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Centric Health Reports Third Quarter 2012 Financial Results

TORONTO, Nov. 13, 2012 /CNW/ - Centric Health Corporation ("Centric Health" or 
"the Company") (TSX: CHH), Canada's leading diversified healthcare services 
company, today announced financial results for the third quarter ended 
September 30, 2012. 
Financial and Operating Highlights for the Third Quarter and Year to Date 2012 


    --  Revenue increased by 60% to $107.4 million for the third
        quarter and by 163% to $325.7 million for the year to date from
        the prior year periods, the result of acquisitions and organic
        growth;
    --  Adjusted EBITDA(1) increased to $33.2 million for the year to
        date from $15.0 million for the prior year period due to
        acquisitions, cost containment initiatives and organic growth;
    --  Adjusted EBITDA(1) decreased to $9.0 million for third quarter
        from $9.7 million for the prior year period due to the impact
        of regulatory changes in the assessments segment ($0.9
        million), increased corporate overhead costs ($1.0 million) and
        lower utilization of operating room capacity in the surgical
        segment ($0.8 million);
    --  Generated $3.4 million in positive cash flow from operations
        for the third quarter as a result of the Company's continued
        focus on cash management;
    --  Completed bought deal offering of convertible unsecured
        subordinated notes generating net proceeds of $25.9 million,
        including the over-allotment option;
    --  Appointed David Cutler as President, Chief Executive Officer
        and a member of the Board of Directors of the Company; and,
    --  The Company continued its focus on cost containment with
        further integration, rationalization, renegotiation of supplier
        contracts and the closure and rationalization of certain
        assessment locations. The Company expects to realize annualized
        savings of $6.0 million to $7.5 million through these
        initiatives. Several top line initiatives have commenced to
        extract synergies and expand operations throughout the Company.

"Centric Health has assembled an irreplaceable platform to deliver the highest 
quality of patient care and create value for all stakeholders," said David 
Cutler, President and Chief Executive Officer, Centric Health Corporation. 
"In my new position, one of my top priorities is to establish the systems, 
structure and processes, and appoint a permanent COO and CIO, to enable us to 
fully capitalize on the significant opportunities inherent in our business. 
At the same time, we are executing on strategies across our organization to 
drive long-term growth, with particular emphasis on our bundled services 
offering to seniors care homes and multiple initiatives to leverage the excess 
capacity at our Surgical and Medical Centres. We are making strong initial 
progress, having recently signed several new bundled services contracts and 
launched our first surgical Centres of Excellence, and expect to realize 
meaningful contributions next year."

"Despite the softer quarter emphasized by seasonality, the Company expects to 
yield meaningful improvements in financial performance in future quarters 
through operational efficiencies, top line initiatives and rationalization and 
cost containments effected in 2012," said Peter Walkey, Chief Financial 
Officer, Centric Health Corporation. "Our continued focus on the integration 
of our acquired business has resulted in a meaningful decrease in corporate 
office expenses as a proportion of revenue so far in 2012. In addition, we 
generated positive cash flow from operations of $3.4 million, the result of 
our cash flow management efforts."

________________________________
(1)Defined and calculated in Reconciliation of Non-IFRS Measures

FINANCIAL RESULTS

(All amounts below are in thousands except per share, shares outstanding, and 
percentage data)

Selected Financial Information
                             Three months ended   Nine months ended
                                September 30,        September 30,
                                 2012      2011      2012      2011
                                   $          $         $         $
                    Revenue     107,358    67,096   325,734   123,727
                                                                     
     Income from operations       2,273     8,428    13,895    12,809
               % of revenue        2.1%     12.6%      4.3%     10.4%
                                                                     
                  EBITDA(1)       6,827    48,190    69,870    58,159
                                                                     
         Adjusted EBITDA(1)       9,008     9,689    33,241    15,093

  Adjusted EBITDA(1 )margin        8.4%     14.4%     10.2%     12.2%
                                                                     
          Net (loss) income     (6,273)    38,889    31,442    43,486
      Per share - basic ($) $    (0.05) $    0.47 $    0.28 $    0.56
    Per share - diluted ($) $    (0.05) $    0.37 $    0.24 $    0.45
                                                                     
    Weighted average shares                                          
                outstanding     116,856    83,156   111,714    77,285

Shares outstanding Sept. 30     121,318    84,433   121,318    84,433

Consolidated Results

Consolidated revenue for the third quarter of 2012 increased by 60% to $107.4 
million from $67.1 million for the comparable period of 2011. The increase 
is primarily the result of several notable acquisitions, as well as organic 
growth.

