David Cutler - President, Chief Executive Officer Daniel Gangon - Chief Financial Officer

Neil Maruoka - Canaccord Genuity Doug Loe - Euro Pacific Frederic Tremblay - National Bank

Thank you Lisa and thanks to everyone joining us on the phone and via the internet. Welcome to our third quarter results conference call.

With me is Daniel Gangon our Chief Financial Officer. For today’s call I will begin with review of the developments for the quarter, I’ll then turn it over to Daniel to review our financial results in detail and then I’ll return with some concluding comments before opening the call out to questions.

Our financial results for the third quarter and the year to date continues to demonstrate the underlying strength of a significant opportunity in our core continuing operations. Revenue from continuing operations increased 10% for both the quarter and year to date compare to the respective period last year with growth in each of our three segment.

Adjusted EBITDA increased 12% for the quarter and 18% for a year to date again with growth in each segment. This resulted in a margin increased to 9.3% for the quarter and 9.1% for the year to date.

We also generated our 10 consecutive quarter of positive cash flow from operation as we continue to have success with our working capital initiatives. A momentum in our core operation is evidence in our trailing 12 months performance.

We expanded forward revenue and EBITA in each of the last 12 months period surpassing the $300 million revenue mark this quarter with adjusted EBITDA just shy of $27 million. The third quarter was also highlighted by another meaningful step forward in our debt reduction plan.

Last quarter I spent a fair amount of time discussing our refine strategy our streamline and more focus business model and our resulting decision to divesting certain non core operations specifically our retail and home medical business and our methadone pharmacy. During the quarter we completed both of those transactions generating gross proceeds of $50 million on the retail HME operations at $20 million on our methadone pharmacy.

Net of transaction cost, we generated approximately $62 million. Upon closing of the methadone pharmacy sales we immediately repaid $10 million of our revolving facility permanently reducing that facility to $40 million from $50 million.

As I discussed previously we have committed to apply a minimum of an additional $15 million to further debt repayment to some combination of the preferred partnership units, the second lean senior secured loans and additional pay down of our revolver. We are continuing to evaluate the base used at the additional $15 million and in the interim that temporally paid down our revolver by that amount.

That leaves us with approximately $37 million from the divesture to deploy to acquisitions of higher margin businesses that are consistent with our refocused strategy. Businesses with strong cash flow, low CapEx and working capital requirement, limited exposure to regulatory and funding changes and importantly that will expand our national network.

We look to maximize our purchasing power of these proceeds through the use of our common share. We are actively pursuing such opportunity and while our objective is to put this proceed to work as quickly as possible we are being prudent and diligent in our pursuits.

In terms of operational highlights we continue to see steady progress in the execution of the growth strategies with each of our segments starting with our physiotherapy rehabilitation and assessment segments. At our Investor Day in June we talk about focus on specialized programs and highlighted Concussion Management as particular area of focus.

I am pleased to report that our Concussion Management program is now available at more than 35 clinic locations across the country and our cancer rehabilitation program has been offered at more than 60 designated clinic. Awareness for each of this program is growing supported by our targeted digital and social media marketing effort.

In a moment I’ll provide an update on our Employer Healthcare Management and Wellness initiative but I do want to note here that we have began to receive RSP and have been awarded our first contracts for programs that will delivered through the Physiotherapy Rehabilitation and Assessment businesses. As I have discussed previously the employer health program will offer services in each of our statement.

Our assessments business continues to see strong steady performance, we are continuing to see rationalization within the industry which is providing us with new opportunities as one of the largest national providers. Our specialty pharmacy segment continues to generate steady growth as we focus on maximizing utilization of our infrastructure through new contract wins with long term care and retirement homes as well as our retail initiative to date.

This year we have added 1000 new bed surpassing our target for 2014. We’ve previously talked about the opportunity to established co-location pharmacy services with an existing Centric Health facility.

Our first such location is slated to open the long side our Physio and Rehab clinic at the Richmond Oval in Richmond BC later this quarter. It will provide the opportunity to co-market and refer across our segments.

