Stuhini Exploration - M&A Activity 2021

Form 51‐102F4

Business Acquisition Report

Item 1 Identity of Company

1.1 Name and Address of Company

WELL Health Technologies Corp.

Suite 200, 322 Water Street, Vancouver, British Columbia V6B 1B6

1.2 Executive Officer

Eva Fong, Chief Financial Officer

604 628‐7266

Item 2 Details of Acquisition

2.1 Nature of Business Acquired

On April 23, 2021, the Company acquired a 100% equity interest in CRH Medical Corporation (“ CRH ”) pursuant to an arrangement agreement dated February 6, 2021, as amended on March 18, 2021 and further amended on April 16, 2021 (collectively, the“ Arrangement Agreement ”) among the Company, WELL Health Acquisition Corp., 1286392 B.C. Ltd. and CRH (the “ Acquisition ”). The Acquisition was completed by way of a statutory plan of arrangement under the provisions of the Business Corporations Act (British Columbia) (the “ Arrangement ”). CRH is now a wholly‐owned subsidiary of the Company.

Under the terms of the Arrangement, each former and eligible shareholder of CRH received US$4.00 in cash in exchange for each CRH common share held immediately prior to the effective time of the Arrangement. Each outstanding CRH option that vested prior to the effective time of the Arrangement was deemed to be assigned to CRH in exchange for a cash payment equal to the difference between US$4.00 and the exercise price for such option (net of any applicable withholding tax). Each outstanding CRH option that had not vested prior to the effective time of the Arrangement was acquired by the Company in exchange for an option to acquire Company shares (a “ Company Option ”). Except as otherwise required to be adjusted by applicable law, each such Company Option issued in exchange for a CRH option: (i) entitles the holder to acquire a number of Company shares equal to the number of CRH shares subject to the exchanged CRH option, multiplied by 0.652 (rounded down to the nearest whole share), and (ii) has an exercise price per Company share equal to the exercise price per CRH share pursuant to the exchanged CRH option, divided by 0.652 (rounded up to the nearest whole cent). Each outstanding CRH Restricted Share Unit (a “ RSU ”) granted under CRH’s 2014 share unit plan and each outstanding CRH RSU granted under CRH’s 2017 share unit plan that was held by an employee, contractor or director of CRH that does not remain employed by CRH when the Arrangement completed was deemed to be assigned to CRH in exchange for US$4.00 in cash (net of any applicable withholding tax). Each outstanding CRH RSU granted under CRH’s 2017 share unit plan that was held by an employee, contractor or director of CRH that remained employed when the Arrangement

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completed was acquired by the Company in exchange for a RSU of the Company (a “ Company RSU ”). Except as otherwise required to be adjusted by applicable law, each such Company RSU issued in exchange for a CRH RSU entitles the holder to acquire a number of Company shares equal to the number of CRH shares subject to the exchanged CRH RSU, multiplied by 0.652 (rounded down to the nearest whole share).

CRH is a North American company focused on providing gastroenterologists throughout the United States with innovative services and products for the treatment of gastrointestinal diseases. In 2014, CRH became a full service gastroenterology anesthesia company that provides anesthesia services for patients undergoing endoscopic procedures in ambulatory surgical centers. To date, CRH has completed 36 anesthesia acquisitions, and now serves 75 ambulatory surgical centers in 16 states. In addition, CRH owns the “CRH O’Regan System”, a single‐use, disposable, hemorrhoid banding technology that is safe and highly effective in treating all grades of hemorrhoids. CRH distributes the O'Regan System, treatment protocols, operational and marketing expertise as a complete, turnkey package directly to gastroenterology practices, creating meaningful relationships with the gastroenterologists it serves. CRH’s O’Regan System is currently used in all 48 lower US states

Further information about the Arrangement and CRH can be found in the Schedule 14‐A Proxy Statement of CRH dated March 19, 2021, which can be accessed under CRH’s issuer profile on SEDAR at www.sedar.com.

2.2 Acquisition Date

April 23, 2021

2.3 Consideration

The Company acquired all of the issued and outstanding securities of CRH for US$4.00 per share in cash, representing an equity consideration of approximately US$286.6M and a transaction value of approximately US$372.9M, inclusive of CRH’s credit facility.

The Acquisition was funded by a combination of a C$302.5M non‐brokered equity financing of 30,867,324 subscription receipts at a price of C$9.80 per share (the “ Offering ”), debt facilities of the Company as well as the Company’s existing cash on hand. Upon closing, all subscription receipts from the Offering automatically converted to 30,867,324 Company common shares, without any further action required on the part of the subscription receipt holders.

2.4 Effect on Financial Position

See the unaudited pro forma condensed consolidated financial statements of the Company and the accompanying notes thereto attached to this Report. The unaudited pro forma financial statements are presented for informational purposes only and do not purport to project the future results of operations or financial position of the Company.

Except as otherwise publicly disclosed and in the ordinary course of the Company’s business, the Company does not currently have any plans or proposals for material changes in the

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business of CRH acquired pursuant to the Arrangement which may have a significant impact on the financial performance and financial position of the Company.

2.5 Prior Valuations

To the knowledge of the Company, there has been no valuation opinion obtained in the last 12 months by the Company or CRH required by securities legislation or a Canadian exchange or market to support the consideration paid by the Company for CRH.

2.6 Parties to Transaction

The Acquisition was not with any “informed person”, as defined in National Instrument 51‐ 102 – Continuous Disclosure Obligations (“ NI 51‐102 ”), associate or affiliate of CRH.

2.7 Date of Report

June 28, 2021

Item 3 Financial Statements and Other Information

Pursuant to Part 8 of NI 51‐102, the following financial statements are attached hereto and form part of this Report:

Attached as Schedule A are the following financial statements of CRH:

a) Audited annual consolidated financial statements of CRH as at and for the years ended December 31, 2020 and 2019. The Company has not requested the consent of CRH’s auditors to include their auditor’s report in this Report, therefore the auditors of CRH have not given their consent to include their auditor’s report in this Report; and
b) Unaudited interim consolidated financial statements of CRH as at and for the three months ended March 31, 2021 and 2020.

Attached as Schedule B are the following unaudited pro forma consolidated financial statements of the Company that give effect to the Acquisition:

a) Unaudited pro forma consolidated balance sheet as at March 31, 2021, which gives effect to the Acquisition as if it had occurred on that date;
b) Unaudited pro forma consolidated statement of operations for the year ended December 31, 2020 and for the three months ended March 31, 2021, which give effect to the Acquisition as if it had occurred on January 1, 2020; and
c) the notes to the pro forma consolidated financial statements,
(collectively, the “ Pro Forma Statements ”).

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Cautionary Note Regarding Unaudited Pro Forma Financial Information

This Report contains the unaudited pro forma consolidated financial statements of the Company comprised of the pro forma consolidated balance sheet as at March 31, 2021 and the pro forma consolidated statements of operations for the three months ended March 31, 2021 and the year ended December 31, 2020. Such unaudited pro forma consolidated financial statements have been prepared using certain historical financial statements of the Company and CRH as more particularly described in the notes to such unaudited pro forma consolidated financial statements. In preparing such unaudited pro forma consolidated financial statements, the Company has not independently verified the financial statements of CRH that were used to prepare the unaudited pro forma consolidated financial statements. The historical audited consolidated financial information has been adjusted in the unaudited pro forma consolidated financial statements to give effect to events that are: (i) directly attributable to the pro forma events, for which there are firm commitments and for which the complete financial effects are objectively determinable; and (ii) with respect to the unaudited pro forma consolidated statement of operations, expected to have a continuing impact on the combined company's results. As such, the impact from Arrangement‐related expenses is not included in the unaudited pro forma consolidated financial statement of operations. The unaudited pro forma consolidated financial statements do not reflect any cost savings from operational efficiencies or synergies that could result from the Arrangement or for liabilities that may result from integration planning. The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and do not necessarily reflect what the combined company's financial condition and results of operations would have been had the Arrangement occurred on the dates indicated. The unaudited pro forma consolidated financial statements also may not be useful in predicting the future financial condition and results of the operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected therein due to a variety of factors. The pro forma adjustments are based on preliminary estimates of the fair value of the consideration paid and the fair value of the assets acquired and liabilities assumed, information available at the time of preparation and certain assumptions that the Company believes are reasonable in the circumstances, as described in the notes to the unaudited pro forma consolidated financial statements. The preliminary purchase price of CRH and recognized amounts of identifiable assets acquired and liabilities assumed has been determined from information that was available to the management of the Company at this time and incorporates estimates, many of which are significant. The amounts are provisional estimates of fair value, which approximate the previously reported carrying values of CRH. As a result, the unaudited pro forma purchase price adjustments are subject to further adjustments as additional information becomes available and as additional analyses are performed during the applicable measurement period. As a result of these factors and others, the actual adjustments will differ from the pro forma adjustments, and the differences may be material. Since the unaudited pro forma consolidated financial statements were developed to retroactively show the effects of the transactions that were expected to occur at a later date, there are limitations inherent in the very nature of pro forma data. Undue reliance should not be placed on such unaudited pro forma consolidated financial statements. The financial position shown therein is not necessarily indicative of what the past financial position of the combined companies would have been had the Company completed the Arrangement with CRH during the historical periods presented, nor necessarily indicative of the financial position of the post‐Arrangement periods.

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Forward‐Looking Statements

This Report may contain certain “forward‐looking statements” or “forward‐looking information” under applicable securities laws. Forward‐looking terms such as “may,” “will,” “could,” “should,” “would,” “plan,” “potential,” “intend,” “anticipate,” “project,” “target,” “believe,” “estimate” or “expect” and other words, terms and phrases of similar nature are often intended to identify forward‐looking statements, although not all forward‐looking statements contain these identifying words. Forward‐looking statements are based on the opinions and estimates of management as of the date such statements are made and represent management’s best judgment based on facts and assumptions that management considers reasonable. Any such forward‐looking statements are subject to a number of risks and uncertainties that could cause actual results and expectations to differ materially from the anticipated results or expectations expressed in this Report. The Company cautions readers that should certain risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. You are referred to the risk factors described in the Company’s most recent Annual Information Form and other documents on file with the Canadian securities regulatory authorities, which are available online under the Company’s SEDAR profile at www.sedar.com. The forward‐ looking statements and information contained in this Report represent the Company’s views only as of today’s date. The Company disclaims any intention or obligation to update or revise any forward‐looking statements, whether because of new information, future events or otherwise, other than as required by law, rule or regulation. You should not place undue reliance on forward‐looking statements.

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SCHEDULE A

CRH FINANCIAL STATEMENTS

[see attached]

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Financial Statements and Supplementary Data

CRH Medical Corporation Index to Consolidated Financial Statements Year ended December 31, 2020

Report of Independent Registered Public Accounting Firm

Management’s Report Consolidated Balance Sheets at December 31, 2020 and 2019 Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2020 and 2019 Consolidated Statements of Changes in Equity for the years ended December 31, 2020 and 2019 Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019 Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors CRH Medical Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of CRH Medical Corporation (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 16, 2021 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of the accuracy of the fair value of impaired intangible assets with finite lives

As discussed in Note 9 to the consolidated financial statements, the Company recorded an impairment charge of $27,008,037 in relation to its Gastroenterology Anesthesia Associates, LLC (GAA) professional services agreements. The Company evaluates these assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the assets. If the carrying amount of the assets exceeds the estimated future undiscounted net cash flows, impairment is measured based on the difference between the carrying amount of the assets and fair value.

We identified the assessment of the accuracy of the fair value of the GAA professional services agreements as a critical audit matter. Auditing this fair value was complex and highly judgmental due to the significant judgment applied by management in determining the significant assumptions used to calculate the fair value. These significant assumptions included expected case counts and revenue rates per case.

The primary procedures we performed to address this critical audit matter included the following. We evaluated the expected case counts by comparing them against historical case counts obtained internally from the Company. We compared the revenue rates per case with the historical collections data obtained internally from the Company. We performed sensitivity analyses over the significant assumptions to assess the impact of reasonably possible alternative assumptions on the Company’s impairment assessment.

Evaluation of the estimate of anesthesia services revenue accrual

As described in Note 3 to the consolidated financial statements, anesthesia service revenues are recognized upon completion of anesthesia procedures for each patient and are recognized net of contractual adjustments and implicit price concessions. Due to such contractual adjustments and implicit price concessions, the transaction price for these services is considered to be variable and not constrained. The Company follows a portfolio approach in estimating this variable consideration based upon the historical trend of cash collections for each payor type. Accrued revenues from the anesthesia segment contributed to a significant portion of the Company’s consolidated net accounts receivable balance of $23,323,473 as of December 31, 2020.

We identified the evaluation of the estimate of the anesthesia services revenue accrual as a critical audit matter. There was 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. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the audit evidence obtained related to the anesthesia services revenue accrual.

The primary procedures we performed to address this critical audit matter included the following. We evaluated the Company’s estimate of future revenue collections by reference to the Company’s historical collections data. We evaluated the Company’s ability to accurately estimate the anesthesia services revenue accrual by comparing actual cash collections to the anesthesia services revenue accrual recorded in the previous financial year. We tested anesthesia services cash collections subsequent to year end by comparing the revenue accrual to the amounts actually collected.

/s/ KPMG LLP

Chartered Professional Accountants

We have served as the Company’s auditor since 2008.

Vancouver, Canada March 16, 2021

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors CRH Medical Corporation:

Opinion on Internal Control Over Financial Reporting

We have audited CRH Medical Corporation’s (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated March 16, 2021 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesses related to the following were identified and included in management’s assessment:

The Company did not have effective continuous risk assessment processes and there were insufficient resources to adequately assess risk.
The Company was unable to rely on internal controls within the service organization used to process anesthesia claims and revenue because that service organization did not provide a third-party attestation report with regard to internal controls over those processes and the Company’s existing review controls did not operate at a sufficient level of precision to compensate for this deficiency.
The Company had a combination of control deficiencies within its information technology (IT) general and application controls across the systems supporting the Company’s financial reporting processes, including access controls related to maintaining appropriate segregation of duties and super-user access. The Company concluded that process-level automated controls and manual controls that were dependent upon IT general controls, information and data derived from impacted IT systems were ineffective.
The Company did not involve personnel with sufficient knowledge and practical experience in performing the discounted cash flow modelling utilized in the impairment evaluation of intangible assets.

The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2020 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Form 10-K. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an

understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Chartered Professional Accountants

Vancouver, Canada March 16, 2021

MANAGEMENT’S REPORT

The accompanying consolidated financial statements of CRH Medical Corporation are the responsibility of management and have been approved by the Board of Directors. The consolidated financial statements have been prepared by management in accordance with United States Generally Accepted Accounting Principles, and where appropriate, reflect management’s best estimates and assumptions based upon information available at the time that these estimates and assumptions were made.

Management is responsible for establishing and maintaining a system of internal controls over financial reporting designed to provide reasonable assurance as to the reliability of financial information and the safeguarding of assets.

The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and internal control. The Board of Directors exercises this responsibility principally through the Audit Committee. The Audit Committee consists of directors not involved in the daily operations of the Company. The Audit Committee is responsible for engaging the external auditor and meets with management and the external auditors to satisfy itself that management’s responsibilities are properly discharged and to review the financial statements prior to their presentation to the Board of Directors for approval.

The Company’s external auditors, who are appointed by the shareholders, conducted an independent audit in accordance with the standards of the Public Company Accounting Oversight Board (United States) and express their opinion thereon.

