CML HealthCare Income Fund to Purchase American Radiology Services, Inc.



    Toronto Stock Exchange Symbol: CLC.UN

    MISSISSAUGA, ON, Dec. 21 /CNW/ - CML HealthCare Income Fund (the "Fund"
or "CML HealthCare") (TSX:CLC.UN), today announced that it has entered into a
definitive agreement to acquire American Radiology Services, Inc. ("ARS"), a
leading provider of fully-integrated diagnostic medical imaging services based
in Baltimore, Maryland. ARS, in conjunction with The Johns Hopkins University
and The Johns Hopkins Health System Corporation (collectively "Johns
Hopkins"), is one of the largest providers of medical imaging services in the
U.S. by volume, performing approximately 2.2 million medical imaging scans per
year. ARS operates 15 fixed-site multi-modality and two single-modality
outpatient centers in Maryland and Delaware and provides radiologist coverage
to 11 hospitals in Maryland. Through its operating division, American
Radiology Solutions, ARS also provides primary or secondary reading services
via its teleradiology network to 25 hospitals across seven states in the U.S.
The acquisition is expected to be immediately accretive to the Fund's
distributable cash(1). The transaction is expected to close in the first
quarter of 2008, subject to customary closing conditions.
    The anticipated annualized revenue contribution resulting from the
acquisition of ARS, as well as the cash consideration paid, are included in
the following summary:

    
    Number of Clinics:        17 in Maryland and Delaware

    Hospital Contracts:       11 in Maryland

    Teleradiology Contracts:  25 across seven states

    Modalities:               Magnetic Resonance Imaging ("MRI"), Computed
                              Tomography ("CT"), Positron Emission
                              Tomography ("PET"), PET/CT, Nuclear Medicine,
                              Bone Densitometry ("DEXA"), Mammography,
                              Ultrasound, X-ray, Fluoroscopy

    Revenues:                 US$142 million(*)
    (Fiscal 2007 estimate)

    Consideration:            US$151 million(xx)
    (approx. cash)

    (*)    In accordance with U.S. GAAP. Please refer to cautionary language
           concerning forward-looking statements on page 3 of this news
           release.
    (xx)   For 100% ownership, inclusive of debt, but exclusive of
           acquisition costs and other post-closing adjustments which may be
           material.
    

