RE:RE:RE:RE:buying moreIt is not so much timing the market as in calling a bottom or top, but more so to float when there is a healthy appetite for digital health plays. Though this appetite was strong in the initial stages of the pandemic, with the initial wave of vaccinations, interest dropped off. However, the shift to digital healthcare is a long term tide and eventually the intrinsic value of this shift will show.
Hamed and team are capital allocators at the end of the day. A good allocator waits as long as necessary to strike a good deal, not an adequate deal for the sake of striking within the timelines of short term investors. Capital allocation only works in long-run horizons, as the returns from allocation decision compound over time.
With positive free cash flow from clinic businesses and growing revenues from digital subsidiaries such as Circle and Wisp, Hamed and team have time. I rather they take this time to find accretive, savvy acquisitions than buy up companies in haste.
$500MM base shelf prospectus. $70MM cash on hand and growing. 2022 revenues to exceed $600MM. By any appropriate measure of value at this stage in the corporate lifecycle, WELL is looking cheap. Just as capital allocators don't provide guidance, I don't have a price target to share here. However, in the long run, the company should continue to grow and grow and grow.
This company is just in the first inning of a long value game. Think about how big the healthcare market is, and how WELL is gaining share in different parts. For example, if you just visit the careers page for Circle Medical, you will over 50 job postings, a majority of them for telehealth physicians = revenue center.
If Circle Medical continues to grow at current rates (and beyond) for the next 5 years, it could be worth >$5Bn standalone. Circle's revenues 2022: $50MM, 2023: $150MM, 2024: $450MM, 2025: ~$1Bn, 2026: $2Bn. 2026 revenue times a 2.5 EV/sales rate WELL currently trades at, $5Bn valuation. Event at $2Bn revenue in 2026, Circle will still have less than 1% of the market.
WELL is a leading player in a multi-decade secular bull run. Healthcare is not like commodities, it is highly inelastic, government and insurer paid and stable against all headwinds. Combine an aging population in USA and Canada, with an influx of newcomers to both countries, and the demand for healthcare just goes up.
Canada's population alone will go from 38 million people today to 100+ million people by the end of the century. I'm not saying you have to wait that long to see WELL's stock price hit triple digits, but it is a massive tailwind that will benefit the company.