CML HealthCare Income Fund Reports 2009 Year-End Financial Results

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

Toronto Stock Exchange Symbol: CLC.UN

MISSISSAUGA, ON, March 4 /CNW/ - CML HealthCare Income Fund (the "Fund" or "CML HealthCare"), (TSX: CLC.UN) today reported its financial results for the three and twelve-month periods ended December 31, 2009 (all amounts are in Canadian dollars, unless noted otherwise).

    
    Highlights:
    -----------

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                                                   Three-    Three-
                    Twelve-   Twelve-             months    months
                    months    months               ended     ended
    (C$ million      ended     ended            December  December
     except       December  December            31, 2009  31, 2008  % Change
     percent      31, 2009  31, 2008  % Change      ("Q4      ("Q4     in Q4
     amounts)     ("F2009") ("F2008") in F2009     2009")    2008")     2009
    -------------------------------------------------------------------------
    Revenue          518.5     462.5     12.1%     128.0     133.4     (4.1%)
    -------------------------------------------------------------------------
    Operating,
     general, &
     administration
     expenses        378.4     324.3     16.7%      93.8      95.7     (2.0%)
    -------------------------------------------------------------------------
    EBITDA(1)        140.1     138.2      1.4%      34.2      37.8     (9.4%)
    -------------------------------------------------------------------------
    EBITDA(1)
     Margin          27.0%     29.9%     (9.7%)    26.7%     28.3%     (5.7%)
    -------------------------------------------------------------------------
    Goodwill
     impairment       50.0         -        na      50.0         -        na
    -------------------------------------------------------------------------
    Net Earnings/
     (Loss)           55.5     101.5    (45.3%)    (17.6)     26.9   (165.2%)
    -------------------------------------------------------------------------
    Adjusted Net
     Earnings(2)     105.5     101.5      3.9%      32.4      26.9     20.4%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Cash provided
     by operating
     activities      131.7     116.4     13.1%      32.6      29.7      9.8%
    -------------------------------------------------------------------------
    Distributable
     cash(3)         106.4     109.8     (3.2%)     25.4      24.8      2.3%
    -------------------------------------------------------------------------
    Distributions
     declared         96.0      94.4      1.7%      24.0      24.0      0.0%
    -------------------------------------------------------------------------
    Payout ratio     90.2%     85.9%      5.0%     94.4%     96.6%     (2.3%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

"We achieved revenue and EBITDA(1) growth of 12.1% and 1.4% respectively in fiscal 2009 compared to the prior year, while maintaining a payout ratio of approximately 90%. Fourth quarter 2009 results included revenue and EBITDA(1) declines of 4.1% and 9.4% respectively. The decline experienced in Q4 2009 was due primarily to foreign exchange and lower volumes on high-tech modalities at our U.S. medical imaging clinics" said Paul Bristow, President and CEO of CML HealthCare Income Fund. "To strengthen the focus in our U.S. operations, on February 24, 2010 we announced the appointment of Kent Wentzell as Senior Vice President of U.S. imaging operations" continued Mr. Bristow. "Over the coming months, I will be taking a leadership role and a more hands-on approach in the U.S. including working closely with Kent to identify additional opportunities in our U.S operations."

"We are committed to our U.S. medical imaging business as a platform for future growth. Our Canadian operations continue to perform well, and we have made good progress on the clinic refurbishment project with approximately 40 clinics now completed or under construction, a number of which are combined clinics offering both laboratory and medical imaging services. The implementation of the RIS/PACS digitization of our Canadian medical imaging services is underway, and we expect to realize both efficiencies and revenue growth once completed," continued Mr. Bristow. "We will continue to explore accretive acquisition opportunities of medical diagnostic assets in both Canada and in the U.S. With our strong balance sheet, cash and cash equivalent of $21.8 million as at December 31, 2009, $69.4 million available under our revolving credit facility, and solid cash flow from operations; we have the liquidity and capital resources to maintain operations, fulfill our capital commitments, and invest in growth opportunities."

"In the fourth quarter of each year, in accordance with GAAP, the Fund must re-evaluate the assumptions used to value its goodwill and intangible assets annually or earlier if there are indicators of impairment of assets," noted Tom Weber, Chief Financial Officer of the Fund. "In light of the evolving U.S. healthcare environment and the forecast for lower volume growth and Medicare reimbursement reductions, the Fund has determined the fair value for goodwill at ARS was lower than its carrying amount. As a result, as at December 31, 2009, the Fund reported a goodwill impairment charge of $50.0 million."

