– Company delivers fourth consecutive quarter of year-over-year improvements in revenue and adjusted EBITDA¹ and twelfth consecutive quarter of positive cash flow from operations  –

TORONTO, May 5, 2015 /CNW/ - Centric Health Corporation ("Centric Health" or "the Company") (TSX: CHH), Canada's leading diversified healthcare services company, today reported its financial results for the first quarter ended March 31, 2015.

Highlights for the First Quarter

(All comparative figures are for the corresponding period of the prior year)

• Revenue from continuing operations increased 11.3% to $83.2 million from $74.8 million;
• Adjusted EBITDA¹ from continuing operations increased 7.2% to $7.4 million from $6.9 million;
• Adjusted EBITDA¹ margin from continuing operations was 8.9% compared with 9.2%;
• Generated cash flow from operations of $2.0 million, which included $2.7 million of restructuring and transaction charges, the twelfth consecutive quarter of positive cash flow from operations;
• Completed the reacquisitions of Community Advantage Rehabilitation, Inc. ("CAR") (previously referred to as the Company's Home Care Operations) and Active Health Services Ltd. ("Active") (previously known as the Company's Seniors Wellness Operations) from Lifespan Health and Wellness Limited ("Lifespan") in consideration for the full repayment of the amounts owing under the two promissory notes previously issued in favour of Centric Health by Lifespan (principal amounts of $2.5 million dollars and $12.0 million dollars); and,
• Completed the acquisition of 100% of the shares of Pharmacare Fulfillment Center Ltd. ("Pharmacare"), an Edmonton-based leading specialty pharmacy business operating under the Care Plus, Pharmacare and Lidia's Pharmacy brands in Western Canada that generated annualized trailing 12-month (period ended December 31, 2014) EBITDA of $5.1 million.

Highlights Subsequent to Quarter End

• The Company has received commitments to extend the Revolving Facility, which was set to mature on June 9, 2015, for one year with consistent terms and conditions. The closing of the extension is expected to occur prior to May 11, 2015. The facility has been increased to $35.0 million from its current temporary level of $25.0 million, an amount that effectively met the Company's operating needs.
• The continued focus on debt repayment includes a planned $15.0 million permanent debt reduction. The debt reduction will be completed through this $5.0 million permanent reduction to the Revolving Facility and a $10.0 million redemption of the second lien senior secured notes in the second quarter of 2015.

"The first quarter marked our fourth consecutive period of year-over-year increases in both revenue and adjusted EBITDA, and our twelfth consecutive quarter of positive cash flow from operations," said David Cutler, President and Chief Executive Officer.  "The majority of first quarter growth was driven by our acquisitions, with several transient factors, primarily related to our Physiotherapy, Rehabilitation and Assessments segment, contributing to lower organic growth than in recent quarters.  We remain confident in the underlying strength and momentum of our business and its ability to generate sustainable, year-over-year organic growth for the long term."

"Strategically the quarter was highlighted by realizing our objective to redeploy net proceeds from our divestitures of non-core operations last year into high-growth businesses with strong margins that align with our focus on hands-on care. The acquisition of Pharmacare in our Specialty Pharmacy segment delivered on our strategy to expand  into the rapidly growing Western Canadian market while significantly enhancing our ability to serve national clients. Combined with our reacquisitions of Active and CAR, these businesses will further support our organic growth going forward."

"We are pleased to deliver on our commitment to finalize our debt reduction plan for the $15.0 million that was used to temporarily reduce our revolving facility," said Daniel Gagnon, Chief Financial Officer. "We continue to actively pursue further opportunities to reduce our debt level, and the additional EBITDA contributions of Pharmacare, Active, and CAR, which are higher than the EBITDA contributions of the divested businesses, will support our efforts in this regard."

FINANCIAL RESULTS

The Company has organized its operations based on the various products and services that it offers. The consolidated operations of the Company comprise three reportable operating segments, referred to as:
(i) Physiotherapy, Rehabilitation and Assessments; ii) Specialty Pharmacy; and (iii) Surgical and Medical Centres.
The support services provided through the corporate offices largely support the operations of the Company and certain of these costs have been allocated to the operating segments based on the extent of corporate management's involvement in the reportable segment during the period.

