# WELL Health



## MrBlackhill (Jun 10, 2020)

This stock has been my winning bet for this year.

I bought this one at the end of April and I'm currently up +220%.

It was only 3% of the total money I invested in my portfolio this year and yet it accounts for 1/5 of my unrealised profits for this year's investments. It's now about 7% of my portfolio for this year.

Maybe it'll crash at some point but so far I really like what I'm reading about this company. It's doing a lot of acquisitions, it has virtual and physical clinics. They are expanding to the US. They were part of the top Venture 50 companies and upgraded to TSX.

There's still some big competition like Teladoc in the US, but if WELL does as good, it'd be very happy. Teladoc valuation grew 20x in 4 years (that's more than +100% CAGR) and nearly 4x in the last year (+300%).

So far WELL also did about +300% in a year. Depending on your risk profile, it may be risky to buy at the currently valuation, but it may worth adding it to your watch list. I think with the COVID situation people will want telehealth services to grow faster.


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## Juggernaut92 (Aug 9, 2020)

I added 10 stocks of this one to my margin/cash account in case it crashes. I am watching it too and it seems like virtual health care is exploding thanks to covid. The only concern is if it will last after.


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## james4beach (Nov 15, 2012)

WELL may be a good scenario for a trailing stop with a generous % band, perhaps something like 50% trailing stop. That way if it keeps rallying like this, you keep all the upside while still protecting yourself in case the fun ends.

WELL does not pass my own stock screening as it would fail both my market cap and volatility criteria, so I can't hold it. It's too risky, even for my high-risk growth portfolio.


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## MrBlackhill (Jun 10, 2020)

I must admit I don't know how to manage this holding.

As a beginner, I never wanted to buy a stock like SHOP or TSLA because it seemed like an overvalued momentum play. SHOP is doing good at the moment because it's now going sideways which limits the huge volatility that we are currently seeing in a stock like TSLA. They are both great companies with historical data to analyse at and certainly a great future.

But then when it comes to a small stock like WELL, I really have no clue about its valuation. And I just noticed I currently have more gains with WELL bought in April (+260% as of today) than buying TSLA in April which everybody are talking about...

From a trader point of view I don't want to risk selling for swing trading a possible dip that's never coming because the stock's volatility is mostly on the upside. From an investor point of view, I don't want to sell because I believe in this company and the future of telehealth.

But from a valuation point of view, I have no clue. I guess at some point the stock may tank a -50%, but that would leave my gains to +80% which would still be awesome...

In the end, I know I'm holding stocks which are high-risk and therefore high-volatility so I should always recall that my current unrealised gains are exactly what it's saying : *un*realised gains. So many things can happen. It's a bit crazy that the small position I took in WELL (3% of 2020's investments) only 5 months ago now accounts for almost 1/4 of my unrealised gains for this year... And that's not because the other holdings are doing bad, most are still at +20% to +40% after the sell off, but that's nothing to be compared with +260%. I just got lucky on this bet.


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## Spudd (Oct 11, 2011)

MrBlackhill said:


> I must admit I don't know how to manage this holding.
> 
> From a trader point of view I don't want to risk selling for swing trading a possible dip that's never coming because the stock's volatility is mostly on the upside. From an investor point of view, I don't want to sell because I believe in this company and the future of telehealth.
> 
> But from a valuation point of view, I have no clue. I guess at some point the stock may tank a -50%, but that would leave my gains to +80% which would still be awesome...


You could set a trailing stop at -50% or whatever you feel comfortable with. The danger is, of course, that it will dip down to that and then recover and go to the moon, and you'll miss out. But the upside is you are guaranteed not to lose money.


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## Jimmy (May 19, 2017)

I am starting to look a these more and more. just bought a little Shopify. I am using the Price to sales ratio to value these. From TMX money, WELL is growing sales at ~ 100%/ yr and its P/S is 20 so you get your $ back fairly quickly in ~ 5 yrs. It will be choppy but unless you see their sales declining due to say another competitor or the economy you should be fine.

These companies are awash in cash ( their current ratio is 2.7) , D/E is .47 and have no other worries really.


