Transaction marks significant expansion of CRH’s gastrointestinal
business

VANCOUVER, Dec. 2, 2014 /PRNewswire/ – CRH Medical Corporation (TSX: CRH) (OTCQX: CRMMF) (“CRH” or the “Company“), a North American medical company focused on providing physicians
with innovative products and services for the treatment of
gastrointestinal diseases, today announced the acquisition (the “Transaction“) of the business, assets and interests of Gastroenterology Anesthesia
Associates, LLC, (“GAA“). GAA is one of the largest providers of anesthesiology services to
gastroenterologists in the southeastern United States.

The Company will pay US$58.6 million at closing with up to an additional
US$14.6 million payable within 4.5 years based on agreed financial
performance requirements of the acquired business. The maximum total
purchase price assuming achievement of all performance measures is
US$73.2 million.

GAA is a provider of anesthesia services and has strong financial
performance with more than US$25 million in revenue and US$16 million
in EBITDA for the 12 months ending June 2014. Gastrointestinal
endoscopy procedures are highly reliant upon anesthesia services from
third-party anesthesia providers, such as GAA. With the acquisition of
GAA, CRH further aligns itself with gastrointestinal physician
specialists that either are or could be users of CRH’s current
business. CRH will initially focus on integrating GAA into the Company.
However, as part of the Transaction, CRH will acquire the expertise,
skills and exemplary track record from which to pursue a strategy of
consolidating additional anesthesia groups. CRH believes this new
platform has the potential to not only grow revenues via future
accretive acquisitions but also through organic growth of the acquired
business.

“The immediate increases in revenues and EBITDA from this transaction
are transformational for CRH,” said Edward Wright, Chief Executive
Officer of CRH Medical. “Our strong relationships with
gastroenterologists as a result of our current business were
instrumental in not only identifying the opportunity but throughout the
process of acquiring GAA. From this foundation, we look forward to
enhancing our reputation as a trusted partner to the gastroenterologist
community and will pursue additional opportunities within our core
competencies.”

Key benefits of the Transaction

• Adds significant revenues and EBITDA to CRH’s business
• Historical financial performance for GAA is strong, with more than US$25
  million in revenue and US$16 million in EBITDA for the 12 month period
  ending June 2014
• Increases CRH’s brand visibility and product offering
• CRH O’Regan System will continue its growth trajectory, potentially
  enhanced by the Transaction

The Transaction is being financed by cash on hand along with senior and
subordinated credit facilities (the “Credit Facilities“) from Knight Therapeutics Inc. (“Knight“) and affiliates of Crown Capital Partners Inc. (“Crown” and, together with Knight, the “Lenders“), in the amounts of US$30 million and approximately US$20 million
respectively, a loan from BBF (as described below) and a private
placement of the Company’s common shares (“Common Shares“).

“We are thankful for the financial support of such reputable firms as
Knight Therapeutics and Crown Capital Partners,” said Richard Bear, CRH
Medical’s Chief Financial Officer. “Based on the historical cash flows
of GAA, we expect to be able to service and repay the credit facilities
from the future cash flows of the acquired business.”

The Credit Facilities are each provided pursuant to credit agreements
entered into by the Company and the respective Lenders as of today’s
date. The Credit Facilities will incur interest at a rate of between
10-12% per annum and will be secured against the assets of the Company
and its subsidiaries. Knight’s Credit Facility will mature after a term
of two years, subject to an extension for an additional year under
certain circumstances, and Crown’s Credit Facility will mature after a
term of 42 months. The Company has issued to the Lenders, as partial
consideration for the Credit Facilities, an aggregate of 5,000,000
Common Shares on a private placement basis. The Company also paid other
fees and expenses to the Lenders, consistent with Credit Facilities of
this nature and has agreed to nominate an individual selected by Knight
to CRH’s board of directors.

Concurrently with closing the Transaction, the Company also completed a
non-brokered private placement for 6,967,845 Common Shares (the “Private Placement“), at a subscription price of $0.82 per share, to, among others, the
owner of GAA and associated individuals, which further aligns the GAA
sellers and CRH’s business prospects.

Bloom Burton & Co. (“Bloom Burton“) acted as financial advisor to CRH in connection with the Transaction.
Bloom Burton subscribed for 1,027,980 Common Shares pursuant to the
Private Placement and the Bloom Burton Healthcare Structured Lending
Fund II (“BBF“) agreed to provide the Company with an unsecured loan in the principal
amount of US$2 million. BBF’s loan accrues interest at a rate of 12% per annum and will
mature after a term of 54 months.

