RE:RE:RE:$325 million in long term debtjdsd0517 wrote: You might be referring to a comment I made in early April where I said, inter alia, "For those that are sophisticated, I would keep a keen eye on this. There is low risk of insolvency, but juggling the cash might be tricky. Especially if there are constraints around how the bank lines can be used. " or when I said "Bottom line? They are going to need to raise more money. This financing is just a drop in the bucket. And hard to justify any NCIB purchases above the financing price, so don't look for internal support on stock price."
I am going to stand by both of these comments. I don't know your background, but I have been investing in software companies for over twenty years, and these are all cash flow based plays. What you are (completely) missing is that the capital structure of the consolidated company hides a lot of moving pieces which you gloss over. In general, your analysis makes too many bad assumptions around financial analysis (to wit, your silly assertions around MyHealth shareholders and the auction process) which betray your claims of being a financial analysis wizard.
I wasn't actually referring to you in my post, but a few other posters. I do appreciate your accounting background (?) and the fact that your posts are well thought out and that you are open to a reasonable debate.
I am no financial wizard and never claimed to be, but many here are hyper focused on EPS and Income Statement. I won't beat a dead horse but this company has a sizeable non-cash expense because of the way CRH structures their contracts. obviously, given the level of M&A in the last year, the company also has a sizeable amount of "one-time expenses". I understand that roll-ups have a bad rap for playing with that number.
I am hyper focused on the debt service coverage of CRH and MyHealth as these are senior debt financed entities. banks don't lend companies this amount of money, at these spreads, without sufficient EV security or without the capacity to pay. both companies have stable and recurring revenues. in the event of any slippage, the senior debt could easily be re-financed based on the low LTV. I think both companies are solid cash compounders on this basis. I also don't think they have a working capital deficiency.
can you speak more to the capital structure 'hiding' things? I have not disputed that CRH has a minority interest component which "owns" income/cashflow under that entity (while WELL reports everything on a Gross basis). that has always been the case with CRH which I have followed for years.
finally - my assertions about MyHealth aren't silly. this is a small mid-market company that grew by acquisition which was self-funded using internal cashflow and the help of senior bank debt (sound familiar?). they did not grow via a major PE/venture financing to give up all the founders equity.
no one sells their company for $200MM, only to turn around in less than 1 year and lose 2/3 of their $100MM share consideration by blowing it out the door. especially when a company is performing and growing. that is not absolute fact here, but based on a simply probability? most astute business owners at this level are not that reckless (or stupid). we will have to agree to disagree what the most probably scenario is.