CRH MEDICAL CORPORATION The following discussion should be read in conjunction with the attached financial statements and notes thereto. The Company prepares its financial statements in accordance withU.S. generally accepted accounting principles ("U.S. GAAP"). This Annual Report on Form 10-K, including the following section, contains forward-looking statements within the meaning of theU.S. Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those expressed or implied by such forward-looking statements. For a detailed discussion of these risks and uncertainties, see Item 1A, "Risk Factors" of this Annual Report on Form 10-K. We caution the reader not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date of this Annual Report on Form 10-K. We undertake no obligation to update forward-looking statements which reflect events or circumstances occurring after the date of this Annual Report on Form 10-K, except as required by law. Throughout this discussion, unless the context specifies or implies otherwise, the terms "CRH," "we," "us," and "our" refer toCRH Medical Corporation and its subsidiaries.
Overview
CRH is a North American company focused on providing GIs with innovative services and products for the treatment of GI diseases. In 2014, CRH acquired a full service gastroenterology anesthesia company, GAA, which provides anesthesia services for patients undergoing endoscopic procedures. CRH has complemented this transaction with thirty-one additional acquisitions of GI anesthesia companies since GAA. According to theCDC , colorectal cancer is the second leading cause of cancer-related deaths inthe United States and recent research indicates that the incidence of colon cancer in young adults is on the rise. TheCDC has implemented campaigns to raise awareness of GI health and drive colorectal cancer screening rates among at risk populations. Colon cancer is treatable if detected early and screening colonoscopies are the most effective way to detect colon cancer in its early stages. Anesthesia-assisted endoscopies are the standard of care for colonoscopies and upper endoscopies. CRH's goal is to establish itself as the premier provider of innovative products and essential services to GIs throughoutthe United States . The Company's CRH O'Regan System distribution strategy focuses on physician education, patient outcomes, and patient awareness. The O'Regan System is a single use, disposable, hemorrhoid banding technology that is safe and highly effective in treating hemorrhoid grades I - IV. CRH distributes the CRH O'Regan System, treatment protocols, operational and marketing expertise as a complete, turnkey package directly to physicians, allowing CRH to create meaningful relationships with the physicians it serves. The Company has financed its cash requirements primarily from revenues generated from the sale of its product directly to physicians, GI anesthesia revenue, equity financings, debt financing and revolving and term credit facilities. The Company's ability to maintain the carrying value of its assets is dependent on the evolving COVID-19 pandemic and the easing of related governmental restrictions and on the Company successfully marketing its products and services, obtaining reasonable rates for anesthesia services and maintaining future profitable operations, the outcome of which cannot be predicted at this time. The Company has also stated its intention to acquire or develop additional GI anesthesia businesses. In the future, it may be necessary for the Company to raise additional funds for the continuing development of its business plan, including additional acquisitions.
Recent Events
FDHS Startup Joint Venture -
On
OnFebruary 9, 2021 , a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire a 100% interest inOak Tree Anesthesia Associates LLC ("OTAA" or "Oak Tree:), a gastroenterology anesthesia services provider inNew Jersey . The purchase consideration, paid via cash, for the acquisition of the Company's 100% interest was$3,250,000 plus acquisition costs of$66,182 . The provisional cost allocated to the exclusive professional services agreement which was acquired as part of this acquisition is$3,316,182 . 47
--------------------------------------------------------------------------------
Acquisition by WELL Health -
OnFebruary 6, 2021 , the Company signed a definitive arrangement agreement (the "Arrangement Agreement") with Well Health Technologies Corp ("WELL Health " or "WELL"), pursuant to which WELL Health will acquire all of the issued and outstanding shares of CRH forUS$4.00 per share (the "Acquisition" or the "Arrangement"). The Acquisition, which is to be carried out by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia ), will require the approval of: (i) two-thirds of the votes cast by shareholders of the Company; and (ii) two-thirds of the votes cast by shareholders, holders of stock options and holders of restricted share units, voting together as single class. The Company's directors and officers, holding an aggregate of approximately 2.1% of the outstanding common shares of the Company, have each entered into voting support agreements to vote their shares in favor of the Acquisition. Completion of the Acquisition will also be subject to court and regulatory approvals and clearances, as well as other customary closing conditions. Subject to the satisfaction of such conditions, the Acquisition is expected to be completed during the second quarter of 2021. The Arrangement Agreement contains certain customary provisions, including covenants in respect of non-solicitation of alternative acquisition proposals, a right to match any superior proposals for WELL Health and a termination fee of$10 million payable to WELL in certain circumstances. The Arrangement Agreement also provides for a reverse termination fee of$10 million payable to CRH in the event of certain breaches of a representation, warranty or covenant by WELL Health.
GAA Contract Non-Renewal & Subsequent Management Services Agreement - December 2020/February 2021
OnDecember 22, 2020 , the Company received notice that United Digestive ("UD") did not intend to renew its professional services agreements pursuant to which the Company provides anesthesia services to 12 of UD's surgery centers in theGreater Atlanta, Georgia markets. The agreements are scheduled to expire onOctober 31, 2021 . The Company acquired most of the professional services agreements upon acquisition ofGastroenterology Anesthesia Associates LLC ("GAA") in 2014 and at the time of acquisition estimated a useful life of 12 years. Revenue earned under these agreements represents a significant portion of the Company's revenue; in 2020 GAA revenue represented approximately 17% of total anesthesia revenue earned.
Subsequently on
As a result of the non-renewal of the GAA professional services agreements, the
Company recorded an impairment loss of
OnDecember 14, 2020 , a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire a 51% interest inFDHS Anesthesia Associates LLC ("FDHS"), a gastroenterology anesthesia services provider inFlorida . The purchase consideration, paid via cash, for the acquisition of the Company's 51% interest was$2,840,000 plus acquisition costs of$81,555 . The cost allocated to the exclusive professional services agreement which was acquired as part of this acquisition is$5,728,541 .
CRH's start-up joint venture in
OnSeptember 1, 2020 , a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire a 51% interest inCoastal Carolina Sedation Associates LLC ("CCSA"), a gastroenterology anesthesia services provider inNorth Carolina . The purchase consideration, paid via cash, for the acquisition of the Company's 51% interest was$1,800,000 plus acquisition costs of$50,381 . The cost allocated to the exclusive professional services agreement which was acquired as part of this acquisition is$3,628,197 . 48
--------------------------------------------------------------------------------
OnAugust 4, 2020 , a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire a 66% interest inOrange County Anesthesia Associates LLC ("OCAA"), a gastroenterology anesthesia services provider inFlorida . The purchase consideration, paid via cash, for the acquisition of the Company's 66% interest was$6,200,000 plus acquisition costs of$51,015 . The cost allocated to the exclusive professional services agreement which was acquired as part of this acquisition is$9,471,235 .
OnJuly 7, 2020 , a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire a 51% interest inCentral Virginia Anesthesia Associates LLC ("CVAA"), a gastroenterology anesthesia services provider inVirginia . The purchase consideration, paid via cash, for the acquisition of the Company's 51% interest was$2,800,000 plus acquisition costs of$145,915 . Additionally, the Company has agreed to pay up to$2,500,000 approximately three years after the transaction date should certain EBITDA, revenue per case and employee headcount targets be met. The cost allocated to the exclusive professional services agreement which was acquired as part of this acquisition is$10,299,776 .
OnJune 22, 2020 , a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire a 75% interest inMetro Orlando Anesthesia Associates LLC ("MOAA"), a gastroenterology anesthesia services provider inFlorida . The purchase consideration, paid via cash, for the acquisition of the Company's 75% interest was$2,803,500 plus acquisition costs of$39,829 . Additionally, the Company has agreed to pay$311,500 two years after the transaction date should certain EBITDA targets be met. The cost allocated to the exclusive professional services agreement which was acquired as part of this acquisition is$4,183,391 .
OnJune 8, 2020 , a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire a 75% interest inLake Lanier Anesthesia Associates LLC ("LLAA"), a gastroenterology anesthesia services provider inGeorgia . The purchase consideration, paid via cash, for the acquisition of the Company's 75% interest was$5,379,954 plus acquisition costs of$48,560 . The cost allocated to the exclusive professional services agreement which was acquired as part of this acquisition is$7,238,018 .
Additionally, at the same time, the Company entered into a start-up joint
venture whereby a subsidiary of the Company owns a 51% interest in
New Director -
Effective
Mr. Griffin has a proven track record of over 35 years of senior leadership and operational experience in healthcare. He most recently served as Chairman and Chief Executive Officer of Diplomat Pharmacy Inc., one of the nation's largest independent Specialty Pharmacies and Pharmacy Benefit Managers (PBM), until it was recently acquired by UnitedHealth Group Inc. (NYSE: UNH). Previously,Mr. Griffin joined Anthem (NYSE: ANTM), in 2013, initially as President and Chief Executive Officer of its Empire BlueCross BlueShield -New York Company , and ultimately assuming the role of President of Anthem's Commercial Business, including its 14 BlueCross BlueShield plans nationwide. Thereafter,Mr. Griffin was named Chief Executive Officer of IngenioRx, Anthem's wholly owned national PBM.Mr. Griffin also held positions of increasing responsibility withMedco Health Solutions, Inc. andUS Healthcare, Inc.
