October 27, 2014

CRH Medical Announces Third Quarter 2014 Results

–       Company Reports Record Quarterly Revenue of $2.2 Million –

VANCOUVER, B.C. – October 27, 2014 – CRH Medical Corporation (TSX: CRH) (OTCQX: CRMMF), a North American medical company focussed on providing physicians with innovative products for the treatment of gastrointestinal diseases, today announced its unaudited financial results for its third quarter ending September 30, 2014. All financial results are expressed in U.S dollars.

Third Quarter Financial Highlights

(in 000’s of US$) Q3 2014 Q3 2013 Change 9-Month 2014 9-Month 2013 Change
Revenue

 

$2,200

 

$1,851

 

+19%

 

$6,238

 

$5,636

 

+11%

 

Total operating expenses

 

$1,570

 

$1,397

 

+12%

 

$4,545

 

$4,407

 

+3%

 

Income and comprehensive income before tax

 

$630

 

$454

 

+39%

 

$1,693

 

$1,229

 

+38%

 

Income tax

 

$210

 

 

 

$578

 

 

 

Net income and comprehensive income $420 $454 -7.5% $1,115 $1,229 -9.2%

 

“We are encouraged by our record third quarter revenue results,” said Edward Wright, Chief Executive Officer of CRH Medical. “We believe these results are primarily attributable to the improvements in our physicians training program that we implemented at the beginning of 2014.”

The Company’s product, the O’Regan System is a single use, disposable, hemorrhoid treatment that is safe and highly effective in treating hemorrhoid grades I – IV.  CRH Medical’s goal is to establish the O’Regan System as the standard of care for hemorrhoid treatment. In addition to the product, the Company delivers clinical, marketing and operational support directly to its partner physicians.

Third Quarter, 2014 Conference Call Notification

CRH Medical will host a telephone conference call to discuss the quarter on Tuesday, October 28, 2014 at 10 am ET. The telephone numbers for the conference call are (888) 231-8191 or (647) 427-7450.

At the call’s completion, an audio replay will be available by calling (855) 859-2056 or (416) 849-0833 and using passcode 13807405. The phone replay will be available until November 11, 2014.

 

Financial Results

Revenue

Revenue for the three months ended September 30, 2014 was $2,200,342 compared to $1,850,761 for the three months ended September 30, 2013. Revenue for the nine months ended September 30, 2014 was $6,237,782 compared to $5,636,098 for the nine months ended September 30, 2013.

The increase in revenue is the direct result of the Company’s continued successful execution in identifying, training and supporting gastroenterologists in their diagnosis and treatment of hemorrhoids. The CRH O’Regan System includes the Company’s hemorrhoid banding technology, treatment protocols, marketing and operational support.

As of September 30, 2014 the Company has trained 1,845 physicians to use the O’Regan System, representing 682 clinical practices. This compares to 1,575 physicians trained, representing 556 clinical practices, as of September 30, 2013.

In the future, the Company expects revenue from product sales to continue to increase as it expands its physician network and through increased physician use of its technology.

Expenses

Product sales expenses for the three months ended September 30, 2014 were $1,053,503 compared to $964,780 for the three months ended September 30, 2013. Product sales expenses for the nine months ended September 30, 2014 were $2,970,586 compared to $3,140,027 for the nine months ended September 30, 2013. For the nine months ending September 30, 2014 the decrease in product sales expenses is a result of the decrease in expenses related to the Company’s Clinical Sales Program which was scaled down during the fourth quarter of 2013.

Corporate expenses for the three months ended September 30, 2014 were $517,142 compared to $432,412 for the three months ended September 30, 2013. Corporate expenses for the nine months ended September 30, 2014 were $1,573,928 compared to $1,267,132 for the nine months ended September 30, 2013.

The increase in corporate expenses is a result of increased travel, corporate expenses, and increase in stock based compensation. Corporate expenses include non-cash stock based compensation and depreciation totaling $72,534 and $253,336 for the three and nine months ended September 30, 2014 compared to $34,262 and $115,372 for the three and nine months ended September 30, 2013. In the future, the Company expects corporate expenses of its current business to remain relatively constant.

Income and comprehensive income before tax

For the three months ended September 30, 2014 the Company recorded income and comprehensive income before tax of $629,697 compared to $453,569 for the three months ended September 30, 2013. For the nine months ended September 30, 2014 the Company recorded income and comprehensive income before tax of $1,693,268 compared to $1,228,939 for the nine months ended September 30, 2013.

Income tax expense

For the three and nine months ended September 30, 2014, the Company recorded income tax expense of $210,117 and $577,776 respectively. In 2013, the Company assessed that its Canadian entity will have future profitability and therefore recognized a deferred tax asset of $692,851. The tax expense for the current period reduces the deferred tax asset and does not represent a cash expense for the Company. In future periods, when the deferred tax asset is depleted, the Company will be required to pay taxes.

