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Agility Health Reports Third Quarter 2016 Financial Results

GRAND RAPIDS, MICHIGAN -- (Marketwired) -- 11/29/16 -- Agility Health, Inc. (TSX VENTURE: AHI) ("Agility Health" or the "Company"), today reports its financial results for the three and nine-month period ended September 30, 2016. All amounts are expressed in U.S. dollars (and intermittently, for convenience, in Canadian dollars at an exchange rate of 1.34 USD/CAD).

Financial and Operating Highlights for the Third Quarter and Year-to-Date

(All comparative figures are for the corresponding period of the prior year)


--  Revenue from continuing operations for the third quarter was $16.0
    million (CAD $21.4 million);
--  Revenue for the first three quarters of 2016 grew to $47.8 million
    (CAD$64.1 million) from $47.0 million (CAD$63.0 million) for the
    comparable period in 2015;
--  Earnings before interest, taxes, depreciation and amortization
    ("EBITDA") from continuing operations for the third quarter was $0.6
    million (CAD$.8 million) or 4% of revenues;
--  Gross margin from operations for the third quarter was 20%;
--  Gross margin from operations for the three quarters ending September 30,
    2016 was 21%. This anticipated 2%-point decline was due in part to the
    various startup/greenfield opportunities that were initiated in 2015;
    and
--  Net and total loss for the three quarters ending September 30, 2016
    increased to $(1.7) million or $(0.03) per share compared with a loss of
    $(1.1) million or $(0.02) per share in the prior year.

"This quarter we completed an operational and administrative expense review," stated Steve Davidson, Agility Health's CEO. "When fully implemented, the Company anticipates annualized cost reductions in excess of $1.0 million. Our greenfield developments are progressing nicely. Historically, our start-ups take 9-12 months to break even and, as such, our recent greenfield developments remain a drag on year-to-date financial performance. Overall, we are making progress on many fronts, including pursuing potential transactions to effect a redemption of units held by Alaris USA, Inc. in Agility Health, LLC, the Company's primary operating subsidiary."

Selected Financial Information



      CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                  September 30, 2016 and December 31, 2015
                         (Expressed in US Dollars)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

                                                 (Unaudited)     (Audited)
                                                  September       December
                                                     30,            31,
                                                     2016           2015
                                                ------------   ------------
ASSETS
Current assets
  Cash                                          $    948,442   $  1,306,593
  Accounts and other receivables                   7,860,683      7,206,485
  Income taxes receivable                                  -        115,808
  Prepaid expenses and other current assets        1,015,733      1,004,376
                                                ------------   ------------
    Total current assets                           9,824,858      9,663,262

Investments                                           86,025         86,025
Property and equipment                               967,316      1,187,773
Intangible assets                                 11,647,186     12,160,263
Goodwill                                           2,354,422      2,531,390
                                                ------------   ------------

  Total assets                                  $ 24,879,807   $ 25,598,713
                                                ------------   ------------
                                                ------------   ------------

LIABILITIES AND EQUITY (DEFICIT)
Current liabilities
  Accounts payable and accrued liabilities      $  9,982,937   $  8,267,626
  Line of credit                                   4,733,603      4,582,875
  Current portion of long-term debt                        -        222,222
  Current portion of other long-term
   liabilities                                       445,444        630,794
                                                ------------   ------------
    Total current liabilities                     15,161,984     13,703,517

Convertible debentures payable                     1,053,101      1,004,628
Other long-term liabilities                       21,681,500     21,832,854
                                                ------------   ------------
  Total liabilities                               37,896,585     36,540,999

Equity (deficit)
  Share capital                                    9,395,485      9,020,480
  Contributed surplus                                363,764        355,267
  Retained deficit                               (24,975,725)   (22,430,873)
                                                ------------   ------------
                                                 (15,216,476)   (13,055,126)
  Non-controlling interest                         2,199,698      2,112,840
                                                ------------   ------------
    Total equity (deficit)                       (13,016,778)   (10,942,286)
                                                ------------   ------------

      Total liabilities and equity (deficit)    $ 24,879,807   $ 25,598,713
                                                ------------   ------------
                                                ------------   ------------


        CONDENSED INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
                        AND OTHER COMPREHENSIVE LOSS
               Three months ended September 30, 2016 and 2015
                         (Expressed in US Dollars)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

                                                 (Unaudited)    (Unaudited)
                                                        2016           2015
                                                ------------   ------------

Revenue                                         $ 15,959,224   $ 15,515,195

Cost of revenues
  Salaries and benefits                           10,725,001      9,834,394
  Contract labor                                     185,038        271,960
  Facility                                         1,067,080        964,283
  Supplies                                           192,149        218,518
  Depreciation and amortization                      156,052        173,805
  Provision for bad debts                            123,448        107,669
  Other                                              353,140        333,933
                                                ------------   ------------
    Total cost of revenues                        12,801,908     11,904,562
                                                ------------   ------------

Gross margin                                       3,157,316      3,610,633

Selling, general and administrative                3,029,808      3,060,205

Other income (expense)
  Interest expense                                  (923,104)    (1,174,089)
  Interest income                                        298              -
  Foreign currency translation gain (loss)               (23)        (1,092)
  Fair value adjustment on warrants and
   obligations                                         5,093        430,202
                                                ------------   ------------
                                                    (917,736)      (744,979)
                                                ------------   ------------

Loss from continuing operations before income
 taxes                                              (790,228)      (194,551)

