$5.54
$11.94
bear $5.54
base $8.75
bull $11.94
margin of safety $4.50
market price* $6.84
United-Guardian is a very small, debt-free maker of specialty ingredients and healthcare products, run from a single plant in Hauppauge, New York. Two product lines produce about 93% of sales. Lubrajel, a family of water-based gels used for texture and lubrication in cosmetics and medical devices, was 48% of 2025 sales. Most of it is sold through Ashland Specialty Ingredients (ASI), which resells it worldwide, with China as ASI's largest market. Renacidin was 45% of sales. It is a prescription irrigation solution that keeps long-term urinary catheters from calcifying. The company says it is the only FDA-approved drug for this use, and an outside contract manufacturer makes it. Medical lubricants (about $2.1M, largely sold to two customers in China) and Clorpactin (an antimicrobial) make up the rest. Sales were $10.5M in 2025, down from $12.2M in 2024 and $13.6-13.9M in 2018, 2019 and 2021. The share count has stayed at 4,594,319 for the whole decade, and the company pays out nearly all of its earnings as dividends. Earning power. Owner earnings (operating cash flow with working-capital swings removed, less upkeep capital spending; there is no stock compensation) ran from $0.54 to $1.10 per share between 2016 and 2025. They were $0.54 in 2023, $0.60 in 2024 and $0.54 in 2025. The company holds about $9.6M of cash and marketable securities. We value that portfolio separately at its June 30, 2026 balance, so we strip the after-tax interest and dividend income it earns out of the operating stream. On that basis, operating owner earnings were $0.98 (2021), $0.72 (2022), $0.49 (2023), $0.53 (2024) and $0.48 (2025). Our starting level is $0.53 per share, the median of 2021-2025. We chose that window because gross margin moved down from about 58% before 2022 to about 50% since. The earlier, richer years describe a more profitable mix that has not come back, so they should not lift the level. The five years still include a strong year (2021) and two disrupted ones. In 2023, Renacidin's contract manufacturer halted production (late 2023 into early 2024). In 2025 ASI's purchases fell 54% because of overstocking and weaker demand in Asia. Two accounting points matter. First, the 2022 loss of $1.05M on the securities portfolio is excluded from operating earnings, as are all portfolio gains. Second, 2025 cash flow got about $0.38M of one-time help from accelerated tax deductions under the 2025 tax law. Without it, 2025 operating owner earnings were closer to $0.40, and the earlier years that bore the cost of the old tax rules were a little understated. The median barely moves either way, so we kept $0.53. Near-term path. In 2025 owner earnings fell about 10% as reported, or about 28% without the tax benefit. We do not extend that decline. Both quarters of 2026 so far beat 2025. First-half revenue rose 12% to $5.98M, and operating income rose 7% to $1.40M, both above the prior year in each quarter. That is consistent with the company's explanation that the 2025 drop came from ASI working down excess stock. The first-half operating run rate works out to roughly $0.49 per share, so the base case starts there, about where the business is earning now. It returns to the $0.53 level the company has already earned only in year three. Named drivers. (1) Medicare rebates on Renacidin. Under the new Medicare Part D Manufacturer Discount Program, United-Guardian qualified as a small manufacturer, so its discounts are low in 2025-2026 and step up to the full rate by 2031. The company states that the full-rate rebates are expected to "significantly exceed" what it paid under the old coverage-gap program. The filing gives no dollar amount. We estimate the extra cost from 2025 pharmaceutical rebates and allowances (about $0.8M on $6.2M of gross pharmaceutical sales) and the statutory 10%/20% discount rates. That gives about $0.30M a year before tax in the base case, phased in through 2031, or roughly $0.05 per share. (2) The ASI distribution agreement. The agreement expired on December 31, 2023 and has not been replaced. As of the 2025 annual report (March 2026) the company was still negotiating, aiming to finish in the first half of 2026. ASI still orders as before. (3) A single outside manufacturer for Renacidin, whose shutdown in 2023-2024 forced the company to ration supply. (4) Slow erosion. Revenue and operating income have drifted down over the decade as Asian and European suppliers offer cheaper substitutes for Lubrajel. Base case: about $8.75 per share. Owner earnings of $0.49, $0.51 and then $0.53, which then erodes about 1% a year, in line with the decade's record. On top of that the Medicare rebate cost phases in to about $0.05 per share by 2031. Renacidin has sold for decades with no FDA-approved rival, and Lubrajel has been sold for decades on trade secrets, so we run the story long (60 years) with the erosion continuing rather than stopping at year ten. The operating business is worth about $6.88 per share ($31.6M). The company has no debt and owes nothing to lenders. Cash and securities beyond about $1M of operating cash add $1.87 per share ($8.6M). Equity: about $8.75. Bear case: about $5.54 per share. The business starts at $0.42. In year two it takes a hit the size of 2023, when the Renacidin supply outage plus ASI weakness cut owner earnings about 30%. The 2020 shutdown year cut them by even more (about 38%), so year two falls to $0.30. Then a partial recovery to $0.38-0.40, and erosion of 3% a year as ASI's role shrinks without a contract and Asian competition presses on Lubrajel. The full Medicare rebate cost is about $0.10 per share. The operating business is worth about $3.67 per share ($16.9M) plus $1.87 of net cash, with no debt. The business stays cash-positive every year, so it can carry itself throughout. Bull case: about $11.94 per share. ASI orders return to their 2024 level ($5.4M of cosmetic ingredient sales against $3.0M in 2025) under a renewed agreement. Renacidin's steady volume gains continue (gross sales rose from $4.9M in 2024 to $5.6M in 2025 as supply was restored), helped by the February 2026 formulary approvals at two major pharmacy benefit managers. Owner earnings get back to about $0.62, close to the 2022-2024 range, and grow 1% a year to year ten before leveling off. The Medicare rebate cost is lighter, at about $0.03 per share. The business is worth about $10.07 per share plus $1.87 of net cash. We gave no case any value for the new Natrajel sexual-wellness line (no sales in 2025; a Brenntag distribution deal signed January 2026), because it is a new product that has not yet sold. Margin-of-safety price: $4.50. How sure are we of the earnings level? Fairly sure within a band. Ten years of filings put operating owner earnings between about $0.40 and $1.06, and every one of the last four years fell between $0.48 and $0.72. The worst plausible event is losing Renacidin supply for a long time, or ASI walking away. Those would take out roughly 45% and 22% of sales respectively. The company would survive either one: it has no debt, and its cash and securities equal about $1.87 per share. If we are wrong about ASI and the Medicare rebates at the same time, the shares are still worth roughly $5.50 on the bear path. The company pays out close to all its earnings, $0.60 a share in each of 2024 and 2025. At $4.50, about $1.87 of the price is covered by cash and securities. The remaining $2.63 corresponds to an operating business that earns about $0.49 a share now, and paying out today's earnings rate as dividends would equal about 11% a year on that price. From that price the bear path implies mid-teens annual returns over three years, and anything close to the median path implies far above 20%. The price assumes a three-to-five-year holding period. Above about $5, the bear path would imply only about 10% a year. The previous published figures were built on a different basis and are not comparable.