    
    Financial Results
    -----------------
    

Twelve Months Ended December 31

For the twelve months ended December 31, 2009 ("F2009"), revenue for the Fund increased 12.1% to $518.5 million from $462.5 million for the same period in 2008. Increased revenue in F2009 is largely attributable to:

    
    -   $26.0 million from full-year contribution from ARS compared to ten
        months in F2008 as ARS was acquired on February 29, 2008;
    -   $1.3 million in revenue from the acquisition of six medical imaging
        clinics (in Rhode Island and Maryland) as well as the opening of a
        new joint venture clinic in Maryland in F2009;
    -   Increased reimbursements in the U.S. resulting from the conversion to
        digital mammography;
    -   $5.1 million from changes in foreign exchange rates impacting revenue
        from ARS;
    -   $8.6 million in revenue from full-year contribution from medical
        imaging clinics acquired in Canada throughout 2008;
    -   $4.7 million increase in total cap revenue based on the Ministry of
        Health ("MOH") funding agreement for laboratory services;
    -   $3.2 million in one-time technical and professional fee payments from
        the MOH and retroactive payments for imaging test fee increases in
        British Columbia related to F2006, F2007, and F2008; and
    -   Organic growth in non-cap revenue
    

Operating, general and administrative ("OG&A") expenses totaled $378.4 million in F2009 compared to $324.3 million in F2008. Higher OG&A expenses in F2009 compared to the prior year reflect:

    
    -   $23.5 million increase in expenses related to full-year operations of
        ARS compared to ten months in F2008;
    -   $4.7 million in additional expenses from ARS due to changes in
        foreign exchange rates;
    -   $6.5 million from full-year operations of medical imaging
        acquisitions in Canada completed in F2008;
    -   $2.5 million relating to systems implementations to support the
        Fund's growth plans; and
    -   Investments made in corporate infrastructure and additional
        laboratory service costs to support utilization increases in excess
        of MOH cap funding
    

F2009 EBITDA(1) totaled $140.1 million compared to $138.2 million in F2008. EBITDA(1) margin in F2009 of 27.0% was lower than F2008 of 29.9% in F2008 largely as a result of a higher proportion of consolidated revenue being derived from medical imaging services acquired in Canada and the U.S. over the past two years.

The Fund's net earnings for F2009 of $55.5 million or $0.62 per Fund unit were 45.3% lower than $101.5 million in F2008. The reason for the decline is a goodwill impairment loss of $50.0 million in Q4 2009 as previously noted. Excluding the goodwill impairment loss, F2009 Adjusted Net Earnings(2) were $105.5 million.

    
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                                  Twelve-     Twelve-      Three-      Three-
    Financial Summary             months      months      months      months
    (C$ millions, except           ended       ended       ended       ended
     percent amounts)           December    December    December    December
    (unaudited)                 31, 2009    31, 2008    31, 2009    31, 2008
    -------------------------------------------------------------------------
    Net earnings (loss) for
     the period                     55.5       101.5       (17.6)       26.9
    -------------------------------------------------------------------------
    Less: recovery of income
     taxes                         (13.6)       (2.7)      (10.1)       (1.5)
    -------------------------------------------------------------------------
    Add: interest expense           13.6        14.7         3.2         4.1
    -------------------------------------------------------------------------
    Less: Loss (gain) on sale
     of property & equipment         0.3        (0.6)        0.1         1.4
    -------------------------------------------------------------------------
    Add: Transaction cost on
     debt financing                    -         3.5           -           -
    -------------------------------------------------------------------------
    Add: Other expenses              0.9         1.3         0.5         0.2
    -------------------------------------------------------------------------
    Less: Foreign exchange gain     (0.2)       (2.0)          -        (2.0)
    -------------------------------------------------------------------------
    Add: Goodwill impairment        50.0           -        50.0           -
    -------------------------------------------------------------------------
    Add: Amortization               33.7        22.5         8.1         8.6
    -------------------------------------------------------------------------
    EBITDA(1)                      140.1       138.2        34.2        37.8
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Revenue                        518.5       462.5       128.0       133.4
    -------------------------------------------------------------------------
    EBITDA(1) margin as a
     percent of revenue            27.0%       29.9%       26.7%       28.3%
    -------------------------------------------------------------------------
    

Three Months Ended December 31

For the three months ended December 31, 2009 ("Q4 2009"), revenue for the Fund totaled $128.0 million, and EBITDA(1) totaled $34.2 million, or 26.7% of revenue; compared to revenue of $133.4 million and EBITDA(1) of $37.8 million, or 28.3% of revenue for the three months ended December 31, 2008 ("Q4 2008"). The decrease in revenue was primarily attributable to foreign exchange on U.S. revenues as well as lower medical imaging volumes at CML's U.S. subsidiary in Q4 2009 compared to the same quarter in 2008. With the goodwill impairment loss of $50.0 million in Q4 2009, the Fund reported net loss of $17.6 million or $0.20 per Fund unit compared to net earnings of $26.9 million or $0.30 per Fund unit in Q4 2008. Excluding the goodwill impairment loss, Q4 2009 net earnings would have totaled $32.4 million.

