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Centric Health Reports Continued Strong Growth and Record Adjusted EBITDA1 from Continuing Operations for Second Quarter of 2016

9 August 2016

TORONTO, Aug. 9, 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 second quarter ended June 30, 2016.

Highlights for the Second Quarter
(All comparative figures are for the second quarter and year to date of the prior year)

  • Revenue from continuing operations increased 4.1% to $43.3 million from $41.5 million;
  • Adjusted EBITDA1 from continuing operations increased to a record $4.1 million from $2.8 million and Adjusted EBITDA1 margin from continuing operations was 9.4% compared with 6.6% (with Adjusted EBITDA1and Adjusted EBITDA1 margin for the second quarter of 2015 reflecting out-sized corporate costs to support since-discontinued operations);
  • The Company continued to advance its debt reduction strategy with the successful completion of a refinancing and reduction of its April 2016 Convertible Notes (the "Notes") under which noteholders of $9.1 million of the $15.0 million principal outstanding agreed to extend the notes to July 31, 2017 and the remaining $5.9 million principal outstanding was repaid at par plus accrued and unpaid interest; and,
  • The Company's debt reduction actions since the beginning of 2016 have reduced outstanding debt by an aggregate of nearly $209 million and will result in annual interest expense savings of nearly $19 million, strengthening the Company's ability to generate free cash flow and providing increased financial flexibility to invest in the growth of its businesses.

Highlights Subsequent to the Second Quarter

  • Entered into 10-year Business Development, Technology and Supply Agreements with Guardian and IDA Pharmacies under which the Company has agreed to an exclusive supply arrangement over the term of the agreement and the two companies have committed to explore partnerships that can result in the creation or extension of patient support initiatives that deliver better quality and more efficient patient care by leveraging technology. Under the terms of the Agreements, Guardian and IDA Pharmacies have committed to invest up to $17 million to support innovative programs and solutions, as well as the organic and acquisitive growth strategies of Centric Health.
  • The Company intends to repay its 6.0% Convertible Notes maturing December 2016 in cash with any of the remaining proceeds from the sale of their Physiotherapy, Rehabilitation, and Medical Assessments segment or the combination of remaining proceeds and the Revolving Facility;
  • Further to the Company's objective of further reducing its debt and simplifying its balance sheet, given the multiple debt instruments with various terms, the Company is currently in active discussions with lenders and intends to provide details on the next definitive steps in its plan before the end of the fourth quarter of 2016.

"The second quarter was highlighted by continuing strong growth for our Specialty Pharmacy segment in Western Canada, as well as our Surgical and Medical Centres segment, which contributed to our ninth consecutive quarter of year-over-year growth in revenue and adjusted EBITDA1 and a strong adjusted EBITDA margin1," said David Cutler, President and Chief Executive Officer, Centric Health Corporation. "With our debt levels now substantially addressed and our corporate costs right-sized, we are focused on executing the growth strategies for each of our businesses to drive revenue and adjusted EBITDA1, with an emphasis on maximizing sustainable free cash flow. Importantly, our national networks in each segment have significant operating leverage that will allow us to generate high margins on incremental volumes.

"Alongside our primary focus on growing our businesses, we continue to actively pursue further debt reduction and simplification of our balance sheet. We expect growth in Adjusted EBITDA1 to accelerate in the coming quarters and the investment of up to $17 million from our new business development and supply partner, along with the $4.4 million in cash and and cash remaining from the sale of the Physiotherapy, Rehabilitation and Medical Assessments operations last December, and the expected $8 million in contingent consideration and hold back from that sale to come over the next nine months, will provide additional near-term financial resources and flexibility in this regard."

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