June 22, 2022

Today's Topics

Hi, we've got 3 charts for you today:

  • Revlon. The beauty company has some ugly financials.
  • Ukraine's refugees. Some are returning home, even if only briefly.
  • Drugs are expensive. Americans pay a lot for pharmaceuticals.
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Revlon, the beauty and cosmetics company first founded in 1932, has filed for bankruptcy.

Ugly financials

For years Revlon, which owns Elizabeth Arden and a number of fragrance lines (including Britney Spears and Christina Aguilera's brands), has struggled with a growing debt pile. From 2009-2015, Revlon mostly had that debt under control, ekeing out enough of a margin to cover the annual interest expense every year.

But then Revlon acquired Elizabeth Arden in a bid to buy its way to growth. That meant taking on more debt, at a time when competition in the beauty space was intensifying. Revlon started to struggle. Having been reliant on physical distribution in malls and shops for years, Revlon suddenly had to compete with upstart brands such as Fenty Beauty (by Rihanna) or Kylie Cosmetics (by Kylie Jenner).

These were digitally-native brands with huge followings that shipped straight to consumers, meaning cheaper marketing and distribution. Fenty Beauty has 12.9m followers across social media platforms Instagram and TikTok, Kylie Cosmetics has 28.9m. Revlon has 3m.

Beauty is in the eye of the debtholder

As debt piled up Revlon shifted some assets into a new holding company, in an attempt to attract new lenders. That was fine except it wasn't — Revlon's long-time lenders sued, alleging that the company had breached their loan agreements. That's complicated enough but it became comically complicated when Citibank — which was acting as a loan agent — accidentally paid off $900m of Revlon loans with its own money. Citi said "woops sorry can we have that back". Some of the counterparties said yes, but others weren't so keen to forgive and forget, leaving Citi out of pocket for Revlon's loans... and now Revlon is going bankrupt. Lawyers, sharpen your pencils.

Data from the Ukrainian borders suggests that a substantial number of refugees that had previously fled Ukraine have now returned home — if only for a short trip.

Data from the UN refugee agency, originally reported on by The Economist, reveals that the gap between the number of people leaving Ukraine and the number of people entering Ukraine has narrowed. Indeed, throughout the first two weeks of June roughly 30,000 people have entered Ukraine per day, mostly staying west where the fighting with Russia has been more muted, suggesting Ukrainians are eager to return home as soon as they can.

Even with the number of returning refugees going up, there's still a net exodus of people leaving the country — although it's more of a trickle at 15,000-20,000 people per day compared to the hundreds of thousands that fled in the early days of the invasion.

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This week a new study from Harvard Medical School researchers estimated that Medicare could save almost $4bn a year were it to purchase drugs and prescriptions from Mark Cuban's Cost Plus Drug Company instead of the complex supply chain of private brokers and pharmacies that it currently sources from.

Billionaire Mark Cuban launched the Cost Plus Drug Company in January this year, selling generic prescriptions direct to consumers with a fixed pricing structure of a 15% mark-up, a $3 dispensing fee and a $5 shipping fee, in a bid to disrupt the $350bn+ a year prescription-drug industry.

America #1

The study showed that in some specific cases Medicare was being charged 800%+ more than what they could pay if they had gone direct or via Cuban's new company. That's no surprise to anyone familiar with the wider data on the US pharmaceutical industry — the latest data from the OECD (charted above) shows that the US spends more per person on pharmaceutical expenditures than any other OECD member.

More Data

1) What do American couples argue about most.

2) Airbnb is doling out a total of $10m to Airbnb hosts via a new OMG! Fund to build 100 of the craziest and most unique property ideas.

3) Kellogg has revealed plans to split up into 3 separate companies in a bid to give the company's shares a little more snap, crackle and pop.

4) Trade the future. Inflation, gas prices, Biden's approval rating, entertainment, weather, travel — you name it, there’s a market for it on Kalshi where you can trade the outcomes of world events on a fully CFTC-regulated exchange.**

5) In a survey of 150,000 people around the world, analytics firm Gallup found that negative emotions reached a record high last year.

6) High gas prices aren't leading to less driving... yet (chart).

7) The rise of the 3-pointer in the NBA in light of the Golden State Warriors' latest championship victory.

**This is sponsored content.

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