Investor Presentation

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Roxanne Barrett
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1 Investor Presentation June 2017

2 Forward Looking Statements 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 forwardlooking information whether as a result of new information, future events or otherwise. All dollar figures are in Canadian dollars unless otherwise stated. 2

3 Capital Markets Profile (as at May 31, 2017) Stock Symbol TSX: CHH Price $ Week Low / High $0.19/$0.91 Market Capitalization Shares Outstanding 1 Basic Diluted 2 Major Shareholders Global Healthcare Investments & Solutions 41% Management & Board 3% $147.0M ~204.2M ~214.2M Total 44% 3 1. As at May 9, Includes 2.6M options, 2.9M warrants and 4.5M restricted share units.

4 Board of Directors Dr. Jack Shevel Chairman >20 years corporate leadership Founded Netcare, international private healthcare provider Yazdi Bharucha Chartered Accountant Former CFO, CAP REIT Chairman of Audit Committee David Cutler CEO Centric Health Former CEO Leisureworld Senior Care Corporation Kevin Dalton >20 years capital markets and investment banking Chairman MOOD Media Former Vice-Chairman Desjardins Securities Ingrid Davis >20 years executive leadership COO of Global Healthcare Investments & Solutions Rik Ganderton >40 years healthcare leadership Former President and CEO Rouge Valley Health System Dr. Robert M. Hollinshead Clinical Professor, University of Calgary Past President, Alberta Medical Association Darren Youngleson CFO of Global Healthcare Investments & Solutions Formerly with Netcare 4

5 Centric Health Value Proposition Uniquely positioned to complement the Canadian healthcare system during a period of unprecedented challenges. Increasing consumption/utilization driving higher costs Aging population Increasing wait lists/constrained access Demand for better outcomes Large, national networks with significant capacity and operating leverage Reputation for trusted care based on overriding commitment to quality Extensive, trusted relationships with payers and providers Proven intellectual capital + systems = expert solutions and highest level of clinical outcomes Focus on innovation and technology Increasingly favourable payer, provider and patient attitudes toward independently provided healthcare 5

Low maintenance capex Low working capital requirements

6 Focused on Two High Growth Opportunities Specialty Pharmacy Strong margins Strong cash flows Surgical & Medical Centres Low maintenance capex Low working capital requirements Operating leverage generates high margin on incremental volumes 6

7 Segment Breakdown (12 months ended March 31, 2017) Revenue 75% 25% 127.7M 42.5M Total 170.2M Adjusted EBITDA 79% 21% 18.8M 5.0M EBITDA Margin: 15% EBITDA Margin: 12% Total 17.2M Corporate costs: ($6.6M) EBITDA Margin after corporate costs: 10% 7 Specialty Pharmacy Surgical and Medical Centres

8 Compelling Canadian Healthcare Trends 8

9 Cost of an Aging Population Canadian Healthcare Consumption by Age Group 1 (per capita) > $11,488 $8,379 $6,424 $2,663 $21,150 For those >85, more than one-third of their lifetime expenditures will accrue in their remaining years. 2 By 2046, spending on continuing care for seniors will increase by >6x 3 to $184B 9 1. Source: National Health Expenditure Trends, 1975 to 2016; Canadian Institute for Health Information. 2. Source: National Center for Biotechnology Information. 3. From $29.3B in Source: Conference Board of Canada

10 Demand for Better Outcomes: Canada s Rankings Commonwealth Fund Healthcare spend (% of GDP) 5 th out of 11 Healthcare system 10 th out of 11 ONLY38% of Canadians feel healthcare system works well 51% think it needs fundamental change 10% believe it needs a complete rebuild World Health Organization 30 th out of 190 countries Canadians are demanding better outcomes and better access 10 Sources: The Commonwealth Fund; WHO s Ranking of the World s Health Systems

11 Our Unsustainable System % of Canadians >65 12% 16% 25% Amt. of every tax dollar $0.16 $0.50? spent on healthcare 11 (billions) $250 $200 $150 $100 $50 $ Source: Canadian Institute for Health Information Healthcare Spending $228B 11% of GDP # of Seniors >65 12M (millions) Governments require innovative, cost-effective solutions to address spiraling costs and growing volumes

Complementing the Public Healthcare System Government - Reduced wait times - Quality care Healthcare Professionals - Content/focused/ productive workforce - Entrepreneurial thinking - Innovation -

