RE:RE:RE:RE:It’s time for a turnaround!jdsd0517 wrote:
I am not a bear on this company, I honestly don't get it. And by "it" I mean the engine of value creation.
Acquisition strategies work when there are economies of scale, or economies of scope. Which of those underpin the strategy? How?
their primary cash generating vehicle is CRH Medical - CRH generates high margin FCF and grows by acquisition via small tuck-ins of anesthesia clinics. the space they operate in is highly fragmented and is comprised of small, regional operations whereas CRH operates ion a national scale. CRH consolidates these and uses their purchasing power/negotiating power to boost margins. they buy 51% controlling interests in the business which keeps the existing owners involved and running the show, while also incenting them to perform.
CRH buys their acquisitons at 4-5X EBITDA, while WELL trades much higher than that - making the acquisitions accretive. they can also finance these acquisitions with existing FCF in conjunction with their senior bank debt (they have a few hundred million in credit) which avoids dilution of shareholders.
WELL is now pushing to cross-sell CRH services from their telehealth/virtual services businesses because they have a huge list of medical community contacts.
they are doing the same thing with MyHealth, which is a diagnostic/imaging provider.
from what I understand, WELL is now focused on these 2 core businesses and is not looking to make any more blockbuster acquisitions which wuld be dilutive (although both the CRH and MyHealth deals were accretive).