The proceeds received by CRH from the Credit Facilities, the loan from
BBF and the Private Placement were used to close the Transaction.

All securities issued pursuant to the Transaction will be subject to a
hold period of four months plus one day from the closing of the
Transaction. The Common Shares issued pursuant to the Private Placement
were issued in a private offering to accredited investors in accordance
with Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act“), and to certain non-U.S. persons in offshore transactions in
accordance with Regulation S promulgated under the Securities Act. The
Common Shares have not been registered under the Securities Act or any
state securities laws and may not be offered or sold in the United
States without registration or an applicable exemption from
registration requirements.

This press release does not constitute an offer to sell, or the
solicitation of an offer to buy, any securities and shall not
constitute an offer, solicitation or sale in any jurisdiction in which
such offer, solicitation or sale would be unlawful

Transaction Overview Conference Call Notification

CRH will host a telephone conference call to discuss the acquisition of
GAA on December 2, 2014 at 10:45 am Eastern Time. The telephone numbers
for the conference call are (888) 231-8191 or (647) 427-7450.

At the call’s completion, an audio replay will be available by calling
(855) 859-2056 or (416) 849-0833 and using passcode 44232294. The phone
replay will be available through January 2, 2015.

About CRH Medical Corporation:

CRH Medical Corporation is a North American company focused on providing
physicians with a growing range of innovative products and services for
the treatment of gastrointestinal diseases. The Company markets the CRH
O’Regan System, a single use, disposable, hemorrhoid treatment that is
rapidly emerging as the standard of care with gastroenterologists who
treat hemorrhoids. In addition to the product, CRH delivers clinical,
marketing and operational support directly to its partner physicians.

Forward looking statements:

The information in this news release contains statements not based on
historical or current facts and these statements are so-called
“forward-looking” statements. These include statements regarding CRH’s
expectations and plans relating to its business, statements about CRH’s
expectations, beliefs, intentions or strategies for the future, which
may be indicated by words or phrases such as “anticipate”, “expect”,
“intend”, “plan”, “will”, “we believe”, “CRH believes”, “management
believes”, and similar language. All forward-looking statements are
based on CRH’s current expectations and are subject to risks and
uncertainties and to assumptions made. Such forward looking statements
involve known and unknown risks, uncertainties and other factors that
may cause the actual results, events or developments to be materially
different from any future results, events or developments expressed or
implied by such forward-looking statements. Assumptions include: the
effect of the Transaction on the Company’s business and operations,
financial performance and results, revenue forecasts, the Company’s
existing relationships and ability to leverage those relationships, any
growth or increase in use of the Company’s products by physicians or
specialists, the Company’s ability to integrate GAA into its business
and to expand GAA’s business, any increase in the Company’s brand
visibility, the Company’s ability to repay the Credit Facilities, or to
reduce their interest rates and extend their terms, and the positive
impacts of the Transaction. Important risk factors that could cause
actual results to differ materially from those expressed or implied by
such forward-looking statements include: our use of proceeds from the
Credit Facilities and the Private Placement; our ability to repay the
Credit Facilities as our obligations come due; that we may not continue
to attract gastroenterologists and other licensed providers to purchase
and use the CRH O’Regan System; our forecasted growth and use of the
CRH O’Regan System; our need for additional financing and our estimates
regarding our capital requirements and future revenues and
profitability; our ability to successfully market and sell our products
and integrate the GAA business into our operations; our ability to
maintain and grow GAA’s business, including any growth or maintenance
of revenue; our estimates of the size of the potential markets for our
products; our ability and forecasts of expansion and the Company’s
management of anticipated growth; risks related to currency exchange
rates; risks associated with the trading of our common shares on a
public marketplace; and other factors referenced in the Company’s
filings with Canadian securities regulators. Although the Company
believes that expectations conveyed by the forward-looking statements
are reasonable based on the information available to it on the date
such statements were made, no assurances can be given as to the future
results, approvals or achievements. Given these uncertainties, readers
are cautioned not to place undue reliance on such forward-looking
statements. The Company does not assume the obligation to update any
forward-looking statements except as otherwise required by applicable
law

SOURCE CRH Medical Corporation