Chief Executive Officer Chief Financial Officer (signed) “Tushar Ramani” (signed) “Richard Bear” March 16, 2021 March 16, 2021

CRH MEDICAL CORPORATION Consolidated Balance Sheets

(Expressed in United States dollars)

As at December 31, 2020 and 2019

As at December 31, 2020 and 2019
	Note	2020	2019
Assets
Current assets:
Cashand cashequivalents		$ 3,919,747	$ 6,568,716
Trade and other receivables,net	5	23,323,473	20,041,288
Income tax receivable		2,942,008	1,332,129
Prepaid expenses and deposits		870,441	729,483
Loanto equityinvestee	10	226,000	—
Inventories		262,466	349,324
		31,544,135	29,020,940
Non-current assets:
Property and equipment,net	8,19	127,800	251,933
Right ofuse assets	7	1,063,804	214,854
Intangible assets,net	4,9,19	136,404,143	163,108,193
Deferred asset acquisitioncosts		68,211	59,249
Investment	4	2,016,076	—
Equityinvestment	10	104,180	—
Deferred tax assets	14	20,456,381	10,440,100
		160,240,595	174,074,329
Total assets		$ 191,784,730	$ 203,095,269
Liabilities
Currentliabilities:
Trade and otherpayables	6	$ 7,023,060	$ 6,196,741
Employee benefits		789,409	992,845
Current portionof leaseliability	7	272,480	125,555
Current taxpayable		753,501	28,589
Deferred consideration		—	1,868,052
Earn-out obligation	16	907,459	1,063,060
Contract payable-CMSAdvancement	11	1,900,589	—
Member loan	4	122,500	68,600
		11,768,998	10,343,442
Non-currentliabilities:
Contingent consideration	4	2,634,317	—
Leaseliability	7	832,514	54,300
Notes payable and bank indebtedness	12	70,600,615	68,380,345
Deferred tax liabilities	14	—	101,822
		74,067,446	68,536,467
Equity
Common stock, no par value; 71,674,647 and 71,603,584 shares issued and outstanding atDecember31,2020 and2019,respectively	13	57,255,264	56,056,113
Additionalpaid-incapital		8,402,216	7,168,156
Accumulated othercomprehensiveloss		(66,772 )	(66,772 )
Retained earnings(loss)		(11,870,442 )	13,154,981
Totalequity attributable to shareholders ofthe Company		53,720,266	76,312,478
Non-controllinginterest		52,228,020	47,902,882
Total equity		105,948,286	124,215,360
Total liabilities and equity		$ 191,784,730	$ 203,095,269

See accompanying notes to consolidated financial statements. Commitments and contingencies (note 17) Subsequent events (note 20)

CRH MEDICAL CORPORATION

Consolidated Statements of Operations and Comprehensive Income (Loss) (Expressed in United States dollars, except for number of shares)

Years ended December 31, 2020 and 2019

	Notes	2020	2019
Revenue:
Anesthesia services	19	$ 97,688,095	$ 110,306,431
Product sales	19	8,484,070	10,078,843
		106,172,165	120,385,274
Expenses:
Anesthesia services expense	19	100,217,372	94,506,039
Product sales expense	19	4,271,333	4,647,719
Corporate expense	19	8,439,419	6,549,321
		112,928,124	105,703,079
Operatingincome (loss)		(6,755,959 )	14,682,195
Finance expense	15	2,151,137	6,609,618
Gain fromequityinvestment	10	(16,416 )	(1,766,968 )
Impairment of intangible asset	9	27,008,037	—
Other income	11	(5,442,457 )	—
Income before tax		(30,456,260 )	9,839,545
Income tax expense(recovery)	14	(7,543,376 )	1,627,061
Net and comprehensive income (loss)		$ (22,912,884 )	$ 8,212,484
Attributable to:
Shareholders ofthe Company		$ (24,476,138 )	$ 3,771,163
Non-controllinginterest		1,563,254	4,441,321
		$ (22,912,884 )	$ 8,212,484
Earnings (loss) pershare attributable to shareholders
Basic	13(f)	$ (0.342 )	$ 0.053
Diluted	13(f)	$ (0.342 )	$ 0.052
Weighted average shares outstanding:
Basic	13(f)	71,535,343	71,536,310
Diluted	13(f)	71,535,343	72,697,539

See accompanying notes to consolidated financial statements.

CRH MEDICAL CORPORATION

Consolidated Statements of Changes in Equity

(Expressed in United States dollars, except for number of shares) For the years ended December 31, 2020 and 2019

	Number of shares	Common stock	Additional paid-in capital	Accumulated other comprehensive loss	Retained earnings (loss)	Non- controlling interest	Total equity
Balance as at January 1, 2019	72,055,688	55,372,884	9,329,335	(66,772 )	12,916,565	59,739,165	137,291,177
Total net and comprehensive income for the year	—	—	—	—	3,771,163	4,441,321	8,212,484
Stock based compensation expense	—	—	976,962	—	—	—	976,962
Common shares issued on exercise of options	840,000	733,165	(306,799 )	—	—	—	426,366
Common shares issued on vesting of share units	325,875	1,159,912	(1,159,912 )	—	—	—	—
Common shares repurchased in connection with normal course issuer bid and cancelled	(1,607,579 )	(1,209,848 )	—	—	(3,532,747 )	—
(note 13(e))							(4,742,595 )
Cancellation of treasury shares (held as treasury shares as of 12/31/2018)	(10,400 )	—	—	—	—	—	—
Distributions to members	—	—	—	—	—	(15,825,600 )	(15,825,600 )
Purchase of equity interest from non-controlling interest	—	—	(1,671,430 )	—	—	(7,676,894 )	(9,348,324 )
Acquisition of non-controlling interest, including LWA price adjustment (note 4)	—	—	—	—	—	7,224,890	7,224,890
Balance as at December 31, 2019	71,603,584	$ 56,056,113	$ 7,168,156	$ (66,772 )	$ 13,154,981	$ 47,902,882	$ 124,215,360
Balance as at January 1, 2020	71,603,584	56,056,113	7,168,156	(66,772 )	13,154,981	47,902,882	124,215,360
Total net and comprehensive income(loss)for theyear	—	—	—	—	(24,476,138 )	1,563,254	(22,912,884 )
Stock based compensation expense	—	—	2,709,617	—	—	—	2,709,617
Common shares issued on exercise of options	25,000	19,007	(8,327 )	—	—	—	10,680
Common shares issued on vestingof share units	446,563	1,493,179	(1,493,179 )	—	—	—	—
Common shares repurchased in connection with normal course issuer bid and cancelled (note 13(e))	(400,500 )	(311,066 )	—	—	(545,253 )	—	(856,319 )
Common shares repurchased in connection with normal course issuer bid and held as treasury shares at December 31,2020(2,500 shares)	—	(1,969 )	—	—	(4,032 )	—	(6,001 )
Distributions to members	—	—	—	—	—	(12,945,380 )	(12,945,380 )
Acquisition of non-controllinginterest, (note 4)	—	—	25,949	—	—	15,707,264	15,733,213
Balance as at December 31, 2020	71,674,647	57,255,264	8,402,216	(66,772 )	(11,870,442 )	52,228,020	105,948,286

See accompanying notes to consolidated financial statements.

CRH MEDICAL CORPORATION

Consolidated Statements of Cash Flows

(Expressed in United States dollars)

For the years ended December 31, 2020 and 2019

	Notes	2020 2019 (Reclassification - see note 2(b))

Operatingactivities:
Net income(loss)		$ (22,912,884 ) $ 8,212,484
Adjustments for:
Depreciation ofproperty,equipment and intangibles		40,658,314 35,009,070
Stock-based compensation		2,709,617 976,962
Unrealized foreign exchange		5,756 8,925
Deferred income tax recovery	14	(10,116,104 ) (3,440,121 )
Change in fair value of contingent consideration	15	(155,601 ) 2,861,204
Accretion on contingent consideration and deferred consideration	15	50,040 133,450
Amortization of deferred financingfees	15	372,835 276,260
Gain on equityinvestment		(16,416 ) (1,766,968 )
Impairment of intangible asset	9	27,008,037 —
Change in current tax receivable(payable)		(896,519 ) 939,779
Change in trade and other receivables		(3,244,859 ) 1,376,733
Change inprepaid expenses		(140,965 ) 132,290
Change in inventories		86,858 53,220
Change in trade and otherpayables,includingcontractpayable		2,789,000 121,615
Change in employee benefits		(203,436 ) 110,654
Cashprovided byoperatingactivities		$ 35,993,673 $ 45,005,557
Financingactivities
Proceeds from member loans		$ 122,500 $ 68,600
Repayment of member loans		(68,600 ) (49,000 )
Equityloan advance	10	(226,000 ) —
Repayment of short-term advances		— (26,783 )
Repayment of notespayable and bank indebtedness		(14,000,000 ) (82,550,000 )
Proceeds on bank indebtedness		16,006,750 81,641,370
Payment of deferred financingfees		(159,314 ) (839,892 )
Payment of deferred consideration		(1,896,850 ) (1,100,000 )
Payment of earn-out obligation		— (4,795,822 )
Acquisition of equityinterest from non-controllinginterest		— (9,924,381 )
Distributions to non-controllinginterest		(12,945,380 ) (15,825,600 )
Proceeds from the issuance of shares relatingto stock-based compensation		10,680 426,366
Repurchase of shares for cancellation	13(e)	(862,320 ) (4,742,595 )
Cash used in financingactivities		$ (14,018,534 ) $ (37,717,737 )
Investingactivities
Acquisition ofpropertyand equipment		$ (42,031 ) $ (59,508 )
Deferred asset acquisition costs		(51,859 ) (59,249 )
Acquisition ofprofessional services agreements	4	(22,465,280 ) (15,052,058 )
Acquisition of investment	4	(2,016,076 ) —
Acquisition of equityinvestment	10	(49,925 ) —
Distribution received from equityinvestment		— 136,650
Purchase adjustment relating to anesthesia service providers acquired in priorperiods	4	— 4,366,000
Cash used in investingactivities		$ (24,625,171 ) $ (10,668,165 )
Effects of foreign exchange on cash and cash equivalents		1,063 2,116
Decrease in cash and cash equivalents		(2,648,969 ) (3,378,229 )
Cash and cash equivalents,beginningofyear		6,568,716 9,946,945
Cash and cash equivalents,end ofyear		$ 3,919,747 $ 6,568,716
Supplemental disclosure of cash interest and taxespaid:
Cash interestpaid		$ (1,949,694 ) $ (3,055,374 )
Leasepayments made		$ (230,228 ) $ (369,262 )
Non-cash acquisition financing		$ (36,659 ) $ (800,985 )
Taxes paid		$ (3,431,921 ) $ (4,127,443 )

See accompanying notes to consolidated financial statements.

1. Reporting entity:

CRH Medical Corporation (“CRH” or “the Company”) was incorporated on April 21, 2001 and is incorporated under the Business Corporations Act (British Columbia). The Company provides anesthesiology services to gastroenterologists in the United States through its subsidiaries and sells its patented proprietary technology for the treatment of hemorrhoids directly to physicians in the United States and Canada.

CRH principally operates in the United States and is headquartered from its registered offices located at Unit 619, 999 Canada Place, Vancouver, British Columbia, Canada.

2. Basis of preparation:

(a) Basis of presentation:

These consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”).

(b) Reclassification adjustment relating to 2019 comparative period:

For the year ended December 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	For the year ended December 31, 2019
	As previously presented	Adjustment As currently presented

Cash flowsfrom financing activities	$ (27,793,356 )	$ (9,924,381 ) $ (37,717,737 )
Cash flows from investing activities	$ (20,592,546 )	$ 9,924,381 $ (10,668,165 )

(c) Functional and presentation currency:

These consolidated financial statements are presented in United States dollars, which is the Company’s presentation currency. The functional currency of the Company and its subsidiaries is the United States dollar.

(d) Use of estimates, assumptions and judgments:

The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Reported amounts and note disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ from those estimates.

( i ) Use of estimates and assumptions:

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Significant areas requiring the use of management estimates relate to the assessment for impairment of intangible assets, estimates supporting reported anesthesia revenues and the determination of the likelihood of realization of deferred tax assets.

( ii ) Judgments:

Significant judgments made by management in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements is the determination of control for the purposes of consolidation.

3. Significant accounting policies:

The accounting policies have been applied consistently by the Company and its subsidiaries.

(a) Basis of consolidation:

These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company through voting control and for anesthesia businesses, control over the assets and business operations of the subsidiary through operating agreements. Control exists when the Company has the continuing power to govern the financial and operating polices of the investee. Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition up to the effective date of disposition or loss of control. Non-controlling interests, if any, are valued at fair value at inception. All significant intercompany transactions and balances have been eliminated on consolidation.

(b) Cash equivalents:

The Company considers all highly liquid investments with an original maturity of 90 days or less, when acquired, to be cash equivalents.

(c) Foreign currency:

Transactions in foreign currencies are translated to the respective functional currencies of the subsidiaries of the Company at exchange rates at the date of the transaction.

Period end balances of monetary assets and liabilities in foreign currency are translated to the respective functional currencies using period end foreign currency rates. Foreign currency gains and losses arising from settlement of foreign currency transactions are recognized in earnings. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

(d) Inventories:

Inventories are measured at the lower of cost, determined using the first-in first-out method, and net realizable value. Inventory costs include the purchase price and other costs directly related to the acquisition of inventory and costs related to bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in the Company’s ordinary course of business, less the estimated costs of completion and selling expenses. All inventory held is finished goods inventory.

(e) Property and equipment, net:

Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

The estimated useful lives and the methods of depreciation for the current and comparative periods are as follows:

Asset	Basis	Rate
Computer equipment Computer software Furniture and equipment Leasehold improvements initial lease Injection mold	Straight-line Straight-line Straight-line Straight-line Straight-line	4 years 1 year 5 years Shorter of initial lease term or useful life 5 years

These depreciation methods most closely reflect the expected pattern of consumption of the future economic benefits embodied in the asset.

Estimates for depreciation methods, useful lives and residual values are reviewed at each reporting period-end and adjusted if appropriate.

3. Significant accounting policies (continued):

(f) Intangible assets:

Intangible assets, consisting of acquired exclusive professional service agreements to provide anesthesia services and the cost of acquiring patents, are recorded at historical cost. For patents, costs also include legal costs involved in expanding the countries in which the patents are recognized to the extent expected cash flows from those countries exceed these costs over the amortization period and costs related to new patents. The amortization term for professional services agreements are based on the contractual terms of the agreements. Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives and are measured at cost less accumulated amortization and accumulated impairment losses. Intangible assets with finite lives are amortized over the following periods:

Asset	Basis	Rate
Intellectual property rights to the CRH O’Regan System Intellectual property new technology Exclusive professional services agreements	Straight-line Straight-line Straight-line	15 years 20 years 4.5 to 15 years

(g) Impairment of non-financial assets:

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 from future undiscounted cash flows. 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 the carrying amount of the asset exceeds the estimated undiscounted future cash flows expected to be generated over the asset’s remaining useful life, the carrying amount of the asset is reduced to its estimated fair value. The fair value is determined by 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 key assumptions in estimating fair value. Significant assumptions included in projected cash flows include anesthesia case growth rates and revenue rates per case.

(h) Income taxes:

The Company is subject to income taxes in Canada and the United States. Judgment is required in determining the provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

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 (recovery) is comprised of current and deferred tax.

3. Significant accounting policies (continued):

(i) Share-based compensation:

The Company records share-based compensation related to equity classified stock options and share units granted using using either the Black-Scholes model or Binomial model. The vesting components of graded vesting employee awards, with only a service vesting condition, are accounted for as separate share-based arrangements. Each vesting installment is measured separately and expensed over the related installment’s vesting period. Compensation cost is measured at fair value at the date of grant and expensed as employee benefits over the period in which employees unconditionally become entitled to the award. Forfeitures are estimated in recognizing share-based compensation, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the vesting date.

(j) Share capital:

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares, stock options and share options are recognized as a deduction from equity, net of any tax effects.

(k) Earnings per share:

The Company presents basic and diluted earnings per share (EPS) data for its common shares. Basic EPS is calculated by dividing the net income or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period, adjusted for own shares held, if applicable. Diluted EPS is determined by adjusting the income or loss attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for own shares held if applicable, for the effects of all dilutive potential common shares. Diluted EPS for year-to-date (including annual) periods is based on the weighted average of the incremental shares included in each interim period for the year-to-date period.

(l) Segment reporting:

The Company’s operating segments consist of the sale of medical products and the provision of anesthesia services.

(m) Finance costs:

Finance cost is primarily comprised of interest on the Company’s notes payable and bank indebtedness and also includes the amortization of costs incurred to obtain loan financing and any fees in respect of arranging loan financing. Deferred finance costs are amortized using the effective interest method over the term of the related loan financing. Deferred finance costs are presented as a reduction to the related liability.

Finance costs also include changes in fair value of the Company’s earn-out obligation.

(n) Asset acquisitions:

Asset acquisitions are accounted for using the cost accumulation and allocation method. The acquisition cost includes directly related acquisition costs. The cost of the acquisition is allocated to the net assets acquired on a relative fair value basis.

Contingent consideration, where the arrangement is not a derivative, is recognized when it is probable and estimable. After the initial acquisition accounting, changes in contingent and deferred consideration are recorded as an adjustment to the related asset.

The Company’s policy is to recognize any non-controlling interest on consolidation either at fair value of the non-controlling interest or at the fair value of the proportionate share of the net assets acquired.

Where the Company acquires an asset via a step transaction, the Company remeasures any previously held interest to fair value.

