WellStar is growing fast, and the spin out should highlight this more than it being a fully-owned subsidiary. It recently raised $62M and is getting good institutional support already. It should bring out value to WELL, which of course has been languishing. However, its overall growth rate could slow, but this will be offset by its ownership in a newly public company. It will still benefit, moreso if WellStar gets a higher valuation in the market from being public. But much will depend on how much WELL keeps, and how well the subsidiary does once public. We do think it is a good move. WELL's potential we think is far higher than what investors are pricing in, with the stock down 43% this year despite still-good earnings growth outlooks. Still, nothing is guaranteed here. The split will create two smaller companies, and small caps can struggle in bad markets. WELL and its subsidiary need to execute and meet expectations to get better investor acceptance.
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