DRI Healthcare Trust (TSX:DHT.U) Beneish M-Score : -1.42 (As of May. 09, 2024)

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What is DRI Healthcare Trust Beneish M-Score?

Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Warning Sign:

Beneish M-Score -1.42 higher than -1.78, which implies that the company might have manipulated its financial results.

The historical rank and industry rank for DRI Healthcare Trust's Beneish M-Score or its related term are showing as below:

TSX:DHT.U' s Beneish M-Score Range Over the Past 10 Years
Min: -1.43 Med: -1.43 Max: -1.42
Current: -1.42

During the past 3 years, the highest Beneish M-Score of DRI Healthcare Trust was -1.42. The lowest was -1.43. And the median was -1.43.

DRI Healthcare Trust Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of DRI Healthcare Trust for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.3024

0.528 * 1

0.404 * 1

0.892 * 2.7291

0.115 * 1

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.6137

4.679 * 0.017993

0.327 * 0.4505

-1.42

* 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.

This Year (Dec23) TTM:

Last Year (Dec22) TTM:

Total Receivables was $64.1 Mil.
Revenue was 56.864 + 24.903 + 115.82 + 20.394 = $218.0 Mil.
Gross Profit was 56.864 + 24.903 + 115.82 + 20.394 = $218.0 Mil.
Total Current Assets was $0.0 Mil.
Total Assets was $835.0 Mil.
Property, Plant and Equipment(Net PPE) was $0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $87.1 Mil.
Selling, General, & Admin. Expense(SGA) was $33.3 Mil.
Total Current Liabilities was $0.0 Mil.
Long-Term Debt & Capital Lease Obligation was $145.5 Mil.
Net Income was 22.175 + -3.781 + 75.033 + -1.123 = $92.3 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 44.131 + 3.634 + 9.505 + 20.011 = $77.3 Mil.

Total Receivables was $77.6 Mil.
Revenue was 16.574 + 23.798 + 18.73 + 20.77 = $79.9 Mil.
Gross Profit was 16.574 + 23.798 + 18.73 + 20.77 = $79.9 Mil.
Total Current Assets was $0.0 Mil.
Total Assets was $633.4 Mil.
Property, Plant and Equipment(Net PPE) was $0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $59.3 Mil.
Selling, General, & Admin. Expense(SGA) was $7.6 Mil.
Total Current Liabilities was $0.0 Mil.
Long-Term Debt & Capital Lease Obligation was $245.0 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total Receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI	=	(Receivables_t / Revenue_t)	/	(Receivables_t-1 / Revenue_t-1)
	=	(64.082 / 217.981)	/	(77.645 / 79.872)
	=	0.29398	/	0.972118
	=	0.3024

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI	=	GrossMargin_t-1	/	GrossMargin_t
	=	(GrossProfit_t-1 / Revenue_t-1)	/	(GrossProfit_t / Revenue_t)
	=	(79.872 / 79.872)	/	(217.981 / 217.981)
	=	1	/	1
	=	1

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (0 + 0) / 834.957)	/	(1 - (0 + 0) / 633.419)
	=	1	/	1
	=	1

4. SGI = Sales Growth Index

Ratio of Revenue in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI	=	Sales_t	/	Sales_t-1
	=	Revenue_t	/	Revenue_t-1
	=	217.981	/	79.872
	=	2.7291

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI	=	(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))	/	(Depreciation_t / (Depreciaton_t + PPE_t))
	=	(59.266 / (59.266 + 0))	/	(87.076 / (87.076 + 0))
	=	1	/	1
	=	1

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI	=	(SGA_t / Sales_t)	/	(SGA_t-1 /Sales_t-1)
	=	(33.282 / 217.981)	/	(7.557 / 79.872)
	=	0.152683	/	0.094614
	=	1.6137

7. LVGI = Leverage Index

The ratio of total debt to Total Assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((145.478 + 0) / 834.957)	/	((244.988 + 0) / 633.419)
	=	0.174234	/	0.386771
	=	0.4505

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA	=	(IncomefromContinuingOperations_t	-	CashFlowsfromOperations_t)	/	TotalAssets_t
	=	(NetIncome_t - NonOperatingIncome_t	-	CashFlowsfromOperations_t)	/	TotalAssets_t
	=	(92.304 - 0	-	77.281)	/	834.957
	=	0.017993

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

DRI Healthcare Trust has a M-score of -1.42 signals that the company is likely to be a manipulator.

DRI Healthcare Trust Beneish M-Score Related Terms

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DRI Healthcare Trust (TSX:DHT.U) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Drug Manufacturers » DRI Healthcare Trust (TSX:DHT.U) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

DHTRF:USA DHT.UN:Canada

Address

100 King Street West, 1 First Canadian Place, Suite 7250, Toronto, ON, CAN, M5X 1B1

Website

https://www.dricapital.com

DRI Healthcare Trust is a pioneer in global pharmaceutical royalty monetization with a more than 30-year history of accelerating innovation by providing capital to inventors, academic institutions, and biopharma companies. In return for providing capital to biopharmaceutical innovators, the company is building a diversified portfolio of interests in medicines that have a demonstrable positive impact on the world.