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## MrBlackhill (Jun 10, 2020)

Jimmy said:


> WELL is growing sales at ~ 100%/ yr and its P/S is 20 so you get your $ back fairly quickly in ~ 5 yrs.


True, for companies which are not profitable yet, I look at the P/S ratio and also I wish there was some PSG (P/S Growth) ratio like there is a PEG. Anyways, since a single metric does not give a clear picture, a complete due diligence analysing the financials in depth is always the best thing to do, but I still wished there was something like PSG to help stock screening.

It's hard to tell what will thrive. In the healthcare sector, I also took a small position in VMD, which is in a different industry (a bet on ventilators during COVID). I'm doing good, but clearly WELL is getting all the hype about telehealth. VMD is growing revenues at +50% a year, currently at over 50% RoE, over 30% RoA, a D/E of 0.22, a P/E of 11, a P/S of about 4, a current ratio of 1.55 but I guess VMD is not a stock to take on a hype momentum. Anyways, as I said, I'm not investing for momentum, so on the long run I should hopefully also be rewarded for holding a stock like VMD. Or maybe not, due to more competition. Or maybe I missed something on that one. I'm still currently +20% up on that one, even after the recent sell off, so I won't complain.


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## Jimmy (May 19, 2017)

MrBlackhill said:


> True, for companies which are not profitable yet, I look at the P/S ratio and also I wish there was some PSG (P/S Growth) ratio like there is a PEG. Anyways, since a single metric does not give a clear picture, a complete due diligence analysing the financials in depth is always the best thing to do, but I still wished there was something like PSG to help stock screening.
> 
> It's hard to tell what will thrive. In the healthcare sector, I also took a small position in VMD, which is in a different industry (a bet on ventilators during COVID). I'm doing good, but clearly WELL is getting all the hype about telehealth. VMD is growing revenues at +50% a year, currently at over 50% RoE, over 30% RoA, a D/E of 0.22, a P/E of 11, a P/S of about 4, a current ratio of 1.55 but I guess VMD is not a stock to take on a hype momentum. Anyways, as I said, I'm not investing for momentum, so on the long run I should hopefully also be rewarded for holding a stock like VMD. Or maybe not, due to more competition. Or maybe I missed something on that one. I'm still currently +20% up on that one, even after the recent sell off, so I won't complain.


I am just starting to look at growth stocks now . Have traditionally just been ETFs but owning a star is usually better than a general index ie Shopify to XIT. Given all this extra risk though, you have to put in much more due diligence. The G&M is an excellent source of material for stocks all in one place. There are up to 5 reports for each stock, a value report, Zack's financials and an excellent report from Value engine that compares the company to its industry and peers.

I just started a membership to Fool.ca too that has been well worth the $ IMO as another source of information to validate findings . I am poring over all this material just to reassure myself as much as possible before investing in a stock

I think the key though is to find some estimates of growth for the industry. As an example Nvidia is in the chip industry expected to grow 30%. Plus egames are expected top grow similar. I think once you have this sort of information you can sleep a little easier buying these stocks trading at 30 x S.


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## MrBlackhill (Jun 10, 2020)

Yes, I also like G&M. I like a few websites in fact, so at the moment I cannot make my mind whether I should subscribe to one of them as I feel like they are complementary and I would end up subscribing to more than one...



Jimmy said:


> Plus egames are expected top grow similar. I think once you have this sort of information you can sleep a little easier buying these stocks trading at 30 x S.


Interesting that you mention this as I have HERO.TO on my watch list which is an ETF about eSports & eGaming. I'd add this ETF for exposure to that industry while adding geographic diversification. I'm still only watching it. I'll analyse its index before buying and take a deeper look at its holdings.


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## Jimmy (May 19, 2017)

MrBlackhill said:


> Yes, I also like G&M. I like a few websites in fact, so at the moment I cannot make my mind whether I should subscribe to one of them as I feel like they are complementary and I would end up subscribing to more than one...


You need the G&M subscription to get all the reports.



