monty613 wrote: bandit69 wrote:
Doubtful. Time is needed for the excessive acquisitions to show their substance (or lack thereof) in future quarters. I still say it'll float down under $4 eventually.
Speaking of acquisitions, what would you say the odds are that there were so many "good" deals out there so ripe for acquisitions within a year? Especially during a pandemic when, apparently, telehealth opportunities were supposedly so hot. Is it reasonable to think there were so many undervalued opportunities out there that WELL could magically increase revenues/multiples/cashflow etc simply by their acquiring them? by cross selling a hemmorrhoid removal tool? uh huh. I see. The markets were hitting record highs, Buffett didn't see a deal out there for years for anything yet WELL had these screaming deals banging down their doors resulting in sometimes several deals in a month.
Makes sense to me.
Buffet isn't exactly dabbling in deals in the hundreds of millions. valuations are frequently out of sync for public companies like this.
I can't speak to the EMR or "tech" acquisitions much, but WELL bought CRH for a bit of a steal when it tanked on the news that their biggest customer (GAA) was shopping their contract. GAA is the *only* client where CRH is simply a vendor to them and doesn't own a piece of the anesthesia business as a joint venture with the doctor(s). basically, GAA had them by the balls as they were like any other supplier. when that was released, WELL stepped in with the buyout offer and subsequently saved the GAA contract under some renegotiated terms. the rest of CRH's contracts are all joint ventures whereby the doctor (who is in control of the contract) also owns a minority stake in the anesthesia business where CRH is the 51% owner. this effectively makes the contracts revolve in perpetuity as the doctor would never 'shop' the anesthesia supplier seeing how they own 49% of the vendor. CRH has grown under WELL already and will continue to grow with internal cashflow and senior bank debt which can be used to roll-up additional GI anesthesia businesses.
re: MyHealth - this was a private company and they were looking to expand so they needed an equity partner. they get that with WELL and will (hopefully) stand to benefit more by taking stock in addition to an up-front lump sum payment, versus selling outright. management also got to keep their jobs, which may not be the case in a different merger or expansion scenario. MyHealth, like CRH, has a long track record of acquiring clinics and growing their EBITDA. IIRC I think it's something like 30 clinics acquired and they have grown EBITDA by > 30%. MyHealth, also like CRH, can grow its business by way of internal cashflow and senior bank debt.
these are WELL's two biggest components - both are solid cash compounders.
Circle and WISP also appear to have been great acquisitions based on their hyper growth, noting they have partners there. wouldn't shock me to see Circle and WISP being spun off eventually (their partners will want to monetize at some point) and WELL could use the proceeds to pay off/pay down the CRH and MyHealth debt. they'd be left with two solid debt-free (or low debt) companies who can continue to grow without the need for dilution.
I know you are extremely bearish, but this company has a few levers to pull to reduce or eliminate their debt load, which you continue to point to.