12 Complementing the Public Healthcare System Government - Reduced wait times - Quality care Healthcare Professionals - Content/focused/ productive workforce - Entrepreneurial thinking - Innovation - Efficiency - Investment Employers - Lower benefits costs - Stable workforce - Lower absenteeism Patients - Quality care - Better access - Peace of mind Insurers - Lower costs - Better access - Quicker patient returns to work Adding value throughout the system 12

13 Specialty Pharmacy

14 Seniors Pharmacy Challenge 4-12 medications/patient 3 administrations/patient/day 30 patients/nurse patients per home up to 12% of seniors hospital admissions due to adverse drug reactions Hospital admissions for seniors are 3x higher than for those aged 65 and under Requires proximity, efficiency and accuracy 14 Sources: Statistics Canada; Canadian Institute for Health Information.

Pharmacy & Pharmacovigilance) Integrated Model with

15 Specialty Pharmacy for Seniors Residences Automated High-Volume Drug Dispensing Medication Management (Clinical Pharmacy & Pharmacovigilance) Integrated Model with Capability and Expertise in Each Component of Care Essential for Success 15

16 The Evolution of Seniors Pharmacy Yesterday Revenue primarily from dispensing drugs Focus on inputs not outcomes Made recommendations, followed orders from others Lack of evidence of value Today & Tomorrow Government patient-centric approach Focus on outcomes Outcome based remuneration Scale required to generate meaningful outcome data Increasing revenue from clinical services Manage drug therapy (comprehensive care plans, medication reviews, monitoring, reporting, intervention) Expanding scope of practice for pharmacists Increasing importance of technology Requires capital investment Increasing importance of scale and efficiency Automation requires capital investment Increasingly national seniors communities require national pharmacy providers Increasing importance of infusion and specialty drug capability

17 One of the Largest Providers in Canada Doublecheck # s 20 fulfilment centres Vancouver Nanaimo Victoria Kelowna Richmond Calgary Edmonton (3) Lethbridge Medicine Hat Grande Prairie (2) Lacombe # of beds serviced Regina 17,039 19,048 20,377 Newmarket 25,184 Burlington (2) London Ottawa 29,054 >425 long-term care and retirement homes >29,000 beds >1,000,000 prescriptions monthly

18 Growth Strategy - Multiple Opportunities 1. Maximize utilization of existing infrastructure through new RFP wins: Regionally to local seniors communities New opportunities as a national provider 2. Tuck-in acquisitions to expand network and geographic coverage 3. Expand clinical capabilities to strengthen value proposition and drive new, higher margin revenue streams 4. Increase penetration at retirement homes 5. Add ancillary services 6. Reduce cost structure and benefit from economies of scale Organic and acquisitive growth plus margin expansion 18

19 Our Value Proposition: Why We Win RFPs A True Partnership Approach National network with broad coverage Patient first model (aligned with government) Leading edge, award-winning clinical pharmacy team Extensive, industry-leading reporting and pharmacovigilance capabilities Comprehensive dispensing, including specialty drugs, infusion and compounding Full technological support and expertise Education advantage Additional value-added services Experienced implementation and change management experts Exemplary customer service Proven quality, safety and customer/patient/family experience 19

20 Strategic Alliance with New Drug Supplier 10-Year Agreements Up to $17M from partner Supply Agreement Partner will become primary supplier of drugs and other medical products and related support services Business Development Agreement To support organic and acquisitive growth strategy Technology Agreement To be designated for implementation of technology solutions Jointly explore development of solutions focused on exceptional patient care while reducing costs/enhancing efficiency 20

21 Other Opportunities: Seniors at Home 400,000 seniors in long-term care and retirement home beds 4 million seniors living at home Capabilities and infrastructure to address the much larger seniors-at-home market 21

22 Surgical & Medical Centres

23 The Cost of Wait Times 20.0 weeks 9.3 weeks ,505 $1, Specialist to treatment GP to specialist Canadians waiting 2 cost per person 1 $1.2B estimated cost of waiting for care in Canada ($3.5B valuing all non-sleep hours in the week) 1 Current wait times are the longest on record 2 Source: Fraser Institute April ; November

orthopaedic, ENT & sinus, cosmetic) Owns Canada's first Centre of Excellence in metabolic and bariatric surgery Diagnostics