3. Significant accounting policies (continued):

(o) Revenue recognition:

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 judgement 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.

The Company recognizes revenue from product sales at the time the product is shipped, which is when title passes to the customer, and when all significant contractual obligations have been satisfied, collection is probable and the amount of revenue can be estimated reliably.

Product sales contracts generally contain a single distinct performance obligation, but multiple performance obligations may exist when multiple product types are ordered by a physician in a contract. The transaction price for product sales is fixed and no variable consideration exists. Contract consideration is allocated to each distinct performance obligation in the contract based upon available stand-alone selling prices obtained from historical sales transactions for each product. The Company recognizes revenue from product sales at the point in time when control of the goods passes to the customer (physician) when the product is shipped, which is when title passes to the customer and an obligation to pay for the goods arises. Shipping services performed after control has passed to the customer, if any, is a separate performance obligation, but was determined to be nominal.

(p) Equity investments

Where the Company does not hold a majority interest in an entity, the Company assesses whether equity method accounting is required under US GAAP Accounting Standards Codification (“ASC”) 323 as well as under ASC 970-323, depending on whether the entity is an LLC. Generally, the Company will account for an investment in an entity as an equity investment where the Company is able to exert significant influence over the operating or financial decisions of the investee, but where control is not established.

The Company records its equity investment initially at cost, including directly attributable third party costs, and subsequently measures its share of any earning or losses of the investee in the periods for which they are reported in the investee financial statements after elimination of any intra-entity profits and losses.

(q) Adoption of new accounting policies:

i) Government Assistance

As a result of the receipt of government stimulus measures in the year ended December 31, 2020 (see note 11), the Company has adopted the following accounting policy in respect of funds received. In general, a government grant is recognized if it is probable that it will be received and that the Company will comply with the conditions associated with the grant. If the conditions are met, the Company recognizes the grant in profit or loss on a systematic basis in line with its recognition of the expenses that the grant is intended to compensate for. For grants related to income, a Company can elect to either offset the grant against the related expenditures or include it in other income. Government assistance received by the Company during the period which met the recognition criteria, has been accounted for as government grants related to income and has been included in other income. Where stimulus is received in the form of a forgivable loan, such as the Paycheck Protection Program (“PPP”), the Company has opted to apply government grant accounting and will recognize the proceeds within other income upon concluding that forgiveness of the loan is probable and that the Company has complied with the relevant provisions of the program. If forgiveness of the loan is not probable, it is presented as a loan on the balance sheet as of the end of the reporting period.

3. Significant accounting policies (continued):

ii) Investments

As a result of the Company’s investment in an anesthesia revenue cycle management organization, the Company has adopted a new accounting policy in the period. In accordance with ASC 323: Investments – Equity Method and Joint Ventures, where the Company exerts virtually no influence over an investment, the Company will account for the investment at cost, using the measurement alternative permitted under ASC 321: Investments – Equity Securities. Equity securities without a readily determinable fair value are recorded at cost, minus impairment, if any.

(r) New standards and interpretations not yet applied:
(i) Credit Losses

In June 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 beginning January 1, 2023 for smaller reporting companies. As CRH meets the definition of smaller reporting company, CRH will adopt this standard for fiscal years beginning January 1, 2023. The Company is currently assessing the impact that adopting this guidance will have on its consolidated financial statements.

(ii) Income Taxes – Simplifying the Accounting for Income Taxes

In December 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 after December 15, 2020, with early adoption permitted. The Company is currently assessing the impact that adopting this guidance will have on its consolidated financial statements.

4. Asset acquisitions:

During the year ended December 31, 2020, the Company completed six asset acquisitions. These asset acquisitions have been included in the anesthesia segment of the Company and represents the following:

Acquired Operation	Date Acquired Consideration
LakeLanier AnesthesiaAssociatesLLC ("LLAA")	June2020 $ 5,428,514
Metro OrlandoAnesthesiaAssociatesLLC ("MOAA")	June2020 $ 3,137,543
CentralVirginiaAnesthesiaAssociatesLLC ("CVAA")	July2020 $ 5,252,886
Orange CountyAnesthesiaAssociatesLLC ("OCAA")	August2020 $ 6,251,015
CoastalCarolina Sedation AssociatesLLC ("CCSA")	September 2020 $ 1,850,381
FDHS Anesthesia Associates LLC ("FDHS")	December 2020 $ 2,921,555

4. Asset acquisitions (continued):

The results of operations of the acquired entities have been included in the Company’s consolidated financial statements from the date of acquisition as the Company has control over these entities.

The following table summarizes the fair value of the consideration transferred and the allocated costs of the assets and liabilities acquired at the acquisition date.

	LLAA	MOAA	CVAA	OCAA	CCSA	FDHS	Total
Cash	$ 5,379,954	$ 2,803,500	$ 2,800,000	$ 6,200,000	$ 1,800,000	$ 2,840,000	$ 21,823,454
Contingent consideration	$ —	$ 294,214	$ 2,306,971	$ —	$ —	$ —	$ 2,601,185
Acquisition costs	$ 48,560	$ 39,829	$ 145,915	$ 51,015	$ 50,381	$ 81,555	$ 417,255
Purchase consideration	$ 5,428,514	$ 3,137,543	$ 5,252,886	$ 6,251,015	$ 1,850,381	$ 2,921,555	$ 24,841,894
Non-controllinginterest	$ 1,809,504	$ 1,045,848	$ 5,046,890	$ 3,220,220	$ 1,777,816	$ 2,806,986	$ 15,707,264
	$ 7,238,018	$ 4,183,391	$ 10,299,776	$ 9,471,235	$ 3,628,197	$ 5,728,541	$ 40,549,158
Assets and liabilities acquired:
Exclusiveprofessional services agreements	$ 7,238,018	$ 4,183,391	$ 10,299,776	$ 9,471,235	$ 3,628,197	$ 5,728,541	$ 40,549,158
Fair value of net identifiable assets and	$ 7,238,018	$ 4,183,391	$ 10,299,776	$ 9,471,235	$ 3,628,197	$ 5,728,541	$ 40,549,158
liabilities acquired
Exclusive professional services	5 years	5 years	5 years	7 years	7 years	7 years
agreements – amortization term
CRH ownership interest	75 %	75 %	51 %	66 %	51 %	51 %

The value of the acquired intangible assets, being exclusive professional services agreements, relate to the acquisition of exclusive professional services agreements to provide professional anesthesia services. The amortization term for the agreements is based upon contractual terms within the respective acquisition agreements and professional services agreements.

The non-controlling interest was determined with reference to the non-controlling interest shareholder’s share of the fair value of the net identifiable assets as estimated by the Company.

The Company has obtained control over the acquired assets via the Company’s majority ownership in the shares of the entities and its agreements with the non-controlling interest shareholders.

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 earnings before interest, tax, depreciation and amortization (“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.

Other Transactions

In addition to the above asset acquisitions, on September 17, 2020, a subsidiary of the Company entered into a membership interest purchase agreement to purchase a 5.56% interest in an anesthesia revenue cycle management organization for $2,000,000. The Company also incurred $16,076 of legal fees as part of the transaction. As the Company has virtually no influence over this investment, in accordance with ASC 323: Investments – Equity Method and Joint Ventures, the Company will account for the investment at cost, using the measurement alternative permitted under ASC 321: Investments – Equity Securities, which is to measure equity securities without a readily determinable fair value at cost, minus impairment, if any.

Additionally, on December 31, 2020, the Company completed an asset purchase agreement to acquire an additional professional services agreement in its West Florida Anesthesia Associates LLC entity. The total cash consideration was $230,000 and the Company incurred $16,978 in transaction costs related to the agreement. The transaction is being accounted for as an asset transaction, with the asset amortized over 5 years.

4. Asset acquisitions (continued):

For those asset acquisitions where CRH ownership interest is less than 100%, in conjunction with the acquisition, both the Company and the non-controlling interest shareholder contributed loans. The terms of the loans are such that they will be repaid first, prior to any future distributions and are non-interest bearing.

	LLAA	MOAA	CVAA	OCAA	CCSA	FDHS	Total
CRH member loan	$ 281,250	$ 168,750	$ 114,750	$ 132,000	$ 127,500	$ 127,500	$ 951,750
Non-controlling interest member loan	$ 93,750	$ 56,250	$ 110,250	$ 68,000	$ 122,500	$ 122,500	$ 573,250
Amount outstanding at December 31, 2020	$ —	$ —	$ —	$ —	$ —	$ 250,000	$ 250,000

During the year ended December 31, 2019, the Company completed five asset acquisitions. These asset acquisitions have been included in the anesthesia segment of the Company and represents the following:

thesia segment of the Company and represents the following:
Acquired Operation	Date Acquired Consideration
Anesthesia CareAssociatesLLC (“ACA”)	January2019 $ 5,355,028
South MetroAnesthesiaAssociatesLLC (“SMAA”)	May2019 $ 1,791,431
Crystal River AnesthesiaAssociatesLLC (“CRAA”)	July2019 $ 2,174,003
Triad Sedation AssociatesLLC (“TSA”)	November 2019 $ 3,828,661
Florida Panhandle Anesthesia Associates LLC (“FPAA”)	December 2019 $ 2,762,302

The results of operations of the acquired entities have been included in the Company’s consolidated financial statements from the date of acquisition as the Company has control over these entities.

The following table summarizes the fair value of the consideration transferred and the allocated costs of the assets and liabilities acquired at the acquisition date.

acquired at the acquisition date.
	ACA	SMAA	CRAA	TSA	FPAA	Total
Cash	$ 5,239,003	$ 1,752,465	$ 2,130,000	$ 3,185,843	$ 2,725,000	$ 15,032,311
Acquisition costs	116,025	38,966	44,003	15,173	37,302	251,469
Deferred consideration	—	—	—	627,645	—	627,645
Pre-transaction equityinterest	—	—	—	1,595,275	—	1,595,275
Purchase consideration	$ 5,355,028	$ 1,791,431	$ 2,174,003	$ 5,423,936	$ 2,762,302	$ 17,506,700
Non-controllinginterest	$ —	$ 1,465,716	$ 2,088,748	$ 5,211,233	$ 2,653,976	$ 11,419,673
	$ 5,355,028	$ 3,257,147	$ 4,262,751	$ 10,635,169	$ 5,416,278	$ 28,926,373
Assets and liabilities acquired:
Exclusiveprofessional services agreements	$ 5,355,028	$ 3,257,147	$ 4,262,751	$ 8,891,711	$ 5,416,278	$ 27,182,915
Cash	—	—	—	115,397	—	$ 115,397
Accounts receivable	—	—	—	1,950,219	—	$ 1,950,219
Prepaid expenses and deposits	—	—	—	1,518	—	$ 1,518
Trade payables and other accruals	—	—	—	(323,676 )	—	$ (323,676 )

The non-controlling interest was determined with reference to the non-controlling interest shareholder’s share of the fair value of the net identifiable assets as estimated by the Company.

4. Asset acquisitions (continued):

Other Transactions

In addition to the above asset acquisitions, on April 3, 2019, a subsidiary of the Company entered into a membership interest purchase agreement to purchase the remaining 49% interest in Arapahoe Gastroenterology Anesthesia Associates LLC (“Arapahoe”); prior to the purchase the Company held a 51% interest in the Arapahoe entity. The purchase consideration, paid via cash, for the acquisition of the remaining 49% interest was $2,300,000 plus 49% of Arapahoe’s working capital as at March 31, 2019. Additionally, the Company incurred deferred acquisition costs of $26,086.

On August 31, 2019, a subsidiary of the Company entered into a membership interest purchase agreement to purchase the remaining 49% interest in Central Colorado Anesthesia Associates LLC (“CCAA”); prior to the purchase the Company held a 51% interest in the CCAA entity. The purchase consideration, paid via cash, for the acquisition of the remaining 49% interest was $7,000,000 plus 49% of CCAA’s working capital as at August 31, 2019. Additionally, the Company incurred deferred acquisition costs of $18,658.

In September 2019, the Company also received a payment of $4,366,000 in respect of the LWA acquisition which was a reduction in the purchase price. This payment served to reduce the value of the related LWA professional services contract intangible and did not modify ownership interest or the term of the LWA agreement.

On November 1, 2019, the Company acquired an additional 36% interest in Triad Sedation Associates LLC and Triad Support Services PLLC (collectively “TSA”). Prior to this transaction, the Company held a 15% interest in TSA and it was accounted for under the equity method. Upon completing the transaction CRH acquired control of TSA; the Company has consolidated the results of TSA from the date control was obtained, November 1, 2019. On conversion from an equity method investment to consolidation, CRH revalued its investment in TSA, resulting in a gain of $1,318,769. See note 10.

5. Trade and other receivables:

	2020	2019
Tradereceivables, gross	$ 23,264,840	$ 20,024,916
Other receivables	81,767	50,756
Less: allowance for doubtful accounts	$ (23,134 )	(34,384 )
	$ 23,323,473	$ 20,041,288
Anesthesia segment–tradereceivables, gross	$ 22,082,820	$ 19,081,177
Product segment – trade receivables, gross	1,182,020	943,739
	$ 23,264,840	$ 20,024,916

6. Trade and other payables:

	2020	2019
Trade payables	$ 946,758	$ 1,213,276
Accruals and otherpayables	6,059,430	4,983,465
Government assistance - Paycheck Protection Program ("PPP")
(note 11)	16,872	—
	$ 7,023,060	$ 6,196,741

7. Right of use assets and related obligations:

The Company has applied the exemption to treat short-term leases as executory contracts as well as applied the practical expedient to choose not to separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component. During the year ended December 31, 2020, the Company incurred total operating lease expenses of $340,726 (2019 - $369,263); this included lease expenses associated with fixed lease payments of $306,635 (2019 - $285,890) and variable lease payments of $34,091 (2019 - $83,373).

Lease expense is allocated to operating segments based on the location of the leases, as follows:

	2020	2019
Anesthesia services expense	$ 166,086	$ 118,943
Product sales expense	87,320	125,160
Corporate expense	87,320	125,160
	$ 340,726	$ 369,263

The weighted average lease term of the Company’s three premises leases is 4.46 years. During the year ended December 31, 2020, the Company entered into a new 5.25 year lease for office space for its Atlanta office location. This lease includes a renewal option to further extend the lease for 2 additional 5-year terms. The Company has not included the 2 additional 5-year renewal terms in its calculation of the lease liability. The weighted average discount rate used by the Company in calculating the obligation relating to right of use assets is based on US Corporate BBB effective bond yields at December 31, 2020.

The following table presents a maturity analysis of the Company’s undiscounted lease obligations for each of the next five years, reconciled to the obligation as recorded on the balance sheet.

	Undiscounted lease payments
2021	$ 300,354
2022	225,769
2023	231,977
2024	238,357
2025	182,853
	$ 1,179,310
Accretion related to outstandinglease obligations	(74,316 )
Total	$ 1,104,994
Current obligation relating toright ofuse assets	$ 272,480
Long-term obligation relatingto right of use assets	$ 832,514
Total	$ 1,104,994

8. Property and equipment:

Property and equipment consist of the following:

equipment: equipment consist of the following:
	December 31,
	2020	2019
Computerequipment and software	$ 146,045	$ 124,640
Furniture and equipment	283,446	267,051
Leaseholdimprovements	10,015	5,784
Injection mold	408,062	408,062
Property and equipment	$ 847,568	$ 805,537
Less: Accumulated depreciation	(719,768 )	(553,604 )
Property and equipment, net	$ 127,800	$ 251,933

9. Intangible assets:

ible assets:
	Professional Services Agreements	Patents	Total

Cost
Balance as at January1,2019	$ 256,491,260	$ 532,598	$ 257,023,858
Additions through asset acquisitions and adjustments	18,622,130	—	18,622,130
(note 4)
Balance as atDecember31,2019	$ 275,113,390	$ 532,598	$ 275,645,988
Additions through asset acquisitions	40,796,136	—	$ 40,796,136
(note4)
Impairment of intangible asset	(27,008,037 )	—	$ (27,008,037 )
Balance as at December 31, 2020	$ 288,901,489	$ 532,598	$ 289,434,087

	Professional Services Agreements	Patents	Total

Accumulated depreciation
Balance as at January1,2019	$ 77,139,732	$ 499,863	$ 77,639,595
Amortization expense and adjustments(note 4)	34,895,944	2,256	34,898,200
Balance as atDecember31,2019	$ 112,035,676	$ 502,119	$ 112,537,795
Amortization expense	40,490,267	1,882	40,492,149
Balance as at December 31, 2020	$ 152,525,943	$ 504,001	$ 153,029,944

	Professional Services Agreements	Patents	Total

Net book value
December31,2020	$ 136,375,546	$ 28,597	$ 136,404,143
December 31, 2019	$ 163,077,714	$ 30,479	$ 163,108,193

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. For each professional services agreement identified, the Company performed undiscounted cash flow modelling which estimated future cash flows based upon expected contract renewal assumptions. The impact of the COVID-19 pandemic (see note 17), has been incorporated into the Company’s key assumptions and underlying cash flow estimates; however, due to uncertainties in the estimates that are inherent to the Company's industry and uncertainties around the duration and longevity of the pandemic, actual results could differ significantly from the estimates made. Many significant 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 reporting unit.

