– Company Delivers Seventh Consecutive Quarter of Year-Over-Year Growth in Revenue and Adjusted EBITDA¹ and Fifteenth Consecutive Quarter of Positive Cash Flow from Operations  –

– Significant Debt Reduction and Strengthened Balance Sheet Provide Financial Flexibility to Capitalize on Growth Opportunities –

TORONTO, March 8, 2016 /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 fourth quarter and year ended December 31, 2015.

Highlights for the Fourth Quarter and 2015 Full Year
(All comparative figures are for the fourth quarter and and full year 2014)

• Revenue from continuing operations for the fourth quarter increased 20.3% to $41.9 million from $34.8 million, and for the year increased 20.1% to $162.4 million from $135.2 million;
• Adjusted EBITDA¹ from continuing operations for the fourth quarter increased 27.4% to $1.7 million from $1.4 million and for the year increased 57.4% to $8.4 million from $5.3 million, with all periods being impacted by out-sized corporate expenses required to support the Physiotherapy, Rehabilitation and Assessments operations prior to their divestiture on December 31, 2015 (7.2% of revenue from continuing operations for both the fourth quarter and full year 2015 as compared to the current run rate of approximately 4.0%);
• Adjusted EBITDA¹ margin from continuing operations for the fourth quarter and year was 4.2% and 5.2%, respectively, compared with 3.9% and 3.9%, with all periods being impacted by out-sized corporate expenses required to support the Physiotherapy, Rehabilitation and Assessments operations prior to their divestiture on December 31, 2015 (7.2% of revenue from continuing operation as compared to the current run rate of approximately 4.0%);
• Normalizing for the out-sized corporate expenses, assuming 4% of revenue from continuing operations (the Company's current run rate post rightsizing of corporate infrastructure following the sale of the Physiotherapy, Rehabilitation and Assessments operations) and pro forma the acquisition of Pharmacare in March 2015, revenue and adjusted EBITDA¹ from continuing operations for the 2015 year were $167.3 million and $14.6 million, respectively, representing an adjusted EBITDA¹ margin of 8.7%;
• Cash flow from operations for the fourth quarter was $7.4 million and for the year was $29.4 million, which included $(0.5) million and $5.0 million, respectively, of restructuring and transaction charges, and marked the fifteenth consecutive quarter of positive cash flow from operations;
• The Company's Smart Shape Weight Loss Centre ("SWLC") was recognized as Canada's first and only Centre of Excellence (COE) in Metabolic and Bariatric Surgery by the Surgical Review Corporation (SRC), an internationally recognized healthcare leader committed to advancing the safety, and efficiency of surgical care worldwide. After a rigorous review process, the SRC has recognized SWLC and its surgeons for its commitment to excellence; and,
• Completed of the sale of substantially all of the businesses within its Physiotherapy, Rehabilitation and Medical Assessments segment (the "Sale Transaction") to Audax Private Equity for cash consideration on closing of $245.0 million, subject to working capital adjustments, plus up to $5.0 million in contingent consideration.  The transaction generated net proceeds of $233.9 million.

Highlights Subsequent to Quarter End

• Used a portion of the net proceeds from the Sale Transaction to purchase and cancel a total principal amount of $164.3 million (plus $4.8 million in accrued and unpaid interest for a total payment of $169.1 million) of the Company's Second Lien Senior Secured Notes (the "Notes"). Following the purchase, there is a principal balance of $25.9 million of the Notes remaining;
• Used $30.0 million of the net proceeds from the Sale Transaction and a promissory note for Lifemark Health Limited Partnership to redeem all of its issued and outstanding remaining Preferred Partnership Units (the "Units"), all of which were held by Alaris Income Growth Fund Partnership ("Alaris"), for the full repurchase price of approximately $38.4 million. Immediately upon redemption of the Units and payment of $30.0 million in cash, Alaris loaned the Company approximately $8.4 million as a promissory note (the "Alaris Promissory Note") on substantially the same economic terms as applied to the equivalent value of Units.
• As a result of the purchase of Notes and redemption of Units, the Company has reduced outstanding debt by an aggregate of $194.3 million since the beginning of 2016, representing 83% of the net proceeds from the Sale Transaction. The Company's current outstanding debt at March 4, 2016 is $120.5 million and net debt (outstanding debt less cash) at March 4, 2016 is $82.9 million. The redemption of the Units will generate incremental interest expense savings of approximately $3.3 million annually, bringing total annual interest savings from the redemption of Units and purchase of Notes to $17.5 million. The debt reduction has reduced the Company's total net debt to Adjusted EBITDA ratio to 5.7 times from 9.7 times and improved its interest coverage ratio to 2.3 times from 1.2 times¹.
• The Company is in the process of negotiating a renewal of the Revolving Facility. A renewed Revolving Facility, along with any remaining proceeds from the Sale Transaction of $34.8 million, would provide the Company with sufficient funding and flexibility to invest in growing the ongoing businesses and manage its cash requirements through 2016, within the restraints of the amended facility's covenants. As part of the negotiations, the Company is discussing the repayment of the convertible debentures that are coming due in 2016 and 2017, which may include repayment from a portion of the remaining proceeds of $34.8 million or with new financing, extensions or exercising the Company's right to use shares to repay the convertible debentures.
• Right-sized the corporate infrastructure following the Sale Transaction such that the current run rate for corporate expenses as proportion of revenue is 4.0%.

