Merry Xmas Investors! :( VANCOUVER, BC, Dec. 22, 2020 /PRNewswire/ - CRH Medical Corporation ("CRH", or the "Company") (TSX: CRH) (NYSE MKT: CRHM) announces that it has received notice today that its largest customer, United Digestive ("UD"), does not intend to renew its professional services agreements pursuant to which CRH provides anesthesia services to 12 of UD's surgery centers in the Greater Atlanta Georgia market. UD represents a significant portion of CRH's revenue, and is expected to represent approximately 20% of adjusted operating shareholder EBITDA ("EBITDA") in 2021. The current professional services agreements are scheduled to expire on October 31, 2021, meaning that the non-renewal will become effective sometime thereafter, such that the effect on CRH's financial results will be seen beginning in 2022.
CRH has been in negotiations with UD for several months and until recently believed that a new agreement would be reached for an ongoing business relationship. The Company intends to continue discussions with UD regarding a new agreement, but it is not clear that an agreement will be reached on terms acceptable to the Company or at all.
"CRH assumed most of these professional service agreements upon our acquisition of Gastroenterology Anesthesia Associates in 2014," said Tushar Ramani, CEO. "We have since changed our partnership model and have developed an entire anesthesia business apart from this initial acquisition, to the point where UD represents a smaller, albeit important, part of our business today. We believe that we can replace much of this EBITDA through acquisitions and organic growth throughout 2021, and mitigate the potential financial impact in 2022. We are thankful for the opportunity to have served UD's patients over the last six years, and are committed to an orderly transition, if needed, at the end of the current agreement."