MrBlackhill said:


> Interesting that you mention this as I have HERO.TO on my watch list which is an ETF about eSports & eGaming. I'd add this ETF for exposure to that industry while adding geographic diversification. I'm still only watching it. I'll analyse its index before buying and take a deeper look at its holdings.


That looks good. It has SEA which I am looking at - have it in my ARK Innovation ETF EARK. The market leader in SE Asia other than China for egames and getting in on ecommerce too . 130%/ yr growth in sales last 5 yrs. Stock up 240% this year and a massive $46B company beating Tencent and Alibaba in those markets ( 2 other companies to look at too) . P/S 15 not too bad. Amazing but a little scary. 

You really have to study if these companies can keep up the revenue growth.


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## MrBlackhill (Jun 10, 2020)

MrBlackhill said:


> Anyways, as I said, I'm not investing for momentum, so on the long run I should hopefully also be rewarded for holding a stock like VMD.


Just pointing out funny coincidences. It always makes me laugh. (I know those swings are due to holding high risk high volatility stocks, but I always find funny when I say something and it's "answered" the next day, even though it's just a coincidence)


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## Jimmy (May 19, 2017)

MrBlackhill said:


> True, for companies which are not profitable yet, I look at the P/S ratio and also I wish there was some PSG (P/S Growth) ratio like there is a PEG. Anyways, since a single metric does not give a clear picture, a complete due diligence analysing the financials in depth is always the best thing to do, but I still wished there was something like PSG to help stock screening.


Here is my roundabout way to get to screen on P/S/G

FYI I use this site for a free screener and you can export the results to a csv file and save as an Excel workbook. Select your criteria, then your view fields and ' Run screener' and you will see the option to export to csv

You can export P/S and 5yr, 3 yr or 1 yr sales growth and create a formula in excel to get to P/S/G. You can then do sorts on that and return ytd etc to get the cheapest real top performers.

I select one simple criteria sales > 0 and it exports pretty well all the ~ 6,000+ US companies. Filtering on ROE or other variables delivers less results ( some good companies aren't profitable yet) Best free screener I have seen






Stock Screener Tool - Zacks Investment Research


Zacks Stock Screener is a best in class tool for helping you find the right stocks for your investment strategy.




www.zacks.com


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## MrBlackhill (Jun 10, 2020)

Thanks, I'll try that out! Do you also have a favorite screener for Canadian stocks?


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## Jimmy (May 19, 2017)

MrBlackhill said:


> Thanks, I'll try that out! Do you also have a favorite screener for Canadian stocks?


Zack's works great.

There aren't any great CDN ones. Here is a link to the old TMX Money screener. No access to this on the new pay site.

It only allows the largest 400 to be exported by assets for your search. What you can do is select by sector though to grab all the companies as each has less then 400 stocks usually . Set sales > 0 under 'Income statement' criteria. Once you run a screen hit 'Ctrl A' which will copy all the records then 'Ctrl V' to paste into Excel.





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TMX Money







web.tmxmoney.com


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## MrBlackhill (Jun 10, 2020)

I just reached +300% in less than 6 months with this stock. It's a momentum play, but so far, so good.


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## Jimmy (May 19, 2017)

MrBlackhill said:


> I just reached +300% in less than 6 months with this stock. It's a momentum play, but so far, so good.


I am looking at adding this at some stage too to the CDN portfolio. Do you think this will have decent growth over the next few years? Slowly adding some growth stocks. Just a little cautious w the 2nd wave of covid now.


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## MrBlackhill (Jun 10, 2020)

Jimmy said:


> I am looking at adding this at some stage too to the CDN portfolio. Do you think this will have decent growth over the next few years? Slowly adding some growth stocks. Just a little cautious w the 2nd wave of covid now.


I'd say I like the idea of telehealth and they are combining virtual & physical clinics. They are doing acquisitions, which is another thing I like. There is no doubt they can scale up a lot.

The CEO seems very good, he previously sold his fintech to PayPal for more than $300 million. They also have a big investor which is Li Ka-Shing.

Now at $8, the P/S seems a bit high even for a growth stock. It's on the hype of a momentum play, so I'd be cautious. And their revenue for this year hasn't grown as much as previously, which is another thing to watch closely.

