Mr. David Cutler reports

CENTRIC HEALTH REPORTS STRONG FOURTH QUARTER AND FULL-YEAR 2014 FINANCIAL RESULTS

Centric Health Corp. has released its financial results for the fourth quarter and year ended Dec. 31, 2014.

"Our fourth quarter results were further confirmation of the underlying strength and momentum in our business as we delivered revenue and adjusted EBITDA growth from continuing operations in each of our segments for the third consecutive quarter," said David Cutler, president and chief executive officer, Centric Health. "For the year as a whole, revenue and adjusted EBITDA grew by 10 per cent and 18 per cent, respectively, as adjusted EBITDA margins expanded to 9.1 per cent from 8.5 per cent. Importantly, the vast majority of our growth continues to be driven organically."

Mr. Cutler continued: "Two thousand fourteen was transformational for Centric Health. We realigned our business model to focus on our core strengths in hands-on health care service delivery, strengthened the balance sheet and repositioned the business model for sustainable, long-term growth. To this end, we divested non-core operations and delivered on our stated objectives to pay down debt and redeploy a meaningful portion of the divestiture proceeds to a high-quality, high-margin business that fits squarely within our refined focus, which we achieved by acquiring the Care Plus group of specialty pharmacies subsequent to year-end."

Highlights for the fourth quarter and 2014 year (all comparative figures are for the corresponding period of the prior year):

• Revenue from continuing operations for the fourth quarter grew 7.8 per cent to $78.2-million from $72.6-million (including organic growth of 6.6 per cent) and for the year grew 9.6 per cent to $308.1-million from $281.1-million (including organic growth of 7.7 per cent).
• Adjusted earnings before interest, taxes, depreciation and amortization from continuing operations for the fourth quarter grew 18.3 per cent to $7.0-million from $5.9-million, while adjusted EBITDA for the year grew 18.0 per cent to $28.0-million from $23.8-million.
• Adjusted EBITDA margin from continuing operations for the fourth quarter increased to 9.0 per cent from 8.2 per cent and for the year increased to 9.1 per cent from 8.5 per cent.
• The company generated cash flow from operations for the fourth quarter of $5.5-million, the 11th consecutive quarter of positive cash flow from operations, and $19.7-million for the year.
• Consistent with the company's refined strategy to focus on its core higher-margin operations, the Centric Health completed the sales of its retail and home medical equipment operations and methadone pharmacy operations for gross proceeds of $50-million and $20-million, respectively.
• It repaid $10-million of its revolving facility, permanently reducing its capacity to $40-million from $50-million.
• The company temporarily repaid an additional $15-million of its revolving facility while it evaluates debt repayment options per its commitment to deploy a minimum of an additional $15-million to some combination of the revolving facility, redemption of second-lien senior secured notes and redemption of preferred partnership units.
• Following the completion of certain earn-out periods, Centric cancelled approximately 17.1 million common shares. The cancellation represents approximately 8.5 per cent of the current total issued and outstanding common shares on a fully diluted basis.

Highlights subsequent to year-end:

• Completed the reacquisition of Community Advantage Rehabilitation Inc. (previously referred to as the company's home care operations) and Active Health Services Ltd. (previously known as the company's seniors wellness operations) from Lifespan Health and Wellness Ltd. in consideration for the full repayment of the amounts owing under the two promissory notes previously issued in favour of Centric Health by Lifespan (principal amounts of $2.5-million and $12-million);
• Completed the acquisition of 100 per cent 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 in Western Canada that generated annualized trailing 12-month (period ended Dec. 31, 2014) earnings before interest, taxes, depreciation and amortization of $5.1-million. The acquisition, which is expected to be immediately accretive, expanded the number of residents serviced by the company's specialty pharmacy segment by almost 25 per cent, provides access to the rapidly growing Western Canadian market and significantly enhances the segment's ability to serve national clients.