Net income and comprehensive income

For the three months ended September 30, 2014, the Company recorded net income and comprehensive income of $419,580 ($0.009 basic and diluted income per share) compared to a net income and comprehensive income of $453,569 ($0.009 basic and diluted income per share) for the three months ended September 30, 2013. Net income and comprehensive income for the three months ended September 30, 2014 includes income tax expense of $210,117 compared to $nil for the three months ended September 30, 2013.

For the nine months ended September 30, 2014, the Company recorded net income and comprehensive income of $1,115,492 ($0.023 basic and diluted income per share) compared to a net income and comprehensive income of $1,228,939 ($0.025 basic and diluted income per share) for the nine months ended September 30, 2013. Net income for the nine months ended September 30, 2014 includes income tax expense of $577,776 compared to $nil for the nine months ended September 30, 2013.

As at September 30, 2014, the Company had $8,621,266 in cash and cash equivalents compared to $6,602,798 at the end of 2013.

The Company’s September 30, 2014 financial report and corresponding MD&A will be available on www.sedar.com and the Company website at www.crhmedcorp.com.

 

 

About CRH Medical Corporation:

CRH Medical Corporation is a North American company focussed on providing physicians with innovative products for the treatment of gastrointestinal diseases. The Company’s product, the CRH O’Regan System, is a single-use, disposable, hemorrhoid treatment that is safe and highly effective in treating hemorrhoid grades I – IV. The O’Regan System is rapidly emerging as the standard of care with gastroenterologists who treat hemorrhoids. In addition to the product, CRH Medical delivers clinical, marketing and operational support directly to its partner physicians. CRH utilizes its web-based platform to connect doctors with patients as well as educating its ever increasing install base of physicians.

For more information, please contact:

Edward Wright, Chief Executive Officer

CRH Medical Corporation

604.633.1440 x1008

ewright@crhmedcorp.com

or

Adam Peeler, Media and Investor Relations

TMX Equicom

416.815.0700 x 225

apeeler@tmxequicom.com

 

Forward looking statements:

The information in this news release contains so-called “forward-looking” statements. These include statements regarding CRH Medical’s expectations and plans relating to its business, statements about CRH Medical’s expectations, beliefs, intentions or strategies for the future, which may be indicated by words or phrases such as “anticipate”, “expect”, “intend”, “plan”, “will”, “we believe”, “CRH Medical believes”, “management believes”, and similar language. All forward-looking statements are based on CRH Medical’s current expectations and are subject to risks and uncertainties and to assumptions made. Assumptions include: (i) that the growth of CRH’s product sales will continue in a consistent manner; (ii) CRH’s costs will not escalate significantly; and (iii) CRH does not incur any extraordinary costs.

Important risk factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include: (i) we may not continue to attract gastroenterologists and other licensed providers to purchase and use the CRH O’Regan System; (ii) our need for additional financing and our estimates regarding our capital requirements and future revenues and profitability; (iii) the policies of health insurance carriers may affect the amount of revenue the Company receives; (iv) our ability to successfully market and sell our products; (v) our estimates of the size of the potential markets for our products; (vi) we may be subject to competition and technological risk which may impact the price and amount of product we can sell; (vii) our ability to and the cost of compliance with extensive existing regulation and any changes or amendments thereto; (viii) changes within the medical industry and third-party reimbursement policies and our estimates of associated timing and costs with the same; (ix) changes in key United States federal or state laws, rules, and regulations; (x) our ability to establish, maintain and defend intellectual property rights in our products; (xi) our ability and forecasts of expansion and the Company’s management of anticipated growth; (xii) our senior management has been key to our growth and we may be adversely affected if we are unable to retain, conflicts of interest develop or we lose any key member of our senior management; (xiii) risks associated with manufacture of our products and our economic dependence on suppliers; (xiv) changes in the industry and the economy may affect the Company’s business (xv) evolving regulation of corporate governance and public disclosure may result in additional corporate expenses; (xvi) adverse events relating to our product could result risks relating to in product liability, medical malpractice, insurance and product recalls; (xvii) risks associated with use of our products in unapproved circumstances; (xviii) various risks associated with other legal, regulatory or investigative proceedings; (xixi) health and safety risks are intrinsic within our industry; (xx) our ability to successfully identify, evaluate and complete future transactions; and (xxi) risks associated with the trading of our common shares on a public marketplace. As a single product company, any adverse event directly or indirectly related to the CRH O’Regan System will have a material impact on the Company’s financial performance. CRH Medical bases its forward-looking statements on information currently available to it, and assumes no obligation to update them, except as required by law.

 

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