Adjusted EBITDA(1), which excludes transaction and restructuring costs and the 
non-cash change in the fair value of the contingent consideration liability, 
for the third quarter of 2012 was $9.0 million compared with $9.7 million for 
the comparable period of 2011. The change is primarily due to the impact of 
regulatory changes in the assessments segment ($0.9 million), increased 
corporate overhead costs associated with the sizable Classic Care and Motion 
acquisitions ($1.0 million) and lower utilization of operating room capacity 
in the surgical segment ($0.8 million). Adjusted EBITDA(1 )margin for the 
third quarter of 2012 was 8.4% compared with 14.4% for the comparable period 
of 2011.

Consolidated revenue and Adjusted EBITDA(1) for the third quarter of 2012 
decreased from $114.1 million and $12.5 million, respectively, in the second 
quarter of 2012, primarily due to seasonality at certain of the Company's 
operations, including fewer physiotherapy treatments as patients take more 
personal vacation over the summer months and certain surgical centres being 
either closed or having fewer procedures due to surgeon vacations.

Consolidated revenue for the first nine months of 2012 increased by 163% to 
$325.7 million from $123.7 million for the comparable period of 2011. Adjusted 
EBITDA(1) for the first nine months of 2012 increased by 120% to $33.2 million 
from $15.1 million for the comparable period of 2011. Adjusted EBITDA(1) 
margin for the first nine months of 2012 was 10.2% compared with 12.2% for the 
comparable period of 2011. The lower margins are a result of the 
acquisitions of Motion Specialties and Classic Care, which generate lower 
margins as compared to the Company's legacy operations.

Segment Results
                                Three months ended September 30,  
                                    Revenue       Adjusted EBITDA     
                                                        (1)
                      2012       2011      2012            2011       
                        $          $          $     %        $       %

Physiotherapy         42,210     40,479     5,497 13.0      5,660  14.0

Pharmacy              22,429      3,883     2,357 10.5      1,074  27.7

Retail &Home          26,176      2,553     1,646  6.3        771  30.2
Medical
Equipment

Assessments            8,712     12,606     1,624 18.6      2,495  19.8

Surgical &             7,831      7,575       340  4.3      1,125  14.9
Medical
Centres

Corporate                  -          -   (2,456)    -    (1,436)     -

Total              $ 107,358   $ 67,096  $  9,008 8.4%  $   9,689 14.4%
                                                                   
                                                                   
                                  Nine months ended September 30,
                            Revenue               Adjusted EBITDA      
                                                        (1)
                      2012       2011      2012            2011       
                        $          $          $     %        $       %

Physiotherapy        132,898     71,737    19,756 14.9      9,452  13.2

Pharmacy*             69,109      6,018     7,312 10.6      1,108  18.4

Retail &Home          69,643      3,259     5,525  7.9      1,081  33.2
Medical
Equipment*

Assessments           28,380     24,500     4,976 17.5      5,320  21.7

Surgical &            25,704     18,213     2,608 10.1      2,544  14.0
Medical
Centres*

Corporate                  -          -   (6,936)    -    (4,412)     -

Total              $ 325,724  $ 123,727        $  10.2 $   15,093  12.2
                                           33,241

* - Adjusted EBITDA margins reflect acquisitions since the third quarter of 
2011 which generate lower margins than legacy operations.

The year-over-year decrease in Adjusted EBITDA(1) for the Physiotherapy 
segment for the third quarter of 2012 is primarily the result of a higher than 
anticipated decline in the number of physiotherapy patients treated over the 
summer months. The third quarter is typically a softer quarter for the 
Company's physiotherapy clinics as patients tend to have fewer treatments due 
to their personal vacation schedules.

The year-over-year decrease in Adjusted EBITDA(1) margin for the Retail and 
Home Medical Equipment segment for the third quarter of 2012 is attributable 
to the acquisition during the first quarter of 2012 of Motion Specialties, 
which generates lower margins than the MEDIchair franchise royalty fees. With 
combined purchasing power benefits and certain rationalization initiatives, 
Adjusted EBITDA(1) margin is expected to improve in the future.

Revenue and Adjusted EBITDA(1) for the Assessments segment for the third 
quarter of 2012 continued to be adversely affected by legislative changes 
surrounding automobile insurance coverage. The Company continues to 
right-size the Assessments operations to improve its margins and during the 
third quarter consolidated its Ontario operations into fewer assessments 
centres. The Assessments segment continues to generate positive income and 
cash flows. The Company has been successful in continuing to win RFPs for the 
provision of assessment services, and is well positioned competitively to 
increase its market share based on its size and national presence.

