TORONTO, May 12, 2020 /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 first quarter ended March 31, 2020.
Highlights for the First Quarter of 2020
- Revenue from continuing operations increased 3.0% to $30.4 million;
- Average number of beds serviced increased 3.4% to 31,387;
- Adjusted EBITDA1 from continuing operations increased 10.0% to $2.0 million; and
- Completed debt financing of up to $42.7 million with Crown Capital Partners Inc. and Yorkville Asset Management Inc. for and on behalf of certain managed funds.
Highlights Subsequent to Quarter-End
- Completed the acquisition of Remedy Holdings Inc. ("RHI") and the Remedy'sRx Specialty Pharmacy business ("Remedy's") on May 7, 2020; and
- Appointed Jeff May to the role of Chief Operating Officer (formerly Executive Vice-President and General Manager of RHI).
"We had a strong start to the year with growth in revenue and profitability, as well as in the average number of beds serviced compared to this time last year," said David Murphy, President and Chief Executive Officer of Centric Health. "During the quarter, we announced the transformative acquisition of Remedy's, which closed last week. The acquisition added over 19,000 beds to our business, making Centric the largest provider of specialty pharmacy services in Canada. We welcome the entire Remedy's team, and look forward to the growth and long-term value that the combination of our two companies will create."
"We continue to play an essential role in the safe and timely supply of medications to Canadian seniors, which has meant that the COVID-19 pandemic has had no material effect on the Company's financial performance to date," said Mr. Murphy. "Our pharmacy locations remain fully operational and we are taking all reasonable steps to mitigate against any expected risks this pandemic may pose to our employees, customers and to our business. I am extremely proud of how our team has worked together to proactively ensure that our customers and their residents can continue to depend on us in the current environment. I would like to thank all of the front-line care workers across the country working both in our facilities and those of our home operator partners, who are working tirelessly to keep seniors safe and well."
Selected Financial Information
(Thousands of Canadian dollars except per share amounts and percentages)
For the three month periods ended March 31,
Revenue from Specialty Pharmacy
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
Per share - Diluted2
Adjusted EBITDA Margin
Net income (loss)
Per share - Basic2
Per share - Diluted2
Cash provided by (used in) operations
See "Non-IFRS Measures" below.
Basic and diluted earnings per share is based on the profit or loss attributable to shareholders of Centric Health Corporation.
Revenue from continuing operations for the quarter increased 3.0% to $30.4 million compared to $29.5 million in the same period in the prior year. The growth was attributable to an increase of 3.4% in the average number of beds serviced over the comparable periods, partially offset by the impact of the amendments to the Ontario Drug Benefit Act ("ODBA") that came into effect on January 1, 2020. The average number of beds serviced during the quarter increased to 31,387 from 30,341 in the first quarter of 2019.
Adjusted EBITDA from continuing operations for the quarter increased 10.0% to $2.0 million compared to $1.9 million in the same period in the prior year. The increase was driven by a year-over-year reduction in corporate costs of 22.3% to $1.2 million from $1.5 million, primarily as a result of labour savings. The benefit from the corporate cost savings was partially offset by a slight decline in Specialty Pharmacy Adjusted EBITDA of 4.3% to $3.2 million from $3.3 million, as anticipated, as the impact of the amendments to the ODBA more than offset the impact of the increase in the average number of beds serviced and cost saving initiatives that were executed in the quarter.
The net impact of the ODBA amendments in the first quarter was a reduction to Adjusted EBITDA of approximately $0.5 million. The quarterly impact of the ODBA amendments is expected to decline in the second quarter of 2020 and onwards as the full quarter impact of cost saving initiatives implemented partway through the first quarter in response to the regulatory changes will be realized.
During the year ended December 31, 2019, the Company divested the operating assets of its retail pharmacy operations in Grande Prairie, AB and Medicine Hat, AB and the Company's Surgical and Medical Centres business. On January 1, 2020, the Company divested its Performance Orthotics business. The results of these operations have been included as part of discontinued operations on the consolidated statement of income and comprehensive income. Revenue and Adjusted EBITDA from discontinued operations for the three-month period ended March 31, 2020 were both nil as compared to $10.7 million and $1.3 million, respectively, for the same period in the prior year.
Centric Health will host a conference call, including a slide presentation, to discuss its first quarter financial results on Wednesday, May 13, 2020 at 8:30 a.m. Eastern Time (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 15 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. 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 https://sedar.com.
ABOUT CENTRIC HEALTH
Centric Health's vision is to be the leading provider of pharmacy and other healthcare services to Canadian seniors. Centric Health is one of Canada's leading and most trusted providers of comprehensive specialty pharmacy services and solutions to seniors. Centric Health operates 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 50,000 residents in over 850 seniors and other communities (long-term care homes, retirement homes, assisted living facilities and group homes) 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. 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 government regulation and funding, liquidity and capital requirements, 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, finance (income) costs, net, and income tax expense (recovery). Adjusted EBITDA is defined as EBITDA before transaction and restructuring costs, change in fair value of contingent consideration liability, impairments, change in fair value of derivative financial instruments, gain on disposal of property and equipment and stock-based compensation expense. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. Adjusted EBITDA per share is defined as Adjusted EBITDA divided by the weighted average 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 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, Chief Financial Officer, Centric Health Corporation, 416-927-8400