RE:RE:RE:RE:It’s time for a turnaround!jdsd0517 wrote:
Secondly, they have pre-announced a REVENUE run rate of >$100mn, they have not provided a specific EBITDA forecast, just a few metrics. Don't confuse those two metrics!
Stock still looks expensive, Assuming the following:
- opening operating CF of $32million (LQA)
- operating CF growth of 50% per year for 10 years (organic and inorganic)
- operating CF growth of 10% per year thereafter in perpetuity
- annual equity increase of 10% per year
- a required rate of return of 25% per year
they are on a $500MM annualized revenue rate and $100MM annualized EBITDA run rate
I think you're confusing the "virtual services" business NR which referenced $100MM in Revenues for that business alone
a lot of noise in the cashflow statement because of acquisition costs, but ultimately this company has a
huge Depreciation/Amortization expense that is most certainly non-cash and is warranted of an add-back. the CRH Medical JV contracts have a finite life so they're amortized.
the catch is they effectively revolve in perpetuity because CRH owns 51% of the anesthesia business and the doctor owns the other 49%.
to understand that you need to understand their business:
- CRH is effectively an anesthesia services vendor.
- the company goes around and buys anesthesia services businesses from doctors who own both the clinic and the anesthesia provider. this monetizes the anesthesia business for the doctor and provides them with a big cash windfall.
- CRH buys 51% controlling interest and the doctor retains 49% of the anesthesia service business only
- the doctor continues to own their clinic, performs procedures and uses the CRH/doctor JV company to provide the anesthesia
- CRH takes care of all the billing and back office functions for the doctor, so they can focus on their practice
- the doctor can never "cancel" the anesthesia contract because they would be cancelling on themselves (they own 49% of it)
because CRH doesn't actually own or lease the clinics their costs are limited (really just staffing and supplies) so they produce high margin cashflows
great business. it's now being augmented as CRH can cross-sell the suite of WELL products to all of their doctors.