TD comments on earningsKey highlights of CRH's Q4/18 results include: 1) Revenue and EBITDA outperformance; 2) 49.6% adj. EBITDA margin; and 3) continued business development activity. Q4/18 revenue grew 4.8% y/y to $32 million; ahead of TD and consensus estimates of $30.1 million and $31.5 million respectively. Overall growth was primarily driven by five acquisitions completed in 2018. Overall growth is inclusive of a 9% drag related to the January 2018 CMS reimbursement cut, and a 5% drag attributable to "contract migration". Q4/18 adj. EBITDA was $15.9 million, well ahead of TD and consensus estimate of $14.2 million and $14.7 million. Conference Call — Thursday, March 14, 10:00 a.m. ET; call-in number: 1-800-319-4610. Impact: POSITIVE
Acquisitions Drive Growth — Anesthesia revenue grew 5.3% y/y to $28.9 million in Q4/18, largely driven by acquisitions completed in 2018. CRH acquired ~$17.6 million in annualized revenues in 5 transactions in 2018. In addition, the company announced another acquisition in Jan. 2019. In our view, CRH appears to be well positioned to continue expanding through acquisition. As of December 30, 2018, CRH had $9.9 million in cash and $70.3 million in debt; reflecting a net debt/ EBITDA position o f ~1.7x. The company had approximately $30 million available on its credit facility.
A Return to Organic Growth in 2019 — Corporate revenues grew 4.8% y/y during Q4/18; and the company completed 81.5K anesthesia cases during the quarter. Revenue per case declined ~14% from the 2017 average to $355; slightly below Q3/18 level. With a full year of the CMS price cut now behind, CRH should be able to return to organic revenue growth in 2019.
They still have a target price of 5.50$