MISSISSAUGA, ON, April 6 /CNW/ - CML Healthcare Inc. and CML Healthcare
Income Fund (the "Fund"), (TSX: CLC.UN), today announced that the Ontario
Association of Medical Laboratories ("OAML") has entered into a new three-year
funding agreement (the "Agreement") with the Ontario Ministry of Health and
Long-Term Care ("MOH"). Under terms of the Agreement, which is retroactive to
April 1, 2005, the MOH will increase the provincial payment cap for laboratory
services to OAML members by 2% per annum for the term of the Agreement. The
resulting base funding cap for laboratory services will be $559.6 million for
the year ending March 31, 2006 (an increase of $11.0 million compared to the
fiscal 2005 funding cap), $570.8 million for the year ending March 31, 2007
(an increase of $11.2 million), and $582.2 million for the year ending
March 31, 2008 (an increase of $11.4 million). CML Healthcare, which currently
holds approximately 30.6% of the community-based Ontario laboratory testing
market, will receive its proportional share of these increases.
The Agreement also includes additional one-time funding provided certain
conditions are met by the industry. This additional funding, to a maximum of
0.8% of the provincial payment cap in the first year ($4.6 million) and an
additional 2% in each of the next two years ($15.9 million in 2006/2007 and
$26.9 million in 2007/2008), would be paid, if earned, annually to OAML
members according to their respective proportional shares of the provincial
payment cap, as part of the MOH year-end reconciliation process. Additional
funding earned in the third year of the Agreement will be added to the
provincial payment cap at the end of the three year term.
Due to the retroactive nature of the Agreement, CML Healthcare will
recognize approximately $2.5 million in unrecorded cap revenue in its fiscal
2006 first quarter financial results, representing the 2% cap increase from
April 1, 2005 to December 31, 2005. CML Healthcare's proportional share of the
additional funding, if the conditions are met, will be recognized in its
fiscal 2006 year end results.
This Agreement ensures funding stability to the community laboratory
sector while at the same time meeting the MOH need to continue with capped
funding for the provision of community laboratory services.
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 (assuming the exchange for units of all of the outstanding
exchangeable shares of CML Healthcare Inc., excluding those held by the Fund
or its affiliates). 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, should be considered forward-looking and
subject to various risks and uncertainties. Such forward-looking statements
are based on management's beliefs and assumptions regarding the information
currently available. The Company's actual results could differ materially from
those expressed in the forward-looking statements. Factors that could cause
results to vary include, among other things, those expressed in the Company's
filings with Canadian securities regulatory authorities. All information
presented herein should be read in conjunction with such filings.
%SEDAR: 00020333E
