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Investor Day October 23, 2012
Dr. Jack Shevel Executive Chairman
Introduction
2
Forward Looking Information & Disclosure
Certain of the statements contained in this presentation are "forward-looking information“ within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, business strategy, plans and other expectations, beliefs, goals, objectives, information and statements about possible future events. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue”, or similar expressions suggesting future outcomes or events. You are cautioned not to place undue reliance on such forward-looking information. Forward-looking information is 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 information contained in this presentation. No assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur or, if any of them do so, what benefits Centric Health will derive therefrom and neither Centric Health nor any other person assumes responsibility for the accuracy and completeness of any forward-looking information. Other than as specifically required by applicable laws, Centric Health assumes no obligation and expressly disclaims any obligation to update or alter the forward-looking information whether as a result of new information, future events or otherwise.
www.centrichealth.ca TSX:CHH
3
Objectives of Annual Investor Day
1. Introduction to key management team
2. Review last 12/24 months
3. What went well?
4. What could have been better?
5. What are the future plans Accountability
6. What’s on the landscape?
7. Give existing & potential investors better understanding of our Company
4
Agenda
5
Introduction Dr. Jack Shevel Executive Chairman
First 50 Days David Cutler President & CEO
Seniors Wellness Catherine Sundeen Director, BD, Seniors Wellness
Physiotherapy/Assessments Craig Gattinger Director
Retail & HME David Fraser President, Retail and HME
Pharmacy Moe Green CEO, Classic Care
Surgical & Medical Centres Dr. Jack Shevel Executive Chairman
Final Thoughts Dr. Jack Shevel Executive Chairman
Centric Under the Colonoscope
• From local to national
• From separate to integrated
• From private to the TSX main board
• Changes in legislation
• A lot of people changes
Over the last 3 years, Centric has undergone a metamorphosis
Diagnosis: Indigestion
6
Prognosis: Excellent – long healthy future
Treatment: DC daily in the early morning
What Could Have Gone Better?
• Underperformance of Assessments Division
• Slow to react to legislative change
• LifeMark PP – 94% cash
• Covenant pressure
• CEO/COO Challenges
• Lack of experience
• Delayed consolidation/integration
• Earn outs created silos
• Integration dividend not achieved
7
What Went Well?
• Assembled “Canada’s Finest”
• Became the largest service provider
• Mitigated risk
• Provinces
• Business units
• National provider network
• Platform for future growth
Accumulated prestigious Canadian healthcare assets to achieve critical mass
8
Preparing for the Next Phase
1. Alternatives for the Balance Sheet
• Base Shelf Prospectus flexibility
• Reverse listings/mergers for equity
• Senior notes to replace Alaris/all or part of senior debt
• Convertible instruments
• Large deal & include equity/pension fund as partner investor
2. New board appointments
3. Key appointments: Building a winning team
9
10
David Cutler President & CEO
First 50 Days
Introduction
• Joined Centric Health September 4, 2012
• CEO at Leisureworld Senior Care Corporation for 22 years
• Lawyer by background, solid understanding of healthcare landscape in Canada, especially in the aging population
• Built and managed strong leadership team
• Led significant growth through mergers and acquisitions in a highly regulated sector
• Took Leisureworld public in March 2010 with shareholder return average 22% per annum
• Served on Ontario Long Term Care Association board of directors for 20 years, primarily as President and VP Government Relations
11
Why Centric Health?
• Compelling company vision
• Governments need private sector involvement
• Growth and assembly of assets since 2009
• The challenge of doing something different
• The vision and track record of Netcare, driven by Dr. Jack Shevel and his GHIS team
• Execution of the acquisition plan
• First “out of the gates – leader”
• Diversified business platform
12
Initial Thoughts/Considerations
• Seasonality
• Integration
• Savings
• Utilization
• Leadership/People
• Structure
• Incentives
• Communication
13
Looking Back
Fall 2011 Status Achievements
Consolidation of Locations Complete Corp. offices, Assessments business
Consolidation of Support Services Complete Financial Departments, Assessment Back Office
Retail (New Service)
Complete Implemented into Clinic Operations
Economies of Scale (Central Purchasing)
Still In Progress Estimated Target: $2.5M
Consolidation of Staff Still In Progress Estimated Target: $4.5M
Bundling of Services Ongoing 24 homes YTD
New Business Ongoing 30 RFPs won YTD
14
Seasonality at Centric Health
15
• No. of Working Days p.m./p.q. • School Vacation • Weather (Assessments) • Benefit Cap / Provincial Budgets • Seasonal Illnesses
Best Quarter: Q2
Softest Quarter: Q3
High: Low ~20%
Physiotherapy Retail &
HME Pharmacy
Seniors Wellness
Assessments Surgical Centres
Working Days
+++ + + ++ +++ ++
Seasons + + ++ No + No
Vacation +++ ++ No ++ ++ +++
Weather + No + + +++ No
Benefits ++ ++ No + No +
30 Projects Underway
Key Priorities
• Top Line Initiatives – Drive Improved EBITDA
• Cost Containment: $1M
• Close Calgary Head Office, close 3 clinics, close Health Impact operations – by Dec. 31, 2012
• Working Capital
• Tight Capex Management
• A/P Payment Terms
• Shared Equipment
• Next Annual Payroll Reduction, 2013
• Decrease Fixed Costs
• Approval Framework
• Acquisitions– Integration Strategy
• Tax planning
16
Top Line Initiatives
Business Line Top Line Initiatives
Home Medical Equipment Oxygen, CPAP (Trucking Initiative)
Rehabilitation Massage Therapy, Retail, Orthotics Employer Services
Seniors Wellness Day Centres, Homecare, Senior Exec Medicals, Dental, Mobile X-rays, Hearing Aids
Surgicentres Centres of Excellence, Extended Patient Care Network, Medical Tourism, Transitional Care Beds
Pharma Hospital Pharmacies, Corporate Health Plans, Compounding, Senior Nutrition, Medical Products
Assessment Requests for Proposals, Life & Health Companies, Employers
BUNDLING
SERVICES
17
Deliverables: Short Term Goals—The Business
• Reviewing each business for margin and EBITDA improvement is ongoing – true impact estimated to be seen Q1 and Q2 of 2013
• Seasonality budgeting to happen for 2013 fiscal year, completed by Nov. 30, 2012
• Pursue more fulsome integration to improve EBITDA, communication and collaboration with improved outcomes.
