RE:RE:RE:RE:RE:RE:Master plan news coming I feel it A $1Bn acquisition is absolutley not off the table and should not make anyone affraid. If the acquisition metrics play out favourably for WELL, then it would be prudent to proceed.
For example, if a $1Bn acquisition got WELL $500MM in revenue and $100MM in EBITDA and $70MM in free cashflow, then why not? Such a transaction can be funded by +$100MM cash on hand, another $500MM in debt (revolving credit facilities are often upsized based on assets acquired) and the remaining in shares at $9.80/share from a combination of Li Ka Shing and institutional investors.
Pro forma, WELL revenues $1Bn, EBITDA's $200MM, has roughly $800MM debt (leverage of 4.0x is not bad for a stable health company) and free cashflows $100-150MM.
What is the big deal here? They have already done acquisitions in the $400MM size in CRH. They have grown the business substantially. Why is it so hard to imagine they can do it again and again? That's the capital allocation business model, right? To acquire, fold into the basket, and repeat.
When the company was half the size, did you have big fears of a $400MM transaction?
When the company was revenuing $100MM, did you have doubts about it revenuing $500MM? Now that it's approaching runrate $500MM, why do you have so many reservations about taking revenue to $1Bn. When WELL reaches $1Bn revenue, will you have the same fears of reaching $2Bn? At $2Bn, will you cry out that it shouldn't dare go to $3Bn?
I for one will be the type of investor cheering the company and its amazing management team on all the way. It is okay to do material acquisitions. Hamed and company have the discipline to ensure such acquistions will be accretive to the firm.