Q: Hi 5i Team - The guest on BNN Market Call today, said that WELL has to grow into itself since it's trading at at 100 times 2025 (I assume earnings). At the same time he praised it for its strong organic growth with 98% returning revenue and 37% revenue growth. I'm a little confused by these numbers. Could you perhaps put them into a perspective that I can understand. Thanks.
5i Research Answer:
WELL currently trades at 15.8X forward earnings, and while we cannot comment on where the BNN guest received their numbers, it has grown into its valuation from 200X forward earnings in FY2020 to around 16X today. Most of its valuation multiples are quite reasonable today.
It has predictable revenues, where demand for healthcare services are largely non-discretionary. 98% of its total revenue is recurring, which means that these are ongoing services or repeat customers. This is important since it provides insight into future sales and it's a more predictable sales model.
37% organic revenue growth means that without acquiring other businesses and growing revenue 'inorganically', its existing services have grown at 37% year-over-year.