    
    Distributable Cash(3)
    ---------------------
    

For the year ended December 31, 2009, the Fund generated distributable cash(3) of $106.4 million and declared distributions totaling $96.0 million, representing a payout ratio(3) of 90.2%. For the year ended December 31, 2008, the Fund generated distributable cash(3) of $109.8 million and declared distributions totaling $94.4 million, representing a payout ratio of 85.9%. Please refer to Standardized Distributable Cash(3) and Distributable Cash(3) table below.

    
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                                  Twelve-     Twelve-      Three-      Three
                                  months      months      months      months
    Standardized Distributable     ended       ended       ended       ended
     Cash(4) & Distributable    December    December    December    December
     Cash(2) Table (C$000s)     31, 2009    31, 2008    31, 2009    31, 2008
    -------------------------------------------------------------------------
    Cash flow from operating
     activities                  131,727     116,433      32,562      29,675
    -------------------------------------------------------------------------
    Less:

      Total capital
       expenditures as per
       consolidated statement
       of cash flows             (25,677)    (23,103)     (3,427)     (6,567)
      Acquisition of licences
       and intangible assets      (5,176)          -      (2,279)          -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Standardized distributable
     cash(4)                     100,874      93,330      26,856      23,108
    -------------------------------------------------------------------------
    Normalizing adjustments
     to non-cash working
     capital items(5)             (5,323)      6,590      (1,486)      3,679
    -------------------------------------------------------------------------
    Capital Expenditures:

      Add back:
        One time capital
         expenditures             11,220       5,690       1,805         434
        Non-recurring capital
         expenditure                   -       1,767           -           -
      Changes in capital
       expenditure notional
       reserve                       825       1,184        (192)      1,963
      Capital lease payments        (224)     (1,162)       (167)       (237)
    -------------------------------------------------------------------------
        Sub-total                107,372     107,399      26,816      28,947
    -------------------------------------------------------------------------
    Discretionary/non-recurring
     (recovery)expenses(6)           533       4,746         185         751
    One-time acquisition of
     licences & intangible
     assets                        1,319           -           -           -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash available for
     distribution                109,224     112,145      27,001      29,698
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Non-recurring revenue(7)      (2,864)     (2,300)     (1,588)     (4,853)
    -------------------------------------------------------------------------
    Distributable cash(3)        106,360     109,845      25,413      24,845
    -------------------------------------------------------------------------
    Distributions to
     unitholders                  95,974      94,387      23,996      24,004
    -------------------------------------------------------------------------
    Total payouts as a
     percentage of
     distributable cash(3)         90.2%       85.9%       94.4%       96.6%
    -------------------------------------------------------------------------
    Total payouts as a
     percentage of
     standardized
     distributable cash(3)         95.1%      101.1%       89.3%      103.9%
    -------------------------------------------------------------------------
    Weighted average number
     of Fund units outstanding
     in the period            89,842,404  89,099,235  89,842,404  89,842,404
    -------------------------------------------------------------------------

    (4) On July 18, 2007, the Canadian Institute of Chartered Accountants
        issued its interpretive release "Standardized Distributable Cash in
        Income Trusts and Other Flow Through Entities: Guidance on
        Preparation and Disclosures". The Fund has reviewed the interpretive
        release and has adopted the guidance as applicable to the Fund. The
        above table represents a summarized presentation. Please refer to our
        December 31, 2009 Management's Discussion and Analysis ("MD&A") for
        complete disclosure relating to Standardized Distributable Cash.
    (5) Comprised of adjustments related to known and measurable timing
        differences in respect of MOH cap revenue receivables; insurance
        adjustments; bonus adjustments; ARS tax refunds related to pre-
        acquisition periods; and non-recurring settlement of a pre-
        acquisition liability relating to ARS.
    (6) Discretionary/Non-recurring expenses represents pre-implementation
        costs related to certain business re-engineering projects; a one-time
        tax adjustment; a one-time write off of a deposit; and non-recurring
        commodity tax recoveries.
    (7) Non-recurring revenue represents retroactive payments for
        professional and lab fees from MOH, retroactive payments in British
        Columbia and retroactive MOH cap adjustment in the first quarter and
        recovery of an impaired investment.


