short reportThe general theme of the report is that WELL has overpaid for all its acquisitions. In support of this theme it does detail a number of WELL's acquistion, but largely complains about historical events prior to the acquisition and what other companies were or were not willing to pay for the same targeted company. I do not find this persuasive. For instance, in the case of Adracare, we are told about a historical bankruptcy and that iGan paid 1.2 million for the post-bankruptcy assets. And then the complaint is that WELL paid a "whopping" CAD $4.75 M dollars for the company. Not really big bucks for a company worth approximately a billion dollars and with $100 mill in spending money for acquisitions. The report further quibbles about whether it will contribute 1.8 million or 2 million in revenues. In either case, acquiring a company for less than 5 mill which will contribute those kind of revenues annually is a good deal in my books.
While acknowledging CRH to be WELL's most significant acquistion, and presumably releasing its report to coincide with the closing of this acquisition, the best they can come up with is that CRH had put itself up for sale in 2019 and a number of other companies looked it over and declined to pursue it. They also imply that WELL did not due its due diligence, else why would it acquire a company which had lost its biggest customer, when the obvious reality is that WELL had communications with the previous customer and when a deal was struck the previous customer was back on board. Thats more than due diligence. That's creative, go get''em and wonderful from any point of view. The report does not at all attempt to wrestle with WELL's detailed analysis frequently reported as to its expected expansion of revenues as a result of this acquisition. The complaint is simply that it overpaid and CRH earnings are likely to decline. Not much of an attack in the face of WELL's detailed description of the revenues it has acquired. And no mention in the report about expansion into the US with this acquisition or other countries with the other acquisitions. Assumptions of no future synergies do not seem credible to me.
A number of unfair allegations. Are we supposed to sell WELL because of some TMZ scandel he unearthed on an internet search about the CEO of one of the acquisitions. Lets get serious. And as for what Playpal did with TIO after it was acquired from our CEO, that really has nothing to do with him, and its impossible for him to defend that charge. He was not part of Playpal or the decision making that went into whatever happened after the TIO acquisition.
The worst part of the report is the conclusion and the thumbnail analysis of the intrinsic value of WELL, based on its "sum of the parts" analysis. There is not reference here to earnings, which most of us would deem central to an analysis of intrinsic value Anyway, the suggestion that intrinsic value is $3.00 is simply ludicrous in light of revenues currently and projected and in comparison to others in this sector.
I prefer the analsys of Simply Wall Street bull and others who are bullish on WELL, and for reference, Simply Wall street numbers are below:
Rewards
Trading at 74.3% below our estimate of its fair value
Earnings are forecast to grow 134.31% per year
Risk Analysis
Shareholders have been diluted in the past year