Paycheck Protection Program -
OnApril 15, 2020 , the Company received loan proceeds of$2,945,620 under the Paycheck Protection Program ("PPP"). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") in order to enable small businesses to pay employees during the coronavirus crisis and provides loans to qualifying businesses for up to 2.5 times their average monthly payroll costs. The amount borrowed under the PPP is expected to be eligible to be forgiven provided that the borrower uses the loan proceeds during the twenty-four week period ("Covered Period") after receiving them, and provided that the proceeds are used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. The amount of loan forgiveness will be reduced if, among other reasons, the borrower does not maintain staffing or payroll levels. 49
-------------------------------------------------------------------------------- Principal and interest payments on any unforgiven portion of the PPP Loan will be deferred for ten months after the end of the Covered Period and will accrue interest at a fixed annual rate of 1%. Additionally, the remaining PPP Loan balance will carry a two year maturity date. There is no prepayment penalty on the PPP Loan. The Company anticipates forgiveness of the loan over the Covered Period indicated. As the Company has accounted for the loan as a government grant related to income, the Company has recognized within other income$2,928,748 of the loan proceeds as atDecember 31, 2020 with the remaining$16,872 included within accounts payable.
InApril 2020 , the Company received$1,971,136 under the CARES Act, with subsequent funds of$177,941 receive in July and August of 2020 and further funds of$295,969 received inDecember 2020 . The CARES Act provided funding to eligible healthcare providers to prevent, prepare for and respond to COVID-19. The funds were intended to reimburse healthcare providers for lost income attributable to COVID-19 and for healthcare related expenses. Consistent with the accounting applied to the PPP loan, the Company has accounted for the HHS Stimulus funds as government grants related to income. As there are no repayment provisions under the CARES Act and the Company has assessed that it has complied with the conditions of this program, funds received under this program have been recognized in other income in the year endedDecember 31, 2020 .
CMS Medicare Advancement -
InApril 2020 , the Company also received$1,900,584 under the Medicare Accelerate and Advanced Payment Program.The Center for Medicare and Medicaid Services ("CMS") offers accelerated and advance payments in a number of circumstances, including in national emergencies to accelerate cashflow to impacted healthcare providers and suppliers. During the quarter endedSeptember 30, 2020 the CMS amended the recoupment process for these funds: under the Continuing Appropriations Act, 2021 and Other Extensions Act, repayment will now begin one year from the issuance date of each provider or supplier's accelerated or advance payment. After that first year, Medicare will automatically recoup 25% of Medicare payments otherwise owed to the provider or supplier for 11 months. At the end of the 11-month period, recoupment will increase to 50% for another 6 months. As a result of the recoupment process, CRH has recognized the funds received as a liability on the balance sheet, including them within Contract liability - CMS Advancement atDecember 31, 2020 .
COVID-19 -
InMarch 2020 , a pandemic relating to the novel coronavirus known as COVID-19 occurred causing significant financial market disruption and social dislocation. The pandemic is dynamic with various cities, counties, states and countries around the world responding in different ways to address and contain the outbreak, including the declaration of a global pandemic by theWorld Health Organization , a National State of Emergency inthe United States and state and local executive orders and ordinances forcing the closure of non-essential businesses and persons not employed in or using essential services to "stay at home" or "shelter in place". At this stage, we have no certainty as to how long the pandemic will last, what regions will be most effected or to what extent containment measures will be applied. As a result of the pandemic, the Company's operations were impacted in the last half ofMarch 2020 and continued to be impacted throughout April andMay 2020 , with recovery beginning in late May andJune 2020 . As a result of the COVID-19 pandemic, patients inthe United States have cancelled or deferred non-emergent procedures or otherwise avoided medical treatment, resulting in reduced patient volumes and operating revenues and income from both our Products and Anesthesia Services businesses. These cancellations and deferrals continued throughJuly 2020 , but recovered in the fourth quarter of 2020 as patients resumed medical treatments. While we are currently at around 100% of our pre-COVID estimated volume, these deferrals impacted our results in the first, second and third quarters of 2020. Until the COVID-19 pandemic is controlled, the potential remains for significant declines in revenue and operating income in the future. See "Risk Factors - Our operations and financial results have been and could be further harmed by the COVID-19 pandemic." Results of Operations The following tables provide a detailed analysis of our results of operations and financial condition. For each of the periods indicated below, we present our revenues by business segment, as well as present key metrics, such as operating expenses, operating income and net and comprehensive income attributable to shareholders of the company and non-controlling interest, from our statements of operations. 50
--------------------------------------------------------------------------------
The selected financial information provided below has been prepared in accordance with United States Generally Accepted Accounting Principles ("US GAAP").
SELECTED US GAAP FINANCIAL INFORMATION
2020 2019 % Change
Anesthesia services revenue $ 97,688,095 $110,306,431 (11 )% Product sales revenue 8,484,070 10,078,843 (16 )% Total revenue 106,172,165 120,385,274 (12 )% Total operating expenses, including: 112,928,124 105,703,079 7 % Depreciation and amortization expense 40,658,314 35,009,070 16 % Stock based compensation expense 2,709,617 976,962 177 % Operating income (loss) (6,755,959 ) 14,682,195 (146 )% Operating margin (6.4 )% 12.2 % Net finance expense 2,151,137 6,609,618 (67 )% Income from equity investment (16,416 ) (1,766,968 ) (99 )% Impairment of intangible asset 27,008,037 - NA Other income (5,442,457 ) - NA Tax expense (recovery) (7,543,376 ) 1,627,061 (564 )% Net and comprehensive income (loss)$ (22,912,884 ) $ 8,212,484 (379 )% Attributable to: Shareholders of the Company (24,476,138 ) 3,771,163 (749 )% Non-controlling interest1 1,563,254 4,441,321 (65 )% Earnings (loss) per share attributable to shareholders: Basic$ (0.342 ) $ 0.053 Diluted$ (0.342 ) $ 0.052
1 Non-controlling interest reflects the ownership interest of persons holding
non-controlling interests in non-wholly owned subsidiaries of the Company.
NON-GAAP FINANCIAL MEASURES In addition to results reported in accordance with US GAAP, the Company uses certain non-GAAP financial measures, including adjusted operating expenses (in total and broken down by operating segment), adjusted operating EBITDA (in total and broken down as attributable to non-controlling interest and shareholders of the Company) and adjusted operating EBITDA margin as supplemental indicators of its financial and operating performance. These non-GAAP measures are not recognized measures under US GAAP and do not have a standardized meaning prescribed by US GAAP, and are therefore unlikely to be comparable to measures presented by other companies. These measures are provided as additional information to complement US GAAP measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analyses of the Company's financial information reported under US GAAP. See "Use of Non-GAAP Financial Measures" elsewhere in this Annual Report on Form 10-K.
SELECTED FINANCIAL INFORMATION - NON-GAAP MEASURES1
2020 2019 % Change
Total Adjusted operating expenses $ 69,235,347 $ 68,681,627 1 %
Adjusted operating EBITDA - non-controlling
interest2 13,637,786 15,080,425 (10 )%
Adjusted operating EBITDA - shareholders of
the Company 28,741,294 36,623,224 (22 )% Adjusted operating EBITDA - total$ 42,379,080 $ 51,703,649 (18 )% Adjusted operating EBITDA margin 39.9 % 42.9 % 1 See "Use of Non-GAAP Financial Measures" below for definitions of Non-GAAP-based measures and reconciliations of GAAP-based measures to Non-GAAP-based measures.
2 Non-controlling interest reflects the ownership interest of persons holding
non-controlling interests in non-wholly owned subsidiaries of the Company.