Selected Financial Information
(All amounts in the chart below are in thousands except per share, shares outstanding, and percentage data)

¹ See "Non-IFRS Measures" below.
²  Basic and diluted earnings per share is based on the profit or loss attributable to shareholders of Centric Health Corporation.
³ Excludes contingent escrowed shares and restricted shares.

Consolidated Results

Consolidated Revenue from continuing operations for the three month period ended March 31, 2015 increased 11.2% to $83.2 million from $74.8 million for the three month period ended March 31, 2014.  The increase was primarily due to:

• The reacquistions of CAR and Active and the acquisition of Pharmacare, which, in aggregate, contributed Revenue growth of $6.5 million, or 8.7%, and;
• Organic growth of $1.9 million, or 2.6%.

Adjusted EBITDA¹ from continuing operations for the three month period ended March 31, 2015 increased 7.2% to $7.4 million from $6.9 million from the three month period ended March 31, 2014.  Adjusted EBITDA¹ margin from continuing operations for the three month period ended March 31, 2015 was 8.9% compared with 9.2% for the three month period ended March 31, 2014.

Segment Results

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

OUTLOOK

With services that address growing demand and evolving needs within the Canadian healthcare system, Centric Health's unparalleled national care delivery platform provides significant potential for future expansion and growth. Following an extensive review of its core competencies, business segment performance and market opportunities, in June 2014 the Company announced a re-focused strategy on its core healthcare service businesses in the pursuit of top-line growth, improved profitability and free cash flow generation.

The Company's organic growth initiatives will be focused on business development opportunities with low capital investment that leverage the Company's existing resources and capacity. Going forward, while management expects continued organic growth from each of the segments, management would also expect that the timing and cycles of the contract procurement process could result in some fluctuation of organic growth rate from quarter to quarter.  Acquisitions are expected to be accretive and consistent with the Company's focus on its core business segments and on operations that generate high margins and strong cash flow, require low capital expenditures and have low exposure to regulatory or public funding changes.

As management continues to explore opportunities to further optimize the Company's asset mix and strengthen the Company's balance sheet, the Board of Directors has approved further debt reduction strategies to maximize shareholder value, which may include additional divestitures of existing businesses and other such initiatives to reduce overall leverage.

Physiotherapy, Rehabilitation and Assessments

The Company's Physiotherapy, Rehabilitation and Assessments segment achieved solid growth during the period ended March 31, 2015 driven by both acquisition and organic growth.  In the early part of 2015, the Company completed the reacquisition of Active and CAR.  The Company anticipates continued growth in the rehabilitation clinic network through organic initiatives such as continued expansion of its preferred provider relationships with employers and other organizations. Specialty programs offered by the Company's network of rehabilitation clinics differentiates Centric Health in a highly competitive industry.  The Company is also undertaking expanded digital and local marketing initiatives to drive brand awareness and increase the volume of patient visits. Growth in the Company's assessments business is targeted through increased market share from successful RFPs.

In addition to the above listed organic growth opportunities through preferred provider networks and specialty programs, the Company will continue to pursue expansion of the national clinic footprint through additional strategic tuck-in acquisitions.  Growth through acquisition will only occur if the acquisition will be accretive to earnings and complementary to the national network and strategic plan.  Over the longer term, this segment should benefit from growth in Employer Healthcare Management and Wellness contracts, which should contribute to increased volumes at the Company's rehabilitation clinics.

Specialty Pharmacy

Delivering on the previously stated objective to expand into Western Canada and to establish a national delivery platform, on March 2, 2015, the Company completed the acquisition of 100% of the shares of Pharmacare, an Edmonton-based leading specialty pharmacy business operating under the Care Plus, Pharmacare and Lidia's Pharmacy brands in Western Canada, effectively expanding the number of residents serviced by its Specialty Pharmacy segment by almost 25%.