"During 2014, we continued to make meaningful progress on our debt reduction plan, highlighted by the use of $25-million of the divestiture proceeds to pay down our revolving facility comprised of a $10-million permanent reduction and a $15-million temporary reduction as we determine the best application of those funds towards some combination of the revolving facility, redemption of second-lien senior secured notes and redemption of the preferred partnership units," said Daniel Gagnon, chief financial officer, Centric Health. "Reducing debt remains a top priority for us in 2015 as we continue to pursue expansion of our EBITDA and free cash flow from our growing business."

Financial results

As a result of the initiative to define the company's long-term operating model and the company's decision to divest substantially all of its retail and home medical equipment operations, its chief operating decision maker has amended the manner in which the business is operated and accordingly how financial information is presented to the CODM. As a result, the company has amended its reportable operating segments and will now present three reportable operating segments rather than five reportable operating segments as was previously presented. Operating segments, as reported to the CODM, are as follows: physiotherapy, rehabilitation and assessments; specialty pharmacy; and surgical and medical centres. The assessment operations which were separately reported in the past are now reported as part of the renamed physiotherapy, rehabilitation and assessments segment. This segment was previously named the physiotherapy segment. As a result of the planned divestiture of substantially all of the retail and home medical equipment segment, the remaining component of this segment will now be reported as part of the physiotherapy, rehabilitation and assessments segment. Comparative balances have been amended to reflect the presentation of three reportable operating segments. The support services provided through the corporate offices largely support the operations of the company, and certain of these costs have been allocated to the operating segments based on the extent of corporate management's involvement in the reportable segment during the period.

                                SELECTED FINANCIAL INFORMATION
              (all amounts in thousands except per-share and percentage data)

                                                     For the three months ended      For the years ended 
                                                                Dec. 31,                   Dec. 31,
                                                         2014     2013     2012     2014     2013     2012

Revenue                                               $78,245  $72,589  $65,567 $308,074 $281,148 $264,139
(Loss) from continuing operations                      (2,328)  (2,627) (11,470)  (5,208) (12,922) (24,178)
(Loss) income from continuing operations before
interest expense and income taxes                      (1,936)    (269) (27,936)  (6,342)   4,526    5,045
EBITDA from continuing operations                       4,528    6,135  (16,087)  19,695   30,917   33,020
Adjusted EBITDA from continuing operations              7,004    5,920    3,972   28,025   23,760   18,528
Per share -- basic                                      $0.05    $0.04    $0.03    $0.19    $0.18    $0.16
Per share -- diluted                                    $0.03    $0.03    $0.02    $0.14    $0.13    $0.12
Adjusted EBITDA margin from continuing operations         9.0%     8.2%     6.1%     9.1%     8.5%     7.0%
Adjusted EBITDA                                         7,004    6,186    9,591   29,176   33,601   42,832
Per share -- basic                                      $0.05    $0.05    $0.08    $0.20    $0.26    $0.38
Per share -- diluted                                    $0.03    $0.03    $0.06    $0.14    $0.18    $0.28
Adjusted EBITDA margin                                    9.0%     5.6%     8.6%     7.3%     7.4%     9.8%
Net (loss)                                             (8,035) (39,257) (38,530) (57,203) (90,850)  (7,088)
Per share -- basic                                     ($0.04)  ($0.30)  $(0.33)  ($0.40)  ($0.71)  $(0.06)
Per share -- diluted                                   ($0.04)  ($0.30)  $(0.32)  ($0.40)  ($0.71)  $(0.05)

Consolidated results

Consolidated revenue from continuing operations for the three-month period ended Dec. 31, 2014, increased 7.8 per cent to $78.2-million from $72.6-million for the comparative period in the prior year. The increase was primarily attributable to:

• Organic growth of $4.8-million, or 6.6 per cent, with growth across all operating segments;
• The acquisition of SmartShape Weight Loss Centres (December, 2013) and other start-up initiatives contributed incremental revenue of $1.6-million.

