Centric Health Acquires Leading Alberta-Based Specialty Pharmacy Business

Acquisition of Care Plus Group Enhances Ability to Serve National Customers While Significantly Strengthening Clinical Intervention Capabilities

TORONTO, March 2, 2015 /CNW/ - Centric Health Corporation ("Centric Health" or "the Company") (TSX: CHH), announced today that it has completed the acquisition of 100% of the shares of Pharmacare Fulfillment Center Ltd., an Edmonton-based leading specialty pharmacy business operating under the Care Plus, Pharmacare and Lidia's Pharmacy brands (collectively, the "Care Plus Group"). The Care Plus Group provides medication dispensing services and clinical care programs to more than 4,800 long-term care and retirement community residents at over 40 client facilities across western Canada through an integrated distribution model. All regulatory approvals have been obtained and all closing conditions have been satisfied. The acquisition, which is on a debt free basis, is expected to be immediately accretive.

"The addition of the Care Plus Group effectively expands our number of residents serviced by almost 25%, further solidifying our position as one of the top three long-term care and retirement community pharmacy providers in Canada," said David Cutler, President and Chief Executive Officer, Centric Health Corporation. "More importantly, the Care Plus Group significantly enhances our platform for sustainable, long-term growth, providing entry into the rapidly growing western Canadian marketplace, where the number of seniors is expected to nearly double over the next decade and a half. Combining our reach and expertise will create new opportunities, enhancing our ability to serve national clients while diversifying our Specialty Pharmacy revenue streams from both a regulatory and payor perspective."

"We are proud to bring our entrepreneurial culture, operational expertise and passion for quality, safety and patient-centric care to the Centric Health family," said William Milroy, Vice President, Pharmacare and Care Plus Group. "Centric Health's Classic Care Pharmacy team has established a strong presence and track record for growth in Ontario and we are confident that joining forces will create new opportunities for our organizations and employees as we continue to focus on delivering industry-leading services and care."

"The acquisition of the Care Plus Group delivers on our stated objective to redeploy net proceeds from the divestitures last year of non-core operations toward high-growth businesses aligned to our refined strategic focus on hands-on care delivery services that generate high margins and strong cash flows with low working capital and capex requirements. With this acquisition, we are redeploying just over half of the net proceeds from our divestitures plus shares to acquire significantly more annualized EBITDA1 than that of the divested businesses," Mr. Cutler continued. "The Care Plus Group has consistently demonstrated industry leadership in clinical intervention and this partnership will enable us to grow and adapt our scope of clinical practice across our Specialty Pharmacy operations, positioning the Company for success as seniors' pharmacy needs continue to evolve."   

The Care Plus Group generated annualized trailing 12-month (ended December 31, 2014) EBITDA1 of $5.1 million. The total consideration will be settled by cash of up to $34.0 million, of which $26.0 million (subject to post-closing adjustment) was payable on closing, and the issuance of up to 12,608,695 Centric Health common shares (the "Purchase Shares"), of which 4,347,826 Purchase Shares were issued on closing. The contingent consideration of up to $8.0 million in cash and up to 8,260,869 Purchase Shares is to be paid over a 3-year period based on the achievement of EBITDA1 performance targets as outlined below (with the number of Purchase Shares issuable at the greater of $1.15 per share or 90% of the five-day volume-weighted average price of Centric Health common shares on the Toronto Stock Exchange at the end of each of three warranty periods to a maximum of $1.75 per share).

Period Ended

EBITDA1
Performance
Targets

Maximum

Cash
Consideration
($)

Maximum
Purchase Share

Consideration
(# of Shares)

Dec 31, 2015

$6.75 million

  $3.0 million

1,739,130

Dec 31, 2016

$7.50 million

$2.5 million

1,739,130

Dec 31, 2017

$8.25 million

$2.5 million

4,782,609

Total


$8.0 million

8,260,869

 

The Company also issued warrants to the vendor to purchase up to 4.0 million Centric Health common shares accrued based on outperformance of the total 3-year EBITDA1 target. The Warrants will have a 2-year term from the date on which they vest and become exercisable. The exercise price for the warrants is the market price as at the date of closing.

The acquired businesses do not include Care Plus's home medical equipment divisions Better Life Home Medical and Eco Medical Edmonton.

Centric Health is continuing to pursue further expansion of its business, including potential accretive acquisition opportunities, through reinvestment of additional net proceeds from the sale of its home medical equipment retail operations and methadone pharmacy operations in September, 2014.

About Care Plus Group

The Edmonton-based Care Plus Group of pharmacies is a leading pharmacy services company that specializes in providing medication dispensing services and clinical care programs to more than 4,800 long term care, supportive living, and retirement home residents at over 40 client facilities across western Canada through an integrated distribution model. Operating under the Care Plus, Pharmacare and Lidia's Pharmacy brands, the Care Plus Group's talented team of 145 professionals and support staff have led the way in developing cost-effective medication delivery services, compliance packaging and clinical care plans through their dedication to quality, innovation and a patient-centric approach.

About Centric Health's Specialty Pharmacy Operations

Centric Health's Specialty Pharmacy division is primarily composed of its seniors home pharmacy operations, which provide medication dispensing and consulting services to nearly 300 long term care and retirement communities across Canada through a network of 14 pharmacy and fulfilment centre locations. With the acquisition of the Alberta-based Care Plus Group of specialty pharmacy operations, the Company has strategically expanded the business beyond Ontario and enhanced its ability to service clients with national networks. The Company is also pursuing organic growth opportunities by establishing co-location pharmacy services within selected existing facilities across business divisions, including a recently opened pharmacy location at its LifeMark Sports Medicine facility in Richmond, British Columbia.

Conference Call

Centric Health will host a conference call, including a slide presentation, to discuss this announcement today, Monday, March 2, 2015 at 12:00 PM 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/events-presentations.php).  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 Monday, March 9, 2015 at midnight.  To access the archived conference call, dial 1-855-859-2056 or 416-849-0833 and enter the reservation number 89826943.

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/events-presentations.php).

About Centric Health Corporation

Centric Health is Canada's largest and most comprehensive national provider of healthcare services focused on producing leading patient outcomes and delivering quality, innovation and sustainable value to patients, clients and stakeholders. With more than 3,000 dedicated healthcare professionals, consultants and support staff serving patients and clients through an extensive platform of 500 locations across the country, Centric Health is uniquely positioned to meet growing healthcare needs in key markets. The Company's long-term strategy focuses on organically growing core high-margin business units with strong profitability and targeting select expansion opportunities to further its national reach in the areas of physiotherapy, rehabilitation and assessments, specialty pharmacy services and surgical and medical centres. 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.

1NON-IFRS MEASURES

This press release includes certain measures which have not been prepared in accordance with IFRS such as EBITDA.  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.

 

SOURCE Centric Health Corporation

For further information: Renée Hourigan, Director of Communications, Centric Health, 416-619-9413, renee.hourigan@centrichealth.ca; Lawrence Chamberlain, Investor Relations, TMX Equicom, 416-815-0700 ext. 257, lchamberlain@tmxequicom.com


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