"Our financial results for both the fourth quarter and the entire 2015 year were once again indicative of the underlying strength of our continuing operations," said David Cutler, President and Chief Executive Officer, Centric Health Corporation. "We delivered our seventh consecutive quarter of year-over-year growth in continuing operations, with revenue up 20.3% and adjusted EBITDA¹ up 27.4%. For the full year, revenue and adjusted EBITDA¹ grew 20.1% and 57.4%, respectively.  We also achieved our fifteenth consecutive quarter of cash flow from operations at $7.4 million bringing our total for the year to $29.4 million. Importantly, immediately upon announcement of the Sale Transaction, we moved to right-size our corporate infrastructure to bring our run rate for corporate expenses back into line with our target of 4% of revenue from continuing operations and, I am pleased report, that we achieved that several quarters ahead of schedule."

Mr. Cutler added, "Following our deployment of more than $190 million to debt reduction since the beginning of 2016, we have entered a new era for Centric Health -- one in which our primary focus can be on the significant opportunities within our ongoing businesses and our strengthened balance sheet and significantly greater financial flexibility provide the ability to invest in their growth. With leading market positions, national networks and an overriding commitment to the highest quality care and best possible patient outcomes, our Specialty Pharmacy and Surgical Medical Centres businesses are each positioned benefit from our increased focus and investment to generate sustainable growth and healthy free cash flow over the long term."

The Company also announced that, following from the divestiture of the Company's Physiotherapy, Rehabilitation and Assessments operations, Craig Gattinger will retire from Centric Health's Board of Directors, effective March 31, 2016. Mr. Gattinger joined Centric Health's Board following the Company's acquisition in 2011 of LifeMark Health, of which he was Chief Executive Officer.

"On behalf of the Board of Directors and senior management team, we would like to thank Craig for his significant contribution to the Company throughout  the past five years," said Dr. Jack Shevel, Chairman, Centric Health Corporation. "Craig's deep expertise in the field of physiotherapy and rehabilitation has been invaluable as we built upon the LifeMark asset to grow our Physiotherapy, Rehabilitation and Assessments operations, culminating with its monetization at an attractive multiple at the end of 2015.  We wish Craig well in his future pursuits."

FINANCIAL RESULTS

Discontinued Operations

On December 31, 2015, the Company completed the sale of its Physiotherapy, Rehabilitation and Assessments operations ("PR&A operations"), which are composed of its physiotherapy network, Community Advantage Rehabilitation ("CAR") (the Company's Home Care operations) and Active Health Services Ltd. ("AHS") (the Company's Seniors Wellness operations) and the Company's Assessments (Independent Medical Examinations) operations. Consequently, those businesses have been classified as discontinued operations for both the current and comparative periods and the Company now organizes its operations into two reportable operating segments based on the various products and services that it offers. The consolidated operations of the Company are composed of: (i) Specialty Pharmacy; and (ii) 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. The sale of the PR&A operations does not include Performance Medical Group, which was previously part of the Company's Physiotherapy, Rehabilitation and Assessments segment, is now included in the Company's Surgical and Medical Centres segment.

Selected Financial Information

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

Consolidated Results

Consolidated Revenue from continuing operations for the three month period ended December 31, 2015 increased 20.3% to $41.9 million from $34.8 million for the three month period ended December 31, 2014. The increase was primarily due to due to acquisition growth of $7.7 million, driven primarily from the Pharmacare acquisition.

Consolidated Revenue from continuing operations for the year ended December 31, 2015 increased 20.1% to $162.4 million from $135.2 million for the year ended December 31, 2014. The increase was primarily due to acquisition growth of $24.6 million related to the Pharmacare acquisition.

