Centric Health Reports Fourth Quarter and Year End 2012 Financial Results TORONTO, March 28, 2013 /CNW/ - Centric Health Corporation ("Centric Health" or "the Company") (TSX: CHH), Canada's leading diversified healthcare services company, today announced financial results for the fourth quarter and year ended December 31, 2012. Financial and Operating Highlights for Fourth Quarter and 2012 Year -- Revenue increased by 44% to $110.9 million for the fourth quarter and by 117% to $436.7 million for the year from that for the corresponding periods of 2011, the result of acquisitions and organic growth; -- Adjusted EBITDA(1) increased by 53% to $9.6 million for the fourth quarter and 101% to $42.8 million for the corresponding periods of 2011, the result of acquisitions, cost containment initiatives and organic growth; -- Generated positive cash flow from operations for the fourth quarter of $14.8 million and $15.3 million for the year as the Company focused on cash management as compared to $0.6 million and $7.6 million respectively in the prior year; -- Completed the acquisition of Motion Specialties Inc., expanding the Company's national presence in the retail and home medical equipment sector, which was accretive by $5.9 million to the Company's 2012 results; -- Added senior management with significant industry experience with the appointments of David Cutler as President and Chief Executive Officer, Daniel Gagnon as Chief Financial Officer (subsequent ot year end on February 13, 2013) and Chris Dennis as Chief Operating Officer (subsequent to year end, effective April 9, 2013); -- Strengthened the Board of Directors with the appointment of Yazdi Bharucha as an independent Director and Chair of the Audit Committee (subsequent to year end on February 22, 2013); -- Completed a bought deal for $25.9 million in net proceeds from convertible subordinated, unsecured notes and a private placement for $15.0 million in proceeds from convertible subordinated, unsecured convertible notes, the proceeds of which were both used to pay down the Company's senior debt. In addition, completed the second closing of an innovative prospectus supplement focusing on staff and healthcare professionals that raised aggregate gross proceeds under both closings of $13.6 million; -- Following an active period of mergers and acquisitions in 2011 and into the first quarter of 2012, 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. Corporate office expenses improved to 3.7% of revenue for 2012 from 5.6% for 2011. In addition, the Company has launched multiple top line initiatives with the goal of extracting synergies and expanding operations throughout the Company. "Centric Health has assembled a national healthcare services platform that is unrivaled in Canada and we now have the senior management team in place to fully extract the value available through integration and growth of that platform and create value for all stakeholders," said Dr. Jack Shevel, Chairman Centric Health Corporation. "I have the utmost confidence in our team's ability to deliver on Centric Health's strategy to establish a national network focused on delivering the highest quality care through services to seniors, corporate health plans and surgical and medical centres and assist with Canada's ever-expanding healthcare needs." "Over the past several months, we have made significant progress toward establishing the systems, structure and processes that are essential to enable us to generate meaningful margin expansion and EBITDA growth and the addition of our new COO, Chris Dennis, is a significant next step in this direction," said David Cutler, President and Chief Executive Officer, Centric Health Corporation. "The additions of our new Chief Financial Officer, Daniel Gagnon, new Chief Operating Officer, Chris Dennis, and new Chief Information Officer, Jim Black, are significant next steps in this direction. We have a plan in place to realize the benefits of the integration of our businesses and are driving forward on multiple cost savings and revenue growth initiatives across the organization - we have more than 20 top line initiatives alone. Notably, we continue to sign new bundled services contracts for retirement and long term care homes and we are progressing on a number of innovative programs to leverage the available operating room capacity at our surgical centres. It will, however, take time to begin to realize the benefits of these initiatives and therefore expect it will be several quarters before we see them meaningfully reflected in our financial results." FINANCIAL RESULTS (All amounts below are in thousands except per share, shares outstanding, and percentage data) Selected Financial Information Three months ended Year ended December 31, December 31, 2012 2011 2012 2011 $ $ $ $ Revenue 110,917 77,265 436,651 200,992 Loss from operations (6,846) (5,997) (9,269) (4,532) % of revenue (6.2)% (7.8)% (2.1)% (2.3)% EBITDA(1) (13,816) (53,999) 53,476 15,897 Adjusted EBITDA(1) 9,591 6,271 42,832 21,360 Adjusted EBITDA(1 )margin 8.6% 8.1% 9.8% 10.6% Net loss (38,530) (67,484) (7,088) (8,978) Per share - basic ($) $ (0.32) $ (0.74) $ (0.06) $ (0.11) Per share - diluted ($) $ (0.32) $ (0.74) $ (0.06) $ (0.11) Weighted average shares outstanding (basic)(*) 121,338 90,691 114,140 80,656 Shares outstanding Dec. 121,389 98,220 121,389 98,220 31(*) Cash flow from operations 14,813 621 15,314 7,598 *Excludes contingent escrowed shares and restricted shares Consolidated Results