We are continuing to evaluate opportunities around broadly expansion of this business into Western Canada and the Richmond co-location is the initial step forward in this regard. In our Surgical and Medical center segment the acquisition of 75% of SmartShape weight loss centers is clearly having a positive impact on our results and we are beginning to see the impact of the roll out of that model across Centric’s facility.

During the quarter we made additional investment in marketing and advertising that we expect will drive bariatric volumes in the near term at our facility. Earlier this year we added the gastric sleeve procedure at the Don Mills facility and in September we performed our first procedure.

It is the only Canadian clinic outside Quebec where this procedure is available privately. We have also expanded our national appraisals who are recently formed partnership for Saskatchewan to offer lifetime procedures in that market.

Also during this quarter we completed the renovation of our Don Mills facility in addition to supporting bariatric procedure the innovation will enable us to expand our services to shoulder surgery and additional foot and ankle procedures to support growth in employer contract. We will undertake renovation on our Fall Street Center in Vancouver in Q1 of next year to support our continued expansion of our services and partnership including our growing executive health program and private family practice services.

We are continuing to see the results of our multi [indiscernible] of growth strategy to drive utilization of our national network. I’ve previously talked about our focus on partnering with public hospital system in the best interest of patients by helping to alleviate wait time and address capacity challenges.

I’m pleased to report that the Winnipeg Regional Health Authority and Manitoba Health recently extended our contract to provide echocardiograms for an additional three year. Utilization in Q3 grew to 38% of capacity up from 34% in Q2 of this year and from 30% in Q1, I will note that the number of both Q1 and Q3 exclude the impact of the closures of the facilities for innovation in each of these quarters.

We are making steady progress on our Employer Health Management Enrollment business development initiative that we initiated earlier this year. As a reminder this offering will provide clients with customizable health care enrollment programs, chosen from a broad continuing of Centric Health and partner services everything from mandatory work place injury insurance programs to optional wellness program to corporate health benefits in prescriptions plan to surgeries.

We successfully launched incentive based employee’s wellness highlight program to our UT Star just last week. This pilot is our first joint offering in partnership with Based Life Rewarder, a recognized industry leader in providing wellness intensive platforms and programs to large organization.

Externally we have began responding to RSP and I am pleased to report we are beginning to win contract. As I mentioned earlier our first contract are within our Phyiso, Rehab and assessment segments.

However we expect that this initiative will eventually feed each of our segments. Across selling opportunities are already becoming apparent as we respond to the RSPs and have discussions with customers, its early days and it will take time to broadly role out this program.

However we are very encouraged by our initial success and I think its worth noting that because of our platform in national network we are able to implement this program with little investment. With that I would now like turn the call over to Daniel to review our financial result in detail Danny.

Thanks David and good morning everyone. In the interest of time I will confined my remarks primarily for the results for the quarter.

Our full financial statements and MD&A for the quarter and year to date have been filed with SEDAR and our available on our website. As a reminder, as the result of the divesture of the senior’s wellness and home care operations in the first quarter and of the retail and home medical equipment operations and methadone pharmacy operations in the third quarter, each of this businesses has been classified as discontinued operations for the purpose of our financial reporting.

Turning to the results as David mentioned earlier we continue to see strong performance across our business. Consolidated revenue from continuing operations for the third quarter grew 9.7% to $75.6 million from $69 million for the same quarter of last year.

With growth in each segment importantly we continue to generate solid organic growth at 7.7% with remainder coming from the acquisition of SmartShape weight loss center last December and other start up initiative. Consolidated adjusted EBITDA which excludes transaction and restructuring cost, change in fair value of contingent consideration liability, impairments, change in fair value of derivative financial instruments, gain on disposal of our property and equipment, and stock based compensation expense.

Our continuing operations for the third quarter grew 11.7% to $7 million from $6.3 million in Q3 last year. Again we saw growth in each of our segments.

