simple and rough calculation - VRX generated about $400M in cash flow.
- cash balance up $700M
- current debt down $150M
- accured liab down $500M
- LT debt up up $1B
- CFO up $558M
- CFI down $112M
This quarter was somewhat less than last year but it definitely performed well given the tough environment. Remaining quarters should be in line or above the new guidance which it should generate another $1.3-$1.5B.
Given the fact that the company pays about 4% annual interest in debts, I expect to see company building up cash position throughout the year.
As Ackman and new management/boards are exploring to divestiture non-core assets, Year-end cash balance may be as high as $4.0-$5.0B range.
LendingClub has been sending out an email that stated that borrowers can change payment date by before/after 15 days from current payment date. But, what they didn't tell borrowers was that it would increased monthly payment amount!
CFPB should be looking into this situation - borrowers are getting charged with hidden fee with clearly stating to customer under Disclosure Act.
And what's the stock price? it should have been $80 - $120 using similar multiple to industry average.
Also, $660M of depreciation and amortization is "non-cash" item based on GAAP, i.e. EBITDA is much higher than EPS projection. Is VRX making any additional acquisition? Did VRX miss any reporting requirement at this point? None. Which means, its balance sheet with $6.60-$7.00 EPS with $660M D&A is improving so much this year.
Is VRX still a target for M&A? Yes. The possible price range? I think it should be in the range of industry multiple.
And I just realized something - this 15 days is considered to be a grace period prior to getting late fee which lenders are entitled to receive.
Who is getting this hidden fee? Lender or LendingClub? If it goes to LendingClub, the company is truly committing the fraud as it is collecting interest payment which belongs to lenders. If it goes to Lenders, it also violates original loan document which states that there is no fee charged under 15 days grace period.
Either way, LendingClub needs to reimburse this amount and makes an apology statement for borrowers before a class action lawsuit starts.
No wonder why CEO walked away quickly and no one is interested in taking the position.