Centric Health reports solid 2009 third quarter financial results

TORONTO , Nov. 5 /CNW/ - Centric Health Corporation (TSX: CHH), a diversified healthcare company, today announced its financial results for the third quarter ended September 30, 2009 .

"During the quarter, Centric Health continued to advance its growth strategy. The integration of the Active Health business acquired earlier this year is progressing ahead of expectations. These business units are performing extremely well and we expect that on an annual basis, they will contribute significantly to revenue and EBITDA which represents a solid foundation to the Rehabilitation, Disability Management and Physiotherapy divisions of Centric Health," said Dr. Jack Shevel , Interim President and Chief Executive Officer of Centric Health Corporation. "We continue to evaluate other business opportunities as part of our strategic expansion process which is primarily aimed at enhancing our current business units and diversifying into new targeted sectors within the healthcare industry."

Third Quarter 2009 Financial and Operating Highlights

    
    -   On August 25, 2009, the Company changed its name from Alegro Health
        Corp. to Centric Health Corporation to better reflect its strategic
        focus of being Patient, Healthcare Professional and People Centric.
    -   The Company migrated to the main board of the TSX.
    -   Revenue increased by 242% or $8.8 million over the quarter ended
        September 2008, driven largely by the acquisition of the Active
        Health business and inclusion of its revenue.
    -   EBITDA increased to $1.6 million compared with $0.3 million for the
        comparable quarter in 2008.
    -   Fully diluted earnings per share increased 117% to $0.013 per share
        from $0.006 per share.
    -   At September 30, 2009, the Company had cash on hand of $1.9 million
        and an unused line of credit of $4.0 million.
    -   On October 8, 2009, the Company made a strategic investment in
        Wellness and Preventative Healthcare by concluding a letter of intent
        with PrevCan Inc. ("Intervent Canada").
    

Financial Results

    
    Selected Financial Results (in thousands)

                             Three Months Ended         Nine Months Ended
                               September 30,              September 30,
                          2009     2008    Change     2009     2008   Change
                        -------------------------   -------------------------
    Revenue             $12,431   $3,635     242%   $23,727  $11,200    112%
    Expenses
    Direct costs          9,314    2,492     274%    16,824    7,422    127%
    General and
     administrative
     expense              1,477      795      86%     3,816    2,589     47%
    Amortization            126       40     215%       233      131     78%
                        -------------------------   -------------------------
                         10,917    3,327     228%    20,873   10,142    106%
                        -------------------------   -------------------------

    Income before
     interest expense     1,514      308     392%     2,854    1,058    170%
    Interest expense        190        -                250        -

                        -------------------------   -------------------------
    Income before
     income taxes        $1,324     $308     330%    $2,604   $1,058    146%
                        -------------------------   -------------------------

    EBITDA(1)            $1,640     $348     371%    $3,087   $1,189    160%
    

Revenue for the quarter ended September 30, 2009 increased by $8.8 million over the comparable quarter last year and includes operations for the newly acquired Active Health business which generated $8.5 million for the quarter. The combined revenue in the third quarter for the disability management divisions of Work Able and Direct Health was $3.6 million , which was $0.3 million higher than the prior year. This growth was attributable to customer service strategies that promoted newer and higher repeat business with existing clients. Don Mills Surgical Unit ("DMSU") revenue for the third quarter was consistent with last year.

Direct costs include third party consultant fees associated with the assessment and physiotherapy businesses and salaries and wages of employees working directly in each business segment. Direct costs for the quarter were $9.3 million , which was an increase of $6.8 million over the prior year primarily accounted for by Active Health. For the quarter, direct costs expressed as a percentage of revenue was 75% versus 69% the prior year. Direct costs are higher for the Active Health business than for the other business segments.

General and administrative expense for the quarter ended September 30, 2009 was $1.5 million which was $0.7 million higher than the prior year. Active Health accounted for $0.3 million of this increase; the remainder was driven by higher consulting, professional fees and bonus incentives.

As at September 30, 2009 , the Company had total shares outstanding of 61,015,095 compared to 36,581,762 at December 31, 2008 . There were also 20,500,000 warrants and 3,175,000 options outstanding.

At September 30, 2009 , the Company had total cash on hand of $1.9 million , an increase of $1.0 million during the quarter after repaying principal of $550,000 (payable quarterly) on the senior debt relating to the acquisition of Active Health. The outstanding principal of the senior debt was $10.45 million at the end of the period.

Subsequent Event

On October 8, 2009 , the Company signed a letter of intent to form a strategic alliance with PrevCan Inc. ("INTERxVENT Canada "). The transaction represents Centric Health's Strategic Investment in Wellness and Preventative Healthcare. Centric Health, through Alegro Health Partners, will make a mandatorily convertible loan of $2 million to INTERxVENT Canada during 2010 and 2011 subject to certain terms and milestones. Absent an event of default, conversion will result in Centric Health owning between a minimum of 20% and a maximum of 32% of the fully diluted shares of INTERxVENT Canada linked to it achieving an EBITDA of $2 million for the financial year ending December 31, 2011 . As a condition of this alliance, key INTERxVENT Canada management and existing shareholders will invest a further $500,000 on the same terms and conditions. In addition, current INTERxVENT Canada shareholders will be granted a total of one million Centric Health warrants exercisable over a five year period subject to certain performance criteria. The effective date of the transaction will be January 4, 2010 , subject to certain conditions precedent and milestones being achieved.

For further information please refer to the Company's press release dated October 8, 2009 and for a complete review of financial statements, please visit www.sedar.com.

About Centric Health

Centric Health's vision is to be Canada's premier healthcare company, providing innovative solutions centered round patients and healthcare professionals. As a diversified healthcare company with investments in several niche service areas, Centric Health currently has operations in medical assessments, disability and rehabilitation management, physiotherapy and hospital services. With knowledge and experience of healthcare delivery in international markets and extensive and trusted relationships with payers, physicians, and government agencies, Centric Health is pursuing expansion opportunities into other healthcare sectors to create value for all stakeholders with an unwavering commitment to the highest quality of care and to this end has an advisory agreement with Global Healthcare Investments & Solutions Inc (www.ghis.us). Centric Health is listed on the TSX under the symbol CHH. For further information, please visit www.centrichealth.ca.

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.

Non-GAAP Measure(1): The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. EBITDA is not a recognized measure under Canadian GAAP. Management believes that in addition to net earnings, EBITDA is a useful supplemental measure, as it provides an indication of performance. One should be cautioned, however, that EBITDA should not be construed as an alternative to net earnings determined in accordance with GAAP. The method of calculating EBITDA may differ from other companies and accordingly, EBITDA may not be comparable to measures used by other companies.

%SEDAR: 00016656E

For further information: Peter Walkey, Chief Financial Officer, Centric Health, [phone] ext. 309, [email protected]; Michael Moore, Investor Relations, Equicom Group, [phone] ext. 241, [email protected]