Houston, we have a problemI'm sure that those who follow this company closely already are aware that Q3 will have a scary headline. Myself, I wasn't aware until yesterday what an oversized impact the share price of AIDX has on WELL's quarterly results. Something I read elsewhere from "WolfofOakville" tweaked me to this.
According to him, "For every penny AIDX falls from $2.53 (Q2 close) will decrease Well Health's profitiability by approx $750k."
That comment provoked me to take a look at the Q2 income statement. Silly me, I hadn't done so previously.
Just to review: in Q2 WELL reported net income of $116,976,000. The overwhelming majority of that came from change in fair value of investments in the amount of $116,327,000. Without AIDX's rise in price, WELL would have had a profit of some $650,000.
WELL has a mix of AIDX convertible debs, warrants and call options. Until somebody shows me differently, I will assume that Wolf's numbers are correct. If AIDX is valued at today's $1.35 the result is a "loss" of $88,500,000 from Q2's "gain" of $116 million. The impact on Q3 and 9 month results is going to focus attention on just what the true margins are, and things like how much money is consumed by G & A expenses - $75.5 million in Q2.
Each to his/her own, but thanks to that insight, I am temporarily out. I don't want to be a shareholder when this news hits at the peak of tax loss selling season.