Emmaus Life Sciences, Inc.

Where It Passes

Where It Falls Short

• Profitability0% pass✓ 6✗ 29▾

  No clean pass — all 16 investors flag at least one profitability criterion

  Positive EPS (10 years)1/18 years positive

  ✗GrahamPositive EPS every year for 10 years

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Net Income Positive (10+ years)1/18 years positive

  ✗BuffettPositive every year for 10+ years

  ROE (up to 5-year arithmetic mean)-38.9%

  ✗Buffett> 15% arithmetic mean (app rule)

  Operating Margin (10-yr trend)1.9% (latest)

  ✓BuffettStable or rising over 10 years

  Free Cash Flow Proxy$-7.5M

  ✗BuffettPositive and growing

  Earnings Variance (10-yr CoV)

  ✗BuffettCoV < 0.3

  Retained Earnings Effectiveness

  ✗Buffett$1 retained -> > $1 market value created

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  ROEN/A (negative equity)

  ✗Lynch> 15%

  EBIT / Enterprise Value19.6%

  ✓Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=19.6%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Net Income / Total Assets-34.95%

  ✗PiotroskiROA > 0

  ROA Change YoY-27.34% -> -34.95% (delta: -7.61%)

  ✗PiotroskiCurrent ROA > Prior ROA

  (CFO / Total Assets) vs ROACFO/Assets=-0.05%, ROA=-34.95%

  ✓PiotroskiCFO/Assets > ROA

  Gross Margin Change YoY92.8% -> 93.1%

  ✓PiotroskiImproved YoY

  Pre-Tax Income / Revenue-34.9%

  ✗Dreman>= 8%

  Net Income / Shareholders' Equity

  ✗Dreman> 12%

  Margin of Safety

  ✗PabraiP/B < 1.5 or P/E < 15

  Return on Equity-38.9% (3-yr avg)

  ✗AkreROE > 20% (3-year avg)

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Positive Net Income Frequency1/16 years positive

  ✗MarksPositive net income in >= 7 of last 10 years

  Operating Income / Revenue29.3%

  ✓Ackman>= 15%

  Net Income / Shareholders Equity

  ✗Ackman>= 15%

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Operating Margin Trend12.0% (2023) -> 1.9% (2025)

  ✗TempletonNon-negative operating-margin trend over 3 years

  Revenue growth vs. gross and operating margin trendgross margin 95.5% -> 93.1%, operating margin 12.0% -> 1.9%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  Net income / market capitalization-572.08%; #5954/6340 (top 93.9%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Gross profit / total assets+88.80%; #188/3702 (top 5.1%)

  ✓AsnessTop 30% of eligible cross-section

  Net income / positive book equity

  ✗AsnessTop 30% of eligible cross-section

  Negative 5-year standard deviation of ROA-0.0811; #3220/5884 (top 54.7%)

  ✗AsnessTop 30% of eligible cross-section

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized

  Positive Diluted-EPS Years1/10 years positive

  ✗Schloss>= 70% positive over 5-10 observed years (app rule)
• Debt & Leverage0% pass✗ 15▾

  All 12 investors flag EMMA's debt & leverage

  LT Debt vs Net Current AssetsLT Debt $25.0M vs NCA $-60.1M

  ✗GrahamLT Debt <= Net Current Assets

  Debt/Equity & Interest CoverageD/E: N/A (negative equity), IC: 0.6x

  ✗BuffettD/E < 0.5 AND Interest Coverage > 5x

  Total Debt / EquityN/A (negative equity)

  ✗Lynch< 0.33

  Cash - Long-term Debt$-22.2M

  ✗LynchPositive preferred

  LT Debt / Total Assets Change122.72% -> 126.55%

  ✗PiotroskiDecreased YoY

  Current Assets / Current Liabilities0.09

  ✗Dreman> 1.5✗SchlossCurrent ratio >= 1.50x (app cutoff)

  Total Debt / Shareholders' Equity

  ✗Dreman< 0.8✗Templeton< 1.0 (fixed cap; proxy for below-sector-median leverage)✗SchlossD/E < 1.00x

  Debt LevelsN/A (non-positive equity)

