- Quarter Highlighted by Continuing Strong Growth and Progress on Debt Reduction -

TORONTO, Nov. 4, 2014 /CNW/ - Centric Health Corporation ("Centric Health" or "the Company") (TSX: CHH), Canada's leading diversified healthcare services company, today announced financial results for the third quarter ended September 30, 2014.

"The first three quarters of 2014 saw the transformation of Centric Health's business model in alignment with its refined strategy focused on the Company's core strengths in healthcare service delivery," said David Cutler, President and Chief Executive Officer, Centric Health Corporation. "We achieved year-over-year revenue and Adjusted EBITDA¹ growth across all segments. With the completion of the previously announced sales of non-core operations during the quarter, we are well positioned to re-invest those proceeds not applied to debt reduction in higher margin businesses consistent with our re-focused strategy to restore and grow our Adjusted EBITDA¹ beyond historical levels."

Financial and Operating Highlights for the Third Quarter and Year-to-Date²

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

• Revenue from continuing operations for the third quarter grew 9.7% to $75.6 million from $69.0 million, including organic growth of 7.7%;
• Adjusted EBITDA¹ from continuing operations for the third quarter grew 11.7% to $7.0 million from $6.3 million;
• Revenue from continuing operations for the year-to-date grew 10.2% to $229.8 million from $208.6 million, including organic growth of 8.3%;
• Adjusted EBITDA¹ from continuing operations for the year-to-date grew 17.8% to $21.0 million from $17.8 million;
• Adjusted EBITDA¹ margin from continuing operations for the third quarter increased to 9.3% from 9.1% and for the year-to-date increased to 9.1% from 8.6%;
• Achieved tenth consecutive quarter of positive cash flow from operations;
• Consistent with the Company's refined strategy to focus on its core higher-margin operations, completed the sales of its retail and home medical equipment operations and methadone pharmacy operations for gross proceeds of $50 million and $20 million, respectively;
• Repaid $10 million of its Revolving Facility, permanently reducing its Revolving Facility to $40 million from $50 million; and,
• Temporarily repaid an additional $15 million of its Revolving Facility while the Company evaluates debt repayment options per its commitment to deploying a minimum of an additional $15 million to some combination of the Revolving Facility, redemption of second lien senior secured notes and redemption of preferred partnership units.
• "The proceeds from the sales of non-core operations enabled us to take yet another meaningful step forward in our debt reduction plan during the quarter, repaying $10 million and permanently reducing our Revolving Facility," said Daniel Gagnon, Chief Financial Officer, Centric Health Corporation.  "We are evaluating the best deployment of a minimum of an additional $15 million for debt reduction to some combination of the Revolving Facility, redemption of second lien senior secured notes and redemption of the preferred partnership units and, in the interim, have temporarily applied an additional $15 million to the Revolving Facility.  We remain committed to and focused on our debt reduction plan."

FINANCIAL RESULTS

As a result of the strategic initiative to define the Company's long term operating model and the Company's decision to divest substantially all of its retail and home medical equipment operations, the Company's Chief Operating Decision Maker ("CODM") has amended the manner in which the business is operated and accordingly how financial information is presented to the CODM. As a result, the Company has amended its reportable operating segments and will now present three reportable operating segments rather than five reportable operating segments as was previously presented. Operating segments, as reported to the CODM are as follows: Physiotherapy, Rehabilitation and Assessments, Specialty Pharmacy, and Surgical and Medical Centres. The assessment operations which were separately reported in the past are now reported as part of the renamed Physiotherapy, Rehabilitation and Assessments segment. This segment was previously named the Physiotherapy segment. As a result of the planned divestiture of substantially all of the retail and home medical equipment segment, the remaining component of this segment will now be reported as part of the Physiotherapy, Rehabilitation and Assessments segment. Comparative balances have been amended to reflect the presentation of three reportable operating segments. 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)