• Cost Containment measures in progress
• Establishing common mission, vision and values to be determined at a retreat Oct. 29 and 30, 2012 and then communicated broadly
• Rebranding of Rehab division to Centric by Mar. 2013 will provide national brand exposure
• Continue to establish corporate procurement contacts
18
Deliverables: Short Term Goals—The People
• Organizational design analysis and reporting structures are in progress and to be completed Q1 2013
• Regular management meetings occurring to facilitate communication across all business lines
• CIO – LITCOM hired, report on system architecture, I.T. and people skills to be provided by Oct. 31, 2012
• Interviews for communications expert underway and expect candidate to be in place Q1 2013
• Search for COO has commenced: Candidate to be in place Q1 2013
• Surgical Centres’ operation leaders for east and western Canada to be sought out and in place Q1 2013
• Talent pool assessment and development
19
Organic Growth
• Maximize Bundling of Services
• HME: CPAP, Oxygen
• Rehab: Massage Therapy, Employer Services
• Surgical Centres: COE’s, Extended Patient Choice Network, Med Tourism
• Seniors Wellness: Seniors Exec Medicals
• More clearly define Centric Health’s promise
External Growth
• Primary Care
• Expand Sleep Centres
• Expand Pharma to western provinces
Deliverables: Long Term Goals
20
Looking Forward
• Simplify organizational structure
• Focus on sustainability
• Develop our People:
• Communication, Communication, Communication!
• Leadership & Management Development
• Alignment throughout the organization: “The Head, the Heart and the Hands”
• Performance-based incentives
21
A great platform to be Proud Of and Part Of in Making a Difference: Your Care, Our Focus
Looking Forward
• Centric Health’s vision and assembly of assets by acquisition is impossible to replicate
• Systems, structure and process establishment are hallmarks of growing business entities
• ROI and returns to shareholders, through improved financial performance will occur in Q1 and Q2 2013
• The leadership team will deliver performance improvement and strongly support the top line initiatives
22
Stronger, leaner organization that will deliver quality care, services & products, as well as stakeholder value creation
Physiotherapy Seniors Wellness Division
Catherine Sundeen Director, Business Development
23
Specializing in provision of rehabilitation services for seniors
Snapshot
24
~1,000 healthcare professionals
~50,000 LTC and RH beds
>40% market share
>450 Customers • Ministry of Health • Private Insurance • Discretionary and private pay
Long Term Care Centres & Retirement Homes
Services for Seniors
25
• Physiotherapy
• Occupational Therapy
• Massage Therapy
• ADP Services
• Adult Day Programs
• Community Exercise Programs
• Convalescent Care Programs
• Education and Training
• Seniors Centre • Work Injury Prevention
Management • Foot Care • Orthotics • X-Ray/Diagnostics • Speech Language Therapy • Dental1 • Lab Services1
• Audiology1
• Optometry1
Core Services Support Services Associated Services
1 Coming soon
Focused on keeping seniors healthy, active & independent 1 In development
Strong Steady Growth
26
0
50
100
150
200
250
300
350
400
450
500
0
10,000
20,000
30,000
40,000
50,000
60,000
Jan-09 Jan-10 Jan-11 Jan-12
Beds Homes
# Beds # Homes
49,735
457
100% Monthly revenue increased
from Jun 2010 to Jun 2012
22,661
211
LifeMark Acquisition (June 2011)
Competitive Advantage: Our People
27
Tina Bishai COO, Seniors Wellness
Catherine Sundeen Director, Business Development
Meagan Mabady Director, Corporate Relations
Janet Carey Director, Operations
Dorothy Ginther Director, Implementation & RAI-MDS
Alexis St-Jean Director, Sales & Marketing
Registered Physiotherapist (PT), MBA; 14 years in management with Centric Health (formerly Active)
6 years experience in Pharmaceutical Sales & Marketing, MBA
Registered PT, 11 years in management
Registered PT, 5 years in management
Registered PT, over 20 years in management
Registered PT, 4 years in management
Competitive Advantage: Our People
28
Strong support infrastructure and a wide network of dedicated healthcare professionals who are located in every region across Ontario and in B.C.