Consolidated adjusted EBITDA margin increased to 9.3% from 9.1% for the year to date ended September 30 revenue increased 10.2% to $229.8 million while adjusted EBITDA increased 17.8% to $21 million compared to the same period last year. Adjusted EBITDA margin grew to 9.1% from 8.6% I will now walk through the quarter results for each of our business segment individually.

Starting with Physiotherapy Rehabilitation and Assessments revenue for that segment grew 6.7% to $42.3 million from $39.6 million in Q3 last year. Adjusted EBITDA grew 6% to $5.7 million from 5.3 million for Q3 last year.

The increases were mainly the result of organic growth as well as the addition of four new rehabilitation clinics in 2014. I will note that adjusted EBITDA growth in Q3 was dampened by [salary] cost through the additional frontline fact David discussed earlier that have not yet reached their full revenue generating capacities.

Adjusted EBITDA margin was relatively unchanged at 13.4%. Revenue for the specialty pharmacy segments for Q3 grew 7.4% to $24 million from 22.3 million in Q3 last year.

The increase is primarily the result of growth in script volumes and the number of beds serviced as well as the addition of ancillary services to existing customers. Adjusted EBITDA grew 15.7% to $3.3 million from 2.9 million in Q3 last year.

Organic growth generated by the competitive expansion of script count and bed service as well as offering ancillary services to customers was partially offset by higher lease hold cost related to the opening of a new dispensing facility in Q1 of this year. Adjusted EBITDA margin for specialty pharmacy improved to 13.9% from 12.9% in Q3 last year.

Revenue for the surgical and medical center segments for Q3 increased 33.5% to $9.3 million from 7 million in Q3 last year. While adjusted EBITDA increased to 0.7 million from 0.6 million the increases were primarily the result of the accretive contribution of SmartShape which was partially offset by the temporary closer of our Don Mills facility for renovation in Q3 of this year.

In addition adjusted EBITDA was dampened by higher SmartShape marketing and advertising cost intended to drive near term bariatric volumes as well as higher occupancy cost at our Calgary and Don Mills facility. Adjusted EBITDA margin was 7.6% compared with 9.2% for Q3 last year.

As David mentioned earlier we will be investing in renovation of our False Creek facility and it will be closed for another week of fourth quarter. As a result we expect Q4 results for surgical to be in line or slightly below those for Q3.

Corporate cost for the third quarter were 2.7 million which was consistent with the same period last year, the result of initiatives undertaking to optimize our corporate infrastructure and rationalize resources that support the business divested during the third quarter. As well as cost savings from the finance department re-org in the back half of last year.

This was partially offset by advisory fees which had been waived in the third quarter of last year. On a year-to-date basis we have similarly seen solid growth in both the revenue and EBITDA in across each of our segments.

Our continuing focus on cash management initiatives contributed to our 10th consecutive quarter of positive cash flow from operations in Q3 at 1.8 million that increases to $3 million when transaction restructuring costs are excluded. The 1.8 million brings our total cash flow from operations for year-to-date to $14.9 million.

Based on meeting 2014 fourth quarter financial forecast and a 2015 operating budgets the company anticipates generating cash flow generally experienced to meet obligations as they can do. Earlier David discussed the actions we have taken to reduce our debt.

Just to reiterate following the close of the DNPI sale we applied $10 million to our revolving facility to permanently reduce its capacity from $50 million to $40 million and have temporarily reduced another 50 million as we determined the best used application of that money among some combinations of paying down the revolver or redeeming a portion of the second lean senior secured notes or preferred partnership units. Regardless of our decision we will have taken another meaningful step forward in our debt reduction plan having reduced our debt by $25 million.

I will also note that as a result of our divestitures we have reduced our working capital requirement as well as our days outstanding for receivables. You will recall days outstanding is down from 35 days at June 30th of this year to 28 days at September 30th.

