Canaccord Is Positive On CRH Medical's Acquisition Of Arapahoe

Canaccord Genuity provided its opinion on the announced acquisition of Arapahoe Gastroenterology Anesthesia Associates (AGAA), which provides anesthesia services to one ambulatory surgery center (ASC) in Littleton, Colorado, by CRH Medical Corp (NYSE: CRHM).

The analysts stated their positive outlook on this acquisition, mentioning two reasons:

1. AGAA is an existing O'Regan System customer, which reinforces their thesis that the current customer base will provide fruitful M&A opportunities.

2. The transaction builds on the recently announced June 16 acquisition to surpass their previously assumed acquisition estimates.

"We are also encouraged by the entry into Colorado, a new state for CRHM on the anesthesia services side of the business. With a strong pipeline for M&A, approx. $30 million remaining in purchasing power and strong FCF, we believe the company is well positioned for continued growth via M&A," wrote Canaccord.

The analysts expect this acquisition to contribute annualized adjusted EBITDA and adjusted EPS of $0.7 million and $0.01, respectively, taking into account AGAA's estimated annualized revenues of $2.6 million and an assumed margin of 53.5 percent.

According to the analysts, the acquisition price is around $2.8million–$3.5million, which is based on the company's stated acquisition range of 4.5x–5.0x adjusted EBITDA.

At time of writing, CRH Medical was trading up 0.51 percent on the day at $3.94.