VANCOUVER, B.C. – April 29, 2015 – CRH Medical Corporation (TSX: CRH) (OTCQX: CRMMF) (“CRH” or the “Company”), a North American medical company that provides physicians with innovative products and services for the treatment of gastrointestinal diseases, today announced its unaudited interim financial results for the quarter ended March 31, 2015. All financial results are expressed in U.S. dollars.
Q1 2015 Financial Highlights
(All amounts in US$)
|March 31,||March 31,|
|Operating expenses – adjusted2|
|Total operating expenses – adjusted2||4,526,649||1,300,561||248%|
|Total operating EBITDA2||5,093,001||690,663||637%|
|1||Based on historical information, the first quarter represents approximately 21% of the total annual revenue.|
|2||Non-IFRS Measure. Refer to page 4 of this document for reconciliation of reported results to non-IFRS measures.|
“The financial results for the first quarter of 2015 clearly demonstrate the financial transformation of CRH stemming from both the anesthesia services acquisition we announced on December 2, 2014 and the continued strong growth of the CRH O’Regan System. These results are even more impressive when you consider that the first quarter is historically the weakest quarter of the year for our businesses.”, said Edward Wright, Chief Executive Officer of CRH. Edward added, “the anesthesia services business line represents a significant growth opportunity for CRH and during Q1 2015 we confirmed two add-on anesthesia transactions. We believe that those two additional transactions represent the first of many more potential anesthesia related transactions for CRH, which we believe could have a significant impact on revenue and Operating EBITDA in the future.”
First Quarter 2015, Conference Call Notification
CRH Medical will host a telephone conference call to discuss the quarter on Wednesday, April 29, 2015 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 36237049. The phone replay will be available until May 13, 2015.
Q1 2015 Financial Results
Total revenues for the three months ended March 31, 2015 were $9,619,650 compared to $1,991,224 for the three months ended March 31, 2014.
Revenues from product sales for the quarter were $2,162,519 compared to $1,991,224 for the first quarter of 2014. The 9% increase in product sales is the result of the continuing successful execution of the Company’s direct to physician program that provides physicians the ability to purchase our hemorrhoid banding technology, treatment protocols, marketing and operational experience. As of March 31, 2015 the Company had trained 1,983 physicians to use the CRH O’Regan System, representing 730 clinical practices, which compares to 1,690 physicians trained, representing 609 clinical practices, as of March 31, 2014. Based on historical information, the first quarter of the year represents approximately 23% of total annual product revenue.
Revenues from anesthesia services were $7,457,131. This represents one month of activity from the Company’s most recent acquisition and three months of activity from its initial anesthesia services acquisition in December 2014. Based on historical information, the first quarter of the year represents approximately 21% of total annual anesthesia services revenue.
For the quarter ended March 31, 2015, total adjusted operating expenses were $4,526,649 compared to $1,300,561 for the first quarter of 2014, an increase of $3,226,088.
Product sales adjusted operating expenses for the quarter were $904,185 compared to $866,915 for the quarter ended March 31, 2014. The increase in expenses is a reflection of the increased sales in the quarter, offset by the Company’s decision, effective February 17, 2014, to begin invoicing customers for the 2.3% medical device excise tax. Prior to February 17, 2014 the Company was expensing the cost of the medical device excise tax. Product sales expenses primarily include employee wages, product cost and support, marketing programs, office expenses, professional fees, and insurance.
Anesthesia services adjusted operating expenses for the quarter ended March 31, 2015 were $2,984,159. Anesthesia services expenses primarily include labor related cost for the medical director and certified registered nurse anesthetists, medical drugs and supplies, and billing and management related expenses.
Corporate adjusted operating expenses for the quarter were $638,305 compared to $433,646 for the quarter ended March 31, 2014. This reflects a growth in expenses in 2015 of $204,659. The growth in corporate expenses is primarily the result of an increase in employee related costs and professional fees and, in general, is reflective of the additional activities incurred in support of the Company’s expanded service offering.
Operating EBITDA for the quarter was $5,093,001, an increase of $4,402,338. This is primarily a reflection of the Company’s newly acquired anesthesia service providers offset by net increases in product and corporate operating expenses.
The Company’s March 31, 2015 financial report and corresponding MD&A are available on www.sedar.com and the Company’s website at www.crhmedcorp.com.
About CRH Medical Corporation:
CRH Medical Corporation is a North American company that provides physicians with innovative products and services for the treatment of gastrointestinal diseases. The Company’s product distribution strategy focuses on physician education, patient outcomes, and patient awareness. The Company’s first product, the CRH O’Regan System, is a single use, disposable, hemorrhoid banding technology that is safe and highly effective in treating hemorrhoid grades I – IV. CRH distributes the CRH O’Regan System, treatment protocols, operational and marketing expertise as a complete, turnkey package directly to physicians, allowing CRH to create meaningful relationships with the physicians it serves. CRH also operates full service gastroenterology anesthesia services businesses, which provide anesthesia services for patients undergoing endoscopies and colonoscopies. Performing these procedures under anesthesia makes these procedures more comfortable for patients and allows gastroenterologists to perform more procedures than in the absence of anesthesia. CRH expects to leverage the capabilities it acquired through these gastroenterology anesthesia companies to consolidate the highly fragmented gastroenterology anesthesia provider business. The Company’s goal is to establish CRH as the premier provider of innovative products and essential services to gastroenterologists throughout the United States.
