[doctrine]

Well has negative operating earnings. Gross profit has little translation to long term success. This company is issuing stock and making acquisitions everywhere and spending every cent they have left over on marketing. Marketing and sales (SG&A) expense is a fundamental core operating cost - there is no evidence this company could survive without it. They have nothing to reinvest with negative operating earnings. They are investing new capital.

From what I can tell they only had $50M in book value and just did offerings worth $93M in shares - that should put in perspective that they are relying on share issues to grow. This story has multiple ways to go off the rails, especially when acquisitions start being written down, although by then it will be too late. They will need to grow and buy companies and they will pay any price and have the cash to do so. This company's press releases and financial statements have a good chance of being used as future case studies for finding warning signs, it is just one red flag after another. Unfortunately, with a high stock price and supportive investors, they can continue the party for quite some time.

Of course I would have been wrong at $1 let alone $8, so maybe you should ignore me. But there is a lot of reckoning here to come. This is not Amazon.

 

[Jimmy]

They are spending more than required on SG& A as part of their rapid expansion. IMO If they are growing sales at 300% /yr as a result survival is hardly an issue. They are also sitting on a mountain of cash and can raise whatever they want given their proven sales growth.

Most of the growth companies operate at a loss in their expansion phase. They are sitting on $24M in cash enough to retire all the LT debt tomorrow if they wanted. Cash and current ratio > 2. . D/E .5. I think you might be overreacting a little as far as any warning signs.

 

[MrBlackhill]

WELL's momentum came to an end and dropped -20% in the last month. I'm still holding it, I believe in this company and I knew the valuation was getting high. I think there's a stock rotation happening due to vaccine news. I'm still up +236%.

 

[doctrine]

What does WELL have when the vaccine gets out and people start going back to see their doctors in person, and competition takes over because there is almost no proprietary patents involved, and margins are crushed? At 12+ times book value, there could be a lot of air, and I see high selling volume today.

I've seen this high growth acquisition story many times before. What typically happens is at some point the acquisitions will start to underperform. Then come the goodwill "NON-CASH BUT DON'T WORRY" write-downs. Then there is no bottom and you could easily lose 80% on a high flyer like this.

If anyone holds stock and is up multi-bagger, you would be well advised to take some profits off the table so you aren't left holding the bag.

 

[MrBlackhill]

What does WELL have

What do they have? 20 clinics with about 180 practitioners serving about 600,000 patients a year. That's the core of their organization and that makes them the largest single chain of primary healthcare clinics in British Columbia. They have all the specialists you need. And then they have the virtual clinics for telehealth. I'm all-in with telehealth because that's the kind of service I need as I never take time (or need to) go to a clinic, I don't have a family doctor, so it's pretty convenient to have access to telehealth.

They have Hamed Shahbazi as CEO and Li Ka Shing as an investor.

 

[MrBlackhill]

Then there is no bottom and you could easily lose 80% on a high flyer like this.

I bought at $2 and it went up to $8, so even if it loses -75% from its peak I still wouldn't have lost money so I'll take my chances. As of today, after dropping by more than -15%, it could drop another -50% and I'd still be up +70%. I guess the entry point is important. That's like my KXS holding who dropped about -25% in the last month but I'm still up +30%.

But I'll give you one thing. I'm a beginner, so - yes - there are things I still have to figure out and situations I still have to experience.

 

[Jimmy]

I think you have lots of margin of safety. You likely got in at a P/S of ~ 4 or 5 at $2. At $8 now the P/S is 20 but they are still young and growing sales at 50%. The market probably thinks they will lose 15% of their sales now the crisis is ending. A good Q4 w more new sales growth of around 40- 50% and this stock will bounce back and more.