VANCOUVER, B.C. – July 30, 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 second quarter, ended June 30, 2014. All financial results are expressed in U.S dollars.
Second Quarter Financial Highlights
|(in 000’s of US$)||Q2 2014||Q2 2013||Change||6-Month 2014||6-Month 2013||Change|
|Total operating expenses||$1,544||$1,448||+7%||$2,974||$3,010||-1%|
|Income and comprehensive income before tax||$501||$502||–||$1,064||$775||+37%|
|Net income and comprehensive income||$328||$502||-35%||$696||$775||-10%|
“CRH Medical is focussed on consistently growing top-line revenue and we continued to deliver that growth in the second quarter of 2014 compared to the same period in 2013,” said Edward Wright, Chief Executive Officer of CRH Medical. “We also strengthened our cash position with $7,962,731 in cash and cash equivalents in the bank at the end of the second quarter of 2014, compared to $6,602,798 at the end of 2013.”
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.
Revenue for the three months ended June 30, 2014 was $2,046,216 compared to $1,949,555 for the three months ended June 30, 2013. For the six months ended June 30, 2014, revenue was $4,037,440 compared to $3,785,337 for the six months ended June 30, 2013. The increase in product sales revenue is the result of the Company’s sales of its CRH O’Regan System direct to gastroenterologists.
Product sales expenses for the three months ended June 30, 2014 were $939,806 compared to $1,016,669 for the three months ended June 30, 2013. For the six months ended June 30, 2014, product sales expenses were 1,844,709 compared to $2,175,247 for the six ended June 30, 2013.
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. Also contributing to the decrease in product sales expenses is 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. Product sales expenses also include non-cash stock based compensation and depreciation totaling $22,417 for the three months ended June 30, 2014 compared to $41,098 for the three months ended June 30, 2013. In the future, the Company expects to continue to invest in activities to increase demand for trainings and use of the CRH O’Regan System.
Corporate expenses for the three months ended June 30, 2014 were $605,163 compared to $431,041 for the three months ended June 30, 2013. The increase in corporate expenses is a result of increased professional fees and an increase in stock based compensation. Corporate and other expenses include non-cash stock based compensation and depreciation totaling $90,451 for the three months ended June 30, 2014 compared to $37,518 for the three months ended June 30, 2013. In the future, the Company expects corporate expenses of its current business to remain relatively constant.
For the three months ended June 30, 2014 the Company recorded tax expense of $173,726. In 2013, the Company assessed that the 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.
For the three months ended June 30, 2014, the Company recorded net income of $327,523 ($0.007 basic and diluted income per share) compared to a net income of $501,846 ($0.01 basic and diluted income per share) for the three months ended June 30, 2013. Net income for the three months ended June 30, 2014 includes income tax expense of $173,724 compared to $nil for the three months ended June 30, 2013.
As at June 30, 2014, the Company had $7,962,731 in cash and cash equivalents compared to $6,602,798 at the end of 2013. At June 30, 2014, working capital was $8,729,821 compared to working capital of $7,399,110 as at December 31, 2013.
The Company’s June 30, 2014 financial report and corresponding MD&A will be available on www.sedar.com and the Company website at www.crhmedcorp.com.
Second Quarter, 2014 Conference Call Notification
CRH Medical will host a telephone conference call to discuss the quarter on July 31, 2014 at 10:00 am Eastern Time. 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 79425775. The phone replay will be available through August 14, 2014.
About CRH Medical Corporation:
CRH Medical Corporation is 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
Adam Peeler, Media and Investor Relations
416.815.0700 x 225
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. Evolving regulation of corporate governance and public disclosure may result in additional corporate expenses; (xv) adverse events relating to our product could result risks relating to in product liability, medical malpractice, insurance and product recalls; (xvi) risks associated with use of our products in unapproved circumstances; (xvii) various risks associated with other legal, regulatory or investigative proceedings; (xviii) health and safety risks are intrinsic within our industry; (xix) our ability to successfully identify, evaluate and complete future transactions; (xx) 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.