We remain committed to strengthening the balance sheet, we’re executing on our plan to achieve this based on continued organic growth, deployment of remainder of the divestiture proceeds towards accretive acquisition, additional corporate cost savings and working capital improvements to generate additional EBITDA and free cash flow from operations. We will continue to evaluate better opportunities to strengthen our balance sheet and pursue such opportunities with a context of strategic rationale and prevailing market conditions.

With that I will turn the call back to David. David?

Thanks Daniel. The first nine months of 2014 has been transformational for Centric Health.

We’ve refocused our business on our core strength and our best opportunity. Our continuing operations are delivering solid financial results and each has a growth strategy based on multiple expansion opportunity within the context of fundamental growing needs in Canadian healthcare.

With the recent completion of our divestiture, we have the capital resources to generate step function growth through acquisitions of higher margin businesses with the opportunity to amplify returns on these investments via use of our shares in these transactions. And we’re making steady incremental progress in strengthening our balance sheet and reducing our overall debt level.

We recognized that it will take time, however we’re confident that with the success of our refocused business it can be achieved. In short we’re successfully executing on a strategy that we’re confident will deliver value to shareholders over both the short-term and long-term.

That concludes our prepared remarks. I will now like to open the call up to questions.

Lisa.

First question just on False Creek and maybe David if you could clarify your comments. You said Q1 but in the press release it said that False Creek will be shut down in Q4?

It could straddle, I think it’s going to straddle the alterations beginning in Q4 and we’ll carry through into probably the third week of Q1. So it’s going to straddle the end of December and going into January.

Can you quantify that in terms of what proportion of your overall surgical medical center revenue comes from False Creek? Just for expectations on the impact.

Well I don’t have that available but --

We tried for guidance -- but this we try to explain that we expect Q4 to be either similar levels as Q3 2014 or maybe slightly lower. Although offsetting as well on seasonality and hopefully we don’t have the winter that we had last year in December, so trying to guide you that way.

And just on your specialty pharmacy growth strategy, the expansion into Western Canada it seems that the co-location strategy requires less capital intensive is this focus? And how many co-location sites do you need to have in place in order to satisfy the market?

There is no right answer to that the first one in the Oval is our first stab at it and rationalities we have a family practice of seven positions they are seeing about 150 people a day two thirds of those walking out without prescription. So it makes absolute sense, it also allows us to go and look at opportunities to service long term caring retirement in which we have a lot of experience.

We will look at and evaluate opportunities as they come up whether its co-location for whether its acquisition we did indicate you that we are looking at opportunities for acquisition as well. That we are been careful and waving each one as we get there.

I think if you can look forward to more as far as the number I can’t give you that.

Yes thank you very much and good morning gentleman. My question somewhere around [capital] and focused on special requirements as pharmacy and surgical starting with pharmacy.

In the quarter you generated solid EBITA margin 13.9% and that’s like a little bit higher then what I thought that business could even achieved under best case scenario. So I am just wondering if may be you could provide maybe just a little bit of extra granularity as to what the margin drivers were in the quarter and just whether or not margins are sustainable at or above that level into future periods, not-withstanding the seasonal softness on consolidated results that we were expecting in Q3.

So that’s the first question and then on surgical the other of the coin EBITDA margin of 7.6% trending down year over year on a consolidated basis and I was just wondering perhaps if could maybe just comment on how procedural volumes and compressed utilization in general trends have been manifesting themselves in that business in prior quarters you have talked about certain levels of capacity utilization in the prior quarter. Just want to get a sense from how that might be effecting margins and a specific initiative where on a center by center basis where you think these procedural will climb in future periods?

And I’ll leave it there. Thanks.

So its pretty broad in terms of surgical medical centers the decrease in the margin is due to a couple of things one we have increased our advertising and marketing spend in the last band and gastric sleeve areas in order to grow that market. So we will see the return on that investment hopefully in future quarters.

Secondly there was the close down so that’s all contributed to the lower margin in terms of the surgery center. We are starting for example I am giving you the example of the echocardiograms, that contracts being renewed.