    Segmented Highlights
    --------------------

    Canadian Operations
    -------------------------------------------------------------------------
                                  Twelve-     Twelve-      Three-      Three
    (C$ millions, except          months      months      months      months
     percentages and business      ended       ended       ended       ended
     days)                      December    December    December    December
    (unaudited)                 31, 2009    31, 2008    31, 2009    31, 2008
    -------------------------------------------------------------------------
    Revenue                        362.1       339.1        92.0        91.3
    -------------------------------------------------------------------------
    OG&A                           241.1       216.8        61.0        58.9
    -------------------------------------------------------------------------
    EBITDA(1)                      121.0       122.3        30.9        32.3
    -------------------------------------------------------------------------
    EBITDA(1) margin               33.4%       36.1%       33.7%       35.4%
    -------------------------------------------------------------------------
    Net earnings for the period    103.0        99.9        32.2        27.0
    -------------------------------------------------------------------------
    

The F2009 and Q4 2009 increase in revenue in Canada compared to the corresponding periods in 2008 reflect primarily: i) full-year contributions from acquisitions of medical imaging clinics completed in 2008; ii) increase in cap revenue based on the MOH agreement; iii) one-time retroactive technical and professional fee payments from the MOH and British Columbia medical services plan; and iv) organic growth in non-cap revenue. F2009 and Q4 2009 OG&A increased relative to the same periods in 2008 reflect full-year operations of medical imaging clinics acquired in 2008. F2009 and Q4 2009 EBITDA(1) margins were lower than the same period in 2008 primarily due to: i) a higher proportion of revenue derived from medical imaging services resulting from acquisitions completed in 2008; ii) investments made in corporate infrastructure and systems implementations to support the Fund's growth plans; and iii) additional laboratory service costs to support increased utilization.

    
    U.S. Operations
    -------------------------------------------------------------------------
                                  Twelve-     Twelve-      Three-      Three
    (US$ millions, except         months      months      months      months
     percentages and business      ended       ended       ended       ended
     days)                      December    December    December    December
    (unaudited)                 31, 2009  31, 2008*   31, 2009    31, 2008
    -------------------------------------------------------------------------
    Number of business days          255         213          64          64
    -------------------------------------------------------------------------
    Revenue                        136.9       114.5        34.1        34.8
    -------------------------------------------------------------------------
    OG&A                           120.2        99.8        31.0        30.3
    -------------------------------------------------------------------------
    EBITDA(1)                       16.8        14.7         3.1         4.5
    -------------------------------------------------------------------------
    EBITDA(1) margin               12.2%       12.8%        9.1%       12.9%
    -------------------------------------------------------------------------
    Goodwill impairment            $50.0           -       $50.0           -
    -------------------------------------------------------------------------
    Net earnings for the period    (45.6)        1.4       (47.5)       (0.1)
    -------------------------------------------------------------------------
    * Represents ARS operations from March 1, 2008 onwards
    

F2009 revenue exceeded F2008 by 19.6% since ARS was acquired on February 29, 2008. The decline in revenue in Q4 2009 compared to the same period in 2008 reflects decreased volumes in high-tech modalities in the quarter, partially offset by higher reimbursement resulting from conversion to digital mammography. F2009 and Q4 2009 OG&A expenses were greater than the corresponding periods in 2008 primarily as a result of: i) full-year operations at ARS acquired in February 2008 (applies to F2009 only); ii) acquisition of Quarry Lake and TII, and the opening of UCH in F2009; and iii) increased physician salary costs as a result of market rate adjustments. The lower EBITDA(1) margins for F2009 and Q4 2009 compared to the same periods in 2008 reflect the items previously discussed.

    
    Balance Sheet
    -------------
    

As at December 31, 2009, the Fund had working capital of $25.2 million, including cash and cash equivalents of $21.8 million, compared to working capital of $37.5 million, including cash and cash equivalents of $21.5 million as at December 31, 2008. Long-term debt of the Fund, including the current portion, was $320.5 million as at December 31, 2009, compared to $320.2 million as at December 31, 2008. As at December 31, 2009, the Fund had approximately $69.4 million available under the revolving credit facility. As at December 31, 2009, there were 89,842,404 Fund units issued and outstanding.

    
    Tax Fairness Plan
    -----------------
    

In June of 2007, the Government of Canada enacted legislation previously proposed on October 31, 2006 that will apply a tax at the income trust level on unitholder distributions commencing January 1, 2011. At this time, the Fund does not anticipate making changes to its structure prior to 2011. The Fund is now in the process of planning for this corporate conversion and will communicate a definitive plan and timeline in due course.

