CML HealthCare Income Fund Reports Fiscal 2007 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 27 /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, 2007.

    
    2007 Highlights

    -   Revenue increased 8.3% to $312.8 million from $288.9 million for the
        year ended December 31, 2006
    -   Net earnings increased 8.4% to $100.2 million compared to
        $92.4 million in 2006
    -   EBITDA(*) increased 5.2% to $123.1 million compared to $117.0 million
        in 2006
    -   Cash provided by operating activities increased 7.0% to
        $105.8 million compared to $98.9 million in 2006
    -   The Fund generated distributable cash(xx) of $102.3 million and
        declared distributions (including payments to non-controlling
        interest and Part VI.1 tax paid) totaling $88.5 million, representing
        a payout ratio of 86.5%
    -   Annualized unitholder distributions increased 3.5% from $1.00 per
        unit to $1.035 per unit, effective as of the Fund's May 2007
        distribution
    -   Appointment of Dr. Joseph Fairbrother, BM, FRCPC, to the Fund's Board
        of Trustees
    -   Appointment of Kent Nicholson as Chief Operating Officer
    -   Completed acquisitions of 11 medical imaging clinics in Ontario and
        Alberta
    -   Entered definitive agreement to acquire Baltimore, Maryland-based
        American Radiology Services, Inc., (acquisition was successfully
        closed on February 29, 2008)
    

    "We are pleased to report continued growth in revenue, earnings and cash
flow from operations for the year. Our strong performance demonstrates our
commitment to maintaining financial discipline and strong operating margins as
we continue to grow our business, both organically and through accretive
acquisitions," said Paul Bristow, President and CEO of CML HealthCare Income
Fund. "During 2007, we achieved organic growth in both our capped and
non-capped laboratory services and medical imaging revenue. Additional growth
was driven by accretive acquisitions of medical imaging clinics in Canada. We
advanced several other strategic initiatives to strengthen our position for
future growth, including: the commencement of a PACS rollout in our
Edmonton-based medical imaging operations to complement our already
fully-digitized operations in Calgary; and, the commencement of our clinic
refurbishment program."
    "Subsequent to year end, on February 29, 2008, CML HealthCare
successfully closed the acquisition of Baltimore, Maryland-based American
Radiology Services, Inc. ("ARS") for total consideration of US$150.4 million,
inclusive of debt. The acquisition, which is immediately accretive to the
Fund's distributable cash on a per unit basis, was funded with our new
$450 million credit facility. On March 26, 2008 we completed a $50.6 million
bought deal equity offering, the proceeds of which were used to reduce
borrowings from our credit facility," continued Mr. Bristow. "ARS' highly
scalable and geographically concentrated network of state-of-the-art imaging
clinics provides us with a strong platform to pursue accretive acquisitions of
medical imaging assets in the United States. We also remain focused on
consolidating imaging clinics in Canada. Our new credit facility has been
structured to include a $100 million acquisition revolver for future
acquisitions. We look forward to moving ahead with our growth plans in both
Canada and the United States."

