RE:RE:RE:Normalized Earnings Analysis of CRH Medicalgreat analysis PSD. one metric you should look at for valuation is Enterprise Value/EBITDA multiple.
CRH's EV/EBITDA trading multiple has essentially been halved due to the uncertainty surrounding revenue per case and margin profile. CRH is trading at 6X-8X F2018 estimates depending on which analyst reports you read. other ASC operators and healthcare services (ie. Envision Healthcare) trade at an EV/EBITDA multiple of 10X-15X. granted, companies like Envision are considerably larger.
if you look at CRH results quarter-over-quarter there have been nice sequential increases to Revenues/EBITDA with a bit of a blip for Q2/2017. the market has knocked CRH down more than a few notches because of the uncertainty introduced by CMS coding changes. these changes have yet to play out in the financial statements. the stock is simply trading on (negative) future expectations. no one knows what F2018 will look like and it's clear the investment banking analysts can't accurately model what the CMS changes will actually look like. also note that CMS has yet to finalize their proposed rule re: F2018 coding (open for comments until Sept/2017 with final rule tabled a few months later).
in summation - if you believe in management, when CRH proves that their high margin cashflows can remain relatively intact and they will continue to roll-up additional EBITDA by way of acquisition, you could see the EV/EBITDA multiple revert back to historical norms. there is a huge runway for consolidation in the GI anesthesia space.
it wouldn't shock me either if a company like CRH was absorbed by a bigger player or a Private Equity firm given the depressed share price and the catalysts for growth.