WELL Health Technologies Corp T.WELL

The effect of rate hikes...

[jdsd0517]

There is a back and forth on the effect of rate hikes on WELL, but that discussion in one dimensional.  There are at least three effects:

1. The one that is most discussed is that WELL's borrowing costs will rise.  True but the company appears to have healthy debt service ratios, so probably not an issue.
2. Rising rates will have an effect on availability of future credit; easy money becomes less "easy." This may have an impact on the company's ability to do large acquisitions down the road.
3. Most importantly, rising rates affect the discount rate that sophisticated investors use to value a company (which is really just a set of cash flow streams).  For the layman, this will manifest in the compression of multiples.

So rising rates will:

• have little to no effect on current operations
• make it harder to do deals in the future (for everyone, not just WELL)
• negatively impact the value of ALL COMPANIES as discount rates rise and multiples compress

On balance, rising rates are a net negative

[monty613]

fair commentary - but healthcare multiples are generally pretty stable and I do not foresee a major re-rate because of interest rates rising. in the private market multiples have not been crushed like publiccos. I think there is, and will be, a healthy demand for companies like MyHealth and CRH given their growth profile and cashflow profile. the telehealth multiples already got smashed here and

[bandit69]

Where did I say it was a death blow?  You clearly do not understand interest rates and the bond markets or even how money works (or, more specifically, the cost of money).  I tried to explain things as clearly as possible here but obvious willful blindness affects readers here.

[monty613]

you have been adamant that the company will need to raise equity because of their inability to service their debt. that is absolutely ridiculius when you look at WELL's DSC. I work in the corporate lending and money markets business as a day job. I understand how the cost of money works.

[bandit69]

Wrong.  I never said they would not be able to service their debt but nice try.  Maybe learn to read too.  I said debt servicing costs would rise with variable rate debt.   And yes, I do believe they will need to raise cash eventually.  Will it be a raise or under the mask of another stellar acquisition....I have no idea. I've come across many in the world of

[monty613]

pat yourself on the back for reading your economics text book?  I would comment as follows: WELL's bank spreads will not change for a number of years because of rising rates - they have committed credit. even at term renewal, the medical space is highly competitive amongst senior lenders due to its low risk, stable cashflow generating profile and it is doubtful their credit spread

[Capharnaum]

I would also add a couple of things... The short term rate isn't necessarily indicative of the long term rate. So, if you're looking at investing long term, the risk-free rate might differ from the short term rate (which is why an inverted yield curve matters). Also, the premium over the risk free rate isn't fixed or linear. Even if the long term risk free rates are at 1% and long

[jdsd0517]

WELL is not a government bond.  Anyone who looks for a risk premium of 6% in a stock like this is nuts. Multiples WILL ABSOLUTELY contract in the market when rates go up.  It's basic financial math.  That concept is the BEDROCK of all financial theory.  You don't have to believe me, check Wikipedia. You might also want to check your understanding of capital markets

[bandit69]

Wrong.  You obviously missed my commentary on the bond markets (i.e. long term rates) and the Fed.  I've already explained why valuations for almost everything will be reduced.  Based on your commentary, there was obviously no point in me doing so. As someone already mentioned, WELL is not gov't debt. and WELL is not "cheap" as you say.  Again, deny or debate

[Noshortsallowed]

I agree with all of this but I think it's important to think of WELLs fundamentals vs other comparables in this sector and opportunities for SaS revenue in healthcare and it's hard to argue that WELLs size and structural advantages in the sector relative to its peers of comparable size makes it a particularly good choice BECAUSE of the factors you outline because in an arena of compressed

[Capharnaum]

The reason that the yield curve is inverting is because higher rates are unsustainable long term, so the market thinks that increased rates will be temporary. The argument that higher rates will lower multiples is market wide, not specific to WELL. Depending on your view, this could be a reason to leave the stock market. However, for those who stay and believe that long term it will still yields

[bandit69]

As I said more than once.  Especially in regards to your value and discount rate comments.

[Noshortsallowed]

You don't have an answer then. What do you say to the investor who wants to invest in digital healthcare in a "high" interest rate market and they are looking at Teledoc with projected -1.60 EPS for 2022 and WELL which is projected to be positive EPS this year with merely one quarter the revenue of that company which is more than 10x our market cap. Which is the better buy in with

[bandit69]

Are you a paid pumper?  If so, you should be fired.  You have no idea what you're talking about.

[Noshortsallowed]

That's what you say when you don't have an answer. No I just own 80k shares, so I'm legitimately interested in WELL.

[Noshortsallowed]

But you are here because you are legitimately interested in a stock you don't own nor think is worth buying? I think we both know who is paid to be here.

[jdsd0517]

WELL isn't really a digital health stock.  They are a digital health stock like Canadian Tire is an ecommerce play, only around the edges. Pure plays are generally valued higher.  That said, I have no opinion on Teledoc at this point, and my opinion on WELL is well documented here.  Which, for the record is: I don't hate the company, I believe it is structurally overly

[bandit69]

I couldn't agree more.  Even the company name says a lot to me. I don't see you as bashing or pumping really, simply revealing the numbers and what they mean and coming to a conclusion based on what you see.  Nothing wrong with that.   I am neither a pumper or basher but when I see red flags all over the field I call them out even if I do, or did, own the shares of a