    CML HealthCare is inviting ARS senior management, Johns Hopkins and
radiologists associated with American Radiology Associates, P.A. (described
below), who are current shareholders of ARS, to retain minority equity
interests in ARS. To the extent such interests are retained, the purchase
price and CML HealthCare's ownership of ARS will be reduced.
    CML HealthCare also announced that it has secured a fully underwritten
commitment for a C$450 million credit facility from The Toronto-Dominion Bank.
The credit facility will provide: up to C$350 million to fund the acquisition
of ARS and repay certain indebtedness of CML HealthCare (if required); and a
C$100 million revolving credit facility for general corporate purposes,
including future acquisitions. Although CML HealthCare has arranged a
committed credit facility for 100% of the purchase price of ARS, CML
HealthCare intends to continue to manage its capital structure and financial
flexibility in a conservative manner over the long term consistent with its
past practice.
    "We believe ARS is an excellent operational and strategic fit for CML
HealthCare. We share a common vision with ARS for the delivery of exceptional
patient care and for the future of medical imaging. ARS augments CML
HealthCare's competitive strengths and provides a tremendous platform for
continued growth that supports the execution of our overall strategy," said
Paul Bristow, President and CEO of CML HealthCare. "ARS has significant
geographic concentration of imaging clinics in an attractive regional market
that offers abundant consolidation opportunities in Maryland and several other
Mid-Atlantic states. ARS has a strong management team, state-of-the-art
imaging equipment and teleradiology network, robust information systems, an
exceptional pool of radiologists and technicians, more than 11,000 referring
physicians, and established relationships with a diverse base of payors.
Accordingly, ARS is well positioned to exploit growth opportunities, while
continuing to deliver best-in-class patient care. Furthermore, ARS currently
has an affiliation with Johns Hopkins that offers a number of compelling
strategic benefits, including, access to faculty and training resources,
sub-specialty radiologist expertise and radiologist recruitment, interaction
and staffing."
    ARS is focused on the regional delivery of best-in-class imaging services
through its state-of-the-art, multi-modality imaging centers. Since 2001, ARS
has made substantial investments in its diagnostic imaging equipment,
information technology and facilities improvements. ARS recently began the
rollout of digital mammography within its growing women's health franchise.
ARS, through an exclusive management services contract with American Radiology
Associates, P.A. ("ARA"), has access to 68 radiologists and through its
affiliation with Johns Hopkins, access to a significant additional pool of
Johns Hopkins radiologists. The radiologists at ARA are board certified and
co-trained through specialized programs with Johns Hopkins, one of the leading
healthcare institutions in the U.S. The Johns Hopkins healthcare network
consists of Johns Hopkins Hospital, Johns Hopkins School of Medicine and Johns
Hopkins University. Johns Hopkins Hospital has been ranked as the "Best of the
Best" in U.S. News & World Report's Honor Roll of "America's Best Hospitals"
for 17 consecutive years. The Johns Hopkins University Russell H. Morgan
Department of Radiology and Radiological Science was recently ranked the top
U.S. radiology department by Medical Imaging Magazine. ARS is uniquely
positioned with Johns Hopkins, a relationship that supports the continual
recruitment of high-quality radiologists and marketing of services to more
than 11,000 referring physicians. Access to Johns Hopkins faculty and
sub-specialists, cooperative studies and potential expansion opportunities are
also made possible through this affiliation.
    "We believe ARS will support CML HealthCare's initiatives to enhance
patient care in Canada and help to further elevate our profile in the
healthcare services community. Through ARS and their affiliation with Johns
Hopkins, we will gain unique insight into a highly scalable and advanced
digital imaging network and accompanying expertise that will support, enhance
and accelerate our own digitization initiatives throughout our imaging clinic
network across Canada," said Mr. Bristow. "We also expect to benefit from
other ARS resources, including: access to exceptional radiologists and
training programs; being able to offer our own referring physicians access to
advanced imaging modalities, such as PET/CT scanning; innovative sales and
marketing programs; and opportunities to jointly evaluate new and
complementary healthcare services both in Canada and the U.S."
    "Senior management of CML HealthCare and ARS share many of the same
strategic goals and objectives concerning the provision of exceptional patient
care and delivering value to our respective payors. CML HealthCare's strong
track record of operational and financial discipline and stable business model
provides a strong foundation for growth," said Bob Carfagno, President of ARS.
"As part of CML HealthCare, we look forward to moving ahead with our strategic
focus on becoming the leading radiology group in the Mid-Atlantic region,
through our commitment of resources to develop an organization that achieves
both medical and operational excellence, and major market share in the
counties where we operate, as we expand our geographic coverage."
    TD Securities acted as financial advisor to CML HealthCare and UBS
Investment Bank acted as financial advisor to ARS on the transaction.

    (1) Distributable Cash is not a recognized measure under Canadian
    generally accepted accounting principles ("GAAP"); however, the Fund
    believes that distributable cash is a useful measure as it provides
    investors with an indication of cash available for distribution. The
    Fund's method of calculating distributable cash may differ from that
    of other issuers and, accordingly, distributable cash may not be
    comparable to measures used by other issuers. Investors are cautioned
    that distributable cash should not be construed as an alternative to
    the statement of cash flows as a measure of liquidity and cash flows
    of the Fund.

    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; and our success in anticipating and managing the
foregoing risks.
    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.

    Notice of Conference Call

    Management of CML HealthCare Income Fund will host a conference call
today, December 21, at 10:00 am (EDT) to discuss the Fund's acquisition of
American Radiology Services, Inc. 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 December 28 midnight at
1-877-289-8525 or 416-640-1917, reference number 21257965 followed by the
number sign.

    About American Radiology Services, Inc.

    American Radiology Services, Inc. is a Baltimore-based leading provider
of fully-integrated diagnostic imaging services in the U.S. ARS was created in
February 1997 through the consolidation of four Maryland radiology practices,
including one owned by Johns Hopkins, with Johns Hopkins participating as a
shareholder and strategic partner. ARS operates 17 fixed-site outpatient
centers in Maryland and Delaware and provides radiologist coverage in 11
Maryland hospitals. Through its operating division, American Radiology
Solutions, ARS also provides teleradiology services to 25 hospitals throughout
the U.S. For more information, please visit www.americanradiology.com.

    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. CML is a leading provider of laboratory testing services in
Ontario and the largest private provider of medical imaging services in
Canada. CML HealthCare Income Fund is publicly traded on the Toronto Stock
Exchange under the symbol "CLC.UN" and has approximately 86.6 million units
outstanding. To reach CML HealthCare Income Fund via the worldwide web, log on
to www.cmlhealthcare.com.

    %SEDAR: 00020333E




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; Paul Bristow, President and Chief Executive 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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