Adjusted EBITDA¹  and Adjusted EBITDA¹ margin for all periods reflects the impact of out-sized corporate expenses resulting from the larger corporate infrastructure required to support the business prior to the closing of the sale of the Physiotherapy, Rehabilitation and Assessments operations on December 31, 2015. Subsequent to the closing of the sale, the Company has right-sized its corporate infrastructure such that its run rate for corporate is currently approximately 4% of revenue from continuing operations.

Adjusted EBITDA¹ from continuing operations for the three month period ended December 31, 2015 increased 27.4% to $1.7 million from $1.4 million from the three month period ended December 31, 2014. For the year ended December 31, 2015. Adjusted EBITDA margin was impacted by the reduction in the ODB dispensing fee that became effective as of October 1, 2015, although the impact was partially offset by cost containment measures. Adjusted EBITDA¹ from continuing operations for the year ended December 31, 2015 increased 57.4.0% to $8.4 million from $5.3 million from year ended December 31, 2014.

Adjusted EBITDA¹ margin from continuing operations for the three month period ended December 31, 2015 and the year ended December 31, 2015 was 4.2% and 5.2% compared with 3.9% and 3.9% for the same periods of the prior year.

Segment Results

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

OUTLOOK

Centric Health has delivered on its three-year strategic commitment to strengthening its balance sheet to provide the financial flexibility to invest in its ongoing businesses and capitalize on the significant opportunities therein to generate long-term, sustainable growth. Throughout 2015, and subsequent to year end, the Company continued to make steady, meaningful progress on each of its three strategic priorities:

• Reduce debt and strengthen the balance sheet;
• Strengthen the foundation; and,
• Grow organically and through strategic acquisitions.

During 2015 and subsequent to year end, the Company took significant additional steps under its strategy to reduce debt and strengthen the balance sheet. The actions taken by the Company in this regard in aggregate reduced outstanding debt by a further $204.1 million since the beginning of 2015, significantly improving its leverage ratios, and will result in interest expense savings of $18.4 million annually. In addition, the strengthened balance sheet provides increased financial flexibility to enable the Company to invest in the growth of its ongoing businesses going forward.

With services that address growing demand and evolving needs within the Canadian healthcare system, the platforms within each of Centric Health's core businesses provide significant potential for future growth.  The Company's organic growth initiatives are focused on leveraging its value proposition with customers, patients and payers to win new contracts within its existing scope of services, expanding its scope of services to leverage its existing customer base and attract new customers; and maximizing the capacity utilization of its existing facilities.

Although management expects the Company to continue to generate organic growth over the long term into the foreseeable future, the timing and cycles of the contract procurement process could result in some fluctuation of organic growth rate from quarter to quarter.

In addition to organic growth, the potential acquisitions are expected to be accretive and consistent with the Company's focus on its core business segments and on operations that will contribute to the Company's focus on generating strong margins and cash flow and have low capital expenditures and working capital requirements.

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.

In addition to the acquisition growth for the segment, 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 and by expanding its retail initiatives. While the Company anticipates that Revenue and Adjusted EBITDA growth in its Specialty Pharmacy segment will continue for 2016 and beyond through the previously mentioned revenue growth opportunities, management will also continue to pursue operational efficiencies and cost savings to offset the potential impact of regulatory changes, increased competition and investments in administrative start-up costs new RFPs may require. In addition, the Company expects that it can further leverage its existing facilities to support an expanded multi-province customer base.

The Western expansion of the Specialty Pharmacy segment significantly strengthened its value proposition by enhancing the ability to service those customers with operations in multiple provinces, many of which prefer to be serviced by a single provider for most or all of its seniors communities, giving rise to business opportunities not previously available to the Company. It also provided important diversification across the existing payer base. By delivering services across a number of provinces, the segment has diversified its revenue with less reliance on any one government payer. In addition, the Specialty Pharmacy segment benefits from the scale of national operations from a management and operational perspective.

The Company will continue to explore strategic, tuck-in acquisitions within the Specialty Pharmacy segment to further strengthen its national delivery platform. Leveraging the significant expertise and capabilities added with the acquisition of Pharmacare, the Company expects to capitalize a shift in the Canadian pharmacy industry that resulting in an expanded scope of practice for pharmacists as they are increasingly being recognized as the medication management experts of the health care team. In addition, the Company expects that pharmacovigilance will be increasingly valued by customers and patients as the number of seniors, who are typically on multiple medications at any given time and who are typically on more medications as they age, continues to grow.

