RE:ExcitementHope4Best779 wrote: from the stock price increase you would think the asset being purchased was fantastic. crh stock hasn't done anything in 5 years except for being sold today. There's a reason for that. They only made 3cents a share in 2019 and have lost money so far this year. I guess that's better than the profit at well. Stock market is way overpriced.
there's a huge Amortization component on the CRH Income Statement - look at their EBITDA and Free Cash Flow.
CRH provides anesthesia services to gastroenterologist doctors - they sign JV deals that have contracts with the doctors to provide the anesthesia as part of the doctors' colonoscopy services.
the contracts do have a finite life, but they are assumed to roll over at expiry given:
- CRH is a joint venture owner with the doctor in the anesthesia business. CRH typically buys a 51% interest and the doctor holds the minority share. this keeps the doctor incented.
- The doctor can't really "cancel" the anesthesia contract, as they would be cancelling on their own company
- Given the above, it's of the view that the non-cash Amortization of the contract should be added back