So far, I don't know what to think of the current level. I was happy when it went up to $3 and plateaued. But then it climbed again and plateaued at $5. And then at $6.50. And now it's at $8. I truly expect a correction at some point, but so far it keeps climbing the stairs. I have no clue if it'll be at $10 by EOY or $6.

I entered at $2 because I got lucky to find that stock and it felt like it was a safe entry point and a good catch for the COVID situation. Now I'm just amazed. About the second COVID wave, I actually think it's good for healthcare sector and moreover for the telehealth industry. I also think the pandemic will be a game-changer for the telehealth industry in the following years. People will want to be able to do as much as possible from distance. That's also why I'm still pretty bullish on the tech sector.

I would suggest watching closely and taking only a small position. I entered WELL with a small position. Recall that this is a tiny company, it's at $1B cap at the moment, but it was only at $200M a year ago and its IPO was only 3 years ago. You can see their milestones and the details of their clinics and business on their website.


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## Jimmy (May 19, 2017)

MrBlackhill said:


> I'd say I like the idea of telehealth and they are combining virtual & physical clinics. They are doing acquisitions, which is another thing I like. There is no doubt they can scale up a lot.
> 
> The CEO seems very good, he previously sold his fintech to PayPal for more than $300 million. They also have a big investor which is Li Ka-Shing.
> 
> ...


Great. Thanks for the helpful in depth background and insights. I am looking at a few of these companies - Livongo is another and there is even an ETF now called EDOC that covers this growing industry. It will be a 2% type holding and I may go in 1/3 rds and average in. Good pt about the covid helping these stocks too. Hard part is waiting for a time to buy as they don't seem to have downturns or lulls lol.

Have been adding to ecommerce growth stocks over the past month after the little pullback and they have been doing amazing. SHOP,.ETSY , FSLY, SEA etc. FSLY is up 13+% today. Can't believe how well these are doing. And they , like WELL, have the revenue growth to support their multiples too.


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## doctrine (Sep 30, 2011)

So a billion dollar company with maybe $40M in sales and negative margins. I think the stock can probably go another 300% before it peaks. Meanwhile management can't seem to issue new shares quickly enough. Surely all that new money will be invested for great future profits.


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## Jimmy (May 19, 2017)

doctrine said:


> So a billion dollar company with maybe $40M in sales and negative margins. I think the stock can probably go another 300% before it peaks. Meanwhile management can't seem to issue new shares quickly enough. Surely all that new money will be invested for great future profits.


They have little earnings because they are investing everything back into the company's expansion through increased SG&A costs. That is what you do when your sales are growing 300+%/yr. You can see this if you study their I/s. Cash flow is a better measure of growth companies too vs accounting earnings btw. They are cash cows w growing cash flows. Avoiding taxes is also a good idea. 

They don't have -ve margins either. GP is +ve. Noone ever went broke making 300% on a stock in a year. Amazon had little earnings for a decade too so not sure why this is such an affront either.


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## doctrine (Sep 30, 2011)

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.


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## Jimmy (May 19, 2017)

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.


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## MrBlackhill (Jun 10, 2020)

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%.


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## doctrine (Sep 30, 2011)

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.


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## MrBlackhill (Jun 10, 2020)

doctrine said:


> 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.


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## MrBlackhill (Jun 10, 2020)

doctrine said:


> 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.


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## Jimmy (May 19, 2017)

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.


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## MrBlackhill (Jun 10, 2020)

Today, WELL.TO jumped about +15% to +20% as they acquired CRHM / CRH.TO (which jumped +80% because they've been bought at US$4 per share).

I'm currently up +375% since I bought WELL.TO at $2 by the end of April 2020.


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## Ponderling (Mar 1, 2013)

I am usually not into buying companies without earnings, but I put about 6k in the TFSA into this one at $6.90 per share. 
I got in on the premise that e-health solutions they were a part of were going to take hold in covid and stay going when this mess is in the past. 

And we own positions in the 4 largest pharma stocks, so a little guy might make the holdings a bit more interesting to check up on. 

Nice when others with deep pockets hop on my little position and decide to buy out another channel to grow into.


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