Q: How recession-resilient would you see WELL - especially in an abnormal, more prolonged downturn ? How would you compare this company's resiliency relative to that of other small and mid-cap companies ? Could you please also compare specifically to LMN ?
5i Research Answer:
With its healthcare focus, we would expect WELL to be more resilient than most small caps. That being said, it has not been public in a bad recession. It survived Covid very easily, however, but it was in acquisition mode at the time. Its revenue base is now approaching $1B and it is profitable, so we would expect it to be OK. LMN has been public an even shorter time. But it, and its parent company are generally conservative. Its balance sheet is fine and cash flow is growing. It might see a valuation change if the tech sector cracks, but we would not have many concerns about its business operations in a downturn. From a stock viewpoint, LMN is more expensive than WELL so in theory its stock might be more volatile in a bad market.