RE:RE:RE:RE:RE:RE:Going concern? Definitely not the last financing...The debt that they have to payback is $35M in notes payable and $55M in deferred acquisition costs, for a total of $90M. That's the cash required for the next 12 months.
The other current liabilities are going to come up as charges on the earnings report, so if they can keep their current margins those will be handled with revenues coming up.
The account receivables greatly outweight the accounts payable, so those should sort themselves out.
If we look at cash flows generated in the first quarter and consider:
- a growing imbalance of $3.6M in working capital changes
- the interest expense accretion should be substracted
- cash flows growing by 5%, like the outlook provided
Then, WELL should receive cashflow from operations around $43M in the next twelve months.
Adding current cash of $36M with expected cash flows from the next three quarters of $43M with the net issue of around $30M (considering a 15% oversubscription), the liquidity would be $109M, so enough to cover deferred acquisition costs and bank notes coming up in the next 12 months.
Also, it should be noted that they have paid in the first quarter $29.8M of their debt and that another $35M is coming up. If they do pay it down, then long term debt will have been reduced by 22% at the end of the year. I don't see why they couldn't just take back long term debt if they wanted considering their financial results show plenty of room to borrow if required.
About liquidity, there is no going concern mention in the report, it is noted on p.13 that they should be able to meet their obligations.
The going concern mention on p.15 notes that accounting estimates and judgment rely on the company's expectations. It doesn't mean that there's a going concern about the company's ability to continue over the next 12 months.