CRH Medical’s (CRH Medical News, Stock Quote, Chart TSX:CRH) second quarter results are a sneak peek at even better things to come says Beacon Securities analyst Doug Cooper.
ON Wednesday, CRH reported its Q2, 2019 results. The company earned (US) $1.6-million on revenue of $30.5-million
“Our 2019 Q2 results show solid revenue and corresponding EBITDA growth, reflecting the hard work of our entire team at CRH,” CEO Dr. Tushar Ramani said. “Further, we are pleased to report shareholder level EBITDA of $9.7 million for the quarter.” Dr. Ramani added, “Executing on current initiatives, CRH is poised to further build on this growth, heading into the second half of 2019 and beyond.”
Cooper says the quarter topped his expectations. He summarized the Q2.
“Growth was driven by the anesthesia segment, which grew 14% y/y ($28m v/s $24.7m) and was driven by acquisitions executed over the course of the past year and organic growth of ~3%. Product sales of $2.5 million were essentially flat y/y.”
The analyst he thinks the second half of 2019 and fiscal 2020 will be even stronger for CRH.
“The company maintained its view, supported by its current funnel, that it will spend $35m on acquisitions this year,” Cooper notes. “YTD it has spent $11.4m. Assuming it spends $23.6m in 2H19, that could add $5m of annualized EBITDA heading into FY20 (+12%). To fund such deals, CRH has $33m of debt availability and generates $5.5m of FCF per quarter. Such an M&A strategy remains a core tenet of its growth strategy. In fact, CRH is working on a new credit facility, which it expects could be in place by the end of August. Its current facility is for $100m with Scotiabank (libor + 225bp). We would not be surprised to see a larger facility at a lower cost.”
CRH Medical Stock has big upside, the analyst says
In a research update to clients today, Cooper maintained his “Buy” rating and one-year price target of $6.00 on CRH, implying a return of 111 per cent at the time of publication.
Cooper thinks the company will post EBITDA of $41.2-million on revenue of $131-million in fiscal 2019. He expects those numbers will improve to EBITDA of $42.5-million on a topline of $135.2-million the following year.