Management Infrastructure
• 20 Regional Managers (most are registered PTs); 8 Customer Service Reps
• Ancillary and Support Services Coordinators
• Quality Assurance, HR, OT Services and Massage Services Managers
Healthcare Professional Network
• 763 Physiotherapists & Assistants
• 80 Occupational Therapists
• 144 Massage Therapists
~1,000 healthcare professionals
Competitive Advantage: Our Quality
29
• Proprietary data collection system allows for robust analysis
• Centric physiotherapy programs are proven to decrease the risk of falls
• Focus on research and outcomes facilitates a culture of continuous quality improvement
• Centric-serviced Homes perform better than the Provincial average on publicly reported quality of care outcomes
• Data for Centric-serviced Homes show a trend of consistent improvement for this data over the past two years
Competitive Advantage: Our Quality
30
• Recent data analysis of >50,000 patient charts (performed by a UofT research professor) showed that frequent participation in our Physiotherapy “Falls Prevention” programs prevents an increase in the risk of falling (preventing decline, maintaining independence)
Competitive Advantage: Our Quality
31
Competitive Advantage: Innovation
32
Seniors Centre, St. Catharine’s • One-stop-shop for medical & wellness services for Seniors – Renovated
4000 sq. ft. within an existing St. Catharine’s seniors housing campus
• Platform to deliver services and preventative programs to seniors at home in the community
Services Include:
Family Medical Practice/Physicians Physiotherapy
Lab Services Occupational Therapy
X-ray, Ultrasound & Diagnostics Massage Therapy
Echo Testing Dental Hygiene
Spirometry Wellness Education Seminars
Foot care Fitness, Relaxation & Aqua Fit Classes
Centric’s First Seniors Wellness Centre
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Strategic Imperatives for 2012-2013
34
Quality
• Continue to leverage our depth of experience, focus on quality improvement, research, and outcome analysis
Innovation
• Create a new service delivery platform through Bundled Services
Future Positioning
• Evolve to meet the priorities of the MOH and the changing demands of seniors (Home Care, Aging at Home, Right Care Right Time Right Place, Ontario Seniors Strategy)
Bundled Services Opportunity
35
Bundled Services
36
• Opportunity to integrate solutions and bundle services for seniors to create greater value
• Clients benefit from improved quality, increased efficiency and enhanced value
Bundled Services
37
Efficiency
Quality
Value Enhanced value-added options, greater support
Development of combined education, cross discipline quality analysis and program development
Streamlined communication, combined access to information, greater convenience and efficiency
Progress
38
• Administrative & operational process in place
• Combined quality reporting launched
• Value added offering articulated
• IT components in process
• Service enhancements in progress
24 LTC/RH
After 6 months of this initiative
have started “bundled” services
Total homes with
3+ services
Total homes with
2 services
Homes with Classic/ Motion
Homes with SW/Classic
Homes with SW/Motion
LTC 7 51 22 11 28
Retirement Homes
5 81 14 35 32
Future Positioning
39
Seniors Prevention Model
Seniors Centres
Home Care
• Creation of preventative medical services model for seniors that supports aging in place
• Services at Seniors Centres
• Providing support, wellness, prevention & medical services to seniors in community
Centric at All Points in Continuum of Care
40
Active Seniors in the Community
Other Seniors in the Community
Supportive Housing
Retirement Residences
Long Term Care Homes
Physiotherapy Clinics
Seniors Centres, Preventative Health Solutions, HME, Home Care
Services
Seniors Wellness Rehab, “Ancillary” Services, Specialty Pharmacy, HME, Seniors Centres
Centres of Excellence (Orthopaedics and Cataracts)
Positioning to Meet Shifting Demand
41
Ontario’s Seniors Care Strategy Centric Health Services
Promotion of Wellness & Prevention Preventive Health Model; Seniors Wellness Services; Centric Seniors Centre
Ensuring Better Equity, Access, Value, & Choice
All Centric Senior’s services across the continuum
Leverage Existing Infrastructure & Resources
Respite/Convalescent Programs; Centric Seniors Centre
Improving Coordination of Care in the Community
All Centric Senior’s services across the continuum
Align Incentives With & Across Sectors with Metrics & Accountability Frameworks
Seniors Wellness Programs
Growth Focus
42
• Organic growth: increase market share of LTC/RH beds serviced
• Expand delivery of associated services
• Roll out new initiatives aligned with shifting demand
• Expand core services to other provinces
Short Term (2012-13)
Medium/Long Term (2013 onwards)
The highest standards of quality care and outcomes for seniors
43
• Largest provider; >40% market share
• Over 20 years of strong, consistent growth
• Strong leadership team and network of ~1,000 HCPs across Ontario
• Competitive advantage through focus on quality and innovation
• Short term growth: organic growth, bundled services, associated services
• Med/Long term growth: new initiatives to meet shifting demand, national expansion
Physiotherapy Clinic Centres
Craig Gattinger Director
44
Physiotherapy treatment via national clinic network
Significant opportunity for expansion
Snapshot
1.2M patient visits annually
150,000 patients annually
110 owned
40 network
45
150 clinics
5% market share
Overview
46
~2,000 staff • Physiotherapists
• Kinesiologists
• Occupational Therapists
• Massage Therapists
• Physicians – Sport, Orthopedic, Occupational Health
• Nurses & Chiropractors
96% of patients would recommend LifeMark to friends1
Why?
• Patients seek pain relief and a return to normal daily activities
• Preference for active, healthier lifestyle driving demand
How?