24 Surgical and Medical Centres Serves a diversified customer base: private paid non-insured surgeries and diagnostics government outsourced insured surgeries third-party payors (e.g. Workers Comp) Broad range of surgical procedures (general, orthopaedic, ENT & sinus, cosmetic) Owns Canada's first Centre of Excellence in metabolic and bariatric surgery Diagnostics (MRI, CT, full body scan) Family practice, women s health, executive health Primary and mid-care services drive surgical volumes 24

25 Significant Growth Opportunity Growing demand for independently delivered procedures and diagnostics Limited operating room availability and constrained budgets of public hospitals, resulting in: long wait times delisting of procedures from government coverage Increased outsourcing to independent providers by government to address backlogs and reduce costs Improved technology and anesthesia increasing same-day surgical procedures Patients and payers demand expert solutions and trusted care Well positioned as Canada s only national independent surgical network 25

26 National Network with Significant Operating Leverage 5 facilities 25 operating rooms 8 procedure rooms 72 beds 245 physicians Toronto facility has one of only three private hospital licenses in Ontario 26

27 Growth Strategy Drive Utilization 42% 44% 38% 33% 24% 20% Utilization Rate Grow third-party payer services (insurers, benefits providers, employers) Relationships with physicians & health authorities Accreditations & facilities quality to support preferred provider status Expanded diagnostics offerings Increase outsourcing from governments Coordinate interprovincial & foreign procedures Grow volume of uninsured services Marketing & promotions, including expanded online marketing Add new technologies Develop Centres of Excellence (Bariatrics) Target 50% capacity utilization in medium-term 27

28 Financial Review

29 Favorable Financial Profile High revenue visibility resulting from long-term contracts in specialty pharmacy Strong cash flows Strong creditworthy payers Regular frequency of collections Specialty pharmacy: billed twice monthly Low maintenance cap ex All premises leased ~2-3% of revenue annually Low bad debt: less than 0.1% Strong creditworthy payers Private pay: upfront with credit cards Efficient Shared Services Model 29

30 Continued Strong Results Revenue (in Millions, C$) Adj. EBITDA % 2 2 Margin: (in Millions, C$) 7.1% 10.0% 55% Q Q Q Q consecutive quarters of growth in revenue and adj. EBITDA From continuing operations. 2. Normalized for the reclassification of $1.5M of revenue as cost of sales in Q1/17

31 Specialty Pharmacy Revenue (in Millions, C$) Adj. EBITDA (in Millions, C$) Margin: 10.8% 14.2% Q Q Q Q Target Adj. EBITDA margin in the mid-teens for the medium term Normalized for the reclassification of $1.5M of revenue as cost of sales in Q1/17.

32 Surgical and Medical Centres Revenue (in Millions, C$) Margin: Adj. EBITDA (in Millions, C$) 11.9% 11.0% Q Q Q Q Target Adj. EBITDA margin in the low- to mid-teens for the medium term 32

33 Cash Flow from Operations 1.1 Third consecutive quarter of positive cash flow Reflects completion of business realignment strategy -7.2 Q Q Expect to continue to generate positive CFO going forward 33

34 Continued De-Leveraging/ Balance Sheet Optimization December 2016 Redemption of the entire 10.8M of the 6% December 2016 convertible notes March 2017 Conversion of $9.1M of the July 2017 unsecured convertible notes March 2017 Conversion of $5.0M of the April 2018 unsecured convertible loan $233.5M in debt reduction since beginning of 2016 Reduced annual interest expense by $20.5M 34

35 New Debt Facility $113.5M Facility includes: $100M secured senior facility $13.5M subordinated term credit facility Option to increase the senior facility by additional $25M Cost of debt reduced from $26.4M to <$4.5M Financial flexibility to continue to grow 35

36 Conclusion

37 Investment Proposition Significantly reduced leverage & strengthened balance sheet Compelling Canadian healthcare industry fundamentals create unique macro opportunity Strong margins, strong cash flows, low maintenance capex and working capital needs Leading market positions and national networks with significant operating leverage Strong organic growth potential plus accretive acquisition opportunities Deeply experienced, well aligned management team and strong partnerships with healthcare providers 37

38 Investor Presentation May

INVESTOR DAY Annual Meeting of Shareholders

INVESTOR DAY Annual Meeting of Shareholders INVESTOR DAY 2014 Annual Meeting of Shareholders May 10, 2017 Dr. Jack Shevel Chairman INVESTOR DAY 2014 Annual Meeting of Shareholders May 10, 2017 David Cutler President & Chief Executive Officer Forward