51
--------------------------------------------------------------------------------Summary of Quarterly Results (Unaudited)
The following table sets forth certain unaudited consolidated statements of operations data for each of the eight most recent quarters that, in management's opinion, have been prepared on a basis consistent with the audited consolidated financial statements for the year endedDecember 31, 2020 . Seasonality impacts quarterly anesthesia and product revenues. With our expenses primarily fixed, adjusted operating EBITDA margins will fluctuate quarterly. Seasonality also impacts net income as net income will fluctuate with fluctuations in adjusted operating EBITDA.1 (in 000's of US$, except EPS) Q4 '20 Q3 '20 Q2 '20 Q1 '20 Q4 '19 Q3 '19 Q2 '19 Q1 '19 Anesthesia services revenue 34,126 27,984 12,427 23,150 27,621 27,967 28,026 26,693 Product sales revenue 2,657 2,366 1,158 2,304 2,749 2,448 2,456 2,426 Total revenue 36,783 30,349 13,585 25,455 30,369 30,415 30,482 29,119 Total operating expense 32,977 30,265 21,634 28,052 27,812 26,702 25,895 25,294 Adjusted operating expenses Anesthesia services 18,369 16,022 9,416 15,094 15,588 15,036 14,609 13,779 Product sales 1,062 980 696 1,057 1,118 1,002 1,131 1,053 Corporate 1,593 1,792 1,397
1,756 1,393 1,319 1,444 1,211 Total adjusted operating expenses
21,024 18,794 11,510 17,907 18,099 17,357 17,184 16,042 Operating income (loss)
3,806 85 (8,049 ) (2,597 ) 2,558 3,713 4,587 3,825
Operating margin 10 % 0 % (59 )% (10 )% 8 % 12 % 15 % 13 %
Adjusted operating EBITDA -
non-
controlling interest2 4,834 3,877 2,251 2,676 3,465 3,666 3,638 4,311 Adjusted operating EBITDA-
shareholders of the Company 11,221 7,968 4,681
4,871 8,805 9,392 9,661 8,766 Adjusted operating EBITDA - total
16,055 11,845 6,932 7,547 12,270 13,058 13,298 13,077 Adjusted operating EBITDA margin
44 % 39 % 51 % 30 % 40 % 43 % 44 % 45 % Net finance expense
765 442 447 497 913 1,125 2,179 2,392
(Income) loss from equity
investment (54 ) - 22 16 (1,350 ) (77 ) (214 ) (125 ) Impairment of intangible assets
27,008 - - - - - - -
Other income (296 ) (290 ) (4,857 ) - - - - -
Income tax expense (recovery) (5,959 ) (376 ) (234 )
(974 ) 891 565 4 167
Net income (loss) (17,658 ) 309 (3,428 ) (2,135 ) 2,104 2,099 2,619 1,391
Net income (loss) attributable
to:
Shareholders of the Company (19,152 ) (338 ) (2,908 ) (2,078 ) 1,219 982 1,647 (77 )
Non-controlling interest2 1,494 647 (521 ) (56 ) 885 1,117 972 1,468
Earnings (loss) per share
attributable to
shareholders
Basic (0.268 ) (0.005 ) (0.041 ) (0.029 ) 0.017 0.014 0.023 (0.001 )
Diluted (0.268 ) (0.005 ) (0.041 ) (0.029 ) 0.017 0.013 0.022 (0.001 )
1 See "Use of Non-GAAP Financial Measures" below for definitions of
Non-GAAP-based measures and reconciliations of GAAP-based measures to
Non-GAAP-based measures.
2 Non-controlling interest reflects the ownership interest of persons holding
non-controlling interests in non-wholly owned subsidiaries of the Company.
Results of Operations for the Years Ended
Revenues for the year endedDecember 31, 2020 were$106,172,165 compared to$120,385,274 for the year endedDecember 31, 2019 . The 12% decrease is driven primarily by a decrease in volumes and reduced activity levels as a result of COVID-19, primarily in the first, second and third quarters of 2020, offset by revenues from acquisitions completed in 2020 and from 2019 mid-year acquisitions. Revenue for the three months endedDecember 31, 2020 reflect the revenue contributions from anesthesia businesses acquired during 2020 and were$36,783,014 , an increase of 21% or$6,413,791 when compared to the three months endedDecember 31, 2019 . 52
-------------------------------------------------------------------------------- Revenues from anesthesia services for the year endedDecember 31, 2020 were$97,688,095 compared to$110,306,431 for the year endedDecember 31, 2019 . As above, the decrease was primarily a result of a decrease in anesthesia service volumes as a result of COVID-19, partially offset by revenue increases from acquisitions completed in 2020 and 2019; however, there were additional factors which impacted the change in revenue between fiscal 2020 and fiscal 2019. The$12.6 million decrease in revenue from the prior period is reflective of the following:
• growth through acquisitions completed in 2019 and 2020 contributed
million to revenue when comparing the two periods;
• after excluding case growth from acquisitions, above, cases declined by
19.9% from cases reported in 2019, equivalent to
revenue. The decline in cases is related to temporary closures of
anesthesia service centers and decreased case volumes where we provide our
services. Many locations started closures as early as mid-March due to the
COVID-19 pandemic, with many subsequently resuming services in May and
June 2020 and early in the third quarter of 2020;
• changes in non-contracted payor reimbursement strategies and payor mix,
primarily related to entities acquired prior to 2019, offset by favourable
rate variances arising from our rate strategies, decreased 2020 revenue by
approximately
• included within 2020 revenue is a negative prior period revenue adjustment
of approximately
positive
recoveries compared to our estimates; and
• revenue related to services provided to non-owned anesthesia entities
decreased by
Anesthesia revenues for the three months ended
• growth through acquisitions completed in 2019 and 2020 contributed
million to revenue when comparing the two periods;
• after excluding case growth from acquisitions, above, cases declined by
1.6% from cases reported in the fourth quarter of 2019, equivalent to
approximately $0.3 million in revenue;
• as a result of our rate strategy, we've seen favorable rate variances
resulting in an approximately
and
• included within the fourth quarter of 2020 revenue is a positive prior
period revenue adjustment of approximately
the fourth quarter of 2019 we recognized a negative
period revenue adjustment based on actual recoveries compared to our
estimates.
In the year ended December 31, 2020 , the anesthesia services segment serviced
323,644 patient cases compared to 345,393 patient cases during the year ended
December 31, 2019 . Patient cases serviced in the fourth quarter of 2020 were
108,681 compared to 94,503 patient cases in the fourth quarter of 2019.
The tables below summarize our approximate payor mix as a percentage of all
patient cases for the years ended
Three months ended Years ended
December 31, December 31, December 31, December 31,
Payor 2020 2019 Change 2020 2019 Change
Commercial 60.6 % 60.7 % (0.2 )% 57.7 % 58.8 % (1.9 )%
Federal 39.4 % 39.3 % 0.3 % 42.3 % 41.2 % 2.7 %
Total 100.0 % 100.0 % 100.0 % 100.0 %
The payor mix for the three months and year ended December 31, 2020 includes
acquisitions completed during 2020 and 2019 and as a result is not directly
comparable to the three months and year ended December 31, 2019 . As we acquire
anesthesia providers, these providers may have different payor mix profiles and
impact our overall payor mix above.
53
--------------------------------------------------------------------------------
The table below summarizes our approximate payor mix as a percentage of all
patient cases for the three months and year ended December 31, 2020 and 2019,
but exclude patient cases related to acquisitions completed in 2020 and 2019 as
inclusion of these acquisitions would reduce comparability of the data
presented.
Three months ended Years ended
December 31, December 31, December 31, December 31,
Payor 2020 2019 Change 2020 2019 Change
Commercial 62.7 % 62.1 % 1.0 % 59.6 % 59.4 % 0.3 %
Federal 37.3 % 37.9 % (1.6 )% 40.4 % 40.6 % (0.5 )%
Total 100.0 % 100.0 % 100.0 % 100.0 %
The table below summarizes our approximate payor mix as a percentage of all
patient cases for the year ended December 31, 2020 , by quarter, and excludes
patient cases related to acquisitions completed in 2020 and 2019 as inclusion of
these acquisitions would reduce the comparability of the date presented.
Payor Q4 2020 Q3 2020 Q2 2020 Q1 2020
Commercial 62.7 % 58.7 % 56.5 % 58.1 %
Federal 37.3 % 41.3 % 43.5 % 41.9 %
Total 100.0 % 100.0 % 100.0 % 100.0 %
Seasonality is driven by both patient cases and seasonal payor mix. As a result,
revenue per patient will fluctuate quarterly. The seasonality of patient cases
for fiscal 2020 is provided below for organic patient cases; it excludes patient
cases relating to acquisitions completed in 2020. COVID-19 had the most
significant impact on case volumes in the second quarter of 2020.
Seasonality Q4 2020 Q3 2020 Q2 2020 Q1 2020
Patient cases 31.8 % 28.7 % 13.8 % 25.7 %
Revenues from product sales for the year ended December 31, 2020 were $8,484,070
compared to $10,078,843 for 2019. Product sales volume was impacted by the
effect of COVID-19, with the majority of the impact felt in the first, second
and third quarters of the year. Product sales revenue for the quarter ended
December 31, 2020 was $2,656,533 compared to $2,748,696 for the quarter ended
December 31, 2019 . As of December 31, 2020 , the Company has trained 3,254
physicians to use the O'Regan System, representing 1,253 clinical practices.
This compares to 3,158 physicians trained, representing 1,209 clinical
practices, as of December 31, 2019 .
