhibited a more aggressive growth trajectory than operating cash flow during the initial growth phase. From 2017 to 2020, FCFF increased from 48,119 thousand US dollars to 270,914 thousand US dollars, marking a significant escalation in the company's ability to generate cash available to all capital providers. Similar to the operating trend, FCFF declined in 2021 to 221,195 thousand US dollars before rebounding to 249,627 thousand US dollars in 2022.
- Cash Flow Conversion and Capital Expenditure Trends
- The gap between net cash provided by operating activities and FCFF indicates the level of capital expenditures. In 2017, the variance was substantial, with FCFF representing only about 42% of operating cash flow. However, by 2020, this conversion improved significantly, with FCFF reaching approximately 86% of operating cash flow. This pattern suggests an increase in capital efficiency or a reduction in the intensity of capital reinvestment relative to the scale of operations over time.
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Interest Paid, Net of Tax
Abiomed Inc., interest paid, net of tax calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
2 2022 Calculation
Cash paid for interest on capital lease obligation, tax = Cash paid for interest on capital lease obligation × EITR
= 0 × 28.40% = 0
Analysis of the financial figures reveals significant volatility in the effective income tax rate and limited reporting regarding net interest payments on capital lease obligations over the observed six-year period.
- Effective Income Tax Rate Trends
- A period of substantial fluctuation is observed in the effective income tax rate. The rate declined sharply from 43.00% in 2017 to a low of 1.60% in 2019. Subsequently, a steady upward trend emerged, with the rate increasing to 21.00% in 2020, 21.80% in 2021, and concluding at 28.40% by March 31, 2022.
- Capital Lease Interest Obligations
- Cash paid for interest on capital lease obligations, net of tax, showed an increase from US$ 202 thousand in 2017 to US$ 250 thousand in 2018. However, no values were recorded for this item from 2019 through 2022, indicating either a cessation of such obligations or a change in reporting availability.
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Enterprise Value to FCFF Ratio, Current
Abiomed Inc., current EV/FCFF calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 16,088,812) |
| Free cash flow to the firm (FCFF) | 249,627) |
| Valuation Ratio | |
| EV/FCFF | 64.45 |
| Benchmarks | |
| EV/FCFF, Competitors1 | |
| Abbott Laboratories | 25.75 |
| Elevance Health Inc. | 20.49 |
| Intuitive Surgical Inc. | 62.87 |
| Medtronic PLC | 25.42 |
| UnitedHealth Group Inc. | 20.98 |
| EV/FCFF, Sector | |
| Health Care Equipment & Services | 20.11 |
| EV/FCFF, Industry | |
| Health Care | 27.54 |
Based on: 10-K (reporting date: 2022-03-31).
1 Click competitor name to see calculations.
If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.
Enterprise Value to FCFF Ratio, Historical
Abiomed Inc., historical EV/FCFF calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Enterprise value (EV)1 | 9,983,091) | 12,099,179) | 8,382,834) | 11,359,861) | 17,182,479) | 5,740,561) | |
| Free cash flow to the firm (FCFF)2 | 249,627) | 221,195) | 270,914) | 208,193) | 136,933) | 48,119) | |
| Valuation Ratio | |||||||
| EV/FCFF3 | 39.99 | 54.70 | 30.94 | 54.56 | 125.48 | 119.30 | |
| Benchmarks | |||||||
| EV/FCFF, Competitors4 | |||||||
| Abbott Laboratories | 23.24 | 23.47 | — | — | — | — | |
| Elevance Health Inc. | 13.32 | 12.74 | — | — | — | — | |
| Intuitive Surgical Inc. | 85.45 | 56.01 | — | — | — | — | |
| Medtronic PLC | 20.32 | 33.84 | — | — | — | — | |
| UnitedHealth Group Inc. | 19.30 | 22.21 | — | — | — | — | |
| EV/FCFF, Sector | |||||||
| Health Care Equipment & Services | 20.44 | 23.51 | — | — | — | — | |
| EV/FCFF, Industry | |||||||
| Health Care | 18.66 | 17.80 | — | — | — | — | |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
3 2022 Calculation
EV/FCFF = EV ÷ FCFF
= 9,983,091 ÷ 249,627 = 39.99
4 Click competitor name to see calculations.
The financial data indicates a period of significant valuation volatility paired with a consistent expansion in cash flow generation. While the enterprise value fluctuated substantially between 2017 and 2022, the free cash flow to the firm maintained a general upward trajectory, resulting in a significant compression of the EV/FCFF multiple over the analyzed period.
- Enterprise Value Trends
- The enterprise value exhibited high volatility, peaking in March 2018 at approximately 17.18 billion US dollars. This was followed by a period of contraction reaching a low of 8.38 billion US dollars in 2020, before fluctuating and ending at 9.98 billion US dollars in 2022. These movements suggest substantial shifts in market capitalization or debt levels relative to the firm's valuation.
- Free Cash Flow to the Firm (FCFF) Performance
- FCFF demonstrated strong and steady growth, increasing from 48.12 million US dollars in 2017 to 249.63 million US dollars by 2022. Despite a slight decrease in 2021, the overall trend reflects a significant improvement in the company's ability to generate cash available to all capital providers.
- EV/FCFF Ratio Interpretation
- The EV/FCFF ratio experienced a sharp decline from a peak of 125.48 in 2018 to a minimum of 30.94 in 2020. This dramatic reduction indicates a shift from an aggressive valuation—likely driven by high growth expectations—toward a more conservative multiple as actual cash flow performance improved. The ratio stabilized between 39.99 and 54.70 in the final two years, suggesting a realignment between the firm's market value and its fundamental cash-generating capacity.
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