In addition to the above acquisition of Pharmacare, the Specialty Pharmacy segment also continued to achieve success with its organic growth strategy focused on maximizing the utilization of existing infrastructure by winning new tenders for contracts with long-term care and retirement homes that increased the number of homes serviced by 16% and expanding its retail initiatives.  While the Company anticipates that Revenue and Adjusted EBITDA growth in its Specialty Pharmacy segment will continue for 2015 and beyond through the previously mentioned revenue growth opportunities, management will also continue to pursue operational efficiencies and cost savings to offset increased competition and investments in administrative start-up costs new RFPs may require.

The Western expansion of the Specialty Pharmacy segment provides important diversification across the existing payor base.  By delivering services across a number of provinces, the segment has less reliance on any one government payor for ongoing Revenue  streams.  In addition to diversification across the existing payor base, the Specialty Pharmacy segment now also benefits from the scale of national operations from a management and operational perspective.

Surgical and Medical Centres

Growth in the Company's Surgical and Medical Centres segment is expected to be driven primarily by increasing utilization of the existing network capacity through a multi-faceted strategy that includes: partnerships with local physicians and health authorities, marketing and brand development, and the introduction of innovative programs and new technologies. Efforts to further expand the roster of physicians and surgical privileges to optimize operating room capacity are ongoing at all of the Company's surgical centres. Additionally, Centric Health will continue to pursue opportunities to work alongside governments, health authorities and hospitals to find opportunities to relieve surgical wait-lists through new partnerships and business models.

The benefits of the strategic positioning of the centres as partners with physicians, hospitals and health authorities are beginning to be realized as is demonstrated by the Revenue increase over the same period in the prior year.  As the surgical centres continue to explore opportunities to increase utilization of available capacity, the segment remains susceptible to one-time events which may impact Adjusted EBITDA and Adjusted EBITDA margin, though the overall growth in Revenue is indicative of continued progress in the segment.  The new contracts and strategic relationships including other Centric Health services are affirmations of management's belief in the strategic importance of the surgical network.  During the first quarter of 2015, the Company undertook significant renovation to its False Creek location in Vancouver, British Columbia to further enhance the patient experience and ensure that the facility continues to meet and exceed all accreditation standards, which resulted in work disruption of the facility over the period.

Employer Healthcare Management and Wellness

First launched during the second half of 2014, the Company's Employer Healthcare Management and Wellness initiative provides employee benefits and wellness programs to large employer clients, enabling them to select from a broad range of healthcare and wellness options and combine them into a plan that meets their needs. Supported by a dedicated cross-divisional business development team, the initiative continued to gain traction and momentum with clients throughout the first quarter of 2015, resulting in several new and expanded contracts, including a contract with a major Canadian benefits provider for assessments and orthopedics, marking the Company's first multi-segment contract that includes surgical services. The Company expects contracts signed in the first quarter of 2015 to begin generating additional revenue into various core segments in the second quarter of 2015. Importantly, Centric Health is able to implement this growth initiative with minimal investment through its existing platform and national network.

Corporate Infrastructure

Management believes overall profitability can be improved through further optimization of corporate infrastructure. The Company continues to implement opportunities to reduce corporate costs as a proportion of consolidated revenue through centralization of functions, rightsizing, achieving deeper synergies amongst the operating segments through coordinated business development efforts and managing discretionary spend and professional fees.

Financing and Debt Reduction

As at March 31, 2015 the company has $10.4 million of restricted cash representing the balance of net proceeds from the sale of the methadone pharmacy operations and the retail and home medical equipment business after the cash payment for the Pharmacare acquisition. The Company intends to use the remaining restricted cash to reinvest in its core businesses through accretive acquisitions, further debt reductions and capital expenditures.

With the successful acquisition of Pharmacare, the Company was in compliance with its financial performance covenants at March 31, 2015. Notwithstanding the acquisition, the Company had previously received a waiver for one financial covenant for the three month period ended March 31, 2015.

The Company has received commitments to extend the Revolving Facility, which was set to mature on June 9, 2015, for one year with consistent terms and conditions. The closing of the extension is expected to occur prior to May 11, 2015. The facility has been increased to $35.0 million from its current temporary level of $25.0 million, an amount that effectively met the Company's operating needs. The continued focus on debt repayment includes a planned $15.0 million permanent debt reduction. The debt reduction will be completed through this $5.0 million permanent reduction to the Revolving Facility and a $10.0 million redemption of the second lien senior secured notes in the second quarter of 2015.