		For the three month periods ended September 30,			For the nine month periods ended September 30,
(in $000)		2014 $	2013 4 $	2012 $	2014 $	2013 4 $	2012 $
Revenue		75,625	68,962	62,488	229,829	208,559	198,572
Loss from continuing operations		(1,471)	(1,642)	(6,799)	(2,880)	(10,295)	(12,708)
(Loss) income from continuing operations before interest expense and income taxes		(1,049)	2,996	(4,858)	(4,406)	4,795	32,981
EBITDA1 from continuing operations		5,671	9,720	681	15,167	24,782	49,107
Adjusted EBITDA1 from continuing operations		7,019	6,286	3,447	21,021	17,840	14,556
	Per share - Basic	$0.05	$0.05	$0.03	$0.15	$0.14	$0.13
	Per share - Diluted	$0.03	$0.03	$0.03	$0.11	$0.10	$0.11
Adjusted EBITDA1 Margin from continuing operations		9.3%	9.1%	5.5%	9.1%	8.6%	7.3%
Adjusted EBITDA1		7,223	8,559	9,008	22,172	27,415	33,241
	Per share - Basic	$0.05	$0.06	$0.08	$0.16	$0.21	$0.30
	Per share - Diluted	$0.03	$0.05	$0.07	$0.11	$0.15	$0.26
Adjusted EBITDA1 Margin		7.3%	7.7%	8.4%	6.9%	7.9%	10.2%
Net income (loss)		743	(40,590)	(6,273)	(49,168)	(51,593)	31,442
	Per share - Basic5	$0.00	($0.31)	$(0.05)	($0.35)	($0.41)	$0.28
	Per share - Diluted5	$0.00	($0.31)	$(0.05)	($0.35)	($0.41)	$0.24
Cash flow from operations		1,753	4,894	3,402	14,195	11,555	501
Weighted Average Shares Outstanding (Basic)3		153,176	132,246	116,856	142,478	127,668	111,714
Shares Outstanding, September 30 3		153,280	132,558	121,318	153,280	132,558	121,318

¹See "Non-IFRS Measures" below.
³Excludes contingent escrowed shares and restricted shares.
⁴ As part of the year end financial statement close process for the year ended December 31, 2013, the Company's Motion  Specialties operations performed an inventory count and valuation. Upon the completion of the inventory count and inventory valuation, adjustments of $1,819 ($1,337 net of income taxes) and $5,919 ($4,351 net of income taxes) were recorded for the three and nine month periods ended September 30, 2013 which reduced inventory and increased cost of healthcare services and supplies.
⁵  Basic and diluted (loss) earnings per share is based on the (loss) earnings attributable to shareholders of Centric Health Corporation.

Consolidated Results

Consolidated revenue from continuing operations for the three month period ended September 30, 2014 increased 9.7% to $75.6 million from $69.0 million for the comparative period in the prior year. The increase was primarily attributable to:

• Organic growth of $5.8 million, or 7.7%, across all operating segments; and
• The acquisition of SmartShape (December 2013) and other start-up initiatives contributed incremental revenue of $1.8 million.

Partially offsetting these increases was the impact of generic drug price reductions in the Specialty Pharmacy segment.

Consolidated revenue from continuing operations for the nine month period ended September 30, 2014 increased 10.2% to $229.8 million from $208.6 million for the nine month period ended September 30, 2013.  The increase was primarily due to:

• Organic growth of $17.3 million, or 8.3%, across all operating segments; and
• The acquisition of SmartShape (December 2013) and other start-up initiatives contributed incremental revenue of $5.6 million.

Partially offsetting these increases was the impact of generic drug price reductions in the Specialty Pharmacy segment and the closure of certain underperforming rehabilitation clinics in the  Physiotherapy, Rehabilitation and  Assessments segment.

Adjusted EBITDA¹ from continuing operations for the three month period ended September 30, 2014 increased 11.7% to $7.0 million from $6.3 million for the three month period ended September 30, 2013.   Adjusted EBITDA¹ margin from continuing operations for the three month period ended September 30, 2014 increased to 9.3% from 9.1%  for the three month period ended September 30, 2013.

Adjusted EBITDA¹ from continuing operations for the nine month period ended September 30, 2014 increased 17.8% to $21.0 million from $17.8 million for the nine month period ended September 30, 2013.  Adjusted EBITDA¹ margin from continuing operations for the nine month period ended September 30, 2014 increased to 9.1% from 8.6% for the nine month period ended September 30, 2013.

Segment Results

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

For the three month periods ended September 30,	Revenue				Adjusted EBITDA from continuing operations
(in $000)	2014 $		2013 $		2014 $		%		2013 4 $		%
Physiotherapy, Rehabilitation and Assessments	42,314		39,647		5,657		13.4		5,339		13.5
Specialty Pharmacy	23,978		22,323		3,328		13.9		2,877		12.9
Surgical and Medical Centres	9,333		6,992		705		7.6		645		9.2
Corporate	—		—		(2,671)		—		(2,575)		—
Total	75,625		68,962		7,019		9.3		6,286		9.1

For the nine month periods ended September 30,		Revenue				Adjusted EBITDA from continuing operations
(in $000)		2014 $		2013 $		2014 $		%		2013 4 $		%
Physiotherapy, Rehabilitation and Assessments		131,118		122,384		18,603		14.2		17,020		13.9
Specialty Pharmacy		70,997		64,243		8,947		12.6		6,704		10.4
Surgical and Medical Centres		27,714		21,932		2,712		9.8		2,129		9.7
Corporate		—		—		(9,241)		—		(8,013)		—
Total		229,829		208,559		21,021		9.1		17,840		8.6

OUTLOOK

With services that address growing demand and unmet 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, the Company has focused its 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 those opportunities with low capital investment that leverage the Company's existing resources and capacity. Acquisitions are expected to be accretive and will be 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.