• Our therapists provide Manual Therapy, Active Exercise, Acupuncture and Electrotherapy treatment modalities as well as injury specific education
1 Patient Satisfaction Survey, Q2 2012 (1910 respondents)
- Occupational Rehabilitation - Chronic Pain Management
- Occupational Therapy - Massage Therapy
Core - Physiotherapy Treatment
- Manual Therapy - Active Exercise
- Acupuncture - Education & Prevention
MC Accident LT Disability Employer
Specialized - Vestibular Rehabilitation
- Pelvic Health - Head Injury Rehabilitation
- TMJ and Facial Rehab - Concussion Programs - Cancer Rehabilitation
Our Services
Channels
- Extended Health Benefits - Out of Pocket
- Private - Public
- Gov’t Agencies
- Casualty Insurers - WCB - WSIB
- Ministry of Health - Group Life Companies
Secondary - Occupational Health & Wellness
- Sport Medicine - Chiropractic - Orthotics
Work Injury Private Government
Payors
Highest Quality Care Through Aligned Healthcare Professionals
Full Continuum of Therapy
Geographical Diversification
48
41%
29%
14%
13% 3%
Clinics by Region
Ontario Alberta BC Atlantic Prairies
27%
45%
13%
8%
7%
Revenue by Region
Ontario Alberta BC Atlantic Prairies
Payor Diversification
• >40% of patients pay privately (EHB/out-of-pocket): not impacted by legislative changes
• Longstanding Preferred Provider relationships with WCB in BC, AB, SK & NS
• Increasing number of Preferred Provider relationships with Auto Insurers and Employers (e.g. Vale, ENMAX, Compass Group, Ceridian, TTC)
42%
27%
10%
8%
8% 5%
Revenue by Payor
Private WCB MVA
Gov't Other Employer
49
1 LTM ended June 30, 2012
1
Competitive Advantages
Strong Patient Outcomes & Customer Service • Increasing private patient referrals
Continued Expansion of Our Continuum of Care • New services and specialized programs added each year (e.g. Vestibular
Rehab, Pelvic Health and OT services)
Experienced Leadership Team • 4 Provincial Leaders: 35+ years combined experience at LifeMark • 11 Area Managers: all with clinical designations (PT, OT, Kin, RN) &
leadership training
Industry Leading IT Infrastructure • Scalable web-based systems and enhanced information for customers
Ongoing Commitment to Quality and Accreditation
50
Top Priorities
1. Increase Private Patient Retention • Implement Therapist scorecard
• Develop training/mentorship programs
• Improve customer service and expand operating hours, including Saturday openings
2. Enhance LTD Programs & Services • Roll-out of occupational rehab, chronic pain & cognitive training programs
• Develop case coordination capabilities
• Deliver OT services in 50% of clinics
3. Leverage Platform • Implement retail sales platform
• Launch massage therapy initiative
• Enhance patient experience through clinically relevant products
• Integration of Performance Orthotics
51
Massage Therapy Initiative
52
centrichealthmassage.ca
Top Priorities
4. Increase number of Preferred Provider Relationships: MVA, LTD, Employers
5. Each clinic to implement local strategies that meet the needs of their communities and builds on the interests and expertise of their staff by enhancing core programs and further developing specialized services
6. Expand clinic network through acquisitions/mergers and new centres
53
Performance Measurement
Q2 2012 Results Company BC AB SK MB ON Atantic
Surveys submitted 1910 185 607 50 46 715 307
I would return to this clinic again. 95.98% 96.98% 93.93% 93.30% 96.00% 97.88% 97.79%
I would recommend this clinic to my friends & family. 95.78% 95.73.% 93.43% 93.30% 96.30% 98.06% 97.89%
I was greeted in a friendly manner on each visit. 94.40% 94.98% 92.11% 93.55% 92.20% 97.00% 96.55%
The reception staff were helpful. 93.72% 94.78% 90.96% 92.85% 89.80% 97.05% 96.86%
The therapist(s) communicated with me in an effective manner. 96.42% 96.76% 95.53% 93.50% 96.70% 98.26% 97.79%
My treatment options were explained thoroughly by my therapist (s). 95.46% 96.16% 93.14% 93.25% 95.20% 97.61% 96.62%
I was given education about my injury. 94.02% 95.50% 91.84% 89.75% 94.10% 96.29% 95.97%
My treatment results were above my expectations. 91.83% 94.38% 90.37% 85.15% 91.10% 94.00% 97.79%
95% - 100%Green highlights = excellent performance
85% -94% Orange highlights = very good performance
75% - 84% Purple highlights - good performance
65% - 74% Blue highlights = neutral performance
<64% Yellow highlights = poor performance
Revised Scoring Breakdown
Customer Satisfaction • Example: Quarterly Performance Measurement Results
54
Patient Outcomes • Analyzed by region vs. national average, including Return To Work, Return To
Activities Of Daily Living, and Symptom Improvement
Q2 2012 Results Company BC AB SK MB ON Atantic
Surveys submitted 1910 185 607 50 46 715 307
I would return to this clinic again. 95.98% 96.98% 93.93% 93.30% 96.00% 97.88% 97.79%
I would recommend this clinic to my friends & family. 95.78% 95.73.% 93.43% 93.30% 96.30% 98.06% 97.89%
I was greeted in a friendly manner on each visit. 94.40% 94.98% 92.11% 93.55% 92.20% 97.00% 96.55%
The reception staff were helpful. 93.72% 94.78% 90.96% 92.85% 89.80% 97.05% 96.86%
The therapist(s) communicated with me in an effective manner. 96.42% 96.76% 95.53% 93.50% 96.70% 98.26% 97.79%
My treatment options were explained thoroughly by my therapist (s). 95.46% 96.16% 93.14% 93.25% 95.20% 97.61% 96.62%
I was given education about my injury. 94.02% 95.50% 91.84% 89.75% 94.10% 96.29% 95.97%
My treatment results were above my expectations. 91.83% 94.38% 90.37% 85.15% 91.10% 94.00% 97.79%
95% - 100%Green highlights = excellent performance
85% -94% Orange highlights = very good performance
75% - 84% Purple highlights - good performance
65% - 74% Blue highlights = neutral performance
<64% Yellow highlights = poor performance
Revised Scoring Breakdown
Revised Scoring Breakdown 95-100% - excellent performance 85-94% - very good performance 75-84% - good performance 65-74% - neutral performance <64% - poor performance
