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OncoCyte WACC %

:12.11% (As of Today)
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As of today (2021-10-27), OncoCyte's weighted average cost of capital is 12.11%. OncoCyte's ROIC % is -41.64% (calculated using TTM income statement data). OncoCyte earns returns that do not match up to its cost of capital. It will destroy value as it grows.


OncoCyte WACC % Historical Data

The historical data trend for OncoCyte's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

OncoCyte Annual Data
Trend Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
WACC %
Premium Member Only Premium Member Only Premium Member Only 8.44 8.47 19.85 29.99 13.99

OncoCyte Quarterly Data
Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 16.00 12.68 13.99 12.71 11.81

Competitive Comparison

For the Biotechnology subindustry, OncoCyte's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

OncoCyte WACC % Distribution

For the Biotechnology industry and Healthcare sector, OncoCyte's WACC % distribution charts can be found below:

* The bar in red indicates where OncoCyte's WACC % falls into.



OncoCyte WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, OncoCyte's market capitalization (E) is $301.998 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Jun. 2021, OncoCyte's latest two-year average Short-Term Debt & Capital Lease Obligation was $2.0835 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $5.2005 Mil. The total Book Value of Debt (D) is $7.284 Mil.
a) weight of equity = E / (E + D) = 301.998 / (301.998 + 7.284) = 0.9764
b) weight of debt = D / (E + D) = 7.284 / (301.998 + 7.284) = 0.0236

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 1.64000000%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. OncoCyte's beta is 1.78.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 1.64000000% + 1.78 * 6% = 12.32%

3. Cost of Debt:
GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
As of Dec. 2020, OncoCyte's interest expense (positive number) was $0.252 Mil. Its total Book Value of Debt (D) is $7.284 Mil.
Cost of Debt = 0.252 / 7.284 = 3.4596%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation. The calculated average tax rate is limited to between 0% and 100%. If the calculated average tax rate is higher than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is set to 0%.
The latest Two-year Average Tax Rate is 2.01%.

OncoCyte's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.9764*12.32%+0.0236*3.4596%*(1 - 2.01%)
=12.11%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


OncoCyte  (NAS:OCX) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, OncoCyte's weighted average cost of capital is 12.11%. OncoCyte's ROIC % is -41.64% (calculated using TTM income statement data). OncoCyte earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.


Related Terms

OncoCyte Business Description

OncoCyte logo
Industry
Healthcare » Biotechnology NAICS : 325412 SIC : 2834
Traded in Other Exchanges
Address
15 Cushing, Irvine, CA, USA, 92618
OncoCyte Corp focuses on the discovery, development, and commercialization of novel, non-invasive, liquid biopsy diagnostics for the early detection of cancer. It develops diagnostic tests based on liquid biopsies using blood or urine samples for detecting lung, bladder, and breast cancers. In addition, the company also developing screening diagnostics as potential replacements for screening imaging procedures that do not meet the needs of patients, health care providers or payers. Geographically operation of the group is carried through United States and it earns revenue from the sale of diagnostic tests.
Executives
Carter Jennifer L. director C/O DFP SPONSOR LLC 780 THIRD AVENUE, 37TH FLOOR NEW YORK NY 10017
Kalajian Tony T officer: Sr.VP/Chief Accounting Officer 1010 ATLANTIC AVENUE SUITE 102 ALAMEDA CA 94501
Parker Albert P officer: Chief Operating Officer C/O ONCOCYTE CORPORATION 1010 ATLANTIC AVENUE, SUITE 102 ALAMEDA CA 94501
Levine Mitchell S officer: Chief Financial Officer ONE FERRY BUILDING, SUITE 255 SAN FRANCISCO CA 94111
Andrews Ronald Asbury director, officer: Chief Executive Officer 5791 VAN ALLEN WAY CARLSBAD CA 92008
Redmond Cavan M. director 5 GIRALDA FARMS MADISON NJ 07940
Griffith Melinda director 1010 ATLANTIC AVENUE SUITE 102 ALAMEDA CA 94501
Arno Andrew director C/O MERRIMAN CURHAN FORD GROUP, INC. 600 CALIFORNIA STREET, 9TH FLOOR SAN FRANCISCO CA 94108
Kingsley Alfred D director 150 E 57TH STREET NEW YORK NY 10022
Last Andrew J. director 3420 CENTRAL EXPRESSWAY SANTA CLARA CA 95051
Broadwood Capital Inc 10 percent owner 724 FIFTH AVENUE 9TH FLOOR NEW YORK NY 10019
Broadwood Partners, L.p. 10 percent owner BROADWOOD CAPITAL INC. 724 FIFTH AVENUE, 9TH FLOOR NEW YORK NY 10019
Bradsher Neal C 10 percent owner PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: BRADSHER NEAL C a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}
Ross Douglas T. officer: Chief Medical Officer 15 CUSHING IRVINE CA 92618
Sundar Padma officer: SVP, Marketing & Market Access 1010 ATLANTIC AVENUE SUITE 102 ALAMEDA CA 94501

OncoCyte Headlines

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