Consolidated revenue for the fourth quarter of 2012 increased by 44% to $110.9 million from $77.3 million for the comparable period of 2011. The increase is primarily the result of acquisitions, as well as organic growth, synergies resulting from acquisitions and growth strategies. Adjusted EBITDA(1), which excludes impairments, transaction and restructuring costs and the non-cash change in the fair value of the contingent consideration liability, for the fourth quarter of 2012 increased 53% to $9.6 million compared with $6.3 million for the comparable period of 2011. The increase is primarily attributable to the accretive contribution of the Motion Specialties acquisition from February 2012 ($1.4 million), the accretive contribution of the Classic Care acquisition from November 2011 ($0.9 million) and the decrease in corporate costs ($2.7 million) resulting from the Company's rationalization and centralization initiatives, including the closure of the Company's Calgary head office in 2012. The Company also realized a gross margin improvement in the Assessments operations through right-sizing measures. These were partially offset by a decline in the financial performance of the Company's Surgical operations due to excess operating room capacity and the implementation of certain management changes at the Company's Sarnia location. Adjusted EBITDA(1 )margin for the fourth quarter of 2012 was 8.6% compared with 8.1% for the comparable period of 2011. Consolidated revenue for the year increased by 117% to $436.7 million from $201.0 million for 2011. Adjusted EBITDA(1) for the year increased by 101% to $42.8 million from $21.4 million for 2011. The increase was driven by the accretive contribution of the 2011 and 2012 acquisitions, organic growth initiatives, and cost containment measures, which were partially offset by a decline in the results of the Company's Surgical operations resulting from excess operating room capacity. Adjusted EBITDA(1) margin for 2012 decreased to 9.8% from 10.6% for 2011 due to the lower margins associated with the acquisition of Motion Specialties, which has relatively low margins, the impact of regulatory reform in the Assessments segment and the decline in financial performance of the Surgical operations, which tends to have relatively high margins. Segment Results Three months ended December 31, Revenue Adjusted EBITDA(1) 2012 2011 2012 2011 $ $ $ % $ % Physiotherapy 41,416 13.6 6,983 16.9 43,828 5,966 Pharmacy 23,660 13,217 2,344 9.9 1,056 8.0 Retail & Home 26,802 2,706 1,325 4.9 137 5.1 Medical Equipment Assessments 8,830 10,553 1,744 19.8 1,739 16.5 Surgical & 7,797 9,373 578 7.4 1,453 15.5 Medical Centres Corporate - - (2,366) - (5,097) - Total $ 110,917 $ 77,265 $ 9,591 8.6% $ 8.1% 6,271 Year ended December 31, Revenue Adjusted EBITDA(1) 2012 2011 2012 2011 $ $ $ % $ % Physiotherapy 176,726 112,307 14.6 13,460 12.0 25,725 Pharmacy* 92,769 19,235 9,714 10.5 1,622 8.4 Retail & Home 96,445 6,170 6,906 7.2 1,381 22.4 Medical Equipment* Assessments 37,210 35,654 6,720 18.1 6,306 17.7 Surgical & 33,501 27,626 3,201 9.6 3,321 12.0 Medical Centres* Corporate - - (9,434) - (4,730) - Total $ 436,651 $ 200,992 $ 9.8 $ 10.6 42,832 21,360 *Adjusted EBITDA margins reflect acquisitions since the fourth quarter of 2011 which generate lower margins than legacy operations. SHARES OUTSTANDING As at both December 31, 2012 and the date of this news release, the Company has total shares outstanding of 144,620,526, of which 22,231,081 are held in escrow pending acquired businesses achieving performance targets or vesting milestones and 1,000,000 are restricted shares at December 31, 2012 and 18,686,853 are held in escrow pending acquired businesses achieving performance targets or vesting milestones and 800,000 are restricted shares at March 28, 2013. Consequently, there are 121,389,445 shares outstanding excluding restricted shares and shares held in escrow as contingent consideration for the vendors of acquired businesses at December 31, 2012 and 125,133,673 at March 28, 2013. The number of options outstanding is 11,224,500 and the number of restricted share units outstanding is 610,000 at December 31, 2012 and March 28, 2013. The number of warrants outstanding is 28,576,590 at December 31, 2012 and 33,078,390 at March 28, 2013. Should all outstanding options and warrants that were exercisable at December 31, 2012 be exercised, the Company would receive proceeds of $17,624. LIQUIDITY AND CAPITAL RESOURCES The Company was in compliance with its financial performance covenants at December 31, 2012. The Company anticipates that, based on meeting its 2013 operating budget, it will generate sufficient cash flow from operations in 2013 to meet its obligations as they come due. However, based on existing cash flow, overall debt levels and the need to focus on operational performance improvements, the Company is considering alternative lending arrangements to replace the existing Term Loan and Revolving Facility. While alternative arrangements may come at a higher interest cost, their terms would likely provide greater financial flexibility with more relaxed financial performance covenants. OUTLOOK Centric Health has established an integrated national healthcare company with a platform for growth that is unparalleled in Canada and well positioned to assist with Canada's ever-expanding healthcare needs. Under the direction of new President and Chief Executive Officer, David Cutler, new Chief Financial Officer, Daniel Gagnon, new