    
    Notice of Conference Call
    -------------------------
    

Management of CML HealthCare Income Fund will host a conference call today, Thursday, March 4, 2010 at 10:00 am (EST) to discuss the Fund's 2009 year-end financial results. A live audio webcast of the call will be available at www.cmlhealthcare.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to hear the webcast. An archived replay of the webcast will be available for 90 days. A taped replay of the conference call will also be available until Thursday, March 11th, 2010 by calling 1-800-642-1687 or 416-849-0833, reference number 55896378 followed by the number sign.

    
    (1) The Fund defines EBITDA as earnings before interest, taxes,
        amortization, other expenses, goodwill impairment, non-controlling
        interest, gain/loss on disposals of property and equipment, foreign
        exchange gain and transaction costs on debt financing. Adjusted
        EBITDA is defined as EBITDA less certain adjustments for revenue and
        operating expenses. EBITDA margins are calculated by dividing EBITDA
        by revenue. 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 trusts.

    (2) The Fund defines Adjusted Net Earnings as Net Earnings excluding the
        impact of Goodwill Impairment. Adjusted Net Earnings is not a
        recognized measure under Canadian GAAP. Management believes that, in
        addition to net earnings, Adjusted Net Earnings is a useful
        supplemental measure, as it provides investors with an indication of
        the Fund's performance. Adjusted Net Earnings is used by the Fund to
        analyze performance and compare profitability between periods.
        Investors should be cautioned, however, that Adjusted Net Earnings
        should not be construed as an alternative to net earnings determined
        in accordance with GAAP. The Fund's method of calculating Adjusted
        Net Earnings may differ from other companies or income trusts and,
        accordingly, Adjusted Net Earnings may not be comparable to measures
        used by other companies or income trusts.

    (3) 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.
    

To view the Fund's F2009 Financial Statements and Notes, please click here: http://files.newswire.ca/736/cml0304.pdf

About CML HealthCare Income Fund

CML HealthCare Income Fund is an unincorporated open-ended trust that owns CML HealthCare Inc., one of North America's largest healthcare services businesses. Based in Mississauga, Ontario, CML HealthCare Inc. is a leading provider of laboratory testing services in Ontario, the largest provider of medical imaging services in Canada and is a leading provider of medical imaging services in the U.S. Northeast. 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

This document includes forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario) and other provincial securities law in Canada. These forward-looking statements include, among others, statements with respect to our objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on these statements, as a number of important factors, many of which are beyond our control, could cause our actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, general economic conditions; dependence on government-based revenues; the ability to renew the Ministry of Health and Long-Term Care contracts on favourable terms; pending and proposed legislative or regulatory developments including the impact of changes in laws (including income tax), regulations and the enforcement thereof; intensifying competition, resulting 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 operating subsidiary to pay its interest obligations to us; fluctuations in cash distributions and capital investment; management of credit, market, liquidity and funding and operational risks; judicial judgements and legal proceedings; privacy laws; 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 any one 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 business operations in the U.S. imaging market include, but are not limited to, our ability to successfully integrate the U.S. Northeast operations; additional liabilities or costs attributable to the acquisitions; unknown liabilities of acquisitions in the U.S.; the ability to retain senior management of ARS; the ability to complete accretive acquisitions in the U.S.; our ability to continue contracted radiology practice arrangements and patient referrals; changes in payor reimbursement rates; healthcare cost reductions in the U.S.; changes in technology; competition from other imaging service providers; changes in state and federal regulations relating to imaging business; the continuation and nature of the relationship with Johns Hopkins; and changes in U.S. federal and state healthcare laws and regulations, including Medicare and Medicaid reimbursements levels and including those that may arise from potential U.S. Healthcare reform initiatives.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When reviewing our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found in the "Risk Factors" section, under "Business Risks" and elsewhere in our Management's Discussion and Analysis of Operating Results and Financial Position for the year ended December 31, 2008 and elsewhere in our filings with Canadian securities regulators. 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.

%SEDAR: 00020333E

SOURCE CML HEALTHCARE INC. (FORMERLY CML HEALTHCARE INCOME FUND)

For further information: For further information: Alice Dunning, Investor Relations, The Equicom Group Inc., (416) 815-0700 ext 255, (416) 815-0080 fax, Email: adunning@equicomgroup.com; Tom Weber, Chief Financial Officer, CML HealthCare Income Fund, (905) 565-0043, (905) 565-1776 fax, Internet: www.cmlhealthcare.com

Organization Profile

CML HEALTHCARE INC. (FORMERLY CML HEALTHCARE INCOME FUND)

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