    Financial Results

    For the three months ended December 31, 2007, the Fund generated
distributable cash(xx) of $25.4 million, and declared distributions totaling
$22.4 million, representing a payout ratio of 88.0%. For the year ended
December 31, 2007, the Fund generated distributable cash(xx) of
$102.3 million, and declared distributions (including payments to
non-controlling interest and Part VI.1 tax paid) totaling $88.5 million,
representing a payout ratio of 86.5%. Please refer to Standardized
Distributable Cash(1) and Distributable Cash(xx) table below.
    Revenue for the Fund in the fourth quarter of 2007 increased 14.3% to
$82.3 million compared to revenue of $72.0 million in the fourth quarter of
2006. The Fund's increased revenue in the quarter reflects increased lab
services funding from the Ontario Ministry of Health and Long-Term Care
("MOH"), as well additional funding as set out in the agreement, organic
growth of non-cap revenues and new revenue from acquisitions. For the twelve
months ended December 31, 2007, revenue for the Fund increased 8.3% to
$312.8 million compared to $288.9 million for the year ended December 31,
2006. Increased revenue in 2007 resulted from: $12.9 million in additional
revenue from the acquisition of new imaging clinics in Ontario and Alberta; a
$3.6 million increase in cap revenue, based on the MOH Funding Agreement for
laboratory services; $6.1 million in additional funding, as set out in the MOH
Funding Agreement; a $0.3 in retroactive fee increases by the MOH for certain
imaging services performed; and, organic growth in non-cap revenue.
    Operating, general and administrative ("OG&A") expenses for the fourth
quarter of 2007 were $52.1 million, or 63.3% of revenue, compared to OG&A
expenses of $45.6 million, or 63.3% of revenue, for the comparable period in
2006. OG&A expenses for the twelve months ended December 31, 2007 totaled
$189.7 million or 60.6% of revenue, compared to $171.9 million or 59.5% of
revenue in 2006. Increased OG&A expenses in both the fourth quarter and full
year of 2007 were primarily attributable to: higher operating expenses
(including salaries, professional fees and supplies) due to acquisitions and
growth in tests and procedures performed; $0.8 million incurred to set up a
revolving line of credit; and a lease cancellation fee of $1.1 million.
    Earnings Before Interest, Taxes, Depreciation, Amortization,
Non-Controlling Interest, Other Expenses and Provisions (EBITDA)(*) in the
fourth quarter of 2007 totaled $30.2 million, or 36.7% of revenue, compared to
EBITDA(*) of $26.4 million, or 36.7% of revenue, for the fourth quarter of 2006.
EBITDA(*) for the year ended December 31, 2007, totaled $123.1 million or 39.4%
of revenue, compared to EBITDA(*) of $117.0 or 40.5% of revenue for the year
ended December 31, 2006.
    The Fund's net earnings for the fourth quarter of 2007 increased 11.5% to
$24.3 million or $0.28 per Fund unit (basic and diluted), compared to net
earnings of $21.8 million or $0.27 per Fund unit (basic and diluted) in the
fourth quarter of 2006. For the year ended December 31, 2007, the Fund's net
earnings increased 8.4% to $100.2 million or $1.16 per Fund unit (basic and
diluted), compared to $92.4 million or $1.14 per Fund unit (basic and diluted)
for the year ended December 31, 2006.

    
    -------------------------------------------------------------------------
    Standardized Distributable Cash(1)               October 1,    January 1,
     and Distributable Cash(xx) Table                  2007 to       2007 to
                 ($000s)                           December 31,  December 31,
                                                          2007          2007
                                                    (unaudited)   (unaudited)
    -------------------------------------------------------------------------
    Cash flow from operating activities                 27,735       105,770
    -------------------------------------------------------------------------
    Less:
      Total capital expenditures as per
       consolidated statement of cash flows             (2,206)       (5,764)
      Existence of a non-controlling interest
       in a subsidiary(2)                                    -           (53)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Standardized distributable cash(1)                  25,529        99,953
    -------------------------------------------------------------------------
    Normalizing adjustments to non-cash
     working capital items(3)                            1,995         6,757
    -------------------------------------------------------------------------
    Capital Expenditures:
      One time capital expenditures                        721         1,005
      Changes in maintenance capital
       expenditure notional reserve                       (117)       (1,187)
      Capital lease payments                              (299)       (1,180)
    -------------------------------------------------------------------------
        Sub-total                                          305        (1,362)
    -------------------------------------------------------------------------
    Discretionary/non-recurring expenses(4)                821           821
    -------------------------------------------------------------------------
    Part VI.1 tax adjustment(5)                              -            27
    -------------------------------------------------------------------------
    Payments to non-controlling interest                     -            53
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash available for distributions                    28,650       106,249
    -------------------------------------------------------------------------
    Non-recurring revenue(6)                            (3,226)       (3,906)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Distributable cash(xx)                              25,424       102,343
    -------------------------------------------------------------------------
    Distributions to unitholders                        22,374        88,408
    -------------------------------------------------------------------------
    Payments to non-controlling interest                     -            53
    -------------------------------------------------------------------------
    Part VI.1 tax paid                                       -            27
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total distributions/payments to non-controlling
     interest and Part VI.1 tax paid                    22,374        88,488
    -------------------------------------------------------------------------
    Total payouts as a percentage
     of distributable cash(xx)                           88.0%         86.5%
    -------------------------------------------------------------------------
    Total payouts as a percentage of
     standardized distributable cash(1)                  87.6%         88.5%
    -------------------------------------------------------------------------