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 majority of the professional services agreements were acquired in conjunction with the GAA acquisition in 2014. At the time of acquisition, CRH estimated a useful life of 12 years for 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 significant assumptions, including revenue rates per case and expected case counts.

9. Intangible assets (continued):

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 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.

As a result of the impairment of these assets, the Company will record a tax recovery of approximately $6.6 million as a result of these assets continuing to be tax deductible.

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. No impairment was indicated based on the discounted cash flow modelling performed.

Various of the Company’s professional services agreements are subject to renewal terms. The weighted average period before the Company’s professional services agreements are up for renewal is 2.76 years. The weighted average remaining amortization period for the Company’s professional services agreements is 3.32 years.

Based on the Company’s professional services agreements in place at December 31, 2020, the Company anticipates that the amortization expense to be incurred by the Company over the next five years is as follows:

	Amortization
	Expense
Forprofessionalservices agreements as atDecember31,2020:
2021	$ 39,774,863
2022	26,887,710
2023	22,741,294
2024	20,817,379
2025	11,378,480
	$ 121,599,726

10. Equity investment:

In June 2020, the Company entered into an agreement with 6 doctors located in North 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 than September 2021. The Company assessed and concluded that as WCSA is an LLC entity, equity method accounting is required. WCSA began operations on October 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 option agreement was determined to be an executory contract and was determined to have only nominal value upon grant and as at December 31, 2020.

The following table provides a summary of the Company’s investment in WCSA as at December 31 2020:

	12 months ended December 31,	12 months ended December 31,
		2020
Beginning balance	$	—
Directly attributable transactioncosts		49,925
Share of netincome		54,255
Member distributions		—
Ending balance	$	104,180

10. Equity investment (continued):

The following tables summarize unaudited financial information for our equity method investee:

Balance sheet	December 31, 2020
Current assets	$ 650,063
Non-current assets	—
Totalassets	$ 650,063
Currentliabilities	$ 334,498
Non-currentliabilities	—
Shareholder's equity	315,565
Total liabilities and shareholders' equity	$ 650,063

	Twelve months ended December 31, 2020
Results of operations
Anesthesiarevenue	$ 576,686
Anesthesia services expense	(261,121 )
Net income	$ 315,565

In October 2018, the Company entered into an agreement with Digestive Health Specialists (“DHS”), located in North Carolina, to assist 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, Triad Sedation Associates LLC (“TSA”) 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, but no sooner than November 2019. On November 1, 2019, the Company acquired control of TSA via the exercise of its option to acquire an additional 36% interest. Refer to note 4. The results of operations of the TSA equity investment, up to the date control was obtained by CRH, is presented below. On obtaining control of TSA and completing its option to purchase an additional 36% interest in the entity, CRH revalued its original 15% equity investment with reference to the price paid for the additional 36% interest. This resulted in a gain arising on its equity investment of $1,318,769 in the year. Prior to obtaining control, CRH recorded equity income of $448,199 in relation to its 15% investment in TSA.

	Ten months ended October 31, 2019
Results of operations
Anesthesiarevenue	$ 4,169,162
Anesthesia services expense	(1,514,704 )
Net income	$ 2,654,458

11. Government assistance:

On April 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.

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 at December 31, 2020 with $16,872 included within accounts payable. The Company has and will recognize the grant in earnings on a systematic basis in line with the recognition of eligible expenses.

11. Government assistance (continued):

During the year ended December 31, 2020, the Company also received additional funds of $2,445,046 under the CARES 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 ended December 31, 2020.

During the year ended December 31, 2020, the Company also received additional funds of $68,663 under the Canadian Employee Wage Subsidy (“CEWS”) program. As 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 ended December 31, 2020.

During the year ended December 31, 2020, the Company also received $1,900,589 under the Medicare Accelerated 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 ended September 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 payable – CMS advancement at period end.

12. Notes payable:

	December 31,	December 31,
	2020	2019
Current portion	$ —	$ —
Non-currentportion	70,600,615	68,380,345
Total loans and borrowings	$ 70,600,615	$ 68,380,345

12. Notes payable (continued):

J.P. Morgan Chase (“JP Morgan Facility”)

On October 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 on October 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 will be 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 ended December 31, 2019 and incurred additional deferred fees of $125,000 in the year ended December 31, 2020 when the Company further amended its facility on September 18, 2020. This amendment, in conjunction with a previous amendment dated August 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 ended June 30, 2021. Should the Company’s PPP loan be forgiven prior to June 30, 2021, the ratio is amended downward to 3.25:1.00. After June 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 of December 31, 2020 were $747,505. Under the JP Morgan Facility, there are no quarterly or annual repayment requirements. As of December 31, 2020, the Company had drawn $71,348,120 on the JP Morgan Facility (2019 - $69,341,370). As at December 31, 2020, the Company is required to maintain the following financial covenants in respect of this Facility:

December 31, 2020, the Company is required to maintain the following financial covenants in respect of	this Facility:
Financial Covenant	Required Ratio
Total leverageratio	Not greaterthan3.50:1.00
Interest coverage ratio	Not less than 3.00:1.00

The Company is in compliance with all covenants as at December 31, 2020.

The consolidated minimum loan payments (principal) in the future for all loan agreements in place as of December 31, 2020 are as follows:

	Minimum Principal
AtDecember31,2020
2021	—
2022	71,348,120
	$ 71,348,120

13. Share capital:

(a) Authorized:

100,000,000 common shares without par value.

(b) Issued and outstanding – common shares:

Other than in connection with shares issued in respect of the Company’s share unit and share option plans and in connection with the Company’s normal course issuer bid (note 13(e)), there were no share transactions in the years ended December 31, 2020 and 2019.

13. Share capital (continued):

(c) Stock option plan:

Under the Company’s Stock Option Plan, the Company may grant options to its directors, officers, consultants and eligible employees. The plan provides for the granting of stock options at the fair market value of the Company’s stock at the date of grant, and the term of options range from two to ten years. The Board of Directors may, in its sole discretion, determine the time during which options shall vest and the method of vesting. As a result of the Share Unit plan approved in June 2020, the Company is authorized to grant a total of 1,826,096 options or share units under its Equity Compensation Plans. A summary of the status of the plan as of December 31, 2020 and 2019 is as follows (options are granted in CAD and USD amounts are calculated using prevailing exchange rates):

	Number of options	Weighted average exercise price	Weighted average exercise price
		CAD	USD
Outstanding, January1,2019	1,344,687	$ 0.69	$ 0.53
Issued	500,000	3.56	2.73
Exercised	(840,000 )	(0.68 )	(0.52 )
Forfeited	—	—	—
Expired	—	—	—
Outstanding,December31,2019	1,004,687	$ 2.12	$ 1.63
Issued	—	—	—
Exercised	(25,000 )	(0.60 )	(0.47 )
Forfeited	—	—	—
Expired	—	—	—
Outstanding, December 31, 2020	979,687	$ 2.16	$ 1.69

All but 375,000 options are vested as of December 31, 2020 (2019 – 500,000 options).

The weighted average fair value of stock options granted during the year ended December 31, 2019 was $1.43 (CAD$1.86) The estimated fair value of the stock options granted was determined using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	2019
Expected life of options	5.05 years
Risk-free interest rate	1.61%
Dividend yield	0%
Volatility	63%
Pre-vest forfeiture rate	3.67%

There is no dividend yield because the Company does not pay, and does not plan to pay, cash dividends on its common shares. The expected stock price volatility is based on the historical volatility of the Company’s average monthly stock closing prices over a period equal to the expected life of each option grant. The risk-free interest rate is based on yields from Canadian Government Bond yields with a term equal to the expected term of the options being valued. The expected life of options represents the period of time that the options are expected to be outstanding based on historical data of option holder exercise and termination behaviour.

For those options that were exercised in 2020, the intrinsic value of the options that were exercised was $32,555 and the fair value of the options that were exercised was $8,327.

For those options that were exercised in 2019, the intrinsic value of the options that were exercised was $2,067,497 and the fair value of the options that were exercised was $306,798.

13. Share capital continued:

(c) Stock option plan (continued):

The following table summarizes information about the stock options outstanding as at:

December 31, 2020:

Exerciseprice	Exerciseprice		Options outstanding	Options outstanding		Options exercisable	Options exercisable
$CAD	$USD	Number of options	Weighted average remaining contractual life (years)	Weighted average exercise price ($CAD)	Weighted average exercise price ($USD)	Number of options	Weighted average exercise price ($CAD) Weighted average exercise price ($USD)
0.60-0.70	0.47-0.55	479,687	3.06	0.69	0.54	479,687	0.69 0.54
3.56 - 3.56	2.79 - 2.79	500,000	8.27	3.56	2.79	125,000	3.56 2.79

December 31, 2019:

Exerciseprice	Exerciseprice		Options outstanding	Options outstanding		Options exercisable	Options exercisable
$CAD	$USD	Number of options	Weighted average remaining contractual life (years)	Weighted average exercise price ($CAD)	Weighted average exercise price ($USD)	Number of options	Weighted average exercise price ($CAD) Weighted average exercise price ($USD)
0.60-0.70	0.46-0.57	504,687	4.05	0.69	0.53	504,687	0.69 0.53
3.56 - 3.56	2.73 - 2.73	500,000	9.27	3.56	2.73	—	— —

For the year ended December 31, 2020, the Company recognized $237,284 (2019 - $239,413), in compensation expense as a result of stock options awarded and vested. Compensation expense is recorded in the consolidated statement of operations and comprehensive income and is allocated to product sales expenses, corporate expenses and anesthesia expenses on the same basis as the allocations of cash compensation. See note 19.

(d) Share unit plan:

In June 2017, the shareholders of the Company approved a Share Unit Plan and the plan was subsequently amended and approved in June 2020. Employees, directors and eligible consultants of the Company and its designated subsidiaries are eligible to participate in the Share Unit Plan. In accordance with the terms of the plan, the Company will approve those employees, directors and eligible consultants who are entitled to receive share units and the number of share units to be awarded to each participant. Each share unit awarded conditionally entitles the participant to receive one common share of the Company upon attainment of the share unit vesting criteria. The vesting of share units is conditional upon the expiry of time-based vesting conditions or performance-based vesting conditions or a combination of the two. Once the share units vest, the participant is entitled to receive the equivalent number of underlying common shares; the Company issues new shares in satisfying its obligations under the plan. As at December 31, 2020, the Company is authorized to grant a further 1,826,096 option or share unit awards under its Equity Compensation Plans.

13. Share capital continued:

(d) Share unit plan (continued):

A summary of the status of the share unit plan as of December 31, 2020 and 2019 is as follows:

	Time based share units	Time based share units	Performance based share units	Performance based share units
Outstanding, January1,2019		1,045,250		1,500,000
Issued		1,553,125		—
Exercised		(325,875 )		—
Forfeited		(125,000 )		(550,000 )
Expired		—		—
Outstanding,December31,2019		2,147,500		950,000
Vested		—		—
Expected to vest		2,147,500		—
Outstanding, January1,2020		2,147,500		950,000
Issued		751,250		—
Exercised		(446,563 )		—
Forfeited		(115,625 )		—
Expired		—		—
Outstanding,December31,2020		2,336,562		950,000
Vested		—		—
Expected to vest		2,336,562		—

	Time based share units		Performance based share units
Outstanding, January1,2020	2,147,500		-
Weighted average contractual life(years)	3.03		7.02
Outstanding,December31,2020	2,336,562		950,000
Weighted average contractual life (years)	2.53		6.02

For those share units that vested in 2020, the intrinsic value of the share units that vested was $1,130,815 and the fair value of the share units that vested was $1,493,178.

For those share units that vested in 2019, the intrinsic value of the share units that vested was $1,038,456 and the fair value of the share units that vested was $1,159,913.

During the year ended December 31, 2020, the Company granted 751,250 time based share units. The weighted average fair value for the time based units at the date of grant was $2.15 (CAD$2.80) per unit. The fair value per unit was based on the market value of the underlying shares at the date of issuance.

During the year ended December 31, 2020, the Company issued 446,563 shares in respect of the 446,563 time-based share units which vested during the year.

During the year ended December 31, 2019, the Company granted 1,553,125 time based share units . The weighted average fair value for the time based units at the date of grant was $2.93 (CAD$3.81) per unit. The fair value per unit was based on the market value of the underlying shares at the date of issuance.

During the year ended December 31, 2019, the Company issued 325,875 shares in respect of the 325,875 time-based share units which vested during the year.

During the year ended December 31, 2020, the Company recognized $2,472,333 (2019 - $737,548), in compensation expense in relation to the granting and vesting of share units. See note 19 for allocation of expense between the Company’s segments.

13. Share capital continued:

(e) Normal Course Issuer Bid:

On November 6, 2017, the Board of Directors of the Company approved a normal course issuer bid to purchase outstanding shares of the Company. On November 8, 2018, the Company’s normal course issuer bid was renewed, with subsequent renewals on November 6, 2019 and November 19, 2020. Under the renewed bid, the Company may purchase up to 6,999,137 shares pursuant to the bid, representing no more than 9.8% of the Company’s shares outstanding on October 30, 2020. All purchases of shares under the bid are made pursuant to an Automated Share Purchase Plan. Subject to any block purchases made in accordance with the rules of the TSX, the bid is subject to a daily repurchase maximum of 39,673 shares. Shares are purchased at the market price of the shares at the time of purchase and are purchased on behalf of the Company by a registered investment dealer through the facilities of the TSX or alternative Canadian and US marketplaces.

During 2020, the Company repurchased 403,000 of its shares for a total cost, including transaction fees, of $865,302 (CAD$1,164,632). As at December 31, 2020, 400,500 of these shares have been cancelled, with the remaining 2,500 shares scheduled for cancellation on January 8, 2021.

During 2019, the Company repurchased 1,607,579 of its shares for a total cost, including transaction fees, of $4,754,295 (CAD$6,313,347). As at December 31, 2019, all of the repurchased shares had been cancelled.

(f) Earnings per share:

The calculation of basic earnings per share for the years ended December 31, 2020 and 2019 is as follows:

		2020			2019
	Net earnings	Weighted average number of common shares outstanding	Per share amount	Net earnings	Weighted average number of common shares outstanding	Per share amount
Net earnings attributable to shareholders:
Earningsper common share:
Basic	$ (24,476,138 )	71,535,343	(0.342 )	$ 3,771,163	71,536,310	$ 0.053
Share options		—			421,249
Share units		—			739,980
Diluted	$ (24,476,138 )	71,535,343	$ (0.342 )	$ 3,771,163	72,697,539	$ 0.052

For the year ended December 31, 2020, 979,687 options (2019 –583,438) and 3,286,562 share units (2019 – 2,357,520) were excluded from the diluted weighted average number of common shares calculation as they are anti-dilutive.

The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding. The treasury method is used to determine the calculation of dilutive shares.

