Centric Health Agrees to Divest Physiotherapy, Rehabilitation and Assessments Operations for Gross Proceeds of up to CAD$250 Million in Cash

– Company to Use Substantial Portion of Net Proceeds to Pay Down Debt, Significantly Reducing Leverage and Strengthening its Balance Sheet –

– Company to Focus on High-Growth Opportunities Across National Platform in Specialty Pharmacy and Surgical and Medical Centres –

TORONTO, Nov. 25, 2015 /CNW/ - Centric Health Corporation ("Centric Health" or "the Company") (TSX: CHH) today announced it has entered into a definitive agreement to sell substantially all of the businesses within its Physiotherapy, Rehabilitation and Medical Assessments segment to Audax Private Equity ("Audax"), an Audax Group business, for a cash purchase price at closing of CAD$245 million, subject to certain closing adjustments, plus up to CAD$5 million in contingent consideration based on the divested businesses achieving certain performance thresholds in 2016 and/or other criteria being met during the first half of 2017. The Company intends to use a substantial portion of the net proceeds from the sale, which are expected to be between CAD$230 million and CAD$235 million (excluding the up to CAD$5 million contingent consideration), to pay down debt and significantly reduce the Company's leverage.

"The divestiture of these businesses at an attractive valuation will enable us to transform our business by paying down debt, reducing our leverage and providing the financial flexibility to invest in the significant growth opportunities in the ongoing business," said David Cutler, President and Chief Executive Officer. "With a significantly strengthened balance sheet and free cash flow, we are well positioned to create meaningful and sustainable value through opportunities inherent in the Canadian healthcare industry as governments seek solutions to the economic, social and technological healthcare demands associated with an aging population."

Mr. Cutler continued, "Our leading positions and national networks in our Specialty Pharmacy and Surgical and Medical Centres businesses position each for strong organic growth and margin improvement as we drive utilization at our facilities and expand our service offerings. We will also continue to explore strategic, accretive, complementary acquisitions to further strengthen our value proposition as a national provider in our Specialty Pharmacy segment."

The businesses to be divested are composed of the Company's Physiotherapy, Rehabilitation (including Seniors Wellness and Homecare) and Medical Assessments operations which are comprised of brands including LifeMark Health, Community Advantage Rehabilitation, Centric Health Seniors Wellness, Centric Health Medical Assessments and Viewpoint Medical Assessment Services.

"We are excited by this announcement and by what it means for the Physiotherapy, Rehabilitation and Assessments operations and its dedicated professionals going forward," said Peter Stymiest, Chief Operations Officer of Centric Health's Physiotherapy, Rehabilitation and Medical Assessments Division and who will become CEO of the new entity under Audax' ownership. "Audax has long-standing and significant experience investing in the healthcare space. The expertise and strong brands of the Physiotherapy, Rehabilitation and Medical Assessments operations joined with Audax' resources represents a powerful combination."

The Centric Health Opportunity Post-Transaction

Following closing of the transaction, Centric Health will be composed of two core businesses, each with national networks and leading market positions, consistent with the Company's focus on "hands-on" healthcare services, with significant growth opportunities that generate strong margins and cash flows, while having low working capital and long-term capital expenditure requirements.

Pro forma the divestitures, as well as the acquisition of Pharmacare in March of this year, Centric Health generated revenue and adjusted EBITDA of $168.4 million and $14.6 million for the trailing twelve-month period ended September 30, 2015, respectively, resulting in an adjusted EBITDA margin of 8.6%. Adjusted EBITDA for that period assumes corporate costs of approximately 4% of revenue, which is the Company's target for the end of 2016.

Specialty Pharmacy Business

Centric Health's Specialty Pharmacy business provides pharmaceutical dispensing, compliant packaging and ancillary products and services for seniors communities (retirement homes and long term care facilities), servicing more than 300 customer facilities with more than 25,000 beds in four provinces filling a combined 800,000 prescriptions monthly. The Specialty Pharmacy business also provides pharmaceutical dispensing services for employees insured by corporate health plans.

