Delivers Specialty Pharmacy Adjusted EBITDA growth of 50.5%
TORONTO, Aug. 14, 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 second quarter of 2019.
Highlights for the Second Quarter
- Specialty Pharmacy revenue increased 6.5% to $31.5 million;
- Average number of beds serviced increased 9.6% to 31,265;
- Specialty Pharmacy Adjusted EBITDA1 from continuing operations increased 50.5% to $3.7 million; and
- Adjusted EBITDA margin in Specialty Pharmacy was 11.8% (10.4% excluding the impact of IFRS 16).
Highlights Subsequent to Quarter-End
- Entered into a definitive agreement on August 9, 2019 to sell its Surgical and Medical Centres business to the Kensington Private Equity Fund for a cash purchase price of $35 million.
"We are pleased with our strong second quarter performance, which was driven by continued expansion of beds serviced and the significant improvements made to our cost structure in the past year," said David Murphy, President and Chief Executive Officer. "With the recently announced divestiture of our Surgical and Medical Centres business, our strategic transformation is on track and we are increasingly well positioned to pursue further growth opportunities and continue our strong momentum."
Revenue from Specialty Pharmacy for the second quarter increased 6.5% to $31.5 million as a result of continued growth in the average number of beds serviced during the quarter and the impact of revenue initiatives from the 2018 Business Re-Engineering Plan. Together, the higher bed count and the revenue initiatives from the Business Re-Engineering Plan more than offset the impact of the regulatory changes that came into effect in the second quarter of the prior year.
Adjusted EBITDA from Specialty Pharmacy increased 50.5% to $3.7 million for the second quarter. The increase was due to the increased revenue, cost savings achieved through the Business Re-Engineering Plan, and operational efficiencies resulting from increased scale from the higher average number of beds serviced compared to the same period in the prior period. The impact of IFRS 16 for the quarter was an increase to Adjusted EBITDA from Specialty Pharmacy of $0.4 million. Adjusted EBITDA margin from Specialty Pharmacy was 11.8% for the quarter (10.4% excluding the impact of IFRS 16).
Selected Financial Information
(Thousands of Canadian dollars except per
share amounts and percentages)
For the three month periods
ended June 30,
For the six month periods
ended June 30,
Revenue from continuing operations
Adjusted EBITDA1 from Specialty Pharmacy
Adjusted EBITDA margin from Specialty Pharmacy
Corporate Office Costs
Adjusted EBITDA from continuing operations
Adjusted EBITDA Margin from continuing operations
Per share - Basic2 and Diluted2
Adjusted EBITDA Margin
Net income (loss)
Per share - Basic2 and Diluted2
Cash provided by operations
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.
The Company's 2019 financial results include the impact of IFRS 16, a substantial change to the lease accounting standards, effective January 1, 2019. Centric Health adopted IFRS 16 using the modified retrospective approach and the Company's comparative information was not restated. As a result, the comparability of the Company's 2019 Adjusted EBITDA to periods prior to January 1, 2019 is impacted.
Corporate office expenses for the quarter increased 2.0% to $1.5 million, with the variance being primarily due to executive position vacancies in the prior year.
Adjusted EBITDA from continuing operations increased 118.7% to $2.2 million for the quarter. The overall impact to Adjusted EBITDA from continuing operations from the adoption of IFRS 16 was an increase of $0.5 million for the quarter.
During the three and six month periods ended June 30, 2019, the Company disposed of the operating assets of its retail pharmacy operations in Grande Prairie, AB and Medicine Hat, AB. The results of these operations have been included 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 Surgical and Medical Centres segment as assets held for sale and have presented its current and prior year results as discontinued operations. Revenue and Adjusted EBITDA from discontinued operations were $11.3 million and $1.3 million, for the three month period ended June 30, 2019, respectively. The impact of the transition to IFRS 16 in discontinued operations was an increase to Adjusted EBITDA of $0.4 million.
Centric Health will host a conference call, including a slide presentation, to discuss its second quarter financial results on Thursday, August 15, 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, August 22, 2019 at midnight. To access the archived conference call, dial 416-849-0833 or 1-855-859-2056 and enter the reservation number 8558036.
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 31,000 residents in over 460 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