14. Income taxes:

(a) Income tax expense is comprised of the following:

: tax expense is comprised of the following:
	2020	2019
Current taxexpense	$ 2,572,728	$ 5,067,182
Deferred tax recovery	(10,116,104 )	(3,440,121 )
Total tax expense	$ (7,543,376 )	$ 1,627,061

The reconciliation of income tax computed at statutory tax rates to income tax expense, using a 27% (2019 – 27%) statutory rate,

is:

	2020	2019
Netincome before tax –Canada	$ 6,761,468	$ 6,889,481
Net income before tax – United States	(37,217,728 )	2,950,064
Netincome before tax – Alljurisdictions	$ (30,456,260 )	$ 9,839,545
Taxexpense at statutoryincome tax rates	$ (8,223,190 )	$ 2,656,677
Permanent differences	(96,384 )	(50,235 )
Income attributable tonon-controllinginterest	(421,055 )	(1,192,280 )
Foreign income taxed at differentrates	996,636	33,189
Impact ofchangeintax rates	314,056	26,902
Other	(113,439 )	152,808
Total tax expense	$ (7,543,376 )	$ 1,627,061

(b) Deferred tax assets and liabilities:

The Company had the following deferred tax assets and liabilities resulting from temporary differences recognized for financial statement and income tax purposes.

e tax purposes.
	2020	2019
Deferred taxassets:
Property and equipment	$ 38,391	2,684
Intangible assets	18,461,272	9,222,824
Financerelated costs	4,335	224,986
Reserves	55,464	64,755
Share transactioncosts	643,733	—
Stock-based compensation	1,052,095	767,228
Earn-out obligation	221,751	265,660
Deferred tax liabilities:
Property and equipment	—	(23,757 )
Deferred consideration	—	(4,226 )
Reserves	(2,557 )	(83,206 )
Unrealizedforeignexchange	(18,103 )	(20,610 )
Finance related costs	—	(78,060 )
Net deferred tax asset	$ 20,456,381	$ 10,338,278

14. Income taxes (Continued):

(b) Deferred tax assets and liabilities (Continued):

Deferred tax assets by jurisdiction	2020	2019
Canada:
Deferred taxasset	$ 36,851	$ —
Deferred tax liability	—	(101,822 )
Net deferred tax asset(liability)	$ 36,850	$ (101,822 )
United States:
Deferred taxasset	$ 20,440,190	$ 10,548,137
Deferred tax liability	(20,659 )	(108,037 )
Net deferred tax asset (liability)	$ 20,419,531	$ 10,440,100

The realization of deferred income tax assets is dependent on the generation of sufficient taxable income during future periods in which the temporary differences are expected to reverse. If it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is provided against such deferred tax assets. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

As at December 31, 2020 and 2019, the Company had no valuation allowance against its deferred income tax assets. The Company currently does not have any unrecognized tax benefits or material uncertain tax positions.

The Company currently files income tax returns in Canada and the US, the jurisdiction in which the Company believes that it is subject to tax. The Company is currently under audit by the IRS for its 2017 taxation year. Management is not aware of any other material income tax examination currently in progress by any taxing jurisdiction. Tax years ranging from 2016 to 2020 remain subject to Canadian income tax examinations. Tax years ranging from 2017 to 2020 remain subject to U.S. income tax examinations.

15. Net finance expense

Recognized in earnings in the years ended December 31:

		2020	2019
Finance expense:
Interest and accretionexpense onborrowings	$ 1,883,863		$ 3,288,704
Accretion expense on earn-out obligation and deferred consideration		50,040	133,450
Amortizationofdeferredfinancingfees		372,835	276,260
Net change in fair value of financial liabilities at fairvalue throughearnings		(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

16. Financial instruments:

The Company’s financial instruments consist of cash and cash equivalents, trade and other receivables, investments, trade and other payables, employee benefit obligations, loans, notes payable and bank indebtedness, deferred consideration and the Company’s earn-out obligation. The fair values of these financial instruments, except the Company’s investment, notes payable balances, the deferred consideration and the earn-out obligation, approximate carrying value because of their short-term nature.

The Company’s investment, which is recorded at cost, does not have a readily determinable fair value. The Company has assessed whether there any changes in the investment which would indicate impairment at December 31, 2020 and concluded that there is no impairment of this asset.

The Company’s Notes Payable balance, which is comprised of the JP Morgan Facility, is a floating rate instrument which is based on LIBOR plus 1.25% to 1.75% dependent on the Company’s total Leverage Ratio. As a result, a portion of the interest on this instrument is fixed rate. The Company has estimated the fair value of this financial instrument to be $70,884,761 as at December 31, 2020 based on Level 3 unobservable inputs. The fair value of the Company’s Notes Payable balance approximated book value as at December 31, 2019 due to the facility’s interest rates being set shortly before period end.

The Company’s deferred consideration, related to its MOAA and CVAA acquisitions, approximates fair value as the amounts payable under these deferred consideration arrangements are discounted based on Corporate BBB effective bond yields.

The Company’s earn-out obligation is recorded at fair value.

An established fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is available and significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Liabilities	December 31, 2020	Level 1	Level 2 Level 3
Earn-out obligation	$ 907,459	$ —	$ — $ 907,459
Total	$ 907,459	$ —	$ — $ 907,459

Liabilities	December 31, 2019	Level 1	Level 2 Level 3
Earn-out obligation	$ 1,063,060	$ —	$ — $ 1,063,060
Total	$ 1,063,060	$ —	$ — $ 1,063,060

16. Financial instruments (Continued):

The Company’s earn-out obligation is measured at fair value on a recurring basis using significant unobservable inputs (Level 3). The earn-out obligation relates to the Company’s Gastroenterology Anesthesia Associates LLC acquisition, which was acquired in 2014. As part of the business combination, the Company is required to pay consideration contingent on the post-acquisition earnings of the acquired asset. The Company expects to pay the remaining obligation of $907,459 within the first quarter of 2021. The Company measures the fair value of the earn-out obligation based on its best estimate of the cash outflows payable in respect of the earn-out obligation. This valuation technique includes inputs relating to estimated cash outflows under the arrangement. The Company evaluates the inputs into the valuation technique at each reporting period. During the year ended December 31, 2020, the Company revised its estimate underlying the remaining amount to be paid under the earn-out obligation. The amendment of the cash outflow estimates underlying the earn-out resulted in an decrease of $155,601 for the year ended December 31, 2020 to the fair value of the earn-out obligation. The impact of this adjustment was recorded through finance expense in the period.

Reconciliation of level 3 fair values:

vel 3 fair values:
	Earn-out obligation
Balance as at January1,2019	$ 2,920,583
Payment	(4,795,822 )
Recordedin finance expense:
Accretionexpense	77,095
Fair value adjustment	2,861,204
Balance as at January 1, 2020	$ 1,063,060
Recordedin finance expense:
Fair value adjustment	(155,601 )
Balance as at December 31, 2020	$ 907,459

The Company’s financial instruments are exposed to certain financial risks, including credit risk, and market risk.

(a) Credit risk:

Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’s cash and cash equivalents and trade receivables. The carrying amount of the financial assets represents the maximum credit exposure.

The Company limits its exposure to credit risk on cash and cash equivalents by placing these financial instruments with high-credit quality financial institutions and only investing in liquid, investment grade securities.

The Company has a number of individual customers and no one customer represents a concentration of credit risk.

No one customer accounts for more than 10% of the Company’s consolidated revenue. The Company establishes a provision for losses on accounts receivable if it is determined that all or part of the outstanding balance is uncollectable. Collectability is reviewed regularly and an allowance is established or adjusted, as necessary, using a combination of the specific identification method, historic collection patterns and existing economic conditions. Estimates of allowances are subject to change as they are impacted by the nature of healthcare collections, which may involve delays and the current uncertainty in the economy.

(b) Market risk:

Market risk is the risk that changes in market prices, such as interest rates, will affect the Company’s income or the value of the financial instruments held.

( i ) Interest rate risk:

As at December 31, 2020, the Company’s only interest bearing liability is its JP Morgan Facility. With respect to the Company’s Facility, with all other variables held constant, a 10% increase in the interest rate would have reduced net income by approximately $188,000 (2019 - $329,000) for the year ended December 31, 2020. There would be an equal and opposite impact on net income with a 10% decrease.

17. Commitments and contingencies:

The Company is a party to a variety of agreements in the ordinary course of business under which it may be obligated to indemnify third parties with respect to certain matters. These obligations include, but are not limited to contracts entered into with physicians where the Company agrees, under certain circumstances, to indemnify a third party, against losses arising from matters including but not limited to medical malpractice and product liability. The impact of any such future claims, if made, on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to final outcome of these potential claims.

From time to time, the Company is subject to various legal proceedings and claims related to matters arising in the ordinary course of business. The Company does not believe it is currently subject to any material matters where there is at least a reasonable possibility that a material loss may be incurred.

In March 2020 the COVID-19 outbreak was declared a pandemic by the World Health Organization. The situation is dynamic and the ultimate duration and magnitude of the impact on the economy and our business are not known at this time. These impacts could include an impact on our ability to obtain debt and equity financing, impairment in the value of our long-lived assets, or potential future decrease in revenue or the profitability of our going operations.

18. Related party transactions:

Balances and transactions between the Company and its wholly owned and controlled subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of the transactions between the Company and other related parties are disclosed below:

(a) Related party transactions:

During the year ended December 31, 2020, the Company made product sales totaling $28,475 (2019 - $35,095) to one company owned or controlled by one of the Company’s Directors. The transaction terms with related parties may not be on the same price as those that would result from transactions among non-related parties. There were no amounts owing by or to this related party as of December 31, 2020 (2019 - $nil).

19. Segmented information:

The Company operates in two industry segments: the sale of medical products and the provision of anesthesia services. The revenues relating to geographic segments based on customer location, in United States dollars, for the years ended December 31, 2020 and 2019 are as follows:

ows:
	2020	2019
Revenue:
Canada and other	$ 181,372	$ 225,807
United States	105,990,793	120,159,467
Total	$ 106,172,165	$ 120,385,274

The Company’s revenues are disaggregated below into categories which differ in terms of the economic factors which impact the amount, timing and uncertainty of revenue and cash flows.

uncertainty of revenue and cash flows.
	2020	2019
Revenue:
Commercial Insurers	$ 79,609,199	$ 90,332,380
Federal Insurers	17,715,466	19,404,851
Physicians	8,484,070	10,078,843
Other	363,430	569,200
Total	$ 106,172,165	$ 120,385,274

19. Segmented information (Continued):

The Company’s property and equipment, intangibles, other assets and total assets are located in the following geographic regions as at December 31, 2020 and 2019:

	2020	2019
Property and equipment:
Canada	$ 78,820	$ 210,386
United States	$ 48,980	41,547
Total	$ 127,800	$ 251,933
Intangible assets:
Canada	$ 28,596	$ 30,478
United States	$ 136,375,547	163,077,715
Total	$ 136,404,143	$ 163,108,193
Total assets:
Canada	$ 3,379,636	$ 3,231,845
United States	$ 188,405,094	199,863,424
Total	$ 191,784,730	$ 203,095,269

The financial measures reviewed by the Company’s Chief Operating Decision Maker are presented below for the years ended December 31, 2020 and 2019. The Company does not allocate expenses related to corporate activities. These expenses are presented within “Other” to allow for reconciliation to reported measures.

		2020	2020
	Anesthesia services	Product sales	Other	Total
Revenue	$ 97,688,095	$ 8,484,070	$ —	$ 106,172,165
Operatingcosts	100,217,372	4,271,333	8,439,419	112,928,124
Operating income (loss)	$ (2,529,277 )	$ 4,212,737	$ (8,439,419 )	$ (6,755,959 )

		2019
	Anesthesia services	Product sales	Other	Total
Revenue	$ 110,306,431	$ 10,078,843	$ —	$ 120,385,274
Operatingcosts	94,506,039	4,647,719	6,549,321	105,703,079
Operating income (loss)	$ 15,800,392	$ 5,431,124	$ (6,549,321 )	$ 14,682,195

Additionally, the company incurs the following in each of its operating segments:

		2020	2020
	Anesthesia services	Product sales	Other Total

Finance expense	$ (105,561 )	$ —	$ 2,256,698 $ 2,151,137
Stockbased compensationexpense	$ 551,323	$ 342,361	$ 1,815,933 $ 2,709,617
Depreciation and amortization expense	$ 40,504,339	$ 69,604	$ 84,370 $ 40,658,314

		2019
	Anesthesia services	Product sales	Other Total

Finance expense	$ 2,994,654	$ —	$ 3,614,964 $ 6,609,618
Stockbased compensationexpense	$ 481,240	$ 318,554	$ 177,168 $ 976,962
Depreciation and amortization expense	$ 34,908,764	$ 25,534	$ 74,772 $ 35,009,070

20. Subsequent events:

Acquisition by WELL Health Technologies Corp

On February 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 for US$4.00 per share (the “Arrangement”).

The Arrangement, 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 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 Acquisition 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.

Oak Tree Anesthesia Associates LLC Acquisition

On February 9, 2021, a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire a 100% interest in Oak Tree Anesthesia Associates LLC (“Oak Tree”), a gastroenterology anesthesia services provider in New Jersey. The purchase consideration, paid via cash, for the acquisition of the Company’s interest was $3,250,000 plus deferred acquisition costs of $66,182. The provisional cost allocation of the exclusive professional services agreement which was acquired as part of this acquisition is $3,316,182.

UD Management Services Agreement

On February 22, 2021 a subsidiary of the Company entered into a five-year exclusive Management Services Agreement with United Digestive (“UD”). Under this agreement, the Company will earn a fee for managing UD’s anesthesia service. The agreement is effective November 1, 2021.

FDHS Startup Joint Venture

On March 1, 2021, the Company entered into a startup joint venture, whereby the Company will own a 51% interest in a gastroenterology anesthesia practice located in Largo, Florida.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CRH Medical Corporation

Index to Condensed Consolidated Interim Financial Statements (unaudited) As of and for the three months ended March 31, 2021 and 2020

Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Condensed Consolidated Statements of Changes in Equity Condensed Consolidated Statements of Cash Flows Notes to the Condensed Consolidated Financial Statements	Page
	2 3 4 6 7

CRH MEDICAL CORPORATION

Condensed Consolidated Balance Sheets (unaudited) (Expressed in United States dollars)

	Notes	March 31, 2021	December 31, 2020
Assets
Current assets:
Cashand cashequivalents		$ 21,569,335	$ 3,919,747
Trade and other receivables,net	5	23,267,256	23,323,473
Income tax receivable		4,354,683	2,942,008
Prepaid expenses and deposits		1,185,308	870,441
Loan to equity investee		—	226,000
Inventories,finishedgoods		341,052	262,466
		50,717,634	31,544,135
Non-current assets:
Property and equipment, net		136,294	127,800
Right ofuse asset	7	977,616	1,063,804
Intangible assets, net	8	131,505,145	136,404,143
Deferred asset acquisitioncosts		77,363	68,211
Investment		2,016,076	2,016,076
Equityinvestment		90,808	104,180
Deferred tax assets		20,801,370	20,456,381
		155,604,672	160,240,595
Total assets		$ 206,322,306	$ 191,784,730
Liabilities
Current liabilities:
Trade and otherpayables	6	$ 10,709,110	$ 7,023,060
Employee benefits		1,004,992	789,409
Current taxpayable		698,501	753,501
Current portion of lease liability	7	243,255	272,480
Earn-out obligation	13	—	907,459
Contract payable – CMS Advancement		1,900,589	1,900,589
Member loan		58,800	122,500
		14,615,247	11,768,998
Non-currentliabilities:
Contingent consideration		2,651,637	2,634,317
Leaseliability	7	782,698	832,514
Notes payable and bank indebtedness	10	85,704,026	70,600,615
		89,138,361	74,067,446
Equity
Common stock, no par value; 71,645,447 and 71,674,647 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	11	57,284,113	57,255,264
Additional paid-in capital		8,965,360	8,402,216
Accumulated othercomprehensiveloss		(66,772)	(66,772)
Retained earnings		(14,031,217 )	(11,870,442 )
Totalequity attributable to shareholders ofthe Company		52,151,484	53,720,266
Non-controlling interest		50,417,214	52,228,020
Total equity		102,568,698	105,948,286
Total liabilities and equity		$ 206,322,306	$ 191,784,730

See accompanying notes to condensed consolidated financial statements. Commitments and contingencies (note 14) Subsequent events (note 17)

CRH MEDICAL CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) (Expressed in United States dollars, except share and per share data)

		Three months ended March 31,	Three months ended March 31,
	Notes	2021	2020
Revenue:
Anesthesia services	16	$ 31,440,863	$ 23,150,397
Product sales	16	2,466,566	2,304,395
		33,907,429	25,454,792
Expenses:
Anesthesia services expense		30,406,362	24,629,366
Product sales expense		1,134,860	1,191,484
Corporate expense		3,597,491	2,230,804
		35,138,713	28,051,654
Operatingloss		(1,231,284 )	(2,596,862)
Financeincome	12	—	(190,992)
Finance expense	12	551,100	687,832

(Gain)loss from equityinvestment	9	(20,078 )	15,666
Income (loss) before tax		(1,762,306 )	(3,109,368)
Income tax recovery		(623,278 )	(974,411)
Net and comprehensive loss		$ (1,139,028 )	$ (2,134,957)
Attributable to:
Shareholders ofthe Company		$ (2,087,197 )	$ (2,078,494 )
Non-controllinginterest		948,169	(56,463)
		$ (1,139,028 )	$ (2,134,957 )
Loss pershare attributable to shareholders
Basic and diluted	11(f)	$ (0.029 )	$ (0.029 )
Weighted average shares outstanding:
Basic and diluted	11(f)	71,672,147	71,608,769

See accompanying notes to condensed consolidated financial statements.

