Toronto Stock Exchange Symbol: CLC.UN
MISSISSAUGA, ON, Oct. 7 /CNW/ - CML HealthCare Income Fund (the "Fund" or "CML HealthCare"), (TSX: CLC.UN) today announced that its operating subsidiary, CML HealthCare Inc. ("CML") has entered into definitive agreements to acquire two medical imaging operations comprising six centers located in the Northeast United States. These medical imaging operations include: i) The Imaging Institute ("TII") in Providence, Rhode Island; and ii) The Quarry Lake Imaging Centre ("Quarry Lake") in Baltimore, Maryland. The Quarry Lake acquisition closed on July 31, 2009, and TII is expected to close in the fourth quarter of 2009. The acquisitions are expected to be immediately accretive to the Fund's distributable cash(1) on a per unit basis.
In addition to these acquisitions, CML has entered into a joint venture agreement with Upper Chesapeake Health System ("UCHS") to operate a multi-modality medical imaging center in Bel Air, Maryland. This new facility was opened on August 8, 2009.
"We are pleased to execute on our stated strategy of growing our U.S. medical imaging business through 'tuck-in' acquisitions in the U.S. Northeast region," said Paul Bristow, President and CEO of CML HealthCare. "The Rhode Island acquisition is significant as it provides us with an entry into outpatient imaging in New England with a solid platform for future growth in that region. We are excited to work with TII's team of professionals led by Dr. Daniel DiPrete, former President of the Rhode Island Radiology Society and the former Chief of Diagnostic Imaging at South County Hospital in Rhode Island, as they are recognized leaders in the region and share our vision of providing quality patient care and sound, ongoing physician relationships."
"While the Quarry Lake acquisition and the UCHS joint venture are smaller in scope, they are both important transactions in our key Maryland network," continued Mr. Bristow. "The UCHS joint venture will provide CML with its first multi-modality outpatient imaging center in Harford County, Maryland, and it will enhance our ability to offer a comprehensive network to all payors. The Quarry Lake acquisition will add needed MRI and CT capacity in the Baltimore, Maryland area and will increase our overall market share and competitive position. We welcome the staff from these two new centers, and look forward to working with them to deliver quality patient care in each of their respective communities."
The Imaging Institute and Quarry Lake Acquisition Details
Revenues(2) for the twelve months ended August 31, 2009 (unaudited) of TII
(Rhode Island) and Quarry Lake (Maryland), as well as the aggregate
consideration paid, are included in the following summary:
Number of Clinics Six
Modalities MRI, CT, Digital Mammography, Ultrasound,
X-ray, Bone Densitometry (DEXA)
Revenues(2) (unaudited): US$14.3 million
Consideration: US$12.3 million, including cash and
assumption of capital leases, excluding
EBITDA(3) margins (unaudited) of the combined businesses for the same period are in excess of 20%.
The Imaging Institute
TII consists of five fully digital medical imaging centers in the Providence region of Rhode Island with an integrated RIS/PACS system for remote reading and consultation by physicians. The staff radiologists, including Dr. Daniel DiPrete, have entered into a multi-year management services agreement with CML. TII is one of the largest providers of outpatient diagnostic services in the Rhode Island market place.
Quarry Lake is a 5,000 square foot dual-modality imaging center located within an eight mile radius of three American Radiology Services, Inc. ("ARS") centers. The center is strategically located to take advantage of increased MRI and CT demand at ARS' existing locations.
UCHS Joint Venture
UCHS, established in 1984, is a not-for-profit health organization and the exclusive acute care provider in Harford County, Maryland and includes two hospitals: Upper Chesapeake Medical Center ("UCMC") in Bel Air and Harford Memorial Hospital in Havre de Grace. The new medical imaging center, Upper Chesapeake Health Imaging Center/American Radiology Services, developed as a joint venture with UCHS, is a 10,000 square foot, multi-modality center (including MRI, CT, Digital Mammography, Ultrasound, X-ray, DEXA) that will provide patients with a convenient, off-campus, out-patient facility within one mile of UCMC. The service offering to patients and referring physicians should be seamless as ARS holds the hospital radiology contract at Harford Memorial Hospital and each of ARS and UCHS hold a 50% interest in the new joint venture entity.
(1) Distributable Cash of the Fund is not a Canadian generally accepted
accounting principle ("GAAP") measure, and though it is generally
used by Canadian open-ended trusts as an indicator of financial
performance, it should not be seen as a measure of liquidity or a
substitute for comparable metrics prepared in accordance with GAAP.
One characteristic of certain non-GAAP measures such as Distributable
Cash is the inclusion of management's adjustments for entity-specific
issues not contemplated in a standard measurement, such as
Standardized Distributable Cash that focuses on comparability across
entities and consistency over time. Therefore, the Fund's
Distributable Cash may differ from similar calculations as reported
by other similar entities and, accordingly, may not be comparable to
Distributable Cash as reported by such entities. The Fund's objective
for disclosing the Distributable Cash calculation is to outline the
net cash flow generated by the Fund that was available for
distribution during the period and anticipated to be sustainable into
the next period. The Fund uses Distributable Cash to evaluate, on a
consistent basis, sustainable cash generated from its operations, and
to evaluate cash available for distributions.
