Investment Thesis
Apellis demonstrates strong revenue growth (+28.5% YoY) and maintains an excellent balance sheet with $405M cash and conservative leverage (0.22x debt/equity). However, the company exhibits negative operating cash flow (-$61M) despite positive net income, indicating poor cash conversion quality and unsustainable fundamentals that contradict earnings reports.
Strengths
- Strong revenue growth of 28.5% YoY indicating market traction and demand
- Exceptional liquidity with 3.63x current ratio and $405.2M cash reserves
- Conservative capital structure with low leverage (0.22x debt/equity) and strong interest coverage (9.9x)
Risks
- Negative operating cash flow of -$61M despite positive net income signals poor earnings quality and working capital management issues
- Extremely low returns on equity (4.5%) and assets (1.7%) indicate inefficient capital deployment
- Persistent negative free cash flow at -22.8% margin is unsustainable and erodes cash reserves despite positive profitability
Key Metrics to Watch
- Operating cash flow trajectory - critical to return to positive to validate earnings quality
- Working capital changes and days sales outstanding - understand cash conversion breakdown
- Cash runway and burn rate - monitor depletion of $405M cash reserves at current burn rate
Financial Metrics
Revenue
268.3M
Net Income
18.7M
EPS (Diluted)
$0.15
Free Cash Flow
-61.3M
Total Assets
1.1B
Cash
405.2M
Profitability Ratios
Gross Margin
N/A
Operating Margin
9.9%
Net Margin
7.0%
ROE
4.5%
ROA
1.7%
FCF Margin
-22.8%
Balance Sheet & Liquidity
Current Ratio
3.63x
Quick Ratio
3.16x
Debt/Equity
0.22x
Debt/Assets
61.7%
Interest Coverage
9.85x
Long-term Debt
93.1M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T09:06:34.884785 |
Data as of: 2026-03-31 |
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