Centric Health completes transitional year, establishing solid base for growth
TORONTO, March 20, 2018 /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 fourth quarter ended December 31, 2017.
Highlights for the Fourth Quarter of 2017
(All comparative figures are for the fourth quarter of 2016)
With the completion of the Company's debt refinancing plan, during the second half of 2017, management has turned its primary focus to executing on the growth strategies and operational improvements for each of its business segments.
Highlights for the Full Year 2017
(All comparative figures are for the full year 2016)
Highlights subsequent to quarter-end
"In 2017 we completed what was a three-year transformation, which included selling off non-core businesses, making strategic acquisitions and strengthening the balance sheet," said Jack Shevel, Chairman and Interim CEO of Centric Health. "Moving into 2018, we are positioned as a leading provider of specialty pharmacy services and surgery and medical services with the resources to further consolidate and grow our position."
"In 2018 we will also look for opportunities to build on our position as a key provider to seniors to achieve solid growth," added Dr. Shevel. "This includes the launch of Karie, expected in the second half of the year, which will be a disruptor of traditional drug delivery for seniors at home, and also medical marijuana which has many applications in seniors care."
FINANCIAL RESULTS
Discontinued Operations
The Company's discontinued operations consist of the businesses divested as part of the sale of its Physiotherapy, Rehabilitation and Medical Assessments segment in 2015 and London Scoping Centre in 2016.
Selected Financial Information
(All amounts in the chart below are in thousands except per share, shares outstanding, and percentage data)
For the three month periods |
For the years ended | ||||||
2017 |
2016 |
2015 |
2017 |
2016 |
2015 | ||
(thousands of Canadian Dollars) |
$ |
$ |
$ |
$ |
$ |
$ | |
Revenue |
42,328 |
41,827 |
41,549 |
168,967 |
167,363 |
160,753 | |
Income (loss) from continuing |
(643) |
585 |
(3,282) |
996 |
(3,374) |
(11,076) | |
Income (loss) from continuing |
3,799 |
526 |
(98) |
7,899 |
(8,800) |
(6,626) | |
EBITDA1 from continuing operations |
6,282 |
2,992 |
5,122 |
17,371 |
2,578 |
6,460 | |
Adjusted EBITDA1 from continuing |
4,058 |
4,373 |
1,797 |
17,514 |
15,590 |
8,524 | |
Per share - Basic and diluted |
$0.02 |
$0.03 |
$0.01 |
$0.09 |
$0.09 |
$0.05 | |
Adjusted EBITDA1 Margin from |
9.6% |
10.5% |
4.3% |
10.4% |
9.3% |
5.3% | |
Adjusted EBITDA1 |
4,058 |
4,363 |
6,613 |
17,514 |
15,466 |
31,788 | |
Per share - Basic2 and diluted2 |
$0.02 |
$0.03 |
$0.04 |
$0.09 |
$0.09 |
$0.20 | |
Adjusted EBITDA1 Margin |
9.6% |
10.3% |
7.4% |
10.4% |
9.2% |
9.1% | |
Net income (loss) |
3,301 |
(1,746) |
70,220 |
2,279 |
(19,806) |
45,868 | |
Per share - Basic2 and diluted2 |
$0.02 |
($0.01) |
$0.44 |
$0.01 |
($0.12) |
$0.29 | |
Cash provided by operations |
5,440 |
2,982 |
7,411 |
16,073 |
1,700 |
29,447 | |
Weighted Average Shares |
200,641 |
169,161 |
160,684 |
194,782 |
164,444 |
158,468 | |
Shares Outstanding, December 313 |
201,469 |
169,983 |
160,883 |
201,469 |
169,983 |
160,883 |
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. |
3 |
Excludes contingent escrowed shares and restricted shares |
Consolidated Results
Consolidated Revenue from continuing operations for the three month period ended December 31, 2017 increased marginally by 1.2% to $42.3 million from $41.8 million. Revenue growth in Specialty Pharmacy was dampened due to timing differences in the transitions of certain contracts in Specialty Pharmacy due to the conclusion of a contract with a large long-term care and retirement home operator, and delay in the transition of beds due to a technical issue with a third-party supplier for a new large national customer expected to replenish the beds off-boarded from the concluded contract. The on-boarding of beds under the new contract was substantially completed by the beginning of 2018, allowing for a return to a normalized revenue run-rate by the second quarter of 2018.
Adjusted EBITDA1 from continuing operations for the three month period ended December 31, 2017 decreased to $4.1 million from $4.4 million for the same period in the prior year. The decrease was primarily due to the transition of certain contracts noted above and additional labour costs resulting from the on-boarding of beds under the New Contract, partially offset by growth in the Surgical and Medical Centres segment.
Consolidated revenue from continuing operations for the year ended December 31, 2017 increased by 1.0%, or $1.6 million, to $169.0 million from $167.4 million for the same period in the prior year. However, after normalizing for the $4.1 million reclassification of Revenue to cost of sales, Revenue increased by 3.4%.
Adjusted EBITDA from continuing operations for the year ended December 31, 2017 increased to $17.5 million compared to $15.6 million for the year ended December 31, 2016.
The increase in Revenue and Adjusted EBITDA for the year ended December 31, 2017 was primarily driven by Revenue growth in the Surgical and Medical Centres business through increased surgical volumes and a net increase in higher margin procedures performed.
