RE:RE:RE:CRH earnings release dateFrom a clarus report
Q1/15 Preview – First Full Quarter of Anesthesia
Services Revenue
We expect CRH Medical Corp. to report Q1/15 results on April 28th. The
quarter ended March 31st, 2015 will be the first full quarter CRH has
booked revenues from their Gastroenterology Anesthesia Services
business vertical. We outline our estimates for the quarter below. We
maintain our BUY rating and $5.25 per share price target.
Key Points
Q1/15 Estimates. We are expecting revenues of $10.1MM for the
quarter vs. consensus of $10.4MM. We forecast Q1/15 EBITDA
of $4.9MM vs consensus of $5.1MM and fully diluted EPS of
$0.03. For Q1/15 we estimate product sales of $2.31MM and
anesthesia services revenues of $7.75MM. Our anesthesia
services estimate is the sum of $7.61 from GAA (a full quarter of
booked revenues) and $0.14MM revenues from the small
acquisition announced March 02, 2015 (one month of booked
revenues). We highlight that Q1 is typically the weakest quarter
due to seasonality in both product sales and anesthesia services
revenues.
Revenues from anesthesia services will be the primary source
of growth. While product sales of the O’Regan system will
continue to contribute meaningfully to CRH’s top line, we see
revenues from anesthesia services accounting for 80% of the top
line through 2016YE. This assumes two additional acquisitions in
2H-2015 which cumulatively contribute $3.5MM in annual
EBITDA. We have refrained from forecasting any acquisitions in
2016 until we gain further clarity into how CRH executes on their
inorganic growth strategy (both in terms of frequency of
acquisitions and target size).
Valuation. We value CRH based on a 12x terminal 2016
EV/EBITDA multiple, a 10% discount rate and conservative
revenue estimates applied to our DCF. We assume a $1.25
USD/CAD exchange rate to arrive at our $5.25 per share target
price.