Chief Operating Officer, Chris Dennis (effective April 8, 2013) and new Chief Information Officer, Jim Black (effective April 8, 2013), the Company continues to focus on integration of its past acquisitions to generate cost savings, optimizing cash flow, and executing organic growth initiatives. While the Company continues to seek out strategic acquisitions that will bolster its existing national platform, its main focus in 2013 will be to grow its existing businesses. The Company continues to focus on improving its operating margins through right-sizing activities and operational efficiency projects. In 2012, the Company initiated successful projects for working capital management, the centralization of operational support services and consolidated purchasing within its pharmacy operations. In addition, the Company took decisive action to reduce its workforce in its assessment operations in order to respond to past regulatory changes. As the Company looks forward to 2013, it plans to further consolidate purchasing initiatives in its surgical and retail and home medical equipment operations and to undertake systems integration initiatives specifically aimed at its retail and home medical equipment operations. The Company also commenced numerous organic growth initiatives in 2012. These initiatives tend to have long sales cycles and the Company expects to begin to realize the benefits of these initiatives as 2013 progresses and beyond. The Company's cross-selling initiatives include bundled service contracts, which leverage the Company's platform to offer bundled Physiotherapy, Pharmacy and Home Medical Equipment services to long-term care and retirement homes. The Company signed new bundled services contracts in the fourth quarter of 2012 and further contracts are expected to be signed in 2013. Other cross-selling initiatives include expanding orthotics sales in physiotherapy clinics and in Motion Specialties and MEDIchair stores, and promoting rehabilitative services to surgical patients to expedite recovery. In addition, the Company plans multiple initiatives to leverage the excess capacity at its Surgical and Medical Centres and in the fourth quarter of 2012 launched its first Centre of Excellence with the intention to establish more. The Company's new leadership team is focused on integration and growth initiatives. Many of the initiatives that will be launched by the new management team for both growth and cost containment have longer cycles and the benefits are not expected to be realized in the Company's results until the second half of 2013. When combined with the continued underperformance of the Surgical operations into the beginning of 2013 due to the factors discussed above, management expects incremental improvement in the first quarter 2013 financial results compared to those of the fourth quarter of 2012. In addition, the new leadership team plans on strengthening the Company's balance sheet by reducing the Company's senior debt and total debt leverage ratios over the medium term. (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, amortization of lease incentives, and income tax recovery. Adjusted EBITDA is defined as EBITDA before transaction and restructuring costs and changes in the fair value of the contingent consideration liability, impairments, stock based compensation expense, change in fair value of derivative financial instruments and loss on disposal of property and equipment 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 Year ended December 31, December 31, 2012 2011 2012 2011 $ $ $ $ Net loss (38,530) (67,484) (7,088) (8,978) Depreciation 16,326 12,268 35,441 14,573 and amortization Interest 6,234 4,756 24,350 12,245 expense Amortization 111 - 342 (25) of lease incentives Income tax 443 (3,539) (841) expense (1,918) (recovery) EBITDA(1) (15,416) (53,999) 52,204 15,897 Transaction 2,780 3,627 11,422 8,181 and restructuring costs Change in (5,893) 2,562 (60,078) fair value of (51,164) contingent consideration liability Impairments 27,421 52,801 27,421 52,801 Stock-based 1,512 1,369 4,464 3,163 compensation expense Change in (1,201) (89) (1,947) 1,396 fair value of derivative financial instruments Loss on 388 - 432 - disposal of property and equipment Adjusted EBITDA 9,591 6,271 42,832 21,360 (1) Basic weighted 121,338 90,691 114,140 80,656 average number of shares Adjusted EBITDA $0.08 $0.07 $0.38 $0.26 per share (basic) Fully diluted 155,226 110,697 154,070 102,491 weighted average number of shares Adjusted EBITDA $0.06 $0.06 $0.28 $0.21 per share (diluted) CONFERENCE CALL Centric Health will host a conference call, including a slide presentation, to discuss its fourth quarter and year end 2012 financial results today, Thursday, March 28, 2013, at 4:00 p.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 Thursday, April 4, 2013 at midnight. To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 22236171. 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. Daniel Gagnon Chief Financial Officer Centric Health 416-619-9417 email@example.com Lawrence Chamberlain Investor Relations TMX Equicom 416-815-0700 ext. 257 firstname.lastname@example.org SOURCE: Centric Health Corporation To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/March2013/28/c9117.html CO: Centric Health Corporation ST: Ontario NI: HEA ERN CONF 2575 WNEWS -0- Mar/28/2013 18:30 GMT
Centric Health Reports Fourth Quarter and Year End 2012 Financial Results
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