Medisys Health Group Income Fund Announces Annual Results



    - Fund Announces Reduction in Monthly Distributions -

    MONTREAL, March 30 /CNW/ - Medisys Health Group Income Fund (TSX: MHG.UN)
(the "Fund"), one of Canada's leading national providers of healthcare
services to corporations, individuals and insurance companies, today announced
its financial results for the quarter and year ended December 31, 2006. The
Fund concurrently announced that it will be reducing distributions to
$0.4725 per unit per year. Medisys Holding LP ("Holding LP") will also be
reducing distributions on its limited partnership units that are exchangeable
for Units (the "Exchangeable Units") by the same amount. This adjustment will
begin for the month of April and will not impact the distributions that were
declared on March 21, 2007 for payment on or about April 20, 2007.
    Given the significant acquisition-related and organic growth
opportunities available to the Fund, and the material changes in taxation in
light of the "Tax Fairness Plan", the Trustees of the Fund have decided to
adjust distributions to a level that is aligned with operating cash flows.
This takes into account the disposal of Medgate and strikes a balance between
providing a monthly income stream to unitholders and giving the Fund
additional financial flexibility, thereby building long-term sustainable
value. The Trustees are continuing to monitor and evaluate the distribution
policy of the Fund and may make further changes to the distribution policy in
the future, in light of evolving growth opportunities available to the Fund.

    
    Fourth Quarter and FY2006 Highlights
    -   2006 revenue was $84.1 million, compared to $76.0 million in 2005, an
        increase of 11%;
    -   Corporate Health Services Q4 2006 EBITDA increased 8% relative to
        Q4 2005
    -   Medical Imaging Q4 2006 EBITDA increased 6% relative to Q4 2005
    -   Completed five acquisitions during 2006 - three Medical Imaging
        acquisitions and two Corporate Health Services acquisitions;
    -   Completed the divestiture of Medgate for total cash proceeds of
        $4.5 million;
    -   Generated Distributable Cash(1) of $5.0 million on a trailing
        twelve-month basis as at Q4 2006.
    

    "We continue to see both strong demand for our services and significant
acquisition-related growth opportunities in the Canadian healthcare market
within our core segments of Corporate Health Services and Medical Imaging,"
said Dr. Sheldon Elman, Chairman & CEO of Medisys Health Group. "However, in
order to ensure the financial flexibility to continue to execute our growth
strategy, the Fund has decided to adjust distributions, which will maintain
operational reserves at sustainable levels."

    Financial Results

    For the three months ended December 31, 2006, consolidated revenues
increased to $22.9 million as compared to $21.5 million for the three months
ended December 31, 2005, an increase of 7% or $1.4 million. The increase in
our total revenues is primarily attributable to the impact of the most recent
acquisitions and to organic growth in both the Medical Imaging and Corporate
Health Services segments.
    For 2006, consolidated revenues increased to $84.1 million as compared to
$76.0 million for 2005, an increase of 11% or $8.1 million.
    Medisys' Q4 2006 EBITDA(2) totalled $2.0 million, a decrease of 13% or
$0.3 million relative to the same period in 2005. Included in Q4 2006 were
$0.2 million of one-time costs associated with the implementation of the new
accounting system, and another $0.1 million of costs relating to the 52-109
compliance mandate.
    For the three months ended December 31, 2006, Corporate Health Services
generated $13.5 million in revenue and $2.9 million in operating income, a 5%
increase in revenue and an 8% increase in operating income relative to
Q4 2005. Medical Imaging generated revenues of $6.3 million and operating
income of $1.2 million for the three months ended December 31, 2006, a 24%
increase in revenue and a 6% increase in operating income relative to Q4 2005.
    Insurance Medical Services generated $3.2 million in revenue and
$0.5 million in operating income in Q4 2006, a 12% decrease in revenue and a
28% decrease in operating income relative to Q4 2005.

    Conference Call Notice

    Medisys will host a conference call to discuss its Q4 and year end
financial results on Friday, March 30th, 2007, at 2:00 pm (EST). The dial-in
number for the conference call is (416) 644-3420 or 1-800-588-4942 (reference
No. 21224457). The call will be audiocast live and archived for 90 days at
www.medisys.ca.

    About Medisys Health Group

    Medisys Health Group is a leading Canadian provider of healthcare and
medical imaging services to corporations and individuals and health-related
underwriting support services to insurance companies. Through its national
network of facilities, including offices in Montreal, Ottawa, Toronto, Calgary
and Vancouver, Medisys' Corporate Health Services division delivers
preventive, diagnostic and consultative healthcare services to approximately
4,000 corporations, including 320 companies of the Financial Post 500.
Medisys' Medical Imaging operations service patient populations in both
Ontario and Quebec. Medisys' Insurance Medical Services division supports the
national underwriting activities of more than 60 Canadian and U.S. life and
health insurance companies. Medisys Health Group Income Fund is an
unincorporated, open-ended, limited purpose trust established to invest in
Medisys Health Group and its subsidiaries.