Provision for income taxes
  Current                                                  -              -
  Deferred                                                 -              -
                                                ------------   ------------
                                                           -              -
                                                ------------   ------------
Net and total comprehensive loss from
 continuing operations                              (790,228)      (194,551)

Discontinued Operations
Net and total comprehensive loss from
 discontinued operations                             (78,600)       (18,052)
                                                ------------   ------------

Net and total comprehensive loss                $   (868,828)  $   (212,603)
                                                ------------   ------------
                                                ------------   ------------

Net and total comprehensive income (loss)
 attributable to:
  Shareholders                                  $ (1,147,083)  $   (485,239)
  Non-controlling interest                           278,255        272,636
                                                ------------   ------------
                                                $   (868,828)  $   (212,603)
                                                ------------   ------------
                                                ------------   ------------
Earnings per share
  Basic, loss per share                                (0.01)         (0.01)
  Diluted, loss per share                              (0.01)         (0.01)


        CONDENSED INTERIM CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
                        AND OTHER COMPREHENSIVE LOSS
               Nine months ended September 30, 2016 and 2015
                         (Expressed in US Dollars)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

                                                 (Unaudited)    (Unaudited)
                                                        2016           2015
                                                ------------   ------------

Revenue                                         $ 47,760,101   $ 47,067,546

Cost of revenues
  Salaries and benefits                           31,298,592     29,999,402
  Contract labor                                     689,816        822,618
  Facility                                         3,133,469      2,910,126
  Supplies                                           608,522        602,266
  Depreciation and amortization                      489,038        526,074
  Provision for bad debts                            521,970        360,340
  Other                                            1,048,655        957,980
                                                ------------   ------------
    Total cost of revenues                        37,790,062     36,178,806
                                                ------------   ------------

Gross margin                                       9,970,039     10,888,740

Selling, general and administrative                8,826,692      8,749,526

Other income (expense)
  Interest expense                                (3,068,170)    (3,612,872)
  Interest income                                     14,191             14
  Foreign currency translation gain (loss)                94            (96)
  Fair value adjustment on warrants and
   obligations                                       332,975        565,294
                                                ------------   ------------
                                                  (2,720,910)    (3,047,660)
                                                ------------   ------------

Loss from continuing operations before income
 taxes                                            (1,577,563)      (908,446)

Provision for income taxes
  Current                                                  -              -
  Deferred                                                 -              -
                                                ------------   ------------
                                                           -              -
                                                ------------   ------------
Net and total comprehensive loss from
 continuing operations                            (1,577,563)      (908,446)

Discontinued Operations
Net and total comprehensive loss from
 discontinued operations                            (110,431)      (162,260)
                                                ------------   ------------

Net and total comprehensive loss                $ (1,687,994)  $ (1,070,706)
                                                ------------   ------------
                                                ------------   ------------

Net and total comprehensive income (loss)
 attributable to:
  Shareholders                                  $ (2,544,852)  $ (1,974,287)
  Non-controlling interest                           856,858        903,581
                                                ------------   ------------

                                                $ (1,687,994)  $ (1,070,706)
                                                ------------   ------------
                                                ------------   ------------
Earnings per share
  Basic, loss per share                                (0.03)         (0.02)
  Diluted, loss per share                              (0.03)         (0.02)

Gemino Healthcare Finance, LLC

At September 30, 2016, the Company was not in compliance with the fixed charge coverage ratio covenant in the Gemino Credit Agreement ("Credit Agreement"), which constitutes an event of default thereunder. Nevertheless, Gemino has agreed to extend the maturity date of the line of credit to January 31, 2017, although such extension does not constitute a waiver by Gemino of the event of default or its rights and remedies.

About Agility Health

Through its subsidiary and principal operating entity, Agility Health, LLC, Agility Health operates a multi-state network of outpatient rehabilitation clinics and provides contracted services to hospitals, nursing homes and other institutional clients, providing care and treatment for orthopedic-related disorders, sports-related injuries, preventative care, rehabilitation of injured workers, and a variety of other injuries and conditions. In addition, Agility Health provides a number of ancillary services related to physical rehabilitation, including practice management software systems and custom orthotics. As of September 30, 2016, Agility Health operates 88 outpatient or onsite rehabilitation locations in 16 states.

Agility Health's contract therapy services business provides rehabilitative services to 39 hospitals and inpatient rehabilitation units, 27 nursing homes, long-term care facilities and other service locations in 8 states. For more information, please visit investors.agilityhealth.com.

Non-IFRS Financial Measures

Agility Health's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The Company also uses certain non-IFRS measures, such as EBITDA to measure its financial performance. EBITDA is defined by the Company as the addition of net loss, depreciation and amortization and financial expenses. The Company uses EBITDA for the purpose of evaluating its historical and prospective financial and operational performance. Management believes that EBITDA is a useful measure for evaluating the performance of the Company. EBITDA is not a performance measure recognized under IFRS, therefore it does not have any standardized meaning prescribed by IFRS and may not be comparable to similarly titled financial metrics reported by other companies.

Forward-Looking Information

This press release contains forward-looking statements regarding Agility Health and its business. Such statements are based on the current expectations and views of future events of Agility Health's management. In some cases, the forward-looking statements can be identified by words or phrases such as "anticipate", "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements. The forward-looking events and circumstances discussed in this release, including the anticipated future growth of Agility Health, may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting the company. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumption and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Agility Health undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future events, or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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