CRH positives - former shareholderhi guys - long time CRH shareholder here. at first blush this looks like it was a little rich for WELL shareholders, but there is a HUGE amount of hidden value in CRH Medical. let me explain.
- F2019 revenues of $120MM
- F2019 FCF of $29MM
- CRH has 2 business lines - product sales (a hemmerhoid removal product - nominal amount of overall revenues) and gastro anesthesia service business (lion's share of revenues)
- Both segments are very high margin businesses from an Adj EBITDA standpoint
- The anesthesia business is self-funded and has a HUGE runway for growth. They use the business' FCF and a cheap credit line to acquire JV interests in anesthesia services businesses across the country. They are the only public issuer that focuses on the gastro anesthesia business.
- The anesthesia business is highly fragmented and mostly comprised of small, regional groups owned by the GI doctors themselves.
- Divesting of the anesthesia business to CRH represents a huge win for the doctors who own this part of their practices - one, it's a liquidity event and puts a few million in their pockets, and two - it lessens the administrative burden of BILLING which apparently is a huge pain for the doctors to manage. the management of billing is a huge value proposition by CRH to the doctors.
- CRH's current EBITDA disregards the growth prospects in the anesthesia business. They typically deploy $25MM-$30MM every year and acquire at 5X EBITDA.
- EBITDA Margins are high at ~40%+.
- In 2020 CRH hired a new head of product sales - this business only does ~$10MM in Revenues and they estimate they could grow this to ~$100MM given the size of the market.
here's the most recent investor deck which gives some more insights. happy to chat further on the name.
https://investors.crhsystem.com/wp-content/uploads/CRH_Medical_InvestorDeck_November2020-1.pdf