CRH Medical Announces 2016 Fourth Quarter And Year-End Results

Annual revenue increases by 70% and adjusted operating EBITDA by 73%

VANCOUVER, Feb. 22, 2017 /PRNewswire/ - CRH Medical Corporation (TSX: CRH) (NYSE MKT: CRHM) (the “Company”), today announced its financial results for the quarter and full fiscal year ended December 31, 2016.

This news release should be read in conjunction with the Company’s audited financial statements and management discussion and analysis for the years ended December 31, 2016 and 2015 that have been filed on SEDAR and are available at www.sedar.com and on the Company’s website at www.crhmedcorp.com

Except where otherwise indicated, all financial information discussed in this document is expressed in USD, represents 100% of the consolidated results of the Company, and includes both the Company’s interest in subsidiaries, as well as the interest of persons holding non-controlling interests in non-wholly owned subsidiaries of the Company.

Consolidated Financial Highlights

Edward Wright, Chief Executive Officer of CRH commented, “2016 was another excellent year for CRH. Building on the momentum of our first full year in the gastroenterology anesthesia space, our business grew significantly thanks to the five acquisitions we announced in 2015 and the integration of the three transactions we completed in 2016. This translated into a meaningful increase in patient cases, total revenue, and EBITDA.” Mr. Wright continued, “With over 2,400 physicians trained to date at more than 930 practices using our CRH O’Regan System, product sales grew and continue to make important contributions to our bottom line. After announcing our first anesthesia transaction of 2017 with another O’Regan client practice earlier this month, I am confident that our strategy to leverage our excellent relationships with gastroenterologists will continue to generate growth and increase shareholder value.”

Results of Operations Three Months and Year Ended December 31, 2016

Revenues for the year ended December 31, 2016 were $78,354,632 compared to $46,048,480 for the year ended December 31, 2015. Revenues for the three months ended December 31, 2016 were $25,822,103 compared to $13,927,531 for the comparable period in 2015. The increase in revenues is mainly attributable to revenue contributions from the anesthesia service businesses acquired by the Company in the first, third and fourth quarters of 2015 in addition to the acquisitions completed in June 2016.

Revenues from anesthesia services for the year ended December 31, 2016 were $67,821,879 compared to $36,496,035 for the prior year. Revenues for the three months ended December 31, 2016 were $23,008,147 compared to $11,329,699 for the three months ended December 31, 2015. As noted above, the increases are a result of the Company’s anesthesia acquisitions throughout 2015 and 2016. As a result, the periods presented are not directly comparable. The Company expects revenue from anesthesia services to continue to increase through organic growth in patient cases and deployment of available capital for future acquisitions.

For the twelve months ended December 31, 2016 there were no material changes in reimbursement rates for any of the payors related to our anesthesia business. There was, however in the first quarter of the year, a change in the payor mix in our GAA business as a result of the renewal process that individuals and companies go through each year in selecting their plans and providers. Changes in payor mix are normal, especially due to the nature of the renewal process, and such changes can have either a positive or negative impact on our revenues, or no impact at all on our business. With respect to GAA, the average revenue per case declined by 9% compared to 2015, which was offset by an increase in patient cases of 6%. The Company’s continued expansion of its anesthesia business has mitigated and is expected to continue to mitigate the effect these kinds of changes in payor mix can have on our financial results.

In the year ended December 31, 2016, the anesthesia services segment serviced 141,020 patient cases. In the fourth quarter of the year, the anesthesia services segment serviced 45,041 patient cases.

Revenues from product sales for the year ended December 31, 2016 were $10,532,753 compared to $9,552,445 for 2015. Product sales for the fourth quarter of 2016 were $2,813,956 compared to $2,607,832 for the fourth quarter of 2015. The increase in product sales is the result of the continuing successful execution of the Company’s direct to physician program that provides physicians the ability to purchase our hemorrhoid banding technology, treatment protocols, marketing, and operational experience. As of December 31, 2016 the Company has trained 2,414 physicians to use the O’Regan System, representing 930 clinical practices. This compares to 2,175 physicians trained, representing 811 clinical practices, as of December 31, 2015.

In the future, the Company expects revenue from product sales to continue to increase, as it has historically, as we expand our physician network and increase physician use of our technology.

For the year ended December 31, 2016, total adjusted operating expenses were $36,864,304 compared to $22,016,845 for the year ended December 31, 2015. Total adjusted operating expenses were $11,321,510 for the fourth quarter of 2016 compared to $6,674,324 for the fourth quarter of 2015. The increases in adjusted operating expenses are primarily related to adjusted operating expenses in the anesthesia services business. Factors impacting the fluctuation of total adjusted operating expenses are consistent with those impacting operating expenses.

Anesthesia services adjusted operating expenses for the year ended December 31, 2016 were $29,767,269, compared to $15,528,409 for 2015. In the fourth quarter of 2016, anesthesia adjusted operating expenses were $9,492,140 compared to anesthesia adjusted operating expenses of $5,061,037 in the fourth quarter of 2015. Anesthesia services adjusted operating expenses primarily include labor related costs for certified registered nurse anesthetists and MD anesthesiologists, medical drugs and supplies, and billing and management related expenses. The Company’s first anesthesia acquisition was in the fourth quarter of 2014, with further acquisitions completed in 2015 and in 2016. As a result, 2016 is not directly comparable to 2015, with the majority of the increase relating to operating expenses for acquired companies.

Product sales adjusted operating expenses for the year ended December 31, 2016 were $4,059,858 compared to $3,723,633 for the year ended December 31, 2015. For the fourth quarter of 2016, product sales adjusted operating expenses were $1,083,481 compared to $949,743 for the fourth quarter of 2015. The increase in product sales adjusted operating expenses compared to 2015 is a reflection of increased product cost and support, employee related costs and professional fees resulting from increased sales.

To read full press release, please click here.