CML HealthCare Inc. Reports 2011 Second Quarter Financial Results
(firmenpresse) - MISSISSAUGA, ONTARIO -- (Marketwire) -- 08/11/11 -- CML HealthCare Inc. (the "Company" or "CML") (TSX: CLC) today reported its financial results for the three and six month periods ended June 30, 2011 (all amounts are in Canadian dollars, unless noted otherwise).
During the quarter, negotiations began between the Ontario Association of Medical Laboratories ("OAML"), of which CML is a member, and the Ontario Ministry of Health and Long Term Care ("MOH") on the new funding agreement for capped laboratory services, which make up approximately 55% of Canadian revenues. A new agreement is expected to be in place and announced by early fall 2011. In the interim, the Company continues to be reimbursed based on terms of the existing agreement.
"Revenues from Canadian operations increased 2.5%, demonstrating continued stability and growth in our core business," noted Tom Weber, Executive Vice President and Chief Financial Officer. "During the quarter, we advanced our investments in technology in the Canadian laboratory and imaging operations which accelerates efficiencies and improved quality. The automation of the chemistry platforms at our central laboratory, completed early in the third quarter, will further heighten the lab's productivity."
"The U.S. operations stabilized in the second quarter with both procedural volumes and reimbursements consistent with the first quarter in 2011 ("Q1 2011")," advised Mr. Weber. "As a result of cost containment efforts, both EBITDA and EBITDA margins improved in Q2 2011 over Q1 2011. Given the continued challenging environment, we are focused on reviewing our strategy in the U.S. imaging market and expect to complete our review before the end of this year. During the quarter, CML recorded a $5.0 million goodwill impairment charge associated with the U.S. operations to reflect current assumptions and outlook for the value of this business."
Financial Results
For the three months ended June 30, 2011 ("Q2 2011"), revenue decreased 1.1% to $117.3 million from $118.6 million for the same period in 2010 ("Q2 2010"). Decreased revenue in Q2 2011 was largely attributable to:
The above revenue declines were partially offset by increases from Canadian operations resulting from the following:
Q2 2011 COS and G&A expenses of $93.0 million were 1.4% lower than $94.3 million for the same period in 2010. The decrease reflects:
The above declines in COS and G&A expenses were partially offset by the following:
Q2 2011 EBITDA(1) totaled $31.8 million compared to $32.6 million in Q2 2010. EBITDA(1) margin of 27.1% was in line with Q2 2010 of 27.5%.
The Company's net earnings for Q2 2011 of $7.8 million were lower than $22.4 million in Q2 2010. The decline was largely attributable to a $5.6 million provision for income taxes in Q2 2011 as a result of the conversion from an income fund to a corporation resulting in CML's income becoming taxable, compared to a $1.5 million recovery of taxes in the same period in 2010. Also impacting net earnings in Q2 2011 was a $5.0 million goodwill impairment charge associated with the U.S. operations as previously noted; and a severance charge of $2.6 million related to the departure of the President and Chief Executive Officer (CEO) and the Chief Operating Officer (COO) of the Company in Q2 2011.
AFFO(2) in Q2 2011 totaled $20.9 million compared to $19.8 million in Q2 2010. Increased AFFO(2) in Q2 2011 reflect a $1.1 million increase in cash flow from operating activities in Q2 2011. Dividends declared were $16.9 million in Q2 2011.
Segmented Highlights
Revenue in Q2 2011 increased 2.5% to $95.4 million compared to $93.0 million in the corresponding period in 2010. The increase was due primarily to: i) $0.9 million of one-time laboratory cap funding for the MOH year ended March 31, 2011 recorded in Q2 2011; and ii) growth in non-cap lab and imaging revenue.
Although effective cost containment initiatives in Q2 2011 resulted in supply chain cost savings, Q2 2011 COS and G&A expenses were higher than the same period in 2010 as a result of: i) the impact of HST as previously noted; ii) increased physician fees in-line with increased non-cap revenues; iii) increased depreciation and amortization resulting from the purchase of property and equipment and intangible assets; and iv) general inflation. Net earnings of $14.6 million in Q2 2011 were lower than $22.5 million in Q2 2010. The decrease primarily reflects the provision for income taxes resulting from conversion from an income fund to a corporation, as well as a severance charge of $2.6 million in Restructuring & Other Expenses as previously noted.
Revenue in Q2 2011 totaled US$22.7 million compared to US$24.9 million in Q2 2010. The decrease in revenue in Q2 2011 primarily reflects previously noted reimbursement cuts by Medicare and other payors effective January 1, 2011. Q2 2011 COS and G&A expenses were lower than the same period in 2010 due primarily to cost reduction initiatives. During the quarter, CML recorded a US$5.2 million goodwill impairment charge associated with its U.S. operations to reflect current assumptions and outlook for the value of the business. Consequently, Q2 2011 net loss of US$7.0 million was greater than US$0.1 million in the same quarter in 2010.