Physiotherapy, Rehabilitation and Assessments

The Company's Physiotherapy, Rehabilitation and Assessments segment achieved strong growth in the first three quarters of 2014, driven by both the rehabilitation clinic network and the assessments business.

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 local marketing initiatives to drive brand awareness and increase the volume of patient visits.

The Company expanded its clinic network in the first three quarters of 2014 through the acquisition of four new clinics. The Company will pursue continued expansion of the national clinic footprint through additional strategically beneficial 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.

Segment Adjusted EBITDA¹ margins for the third quarter of 2014 were temporarily dampened by investment in additional front-line staff that have not yet achieved their expected revenue generating capacity.  The Company expects the contribution of these staff will contribute positively to Adjusted EBITDA¹ margins commencing in 2015.

Specialty Pharmacy

The Company anticipates continued revenue and Adjusted EBITDA¹ growth from its Specialty Pharmacy segment throughout the remainder of 2014 and beyond. This segment continues 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 and retail initiatives.

As all of the pharmacies are currently located in Ontario, the Company plans to expand beyond the province, in particular into Western Canada, to develop a national network that would both expand its geographical market and strengthen its value proposition to national long-term care and retirement home providers. The Company is also pursuing organic growth opportunities by establishing co-location pharmacy services within selected existing facilities, including the planned opening of the first co-location pharmacy in the fourth quarter of 2014 at the Richmond Oval in Richmond, British Columbia.

Adjusted EBITDA margins, which have returned to historical levels following the implementation of Electronic Medical Administrative Records ("EMAR") for existing long-term care home contracts, are expected to be stable in coming quarters. However, as Centric wins new contracts, margins may be impacted in the short term as EMAR implementation costs may be absorbed.

Longer term, this segment should benefit from growth in Employer Healthcare Management and Wellness contracts, which should contribute to increased volumes.

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 the introduction of innovative programs and new technologies, partnerships with local physicians and health authorities, marketing and brand development and facilitating medical tourism.  Efforts to expand the roster of physicians in order to utilize excess operating room capacity are ongoing at all of the Company's surgical centres.

The financial results of the Surgical and Medical Centres segment improved in the first three quarters of 2014 due to growth in the contribution from bariatric procedures following the 75% acquisition of SmartShape Weight Loss Centres ("SmartShape"), a leader in state-of-the-art bariatric (weight loss) surgical procedures, in the fourth quarter of 2013. The Company expects the number of bariatric procedures to increase based on the roll out of SmartShape's proven business model at each surgical centre location. SmartShape recently added the higher margin gastric sleeve procedure to its offerings at the Don Mills (Toronto) facility (and will do so at other Ontario facilities pending regulatory approval), which is expected to further increase volumes.

The Company continues to seek partnerships with some of Canada's leading surgeons for the future launch of additional specialized surgical Centres of Excellence and other initiatives. In addition, inter-provincial and foreign medical tourism presents a growth opportunity for the Company.

The Company completed significant renovations to its facility in Calgary, Alberta in the first quarter of 2014 and to its Don Mills (Toronto, Ontario) facility in the third quarter of 2014.  Closure of the Don Mills facility during the third quarter of 2014 for renovations dampened revenue and Adjusted EBITDA¹ for the third quarter, however, the renovations are expected to drive improved results going forward.  In the fourth quarter of 2014, the Company will undertake a renovation of its False Creek facility in Vancouver, British Columbia.

Employer Healthcare Management and Wellness Initiative

The Company recently established a dedicated cross-divisional support team to pursue opportunities in the high growth employer services market by coordinating business development and account-based marketing efforts across multiple entry points. The Company offers clients customizable program options from a broad continuum of services across its platform, including mandatory workplace injury insurance programs, optional wellness programs and corporate health benefits and prescription plans, generating additional revenue in its core segments.  In the fourth quarter of 2014, the Company launched an incentives-based wellness pilot  program for employees to help test and optimize this program offering in advance of a market launch.