(2) Revenues are net of professional services costs in the case of TII.
(3) The Fund defines EBITDA as earnings before interest, taxes,
depreciation, amortization, other expenses, non-controlling interest,
gain/loss on disposals of property and equipment, foreign exchange
gain and transaction costs on debt financing. EBITDA margins are
calculated by dividing EBITDA by revenues. EBITDA is not a recognized
measure under Canadian GAAP. Management believes that, in addition to
net earnings, EBITDA is a useful supplemental measure, as it provides
investors with an indication of the Fund's performance. EBITDA is
used by the Fund to analyze performance and compare profitability
between periods. Investors should be cautioned, however, that EBITDA
should not be construed as an alternative to net earnings determined
in accordance with GAAP. The Fund's method of calculating EBITDA may
differ from other companies or income trusts and, accordingly, EBITDA
may not be comparable to measures used by other companies or income
About CML HealthCare Income Fund
CML HealthCare Income Fund is an unincorporated open-ended trust that owns CML HealthCare Inc., one of Canada's largest healthcare services businesses. Based in Mississauga, Ontario, CML HealthCare Inc. is a leading provider of laboratory testing services in Ontario and the largest private provider of medical imaging services in Canada. The Fund also owns American Radiology Services, Inc., a leading provider of fully-integrated diagnostic medical imaging services based in Baltimore, Maryland. CML HealthCare Income Fund is publicly traded on the Toronto Stock Exchange under the symbol "CLC.UN" and has approximately 89.8 million units outstanding. To reach CML HealthCare Income Fund via the worldwide web log on to www.cmlhealthcare.com.
Caution concerning forward-looking statements
Statements made in this news release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. Some forward-looking statements may be identified by words like "may", "will", "anticipate", "estimate", "expect", "intend", or "continue" or the negative thereof or similar variations. Readers are cautioned not to place undue reliance on such statements, as actual results may differ materially from those expressed or implied in such statements. Factors that could cause results to vary include, but are not limited to: dependence on government-based revenues; pending and proposed legislative or regulatory developments including the impact of changes in laws, regulations and the enforcement thereof; intensifying competition from established competitors and new entrants in the businesses in which we operate; technological change; interest rate fluctuations and general economic conditions; insurance coverage of sufficient scope to satisfy any liability claims; fluctuations in operating results; dependence on our ability to renegotiate the MOH contract on favourable terms; dependence on our operating subsidiary to pay its interest obligations; fluctuations in cash distributions and capital investment; management of credit, market, liquidity and funding and operational risks; judicial judgments and legal proceedings; our ability to complete strategic acquisitions and to integrate our acquisitions successfully; changes in accounting policies and methods we use to report our financial condition, including uncertainties associated with critical accounting assumptions and estimates; operational and infrastructure risks including possible equipment failure and performance of information technology systems; fluctuations in total patient referrals; loss of services of key senior management personnel; other factors that may affect future growth and results including, timely development and introduction of new products and services; changes in our estimates relating to reserves and allowances; future sales of units; changes in tax laws; technological changes and obsolescence, natural disasters, the possible impact on our businesses from public health emergencies, international conflicts and other developments including those relating to terrorism; the effect of anyone or more of such events and risks on our stability ratings and any changes thereto; and our success in anticipating and managing the foregoing risks. Additional factors related to the acquisition of American Radiology Services, Inc. ("ARS") include, but are not limited to, the Fund's ability to successfully integrate the operations of ARS, additional liabilities or costs attributable to the acquisition of ARS, unknown liabilities of ARS, the ability to retain senior management of ARS, the ability to complete accretive acquisitions in the U.S., the continuation and nature of the relationship with The Johns Hopkins University and The Johns Hopkins Health System Corporation (collectively "Johns Hopkins") and changes in U.S. federal and state healthcare laws and regulations, including with respect to Medicare and Medicaid reimbursements levels.
We caution that the foregoing list of factors is not exhaustive and that when reviewing our forward-looking statements investors and others should refer to the "Risk Factors" section of the Fund's Annual Information Form, the "Risks and Uncertainties" and other sections of our Management's Discussion and Analysis of Operating Results and Financial Position and our other periodic filings with Canadian securities regulatory authorities. All forward-looking statements presented herein should be considered in conjunction with such filings. Except as required by Canadian securities law, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made.
SOURCE CML HEALTHCARE INC. (FORMERLY CML HEALTHCARE INCOME FUND)
For further information: For further information: Bruce Wigle or Alice Dunning, Investor Relations, The Equicom Group Inc., (416) 815-0700 ext 228 or ext 255, (416) 815-0080 fax, Email: firstname.lastname@example.org or email@example.com; Tom Weber, Chief Financial Officer, CML HealthCare Income Fund, (905) 565-0043, (905) 565-1776 fax, Internet: www.cmlhealthcare.com