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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: CRH Medical dropped >28% on Friday. I see they repaid their loan to Crown Capital as planned and have taken out a new credit facility (to 2020), reducing their interest expenses from 12% to 2.5% and providing cheaper capital for a future acquisition (3.5%), http://investors.crhsystem.com/1881-2/.

This would seem to be a big positive - quite apart from the recent re-imbursement issue which doesn't seem to realistically reflect the actual impact of any changes (i.e. is more benign than the market has anticipated).

So why the 28% drop? I got in at $4.47 - your advice, please? I'm tempted to buy more but I am/ should be an income investor (ha!).

Thanks as always,
Heather
Read Answer Asked by Heather on July 17, 2017
Q: TD Waterhouse Action Notes Summary Report dated July 7 2017 about "Questions regarding the sustainability of CRH's reimbursement rates have contributed to a two month slide in CRH's stock."
Here's the meat of it.
" We expect a relatively benign outcome to the 2018 fee schedule, partly because of CRH's limited exposure to CMS funding. Our sensitivity analysis indicates that a 5% cut in the Medicare reimbursement fee could cost CRH ~1% in adjusted EBITDA. ....
CRH has limited exposure to MEDICARE- We expect CRH's operating performance to be largely insulated from CMS for two reasons. First, Medicare only represents 10 to 15 % of CRH's revenues. Second, CRH's dominant payers (the private insurers) employ different reimbursement protocols from Medicare. We estimate that commercial payers reimburse the 00810 code at 3X-4X the rate of government payers.
TD Investment Conclusion
We are maintaining our buy rating but reducing our target price to $10.50 (was $12).
Our rating is based on three considerations: 1) leadership in a defensive, growing segment of the U.S. healthcare services market: 2) high margin cash flow streams and: 3) expansion opportunities within CRH's core anesthesiology market.
Hope this soothes a bit!
Read Answer Asked by Clarence on July 15, 2017
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Read Answer Asked by Kel on July 14, 2017
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Paul
Read Answer Asked by Paul on July 14, 2017
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Thank you and thanks for providing this great service
Read Answer Asked by James on July 14, 2017
Q: Hi there

Any ideas for the big drop in CRH Medical today.

Much thanks

Stuart
Read Answer Asked by Stuart on July 14, 2017
Q: CRH is getting hit hard this morning. Why ? Is it our Short Sellor again ? RAK
Read Answer Asked by bob on July 14, 2017
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