Successfully Completes Business Re-Engineering Plan
TORONTO, March 27, 2019 /CNW/ - Centric Health Corporation ("Centric Health" or "the Company") (TSX: CHH), one of Canada's leading healthcare services companies, today reported its financial results for the fourth quarter and year ended December 31, 2018.
"The second half of 2018 was a transformative period for Centric Health," said David Murphy, President and CEO. "We successfully completed a re-engineering initiative to significantly improve the profitability of our core business, while at the same time upgrading our leadership team, winning new business, establishing new strategic partnerships and taking meaningful steps towards deleveraging our balance sheet. Our Q4 results were in line with expectations, as our restructuring efforts started to be reflected in our operating results. We are well positioned for further growth and improved financial performance in 2019 as we continue to establish the Company as the leading provider of pharmacy and other healthcare services to Canadian seniors."
Highlights for the Fourth Quarter of 2018
- Continued revenue growth in Specialty Pharmacy despite significant regulatory changes that occurred during the second quarter of 2018;
- Average beds serviced increased by more than 2,000 compared to Q4 2017, and onboarding of new contracts is expected to bring total beds serviced to over 31,000 by the end of Q1 2019;
- Successfully completed Business Re-Engineering Plan, with all financial targets achieved;
- Specialty Pharmacy delivered sequential profit growth in Q4 2018, with Adjusted EBITDA increasing by 49.5% to $2.1M from $1.4M in Q3 2018. Specialty Pharmacy Adjusted EBITDA margins in Q1 2019 are expected to be approximately 9%, and are anticipated to increase to double-digit margins thereafter;
- Strengthened leadership team, filling key executive roles in both pharmacy operations and the corporate office;
- Continued execution of seniors medical cannabis strategy, with deliveries to residents commencing during Q1 2019; and
- The Company's Surgical and Medical Centres segment and the divested retail pharmacy in Medicine Hat, AB have been classified as held for sale and have been reported as discontinued operations, as required under IFRS.
Highlights Subsequent to Quarter-End
- Further advanced deleveraging strategy by completing $12M private placement of convertible preferred shares to Ewing Morris & Co. Investment Partners Ltd.
Selected Financial Information
(All amounts in the chart below are in thousands except per share and percentage data)
For the three month periods
ended December 31,
For the years ended
Revenue from continuing operations
Income (loss) from continuing
Income (loss) from continuing
operations before interest expense
and income taxes
EBITDA1 from continuing operations
Adjusted EBITDA1 from continuing
Per share - Basic2 and Diluted2
Adjusted EBITDA1 Margin from
Per share - Basic2 and Diluted2
Adjusted EBITDA1 Margin
Net income (loss)
Per share - Basic2 and Diluted2
Cash flow provided by (used in)
Weighted Average Shares
Outstanding (Basic and Diluted)3
Shares Outstanding, December 313
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 escrowed shares and restricted shares.
Revenue from continuing operations increased 1.6% to $30.9 million for the fourth quarter of 2018 and by 1.4% to $123.7 million for the fiscal year compared to the same periods in the prior year. Revenue growth was achieved despite the impact of the previously announced regulatory changes as a result of an increase in the average number of beds serviced during the year and revenue initiatives implemented as part of the Business Re-Engineering Plan.
Consolidated Adjusted EBITDA from continuing operations decreased 72.8% to $0.6 million for the fourth quarter of 2018 and by 62.8% to $4.0 million for the fiscal year compared to the same periods in the prior year. Specialty Pharmacy Adjusted EBITDA was $2.1 million for the fourth quarter and $9.6 million for the fiscal year. Specialty Pharmacy Adjusted EBITDA increased by 49.5% compared to the third quarter of 2018 primarily due to the impact of the Business Re-Engineering Plan initiatives completed during the second half of 2018 and beds from new contract wins that were onboarded throughout the third and fourth quarters of 2018.
In the third quarter of 2018, the Company disposed of the operating assets of one of its retail pharmacy operations in Richmond, BC. The Company has included the results of this operation as part of discontinued operations on the consolidated statement of income and comprehensive income. In addition, as required under IFRS, the Company classified its former retail pharmacy in Medicine Hat, AB that was divested on February 14, 2019 as well as its former Surgical and Medical Centres segment as assets held for sale at December 31, 2018. The current and prior year results of these businesses have been presented as discontinued operations within the consolidated statement of income and comprehensive income. Revenue and Adjusted EBITDA from discontinued operations were $10.3 million and $1.3 million, for the three month period ended December 31, 2018, respectively, and $46.0 million and $6.7 million, for the year ended December 31, 2018, respectively.
Centric Health will host a conference call, including a slide presentation, to discuss its fourth quarter financial results on Thursday, March 28, 2019 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 Thursday, April 4, 2019 at midnight. To access the archived conference call, dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 6690373.
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's vision is to be the leading provider of pharmacy and other healthcare services to Canadian seniors. The Company is one of Canada's leading, and most trusted providers of comprehensive Specialty Pharmacy services and solutions to seniors. We operate a large national network of pharmacy fulfilment centres that deliver high-volume solutions for the cost-effective supply of chronic medication and other specialty clinical pharmacy services, serving more than 30,000 residents in over 450 seniors communities (long-term care, retirement homes, and assisted living facilities) nationally.
With services that address the growing demand within the Canadian healthcare system, Centric Health's unparalleled national care delivery platform provides significant potential for future expansion and growth.
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 the Company's business strategy, plans and other expectations, beliefs, goals, objectives, information and statements about possible future events, including statements around 2019 performance, bed growth and Adjusted EBITDA margins. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.
Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements. Factors that could cause such differences include the Company's liquidity and capital requirements, government regulation and funding, the highly competitive nature of the Company's industry, reliance on contracts with key customers and other risk factors described from time to time in the reports and disclosure documents filed by the Company with Canadian securities regulatory agencies and commissions. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. As a result of the foregoing and other factors, no assurance can be given as to any such future results, levels of activity or achievements and neither the Company nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. The factors underlying current expectations are dynamic and subject to change.
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 EBITDA 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 EBITDA as a key component of the covenant calculations. EBITDA and Adjusted EBITDA are not recognized measures under IFRS.
SOURCE Centric Health Corporation
For further information: David Murphy, President and Chief Executive Officer, Centric Health Corporation, 416-927-8400; Andrew Mok, Interim Chief Financial Officer, Centric Health Corporation, 416-927-8400