– Net Proceeds to be Used to Further Reduce Debt and Restore EBITDA Through Accretive Acquisitions –
TORONTO, Sept. 12, 2014 /CNW/ - Centric Health Corporation ("Centric Health") (TSX: CHH), Canada's leading diversified healthcare company, today announced that it has completed the previously announced sale of its MEDIchair and Motion Specialties retail home medical operations to Canadian-based Birch Hill Equity Partners ("Birch Hill") for gross proceeds of $50 million (less a holdback of $9.66 million) and subject to closing adjustments. The parties agreed to a holdback of $9.66 million payable to Centric on receipt by the purchaser of certain regulatory approvals in accordance with the regulators' ordinary course practices surrounding the issuance of billing authorizations in the context of purchase and sale transactions of this nature. Centric expects that these approvals will be received, and the holdback amount released, prior to the close of this quarter ended September 30, 2014.
"The net proceeds from the sale of MEDIchair and Motion Specialties, combined with the previously completed sale of DNPI Group methadone pharmacy operations, will allow us to further reduce our debt level as part of our strategic priority to strengthen our balance sheet," said David Cutler, President and Chief Executive Officer, Centric Health Corporation. "At the same time, we are actively pursuing opportunities to redeploy a portion of the net proceeds to accretive acquisitions of high margin businesses, which will allow us to restore EBITDA to previous levels and generate sustainable long-term growth."
As previously announced, the Company has committed to repaying a minimum of $25 million from the net proceeds from the sale of its MEDIchair and Motion Specialties, as well as the recently completed sale of its DNPI methadone pharmacy operations toward debt reduction. The Company recently repaid $10 million from the proceeds of the DNPI divestiture to its Revolving Facility, permanently reducing the capacity of the Facility to $40 million from $50 million. $15 million from the MEDIchair and Motion Specialties divestiture will be applied to some combination of additional reduction of its Revolving Facility, redemption of second lien senior secured notes and redemption of the preferred partnership units within the next 90 days.
The Company expects the remainder of the net proceeds from the retail home medical and methadone pharmacy divestitures that are not applied to debt will be reinvested in growth opportunities, including accretive acquisitions that will contribute to increased EBITDA and free cash flow from operations. Acquisitions are expected to be consistent with the Company's focus on core business segments and operations that generate high margins and strong cash flow, require low capital expenditures and have low exposure to regulatory or public funding changes.
The sale did 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 and through Centric Health's physiotherapy clinic network.
About Centric Health
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 2,800 dedicated healthcare professionals, consultants and support staff serving patients and clients through an extensive platform of 600 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.
SOURCE: Centric Health Corporation
For further information: Daniel Gagnon, Chief Financial Officer, Centric Health, 416-619-9417, firstname.lastname@example.org; Lawrence Chamberlain, Investor Relations, TMX Equicom, 416-815-0700 ext. 257, email@example.com