Strong Growth
0
20,000
40,000
60,000
80,000
100,000
120,000
Jan-09 Jan-10 Jan-11 Jan-12
Monthly Patient Visits
Monthly Patient Visits
90,693
62,720
0
20
40
60
80
100
120
2006 2007 2008 2009 2010 2011
Revenue
Revenue ($Millions)
$106.7M
$61.5M
55
One of Canada's largest clinic networks offering the highest quality care
56
Assessments Craig Gattinger Director
57
Provision of medical and disability assessment
Snapshot
Largest provider to Ontario auto insurance industry
58
55,000 assessments/year
>3,750 assessors
>600 physicians
>400 customers
~$40M
1 Ended June 30, 2012
Pro forma annualized revenue (LTM1)
Key Services
59
• Work-related and motor vehicle injury assessments
• Medical, functional, vocational, disability management
• Medical assessments for individuals with short- or long-term disabilities
• Catastrophic and complex case management
Employer 7%
Gov't 5%
Disability Insurers 2%
A 37%
B 16%
C 13%
D 13%
E 5%
F 11%
Other 5%
Automobile Insurers
86%
Revenue By Funder Type
60
Automobile Insurers by Customer
Increasing National Presence
61
Total market size: >$1.5B
8% 6%
84%
2%
Business Breakdown by Province
Division Overview
• 4 locations: North York (head office), Mississauga, Barrie and Whitby
• Majority of assessments are in the GTA and occur within our centres
• Heavy reliance on auto sector but well-diversified within that sector
• 5 locations: 2 in Alberta and 3 in BC
• Well-diversified customer base in Medical Legal, Auto, Public Sector and STD/LTD
• Experienced 16% increase in total revenue from 2010-11, attributed to growth in the Medical Legal market
Ontario Western Canada
62
Reengineering the Business
63
Legislative reform has reduced assessment market from $400M (2010) to an estimated $220M (2012)
• “Right-sized” the business – consolidated Ontario operations into fewer centres
• Focused on margin improvement
• Focused on initiatives aimed at increasing market share
• Aggressively pursuing revenue generating opportunities with auto insurers and WCBs – every RFP in 2012 has been successful
• Continuous quality improvement
Continuing to generate positive income & cash flow
0%
5%
10%
15%
20%
25%
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
Adjusted Pro- Forma EBITDA Pro-Forma Revenue Adjusted Pro-Forma EBITDA Margin
Developments since regulatory changes • Have won 10 RFPs / On 30 providers lists / Increased Market Share
Geographic spread • 80% Ontario • 20% West (Viewpoint: CAGR of 30%)
Pro Forma Results – Last 8 Quarters
64
Revenue, Adjusted EBITDA & Margin
Leading & Growing Market Share
65
Number of Contracts/Service Agreements – Ontario Auto Insurance Market
Competitive Advantage
Recognized Experts in Complex Assessments
• Catastrophic, Acquired Brain Injury, Paediatric
Access to innovative health resources and solutions
• Surgical Solutions, Pharma Solutions, Assistive Devices
National Market Leader
• Comprehensive service range on a national basis
• Success in RFPs and preferred provider agreements – 10 out of 10 wins in 2011 to 2012
66
Significantly larger than nearest competitor
Opportunities
• Business and product development – diversification into STD and LTD markets
• Strengthen the “Assessments” brand through the consolidation of all brands
• Diversity in service delivery – pharma, surgical, rehabilitation, assistive devices
• Customer intimacy through management information & B2B contact through operating systems
67
Strategic Imperatives
1. Maintain & Grow High Value Customer Relationships • Continue to refine reports for tracking sales activity • Improve brand recognition within the industry • Increase on-insurer-site education & service delivery • Maximize market share with existing customers
2. Improve Quality & Operating Efficiency • Improve billing cycle times and increase efforts to reduce accounts receivable • Prepare for CARF accreditation
3. Accelerate Product Innovation & Uptake • Exceed performance expectations through enhanced booking strategies –
availability and technology • Roll out “report cards” to assist insurers and adjusters in tracking outcomes
4. Create & Sustain a High Performance Culture • Improve employee satisfaction • Improve staff communications
68
A Solid Base for Future Growth
69
• Long History and Experienced Management Team
• Expert Assessors in Key Areas
• Comprehensive Infrastructure
• Top Quality Assessment Product
David Fraser President
Retail & Home Medical Equipment
70
Provides a wide range of mobility devices and accessibility equipment through retail stores
Snapshot
71
Largest provider of Home Medical Equipment in Canada3
94 locations
~$90M1
Pro forma annualized revenue (LTM2)
1 For MEDIchair, includes revenue from corporate stores and royalties from franchises 2 Ended June 30, 2012 3 By number of locations
Why Home Medical Equipment?
72
Baby Boomers…
…And the Seniors they care for will comprise
• 10M in Canada
• Control 70% of wealth
• 8M are active family caregivers of the population by 2036 (nearly double that in 2009)
• Significant increase in incidence of adult diabetes & obesity creating more demand for assistive devices
• Hospital stays becoming shorter with “quicker & sicker” patient discharges, with little/no information provided to patient
• More reliance on self-care and care by family, especially in ethnic communities
25%
Increasing Prevalence of Disability
73
of pop’n >75 have
a disability (Statscan)
56%
3.7% 4.7% 8.0%
18.3%
33.0%
56.3%
14.3%
Pop'n with a disability by age, 2006 (%)
Overview
74
• Reputation for community and retail clients
• 4 corporate locations, 66 franchised locations
• Strong presence in western Canada & Maritimes
• Opportunity to convert locations to corporate
• Reputation for complex and pediatric rehab
• 24 locations, all corporately owned
• Strong presence in Ontario, Alberta & B.C.
