RE:RE:RE:RE:$325 million in long term debtYou made some great comments there. Thank you! Everyone is better off when we have substantive dialog!
monty613 wrote:
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.
You are right, cash flow is the right metric to focus on. But not adjusted EBITDA, free cash flow starting with CFO on the statement of cash flows. Need to look out for minority interest and back that out.
monty613 wrote:
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.
They are probably safe. My comments on this issue are around posters that believe that the lines INSIDE CRH and MyHealth are available to WELL for general corporate purposes.
monty613 wrote:
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.
That's exactly the issue, along with the comment about how debt can be used. WELL is like a fund of companies, not a giant company. But some posters treat it like the parts are interchangeable financial.
monty613 wrote:
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.
Fair enough, agree to disagree. I have seen founders sell their companies and only care about the cash up front. As far as they were concerned, they took stock to get the deal done and didn't care a lot about whether there was a "loss" relative to the transaction price. In fact, I know founders that sold because they were pissed off that the value of their baby was obscured by the fact that it was in a larger, disparate entity (conglomerate discount). My opinion is coloured by my experience.