Partially offsetting these increases was the impact of generic drug price reductions in the specialty pharmacy segment.

Consolidated revenue from continuing operations for the year ended Dec. 31, 2014, increased 9.6 per cent to $308.1-million from $281.1-million for the year ended Dec. 31, 2013. The increase was primarily due to:

• Organic growth of $21.9-million, or 7.7 per cent, with growth across all operating segments;
• The acquisition of SmartShape (December, 2013) and other start-up initiatives contributed incremental revenue of $7.2-million.

Partially offsetting these increases was the impact of generic drug price reductions in the specialty pharmacy segment and the closure of certain underperforming rehabilitation clinics in the physiotherapy, rehabilitation and assessments segment.

Adjusted EBITDA from continuing operations for the three-month period ended Dec. 31, 2014, increased 18.3 per cent to $7.0-million from $5.9-million for the three-month period ended Dec. 31, 2013. Adjusted EBITDA margin from continuing operations for the three-month period ended Dec. 31, 2014, increased to 9.0 per cent from 8.2 per cent for the three-month period ended Dec. 31, 2013.

Adjusted EBITDA from continuing operations for the year ended Dec. 31, 2014, increased 18.0 per cent to $28.0-million from $23.8-million for the year ended Dec. 31, 2013. Adjusted EBITDA margin from continuing operations for the year ended Dec. 31, 2014, increased to 9.1 per cent from 8.5 per cent for the year ended Dec. 31, 2013.

Outlook

With services that address growing demand and evolving needs within the Canadian health care ecosystem, Centric Health's unparalleled national care delivery platform provides significant potential for future expansion and growth. Following an extensive review of its core competencies, business segment performance and market opportunities, the company has focused its strategy on its core health care service businesses in the pursuit of top-line growth, improved profitability and free cash flow generation. The company's organic growth initiatives focus on those opportunities with low capital investment that leverages the company's existing resources and capacity. Acquisitions are expected to be accretive and will be consistent with the company's focus on its core business segments and on operations that generate high margins and strong cash flow, require low capital expenditures, and have low exposure to regulatory or public financing changes.

Physiotherapy, rehabilitation and assessments

The company's physiotherapy, rehabilitation and assessments segment achieved strong growth in 2014, driven by both the rehabilitation clinic network and the assessments business.

The company anticipates continued growth in the rehabilitation clinic network through organic initiatives, such as continued expansion of its preferred provider relationships with employers and other organizations. Specialty programs offered by the company's network of rehabilitation clinics differentiates Centric Health in a highly competitive industry. The company is also undertaking expanded local and digital marketing initiatives to drive brand awareness and increase the volume of patient visits.

The company expanded its clinic network in 2014 through the acquisition of four new clinics. The company will pursue continued expansion of the national clinic footprint through additional beneficial acquisitions. Growth through acquisition will only occur if the acquisition will be accretive to earnings and complementary to the national network and plan.

Over the longer term, this segment should benefit from growth in employer health care management and wellness contracts, which should contribute to increased volumes at the company's rehabilitation clinics.

In February, 2015, the company completed the reacquisition of Active Health and Community Advantage Rehabilitation. These acquisitions represent a continued focus on meeting the increasing needs of the growing seniors population and overall alignment with the company's core strategy.

Specialty pharmacy

The specialty pharmacy segment continued to achieve success with its organic growth strategy focused on maximizing the utilization of existing infrastructure by winning new tenders for contracts with long-term-care and retirement homes and retail initiatives. The company anticipates that revenue and adjusted EBITDA growth in its specialty pharmacy segment will continue for 2015 and beyond, but expects increased competition for new long-term-care and retirement home contracts through competitive tendering processes across Ontario. To offset the increasing competition, the specialty pharmacy segment will continue to pursue operational efficiencies and cost savings from management.