  ✗MungerDebt/Equity < 0.5✗AkreDebt/Equity < 0.3

  Interest Coverage & Debt/EBITDAIC=0.6x, D/EBITDA=5.4x

  ✗MarksInterest Coverage > 3x; Debt/EBITDA < 4x

  Total Debt / Shareholders Equity

  ✗Ackman<= 1.0

  Negative debt-to-equity (higher means less debt)

  ✗AsnessTop 30% of eligible cross-section
• Valuation0% pass✓ 3✗ 25▾

  No clean pass — all 13 investors flag at least one valuation criterion

  Price / 3-yr avg EPS

  ✗Graham<= 15x

  Price-to-Book Ratio

  ✗Graham<= 1.5x

  P/E x P/B

  ✗Graham<= 22.5

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  EBIT / Enterprise Value19.6%

  ✓Greenblatt> 10%

  Earnings Yield + ROC AssessmentEY=19.6%, ROC=N/A (invested capital <= 0)

  ✗GreenblattBoth EY > 10% and ROC > 25%

  Price / EPS

  ✗Dreman< 12x✗Templeton< 12x (fixed ceiling; proxy for the market's cheapest 40%)

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  Price / Book Value per ShareN/A (negative BVPS)

  ✗Dreman< 1.2x✗Templeton< 1.5x✗SchlossP/B <= 0.80x (app cutoff)

  Valuation ReasonablenessOE Yield=-461.7%

  ✗MungerP/E < 25 or Owner Earnings Yield > 5%

  P/E or FCF YieldFCF Yield=-1.1%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  P/B or P/E vs. Historical Average

  ✗MarksP/E < 15 or P/B < 2.0

  Discount to Intrinsic ValueN/A (negative normalized EPS)

  ✗Marks>= 20% below intrinsic value

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Price vs. Trailing Low253% of trailing low ($0.01)

  ✗Templeton<= 120% of trailing low (certified split-adjusted live window)

  Net income / market capitalization-572.08%; #5954/6340 (top 93.9%)

  ✗AsnessTop 30% of eligible cross-section✗OshaughnessyTop 10% of eligible cross-section

  Positive book equity / market capitalization-62.8558; #6369/6449 (top 98.8%)

  ✗AsnessTop 30% of eligible cross-section

  Price / Diluted EPS

  ✗NeffP/E <= 15x (app proxy for a P/E 40%-60% below the market)

  (EPS CAGR % + Dividend Yield %) / P/E

  ✗Neff> 0.7 (Neff's published traditional edge)

  Price / Tangible Book Value per ShareN/A (non-positive TBVPS)

  ✗SchlossP/TBV <= 1.00x (app cutoff)

  Book Value per Share Change

  ✗SchlossLatest BVPS >= earliest BVPS over >= 3 years (app rule)

  Revenue / market capitalization+14.7508; #251/5247 (top 4.8%)

  ✓OshaughnessyTop 10% of eligible cross-section

  (Operating cash flow - capex) / market capitalization-1.14%; #2679/4519 (top 59.3%)

  ✗OshaughnessyTop 10% of eligible cross-section

  Trailing six-month price return through the evaluation date+152.75%; #204/6202 (top 3.3%)

  ✓OshaughnessyTop 10% of eligible cross-section
• Cash Flow0% pass✓ 1✗ 11▾

  No clean pass — all 10 investors flag at least one cash flow criterion

  Free Cash Flow Proxy$-7.5M

  ✗BuffettPositive and growing

  FCF Positive and Growing$-0.0M

  ✗LynchPositive and growing

  Operating Cash Flow$-0.0M

  ✗PiotroskiCFO > 0

  (CFO / Total Assets) vs ROACFO/Assets=-0.05%, ROA=-34.95%

  ✓PiotroskiCFO/Assets > ROA

  Price / (CFO / Shares)N/A (negative CFPS)

  ✗Dreman< 8x

  P/E or FCF YieldFCF Yield=-1.1%

  ✗PabraiP/E < 15 or FCF Yield > 10%

  FCF Positive0/10 years FCF positive

  ✗MarksPositive FCF in majority of recent years

  (OCF - CapEx) / Market Cap-0.7%

  ✗Ackman>= 4%

  Price / FCF per ShareN/A (negative FCF)

