Canaccord Is Positive On CRH Medical's Acquisition Of Arapahoe

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.

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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.