For more information, please contact:
Edward Wright, Chief Executive Officer
CRH Medical Corporation
Richard Bear, Chief Financial Officer
CRH Medical Corporation
This press release makes reference to certain non-IFRS measures. These non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. When used, these measures are defined in such terms as to allow the reconciliation to the closest IFRS measure. These measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analyses of the Company’s financial information reported under IFRS. Management uses non-IFRS measures such as operating expenses – adjusted and operating EBITDA to provide investors with a supplemental measure of the Company’s operating performance and thus highlight trends in the Company’s core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, and to assess its ability to meet future debt service, capital expenditure, and working capital requirements.
The non-IFRS measures are reconciled to reported IFRS figures in the tables below:
|$USD||Q1 2015||Q1 2014|
|Total Operating EBITDA||5,093,001||690,663|
|Stock based compensation||(342,693)||(110,218)|
Operating expenses – adjusted
|$USD||Q1 2015||Q1 2014|
|Product sales operating expense – adjusted||904,185||866,915|
|Stock based compensation||135,502||30,769|
|Product sales expense||1,040,336||904,903|
|Anesthesia services operating expense – adjusted||2,984,159||–|
|Stock based compensation||2,339||–|
|Anesthesia services expense||4,389,083||–|
|Corporate operating expenses – adjusted||638,305||433,646|
|Stock based compensation||204,852||79,449|
|Total operating expense – adjusted||4,526,649||1,300,561|
|Total operating expense||6,299,992||1,428,900|
Forward looking statements:
Information included or incorporated by reference in this press release may contain forward-looking statements. This information may involve known and unknown risks, uncertainties, and other factors which may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “plan,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. Readers are cautioned regarding statements discussing profitability; growth strategies; anticipated trends in our industry; our future financing plans; and our anticipated needs for working capital. Forward looking statements in this press release include statements regarding additional acquisitions, increasing revenue and operating EBITDA, continued growth of our business and leveraging our capabilities. Actual events or results may differ materially from those discussed in forward-looking statements. There can be no assurance that the forward-looking statements currently contained in this press release will in fact occur. The Company bases its forward-looking statements on information currently available to it, and assumes no obligation to update them. The Company disclaims any intent or obligations to update or revise publicly any forward-looking statements whether as a result of new information, estimates or options, future events or results or otherwise, unless required to do so by law.
Forward-looking information reflects current expectations of management regarding future events and operating performance as of the date of this document. Such information involves significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in forward-looking information, including, without limitation: our need for additional financing and our estimates regarding our capital requirements, future revenues and profitability; unfavourable economic conditions could have an adverse effect on our business; risks related to the Company’s credit facilities; the policies of health insurance carriers may affect the amount of revenue the Company receives; our ability to successfully market and sell our products and services; our estimates of the size of the potential markets for our products and services; we may be subject to competition and technological risk which may impact the price and amount of product we can sell and nature of services we can provide; our ability to and the cost of compliance with extensive existing regulation and any changes or amendments thereto; changes within the medical industry and third-party reimbursement policies and our estimates of associated timing and costs with the same; changes in key United States federal or state laws, rules, and regulations; our ability to establish, maintain and defend intellectual property rights; risks related to U.S. antitrust regulations; risks related to record keeping and confidentiality by our affiliated physicians; our ability to recruit and retain qualified physicians to provide our services; our ability to enforce non-competition covenants of any departed physicians; risks related to corporate practice of medicine and our ability to renew and maintain agreements with anesthesiologists and other contractors; risks related to our ability to renegotiate, renew or replace services agreements under which we provide anesthesia services; risks related to changes in regulations that would necessitate adapting or re-negotiating our existing operating agreements; our ability and forecasts of expansion and the Company’s management of anticipated growth; 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 with or we lose any key member of our senior management; risks associated with manufacture of our products and our economic dependence on suppliers; changes in the industry and the economy may affect the Company’s business; risks related to the competitive nature of the medical industry; evolving regulation of corporate governance and public disclosure may result in additional corporate expenses; adverse events relating to our product or services could result risks relating to in product liability, medical malpractice, other legal claims, insurance, product recalls and other liabilities; risks associated with use of our products in unapproved circumstances; various risks associated with legal, regulatory or investigative proceedings; health and safety risks are intrinsic within our industry; our ability to successfully identify evaluation and complete future transactions; anti-takeover provisions create risks related to lost opportunities; we may not continue to attract gastroenterologists and other licensed providers to purchase and use the CRH O’Regan System or to provide our services; risks associated with the trading of our common shares on a public marketplace; risks related to adverse movements in foreign currency exchange rates; and risks related to maintaining our foreign private issuer status.
Although the GAA acquisition has diversified the Company’s revenue sources, any adverse event directly or indirectly related to the CRH O’Regan System will have a material impact on the Company’s financial performance. In addition, there is a risk that some or all of the expected benefits from the GAA acquisition will not be realized, and risks associated with the integration of the GAA business, as planned.