• Fastest growing HME company over last 5 years in Canada
Largest Player in a Large & Growing Industry
75
• 38 more locations than largest competitor, Shoppers Home Healthcare
• Remainder of industry fragmented with small single owners and small regional dealers
$750M industry in Canada
Well positioned in consolidating industry
Centric HME and next largest competitor comprise almost 50% of market
6-8% annual industry growth
Number of Locations
National Presence
76
Most geographically well positioned provider
3
19 2
19 7
4 6
29
3 24
70
2
David Fraser, President
14 years
Bas VanLankvelt, COO, MEDIchair
15 years
Marco Salvati, CFO and CIO
3 years
Don Mackay, SVP, Sales
18 years
5 VPs avg. 17 years
2 Directors avg. 13 years
4 Regional Managers avg. 17 years
Proven Intellectual Capital
77
Most experienced management team in the industry
A wealth of combined industry experience
Strong Growth
78
0
10
20
30
40
50
60
70
80
90
100
2005 2006 2007 2008 2009 2010 2011
System Revenue ($Millions) $86.9M
$79.0M
1
1 Represents total MEDIchair revenue. Centric Health reports only corporate stores and franchise royalties.
$29.0M
$64.5M 1
Product Mix & Funding Sources
79
55%
10%
20%
5% 5%
5%
Product Mix
Mobility Devices Elevating and Home Accessibility
Retail HHC Respiratory
Serivce Revenue Rentals
45%
10% 10%
20%
15%
Funding Sources
Government (ADP & AADL)
Institutions
Insurance (incl. WSIB)
Cash-paying Customers
Alternative Funding (MOD, Easter Seals)
Synergies Within Centric Health
80
• Relationships are unique to Centric HME
• Relationships being leveraged since Motion joined Centric Health in February 2012
• Very high close rate on presentations for mobility contracts
Seniors Wellness >450 contracts in LTC and Retirement Homes in Ontario
Classic Care >220 homes on a Pharmacy contract in Ontario
Synergies Within Centric Health
81
• Foot Doctor program
• Providing custom and off-the-shelf orthotics
• Rolling out to 15 locations January 2013
• Expanded rollout planned in Q3 2013 to Physio Clinics and MEDIchair locations
New Format Locations
82
• “One stop shop” for all home healthcare needs
• Open and inviting space with on-site service capability
• 12,000 square feet with 3,000 square foot showroom
• High visibility locations
• Training rooms where referral sources can send clients
Windsor
Kingston
Strategic Imperatives
83
1. Expand Retail Sales Mix
2. Long Term Care & Retirement Homes
3. Respiratory
4. Home Accessibility
5. Margin Expansion, Cost Containment, Working Capital
The retail consumer is one of our biggest opportunities
1. Expand Retail Sales Mix
84
• Growing desire for seniors to “age in place” (not having to move from one’s home)
• 92% of Canadians aged 65 and over live in a private household
• Baby Boomers not just buying for parents but are now customers
• Falls are leading cause of injury & hospitalizations for seniors, contributing to 9% of all emergency department visits by seniors
• Education and awareness of assistive devices can drastically reduce the prevalence of falls in the senior population High demand for mobility devices, bathroom safety,
daily living aids and supports & braces
1. Expand Retail Sales Mix
85
2. Long Term Care & Retirement Homes
86
Key Strategies
• Solutions in Motion
• Centric Bundled Services
• Strategic partnership with KCI for support surfaces
• Therapist and Family marketing program
220 Homes Contracts in
Fastest growing LTC & Retirement Provider: >50% per year
Ontario Market: ~$75 million Motion Market share: ~20% 120 Homes in last 18 months
75 Homes signed in 2012
3. Respiratory
87
• Oxygen and CPAP are adjacent market to HME
• Estimated $300 million market in Canada growing at >15%
• Dominant providers resistant to adopt new Portable Oxygen Concentrator technology due to huge investment in liquid oxygen
• Liquid oxygen unsafe and restrictive due to heavy cylinders
• POC’s allow freedom and more cost-effective for supplier to deliver
Significant growth prospects
3. Respiratory – Current Initiatives
88
• Adding experienced Respiratory Therapists with established relationships in the community and LTC & Retirement Homes
CPAP Therapy
• Obstructive Sleep Apnea is an Occupational Health concern – affecting many industries including the Trucking Industry
CPAP Therapy is one of the fastest growing segments of the Centric HME business
• Centric HME has developed a National program for Truck Drivers currently signing companies to contracts to provide therapy and monitoring
Oxygen Therapy
• Success signing LTC & Retirement homes to contracts. Desirable oxygen delivery model with the elimination of liquid oxygen and often cylinders
4. Home Accessibility
89
89% of seniors are modifying their homes to “age in place”
• Seniors want to and can live in
their own home longer with a
planned home accessibility
project
• Assistive devices and HME
too often an after-thought,
when they should play a lead
role in health prevention,
monitoring and home safety
4. Home Accessibility
90
• Ontario: Seniors Healthy Home Tax Credit
• Up to $1,500/year
• Now available to senior homeowners and tenants, and people who share a home with a senior relative
• Limited funding available for home accessibility products such as bath safety, stair-lifts, ceiling lifts, home elevators, hospital and home care beds, support surfaces, home renovations such as walk-in showers
One of the fastest growing segments of Centric HME: >25%
5. Margin Expansion & Cost Containment
91
Margin Expansion • Ability to leverage size with
supplier partners
• Ability to control products sold within channel to optimize gross margins
• Product mix – increase high profit categories
Cost Containment • Recently rationalized
management team to provide higher level of service while at the same time reducing overhead
• Rationalizing real estate and centralizing support services
• Ability to use technology to reduce labour costs and improve efficiency
• Re-negotiated supplier payment terms to better align with government payment pattern – all major suppliers
• Improvements in cash flow cycle
5. Working Capital Improvement
92
• New ERP system allows visibility to store level purchasing
• Ability to control product purchased
• Moving to a just in time inventory model with suppliers holding stock for us
• Negotiated next day delivery terms for many products
93
Centric HME sees >150,000 clients per year
One stop shop for Seniors
HME
Oxygen & CPAP
Orthotics
Physiotherapy
Massage therapy
Pharmacy
Other services coming…
No Competitor Can Offer the Same Bundle
94
• Compelling market growth • Experienced management
team • National presence in key
markets • Exclusive and specialized
products • Private label HME products • Diversified strategy • Passionate people
Why Centric HME?