Corporate Infrastructure

Management believes overall profitability can be improved through further optimization of corporate infrastructure. The Company has multiple initiatives underway and expects to undertake additional initiatives intended to reduce corporate costs as a proportion of consolidated revenue through consolidation and centralization of functions, rightsizing, achieving unrealized synergies amongst the operating segments and managing discretionary spend and professional fees.

FINANCING AND DEBT REDUCTION

On August 29, 2014, the Company repaid $10 million of its Revolving Facility resulting in a permanent reduction in the capacity of the Revolving Facility from $50 million to $40 million.   The Company intends to make a further $15 million in debt reductions through a combination of additional reduction of the Revolving Facility, redemption of second lien senior secured notes and redemption of the preferred partnership units.  While the Company evaluates its debt repayment options, on September 19, 2014, the Company made a temporary repayment of an additional $15 million against the Revolving Facility which further reduced the capacity of the Revolving Facility to $25 million.  However, the capacity on the Revolving Facility can be increased to $40 million with an equivalent return of funds to the escrow cash account for the proceeds of sale from the non-core businesses as long as the Company is not in default under the Revolving Facility.  The Company only intends to return funds to the escrow account for the purpose of making the further $15 million in debt repayments outlined above.  The Company's Revolving Facility matures in June 2015 and the Company is currently negotiating the potential renewal of the Revolving Facility or a similar lending arrangement.

In August 2014, as a result of the pending divestiture of certain non-core operations and subject to the completion of these divestitures, the Company received a waiver from a financial performance covenant at the September 30, 2014 measurement date and amendments to certain financial performance covenants for the remaining measurement dates up to the maturity of the Revolving Facility in June 2015. The Company was in compliance with its financial performance covenants at September 30, 2014, except for the one financial covenant for which the Company received a waiver in August 2014.

SHARES OUTSTANDING

As at September 30, 2014 the Company had total shares outstanding of 171,016,215 and as at the date of this press release (November 4, 2014) the Company had total shares outstanding of 171,049,551.  The outstanding shares at September 30, 2014 and November 4, 2014 include 17,736,637 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 153,279,578 common shares outstanding as at September 30, 2014 and 133,363,294 shares outstanding at December 31, 2013. The number of options outstanding is 7,671,000 at September 30, 2014 and November 4, 2014. The number of restricted share units outstanding is 3,448,169 at September 30, 2014 and 3,434,835 at November 4, 2014. The number of warrants outstanding is 12,677,310 at September 30, 2014 and November 4, 2014.  Should all outstanding options and warrants that were exercisable at September 30, 2014 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

			For the three month periods ended September 30,				For the nine month periods ended September 30,
(in $000)			2014 $		2013 3 $		2014 $	2013 3 $
Net loss from continuing operations			(8,648)		(5,408)		(28,772)	(18,081)
Depreciation and amortization			6,693		6,543		19,443	19,866
Interest expense			8,362		8,403		24,802	27,889
Amortization of lease incentives			27		181		130	121
Income tax expense (recovery)			(763)		1		(436)	(5,013)
EBITDA from continuing operations			5,671		9,720		15,167	24,782
Transaction and restructuring costs			1,281		480		2,927	2,202
Change in fair value of contingent consideration liability			48		(2,982)		695	(9,975)
Stock-based compensation expense			489		724		1,399	5,946
Change in fair value of derivative financial  instruments			(470)		(1,656)		831	(5,115)
Gain on disposal of property and equipment			—		—		2	—
Adjusted EBITDA from continuing operations			7,019		6,286		21,021	17,840
Adjusted EBITDA from discontinued operations			204		2,273		1,151	9,575
Adjusted EBITDA			7,223		8,559		22,172	27,415
Basic weighted average number of shares			153,176		132,246		142,478	127,668
Adjusted EBITDA per share from continuing operations (basic)			$0.05		$0.05		$0.15	$0.14
Adjusted EBITDA per share (basic)			$0.05		$0.06		$0.16	$0.21
Fully diluted weighted average number of shares			210,220		184,955		198,038	181,783
Adjusted EBITDA per share from continuing operations (diluted)			$0.03		$0.03		$0.11	$0.10
Adjusted EBITDA per share (diluted)			$0.03		$0.05		$0.11	$0.15

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 and nine month periods ended September 30, 2014 and 2013. 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 third quarter and year-to-date financial results tomorrow, Wednesday, November 5, 2014, at 8:30 a.m. (ET).

Telephone Dial-In Access Information

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

Webcast Access Information

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

Archive Access Information

The conference call will be archived for replay by telephone until Wednesday, November 12, 2014 at midnight.  To access the archived conference call, dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 21489143.

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