Centric Health Reports Fourth Quarter and Year End 2012 Financial Results

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 
daniel.gagnon@centrichealth.ca

Lawrence Chamberlain Investor Relations TMX Equicom 416-815-0700 ext. 257 
lchamberlain@tmxequicom.com

SOURCE: Centric Health Corporation

To view this news release in HTML formatting, please use the following URL: 
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CO: Centric Health Corporation
ST: Ontario
NI: HEA ERN CONF 2575 WNEWS 

-0- Mar/28/2013 18:30 GMT


 
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