CRH MEDICAL CORPORATION

Condensed Consolidated Statements of Changes in Equity (unaudited) (Expressed in United States dollars, except for number of shares) For the three months ended March 31, 2021 and 2020

	Number of shares	Common stock	Additional paid -in capital	Accumulated other comprehensive loss	Retained earnings	Non-controlling interest	Total equity
Balance as at January1,2020	71,603,584	$ 56,056,113	$ 7,168,156	$ (66,772 )	$ 13,154,981	$ 47,902,882	$ 124,215,360
Total net and comprehensive income(loss)for theperiod	—	—	—	—	(2,078,494 )	(56,463)	(2,134,957)
Stock-based compensation	—	—	652,548	—	—	—	652,548
Common shares issued on vestingof share units	50,000	139,105	(139,105 )	—	—	—	—
Common shares repurchased in connection with normal course issuer bid and cancelled
(note 11(e))	(74,300 )	(57,700 )	—	—	(65,699 )	—	(123,399 )
Common shares repurchased in connection with normal course issuer bid and held as treasuryshares(2,700 treasuryshares) (note 11(e))	—	(2,029 )	—	—	(2,387 )	—	(4,416 )
Cancellation of treasuryshares	—	—	25,949	—	—	—	25,949
Distributions to members	—	—	—	—	—	(2,229,510 )	(2,229,510 )
Balance as at March 31, 2020	71,579,284	$ 56,135,489	$ 7,707,548	$ (66,772 )	$ 11,008,401	$ 45,616,909	$ 120,401,575

CRH MEDICAL CORPORATION

Condensed Consolidated Statements of Changes in Equity (continued) (unaudited) (Expressed in United States dollars, except for number of shares) For the three months ended March 31, 2021 and 2020

	Number of shares	Common stock	Additional paid -in capital	Accumulated other comprehensive loss	Retained earnings	Non-controlling interest	Total equity
Balance as at January1,2021	71,674,647	$ 57,255,264	$ 8,402,216	$ (66,772 )	$ (11,870,442 )	$ 52,228,020	$ 105,948,286
Total net and comprehensive loss for theperiod	—	—	—	—	(2,087,197 )	948,169	(1,139,028 )
Stock-based compensation	—	—	632,696	—	—	—	632,696
Common shares issued on vestingof share units	25,000	69,552	(69,552 )	—	—	—	—
Common shares repurchased in connection with normal course issuer bid and cancelled
(note 11(e))	(51,700 )	(40,703 )	—	—	(73,578 )	—	(114,281 )
Cancellation of treasuryshares	(2,500)	—	—	—	—	—	—
Distributions to members	—	—	—	—	—	(4,251,110 )	(4,251,110 )
Acquisition of non-controlling interest (note 4)	—	—	—	—	—	1,492,135	1,492,135
Balance as at March 31, 2021	71,645,447	$ 57,284,113	$ 8,965,360	$ (66,772 )	$ (14,031,217 )	$ 50,417,214	$ 102,568,698

See accompanying notes to condensed consolidated financial statements.

CRH MEDICAL CORPORATION

Condensed Consolidated Statements of Cash Flows (unaudited) (Expressed in United States dollars)

		Three months ended March 31,	Three months ended March 31,
	Notes	2021	2020
Operatingactivities:
Net income (loss)		$ (1,139,028 )	$ (2,134,957)
Adjustmentsfor:
Depreciationofproperty, equipment andintangibles		11,305,356	9,408,874
Stock-based compensation	11	632,696	652,548
Unrealizedforeignexchange		(18,950 )	(2,399 )
Deferredincome tax recovery		(344,984)	(579,347 )
Changein fairvalue ofcontingent consideration	12	—	(190,992 )
Accretiononcontingent considerationand deferred consideration	12	17,320	10,145
Amortizationofdeferredfinancingfees	12	103,411	90,603
(Gain)lossfromequityinvestment	9	(20,078)	15,666
Changeincurrent tax receivable		(1,467,675 )	(1,181,116 )
Changeintrade and other receivables		52,407	3,168,544
Changeinprepaid expenses		(314,861 )	(264,843 )
Changein inventories		(78,586 )	26,506
Changeintrade and otherpayables		2,244,851	(1,385,549 )
Change in employee benefits		215,583	151,134
Net cashprovided by operating activities		11,187,462	7,784,817
Financing activities
Repayment of member loans		(122,500)	—
Equityinvestmentloan		226,000	—
Payment ofearn-out obligation		(907,459 )	—
Payment ofdeferred consideration		—	(465,645 )
Repayment of notes payable and bank indebtedness		—	(3,000,000 )
Proceedsfrombank indebtedness		15,000,000	5,000,000
Payment ofdeferredfinancingfees		—	(34,314 )
Distributions tonon-controllinginterest		(4,251,110 )	(2,229,510 )
Repurchase of shares for cancellation	11(e)	(114,299 )	(127,816 )
Net cashusedin financing activities		9,830,632	(857,285 )
Investing activities
Acquisitionofproperty and equipment		(34,493 )	(1,636 )
Deferred asset acquisitioncosts		(48,978 )	(159,252 )
Distribution received from equity investment		33,450	—
Acquisition of anesthesia servicesproviders	4	(3,322,269 )	—
Net cash used in investing activities		(3,372,290 )	(160,888 )
Effects of foreignexchange oncash and cashequivalents		3,785	(7,848)
Increase (decrease) in cash and cash equivalents		17,649,588	6,758,796
Cash and cash equivalents,beginningofperiod		3,919,747	6,568,716
Cash and cash equivalents, end of period		$ 21,569,335	$ 13,327,512
Supplementaldisclosures:
Cash interest paid		$ (469,400 )	$ (606,663 )
Taxes paid		$ (1,189,381)	$ (786,053 )
Operating lease payments		$ (86,934 )	$ (69,395 )

See accompanying notes to condensed consolidated financial statements.

CRH MEDICAL CORPORATION

Notes to the condensed consolidated financial statements

(unaudited)

1. Nature of operations:

CRH principally operates in the United States and is headquartered from its registered offices located at Unit 619, 999 Canada Place, Vancouver, British Columbia, Canada.

2. Summary of significant accounting policies:

(a) Basis of presentation:

These condensed consolidated interim financial statements have been prepared in accordance with US GAAP. These interim financial statements do not include all note disclosures required on an annual basis, and therefore, should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2020, filed with the appropriate securities regulatory authorities.

In the opinion of management, all adjustments, which include reclassifications and normal recurring adjustments necessary to present fairly the condensed consolidated balance sheets, condensed consolidated statement of operations and comprehensive income (loss), condensed consolidated statements of changes in equity and condensed consolidated statements cash flows as at March 31, 2021 and for all periods presented, have been recorded. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the Company's full year results.

(b) Basis of consolidation:

These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities controlled by the Company through voting control and for the anesthesia business, control over the assets and business operations of the subsidiary through operating agreements. Control exists when the Company has the continuing power to govern the financial and operating policies of the investee. Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition up to the effective date of disposition or loss of control. Minority interests, if any, are valued at fair value at inception. All significant intercompany transactions and balances have been eliminated on consolidation.

(c) Use of estimates, assumptions and judgments:

The preparation of the Company’s condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

3. Recent accounting pronouncements:

(a) Initial adoption of new accounting standards:
(i) Income Taxes – Simplifying the Accounting for Income Taxes

In December 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 after December 15, 2020, with early adoption permitted. The adoption of this standard has not had a material impact on the Company.

3. Recent accounting pronouncements (continued):

(b) Recent accounting pronouncements not yet adopted:
(i) Credit Losses

In June 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 beginning January 1, 2023 for smaller reporting companies. As CRH meets the definition of smaller reporting company, CRH will adopt this standard for fiscal years beginning January 1, 2023. The Company is currently assessing the impact that adopting this guidance will have on its consolidated financial statements.

4. Asset acquisitions:

During the three months ended March 31, 2021, the Company completed two asset acquisitions. These asset acquisitions have been included in the anesthesia segment of the Company and represents the following:

Acquired Operation	Date Acquired Consideration
Oak TreeAnesthesiaAssociatesLLC (“OTAA")	February2021 $ 3,250,000
Middle Arkansas Sedation Associates LLC ("MASA")	March 2021 $ 1,500,000

The results of operations of the acquired entities have been included in the Company’s consolidated financial statements from the date of acquisition as the Company has control over these entities.

The following table summarizes the fair value of the consideration transferred and the allocated costs of the assets and liabilities acquired at the acquisition date.

	OTAA	MASA	Total
Cash	$ 3,250,000	$ 1,500,000	$ 4,750,000
Acquisition costs	$ 85,483	$ 53,041	$ 138,524
Purchase consideration Non-controllinginterest	$ 3,335,483 $ —	$ 1,553,041 $ 1,492,135	$ 4,888,524
			$ 1,492,135
	$ 3,335,483	$ 3,045,176	$ 6,380,659
Assets and liabilities acquired:
Exclusive professional services agreements	$ 3,335,483	$ 3,045,176	$ 6,380,659
Fair value of net identifiable assets and liabilities acquired	$ 3,335,483	$ 3,045,176	$ 6,380,659
Exclusive professional services agreements – amortization term	6.9 years	10 years

CRH ownership interest	100%	51%

The non-controlling interest was determined with reference to the non-controlling interest shareholder’s share of the fair value of the net identifiable assets as estimated by the Company.

The Company has obtained control over the acquired assets via the Company’s majority ownership in the shares of the entities and its agreements with the non-controlling interest shareholders.

The effective date of the MASA transaction was March 31, 2021; however, cash consideration was not transferred until April 1, 2021. As a result, the purchase consideration is included in accrued liabilities as at period end.

4. Asset acquisitions (continued):

Acquired Operation	Date Acquired Consideration
LakeLanier AnesthesiaAssociatesLLC ("LLAA")	June2020 $ 5,428,514
Metro OrlandoAnesthesiaAssociatesLLC ("MOAA")	June2020 $ 3,137,543
CentralVirginiaAnesthesiaAssociatesLLC ("CVAA")	July2020 $ 5,252,886
Orange CountyAnesthesiaAssociatesLLC ("OCAA")	August2020 $ 6,251,015
CoastalCarolina Sedation AssociatesLLC ("CCSA")	September 2020 $ 1,850,381
FDHS Anesthesia Associates LLC ("FDHS")	December 2020 $ 2,921,555

The results of operations of the acquired entities have been included in the Company’s consolidated financial statements from the date of acquisition as the Company has control over these entities.

The following table summarizes the fair value of the consideration transferred and the allocated costs of the assets and liabilities acquired at the acquisition date.

	LLAA	MOAA	CVAA	OCAA	CCSA	FDHS	Total
Cash	$ 5,379,954	$ 2,803,500	$ 2,800,000	$ 6,200,000	$ 1,800,000	$ 2,840,000	$ 21,823,454
Contingent consideration	$ —	$ 294,214	$ 2,306,971	$ —	$ —	$ —	$ 2,601,185
Acquisition costs	$ 48,560	$ 39,829	$ 145,915	$ 51,015	$ 50,381	$ 81,555	$ 417,255
Purchase consideration	$ 5,428,514	$ 3,137,543	$ 5,252,886	$ 6,251,015	$ 1,850,381	$ 2,921,555	$ 24,841,894
Non-controllinginterest	$ 1,809,504	$ 1,045,848	$ 5,046,890	$ 3,220,220	$ 1,777,816	$ 2,806,986	$ 15,707,264
	$ 7,238,018	$ 4,183,391	$ 10,299,776	$ 9,471,235	$ 3,628,197	$ 5,728,541	$ 40,549,158
Assets and liabilities acquired:
Exclusiveprofessional services agreements	$ 7,238,018	$ 4,183,391	$ 10,299,776	$ 9,471,235	$ 3,628,197	$ 5,728,541	$ 40,549,158
Fair value of net identifiable assets and	$ 7,238,018	$ 4,183,391	$ 10,299,776	$ 9,471,235	$ 3,628,197	$ 5,728,541	$ 40,549,158
liabilities acquired
Exclusive professional services	5 years	5 years	5 years	7 years	7 years	7 years
agreements – amortization term
CRH ownership interest	75 %	75 %	51 %	66 %	51 %	51 %

The non-controlling interest was determined with reference to the non-controlling interest shareholder’s share of the fair value of the net identifiable assets as estimated by the Company.

The Company has obtained control over the acquired assets via the Company’s majority ownership in the shares of the entities and its agreements with the non-controlling interest shareholders.

4. Asset acquisitions (continued):

Other Transactions

5. Trade and other receivables:

	March 31, 2021	December 31, 2020
Tradereceivables, gross	$ 23,226,876	$ 23,264,840
Other receivables	67,522	81,767
Less: allowance for doubtful accounts	(27,153 )	(23,134 )
	$ 23,267,245	$ 23,323,473
Anesthesia segment–tradereceivables, gross	22,173,977	22,082,820
Product segment – trade receivables, gross	1,052,899	1,182,020
	$ 23,226,876	$ 23,264,840

6. Trade and other payables:

	March 31, 2021	December 31, 2020
Trade payables	$ 2,768,727	$ 946,758
Accruals and otherpayables	6,482,311	6,059,430
Payablein respect of MASAacquisition	1,441,200	—
Government assistance – Paycheck Protection Program(“PPP”)	16,872	16,872
	$ 10,709,110	$ 7,023,060

7. Right of use assets and related obligations:

The Company has applied the exemption to treat short-term leases as executory contracts as well as applied the practical expedient not to separate non-lease components from lease components and instead to account for each separate lease component and the nonlease components associated with that lease component as a single lease component. During the three months ended March 31, 2021, the Company incurred total operating lease expenses of $92,066 (2020 - $90,572). For the three months ended March 31, 2021, this included lease expenses associated with fixed lease payments of $87,574 and variable lease payments of $4,492 (2020 - $69,129 and $21,443, respectively).

Lease expense is allocated to operating segments based on the location of the leases, as follows:

	For the three months ended March 31,	For the three months ended March 31,	For the three months ended March 31,
	2021		2020
Anesthesia services expense	$ 54,898		$ 28,180
Product sales expense		18,584	31,196
Corporate expense		18,584	31,196
	$ 92,066		$ 90,572

7. Right of use assets and related obligations (continued):

The weighted average lease term of the Company’s three premises leases is 4.57 years. The weighted average discount rate used by the Company in calculating the obligation relating to right of use assets is based on US Corporate BBB effective bond yields at March 31, 2021.

The following table presents a maturity analysis of the Company’s undiscounted lease obligations for each of the next five years, reconciled to the obligation as recorded on the balance sheet.

	Undiscounted lease payments
Remainderof 2021	$ 213,601
2022	225,769
2023	231,977
2024	238,357
2025	182,853
	$ 1,092,557
Accretion related to outstanding lease obligations	(66,604 )
Total	$ 1,025,953
Current obligation relating to right of use assets	$ 243,255
Long-term obligation relatingto right of use assets	$ 782,698
Total	$ 1,025,953

8. Intangible assets:

Asset		Basis	Basis	Rate
Intellectualpropertyrights to the CRHO’ReganSystem		Straight-line		15 years
Intellectualpropertynew technology		Straight-line		20 years
Exclusive professional services agreements		Straight-line		4.5 to15years

	Professional Services Agreements			Total
			Patents
Cost
Balance as atDecember31,2020	$ 288,901,489		$ 532,598	$ 289,434,087
Additions through asset acquisitions(note 4)	6,380,659		—	6,380,659
Balance as at March 31, 2021	$ 295,282,148		$ 532,598	$ 295,814,746

	Professional Services Agreements		Patents	Total
Accumulated depreciation
Balance as atDecember31,2020	$ 152,525,943		$ 504,001	$ 153,029,944
Amortization expense	11,278,895		762	11,279,657
Balance as at March 31, 2021	$ 163,804,838		$ 504,763	$ 164,309,601

	Professional Services Agreements		Patents	Total
Net bookvalue
March 31,2021	$ 131,477,310		$ 27,835	$ 131,505,145
December 31, 2020	$ 136,375,546		$ 28,597	$ 136,404,143

The Company identified no indicators of impairment at March 31, 2021.

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. For each professional services agreement identified, the Company performed undiscounted cash flow modelling which estimated future cash flows based upon expected contract renewal assumptions. The impact of the COVID-19 pandemic (see note 17), had been incorporated into the Company’s key assumptions and underlying cash flow estimates; however, due to uncertainties in the estimates that are inherent to the Company's industry and uncertainties around the duration and longevity of the pandemic, actual results could differ significantly from the estimates made. Many significant 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 reporting unit.