For the six-month period ended June 30, 2011, revenue declined by 4.8% compared to the same period in 2010 due primarily to: i) $3.3 million from changes in foreign exchange rates; ii) $8.9 million as a result of changes in accounting for the Management Service Agreement (MSA) with Maryland radiologists effective Q2 2010; and iii) reimbursement cuts from Medicare and other U.S. payors. The decrease in revenue was partially offset by increases from i) $0.9 million increase in total laboratory capped revenue based on the funding agreement with the MOH; ii) $0.9 million in one-time laboratory cap funding for the MOH year ended March 31, 2011; and iii) growth in non-cap lab and imaging revenue.
YTD COS and G&A expenses were lower in 2011 compared to 2010 to reflect: i) $8.9 million from the change in accounting for the MSA in Maryland; ii) $3.5 million from changes in foreign exchange rates; iii) decrease in depreciation and amortization; and iv) effective cost containment activities. The decrease in COS and G&A expenses were partially offset by increases from i) general inflation in Canadian operations; ii) increased medical professional fees in-line with increased non-cap revenues; and iii) the impact of HST in British Columbia and Ontario. As a result of lower expenses, both EBITDA and EBITDA margin improved YTD in 2011 compared to 2010.
The decline in 2011 YTD net earnings compared to 2010 was primarily attributable to the provision for income taxes in 2011 since the Company became taxable after its conversion from an income trust to a corporation effective January 1, 2011. During Q2 2011, CML recorded a $5.0 million goodwill impairment charge associated with the U.S. operations to reflect current assumptions and outlook for the value of this business.
YTD AFFO of $40.3 million was higher than $36.9 million in 2010 as a result of increased cash flow from operations and a decrease in property and equipment purchases. Dividends declared were $33.9 million YTD in 2011.
Balance Sheet
As at June 30, 2011, the Company had cash balances of $7.1 million, compared to $9.5 million as at December 31, 2010, and $9.3 million as at March 31, 2011. Long-term debt of the Company, including the current portion, was $315.9 million as at June 30, 2011, compared to $330.2 million as at December 31, 2010 and $320.5 million as at March 31, 2011. As at June 30, 2011, the Company had approximately $62.0 million available under the revolving credit facility with 89,842,404 common shares issued and outstanding.
Notice of Conference Call
Patrice Merrin, Interim CEO and Chairman of the Board will be hosting a conference call today, Thursday, August 11, 2011 at 10:00 am (EST) to discuss the Company's 2011 second quarter financial results. Investors and analysts are invited to join the call by dialing 416-340-2216 or 866-226-1792. Please dial in 15 minutes prior to the call to secure a line. You will be put on hold until the conference call begins.
A live audio webcast of the conference call will be available through . 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, August 25, 2011 by calling 905-694- 9451 or 800-408-3053, reference number 2337877.
About CML HealthCare Inc.
CML HealthCare Inc. is one of North America's largest community-based healthcare services providers. 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 operates 23 medical imaging centres in the U.S. Northeast. CML HealthCare Inc. is publicly-traded on the Toronto Stock Exchange under the symbol "CLC" and has approximately 89.8 million common shares outstanding. To reach CML HealthCare Inc. via the worldwide web, log on to .
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: dependence on government-based revenues in Canada; general economic conditions; pending and proposed legislative or regulatory developments in Canada including the impact of changes in laws, regulations and the enforcement thereof; reliance on funding models in Canada; intensifying competition, resulting from established competitors and new entrants in the businesses in which we operate; our ability to complete strategic acquisitions and to integrate our acquisitions successfully; insurance coverage of sufficient scope to satisfy any liability claims; operational and infrastructure risks including possible equipment failure and performance of information technology systems; fluctuations in total patient referrals; technological change and obsolescence; loss of services of key senior management personnel; privacy laws; ability to pay dividends in the future; leverage and restrictive covenants; fluctuations in cash timing and amount of capital expenditures; tax-related risks; unpredictability and volatility of the price of common shares; dilution; future sales of common shares. Additional factors related to business operations in the U.S. imaging market include, but are not limited to: potential termination of the arrangements with contracted radiology practices; fluctuations in total patient referrals; changes in third-party reimbursement rates or methodology; increased pressure to control healthcare costs; increased competition; technological change; exposure to professional malpractice liability; potential termination of relationship with Johns Hopkins; currency fluctuations; ability to grow business in the United States; U.S. income tax matters; different regulatory environment characterized by extensive regulation; penalties arising from failure to comply with all regulations; federal and state fraud and abuse laws; loss of licensing, certification or accreditation; Certificate of Need regulations; privacy legislation; legislative change affecting prices that physicians or suppliers can charge; avoidance of fee-splitting; environmental health and safety laws; and the uncertainty of, and changes in, the U.S. healthcare regulatory environment.
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 of our Annual Information Form, under "Business Risks" and elsewhere in our Management's Discussion and Analysis of Operating Results and Financial Position for the year ended December 31, 2010 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.
Contacts:
CML HealthCare Inc.
Alice Dunning
Director, Corporate Communications
(905) 565-0043 ext.3472
(905) 565-2844 (FAX)
CML HealthCare Inc.
Tom Weber
Executive Vice President & Chief Financial Officer
(905) 565-0043 ext.3204
(905) 565-2844 (FAX)
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Datum: 11.08.2011 - 10:00 Uhr
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News-ID 45014
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Medical Devices
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