Total operating expenses
Total operating expense for the year endedDecember 31, 2020 was$112,928,124 compared to$105,703,079 for the year endedDecember 31, 2019 . Total operating expense for the three months endedDecember 31, 2020 was$32,977,482 compared to$27,811,635 for the three months endedDecember 31, 2019 . The increase in operating expenses is in part driven by the increase in case volumes associated with our acquisitions completed in the last quarter of 2019 and in 2020. While non-acquisition driven anesthesia cases and revenue declined due to COVID-19, payroll expenses, which are generally fixed, respond more slowly to changes in volume. As a result of COVID-19, CRH engaged in workforce reductions primarily occurring within the Company's contracted workforce. Wherever possible, the Company worked to retain its employee workforce. As a result, total operating expenses, excluding expenses relating to acquisitions completed in 2019 and 2020, did not decline in line with revenues. Government assistance received to encourage this retention of employee workforce has been recognized in other income totaling$5,442,457 in the year. Amortization expense for the year endedDecember 31, 2020 increased by 16% from 2019. This is a result of the incremental amortization expense related to asset acquisitions completed in 2019 and 2020 and the related intangible assets that were acquired. Amortization expense for the three months endedDecember 31, 2020 similarly increased by 21% from the comparable period in 2019. Stock-based compensation expense for the year endedDecember 31, 2020 increased$1,732,655 compared to 2019. This increase is a result of forfeitures experienced in the second quarter of 2019 relating to the departure of the Company's previous CEO. In contrast, stock-based compensation expense for the quarter endedDecember 31, 2020 increased by 16% or$112,043 from the comparable period of 2019, primarily as a result of additional grants issued inSeptember 2020 . 54
--------------------------------------------------------------------------------
Total adjusted operating expenses - Non-GAAP1
For the year endedDecember 31, 2020 , total adjusted operating expenses were$69,235,347 compared to$68,681,627 for the year endedDecember 31, 2019 . For the three months endedDecember 31, 2020 , total adjusted operating expenses were$21,024,048 compared to$18,099,185 for the three months endedDecember 31, 2019 . In general, increases seen in adjusted operating expenses are primarily related to adjusted operating expenses in the anesthesia services business as a result of recent acquisitions, offset by cost reduction initiatives as a result of COVID-19, as well as increases within our corporate segment. Anesthesia services adjusted operating expenses for the year endedDecember 31, 2020 were$58,901,975 , compared to$59,011,532 for the year endedDecember 31, 2019 . Anesthesia services adjusted operating expenses for the three months endedDecember 31, 2020 were$18,369,011 , compared to$15,588,323 for the three months endedDecember 31, 2019 . Anesthesia services adjusted operating expenses primarily include labor related costs for Certified Registered Nurse Anesthetists and MD anesthesiologists, billing and management related expenses, medical drugs and supplies, and other related expenses. With the Company completing acquisitions in both 2019 and 2020, fiscal 2020 is not directly comparable to 2019. Though revenue may fluctuate, adjusted operating expenses, which are primarily employee related costs, due to their fixed nature, primarily increase or decrease as a result of the Company's acquisition strategy or as a result of other than temporary case volume reductions. For the year endedDecember 31, 2020 , as noted above, beginningApril 2020 , the Company was able to reduce its contracted workforce for anesthesia case volume declines and therefore reduce its operating expenses; this most significantly impacted the second quarter of 2020 where case volumes saw significant declines as a result of COVID-19. Additionally, the Company's billing related expenses declined as a result of case volume declines as billing related expenses are based on a percentage revenue. Other ancillary expenses such as travel and entertainment were also curtailed. As a result, Anesthesia services adjusted operating expenses did not increase in 2020 despite the addition of new acquisitions. With case volumes resuming normal activity levels by the end of the third quarter, Anesthesia services adjusted operating expenses resumed normal levels and thus increased when compared to the comparable period of 2019 as a result of expenses incurred by entities acquired in 2020. Total adjusted operating expenses per case1 for the anesthesia segment were$169 per case for the three months endedDecember 31, 2020 and is slightly higher than the$165 per case seen in the fourth quarter of 2019. Total adjusted operating expenses per case1 for the anesthesia segment were$182 per case for the year endedDecember 31, 2020 compared to the$171 seen in year endedDecember 31, 2019 . This case rate is higher than that experienced in 2019 due to the lower case volumes in 2020. While the Company was able to respond to lower case volumes with contracted workforce reductions, the Company also retained as many of its employees as possible. Government stimulus meant to encourage employee workforce retention has been recognized in other income and therefore has not been applied against the costs of retention efforts embedded within adjusted operating expenses. Product sales adjusted operating expenses for the year endedDecember 31, 2020 were$3,794,457 compared to$4,303,630 for the year endedDecember 31, 2019 . The decrease year over year is reflective of reduced activities, including cost of sales and product support costs such as conferences and travel. Product sales adjusted operating expenses for the three months endedDecember 31, 2020 were$1,061,656 compared to$1,117,862 for the three months endedDecember 31, 2019 . In general, expenses have returned to pre-COVID levels as a result of the recovery of product sales activity. Corporate adjusted operating expenses for the year endedDecember 31, 2020 were$6,538,915 compared to$5,366,464 for the year endedDecember 31, 2019 . Corporate expenses have increased when compared to 2019 as a result of increases in corporate and other professional fees. In general, the increases seen in corporate and professional fees, including professional fees relating to Sarbanes-Oxley requirements, are reflective of the increasing complexity of our business which is also increasing our compliance costs. Corporate adjusted operating expenses for the three months endedDecember 31, 2020 were$1,593,382 compared to$1,393,000 for the three months endedDecember 31, 2019 . 1 See "Use of Non-GAAP Financial Measures" below for definitions of Non-GAAP-based measures and reconciliations of GAAP-based measures to Non-GAAP-based measures. 55
--------------------------------------------------------------------------------
Operating income (loss)
Operating loss for the year endedDecember 31, 2020 was$6,755,959 compared to operating income of$14,682,195 for the same period in 2019. Operating income for the three months endedDecember 31, 2020 was$3,805,532 compared to$2,557,588 for the comparable period in 2019. The following schedule reconciles the changes in operating income between periods: Year ended Quarter ended December 31, December 31, 2020 2020 Prior period operating income$ 14,682,195 $ 2,557,588 Increase (decrease) in period revenues (14,213,112 )
6,413,791
Increase in period adjusted operating expenses1 (553,915 ) (2,925,058 ) Increase in period amortization and depreciation expense (5,649,245 ) (1,937,062 ) Increase in period stock based compensation expense (1,732,655 ) (112,043 ) Decrease in other non-recurring expenses 930,917 - Inventory write-off (64,911 ) - Increase in period acquisition expenses (155,233 ) (191,684 ) Current period operating income$ (6,755,959 ) $ 3,805,532 Changes in the company's revenues and adjusted operating expenses1 are described above within their respective sections. Fluctuations in revenue will not necessarily result in correlating fluctuations in operating expenses due to the fixed nature of these costs and as such will impact operating income. The primary driver of the decline in operating income for the year endedDecember 31, 2020 is the reduction in anesthesia and product revenues in the period, with the majority of the reduction directly correlated with COVID-19 and its impact on the Company's anesthesia case and product sales volumes. With many expenses being slow to respond to changes in volume due to their fixed nature, any change in revenue, specifically case volume, directly impacts operating income until the Company is able to respond via workforce reductions. Conversely, in the quarter endedDecember 31, 2020 , with activity levels returning to their pre-COVID levels, operating income increased as a result. The increase in operating income is a direct correlation to acquisitions completed in the fourth quarter of 2019 and in 2020 as well as other revenue gains detailed in the revenue section, offset by related incremental amortization expense. Anesthesia operating loss for the year endedDecember 31, 2020 was$2,529,277 compared to operating income of$15,800,392 for the year endedDecember 31, 2019 . The decrease is primarily reflective of the decrease in adjusted operating EBITDA1 in the year (calculated above as revenues less adjusted operating expenses), in conjunction with an incremental increase in amortization expense of$5,649,245 when comparing fiscal 2020 to fiscal 2019. Anesthesia operating income for the quarter endedDecember 31, 2020 was$4,490,090 compared to operating income of$2,919,379 for the quarter endedDecember 31, 2019 and reflects activity levels returning to pre-COVID levels. Product operating income for the year endedDecember 31, 2020 was$4,212,737 , a decrease of$1,218,387 from the same period in 2019. The decline in operating income is primarily driven by the decline in revenues in the period as a result of COVID-19 and its impact on sales in the first three quarters of the year. Product operating income for the three months endedDecember 31, 2020 was$1,410,459 compared to$1,542,183 for the three months endedDecember 31, 2019 . The slight decrease is due to slightly lower sales volume in the period. 1 See "Use of Non-GAAP Financial Measures" below for definitions of Non-GAAP-based measures and reconciliations of GAAP-based measures to Non-GAAP-based measures. 56
--------------------------------------------------------------------------------
Adjusted operating EBITDA1 - Non-GAAP
Adjusted operating EBITDA attributable to shareholders of the Company for the year endedDecember 31, 2020 was$28,741,294 , a decrease of$7,881,930 when compared to the year endedDecember 31, 2019 . The decrease in adjusted operating EBITDA attributable to shareholders is primarily a reflection of the overall net decline in revenue (described within the revenue section, but, in effect, attributable to COVID-19), offset by reductions in adjusted operating expenses. While revenue declined due to case volume decreases due to COVID-19, the Company took measures to reduce operating expenses, primarily payroll related, beginning earlyApril 2020 . With the majority of its anesthesia locations open and resuming operations in May andJune 2020 , the Company's provider staffing expenses resumed. Note that for the purposes of calculating adjusted operating EBITDA, other income of$4,241,183 arising from the receipt of government assistance has been included for the year endedDecember 31, 2020 . It is management's opinion that this most accurately reflects the financial performance of the Company as the Company may have incurred further workforce reductions to offset reduced revenue volume were it not for the receipt of these incentives. Adjusted operating EBITDA attributable to shareholders of the Company for the three months endedDecember 31, 2020 was$11,220,896 , an increase of$2,416,155 from the comparable period in 2019. The increase in adjusted operating EBITDA attributable to shareholders for the fourth quarter reflects the increase in revenue in the period. Adjusted operating EBITDA attributable to non-controlling interest was$13,637,786 for the year endedDecember 31, 2020 , compared to$15,080,425 for the year endedDecember 31, 2019 . Other income of$1,201,274 arising from the receipt of government assistance has been included in the calculation of adjusted operating EBITDA attributable to non-controlling interest for the year endedDecember 31, 2020 . Adjusted operating EBITDA attributable to non-controlling interest was$4,833,844 for the three months endedDecember 31, 2020 , compared to$3,465,297 for the comparable period in 2019. Note that for comparative purposes, the Company acquired the non-controlling 49% inArapahoe inApril 2019 and CCAA inAugust 2019 ; the financial results of these entities are now included 100% in adjusted operating EBITDA attributable to shareholders. Total adjusted operating EBITDA was$42,379,080 for the year endedDecember 31, 2020 , a decrease of 18% from the same period in 2019. Total adjusted operating EBITDA was$16,054,740 for the three months endedDecember 31, 2020 , an increase of 31% from the same period in 2019.