The year-over-year decrease in Adjusted EBITDA(1) for the Surgical and Medical 
Centres segment for the third quarter of 2012 is mainly due to low utilization 
of operating room capacity as a result of renovations, closures, and surgeon 
vacations. The Company is pursuing innovative strategies including the launch 
of the Company's first surgical Centre of Excellence in October 2012 in 
orthopedic surgery. The Company expects to launch further specialized 
surgical Centres of Excellence over the coming year which will partner the 
Company with some of Canada's leading surgeons. The Company also has 
long-term initiatives to launch triage assessment programs, new treatment 
technologies, an extended patient choice network and transitional care 
maternity beds.

SHARES OUTSTANDING

As at both September 30, 2012 and the date of this news release, the Company 
has total shares outstanding of 144,549,097, of which 23,231,081 are held in 
escrow pending acquired businesses achieving performance targets or vesting 
milestones. Consequently, there are 121,318,016 shares outstanding excluding 
restricted shares and shares held in escrow as contingent consideration for 
the vendors of acquired businesses. The number of options outstanding is 
11,690,500, the number of warrants outstanding is 28,576,590, and the number 
of restricted share units outstanding is 615,000. Should all outstanding 
options and warrants that were exercisable at September 30, 2012 be exercised, 
the Company would receive proceeds of $16,942.

LIQUIDITY AND CAPITAL RESOURCES

The Company was in compliance with its financial performance covenants at 
September 30, 2012. The Company anticipates that based on its expected 
fourth quarter operating results, its 2013 operating budget and working 
capital initiatives, it will generate sufficient cash flows to meet its 
financial performance covenants and other obligations as they come due.

OUTLOOK

In addition to its acquisition strategy, the Company is focused on organic 
growth initiatives, including cross-selling activities and new service 
introductions across its business segments. Many of these organic growth 
initiatives are in their infancy stages and the benefits are not expected to 
be realized until 2013 due to long sales cycles. One of the largest and most 
advanced opportunities is bundled service contracts to long term care and 
retirement homes. The Company has recently signed several such contracts and 
further contracts are expected to be signed in the coming quarters. In 
addition, utilization within the Surgical and Medical Centres remains low and 
presents a high-margin growth opportunity as operations already are above the 
break-even point and the Company will leverage off its already fixed asset 
cost base. The Company has multiple initiatives to capitalize on this excess 
capacity and recently launched the first of many planned surgical Centres of 
Excellence (COEs) and plans to launch additional COEs in 2013 and beyond. 
Other initiatives include increasing retail sales, rolling out orthotics and 
expanding massage therapy within the Physiotherapy network.

With the completion of over 15 acquisitions over the past two years, the 
Company is also focused on integration and rationalization to bring these 
businesses together under a common strategy. Near-term priorities in this 
regard include the appointment of a permanent Chief Operating Officer and 
Chief Information Officer. In addition, the Company continues to focus on 
operational efficiency to improve margins and has undertaken several special 
projects to achieve economies of scale and rationalization benefits, which it 
expects to continue to realize in the fourth quarter of 2012 and into 2013.

(1)Non-IFRS Measures

This press release includes certain measures which have not been prepared in 
accordance with IFRS such as EBITDA, Adjusted EBITDA and Adjusted EBITDA per 
share. These non-IFRS measures are not recognized under IFRS and, 
accordingly, shareholders are cautioned that these measures should not be 
construed as alternatives to net income determined in accordance with IFRS. 
The Company defines EBITDA as earnings before depreciation and amortization, 
interest expense, change in fair value of derivative financial instruments, 
loss on disposal of property and equipment, stock based compensation, 
amortization of lease incentives, and income tax (recovery) expense. Adjusted 
EBITDA is defined as EBITDA before transaction and restructuring costs and 
changes in the fair value of the contingent consideration liability recognized 
in the statement of income. Adjusted EBITDA % is defined as Adjusted EBITDA 
divided by revenue. Adjusted EBITDA per share is defined as Adjusted EBITDA 
divided by the weighted outstanding shares on both a basic and diluted 
basis. The Company believes that Adjusted EBITDA is a meaningful financial 
metric as it assists in the ability to measure cash generated from 
operations. EBITDA and Adjusted EBITDA are not recognized measures under 
IFRS.

