Centric Health second-quarter net income increases 154% to $1.3 million

Aug 12 2010

Centric Health Corporation ("Centric Health") (TSX: CHH), a diversified healthcare company with a vision to become Canada's premier healthcare company providing innovative solutions centered around patients and healthcare professionals, today announced strong financial results for the second quarter ended June 30, 2010.

"Centric Health has successfully integrated the Active Health business and we are seeing the benefits of that acquisition in the form of strong quarterly numbers and synergies," said Dr. Jack Shevel, Chairman and Interim President and Chief Executive Officer of Centric Health. "Besides the benefits of the acquisition, the businesses have shown strong organic growth ahead of expectations of over twenty percent - a testament to our management team and their staff."

Q2 2010 Financial Highlights - Net income grew by 154% to $1.3 million, as compared to $0.5 million in Q2 2009 - EBITDA increased by 174% ($1.5 million) to $2.4 million, as compared to $0.9 million in Q2 2009 - Basic earnings per share doubled from $0.011 in Q2 2009 to $0.022 per share - Maintained a strong balance sheet with $1.6 million of cash on hand at June 30, 2010, an increase of $0.5 million over the end of Q1 2010 Q2 2010 and Operating Highlights - Successful integration of Active Health including initiatives to enhance patient care and outcomes - Operational efficiencies yielding a decline in G&A expenses as a percentage of revenue from 25% to 14% - Development of expansion opportunities using existing infrastructure into Seniors' Health and Wellness Centres, Clinic Network and Sleep Clinic

Financial Results (in thousands)

Revenue for the three months ended June 30, 2010 increased by 127%, or $8,900, to $15,927 over the comparable quarter last year. Revenue attributable to Active Health for the non-comparable months of April and May amounted to $6,043 and revenue for the comparable month of June increased by $646. Impressive organic growth was also seen in the disability management division, which amounted to $2,200 for the quarter, driven primarily by higher number of assessments. Revenue for Don Mills Surgical Unit increased by $11 over the comparable quarter last year.

Direct costs include third-party consultant fees associated with the assessment and physiotherapy businesses and salaries and wages of employees working directly in each business segment. For the three months ended June 30, 2010, direct costs were $11,420, an increase of $6,716 over the comparable quarter in the prior year. This increase is primarily due to Active Health business which is included in all the month's operating results in 2010 and only in the month of June 2009.

General and administrative expenses for the three months ended June 30, 2010 were $2,191, an increase of $728 over Q1 2009. This increase was driven by higher salary and benefit costs of $201 associated with the Active Health business, an increase in non-cash stock-based compensation expense of $99 relating to the increase in options granted at the end of 2009, as well as higher professional fees associated with M&A activity and strategic planning.

At June 30, 2010, the Company had total cash on hand of $1,596, an increase of $547 during the quarter.

As at June 30, 2010, the Company had total shares outstanding of 61,140,095, an increase of 25,000 since March 31, 2010, as a result of options exercised. There were also 20,500,000 warrants outstanding as at June 30, 2010 entitling the holder to acquire 20,500,000 common shares at an exercise price of $0.33 per share.