1 See "Use of Non-GAAP Financial Measures" below for definitions of
Non-GAAP-based measures and reconciliations of GAAP-based measures to
Non-GAAP-based measures.
Net finance (income) / expense
As a result of the Company's debt facilities and long-term finance obligations, including its earn-out obligations, the Company has recorded a net finance expense of$2,151,137 for the year endedDecember 31, 2020 , compared to net finance expense of$6,609,618 in the year endedDecember 31, 2019 . Net finance expense is comprised of both interest and other debt related expenses, including fair value adjustments. Fair value adjustments related to the Company's earn-out obligation are the primary driver of significant fluctuations in finance expense between comparable periods. 2020 2019 Finance expense: Interest and accretion expense on borrowings$ 1,883,863 $
3,288,704
Accretion expense on earn-out obligation and deferred
consideration$ 50,040 $
133,450
Amortization of deferred financing fees$ 372,835 $
276,260
Net change in fair value of financial liabilities at fair value through earnings$ (155,601 ) $ 2,861,204 Other $ -$ 50,000 Total finance expense$ 2,151,137 $ 6,609,618 Net finance expense$ 2,151,137 $ 6,609,618
Net finance expense, excluding fair value adjustments
During the year endedDecember 31, 2020 , the Company recognized a fair value adjustment (recovery) of$155,601 in respect of its earn-out obligation. The fair value adjustment resulted from changes in estimates underlying the Company's earn-out obligation. The changes in estimates underlying the Company's earn-out obligation were driven primarily by the changes in the cash flow estimates, which were driven by both changes in payor mix and revenue rates per unit. During the year endedDecember 31, 2019 , the Company recognized a fair value adjustment of$2,861,204 in respect of its earn-out obligation. 57 -------------------------------------------------------------------------------- Cash interest paid in the year endedDecember 31, 2020 was$1,949,694 compared to$3,055,374 cash interest paid in 2019. The decrease in cash interest paid is reflective of the lower LIBOR rates in 2020 as well as the credit spread on the Company's current JP Morgan Facility being lower than its previous Scotia Facility. As atDecember 31, 2020 , the Company owed$71,348,120 under its JP Morgan Facility as compared to$69,341,370 owed atDecember 31, 2019 . The Company anticipates that, in future, cash interest will fluctuate as the Company draws or repays on its Facility and as LIBOR rates fluctuate.
(Gain) Loss from
In 2019, equity income was derived from the Company's 15% equity interest inTriad Sedation Associates LLC ("TSA").TSA began operating inFebruary 2019 and was the result of an agreement betweenCRH and Digestive Health Specialists ("DHS"), located inNorth Carolina , whereby CRH assisted DHS in the development and management of a monitored anesthesia care program. Under the terms of the agreement, CRH was a 15% equity owner in the anesthesia business and received compensation for its billing and collection services. Under the terms of the limited liability company agreement, CRH had the right, at CRH's option, to acquire an additional 36% interest in the anesthesia business at a future date, which it exercised inNovember 2019 . Upon exercise of the option, CRH obtained control ofTSA andTSA was therefore consolidated 100% within the results of CRH from the date control was acquired. As a result,TSA was not an equity investment as atDecember 31, 2020 ; however, inJune 2020 , the entered into an additional agreement resulting in an equity interest. InJune 2020 , the Company entered into an agreement with 6 doctors located inNorth Carolina to assist these doctors in the development and management of a monitored anesthesia care program. Under the terms of the agreement, CRH is a 15% equity owner in the anesthesia business,Western Carolina Sedation Associates LLC ("WCSA") and receives compensation for its billing and collections services. Under the terms of the limited liability company agreement, CRH has the right, at CRH's option, to acquire an additional 36% interest in the anesthesia business at a future date, but no sooner thanSeptember 2021 . The Company assessed and concluded that as WCSA is an LLC entity, equity method accounting is required under ASC 970-323 until such time as a change in ownership control occurs. WCSA began operations onOctober 1, 2020 , at which time the Company provided a loan of$226,000 to the investment for working capital purposes and is expected to be repaid within twelve months of issue.
The decrease in equity income between 2020 and 2019 is due to the fact that the Company did not have any income from equity investments in the first three quarters of 2020.
Impairment of intangible assets
As a result of the notice of non-renewal of the GAA professional services
agreements by United Digestive ("UD") on December 22, 2020 , CRH recorded an
impairment loss relating to the GAA professional services agreements assets of
$27,008,037 in the year ended December 31, 2020 . The impairment loss was
recorded in the fourth quarter of 2020 as a result of the notification of
non-renewal. The Company provided anesthesia services to 12 surgery centers in
the Greater Atlanta market via these professional services agreements,
representing approximately 17% of the Company's 2020 revenue. The professional
services agreements are set to expire on October 31, 2021 .
Other Income
OnApril 15, 2020 , the Company received loan proceeds of$2,945,620 ("PPP Loan") under the Paycheck Protection Program ("PPP"). The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") in order to enable small businesses to pay employees during the COVID-19 crisis, and provides loans to qualifying businesses for up to 2.5 times their average monthly payroll costs. The amount borrowed under the PPP is expected to be eligible to be forgiven provided that the borrower uses the loan proceeds during the twenty-four week period ("Covered Period") after receiving them, and provided that the proceeds are used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. The amount of loan forgiveness will be reduced if, among other reasons, the borrower does not maintain staffing or payroll levels. The Company anticipates forgiveness of the loan over the Covered Period indicated. As such, the Company has accounted for the loan as a government grant related to income, and has recognized within other income$2,928,748 of the loan proceeds as atDecember 31, 2020 . Additionally, during the year endedDecember 31, 2020 , the Company received funds of$2,445,046 under theCARES Act HHS Stimulus Fund . The CARES Act provided funding to eligible healthcare providers to prevent, prepare for and respond to COVID-19. The funds were intended to reimburse healthcare providers for lost income attributable to COVID-19 and for healthcare related expenses. Consistent with the accounting applied to the PPP loan, the Company has accounted for the HHS Stimulus funds as government grants related to income. As there are no repayment provisions under the CARES Act and the Company has assessed that it has complied with the conditions of this program, funds received under this program have been recognized in other income in the year endedDecember 31, 2020 . 58
--------------------------------------------------------------------------------
Income tax expense
For the year endedDecember 31, 2020 , the Company recorded an income tax recovery of$7,543,376 compared to income tax expense of$1,627,061 for the year endedDecember 31, 2019 . Income tax expense relates only to income attributable to the Company's shareholders and the income tax recovery in the period is driven by the Company's net loss before tax, which in turn is driven by the impact COVID-19 has had on the Company's operating results as well as the impairment of the Company's GAA professional services agreements. The impairment of the Company's GAA professional services agreements resulted in an increase to the Company's deferred assets. The Company has not recorded a valuation allowance against its deferred tax assets as management has assessed that it is more likely than not that those assets will be realized based on projected future taxable income.
Net and comprehensive income
For the year endedDecember 31, 2020 , the Company recorded a net and comprehensive loss attributable to shareholders of the Company of$24,476,138 compared to net and comprehensive income attributable to shareholders of$3,771,163 for the year endedDecember 31, 2019 . The decrease year over year is largely a reflection of the decrease in operating income in the period in addition to the GAA impairment loss recognized in the fourth quarter of 2020 and the related tax recovery. For the three months endedDecember 31, 2020 , the Company recorded a net and comprehensive loss attributable to shareholders of the Company of$19,151,875 compared to net and comprehensive income attributable to shareholders of$1,219,079 for the same period in 2019. The loss generated in the period, given the increase in operating income in the period, is primarily related to the GAA impairment loss recognized in the fourth quarter 2020. Net and comprehensive income attributable to non-controlling interest was$1,563,254 for the year endedDecember 31, 2020 compared to net and comprehensive income attributable to non-controlling interest of$4,441,321 for the year endedDecember 31, 2019 . Consistent with the loss attributable to shareholders, the net and comprehensive income attributable to non-controlling interest in the year is a reflection of the decrease in operating income as a result of the impact COVID-19 has had on the Company's operating results in the year. Additionally, the Company acquired the non-controlling 49% inArapahoe inApril 2019 and CCAA inAugust 2019 ; the financial results of these entities are now included 100% in adjusted operating EBITDA attributable to shareholders. Net and comprehensive income attributable to non-controlling interest was$1,493,674 for the three months endedDecember 31, 2020 compared to the net and comprehensive income attributable to non-controlling interest of$884,610 for the three months endedDecember 31, 2019 . Like net and comprehensive income attributable to shareholders, the impact of operating income increases had a positive effect.
