Q: Over the past ten years Well Health achieved very low "return on invested capital" results. Does this mean that their acquisitions were not financially successful?
Thank you,
Gabor
Thank you,
Gabor
5i Research Answer:
Additional information/answer. Not necessarily. WELL has recently mentioned that its total unlevered pre-tax ROIC for Canadian clinics was 14%. This is quite a healthy rate, but looking over a ten year period, ROIC is likely lower. This would more likely be due to the general difficulty to realize meaningful enough synergies from previous acquisitions due to the company's smaller scale. Essentially, the cost of integrating every additional health care practice was greater ten years ago than it is today. Meaningfully expanding profitability and margins is one of WELL's goals and we think the recent ROIC metrics they have published are quite solid.