CRH Medical’s consolidation strategy is working, says Clarus

CRH Medical (CRH Medical Stock Quote, Chart, News: TSX:CRH) is proving it has the touch when it comes to M&A, says Clarus Securities analyst Noel Atkinson.

Yesterday, CRH reported its Q1, 2016 results. In the first quarter, the company earned $3.0-million on revenue of $13.8-million, a 43.8 per cent topline bump over the same period last year.

“We are pleased with our financial performance from the first quarter, and the fundamentals of our business remain extremely strong, which is facilitating our ability to grow,” said CEO Edward Wright. “We are actively engaging physicians in meaningful discussion regarding the benefits of partnership with CRH and we believe that our message is resonating with our intended audience.”

Atkinson says the quarter was better than he expected and was powered by the fact that CRH is demonstrating the ability to get the most out of its acquisitions.

“CRH beat our revenue forecast and met our Operating EBITDA estimate before minority interests in Q1/16, but outperformance of more recent acquisitions (that are less than 100% owned) led to Operating EBITDA to shareholders being slightly below forecast,” says the analyst. “However, Q1 and Q4/15 both showed that management looks to be quickly achieving and sustaining the expected uplift in revenue and profitability of acquired practices. This is a very positive trend given CRH’s growth strategy of acquiring smaller competitors and boosting their performance via shifting the back office to their more capable and efficient platform.”

In a research update to clients today, Atkinson maintained his “Buy” rating and one-year target of $6.50 on CRH Medical.

More Cantech Health