RE:RE:More M&A Coming - Don't Sleepuudamann wrote: WELL's foray into the US market is exactly what killed CML Labs and KMH, Canadian imaging businesses that underestimated the cutthroat business climate in the US. They blew their brains out and their Canadian operations which were solvent and profitable soon hit the wall.
CML banked on generous CT scan fees which were massively cut almost immediately after CML bought very expensive US imaging operations including hospital based. The vendors obviously had the edge and smoked the hicks.
Americans are uniquely savy knowing when to sell their Krap to the suckers from the great white north when they show up cash in hand.
There is very formidable US based competition in WELL's space who are well entrenched and up to speed.
the good thing is that WELL's entry into the US is via CRH Medical who is the only publicly traded consolidator of GI anesthesia and they are well entrenched in this niche business.
the anesthesia portion of a colonoscopy is billed separately and most GI doctors own and manage both the colonoscopy practice and the anesthesia practice. CRH buys controlling interests in the anesthesia biz and keeps the doctor a miniority owner. this ensures the anesthesia provider contract runs in perpetuity. in turn, the doctor no longer has to deal with billing, the doctor benefits from cost savings and economies of scale given CRH's purchasing power, and most importantly the doctor receives a nice $$$ windfall through the liquidity event of selling. these are bit sized acquisitions which are manageable and have no competitive bidders.
it's a cash printing machine that is ripe for consolidation with a huge runway for growth. there is reimbursement risk but the margins are so fat there is room to offset with acquisitive growth. CRH has already been hit with this in the past and has overcome.
I think your paralells to CML and KMH are wrong here.