    This media release may contain certain forward-looking statements that
reflect the current views and/or expectations of Medisys Health Group Income
Fund, Medisys Holding LP, Medisys Health Group Inc., and Medisys Health Group
LP with respect to their respective performance, business, and future events.
Such statements are subject to a number of risks, uncertainties, and
assumptions as outlined in the Fund's management's discussion and analysis for
the period ended December 31, 2006, and other filings with the Canadian
securities regulatory authorities. Actual results and events may vary.

    
    ---------------------------------
    (1) Distributable Cash is not a recognized measure under Canadian
        generally accepted accounting principles ("GAAP"), and the method of
        calculation adopted by the Fund may differ from methods used by other
        entities. Accordingly, Distributable Cash as presented may not be
        comparable to similar measures presented by other entities. Investors
        are cautioned that Distributable Cash should not be construed as an
        alternative to net income or to the statement of cash flows as a
        measure of liquidity and cash flows of the Fund. Investors are
        encouraged to consider this measure in the context of Medisys' GAAP
        results. For a detailed reconciliation of Distributable Cash to the
        GAAP measure "Cash Flows from Operations", please refer to our 2006
        Annual Report, filed by the Fund with the Canadian securities
        regulatory authorities and available at www.sedar.com.
    (2) EBITDA is not a recognized measure under GAAP. Management believes
        that in addition to net income, EBITDA is a useful supplemental
        measure as it provides investors with an indication of the Fund's
        performance. Investors should be cautioned, however, that EBITDA
        should not be construed as an alternative to net income. The Fund's
        method of calculating EBITDA may differ from that of other
        companies' or income trusts' and, accordingly, EBITDA may not be
        comparable to measures used by other companies or income trusts. For
        a detailed reconciliation of EBITDA to the GAAP measure "Net Income",
        please refer to our 2006 Annual Report, filed by the Fund with the
        Canadian securities regulatory authorities and available at
        www.sedar.com.


    CONSOLIDATED BALANCE SHEETS
    AS AT DECEMBER 31,
    (IN THOUSANDS OF DOLLARS)

                                                          2006        2005
    -------------------------------------------------------------------------
    ASSETS

    Current

    Accounts receivable                                 $ 11,048    $ 13,176
    Supplies inventory                                       247         247
    Prepaid expenses                                         467         580
    Income taxes receivable                                  206           -
    Future income taxes                                      485         690
    -------------------------------------------------------------------------
                                                          12,453      14,693

    Premises & Equipment                                  17,667      14,186
    Other Assets                                           2,569       2,761
    Future Income Taxes                                      701         448
    Licenses                                              17,799      15,326
    Goodwill                                              14,060      12,026
    -------------------------------------------------------------------------
    Total Assets                                        $ 65,249    $ 59,440
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    Current

    Accounts payable and accrued liabilities            $  7,288    $  8,264
    Distributions payable                                    602         525
    Income taxes payable                                       -          71
    Deferred revenue                                           -       1,760
    Current maturity of balances of purchase price         2,173       1,470
    -------------------------------------------------------------------------
                                                          10,063      12,090

    Bank Indebtedness and Term Debt                       10,782      12,047
    Obligations Under Capital Leases                       3,317       4,248
    Balances of Purchase Price                             1,694       2,139
    Deferred Lease Inducements                               722         657
    Future Income Taxes                                    4,203       3,568
    Non-Controlling Interest                                   -         673
    -------------------------------------------------------------------------
                                                          30,781      35,422

    Contingencies & commitments

    Exchangeable Units Interest                            9,200       7,267

    UNITHOLDERS' EQUITY

    Unitholders' Equity                                   25,268      16,751
    -------------------------------------------------------------------------
    Total Liabilities & Unitholders' Equity             $ 65,249    $ 59,440
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF EARNINGS
    FOR THE YEARS ENDED DECEMBER 31,
    (IN THOUSANDS OF DOLLARS, EXCEPT PER UNIT AMOUNTS)

                                                          2006        2005
    -------------------------------------------------------------------------
    Revenues                                            $ 84,088    $ 75,965

    Direct Costs, Selling and Administrative Expenses     77,882      67,654
    -------------------------------------------------------------------------
    Operating income from Continuing Operations before
     the undernoted items                                  6,206       8,311

