November 3, 2017 11:00 am eastern CRH Medical

CRH medical is down a further 12 % in Toronto trading this morning. And down 17% in U.S. trading.

This is due to finalization of government-mandated fee reductions for 2018 which included an additional reduction, not previously anticipated.

The company indicates that adjusted EBITDA previously expected to decrease 13.5% will now decrease 20%. But they also say that adjusted EBITDA margins will remain healthy at 43% and that they look forward to growing the business with more certainty.

It is not clear how much the adjusted net earnings per share will decrease but it would be higher than 20% perhaps far higher.

Unfortunately the margins have already decreased in 2017 for other reasons including the mix of customers. Clearly, I was overly optimistic about this company earlier this year.

I am working on an update but the difficulty is that we won’t know the new level of earnings per share until we see several quarters of results under the new fee structure.