8. Intangible assets (continued):

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 was 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 significant assumptions, including revenue rates per case and expected case counts.

Various of the Company’s professional services agreements are subject to renewal terms. The weighted average period before the Company’s professional services agreements are up for renewal is 2.94 years. The weighted average remaining amortization period for the Company’s professional services agreements is 3.38 years.

Based on the Company’s professional services agreements in place at March 31, 2021, the Company anticipates that the amortization expense to be incurred by the Company over the next five years is as follows:

	Amortization Expense
Forprofessionalservices agreements as atMarch31,2021
Remainderof 2021	$ 29,154,424
2022	27,678,736
2023	23,532,309
2024	21,608,394
2025	12,169,495
The first three months of 2026	7,267,090
	$ 121,410,448

9. Equity investment:

The option agreement was determined to be an executory contract and was determined to have only nominal value upon grant and as at March 31, 2021 and December 31, 2020.

The following table provides a summary of the Company’s investment in WCSA as at March 31, 2021:

	3 months ended March 31, 2021
Beginning balance, January 1, 2021	$ 104,180
Share of netincome	20,078
Member distributions	(33,450 )
Ending balance	$ 90,808

10. Equity investment (continued):

The following tables summarize unaudited financial information for our equity method investee:

Balance sheet	March 31, 2021
Current assets	$ 389,008
Non-current assets	—
Totalassets	$ 389,008
Currentliabilities	$ 191,053
Non-currentliabilities	—
Shareholder's equity	197,955
Total liabilities and shareholders' equity	$ 389,008

	Three months ended March 31, 2021
Results of operations
Anesthesiarevenue	$ 353,847
Anesthesia services expense	(248,456 )
Net income	$ 105,391

10. Notes payable:

	March 31, 2021	December 31, 2020
Current portion	$ —	$ —
Non-currentportion	85,704,026	70,600,615
Total loans and borrowings	$ 85,704,026	$ 70,600,615

J.P. Morgan Chase (“JP Morgan Facility”)

On October 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 on October 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 will be 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 ended December 31, 2019 and incurred additional deferred fees of $125,000 in the year ended December 31, 2020 when the Company further amended its facility on September 18, 2020. This amendment, in conjunction with a previous amendment dated August 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 ended June 30, 2021. Should the Company’s PPP loan be forgiven prior to June 30, 2021, the ratio is amended downward to 3.25:1.00. After June 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 of March 31, 2021 were $644,094. Under the JP Morgan Facility, there are no quarterly or annual repayment requirements. As of March 31, 2021, the Company had drawn $86,348,120 on the JP Morgan Facility (2020 - $71,348,120). As at March 31, 2021, 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 is in compliance with all covenants as at March 31, 2021.

10. Notes payable (continued):

The consolidated minimum loan payments (principal) for all loan agreements in the future are as follows:

	Minimum Principal
AtMarch31,2021
Remainderof 2021	$ —
2022	86,348,120
	$ 86,348,120

11. Share capital:

(a) Authorized:

100,000,000 common shares without par value.

(b) Issued and outstanding – common shares:

Other than in connection with shares issued in respect of the Company’s share unit and share option plans and in connection with the Company’s normal course issuer bid (note 11(e)), there were no share transactions in the three months ended March 31, 2021 and 2020.

(c) Share unit plan:

In June 2017, the shareholders of the Company approved a Share Unit Plan. Employees, directors and eligible consultants of the Company and its designated subsidiaries are eligible to participate in the Share Unit Plan. In accordance with the terms of the plan, the Company will approve those employees, directors and eligible consultants who are entitled to receive share units and the number of share units to be awarded to each participant. Each share unit awarded conditionally entitles the participant to receive one common share of the Company upon attainment of the share unit vesting criteria. The vesting of share units is conditional upon the expiry of timebased vesting conditions or performance-based vesting conditions or a combination of the two. Once the share units vest, the participant is entitled to receive the equivalent number of underlying common shares; the Company issues new shares in satisfying its obligations under the plan.

11. Share capital (continued):

A summary of the status of the plan as of March 31, 2021 is as follows:

	Time based	Performance
	share units	based share units
Outstanding,December31,2020	2,336,562	950,000
Issued	—	—
Exercised	(25,000 )	—
Forfeited	(28,000 )	—
Expired	—	—
Outstanding,March31,2021	2,283,562	950,000
Vested	—	—
Expected to vest	2,283,562	—

During the three months ended March 31, 2021, the Company recognized $581,739 (2020 – $570,254) in compensation expense in relation to share units.

(d) Stock-option plan:

During the three months ended March 31, 2021, there was no activity in the Company’s stock-option plan.

During the three months ended March 31, 2021, the Company recognized $50,957 (2020 - $82,294) in compensation expense in relation to options.

(e) Normal Course Issuer Bid:

During the three months ended March 31, 2021, the Company repurchased 51,700 (2020 – 77,000) of its shares under its Normal Course Issuer Bid for a total cost, including transaction fees, of $114,705 (CAD$146,035) (2020 - $128,365 (CAD$178,486)). As at March 31, 2021, all of the repurchased shares were cancelled (2020 – 74,300).

(f) Loss per share:

The calculation of basic and diluted loss per share for the three months ended March 31, 2021 and 2020 is as follows:

		For the three months ended March	For the three months ended March	For the three months ended March	31,
		2021			2020
	Net loss	Weighted average	Per share amount	Net loss	Weighted average	Per share amount
		number of common			number of common
		shares outstanding			shares outstanding
Netloss attributable to shareholders:
Loss percommonshare:
Basic and diluted	$ (2,087,197 )	71,672,147	$ (0.029 )	$ (2,078,494 )	71,608,769	$ (0.029 )

For the three months ended March 31, 2021, 979,687 options (2020 – 1,004,687) and 3,233,562 share units (2020 – 2,676,896) were excluded from the diluted weighted average number of common shares calculation.

12. Net finance expense

Recognized in earnings in the three months ended March 31, 2021:

		For the three months ended March 31,	For the three months ended March 31,
		2021	2020
Financeincome:
Net change in fair value of financial liabilities at fair value through earnings(note 13)	$	—	$ (190,992)
Total finance income	$	—	$ (190,992)
Finance expense:
Interest and accretionexpense onborrowings	$	430,369	$ 587,084
Accretion expense on earn-out obligation and deferred consideration		17,320	10,145
Amortizationofdeferredfinancingfees		103,411	90,603
Net change in fair value of financial liabilities at fair value through earnings(note 13)		—	—
Total finance expense	$	551,100	$ 687,832
Net finance expense	$	551,100	$ 496,840

13. Financial instruments:

The Company’s investment, which is recorded at cost, does not have a readily determinable fair value. The Company has assessed whether there any changes in the investment which would indicate impairment at March 31, 2021 and concluded that there is no impairment of this asset.

The Company’s Notes Payable balance, which is comprised of the JP Morgan Facility, is a floating rate instrument which is based on LIBOR plus 1.25% to 1.75% dependent on the Company’s total Leverage Ratio. As a result, a portion of the interest on this instrument is fixed rate. The Company has estimated the fair value of this financial instrument to be $85,150,297 as at March 31, 2021 based on Level 3 unobservable inputs (2020 - $70,884,761).

The Company’s earn-out obligation was recorded at fair value.

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Liabilities	March 31, 2021	Level 1	Level 2 Level 3
Earn-out obligation	$ —	$ —	$ — $ —
Total	$ —	$ —	$ — $ —

Liabilities	December 31, 2020	Level 1	Level 2 Level 3
Earn-out obligation	$ 907,459	$ —	$ — $ 907,459
Total	$ 907,459	$ —	$ — $ 907,459

13. Financial instruments (continued):

The Company’s earn-out obligation was measured at fair value on a recurring basis using significant unobservable inputs (Level 3). The earn-out obligation related to the Company’s Gastroenterology Anesthesia Associates LLC acquisition, which was acquired in 2014. As part of the transaction, the Company was required to pay consideration contingent on the post-acquisition earnings of the acquired asset. In the year-ended December 31, 2019, the Company paid $4,795,822 as partial payment of the amount owing under its earn-out obligation; the Company paid the remaining obligation ($907,459) in the first quarter of 2021. The Company measured the fair value of the earn-out obligation based on its best estimate of the cash outflows payable in respect of the earn-out obligation. This valuation technique included inputs relating to estimated cash outflows under the arrangement. The Company evaluated the inputs into the valuation technique at each reporting period.

Reconciliation of level 3 fair values:

	Earn-out obligation
Balance as at January1,2021	$ 907,459
Payment	(907,459 )
Balance as at March 31, 2021	$ —

14. Commitments and contingencies:

The Company is a party to a variety of agreements in the ordinary course of business under which it may be obligated to indemnify third parties with respect to certain matters. These obligations include, but are not limited to, contracts entered into with physicians where the Company agrees, under certain circumstances, to indemnify a third party against losses arising from matters including but not limited to medical malpractice and product liability. The impact of any such future claims, if made, on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to final outcome of these potential claims.

15. Related party transactions:

(a) Related party transactions:

During the three months ended March 31, 2021, the Company made product sales totaling $2,990 (2020 - $7,190) to one company owned or controlled by one of the Company’s Directors. The transaction terms with related parties may not be on the same price as those that would result from transactions among non-related parties. The amount owed by this related party as of March 31, 2021 was $nil (2020 - $nil).

16. Segmented information:

The Company operates in two industry segments: the sale of medical products and the provision of anesthesia services. The revenues relating to geographic segments based on customer location, in United States dollars, for the three months ended March 31, 2021 and 2020 are as follows:

	Three months ended	Three months ended
	March 31, 2021	March 31, 2020
Revenue:
Canada and other	$ 44,063	$ 64,672
United States	33,863,366	25,390,120
Total	$ 33,907,429	$ 25,424,792

16. Segmented information (continued):

The Company’s revenues are disaggregated below into categories which differ in terms of the economic factors which impact the amount, timing and uncertainty of revenue and cash flows.

		Three months ended
		March 31, 2021 March 31, 2020
Revenue:
Commercial Insurers	$	25,164,342 $ 18,608,510
Federal Insurers		6,031,137 4,472,812
Physicians		2,466,566 2,304,395
Other		245,384 69,075
Total	$	33,907,429 $ 25,454,792

The Company’s property and equipment, intangibles, other assets and total assets are located in the following geographic regions as at March 31, 2021 and December 31, 2020:

as atMarch31,2021andDecember31,2020:
		2021	2020
Property and equipment:
Canada	$ 72,188		$ 78,820
United States	$ 64,106		48,980
Total	$ 136,294		$ 127,800
Intangible assets:
Canada	$ 27,835		$ 28,596
United States	$ 131,477,310		136,375,547
Total	$ 131,505,145		$ 136,404,143
Total assets:
Canada	$ 13,892,316		$ 3,379,636
United States	$ 192,429,990		188,405,094
Total	$ 206,322,306		$ 191,784,730

The financial measures reviewed by the Company’s Chief Operating Decision Maker are presented below for the three months ended March 31, 2021 and 2020.The Company does not allocate expenses related to corporate activities. These expenses are presented within “Other” to allow for reconciliation to reported measures.

		Three months ended March 31, 2021	Three months ended March 31, 2021
	Anesthesia services	Product sales	Other	Total
Revenue	$ 31,440,863	$ 2,466,566	$ —	$ 33,907,429
Operatingcosts	30,406,362	1,134,860	3,597,491	35,138,713
Operating income (loss)	$ 1,034,501	$ 1,331,706	$ (3,597,491 )	$ (1,231,284 )

		Three months ended March 31, 2020	Three months ended March 31, 2020
	Anesthesia services	Product sales	Other	Total
Revenue	$ 23,150,397	$ 2,304,395	$ —	$ 25,454,792
Operatingcosts	24,629,366	1,191,484	2,230,804	28,051,654
Operating income (loss)	$ (1,478,969 )	$ 1,112,911	$ (2,230,804 )	$ (2,596,862 )

Additionally, the Company incurs the following in each of its operating segments:

		Three months ended March 31, 2021	Three months ended March 31, 2021
	Anesthesia services	Product sales	Other	Total
Finance (income) expense	$ 17,320	$ —	$ 533,780	$ 551,100
Depreciation and amortization expense	$ 11,284,832	$ 5,708	$ 14,816	$ 11,305,356

		Three months ended March 31, 2020
	Anesthesia services	Product sales	Other	Total
Finance expense	$ (180,847 )	$ —	$ 677,687	$ 496,840
Depreciation and amortization expense	$ 9,383,403	$ 5,295	$ 20,176	$ 9,408,874

17. Subsequent events:

Acquisition by WELL Health Technologies Corp

JP Morgan Facility Amendment

In connection with the acquisition of the Company by WELL, the Company amended its senior secured credit arrangement administered by JP Morgan Chase Bank, N.A. The amendment increased the credit available under the facility to US$175 million and provides access to a US$125 million accordion feature that increases the total aggregate amount of credit available to US$300 million. This new facility replaces the senior secured credit facilities previously maintained by the Company.

The facility is provided by a syndicate that was led by JP Morgan, CIBC and HSBC Bank Canada. The lending syndicate also includes Wells Fargo Bank, N.A., The Bank of Nova Scotia and U.S. Bank National Association. The purpose of the New Facility was to partially fund WELL’s acquisition of the Company as well as to facilitate the Company’s ongoing acquisition program in the United States.

New England Anesthesia Associates LLC Acquisition

On May 1, 2021, a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire an 85% interest in New England Anesthesia Associates LLC (“NEAA”), a gastroenterology anesthesia services provider in Connecticut. The purchase consideration, paid via cash, for the acquisition of the Company’s interest was $4,581,500 plus deferred acquisition costs of $121,544. The provisional cost allocation of the exclusive professional services agreement which was acquired as part of this acquisition is $5,532,992.

Northern Indiana Anesthesia Associates LLC Acquisition

On May 17, 2021, a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire a 51% interest in North Indiana Anesthesia Associates LLC (“NIAA”), a gastroenterology anesthesia services provider in Indiana. The purchase consideration, paid via cash, for the acquisition of the Company’s interest was $2,318,000 plus deferred acquisition costs of $18,509. The provisional cost allocation of the exclusive professional services agreement which was acquired as part of this acquisition is $4,581,389.

FDHS LLC – Bradenton Acquisition

On May 27, 2021, a subsidiary of the Company entered into an asset contribution and exchange agreement to acquire a 51% interest in an add-on practice in Bradenton, Florida which will be part of CRH affiliate FDHS Anesthesia, LLC (“FDHS”). The purchase consideration, paid via cash, for the acquisition of the Company’s interest was $1,432,000 plus deferred acquisition costs of $29,050. The provisional cost allocation of the exclusive professional services agreement which was acquired as part of this acquisition is $2,864,805.