As most of the company's specialty pharmacy operations are based in Ontario, the company seeks to expand this business into key growth markets beyond the province, in particular across Western Canada, and enhance its ability to service clients with national networks. On March 2, 2015, the company completed the acquisition of 100 per cent of the shares of Pharmacare Fulfillment Center, an Edmonton-based leading specialty pharmacy business operating under the Care Plus, Pharmacare and Lidia's Pharmacy brands in Western Canada that generated annualized trailing 12-month (period ended Dec. 31, 2014) EBITDA of $5.1-million. The acquisition, which is expected to be immediately accretive, expanded the number of residents serviced by the company's specialty pharmacy segment by almost 25 per cent, provides access to the rapidly growing Western Canadian market and significantly enhances the segment's ability to serve national clients.

The company is also pursuing organic growth opportunities by establishing co-location pharmacy services within selected existing facilities, having opened the first such pharmacy location during the fourth quarter of 2014 within the Richmond Oval sports medicine complex in Richmond, B.C.

Adjusted EBITDA margins, which have returned to historical levels following the implementation of electronic medical administrative records, for existing long-term-care-home contracts, are expected to be stable in coming quarters. However, as Centric wins new contracts, margins may be impacted in the short term as EMAR implementation costs may be absorbed.

Longer term, this segment should benefit from growth in employer health care management and wellness contracts, which should contribute to increased volumes.

Surgical and medical centres

Growth in the company's surgical and medical centres segment is expected to be driven primarily by increasing utilization of the existing network capacity through a multifaceted strategy that includes the introduction of innovative programs and new technologies, partnerships with local physicians and health authorities, marketing and brand development, and facilitating medical tourism. Efforts to expand the roster of physicians to utilize excess operating room capacity are continuing at all of the company's surgical centres.

The financial results of the surgical and medical centres segment improved in 2014 due to growth in the contribution from bariatric procedures following the 75-per-cent acquisition of SmartShape, a leader in state-of-the-art bariatric (weight loss) surgical procedures, in the fourth quarter of 2013. The company expects the number of bariatric procedures to increase based on the rollout of SmartShape's proven business model at each surgical centre location. SmartShape recently added the higher-margin gastric sleeve procedure to its offerings at the Don Mills (Toronto) facility (and will do so at other Ontario facilities pending regulatory approval), which is expected to further increase volumes.

The company continues to seek partnerships with some of Canada's leading surgeons for the future launch of additional specialized surgical centres of excellence and other initiatives. In addition, facilitating out-of-province care presents a growth opportunity for the company.

During the first quarter of 2014, the company completed a significant renovation to its facility in Calgary, Alta., and completed a renovation of its Don Mills facility in the third quarter of 2014. In the first quarter of 2015, the company is planning an expansion and renovation of its False Creek location in Vancouver, B.C., which will result in a temporary closure of this facility.

Employer health care management and wellness initiative

The company recently established a dedicated cross-divisional support team to pursue opportunities in the high-growth employer services market by co-ordinating business development and account-based marketing efforts across multiple entry points. The company offers clients customizable program options from a broad continuum of services across its platform, including mandatory workplace injury insurance programs, optional wellness programs, and corporate health benefits and prescription plans, generating additional revenue in its core segments. In the fourth quarter of 2014, the company launched an incentives-based wellness pilot program for employees to help test and optimize the offer in advance of a market launch.

Corporate infrastructure

Management believes overall profitability can be improved through further optimization of corporate infrastructure. The company has multiple initiatives under way intended to reduce corporate costs as a proportion of consolidated revenue through consolidation and centralization of functions, rightsizing, achieving unrealized synergies amongst the operating segments, and managing discretionary spend and professional fees.