Reconciliation of Non-IFRS Measures
                  Three months ended             Nine months ended
                                                   September 30,
                    September 30,
                    2012      2011            2012             2011
                     $         $               $                 $

Net (loss) income (6,273)     38,889           31,442                  
                                                                 43,486
    Depreciation    6,563      1,270           19,115             2,305
    and
    amortization
    Interest        7,134      5,018           17,788             7,489
    expense
    Change in       (261)      1,580            (418)             1,485
    fair value of
    derivative
    financial
    instruments
    Loss on             -          -               44                 -
    disposal of
    property and
    equipment
    Stock-based     1,266        817            2,952             1,794
    compensation
    expense
    Amortization      172        (9)              231              (21)
    of lease
    incentives
    Income tax    (1,774)        625          (1,284)             1,621
    (recovery)
    expense

EBITDA(1)           6,827     48,190           68,870            58,159
    Transaction     3,861        873            8,642             4,554
    and
    restructuring
    costs
    Change in     (1,680)   (39,374)         (45,271)          (47,620)
    fair value of
    contingent
    consideration
    liability

Adjusted EBITDA     9,008      9,689           33,241            15,093
(1)
                                                                       

Basic weighted    116,856     83,156          111,714            77,285
average number of
shares

Adjusted EBITDA     $0.08      $0.12 $           0.30 $            0.20
(1) per share
(basic)

Fully diluted     130,414    105,053          129,635            97,531
weighted average
number of shares

Adjusted EBITDA     $0.07      $0.09 $           0.26 $            0.15
(1) per share
(diluted)

CONFERENCE CALL

Centric Health will host a conference call, including a slide presentation, to 
discuss its third quarter 2012 financial results today, Tuesday, November 13, 
2012, at 8:30 a.m. (ET).

Telephone Dial-In Access Information

To access the conference call by telephone, dial 647-427-7450 or 
1-888-231-8191. Please connect approximately 10 minutes prior to the 
beginning of the call to ensure participation. Those participating in the 
conference call by telephone can view the slide presentation by accessing the 
online webcast (see instructions below) and choosing the Non-Streaming Audio 
option.

Webcast Access Information

A live webcast of the conference call, including the slide presentation, will 
be available on the Events and Presentations page of the Investors section of 
the Company's web site 
(http://www.centrichealth.ca/events-presentations.php). Please connect at 
least 15 minutes prior to the conference call to ensure adequate time for any 
software download that may be required to join the webcast. To view the 
webcast presentation with slides, please choose either the Real Streaming 
Audio or Windows Streaming Audio option.

Archive Access Information

The conference call will be archived for replay by telephone until Tuesday, 
November 20, 2012 at midnight. To access the archived conference call, dial 
1-855-859-2056 and enter the reservation number 68298951.

The webcast with slide presentation will be archived for 90 days on the Events 
and Presentations page of the Investors section of the Company's web site 
(http://www.centrichealth.ca/events-presentations.php).

For further information please refer to the Company's complete filings at 
www.sedar.com.

About Centric Health

Centric Health is Canada's leading diversified healthcare company and 
dedicated to building on the strengths of Canada's healthcare system through 
innovative solutions. Through a series of strategic acquisitions, the 
Company has amassed a national platform for delivery of a broad range of 
services through more than 3,600 staff and consultants at almost 1,000 
locations and has preferred provider contracts with over 50 corporations, 
government agencies and employers, and over 600 contracts with Long Term Care 
and Retirement Homes. This platform provides compelling growth prospects 
through synergies, rationalization and cross-pollination opportunities to 
create meaningful value for all stakeholders. Above all, Centric Health has 
an unwavering commitment to employ the highest service and ethical standards 
and deliver a superior quality of care with the best possible clinical 
outcomes. For more information, visit www.centrichealth.ca.

This press release contains statements that may constitute "forward-looking 
statements" within the meaning of applicable Canadian securities 
legislation. These forward-looking statements include, among others, 
statements regarding business strategy, plans and other expectations, beliefs, 
goals, objectives, information and statements about possible future events. 
Readers are cautioned not to place undue reliance on such forward-looking 
statements. Forward-looking statements are based on current expectations, 
estimates and assumptions that involve a number of risks, which could cause 
actual results to vary and in some instances to differ materially from those 
anticipated by Centric Health and described in the forward-looking statements 
contained in this press release. No assurance can be given that any of the 
events anticipated by the forward-looking statements will transpire or occur 
or, if any of them do so, what benefits Centric Health will derive there-from.



Peter Walkey Chief Financial Officer Centric Health 416-619-9417 
peter.walkey@centrichealth.ca

 Lawrence Chamberlain Investor Relations The Equicom Group 416-815-0700 ext. 
257 lchamberlain@equicomgroup.com  

SOURCE: Centric Health Corporation

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/November2012/13/c7307.html

CO: Centric Health Corporation
ST: Ontario
NI: HEA ERN CONF 

-0- Nov/13/2012 12:00 GMT


 
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