    Amortization of premises and equipment                 3,211       2,262
    Amortization of other assets                             789         344
    Amortization of fair value adjustment                    184          88
    Security-based compensation expense                    3,738          48
    Interest on capital lease obligations                    294         346
    Interest on bank indebtedness and term debt              692         602
    Other interest                                           250         293
    IT outsourcing agreement termination expense               -         200
    Write off premises and equipment                         190           -
    Gain on deferred lease inducement                       (170)          -
    -------------------------------------------------------------------------
    Income (Loss) from Continuing Operations before
     Income Taxes                                         (2,972)      4,128

    Income taxes                                            (262)        393
    -------------------------------------------------------------------------
    Income (Loss) from Continuing Operations              (2,710)      3,735

    Exchangeable units interest                             (816)      1,300
    Dilution gain                                         (1,030)       (177)
    -------------------------------------------------------------------------
    Net Income (Loss) from Continuing Operations            (864)      2,612

    Net Income from discontinued operations, net of
     income taxes and exchangeable unit interest           1,550         421
    -------------------------------------------------------------------------
    Net Income                                          $    686    $  3,033
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic Earnings per Unit
      Net income (loss) from continuing operations      $  (0.17)   $   0.65
      Net income                                        $   0.13    $   0.75
    -------------------------------------------------------------------------

    Diluted Earnings per Unit
      Net income (loss) from continuing operations      $  (0.37)   $   0.59
      Net income                                        $  (0.06)   $   0.68
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    FOR THE YEARS ENDED DECEMBER 31,
    (IN THOUSANDS OF DOLLARS)

                                                          2006        2005
    -------------------------------------------------------------------------
    Funds Provided (Used) -
     Operating Activities
      Net Income                                             686    $  3,033
      Results from discontinued operations                (1,550)       (421)
    -------------------------------------------------------------------------
      Results from continuing operations                    (864)      2,612

      Amortization of premises and equipment               3,211       2,262
      Amortization of other assets                           789         344
      Amortization of deferred lease inducements            (105)        (42)
      Amortization of fair value adjustment                  184          88
      Write off premises and equipment                      (170)          -
      Gain on deferred lease inducement                      190           -
      IT outsourcing agreement termination expense             -         200
      Future income taxes                                   (262)        393
      Deferred revenue                                         -         (28)
      Security-based compensation expense                  3,738          48
      Exchangeable units interest                           (816)      1,300
      Dilution gain                                       (1,030)       (177)
    -------------------------------------------------------------------------
                                                           4,865       7,000
    Changes in non-cash operating elements of
     working capital                                      (1,192)     (3,426)
    -------------------------------------------------------------------------
    Net cash provided by (used in) continuing
     operations                                            3,673       3,574
    Net cash provided by (used in) discontinued
     operations                                              647        (423)
    -------------------------------------------------------------------------
    Net cash provided by (used in) operating activities    4,320       3,151
    -------------------------------------------------------------------------

    Financing Activities

      Bank indebtedness and term debt                     (1,948)      5,551
      Distributions to unitholders                        (4,820)     (3,156)
      Distributions and advances to exchangeable
       unitholders                                        (2,162)     (1,818)
      Repayment of obligations under capital leases       (1,526)     (1,586)
      Share redemption of a subsidiary                      (200)       (290)
      Issue of exchangeable units                          2,324         300
      Issue of units (net of issuance costs)               9,665       5,986
    -------------------------------------------------------------------------
    Net cash provided by (used in) continuing
     operations                                            1,333       4,987
    Net cash provided by (used in) discontinued
     operations                                              585        (475)
    -------------------------------------------------------------------------
    Net cash provided by (used in) financing
     activities                                            1,918       4,512
    -------------------------------------------------------------------------

    Investing Activities
      Payment of balance of purchase price                (1,495)     (1,000)
      Acquisitions                                        (2,909)     (3,357)
      Additions to premises and equipment                 (6,732)     (2,521)
      Gouvernment grant                                    1,071           -
      Additions to licenses                                    -        (145)
      Addition to deferred lease inducement                  488           -
      Additions to other assets                              (91)       (582)
    -------------------------------------------------------------------------
    Net cash provided by (used in) continuing
     operations                                           (9,668)     (7,605)
    Net cash provided by (used in) discontinued
     operations                                              (44)        (58)
    Net proceeds from disposal of discontinued
     operations                                            3,474           -
    -------------------------------------------------------------------------
    Net cash provided by (used in) investing
     activities                                         $ (6,238)   $ (7,663)
    -------------------------------------------------------------------------
    Increase (decrease) in Cash                                -           -

    Cash

      Beginning of the year                                    -           -
    -------------------------------------------------------------------------
      End of the year                                   $      -    $      -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00022283EF




For further information:

For further information: Stuart M. Elman, President & Chief Financial
Officer, Medisys Health Group, Phone: (514) 499-2778, Email:
stuart.elman@medisys.ca

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MEDISYS HEALTH GROUP INCOME FUND

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