Centric Health to acquire LifeMark Health

Centric Health Corporation ("Centric Health" or "Centric") (TSX: CHH), Canada's leading diversified healthcare company, announced today that it has entered into an agreement to acquire, amongst other things, all of the common units of LifeMark Health Limited Partnership ("LifeMark"). The transaction is subject to customary closing conditions as well as regulatory, shareholder, unitholder and court approval, financing and satisfactory due diligence.  If all closing conditions are satisfied, the closing is expected to occur in June 2011.

On completion this transaction will provide Centric Health with significant market expansion and scale in the Canadian healthcare industry accompanied by strong earnings and cash flow which will act as a catalyst for Centric's broader strategy.

LifeMark is one of Canada's largest rehabilitation and physiotherapy services companies with a network of over 120 clinics; contracts with 122 senior homes (13,482 beds) and more than 2,000 dedicated employees and consultants operating in seven Provinces. LifeMark also specializes in rehabilitation, eldercare, assessment services, occupational health, disability management and home medical equipment through its interests in Medichair.

Rationale

This strategic acquisition would mark a significant milestone for Centric Health. By combining with LifeMark, Centric Health will have a platform for delivering care in more than 670 locations across Canada and will become one of the largest integrated healthcare providers, offering innovative solutions with improved efficiencies in partnership with healthcare professionals.

With combined pro forma annual revenues in excess of $260 million in 2010 (excluding revenue from LifeMark acquisitions in progress of approximately $30 million), the synergies and rationalization of the two organizations would be significant, offering highly efficient programs and services with a key focus being the provision of unwavering quality care in meeting the needs of patients and healthcare professionals.

The Transaction

The transaction will include, among other things, the purchase of all of the common units of LifeMark, the intellectual property used by LifeMark in connection with its business, the intellectual property related to Medichair and replacement of existing Lifemark debt for an aggregate consideration of up to approximately $215 million. The consideration will be settled by cash of approximately $135 million, the assumption of existing earnout obligations and future debt for acquisitions of up to $20 million and $60 million by the issuance of Centric Health common shares at an issue price of $1.28 per share (the "Performance Shares"), subject to a valuation formula which includes the LifeMark business and certain acquisitions in progress achieving EBITDA of approximately $33 million (before Alaris distributions) for the 12 month period ending June 30, 2012 (the "Warranty Period").

Alaris Royalty Corp ("Alaris") (TSX:AD), an integral partner to Lifemark's success in developing into a national physiotherapy and rehabilitation leader, will be paid $65 million cash for a portion of its financial interest in LifeMark and all of its financial interest in MEDIchair. In addition, Alaris will continue to retain an interest in LifeMark which has redemption value of $65.5 million ("the Alaris interest"). Alaris will receive an annual preferred distribution of $6.75 million ("Alaris distributions") subject to a guaranteed annual increase of 4% at the end of each year thereafter. Centric, Alaris and the general partner of LifeMark will enter into an amended and restated partnership agreement which will, among other things, provide that there may be no redemption of the Alaris interest in LifeMark in the first two years following closing of the transaction. The redemption price of the Alaris interest escalates at 4% per annum commencing on the third anniversary following closing.

As part of the transaction, Centric Health will implement an outperformance bonus plan for a maximum of up to $10 million in value for selected employees, subject to an outperformance formula which includes the LifeMark business and certain acquisitions in progress exceeding EBITDA of approximately $33 million during the Warranty Period.

A syndicate comprised of major Canadian banks have committed, subject to all closing conditions being satisfied, to provide Senior Secured Credit Facilities of $195 million in connection with the transaction. The Senior Secured Credit Facilities would replace existing Centric Health and LifeMark debt and includes capacity for future acquisitions and general corporate purposes. In addition, the Senior Credit Facilities contemplate a $40 million Accordion feature for future expansion purposes.

The maximum number of securities that will be issued in connection with the acquisition is 46,875,000 Centric Health common shares (or approximately 50.2% of Centric Health's current issued and outstanding common shares, on a non-diluted basis and approximately 27% of Centric Health's current issued and outstanding common shares, on a fully diluted basis).

As a result of the acquisition, each of Craig Gattinger and Ron Lowe will on closing, directly or indirectly, hold 14,058,249 common shares of Centric Health and 14,693,354 common shares of Centric Health, respectively which represents approximately 10.02% and 10.48%, respectively, of the current issued and outstanding shares of Centric Health, on a non-diluted basis.

The TSX requires that security holder approval be obtained in those instances where the number of securities issuable in payment of the purchase price for an acquisition exceeds 25% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis.  Centric Health intends to rely on an exemption granted by the TSX from the requirement to hold a formal shareholder meeting on the basis that holders of more than 50% of Centric Health's common shares have consented in writing to the issuance of the securities. The transaction will not materially affect control of Centric Health given current shareholdings.

ADDITIONAL REMARKS

"This will be a landmark transaction for Centric Health - one that will make us the largest provider of integrated rehabilitation, physiotherapy and elderly care services across Canada," said Dr. Jack Shevel, Chairman of Centric Health.  "The merged entity will offer exciting prospects for continued growth and success in the interests of all stakeholders."

"Becoming a part of the Centric organization is a natural fit for LifeMark", said Craig Gattinger, CEO of LifeMark.  "We share the same core values and philosophies as it relates to quality care and outcomes."

"The combination of businesses, core competencies and intellectual capital represents a formidable group with scope to grow meaningfully in terms of its stated strategic objectives," said Dan Carriere, Chief Executive Officer of Centric Health. "Together, we will strive to be the healthcare group of choice for healthcare professionals and patients, delivering a comprehensive range of products and services, coast to coast. It is our goal to offer a unique Centric Brand of Care characterized by quality, efficiency, effectiveness and delivered through its facilities across the country."

On closing of the transaction Craig Gattinger and Ron Lowe, CEO and President of LifeMark, respectively, will lead and develop the Rehabilitation, Elder Care, Medical Assessment and Disability Management component of Centric Health along with their experienced leadership team and staff.