Use of Non-GAAP Financial Measures
As discussed above, in addition to results reported in accordance with US GAAP, the Company uses certain non-GAAP financial measures, including adjusted operating expenses (in total and broken down by operating segment), adjusted operating EBITDA (in total and broken down as attributable to non-controlling interest and shareholders of the Company), and adjusted operating EBITDA margin as supplemental indicators of its financial and operating performance. These non-GAAP measures are not recognized measures under US GAAP and do not have a standardized meaning prescribed byU.S. Generally Accepted Accounting Principles ("US GAAP") and thus the Company's definition may be different from and unlikely to be comparable to non-GAAP measures presented by other companies. These measures are provided as additional information to complement US GAAP measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analyses of the Company's financial information reported under US GAAP. Management uses these non-GAAP measures to provide investors with a supplemental measure of the Company's operating performance and thus highlight trends in the Company's core business that may not otherwise be apparent when relying solely on US GAAP financial measures. Management also believes that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers. In addition, management uses these non-GAAP measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets, and to assess its ability to meet future debt service, capital expenditure, and working capital requirements. The definitions of these measures, as well as a reconciliation of the most directly comparable financial measure calculated and presented in accordance with GAAP to each non-GAAP measure, are presented below. Adjusted operating EBITDA: The Company defines adjusted operating EBITDA as operating earnings before interest, taxes, depreciation, amortization, stock based compensation, acquisition related expenses, asset impairment charges and other non-recurring expenses plus other income related to government assistance. Adjusted operating EBITDA is presented on a basis consistent with the Company's internal management reports. The Company analyzes and discloses adjusted operating EBITDA to capture the profitability of its business before the impact of items not considered in management's evaluation of operating unit performance. 59
-------------------------------------------------------------------------------- Adjusted operating EBITDA margin. The Company defines adjusted operating EBITDA margin as operating earnings before interest, taxes, depreciation, amortization, stock based compensation, acquisition related expenses, asset impairment charges and other non-recurring expenses plus other income related to government assistance as a percentage of revenue. Adjusted operating EBITDA margin is presented on a basis consistent with the Company's internal management reports. The Company analyzes and discloses adjusted operating EBITDA margin to capture the profitability of its business before the impact of items not considered in management's evaluation of operating performance. Adjusted operating expenses: The Company defines adjusted operating expenses as operating expenses before acquisition related expenses, stock based compensation, depreciation, amortization, asset impairment charges and other non-recurring expenses. Adjusted operating expenses are presented on a basis consistent with the Company's internal management reports. The Company analyzes and discloses adjusted operating expenses to capture the operating cost of the business before the impact of items not considered in management's evaluation of operating costs. Adjusted operating expense per case - Anesthesia segment: The Company defines adjusted operating expense per case for the anesthesia segment as adjusted operating expense for the anesthesia segment divided by anesthesia cases serviced in the period. The Company analyzes and discloses adjusted operating expenses to capture the operating cost of the business before the impact of items not considered in management's evaluation of operating costs and evaluates these costs as a per case metric. The Company's management believes that the presentation of the above defined Non-GAAP financial measures provides useful information to investors because they reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business. In addition, they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term "non-operational charge" is defined for this purpose as an expense that does not impact the ongoing operating decisions taken by the Company's management. These items are excluded based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports and are not excluded in the sense that they may be used under US GAAP. The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of non-GAAP measures, which adjusts for the impact of amortization of intangible assets, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company's operating results and underlying operational trends. In summary, the Company believes the provision of supplemental Non-GAAP measures allow investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses and is therefore a useful indication of CRH's performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition toU.S. GAAP measures, supplementary Non-GAAP financial measures that exclude certain items from the presentation of its financial results.
The following charts provide unaudited reconciliations of US GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented:
60
--------------------------------------------------------------------------------Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
Adjusted operating EBITDA
2020 2019
(USD in thousands) FY '20 Q4 '20 Q3 '20 Q2 '20 Q1 '20 FY '19 Q4 '19 Q3 '19 Q2 '19 Q1 '19
Net and comprehensive
income (loss) (22,912 ) (17,658 ) 309 (3,428 ) (2,135 ) 8,213 2,104 2,099 2,619 1,391
Net finance (income)
expense 2,151 765 442 447 497 6,609 913 1,125 2,179 2,392
Equity income (16 ) (54 ) - 22 16 (1,766 ) (1,350 ) (77 ) (214 ) (125 )
Income tax expense
(recovery) (7,543 ) (5,959 ) (376 ) (234 ) (974 ) 1,627 891 565 4 167
Other income -
government assistance (5,443 ) (296 ) (290 ) (4,857 ) - - - - - -
Impairment 27,008 27,008 - - - - - - - -
Operating income (loss) (6,756 ) 3,806 85 (8,049 ) (2,597 ) 14,683 2,558 3,713 4,587 3,825 Amortization expense 40,492 10,889 10,735 9,489 9,380 34,898 9,006 8,528 8,723 8,641
Depreciation and related
expense 166 83 26 28 29 111 29 28 27
27
Stock based compensation 2,710 809 653 595 653 977 697 706 (990 ) 564 Acquisition expenses1 260 173 57 12 18 104 (19 ) 83 20 20 Inventory write-downs 65 - - - 65 - - - - - Other non-recurring items2 - - - - - 931 - - 931 - Other income - government assistance 5,443 296 290 4,857 - - - - - - Total adjusted operating EBITDA 42,378 16,055 11,845 6,932 7,547 51,703 12,270 13,058 13,298 13,077 Adjusted operating EBITDA attributable to: Shareholders of the Company 28,739 11,221 7,968 4,681 4,871 36,623 8,805 9,392 9,661 8,766
Non-controlling interest 13,638 4,834 3,877 2,251 2,676 15,080 3,465 3,666 3,638
4,311
1 Acquisition expenses relating to incomplete acquisitions-
2 Non-recurring expenses relating to the replacement of the Company's CEO
Adjusted Operating EBITDA Margin
2020 2019
(USD in thousands) FY '20 Q4 '20 Q3 '20 Q2 '20 Q1 '20 FY '19 Q4 '19 Q3 '19 Q2 '19 Q1 '19
Revenue 106,172 36,783 30,349 13,585 25,455 120,385 30,369 30,415 30,482 29,119
Operating income (6,756 ) 3,806 85 (8,049 ) (2,597 ) 14,682 2,558 3,713 4,587 3,825
Operating margin (6.4 )% 10.3 % 0.3 % (59.3 )% (10.2 )% 12.2 % 8.4 % 12.2 % 15.0 % 13.1 %
Amortization expense 38.1 % 29.6 % 35.3 % 69.9 % 36.8 % 29.0 % 29.7 % 28.0 % 28.6 % 29.7 %
Depreciation and related
expense 0.2 % 0.2 % 0.1 % 0.2 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % 0.1 %
Stock based compensation 2.6 % 2.2 % 2.2 % 4.4 % 2.6 % 0.8 % 2.3 % 2.3 % (3.2 )% 1.9 %
Acquisition expenses1 0.2 % 0.5 % 0.1 % 0.1 % 0.1 % 0.1 % (0.1 )% 0.3 % 0.1 % 0.1 %
Inventory write-downs 0.1 % 0.0 % (- )% (- )% 0.3 % (- )% (- )% (- )% (- )% (- )%
Other non-recurring items2 (- )% (- )% (- )% (- )% (- )% 0.8 % (- )% (- )% 3.1 % (- )%
Other income - government
assistance 5.1 % 0.8 % 1.0 % 35.8 % (- )% (- )% (- )% (- )% (- )% (- )%
Total adjusted operating
EBITDA margin 39.9 % 43.6 % 39.0 % 51.0 % 29.7 % 42.9 % 40.4 % 42.9 % 43.6 % 44.9 %
61
--------------------------------------------------------------------------------
Adjusted operating expenses
2020 2019
(USD in thousands) FY '20 Q4 '20 Q3 '20 Q2 '20 Q1 '20 FY '19 Q4 '19 Q3 '19 Q2 '19 Q1 '19
Anesthesia services expense 100,217 29,636 26,964 18,988 24,629 94,505 24,701 23,774 23,471 22,559
Amortization expense (40,490 ) (10,888 ) (10,734 ) (9,489 ) (9,379 ) (34,895 ) (9,005 ) (8,527 ) (8,722 ) (8,641 )
Depreciation and related
expense (14 ) (3 ) (3 ) (4 ) (4 ) (13 ) (4 ) (3 ) (3 ) (3 )
Stock based compensation (552 ) (203 ) (148 ) (67 ) (134 ) (482 ) (123 ) (125 ) (117 ) (117 )
Acquisition expenses1 (260 ) (173 ) (57 ) (12 ) (18 ) (104 ) 19 (83 ) (20 ) (20 )
Anesthesia services -
adjusted operating