Financing and debt reduction

On Aug. 29, 2014, the company repaid $10,000 of its revolving facility resulting in a permanent reduction in the capacity of the revolving facility from $50,000 to $40,000. The company intends to make a further $15,000 debt reduction through a combination of additional reduction of the revolving facility, redemption of second-lien senior secured notes and redemption of the preferred partnership units. While the company evaluates its debt repayment options, on Sept. 19, 2014, the company made a temporary repayment of an additional $15,000 against the revolving facility, which further reduced the capacity of the revolving facility to $25,000. However, the capacity on the revolving facility can be increased to $40,000 with an equivalent return of funds to the escrow cash account for the proceeds of sale from the non-core businesses as long as the company is not in default under the revolving facility. The company's revolving facility matures in June, 2015, and the company is in the process of extending the facility with the lender.

In August, 2014, as a result of the pending divestiture of certain non-core operations and subject to the completion of these divestitures, the company received a waiver from a financial performance covenant at the Sept. 30, 2014, measurement date and amendments to certain financial performance covenants for the remaining measurement dates up to the maturity of the revolving facility in June, 2015. In December, 2014, the company received a waiver from a financial performance covenant at Dec. 31, 2014, and March 31, 2015. The company was in compliance with its financial performance covenants at Dec. 31, 2014, except for the one financial covenant for which the company received a waiver in December, 2014.

The company has at Dec. 31, 2014, $36,302 of restricted cash representing the balance of net proceeds from the sale of the methadone pharmacy operations and the retail and home medical equipment business. In February, 2015, the company obtained approval to use $26,000 of this restricted cash from both the second-lien senior secured notes and revolving facility lenders to finance the cash cost of the acquisition of specialty pharmacy business, Pharmacare Fulfillment Center, on March 2, 2015.

With the completion of this accretive acquisition and the company's 2015 projected improved budget from operations over 2014 results through organic growth, operational improvements and cost containment, the company plans to renegotiate its existing revolving facility with its lenders.

The company intends to use the remaining restricted cash to reinvest in its core businesses through accretive acquisitions or further debt reductions.

Shares outstanding

As at Dec. 31, 2014, the company had total shares outstanding of 155,502,902 and as at the date of this press release (March 3, 2015), the company had total shares outstanding of 159,850,725. The outstanding shares at Dec. 31, 2014, include 2,113,916 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 at March 3, 2015, include 1,813,916 which are also 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. Escrowed and restricted shares are not reflected in the shares reported on the company's financial statements. Accordingly, for financial reporting purposes, the company reported 153,388,986 common shares outstanding as at Dec. 31, 2014, and 133,363,294 shares outstanding at Dec. 31, 2013. The number of options outstanding is 6,871,000 at Dec. 31, 2014, and 7,671,000 at March 3, 2014. The number of restricted share units outstanding is 3,414,835 at Dec. 31, 2014, and 3,201,657 at March 3, 2015. The number of warrants outstanding is 12,694,427 at Dec. 31, 2014, and March 3, 2015. Should all outstanding options and warrants that were exercisable at Dec. 31, 2014, be exercised, the company would receive proceeds of $20.8-million.

Presentation of financial results

In the second quarter of 2014, Centric Health launched a plan to focus on core businesses and divest of non-core businesses. As a result of entering into definitive agreements for the divestiture of non-core businesses in June, 2014, which were subsequently closed in September, 2014, the sale of other businesses in May, 2014, and the closure of an underperforming surgical centre, the company has segregated its results from operations between continuing and discontinued operations for the three- and 12-month periods ended Dec. 31, 2014, and 2013. Continuing operations reflect the company's focus on its three core segments: physiotherapy, rehabilitation and assessments; specialty pharmacy; and surgical and medical centres.

Conference call

Centric Health will host a conference call, including a slide presentation, to discuss its fourth quarter and year-to-date financial results March 4, 2015, at 8:30 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 on-line webcast 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 website. 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 March 11, 2015, at midnight. To access the archived conference call, dial 1-855-859-2056 or 416-849-0833 and enter the reservation No. 85639046.

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 website.

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