bandit69 wrote: They have some medical clinics. Ok. How do they actually grow a medical clinic that is typically already booked to capacity on a daily basis and are price takers at whims of gov't and insurer pricing? Some synergies?
I have explained the CRH Medical business in detail on here. CRH represents ~50% of WELL's EBITDA run rate.
it has 2 growth engines. WELL is also trying to capitalize on CRH's relationships with doctors to cross-sell its suite of EMR and other SaaS products.
Product Sales - propietary hemerrhoid banding device with high margins. the company sells this patented device directly to GI doctors. it's a cheap, disposable one-time use product that avoids surgery to remove hemerrhoids. CRH in the past had estimated the market for this could represent a $100MM per annum revenue opportunity. last I checked they were doing $10MM-$15MM per year and they had grown this from $2MM-$3MM. WELL is now opening 'clinics' in Canada (mentioned in recent NR) to deploy this tool and they will have MyHealth (ON) and WELL clinics (BC) do self-referral. I would venture to guess these 'clinics' will operate out of existing MyHealth and WELL spaces so there will be minimal incremental costs. CRH will benefit from product sales to these entities and the MyHealth company will capture revenues from the procedures.
GI Anesthesia Consolidation - the colonoscopy market is highly fragmented the USA and mostly consists of small, regional doctors' groups. the doctors who perform the colonoscopies also own the anesthesia business, which is billed separately to insurers and to Medicare. CRH buys a majority stake in the anesthesia and keeps the doctor on as a 49% owner. the doctor gets a windfall of cash and CRH benefits from profits/cashflow in perpetuity, so long as the doctor is alive and operating his/her clinic. CRH's costs are limited to anesthesia supplies and CRNAs (nurses) who perform the anesthesia. they are simply a vendor to the clinic and don't have all the overhead of a normal clinic owner/operator.
CRH buys at relatively low multiples of EBITDA given the size of the companies (4-5X) and consolidates up into an entity that trades at 10X-15X. there is a long runway for growth because how fragmented the market is. they operate in <100 ASCs/clinics and there are thousands of such acquisition targets.
management at CRH is very experienced has a history in both anesthesia operations and M&A. the former CEO Tushar Ramani just left (cost savings for WELL?) and left the reins to Jay Kreger who used to run HCA Healthcare's ASC operations. HCA has a $74bn market cap. under Mr. Kreger, HCA expanded their ASC business by way of M&A.
https://www.crhanesthesia.com/management-team/