  ✗Ackman<= 25

  Positive Operating Cash Flow frequency0/16 years positive

  ✗SleepPositive OCF in >= 70% of available years

  Operating Cash Flow - Capital Expenditures$-0.0M

  ✗Neff> $0 (app proxy for a strong fundamental case)

  (Operating cash flow - capex) / market capitalization-1.14%; #2679/4519 (top 59.3%)

  ✗OshaughnessyTop 10% of eligible cross-section
• Growth0% pass✗ 13▾

  All 8 investors flag EMMA's growth

  EPS Growth (3-yr avg, 10-yr window)

  ✗Graham>= 33% growth

  Basic earnings-growth PEG (dividends excluded)

  ✗Lynch< 1.0 (ideally < 0.5)

  3-5 Year EPS CAGR

  ✗Lynch15-30% (Fast Grower); > 0% to pass

  Inventory Growth vs Revenue GrowthInv: 21.0% vs Rev: 11.0%

  ✗LynchInventory growth < Revenue growth

  EPS Growth Direction

  ✗DremanPositive over recent years

  EPS CAGR

  ✗Dreman> 5% annualized

  Positive Net Income Frequency1/16 years positive

  ✗MarksPositive net income in >= 7 of last 10 years

  3yr Median Revenue Growth-25.2%

  ✗Ackman>= 5%

  Positive EPS Growth Frequency2/5 years with positive EPS growth

  ✗AckmanPositive EPS growth in >= 3 of last 5 years

  5-Year EPS CAGR

  ✗Templeton> 0% (5-year EPS CAGR)

  Revenue growth vs. gross and operating margin trendgross margin 95.5% -> 93.1%, operating margin 12.0% -> 1.9%

  ✗SleepRevenue rising; gross margin flat or falling; operating margin holding

  5-year Revenue CAGR-11.7%

  ✗SleepCAGR > 7%

  3-5 Year Diluted EPS CAGR

  ✗Neff7%-20% annualized
• Efficiency0% pass✓ 1✗ 10▾

  No clean pass — all 8 investors flag at least one efficiency criterion

  Current Ratio0.09

  ✗Graham>= 2.0

  ROIC (3-5 yr avg)-22.0%

  ✗Buffett> 10%

  ROIC - WACC-32.0%

  ✗BuffettPositive (WACC = 10%)

  EBIT / (NWC + Net Fixed Assets)N/A (invested capital <= 0)

  ✗Greenblatt> 25%

  Current Ratio Change YoY0.11 -> 0.11

  ✓PiotroskiIncreased YoY

  Revenue / Total Assets Change YoY0.71x -> 0.58x

  ✗PiotroskiImproved YoY

  Current Assets / Current Liabilities0.09

  ✗Dreman> 1.5

  Return on Invested CapitalN/A (non-positive invested capital)

  ✗Munger> 15%

  ROIC (high and growing)FY2023: ROIC=unavailable; FY2024: ROIC=unavailable; FY2025: ROIC=unavailable

  ✗AkreLatest 3 consecutive FYs: ROIC > 15% in each

  Reinvestment Rate x ROIC

  ✗AkreReinvestment Rate * ROIC > 10%

  ROIC (5-year)

  ✗SleepROIC > 12% in a majority of years
• Verdicts0% pass✗ 14▾

  Split decision: 14 FAIL · 2 NEUTRAL

  Overall verdict

  ✗GrahamFAIL (0/9)✗BuffettFAIL (1/9)✗LynchFAIL (0/7)•GreenblattNot ranked✗PiotroskiFAIL (F-Score 3)✗DremanFAIL (0/11)✗MungerFAIL (0/4)✗PabraiFAIL (0/3)✗AkreFAIL (1/6)✗MarksFAIL (0/5)✗AckmanFAIL (2/9)✗TempletonFAIL (1/8)✗SleepFAIL (1/6)•AsnessNEUTRAL (Not ranked)✗NeffFAIL (0/6)✗SchlossFAIL (0/7)•OshaughnessyNEUTRAL (Not ranked)