SCHEDULE B

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY GIVING EFFECT TO THE ARRANGEMENT WITH CRH

[see attached]

CW16646724.4

WELL HEALTH TECHNOLOGIES CORP. PRO FORMA CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2021

(UNAUDITED)
ASSETS
Current
Cash and cash equivalents
Accounts and other receivables
Income tax receivable
Inventory and work in progress
Current portion of lease receivable
Other current assets
Total current assets
Financial assets at fair value through profit or loss
Investment accounted for using the equity method
Property and equipment
Intangible assets
Lease receivable
Equity investment
Deferred tax assets
Other non-current assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current
Accounts payable and accrued liabilities
Unearned revenue
Current tax liabilities
Current portion of lease liability
Contract payable - CMS Advancement
Member Loan
Other current liabilities
Total current liabilities
Lease liability
Notes Payable and bank indebtedness
Other non-current liabilities
Total liabilities
Equity
Share capital
Contributed surplus
Accumulated other comprehensive income (loss)
Deficit
Equity attributable to owners of WELL Health
Technologies Corp.
Non-controlling interests
Total equity
Total EQUITY AND LIABILITIES

C$
C$
C$
C$
WELL AS
REPORTED
CRH AS
REPORTED
TOTAL
adjustments
PRO FORMA
TOTAL Notes
83,250,035
27,123,439
(713,598)
109,659,8762 (a) (b) (e)
7,852,345
29,258,574
37,110,919
5,476,014
5,476,014
571,050
428,873
999,923
288,171
288,171
2,258,997
1,490,525
3,749,522
94,220,598
63,777,425
(713,598)
157,284,425
1,090,793
1,090,793
4,978,123
4,978,123
20,111,545
1,400,742
21,512,287
136,050,644
165,367,720
321,178,312
622,596,6762 (f) (g)
1,445,500
1,445,500
114,191
114,191
26,157,723
74,338
26,232,0612 (g)
270,386
2,632,500
2,902,886
258,167,589
259,450,301
320,539,052
838,156,942
8,386,405
13,466,708
26,610,793
48,463,9062 (c) (d)
2,311,056
2,311,056
878,363
878,363
2,647,324
305,893
2,953,217
2,389,991
2,389,991
73,941
73,941
9,178,686
1,263,777
10,442,463
22,523,471
18,378,673
26,610,793
67,512,937
18,535,556
984,243
19,519,799
107,772,813
60,988,750
168,761,5632 (e)
1,593,941
3,334,434
4,928,375
42,652,968
130,470,163
87,599,543
260,722,674
232,633,803
72,034,772
226,765,228
531,433,8032 (a) (f) (g), 4(a)
9,295,695
11,273,940
(11,273,940)
9,295,6952 (c) (f)
(100,764)
(83,966)
83,966
(100,764) 2 (f)
(27,862,464)
(17,644,255)
17,364,255
(28,142,464) 2 (c) (f) (g)
213,966,270
65,580,491
232,939,509
512,486,270
1,548,351
63,399,647
0
64,947,998
215,514,621
128,980,138
232,939,509
577,434,268
258,167,589
259,450,301
320,539,052
838,156,942

WELL HEALTH TECHNOLOGIES CORP. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2020 (UNAUDITED)

(UNAUDITED)
Revenue
Expenses
Cost of sales (excluding depreciation and amortization)
General and administrative
Depreciation and amortization
Stock-based compensation
Foreign exchage loss
Operating loss
Interest income
Interest expense
Time-based earn-out expense
Income tax recovery (expense)
Other income
Net loss before share of profit (loss) of associates
Share of profit (loss) of associates
Net loss for the period
Net profit (loss) attributable to:
Owners of WELL Health Technologies Corp.
Non-controlling interests
Other comprehensive income loss
Exchange difference on translation of foreign operations
Total comprehensive income (loss) for the period
Total comprehensive income (loss) attributable to:
Owners of WELL Health Technologies Corp.
Non-controlling interests
Loss per share for the period attributable to owners of
WELL Health Technologies Corp.
Basic and diluted
Weighted average number of common shares outstanding

C$
C$
C$
C$
WELL AS
REPORTED
CRH AS
REPORTED
TOTAL
ADJUSTMENTS
PRO FORMA
TOTAL Notes
50,240,249 142,429,958
192,670,207
(29,024,783)
(78,188,747)
(107,213,530)
(22,376,825)
(15,126,252)
(37,503,077)
(4,270,370)
(54,543,128)
(58,813,498)
(4,974,781)
(3,634,951)
(28,325)
(8,638,057) 3 (a)
(196,434)
(196,434)
(10,602,944)
(9,063,120)
(28,325)
(19,694,389)
454,379
454,379
(1,934,647)
(3,094,489)
(1,962,293)
(6,991,429) 3 (b)
(1,863,794)
208,739
(1,655,055)
4,362,391
10,119,440
459,027
14,940,8583 (b)
55,852
7,301,056
7,356,908
(2,623,948)
(30,759,656)
(1,531,591)
(34,915,195)
(586,705)
22,022
(564,683)
(3,210,653)
(30,737,634)
(1,531,591)
(35,479,878)
(3,686,464)
(32,834,739)
(1,531,591)
(38,052,794)
475,811
2,097,105
2,572,916
(3,210,653)
(30,737,634)
(1,531,591)
(35,479,878)
(132,651)
(132,651)
(3,343,304)
(30,737,634)
(1,531,591)
(35,612,529)
(3,778,884)
(32,834,739)
(1,531,591)
(38,145,214)
435,580
2,097,105
2,532,685
(3,343,304)
(30,737,634)
(1,531,591)
(35,612,529)
(0.03)
(0.46)
(0.23)
133,911,242
71,558,371
30,867,324
164,778,5664 (b)

WELL HEALTH TECHNOLOGIES CORP. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2021 (UNAUDITED)

(UNAUDITED)
Revenue
Expenses
Cost of sales (excluding depreciation and amortization)
General and administrative
Depreciation and amortization
Stock-based compensation
Foreign exchage loss
Operating loss
Interest income
Interest expense
Time-based earn-out expense
Income tax recovery (expense)
Other income
Net loss before share of profit (loss) of associates
Share of profit (loss) of associates
Net loss for the period
Net profit (loss) attributable to:
Owners of WELL Health Technologies Corp.
Non-controlling interests
Other comprehensive loss
Exchange difference on translation of foreign operations
Total comprehensive loss for the period
Total comprehensive income (loss) attributable to:
Owners of WELL Health Technologies Corp.
Non-controlling interests
Loss per share for the period attributable to owners of
WELL Health Technologies Corp.
Basic and diluted
Weighted average number of common shares outstanding

C$
C$
C$
C$
WELL AS
REPORTED
CRH AS
REPORTED
TOTAL
ADJUSTMENTS
PRO FORMA
TOTAL Notes
25,560,249
42,926,805
68,487,054
(15,520,859)
(23,757,048)
(39,277,907)
(11,232,164)
(5,614,990)
2,909,958
(13,937,196) 3 (c)
(1,442,362)
(14,312,581)
(15,754,943)
(2,992,837)
(800,993)
145,257
(3,648,573) 3 (a)
(11,471)
(11,471)
(5,639,444)
(1,558,807)
3,055,215
(4,143,036)
320,319
320,319
(457,846)
(697,693)
(670,959)
(1,826,498) 3 (b)
(890,948)
(890,948)
(366,717)
789,070
(273,517)
148,8363 (b) (c)
14,056
14,056
(7,020,580)
(1,467,430)
2,110,739
(6,377,271)
(63,921)
25,419
(38,502)
(7,084,501)
(1,442,011)
2,110,739
(6,415,773)
(7,038,909)
(2,642,393)
2,110,739
(7,570,563)
(45,592)
1,200,382
1,154,790
(7,084,501)
(1,442,011)
2,110,739
(6,415,773)
(46,216)
(46,216)
(7,130,717)
(1,442,011)
2,110,739
(6,461,989)
(7,071,019)
(2,642,393)
2,110,739
(7,602,673)
(59,698)
1,200,382
1,140,684
(7,130,717)
(1,442,011)
2,110,739
(6,461,989)
(0.04)
(0.04)
(0.04)
163,123,252
71,672,147
30,867,324
193,990,5764 (b)

WELL Health Technologies Corp. Notes to the Pro Forma Consolidated Financial Statements (Unaudited, in Canadian dollars unless otherwise stated)

1) BASIS OF PRESENTATION

WELL Health Technologies Corp. (“ WELL ” or “the Company”) is a Vancouver based company focused on consolidating and modernizing clinical and digital assets within the healthcare sector.

The pro forma financial statements have been prepared to reflect:

An agreement with CRH Medical Corporation (“ CRH ”) to acquire all the issued and outstanding common shares of CRH pursuant to a Plan of Arrangement under the Business Corporations Act (British Columbia) (the “Agreement”).
They have been prepared from information derived from and should be read in conjunction with:
The audited consolidated financial statements of WELL, together with the accompanying notes thereto, as at and for the years ended December 31, 2020 and 2019.
The audited consolidated financial statements of CRH, together with the accompanying notes thereto, as at and for the years ended December 31, 2020 and 2019.
The unaudited condensed interim consolidated financial statements of WELL, together with the accompanying notes thereto, as at and for the three months ended March 31, 2021.
The unaudited condensed interim consolidated financial statements of CRH, together with the accompanying notes thereto, as at and for the three months ended March 31, 2021.

The pro forma consolidated financial statements have been prepared by management based on the principles of International Financial Reporting Standards (“IFRS”). The pro forma consolidated balance sheet gives effect to the transactions and assumptions described herein as if they had occurred on March 31, 2021 and the pro forma consolidated statement of operations give effect to such transactions and assumptions as if they had occurred on January 1, 2020. The pro forma consolidated financial statements may not be indicative of the results that actually would have occurred if the events reflected therein had been in effect on the dates indicated or of the results which may be obtained in the future.

It is the recommendation of management that this financial information should be read in conjunction with the financial statements and notes referenced above. Accounting policies used in preparation of the pro forma consolidated statements are in accordance with those disclosed in WELL’s audited consolidated financial statements for the years ended December 31, 2020 and 2019, as applicable.

2) PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET ASSUMPTIONS AND ADJUSTMENTS

The unaudited pro forma consolidated balance sheet gives effect to the transaction and adjustments as if they had occurred on March 31, 2021, as well as the following:

Acquisition of CRH

a. Completed bought deal equity financing by WELL by the issuance of 30,867,324 shares at $9.80 per share, with gross proceeds of $302.5 million, financing/share issuance costs of approximately $3.7 million.
b. Payment of cash in the aggregate amount of approximately US$287 million in settlement of the outstanding common shares of CRH,
c. Transaction costs of CRH is estimated at US$16.2 million (C$20.3 million) mainly related to costs directly attributable to the transaction and include contractual bankers’ fees and liquidity payment to the CRH CEO, US$1.4 million already paid and remaining US$14.8 million (C$18.6 million) accrued as of March 31 as accounts payable and accrued liabilities. Payout of vested/accelerated CRH stock options and other equity instruments to

WELL Health Technologies Corp. Notes to the Pro Forma Consolidated Financial Statements (Unaudited, in Canadian dollars unless otherwise stated)

CRH directors and senior management in the aggregate amount of approximately US$6.1 (C$7.7) million accrued as of March 31 as accounts payable and accrued liabilities.

d. Transaction costs of WELL in the aggregate amount of approximately $1.4 million accrued as of March 31 as accounts payable and accrued liabilities,
e. Draw-down of CRH’s credit facility in the estimated amount of US$48.5 million (C$61 million); and
f. WELL will account for the acquisition using the acquisition method of accounting per IFRS.

Cash and cash equivalents
Accounts and other receivables
Inventory and Work in progress
Income tax receivable
Other current assets
Property and equipment
Intangible assets
Deferred tax assets
Equity investments
Other non-current assets
Accounts payable and accrued liabilities
Current tax liabilities
Current portion of lease liability
Contract payable - CMS Advancement
Member Loan
Other current liabilities
Lease liability
Notes Payable and bank indebtedness
Other non-current liabilities
Non-controlling interests
Net assets acquired
Goodwill
Purchase consideration

C$
27,123,439
29,258,574
428,873
5,476,014
1,490,525
1,400,742
165,367,720
26,232,061
114,191
2,632,500
(39,797,499)
(878,365)
(305,893)
(2,389,991)
(73,941)
(1,263,777)
(984,243)
(107,772,813)
(3,334,434)
(63,399,647)

39,324,036
321,178,312
360,502,348

The above preliminary purchase price and recognized amounts of identifiable assets acquired and liabilities assumed has been determined from information that is available to the management of WELL at this time and incorporates estimates, many of which are significant. The amounts are at provisional estimates of fair value, which approximate the previously reported carrying values by CRH.

No adjustment has been made to reflect fair value adjustments that may be required under IFRS 3 – Business combinations and/or operating synergies that may be realized as a result of the transaction. The acquisition accounting will be finalized after all actual results have been obtained and the final fair values of the assets and liabilities have been determined. The estimated costs of the transaction incurred by CRH are expected to be US$16.2 million and are either paid or included in the adjustment to accounts payable and accrued liabilities. The purchase price equation is based on a cash consideration of approximately US$287 (C$361) million. The excess of the purchase consideration over the acquisition date fair values assigned to the identified assets and liabilities resulting in goodwill. Other identifiable intangible assets arising from the acquisition may be determined and expect to include at least similar

WELL Health Technologies Corp. Notes to the Pro Forma Consolidated Financial Statements (Unaudited, in Canadian dollars unless otherwise stated)

intangible assets to those reported by CRH, the fair value of which are expected to be at least the carrying value reported above and are provisional estimates only.

g. Other US GAAP/IFRS adjustments of CRH balance sheet and adjustments for pro forma March 31, 2021 close

Differences between US GAAP and IFRS in the treatment of stock units and stock-based compensation and its associated deferred income tax effects is approximately US$59,000 (C$75,000), and impact to share capital and retained earnings.

h. US$/C$ conversion was at 1.2575, the exchange rate as at March 31, 2021 from Bank of Canada.

3) PRO FORMA UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS ASSUMPTIONS AND ADJUSTMENTS

The unaudited pro forma consolidated statement of operations gives effect to the transaction, with assumptions and adjustments as if they occurred on January 1, 2020.

a. Reduction in stock-based compensation expense as CRH’s equity instruments would have been cancelled had the transaction occurred on January 1, 2020.
b. Increase in interest expense as a result of the credit facility draw-down for the transaction, and its associated tax impacts.
c. Reduction in arrangement-related costs as reflected in general and administrative expenses and their associated tax impacts for the three months ended March 31, 2021had the transaction occurred on January 1, 2020.
d. US$/C$ conversion at 1.3415 and 1.266 for the fiscal year 2020 and three months ended March 31, 2021 respectively, the average US$/C$ exchange rates for the two respective periods from Bank of Canada.

4) SHARE CAPITAL

a. A continuity of pro forma consolidated share capital of WELL as of March 31, 2021 is provided below:

	Shares	$
Balance, March 31, 2021	163,287,618	232,633,803
Shares issued under Bought Deal financing to effect the acquisition	30,867,324	302,500,000
Share issuance costs	-	(3,700,000)
Total Pro forma,March 31,2021	194,154,942	531,433,803

b. Pro forma net loss per share

Pro forma per share amounts are based on historical weighted average number of WELL shares outstanding for the applicable period, adjusted for the share issuance of 30,867,324 units as noted in Note 4(a) above.

AI assistant

Stuhini Exploration — M&A Activity 2021

47721_rns_2021-06-28_9acc4024-5101-45dd-8b7d-9fd3f245cccd.PDF

Form 51‐102F4

Business Acquisition Report

Item 1 Identity of Company

1.1 Name and Address of Company

1.2 Executive Officer

Item 2 Details of Acquisition

2.1 Nature of Business Acquired

2.2 Acquisition Date

2.3

Consideration

2.4 Effect on Financial Position

2.5 Prior Valuations

2.6 Parties to Transaction

2.7 Date of Report

Item 3 Financial Statements and Other Information

Cautionary Note Regarding Unaudited Pro Forma Financial Information

Forward‐Looking Statements

SCHEDULE A

CRH FINANCIAL STATEMENTS

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

Opinion on the Consolidated Financial Statements

Basis for Opinion

Critical Audit Matters

Assessment of the accuracy of the fair value of impaired intangible assets with finite lives

Evaluation of the estimate of anesthesia services revenue accrual

/s/ KPMG LLP

Chartered Professional Accountants

Report of Independent Registered Public Accounting Firm

Opinion on Internal Control Over Financial Reporting

Basis for Opinion

Definition and Limitations of Internal Control Over Financial Reporting

/s/ KPMG LLP

MANAGEMENT’S REPORT

CRH MEDICAL CORPORATION Consolidated Balance Sheets

CRH MEDICAL CORPORATION

CRH MEDICAL CORPORATION

CRH MEDICAL CORPORATION

Consolidated Statements of Cash Flows

1. Reporting entity:

2. Basis of preparation:

(a) Basis of presentation:

(b) Reclassification adjustment relating to 2019 comparative period:

(c) Functional and presentation currency:

(d) Use of estimates, assumptions and judgments:

( ii ) Judgments:

3. Significant accounting policies:

(a) Basis of consolidation:

(b) Cash equivalents:

(c) Foreign currency:

(d) Inventories:

(e) Property and equipment, net:

3. Significant accounting policies (continued):

(f) Intangible assets:

(g) Impairment of non-financial assets:

(h) Income taxes:

3. Significant accounting policies (continued):

(i) Share-based compensation:

(j) Share capital:

(k) Earnings per share:

(l) Segment reporting:

(m) Finance costs:

(n) Asset acquisitions:

3. Significant accounting policies (continued):

(o) Revenue recognition:

(p) Equity investments

i) Government Assistance

3. Significant accounting policies (continued):

ii) Investments

4. Asset acquisitions:

4. Asset acquisitions (continued):

Other Transactions

4. Asset acquisitions (continued):

4. Asset acquisitions (continued):

5. Trade and other receivables:

6. Trade and other payables:

7. Right of use assets and related obligations:

Stuhini Exploration M&A Activity 2021