expense 58,901 18,369 16,022 9,416 15,094 59,012 15,588 15,036 14,609 13,779
Product sales expense 4,271 1,246 1,081 753 1,191 4,647 1,207 1,089 1,217 1,134
Amortization expense (2 ) (1 ) (1 ) - - (3 ) (1 ) (1 ) (1 ) -
Depreciation and related
expense (67 ) (52 ) (5 ) (5 ) (5 ) (24 ) (5 ) (5 ) (5 ) (9 )
Stock based compensation (342 ) (132 ) (95 ) (51 ) (64 ) (318 ) (83 ) (82 ) (81 ) (73 )
Inventory write-downs (65 ) - - - (65 ) - - - - -
Product sales - adjusted
operating expense 3,794 1,062 980 696 1,057 4,304 1,118 1,002 1,131 1,053
Corporate expense 8,440 2,095 2,220 1,894 2,231 6,549 1,904 1,839 1,206 1,600
Amortization expense - - - - - - - - - -
Depreciation and related
expense (85 ) (28 ) (18 ) (19 ) (20 ) (75 ) (20 ) (20 ) (20 ) (15 )
Stock based compensation (1,817 ) (474 ) (410 ) (478 ) (455 ) (178 ) (491 ) (500 ) 1,188 (375 )
Other non-recurring
items2 - - - - - (931 ) - - (931 ) -
Corporate - adjusted
operating expenses 6,538 1,593 1,792 1,397 1,756 5,367 1,393 1,319 1,444 1,211
Total operating expense 112,928 32,977 30,265 21,634 28,052 105,703 27,812 26,702 25,895 25,294
Total adjusted operating
expense 69,235 21,024 18,794 11,510 17,907 68,682 18,099 17,357 17,184 16,042
Adjusted operating expense Per case - anesthesia segment
2020 2019
(USD in thousands,
except case and per
case amounts) FY '20 Q4 '20 Q3 '20 Q2 '20 Q1 '20 FY '19 Q4 '19 Q3 '19 Q2 '19 Q1 '19
Anesthesia services -
adjusted operating
expense 58,901 18,369 16,022 9,416 15,094 59,012 15,588 15,036 14,609 13,779
Anesthesia cases
serviced 323,644 108,681 94,052 42,918 77,993 345,393 94,503 88,733 84,656 77,501
Total adjusted
operating
expense per case -
Anesthesia segment 182 169 170 219 194 171 165 169 173 178
Liquidity and Capital Resources
AtDecember 31, 2020 , the Company had$3,919,747 in cash and cash equivalents compared to$6,568,716 at the end of 2019. The decrease in cash and equivalents is primarily a reflection of cash generated from operations and debt financing activities, less cash used to finance normal course issuer bid repurchases and acquisitions during 2020. Working capital was$19,775,137 atDecember 31, 2020 compared to working capital of$18,677,498 atDecember 31, 2019 . The Company expects to meet its short-term obligations, including short-term obligations in respect of its earn-out obligation and contract payable, through cash earned through operating activities in conjunction with monies available under its credit facility. The average number of days receivables outstanding atDecember 31, 2020 was 57 days. AtDecember 31, 2019 , the average number of days receivables outstanding was 59 days. The Company continues to monitor this measure on an ongoing basis. 62 -------------------------------------------------------------------------------- Cash provided by operating activities for the year endedDecember 31, 2020 was$35,993,673 compared to$45,005,557 in the same period in fiscal 2019. Cash provided by operating activities for the quarter endedDecember 31, 2020 was$11,197,959 compared to$12,335,680 for the same period in fiscal 2019. Cash used in investing activities for the year endedDecember 31, 2020 was$24,625,171 as compared to$10,668,165 for the year endedDecember 31, 2019 . Cash used in investing activities for the quarter-endedDecember 31, 2020 was$3,087,586 as compared to$5,876,008 for the three months endedDecember 31, 2019 .
Cash used in financing activities was
For the year endedDecember 31, 2019 , the statements of cash flows were adjusted to reclassify Acquisition of equity interest from non-controlling interest from investing activities to financing activities given that the transaction is among owners. As a result, net cash flows from investing activities and financing activities are presented as follows: For the year ended December 31, 2019 As previously As currently presented Adjustment presented
Cash flows from financing activities
$ (10,668,165 ) The Company has financed its operations primarily from revenues generated from product sales and anesthesia services and through equity and debt financings and a revolving credit facility. As ofDecember 31, 2020 , the Company has raised approximately$51 million from the sale and issuance of equity securities and most recently, the Company entered into a syndicated debt facility withJP Morgan Chase Bank , increasing its facility to$200 million onOctober 22, 2019 . As atDecember 31, 2020 , the Company owed$71.3 million under the facility. The terms of the Company's facility as ofDecember 31, 2020 is described below.
JP Morgan Chase Facility
OnOctober 22, 2019 , the Company entered into a three year revolving credit line which provides up to$200 million in borrowing capacity. The JP Morgan Facility includes a committed$125 million facility and access to an accordion feature that increases the amount of the credit available to the Company by$75 million . Interest on the facility is calculated with reference to LIBOR plus 1.25% to 1.75%, dependent on the Company's Total leverage ratio. The JP Morgan Facility is secured by the assets of the Company and matures onOctober 22, 2022 . Since the JP Morgan Facility is a syndicated facility, which includes the Bank of Nova Scotia as a lender, any remaining deferred financing fees under the Company's previous Scotia Facility were retained and are amortized over the term of the new facility. The Company incurred deferred financing fees of$839,893 in connection with this facility in the year endedDecember 31, 2019 and incurred additional deferred fees of$125,000 in the year endedDecember 31, 2020 when the Company further amended its facility onSeptember 18, 2020 . This amendment, in conjunction with a previous amendment datedAugust 13, 2020 , allows for the Company to engage in investments where less than 51% equity ownership is held and also amended the Company's Total Leverage Ratio to not greater than 3.50:1.00 until the quarter endedJune 30, 2021 . Should the Company's PPP loan be forgiven prior toJune 30, 2021 , the ratio is amended downward to 3.25:1.00. AfterJune 30, 2021 , the Total Leverage Ratio will revert back to 3.00:1.00. The remaining unamortized fees relating to the JP Morgan Facility and the deferred financing fees under the previous Scotia Facility, as ofDecember 31, 2020 were$747,505 . Under the JP Morgan Facility, there are no quarterly or annual repayment requirements. As ofDecember 31, 2020 , the Company had drawn$71,348,120 on the JP Morgan Facility (2019 -$69,341,370 ). As atDecember 31, 2020 , the Company is required to maintain the following financial covenants in respect of this Facility: Financial Covenant Required Ratio Total leverage ratio Not greater than 3.50:1.00 Interest coverage ratio Not less than 3.00:1.00 The Company's Total Leverage ratio is calculated as the ratio of the Company's total indebtedness at the end of the period to EBITDA for the Company's previous four consecutive quarters.
The Company is in compliance with all covenants at
63
--------------------------------------------------------------------------------Contractual Obligations and Contingent Liabilities
The Company's near-term cash requirements relate primarily to interest payments, remaining payments under its earn-out obligation, operations, working capital and general corporate purposes, including further acquisitions. As a result of the impact of COVID-19, the Company has updated its forecasts to account for the impact of the pandemic. Based on this assessment, the Company believes cash and cash equivalents and the availability of its revolving credit facility will be sufficient to fund the Company's operating, debt repayment and capital requirements for at least the next 12 months. The Company updates its forecasts on a regular basis and will consider additional financing sources as appropriate.
The following table summarizes the relative maturities of the financial
liabilities of the Company at
Maturity
Less than One to Four to five After fiveAt December 31, 2020 TOTAL one year three years years years Trade and other payables$ 7,023,060 $ 7,023,060 $ - $ - $ - Employee benefits 789,409 789,409 - - - Lease liabilities (3) 1,179,310 300,354 457,746 421,210 Notes payable and bank indebtedness (1) 71,348,120 - 71,348,120 - - Earn-out obligation 907,459 907,459 - - - Contract payable 1,900,589 1,900,589 - - - Deferred consideration (2) 2,811,500 - 2,811,500 - -$ 85,959,447 $ 10,920,871 $ 74,617,366 $ 421,210 $ -
(1) Excludes interest payable over the remaining term of the facility. Interest
on the facility is calculated with references to LIBOR plus 1.25% to 1.75%
depending on the Company's Total Leverage Ratio
(2) Excludes expected accretion of $74,316 . Accretion is determined with
reference to a discount rate based on Corporate BBB bond yields.
(3) Excludes expected accretion of
reference to a discount rate based on Corporate BBB bond yields.
As at December 31, 2020 , the Company has no material contractual obligations,
other than those obligations relating to its leases of premises and those
obligations under its debt agreements, deferred consideration agreements, normal
course issuer bid agreements, and earn-out obligations as described above.