Segment Results
(All amounts in the charts below are in thousands except per share, shares outstanding, and percentage data)
For the three month periods ended |
Revenue |
Adjusted EBITDA1 from continuing | ||||
2017 |
2016 |
2017 |
2016 |
|||
(in $000) |
$ |
$ |
$ |
% |
$ |
% |
Specialty Pharmacy |
31,069 |
31,436 |
3,610 |
11.6 |
4,897 |
15.6 |
Surgical and Medical Centres |
11,259 |
10,391 |
1,608 |
14.3 |
1,173 |
11.3 |
Corporate |
? |
? |
(1,160) |
? |
(1,697) |
? |
Total |
42,328 |
41,827 |
4,058 |
9.6 |
4,373 |
10.5 |
For the years ended December 31, |
Revenue |
Adjusted EBITDA1 from continuing | ||||
2017 |
2016 |
2017 |
2016 |
|||
(in $000) |
$ |
$ |
$ |
% |
$ |
% |
Specialty Pharmacy |
124,451 |
125,132 |
17,016 |
13.7 |
17,154 |
13.7 |
Surgical and Medical Centres |
44,516 |
42,231 |
6,179 |
13.9 |
5,039 |
11.9 |
Corporate |
? |
? |
(5,681) |
? |
(6,603) |
? |
Total |
168,967 |
167,363 |
17,514 |
10.4 |
15,590 |
9.3 |
SHARES OUTSTANDING
As at December 31, 2017, the Company had total shares outstanding of 206,522,963. The outstanding shares at December 31, 2017 include 5,054,232 shares which are restricted or held in escrow and will be released to certain vendors of previously acquired businesses based on the achievement of certain stated performance targets and certain customers. Accordingly, for financial reporting purposes, the Company reported 201,468,731 common shares outstanding as at December 31, 2017 and 169,982,529 shares outstanding at December 31, 2016. The number of options outstanding is 2,347,500 at December 31, 2017. The number of restricted share units outstanding is 3,224,080 at December 31, 2017. The number of warrants outstanding is 2,972,000 at December 31, 2017. Should all outstanding options and warrants that were exercisable at December 31, 2017 be exercised, the Company would receive proceeds of $2.6 million.
As at the date of this press release, March 20, 2018, the Company had total shares outstanding of 207,139,399 which include 5,054,232 shares which are restricted or held in escrow. The number of options outstanding is 2,347,500; the number of warrants outstanding is 2,972,000; and the number of restricted share units outstanding is 2,993,246.
1NON-IFRS MEASURES
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 EBITDA1 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 EBITDA1 as a key component of the covenant calculations. EBITDA and Adjusted EBITDA1 are not recognized measures under IFRS.
Reconciliation of Non-IFRS Measures
For the three month |
For the years ended | |||
2017 |
2016 |
2017 |
2016 | |
(in $000) |
$ |
$ |
$ |
$ |
Income (loss) from continuing operations |
3,702 |
(1,423) |
(520) |
(18,276) |
Depreciation and amortization |
2,394 |
2,517 |
9,522 |
11,642 |
Interest expense |
1,485 |
3,157 |
9,902 |
18,348 |
Amortization of lease incentives |
89 |
(51) |
(50) |
(264) |
Income tax recovery |
(1,388) |
(1,208) |
(1,483) |
(8,872) |
EBITDA from continuing operations |
6,282 |
2,992 |
17,371 |
2,578 |
Transaction and restructuring costs |
1,938 |
1,094 |
6,061 |
6,803 |
Change in fair value of contingent consideration |
(4,352) |
(169) |
(6,047) |
5,238 |
Reversal of impairment losses |
? |
? |
(322) |
? |
Stock-based compensation expense |
282 |
234 |
938 |
790 |
Change in fair value of derivative financial |
(90) |
228 |
(534) |
188 |
Gain (loss) on disposal of property and equipment |
(2) |
(6) |
47 |
(7) |
Adjusted EBITDA from continuing operations |
4,058 |
4,373 |
17,514 |
15,590 |
Adjusted EBITDA from discontinued operations |
? |
(10) |
? |
(124) |
Adjusted EBITDA |
4,058 |
4,363 |
17,514 |
15,466 |
Basic and diluted weighted average number of |
200,641 |
169,161 |
194,782 |
164,444 |
Adjusted EBITDA per share from continuing |
$0.02 |
$0.03 |
$0.09 |
$0.09 |
Adjusted EBITDA per share (basic and diluted) |
$0.02 |
$0.03 |
$0.09 |
$0.09 |
PRESENTATION OF FINANCIAL RESULTS
The Company presents two reportable operating segments as follows: Specialty Pharmacy and Surgical and Medical Centres. The financial results of the Company's Performance Medical Group, are included as part of the Surgical and Medical Centres segment.
CONFERENCE CALL
Centric Health will host a conference call, including a slide presentation, to discuss its fourth quarter financial results on Wednesday, March 21, 2017 at 9:30 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 Wednesday, March 28, 2018 at midnight. To access the archived conference call, dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 8564256.
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 Canada's most respected and recognized provider in the independent healthcare sectors in which it operates, world renowned for delivering the highest levels of quality care and outcomes, innovative solutions and value to patients, clients and stakeholders. To this end, Centric Health primarily focuses on two core healthcare businesses:
With national networks of facilities in each of its businesses, 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 goes through a major transformation over the medium to 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
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