    --------------------------
    (1) 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, 2007 year ended Management's Discussion and Analysis
        ("MD&A") for complete disclosure relating to Standardized
        Distributable Cash.
    (2) Represents the payments to non-controlling interest.
    (3) Comprised of adjustments related to known and measurable timing
        differences in respect of: MOH cap revenue receivables; interest
        payments on long-term debt; insurance; and, corporate bonus and LTIP
        payments.
    (4) Non-recurring expenditure represents cost incurred on setting up a
        revolving line of credit.
    (5) Adjustment to normalize the income tax expense which would not be
        payable if the exchangeable shares were converted to units.
    (6) The adjustment for the fourth quarter of fiscal 2007 consisted of
        additional funding as set out in the MOH agreement for the MOH years
        ending March 31, 2007 and 2008. The adjustment for the year ended
        December 31, 2007 represents the additional funding as set out in the
        MOH agreement for the MOH year ended March 31, 2007.



    -------------------------------------------------------------------------
    Comparative Quarterly Financial Summary
     ($ millions, except per unit amounts)
                 (unaudited)                             Q4/07         Q4/06
    -------------------------------------------------------------------------
    Revenue                                               82.3          72.0
    -------------------------------------------------------------------------
    Operating, general and administrative                 52.1          45.6
    -------------------------------------------------------------------------
    EBITDA(*)                                             30.2          26.4
    -------------------------------------------------------------------------
    Amortization                                           1.3           0.9
    -------------------------------------------------------------------------
    Other expenses                                         0.3             -
    -------------------------------------------------------------------------
    Interest expense                                      16.2           3.0
    -------------------------------------------------------------------------
    Provision for (recovery of) income taxes             (11.9)          0.5
    -------------------------------------------------------------------------
    Earnings before the following                         24.3          22.0
    -------------------------------------------------------------------------
      Non-controlling interest                               -           0.2
    -------------------------------------------------------------------------
    Net earnings for the period                           24.3          21.8
    -------------------------------------------------------------------------
    Basic and diluted earnings per unit                   0.28          0.27
    -------------------------------------------------------------------------
    

    As at December 31, 2007, the Fund had working capital of $62.7 million,
including cash and cash equivalents of $58.4 million, compared to working
capital of $72.9 million, including cash and cash equivalents of $70.7 million
as at December 31, 2006. Long-term debt of the Fund, including the current
portion, was $205.1 million as at December 31, 2007, compared to
$192.3 million as at December 31, 2006.
    During the year ended December 31, 2007, 961,392 exchangeable shares of
CML HealthCare Inc. were converted to 961,392 Fund units, pursuant to the
exchangeable share provisions, for a total fair value of $13.7 million. As at
December 31, 2007, there were no exchangeable shares of CML HealthCare Inc.
outstanding and approximately 86,642,404 Fund units were issued and
outstanding, of which 114,216 units were held by the Fund as treasury units in
connection with the LTIP.

    Notice of Conference Call

    Management of CML HealthCare Income Fund will host a conference call
today, Thursday, March 27, 2008 at 10:00 am (EST) to discuss the Fund's 2007
year end financial results. A live audio webcast of the call will be available
at www.cmlhealthcare.com. Webcast attendees are welcome to listen to the
conference in real-time or on-demand at your convenience. A taped replay of
the conference call will be available until Thursday, April 3, 2008 at
midnight at 416-640-1917 or 1-877-289-8525, reference number 21265869 followed
by the number sign.

    
    (*)  The Fund defines EBITDA as earnings before interest, taxes,
         depreciation, amortization, other expenses, non-controlling interest
         and provisions for, or recovery of impairments, of investments and
         other assets. 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.

    (xx) 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 CML HealthCare's fourth quarter and year end financial
    statements, please click here

    http://files.newswire.ca/476/FS_and_Notes_2007.pdf

    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 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 recent 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. The Fund does not undertake to update any
forward-looking statements; such statements speak only as of the date made.





For further information:

For further information: Bruce Wigle, Investor Relations, The Equicom
Group Inc., (416) 815-0700 ext 228, (416) 815-0080 fax, Email:
bwigle@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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