There are other opportunities in play right now that are not quite finalized, that I can’t talk about that will help drive volumes. However the utilization that I refer to has shown a steady increase this yet.

So there are going to be ends and flows depending on seasonality depending on your marketing spend et cetera depending on Doc certification things like that. If I go back into and I hope try to have answer the question I know you will come back if I haven’t.

And the last one is -- that I’ve mentioned full [indiscernible] Don Mill’s surgical unit on private hospital lies with the re-events and the re-open of that is creating that new operating that new operating room that you’ve seen, that allows us to expand the surgeries, particularly for groups like workers compensation, insurance companies et, cedar. We expect to see continued improvement in that facility itself.

At the Specialty Pharma, yes the margin is good, we did say to you more than a year ago we expect that the margins to get better that was because we have rolled out EMA system and keep our foot in place to drive that roll out, it was necessary. We have also said and I’ll repeat here, as we continued to grow and increase based and people require more EMA and if retirements homes will buy that, we could see that we will have to add additional South refinements to roll that out and that could slightly compressor margins at the future, that’s dependent on customer summons and as we pick up more base or gain more contract we will have to judge that at that time.

Hope that answers your question.

Yes that’s great feedback, thanks David.

Just going back on the co-location in pharmacy, I was wondering, what’s the necessary investment to establish each location and what type of revenue or profitability or return on investment do you target for those?

In terms of the co-location -- because we already have the premises, we’re already paying the rents, it’s really the CapEx, I mean the particular example that’s approximately about $150,000, that’s what it is the [fixturing] setting data, so we expect a pretty quick return, until we open we’re expecting as I said you there are 150 people walking out daily with prescription, about a 100 of them will prescriptions at the conversion rate of that. We think that we know that we will breakeven if earnings dispense about 70 prescriptions a day that will be the breakeven.

So we think we’re in a good space and we’ll see how this works out. But as I said this is growing in terms of -- it’s a co-location, what I call sweating the asset, we’ve already invested the money, that’s a small amount of space that’s sitting there and seizing the opportunity which is what we’re doing.

And then as you look to redeploy the proceeds from the divestitures. Can you talk a bit about what the M&A pipeline is looking like currently?

In terms of size and number of opportunities, multiples and what sort of segments maybe you’re targeting more specifically?

As I said I cannot really talk about specifics, we have indicated to you that we are looking for opportunities to expand our pharmacy and its all three segments it depends on the opportunities. We said that we’re going to have a very disciplined approach and making sure that all acquisitions are accretive.

So when we have information and we have a definitive agreement, we will absolutely share the details. Until then I can’t do that, I am sorry.

I just want to ask a question in regards to the scheduled retirement on your debt, some of the second lane you mentioned. I wanted to enquire about the efficiency quarter, convertible debentures of 2017, which you’re currently selling for about $0.50 on $1.

Unless there is a substantial move in the stock and the conversion -- which would probably force you to move the conversion price down substantially when the maturity occurs. Or you’ll have to come with an awful lot of money.

What is that, do you have any attention or you’re looking at perhaps retiring some of this debt when you buy it at $0.50 on $1 rather than gambling on a substantial stock increases to meet the conversion prices?

We are exploring a number of different alternatives as we mentioned in the press release. The key factors are around what is the best option for the company at this point?

What gives us the capacity? What gives us the better cost to capital or the lower cost to capital approach?

And that’s what’s being discussed right now between management and Board. The focus for 2016-2017 is, as David has mentioned in the past we believe that properly executing the strategy that we’ve laid out, bringing the platform, showing generation of profit that we can generate from these three segments, those stock price should reflect that benefit going forward.

And as we get closer to ’16-’17 we’ll see how we’re doing that and we’ll readjust the strategy going forward. But right now we’re looking at the best [indiscernible].

Thank you Lisa and thanks to everyone for taking the time to call in and listen to the presentation and also the participants, thank you for your questions. As I noted earlier the call and the slides will be archived on our Web site and we look forward to talking to you early next year.

Thanks.