TORONTO, May 2, 2014 /CNW/ - Centric Health Corporation ("Centric Health" or "the Company") (TSX: CHH), today provided an update on its previously announced agreement to sell its Home Care business, Community Advantage Rehabilitation, Inc. ("CAR"), and previously announced intention to sell its Seniors Wellness operations, Active Health Services Ltd. ("Active Health"). The Company confirms it is continuing to progress towards closing on the sale of 100% of the common shares of CAR to Lifespan Health and Wellness Limited ("Lifespan" or the "Purchaser") for proceeds of $2.5 million, subject to certain adjustments. In addition, the Company has entered into a non-binding letter of intent with Lifespan, and is in advanced discussions in respect of a definitive agreement with the Purchaser, to sell 100% of its common shares of Active Health, for expected proceeds of $12 million, subject to certain adjustments.
"We believe that the sale of our Seniors Wellness operations, along with the imminent sale of our Home Care operations, will fully resolve the perceived conflict of interest concerns of Ontario's Ministry of Health and Long Term Care," said David Cutler, President and Chief Executive Officer, Centric Health Corporation. "Resolving the matter definitively and expeditiously is in the best interests of all the affected physiotherapists, our customers' residents and patients, as well as the overall health of these businesses. In addition, with the conflict fully resolved, we expect Assisted Device Program referrals to our Retail and Home Medical Equipment business, which have been adversely impacted by the perceived conflict, to progressively increase to historical levels."
Mr. Cutler added, "The fluidity of the healthcare regulatory environment demands that we continually evaluate our business, focus on our best opportunities, and adapt accordingly."
The purchase price for each transaction will be satisfied by the issuance of an eight-year secured promissory note bearing interest at 7 percent (subject to adjustment), payable monthly. Completion of the purchase and sale transactions for Active Health and CAR are subject to certain third party consents, as well as customary closing conditions, and closing for both transactions is expected to be on or about May 8, 2014.
Following the closing of the transactions, Centric Health will provide transitional services to the Purchaser on an interim basis, in support of each business, in order to help effect a seamless transition with minimal disruption in services to customers and patients.
As previously announced, the Ministry of Health and Long Term Care (the "MOHLTC") determined that a perceived conflict of interest existed between Centric Health's Senior Wellness and Home Care businesses and its Retail and Home Medical Equipment operations. The perceived conflict of interest was the result of Centric Health employing and contracting physiotherapists for these businesses who are Registered Authorizers under the MOHLTC's Assisted Device Program ("ADP"), which provides patients with funding for mobility equipment, while at the same time seeking reimbursement from ADP for referrals of Retail and Home Medical Equipment product sales from these authorizers. Following extensive engagement with the MOHLTC to address the matter of the perceived conflict, Centric Health management made the decision to sell its Seniors Wellness and Home Care operations to fully resolve the matter.
The MOHLTC's determination of a perceived conflict has no impact on the Company's Physiotherapy clinic network, where fees are paid privately by insurance companies and individuals.
Centric Health's Seniors Wellness operations consist of a variety of health and wellness services, including physiotherapy, occupational therapy and massage therapy to seniors living in long-term care and retirement homes and in the community. Centric Health's Home Care operation engages occupational therapists, physiotherapists, registered dieticians and social workers to perform homecare services in communities.
About Centric Health Corporation
Centric Health's vision is to be Canada's premier healthcare company, providing innovative solutions centered on 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 surgical centres, homecare, specialty pharmacy and wellness and prevention. 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. 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
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