RE:$325 million in long term debtstarboy101 wrote: With a debt/equity ratio of .60. An extreme amount of debt for a puny company like this.
Another reason to sell this POS!
can you explain why this is an "extreme" amount of debt? balance sheet leverage is the wrong metric to look at here as the company is asset light. WELL bought cashflow, not a company full of inventory or hard assets which are highly leveraged? loan to value on the purchases of MyHealth and CRH were both low (< 50%).
both of the senior bank syndicates who lend WELL money look at cashflow leverage - WELL's FCF leverage is healthy and under 5X which is extremely reasonable for a company in this industry. the DSC ratios and capacity to pay for CRH and MyHealth are alsy very healthy as a considerable amount of equity was used to fund the purchases (in the case of MyHealth it was > 50% of the purchase price). interest rate increases will be able to be serviced.
with the exeption of any earn-outs which are left here, the bulk of the company's debt is senior secured which is monitored quarterly by the banks. investors would be alerted to any defaults in the quarterly statements. WELL's convertibles are trading near par (97.50) which also says the market is not overly concerned with a default on their unsecured debt.
the posters who continuously claim this company will be insolvent do not understand basic financial statement analysis and how a cashflow based company like WELL operates. the same posters have no regard for non-cash expenses like Amortization & Depreciation or the basic concept of EBITDA. I've used the example of an insurance company many times on this board to show how an asset light company full of Goodwill/Intangibles can still pump out profits and cashflow.