January-March 2017

Dear Shareholders and Prospective Shareholders,

We are off to a good start in 2017, after reporting solid financial and operational results for the full-year 2016 on February 23. Here are a few highlights of our 2016 achievements:

  • We invested $34.1 million to complete three anesthesia transactions, expanding our presence to Texas, Massachusetts and Colorado. At year-end, we had exclusive contracts with 25 ASCs in seven states
  • We increased consolidated revenues to $78.4 million, up 70% from 2015
  • We increased adjusted operating EBITDA to $41.5 million, up 73% from 2015
  • We generated $23.2 million in free cash flow, up 92% from 2015
  • At year-end we had trained 2,414 physicians to use the O’Regan System, at 930 practices

Please visit our website to view our year-end 2016 Financial Report and a transcript of the corresponding conference call.

Recent Anesthesia Transactions

In 2017, we expect to maintain the momentum we have built up in the past two years and we have already completed two transactions that are both cash flow, and EBITDA accretive to us.

  • On February 1, we announced a transaction whereby we acquired a 51% interest in DDAB, an anesthesia practice in Decatur, Georgia. This practice has one ASC under contract and we paid a consideration of US$4.09 million cash. We estimate that this transaction will generate revenues of approximately $3.2 million annually.
  • On March 15, we announced a transaction whereby we acquired a 60% interest in an anesthesia practice in Kissimmee, Florida. This practice has one ASC under contract and we estimate that it will contribute total annual revenues of approximately $2.2 million. The transaction’s consideration and other relevant details will be reported in our 2017 first quarter results.

With these two acquisitions, CRH anesthesia has completed 11 acquisitions in the GI anesthesia space and now has 27 GI ASCs under contract in the USA.

Monitored Anesthesia Care (“MAC”, or “Deep Sedation”) Development Program

Concurrently with the Kissimmee acquisition, we announced that we reached an agreement with Puget Sound Gastroenterology, a GI practice with four ASCs in Washington State, to develop our first MAC program.  CRH will set up and manage all of the aspects of this new Deep Sedation anesthesia program, including recruitment of medical staff, clinical and practice management, set up of quality control programs, and management of billing and collections systems. The contract gives us the exclusive option to purchase a 51% interest in the new anesthesia business at a later date, no sooner than 12 months.

This is a very exciting new initiative, which we believe has enormous potential for us, as it does not only provide us with the opportunity to build an anesthesia practice from the ground up following our own business model and standards, but it also serves as an excellent opportunity to engage other GI practices that currently do not use deep sedation as their standard of care. We estimate that approximately 50% of the endoscopic procedures in the US are currently not performed under deep sedation and we believe that this program has the potential to greatly expand our pipeline of acquisition targets. It is important to note that in the meantime, and until at least 12 months from the date of the transaction, we will not incur any expenses for this MAC program and it will not contribute any material revenue to us.

Analyst Coverage

We are glad that the following Canadian institutions have added CRH to their coverage universe during the first quarter of 2017:

Other institutions currently covering CRH are Acumen Capital, Beacon Securities, Bloom Burton & Co., Canaccord Genuity, Cantor Fitzgerald, CIBC, Clarus Securities, Cormark Securities, and RBC Capital Markets.

January-March Marketing

We continue to actively engage investors and educate them on our story. Our CEO, Edward Wright, and our CFO Richard Bear participated in two non-deal roadshows during the first quarter. In late January, they met with investors in Eastern Canada. This was followed by another non-deal roadshow in late February/early March, when they met with investors in Western Canada. Investor interest remains strong and we will continue to reach out to both institutional and retail investors in the US and Canada.

Upcoming Events

Our scheduled marketing activities for the remainder of 2017 include our participation in Health Care Investor Conferences organized by Bloom Burton & Co. in May, Canaccord in August, and Cantor Fitzgerald in September. We will keep you informed as we add other events to our calendar. We will also conduct non-deal roadshows and sales desk presentations throughout the US and Canada.

Finally, we will announce our Q1 2017 operating and financial results in late April. We will issue a news release in the coming weeks to inform you of the announcement date and the ensuing conference call.

As more details of these events become available, we will post them in the “Events” section of our website.

If you have any questions or comments please feel free to email me at ir@crhmedcorp.com.


Kettina Cordero

Kettina Cordero
Director, Investor Relations
CRH Medical Corporation
T: 800.660.2153  x1030  |  F: 604.633.1443
E:  kcordero@crhmedcorp.com  |  W: www.crhmedcorp.com

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