Moe Green CEO, Classic Care
Pharmacy
95
96
Medication & consulting services to Long Term Care and Retirement Homes
Snapshot
+ Southlake Pharmacies + Dedicated National Pharmacies
Increasing opportunity as seniors continue to age
>16,000 LTC & RH beds
97
1 Total Pharmacy segment revenue 2 Ended June 30, 2012
~$90M1
Pro forma annualized revenue (LTM2)
Industry-Leading Team
98
58 pharmacists
166 pharmacy technicians
27office & support staff >100 years
Leadership Team with
of industry experience
Locations provide platform for expanded pharmacy services, including corporate health plans
>250 total staff
99
Strong Growth
0
5
10
15
20
$0
$10
$20
$30
$40
$50
$60
$70
2009 2010 2011
Revenue ($Millions) Beds ('000s)
$65.5M
16,317
Beds
$51.4M
12,500
Beds
27% Growth in revenue 2009-2011
31% Growth in beds 2009-2011
100
Multi-Dose Technology
101
Advanced Medication Delivery System
Ability to provide medications in the
safest and most efficient manner possible
102
Quality Improvement Programs
Unique ability to benchmark against industry average
CATEGORY EXAMPLES: PAIN WOUNDS BEHAVIOURS SAFE MOBILITY
Description % of residents with worsening
pain
% of residents with worsening
stage 2-4 pressure ulcers
% of residents with declining
behavioural symptoms
% of residents who have fallen in the last
30 days
Resident care through medication analysis with a focus on outcomes:
103
Medication Management Systems
Example: Quarterly Evaluation Psychotropic Medication
104
Unique Continued Education Programs
• Annual Nursing Conference
• Education dinners
• Monthly education programs
• Customized education programs at the homes
• Unregulated care program for care providers
Only provider of education/analysis on medications, physiotherapy & mobility together
105
Competitive Strengths
• Unique in the ability to provide pharmacy, mobility and physio to homes in Canada
• Very difficult for smaller pharmacies to compete or enter the market (regulatory burdens imposed and costs)
• Currently servicing Ontario with plans to expand to two other provinces in Q4 2012/Q1 2013
One of the 3 largest providers in Canada
Competitive Strengths
• Continually improving our relationship with Home management, nurses, MDs, residents & corporate office staff
• Giving back to the community • Events (Walk for Cancer) • Wellness fairs for residents &
family • Education programs • Local sponsorships
106
Relationships & Communications
Technology
• Cutting edge technology focused on efficiency, communication and quality improvement
• State of the art, fully integrated eMAR system that best suits the client’s specific needs • Certified eMAR trainers on staff
• eORDERING
• WebPORTAL
• CentricTV
Conduct various surveys to monitor our services and ensure the highest quality
• Annual Pharmacy Services Survey (Quality Assurance Survey)
• Annual Customer Service Survey
• Annual Clinical Consultant Pharmacist Survey
• New Home Transition Survey
107
Performance Measurement: Surveys
Highly committed to customer satisfaction, with 90% satisfaction level
• Only company able to offer a bundled service
• Demographics of increased new Homes throughout Canada
• National provider (expansion to Quebec and Alberta)
• Purchased Classmed to expand products and services to residents
• Infusion and compounding services for residents and Home Care
• Scope of practice for pharmacists continually change (now permitted to provide immunizations)
108
Opportunities/Goals & Objectives
109
Summary
With the ability to offer
more services to homes than any other provider in Canada, combined with
leadership of all Centric Health divisions, Centric Health Pharmacies is
well positioned for continued strong growth
110
Dr. Jack Shevel Executive Chairman
Surgical & Medical Centres
Pro forma annualized revenue (LTM1)
Day and overnight surgical interventions
Snapshot
111
~180 physicians
19 operating rooms
Largest surgical centre network across Canada
7 surgery centres Customers • Ministry of Health • Workers Compensation • Private Insurance • Discretionary and private pay
86 beds ~$35M
1 Ended June 30, 2012
Significant growth opportunity
Developing a National Network
112
False Creek Surgical Centre – Vancouver, BC
113
Ontario $9M
Alberta $5M
British Columbia
$15M
Manitoba $6M
Surgical Revenue By Province
NOTE: LTM revenue as of June 2012
19.0%
14.6% 39.6%
26.9%
114
Controls & Measures
• Joint Medical Advisory Committee at each Centre to ensure highest levels of quality care & outcomes
• Standardized chart of accounts/accounting platform
• Fixed vs. variable costs
• KPIs
• Nursing acuities
• Activity-based costing
• Tariff structure
115
Key Interventions
Economies of Scale
• Centralized negotiations
• Preferred supplier
• Volume rebates
• Extended payment terms
• Surgical formularies
116
Key Interventions
Re-engineering
• Integrated system
• Database
• Common IT platform
• Perpetual inventory
Shouldice Hospital
117
Shared strategic fit
• Internationally recognized super speciality hernia repair hospital reviewed by Harvard
• Treated over 300,000 Canadians
• Started medical tourism in the 1950s
• Highest levels of quality care and outcomes with lowest cost
• 89 overnight stay beds & 5 operating rooms
• 14 additional surgeons + 170 dedicated staff
• Awaiting Ministerial approval
Innovation Driving Top Line Growth
118
• False Creek
• Fraser Health – Neuro/Mastectomy
• Vancouver Health Region – Balloon Sinuplasty
• Maples
• 5 x 8 hour OR slate
• Echo Program (2,500)
• Don Mills: $1.2m
• Shouldice: $6.4m
1. Public Private Partnerships
119
WCB at All Surgical Centres (except Blue Water)
• To establish specialized Centres Of Excellence “COE” in partnership with Canada’s leading healthcare professionals in their field of expertise
• To afford Specialists and Physicians an investment opportunity in a sector in which they are familiar
• To align the interests of all Parties to ensure that patient’s expectations are exceeded