Centric Health's Specialty Pharmacy business is well positioned to continue to generate strong organic growth based on its strong competitive position by winning new contracts with seniors community customers as that industry expands with the significant, long-term growth in the Canadian seniors population. In March 2015, the Specialty Pharmacy business expanded into Western Canada through the acquisition of Edmonton-based Pharmacare, allowing it to service those customers with operations in multiple provinces, giving rise to business opportunities not previously available to the Company. The addition of Pharmacare also strengthens Centric Health's abilities to provide expanded, value-added pharmacy services as the industry moves to increase pharmacists' scope of practice. Such services include pharmacovigilance, which is increasingly becoming a focus for governments as they seek to address the issue of hospitalizations due to drug interactions and reduce the associated costs.

Surgical and Medical Centre Business

Centric Health operates seven surgical and medical centres in four provinces (primarily in major centres), with a total of 25 operating and procedure rooms and 76 beds and serving workers' compensation boards, regional health authorities, non-residents, private patients and various governmental agencies. Centric Health has recently invested in facility upgrades and professional accreditations that significantly strengthen its capabilities and credentials as a preferred provider to governments as they increasingly outsource surgical procedures to reduce costs and wait times.

Centric Health's Surgical and Medical Centres business continues to generate strong organic revenue growth based on its strategic positioning as a partner to physicians, hospitals and health authorities. The business has expanded capacity utilization to approximately 38% in the third quarter of 2015 from approximately 30% at the beginning of 2014 and believes that it can attain 50% capacity utilization in the medium term, which should drive both revenue growth and EBITDA margin expansion.

The divestiture does not include Performance Medical Group, which offers state-of-the-art custom orthotics, off-the-shelf orthotics, custom bracing, and laser and shockwave therapy at 50 locations across Canada.

Expected Closing

The sale is subject to certain customary closing conditions, and is expected to close within 90 days.

Strategic Review

The transaction is an output of the strategic review process undertaken by the Board of Directors in July 2015 in response to unsolicited interest in certain of the Company's businesses.

"After a comprehensive review of the options to maximize shareholder value, the Board of Directors determined that these divestitures at attractive valuations were in the best interests of the Company and its shareholders, while at the same time positioning the Physiotherapy, Rehabilitation and Assessments operations for long-term success," said Mr. Yazdi Bharucha, Chair of the Centric Health's Audit Committee and Chair of the Special Committee overseeing the ongoing strategic review process. "We were able to secure an attractive outcome for our shareholders, and create significant balance sheet flexibility for Centric Health."

Advisors

Centric Health received financial advice from National Bank Financial Inc. and Canaccord Genuity Corp., and legal advice from Stikeman Elliott LLP. Audax received legal advice from Blake, Cassels & Graydon LLP‎.

About Audax Group

Audax Group is an alternative asset management firm specializing in investments in middle market companies. With offices in Boston, New York, and Menlo Park, Audax has over USD $9 billion in assets under management across its Private Equity, Mezzanine, and Senior Debt businesses. For more information visit the Audax Group website www.audaxgroup.com.

About Centric Health

Centric Health provides expert solutions and trusted care through a national community of experts who can be accessed quickly and have a track record of achieving superior patient outcomes and providing outstanding client satisfaction. Centric Health's vision is to be Canada's most respected brand in the independent healthcare sector and world renowned for quality, innovation and for delivering sustainable value to patients, clients and stakeholders. With national networks of facilities in each of its core businesses of Specialty Pharmacy and Surgical and Centres, deep knowledge and experience of healthcare delivery and extensive, trusted relationships with payers, physicians, and government agencies, the Company is uniquely positioned to address current and future healthcare needs in growing markets as the Canadian healthcare industry continues to evolve over the long term.

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

Daniel Gagnon, Chief Financial Officer, Centric Health, 416-619-9417, [email protected]; Lawrence Chamberlain, Investor Relations, NATIONAL Equicom,416-848-1457, [email protected]