With the completion of accretive acquisitions made during the first quarter of 2015, the Company anticipates it will be in compliance with the covenants in its Revolving Facility during 2015 and continue to generate sufficient cash flow to meet its obligations as they come due through future organic growth and ongoing operational improvements and cost containment initiatives. There can be no assurance that the Company will be successful in achieving the results targets as set out in its operating plan for each of the quarters in 2015.

SHARES OUTSTANDING

As at March 31, 2015 and as at the date of this press release (May 5, 2015) the Company had total shares outstanding of 161,202,080. The outstanding shares at March 31, 2015 and May 5, 2015 include 1,813,916 shares which are restricted or held in escrow and will be released to certain vendors of previously acquired businesses based on the achievement of certain stated performance targets. Accordingly, for financial reporting purposes, the Company reported 159,388,164 common shares outstanding as at March 31, 2015 and 153,388,986 shares outstanding at December 31, 2014. The number of options outstanding is 7,871,000 at March 31, 2015 and May 5, 2015. The number of restricted share units outstanding is 4,036,657 at March 31, 2015 and May 5, 2015. The number of warrants outstanding is 12,694,427 at March 31, 2015 and May 5, 2015. Should all outstanding options and warrants that were exercisable at March 31, 2015 be exercised, the Company would receive proceeds of $20.8 million.

¹NON-IFRS MEASURES

This press release includes certain measures which have not been prepared in accordance with IFRS such as EBITDA, Adjusted EBITDA, Adjusted EBITDA margin 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 non-IFRS measures presented are unlikely to be comparable to similar measures presented by other issuers.

The Company defines EBITDA as earnings before depreciation and amortization, interest expense, amortization of lease incentives, and income tax expense (recovery).  Adjusted EBITDA is defined as EBITDA before transaction and restructuring costs, changes in the fair value of the contingent consideration liability, impairments, stock based compensation expense, change in fair value of derivative financial instruments and gain on disposal of property and equipment recognized in the statement of income. Adjusted EBITDA margin 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 EBITDA¹ is a meaningful financial metric as it measures cash generated from operations which the Company can use to fund working capital requirements, service interest and principal debt repayments and fund future growth initiatives.  The Company's agreements with senior lenders are structured with certain financial performance covenants which includes Adjusted EBITDA¹ as a key component of the covenant calculations. EBITDA and Adjusted EBITDA¹ are not recognized measures under IFRS.

Reconciliation of Non-IFRS Measures

²PRESENTATION OF FINANCIAL RESULTS

In the second quarter of 2014, Centric Health launched a strategic plan to focus on core businesses and divest of non-core businesses.  As a result of entering into definitive agreements for the divestiture of non-core businesses in June 2014, which were subsequently closed in September 2014, the sale of other businesses in May 2014 and the closure of an underperforming surgical centre, the Company has segregated its results from operations between continuing and discontinued operations for the three month periods ended March 31, 2015 and 2014. Continuing operations reflect the Company's focus on its three core segments: Physiotherapy, Rehabilitation and Assessments, Specialty Pharmacy, and Surgical and Medical Centres.

CONFERENCE CALL

Centric Health will host a conference call, including a slide presentation, to discuss its first quarter financial results tomorrow, Wednesday, May 6, 2015, at 2:00 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 Wednesday, May 13, 2015 at midnight.  To access the archived conference call, dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 32364230.

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's vision is to be Canada's premier healthcare company, providing innovative solutions centered on patients and healthcare professionals. As a diversified healthcare company with investments in several niche service areas, Centric Health currently has operations in medical assessments, disability and rehabilitation management, physiotherapy and surgical centres, specialty pharmacy and wellness and prevention. With knowledge and experience of healthcare delivery in international markets and extensive and trusted relationships with payers, physicians, and government agencies, Centric Health is pursuing expansion opportunities into other healthcare sectors to create value for all stakeholders with an unwavering commitment to the highest quality of care. Centric Health is listed on the TSX under the symbol CHH. For further information, please 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.

SOURCE Centric Health Corporation