• To offer Doctor participation at all levels to ensure that these centres offer the highest standards of care and are at the cutting edge of technology
• To provide Physicians with a valuable retirement asset
2. Utilizing Capacity: Centres Of Excellence
120
Each partner specialty will form its own Centre of Excellence
• Bariatric Surgery • Centres for Diabetic &
Endocrinology • Dental • Dermatology • Diabetic Prevention • Endoscopy (GIT, Gynae, Surgical) • ENT • Infertility & IVF • Maxillofacial & Specialized Dentistry • Men’s Health
• Ophthalmology • Orthopaedics
• Foot & Ankle Arthroplasty • Hip and Knee Surgery • Shoulder, Hand, Arthroscopy
• Plastics and Reconstructive Surgery
• Step Down • Women’s Health • Urology
Centres Of Excellence – Partnership Specialties
Partner Specialties:
121
• Certain surgical specialities have wait lists >18 months
• Each doctor may have >2,000 patients on wait lists
• Only 20-40% of patients will be suitable for surgery
3. Triage Assessment Program (TAP)
Advantages of TAP: • Patients can be seen earlier by TAP team
• Allows for comprehensive and multidisciplinary assessment
• Further investigation can be requested
• Early diagnosis allows for unnecessary delay of treatment
• Deteriorations and complications can be avoided
• Early intervention will reduce pain, medication and costs
• Allows better use of surgeon’s time
122
TAP Care Pathway
PATIENT
SPECIALIST REFERRAL
OTHER SERVICES MEDICINES,
PRODUCTS & DEVICES (HME)
TREATMENT REFERRAL
FURTHER INVESTIGATION
TRIAGE ASSESSMENT PROGRAM TEAM
IMAGING PATHOLOGY
EMG NCS
PRP SURGERY
OTHER
PAIN CLINIC TRIALS
IME PERS. TRAINER
ACUTE/CHRONIC COMPOUNDING
MOBILITY DEVICES
REHAB CHIRO
SHOCKWAVE BRACING
OTHER
20-40%
123
Orthopaedic Centre Of Excellence
124
• To establish a network of surgicentres and specialists across Canada
• To offer patients out of province surgical solutions
• The network of accredited specialists will ensure a continuum of high quality patient care and outcomes
• A fixed cost Global Surgical Fee will be offered for certain procedures
• Professional fees will be recovered by the province domicile
• Patients will be assessed and followed up by their referring Specialist
4. Extended Patient Choice Network (EPCN)
125
• Wait times are increasing and may exceed 18 months
• Active lifestyle is affected
• The aging population is experiencing more complications and are debilitating whilst on the waitlist
• Many patients are prepared to pay for certain of these procedures and are accessing their healthcare in the US at a higher cost (professional fees not recovered)
• Budgets and OR time will continue to be rationed despite an increasing demand
• The internet is promoting medical tourism
Rationale – Patient Choice
With aging population and budgetary constraints:
126
• Patients want early intervention and choice
• Doctors are requested to provide alternatives
• Doctors are happy to refer to their colleagues in other provinces
• Referring Doctor can assist with assessment, administration, post-op follow up and quality assurance
• Ensures continuum and high standards of care
• Reduces complications with earlier treatment
• Doctors’ hands are tied because of limited OR time and are becoming increasingly frustrated
Rationale – Doctor’s Dilemma
127
EPCN Care Pathway
Patient waiting for 2+ years for surgery
Referred Out of Province
Procedure by Specialist in
Network Surgical Centre
Referring Physician
PATIENT On Surgery Waiting List
Patient assessment reports and
referral letter
Discharge Report, Follow Up & QA
128
5. Transitional Care Maternity Beds (TCMB)
• Provide expectant mothers value added prenatal services and postpartum recovery in a 5 star accommodation with 10 star service and support
• Offer fully inclusive fixed cost packages (2-4 nights)
• Give mothers an opportunity to rest, recover and bond with their newborns in a supportive therapeutic environment encompassing support, confidence and life skills
• Contribute to the educational needs of the family acting as a resource for mother and baby
• Provide Midwives, Primary Care Physicians and Obstetricians (Healthcare Professionals-“HCP’s”) an investment opportunity in the Centre of Excellence
129
• Moms and newborns are discharged from hospital within 12-24 hours
• First-time and seasoned mothers need additional support, care and education
• Home environment not conducive to recovery and transition
• Expert advice readily available
• Similar programs have gained popularity in other countries
• Grandparents, family or friends can contribute for loved one to receive services
Rationale For TCMB
130
6. New Technologies
Balloon Sinuplasty (in partnership with J&J)
131
Dr. Jack Shevel Executive Chairman
Final Thoughts
132
Canadian Healthcare Spending Landscape
Public (70%) • Government Health
Programs • Hospitals • Drugs • Physicians • Administration • Surgery • Diagnostics
Insured (18% or $36.5B) • Drug plans • Dental & Vision • Rehabilitation Services • Diagnostics
Discretionary (12% or $20B) • Plastic Surgery • Elder/Convalescent Care • Cosmetic /Dental • Diagnostics
$135.1B $56.5B
Public Healthcare
Insured & Discretionary
Source: Canadian Institute for Health Information: National Health Expenditure Trends, 1975 - 2010
45% or $61B of Publicly Funded Healthcare is Delivered Privately
Total Privately Delivered Healthcare >$100B
Centric Health Strategy
134
Focus • Seniors
• Corporate Health Plans
• Surgi/Medi Centres
Key Investment Considerations
Strong Cash Flows underpinned by Low Capex Requirements
Canada’s Largest HC Service Provider Diversified by
Province & Business Sector
Favorable Industry Dynamics
Integrated Multidisciplinary Approach Across
Provinces
Experienced Management
(Heavily Invested) with Proven Track Record
Growth by Acquisition & Consolidation of Businesses
& Industry Leaders
135
Investor Day October 23, 2012