The Company's earn-out obligation arose in respect of the Company's acquisition
of Gastroenterology Anesthesia Associates LLC in 2014. The Company's earn-out
obligation is recorded at fair value and reflects management's best estimate of
the contingent consideration payable. As at December 31, 2020 , the fair value of
the earn-out obligation is $907,459 . The Company paid this obligation in the
first quarter of 2021.
The Company's deferred consideration arose in respect of the Company's
acquisitions of Metro Orlando Anesthesia Associates LLC ("MOAA") and Central
Virginia Anesthesia Associates LLC ("CVAA") in 2020. As part of the MOAA
transaction, the Company is required to pay $311,500 to the seller after the
second anniversary date of the transaction dependent on MOAA meeting certain
EBITDA targets during the first and second year after the transaction date.
Based on the Company's current forecasts, the Company believes it probable that
the EBITDA targets will be met. If the EBITDA targets are not met, no contingent
consideration is payable. As part of the CVAA transaction, the Company is
required to pay either $1,500,000 or $2,500,000 to the seller after the third
anniversary date of the transaction dependent on CVAA meeting certain EBITDA,
full-time equivalent employee and revenue per case targets during the second and
third year after the transaction date. Based on the Company's current forecasts,
the Company believes it probable that the targets will be met and the full
amount of the contingent consideration, $2,500,000 , will be paid.
The Company's contract payable relates to funds received under the Medicare
Accelerated and Advanced Payment Program. Repayment under the program is
expected to be completed prior to
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance withU.S. generally accepted accounting principles (GAAP). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates under different assumptions or conditions. 64
-------------------------------------------------------------------------------- An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. We believe that the assumptions and estimates associated with management's assessment for impairment, estimates supporting reported anesthesia revenues and the valuation of deferred tax assets have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see Note 3 - Significant Accounting Policies in the accompanying notes to consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K
Impairment of intangible assets:
The Company's intangible assets are comprised of purchased professional service agreements and patents.
The carrying amounts of the Company's non-financial assets, other than
inventories and deferred tax assets, are reviewed at each reporting date to
determine whether there are any events or changes in circumstances which
indicate that the carrying value may not be recoverable. Example factors that
could trigger impairment reviews include significant underperformance relative
to historical or projected future operating results, significant changes in the
use of the acquired assets or strategy for the overall business and significant
negative economic trends. Depending on the specific asset and circumstances,
assets are assessed for impairment as an individual asset, as part of an asset
group or at the reporting unit ("RU") level. A reporting unit is an operating
segment or one level below an operating segment if certain conditions are met.
For the purpose of impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from continuing use that
are largely independent of cash inflows from other assets or groups of assets.
If indicators of impairment exist, an asset or asset group is impaired if its
carrying amount exceeds its fair value, being the projected future discounted
cash flows that are directly associated with and that are expected to arise as a
direct result of the use and eventual disposition of the asset or asset group.
Projected cash flows are based upon historical results adjusted to reflect
management's best estimate of future market and operating conditions which may
differ from actual cash flows. The process of determining estimated fair value
is complex and there is significant judgment applied in determining significant
assumptions used when estimating fair value. Significant assumptions included in
projected cash flows include anesthesia case growth rates and revenue rates per
case.
As at December 31, 2020 , the Company identified indicators of impairment in
respect of three of its professional services agreements relating to financial
performance and contract non-renewal. Upon performing undiscounted cash flow
models for these assets, the Company identified only one asset that required
further review for impairment: Gastroenterology Anesthesia Associates LLC "GAA".
The requirement to further assess this asset was driven by non-renewal of the
Company's GAA professional services agreement assets. On December 22, 2020 , the
Company received notice that these professional services agreements would not be
renewed. CRH provided anesthesia services to 12 surgery centers in the Greater
Atlanta market via these professional services agreements, representing
approximately 17% of the Company's 2020 revenue. The professional services
agreements were set to originally expire on October 31, 2021 ; the majority of
these agreements were acquired in conjunction with the GAA acquisition in
December 2014 . At the time of acquisition, the Company estimated a useful life
of 12 years these professional services agreements.
The Company performed discounted cash flow modelling for these assets and
compared the resultant discounted cash flows expected over the life of the
assets, estimated to be approximately 10 months, to the carrying amounts as at
December 31, 2020 . The income approach is used for the quantitative assessment
to estimate the fair value of the assets, which requires estimating future cash
flows and risk-adjusted discount rates in the Company's discounted cash flow
model. The overall market outlook and cash flow projections for these assets
involves the use of key assumptions, including revenue rates per case and
expected case counts.
As a result of performing the above discounted cash flow analysis, the Company
has recorded an impairment charge of $27,008,037 in relation to its GAA
professional services agreements. The discounted cash flow analysis is highly
sensitive to revenue rates per case and the expected case counts. A +/-1%
change in the revenue rate per case utilized would result in a $120,000
adjustment to the impairment charge taken. Similarly, a +/- 1% change in the
expected case counts would result in a $110,000 adjustment to the impairment
charge taken. Due to uncertainties in the estimates that are inherent to the
Company's industry, actual results could differ significantly from the estimates
made. Many key assumptions in the cash flow projections are interdependent on
each other. A change in any one or combination of these assumptions could impact
the estimated fair value of the assets.
At December 31, 2019 , the Company identified indicators of impairment in respect
of six of its professional services agreements. Upon performing undiscounted
cash flow models for these assets, the Company identified only two assets that
required further review for impairment.
65
--------------------------------------------------------------------------------
As a result of this test, no write-downs to the intangible assets were required
for the year ended
Revenue recognition - Anesthesia services:
Our anesthesia service revenues are derived from anesthesia procedures performed under our professional services agreements. The fees for such services are billed either to a third party payor, including Medicare or Medicaid or to the patient. We recognize anesthesia service revenues, net of contractual adjustments and implicit price concessions, which we estimate based on the historical trend of our cash collections and contractual adjustments. There is significant judgment involved in determining the estimated revenues that will be collected in the future due to the judgment required in estimating the amounts that third-party payors will pay for services based on past collections. Anesthesia services procedures for each patient qualify as a distinct service obligation, as they are provided simultaneously with other readily available resources during the service procedure. The transaction price is variable and not constrained. Variable consideration relates to contractual allowances, credit provisions and other discounts. The standard requires management to estimate the transaction price, including any implicit concessions from the credit approval process. The Company adopted a portfolio approach to estimate variable consideration transaction price by payor type (patient, government and/or insurer) and the specifics of the services being provided. These portfolios share characteristics such that the results of applying a portfolio approach are not materially different than if the standard was applied to individual patient contracts. Revenue is recognized upon completion of the services to the customer (patient) for practical reasons as the service period is performed over a short time period.
Income taxes:
The Company records a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, it recognizes deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. The Company recognizes the deferred income tax effects of a change in tax rates in the period of the enactment. The Company records a valuation allowance to reduce its deferred tax assets to the net amount that management believes is more likely than not to be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than fifty percent likely of being realized. The Company records interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.
Income tax expense is comprised of current and deferred tax.
Recently Issued Accounting Pronouncements
InJune 2016 , FASB issued ASU No. 2016-13, "Financial Instruments- Credit Losses (Topic 326)", which requires companies to measure credit losses on financial instruments measured at amortized cost by applying an "expected credit loss" model based upon past events, current conditions and reasonable and supportable forecasts that affect collectability. Previously, companies applied an "incurred loss" methodology for recognizing credit losses. This standard is effective for fiscal years beginningJanuary 1, 2023 for smaller reporting companies. As CRH meets the definition of smaller reporting company, CRH will adopt this standard for fiscal years beginningJanuary 1, 2023 . The Company is current assessing the impact that adopting this guidance will have on its consolidated financial statements. InDecember 2019 , the FASB issued ASU 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes. The new guidance simplifies the accounting for income taxes by removing several exceptions in the current standard and adding guidance to reduce complexity in certain areas, such as requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning afterDecember 15, 2020 , with early adoption permitted. The Company is currently assessing the impact that adopting this guidance will have on its consolidated financial statements.
Off-Balance Sheet Arrangements
The Company has no material undisclosed off-balance sheet arrangements that have or are reasonably likely to have, a current or future effect on our results of operations or financial condition. See Recent Events section for disclosure of the pending acquisition of the Company by Well Health Technologies Corp.
Tabular Disclosure of Contractual Obligations
Not applicable.
66
--------------------------------------------------------------------------------Outstanding Share Data
As at
As atDecember 31, 2020 , there were 979,687 options outstanding at a weighted-average exercise price of$1.69 per share, of which 604,687 were exercisable into common shares at a weighted-average exercise price of$1.01 per share. As atDecember 31, 2020 , there were 3,286,562 share units ("SUs") issued and outstanding.
As at
As atMarch 12, 2021 , there were 979,687 options outstanding at a weighted-average exercise price of$1.73 per share, of which 604,687 were exercisable into common shares at a weighted-average exercise price of$1.03 per share. As atMarch 12, 2021 , there were 3,286,562 share units ("SUs") issued and outstanding.
© Edgar Online, source