On October 1, 2015 the Ontario Ministry of Health and Long Term Care ("MOHLTC") implemented amendments to Ontario Regulation 201/96 under the Ontario Drug Benefit Act ("ODBA") which regulates the Ontario Pharmacy industry. These changes, localized to Ontario, demonstrate the importance of the Company's national specialty pharmacy platform. The acquisition of Pharmacare meaningfully diversified the Specialty Pharmacy segment's revenues beyond Ontario (prior thereto, all Specialty Pharmacy revenue was generated in Ontario) and the Company expects that further growth of its business in Western Canada will continue to diversify its revenue from this segment. Centric management believes that efficiencies the Company can continue to realize in its Specialty Pharmacy business, as well as revisions to its seniors community pharmacy service model in Ontario related to ancillary services, will serve to partly offset the impact on the profitability of its Specialty Pharmacy segment. In this context, Centric will continue to focus and deliver on its primary objective of achieving the highest levels of quality care and safe medication services.

Surgical and Medical Centres

Growth in the Company's Surgical and Medical Centres segment is expected to be driven primarily by increasing the utilization of the existing network capacity through a multi-faceted strategy that includes expanding partnerships with local physicians and health authorities, marketing and brand development and the continued 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 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 year-over-year increase in revenue in 2015. A key contributor to this growth has been and is expected to continue to be the continued roll-out and ramp up of bariatrics across all of the Company's Surgical Centres. The Surgical and Medical Centres segment is also focused on increasing its online presence to generate new business leads. Year to date 2015, the segment has seen a 21% year-over-year increase in online inquiries as a result of this initiative.

Earlier this year, 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.

As the Company continues to pursue opportunities to increase utilization of available capacity within is Surgical Centre network, due to its limited scale 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.

Corporate Infrastructure

Due to the timing of the Sale Transaction, the corporate office expenses included costs associated with, primarily, salaries and benefits of resources that were included as part of the divestiture or were terminated. The corporate office expenses are currently shown as 7.2% of Revenue. However, this is representative of corporate office expenses at a fully burdened rate. With the rightsizing of corporate functions, normalizing for these non-recurring costs would result in corporate office expenses that are comparable with historical levels and below the Company's target of 4% of Revenue, and would result in a pro forma Adjusted EBITDA consistent with the previously disclosed $14.6 million level.

Upon announcement of the Sale Transaction, the Company immediately began a rightsizing initiative of its corporate functions.  The rightsizing initiatives have been substantially completed and the Company currently has a run rate for corporate office expenses as a proportion of Revenue from continuing operations in line with its target of 4%.

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.

SHARES OUTSTANDING

As at December 31, 2015, the Company had total shares outstanding of 162,458,625. The outstanding shares at December 31, 2015 include 1,576,025 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 160,882,600 common shares outstanding as at December 31, 2015  and 153,388,986 shares outstanding at December 31, 2014. The number of options outstanding is 5,691,000 at December 31, 2015. The number of restricted share units outstanding is 2,642,488 at December 31, 2015. The number of warrants outstanding is 7,595,507 at December 31, 2015. Should all outstanding options and warrants that were exercisable at December 31, 2015 be exercised, the Company would receive proceeds of $12.4 million.

As at the date of this press release, March 8, 2016, the Company had total shares outstanding of 162,458,625, which include 201,025 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. The number of options outstanding is 5,691,000; the number of warrants outstanding is 7,595,507; and the number of restricted share units outstanding is 2,982,488.

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

PRESENTATION OF FINANCIAL RESULTS

As a result of the Company completing the Sale Transaction on December 31, 2015, the Company has amended its reportable operating segments. The Company will now present two reportable operating segments rather than three reportable operating segments as was previously presented. Operating segments are as follows: Specialty Pharmacy and Surgical and Medical Centres. The financial results of the Company's Performance Medical Group, which were included in the past as part of the Physiotherapy, Rehabilitation and Assessments segment, is now included as part of the Surgical and Medical Centres segment.

CONFERENCE CALL

Centric Health will host a conference call, including a slide presentation, to discuss its fourth quarter financial results tomorrow, Wednesday, March 9, 2016, 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/investors/events-and-presentations.html). 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, March 16, 2016 at midnight. To access the archived conference call, dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 49104741.

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/investors/events-and-presentations.html).

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

About Centric Health

Centric Health provides expert solutions and trusted care through a national community of experts who can be accessed quickly and have a track record of achieving superior patient outcomes and providing outstanding client satisfaction. Centric Health's vision is to be Canada's most respected brand in the independent healthcare sector and world renowned for quality, innovation and for delivering sustainable value to patients, clients and stakeholders. With national networks of facilities in each of its core businesses of Specialty Pharmacy and Surgical Centres, deep knowledge and experience of healthcare delivery and extensive, trusted relationships with payers, physicians, and government agencies, the Company is uniquely positioned to address current and future healthcare needs in growing markets as the Canadian healthcare industry continues to evolve over the long term.

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