Futuremed Healthcare Income Fund
TSX : FMD.UN

Futuremed Healthcare Income Fund

August 13, 2007 17:30 ET

Futuremed Announces Continued Growth in Second Quarter 2007

CONCORD, ONTARIO--(Marketwire - Aug. 13, 2007) - Futuremed Healthcare Income Fund (TSX:FMD.UN) ("Futuremed" or the "Fund") announced today solid results for the three and six months ended June 30, 2007.

Quarterly Highlights:

- Increased share of all geographic markets

- Growth in both consumable nursing supplies and furniture & equipment business

- New customers and increased utilization drive 12% increase in nursing supplies sales

- Gross profit up 13%

- Distributable cash up 25%

- Payout ratio improves to 93%

Futuremed generated increased revenue across all geographic markets and most product lines in the second quarter of 2007. Total sales in the quarter rose 10.8% to $25.2 million compared to $22.8 million in the same quarter last year. For the six months ended June 30, 2007, total sales were $52.8 million, consistent with revenue in the same period last year.

For the three months ended June 30, 2007 sales of the Fund's nursing supplies rose 11.8% to $22.3 million, driven by higher sales volume of incontinence products and other nursing supplies. For the first six months of 2007, revenues from nursing supplies increased 14.1% to $44.8 million compared to $39.2 million for the same period last year. Consumable nursing supplies represented approximately 88% of the Fund's total sales in the quarter and 85% for the first half of 2007.

Sales of the Fund's furniture and equipment business increased 4.4% in the second quarter of 2007 to $2.9 million compared to the same period last year, due primarily to replacement spending at a number of long-term care facilities. For the six months ended June 30, 2007 sales of furniture and equipment were $8.0 million compared to $13.6 million last year. Sales of these products are dependent on government-funded infrastructure projects announced from time-to-time. The first six months of 2006 included revenue of approximately $3.9 million related to a large Durable Medical Equipment ("DME") project managed by the Ontario Government. There were no such infrastructure projects announced through the first six months of 2007.

"We were pleased with the solid organic growth generated during the second quarter as we increased market share in all of our geographic regions and across most of our product lines," commented Raymond Stone, President and Chief Executive Officer of Futuremed. "As our results reflect, our nursing supplies segment remains a significant driver of our growth, and as we penetrate further into our high-growth markets, our revenues and cash flow should continue to increase."

On a geographic basis, sales in Ontario increased 8.7% in the second quarter of 2007 compared to the prior year. For the six months ended June 30, 2007, sales in Ontario decreased 4.8% compared to the same period in 2006, due primarily to the impact of the DME project in 2006. Not including sales of furniture and equipment, sales in Ontario increased 5.1% in the first six months of 2007 compared to the same period last year.

In British Columbia sales rose 34.0% for the second quarter of 2007 compared to the same period last year, while sales in the other Western Canadian provinces of Alberta, Saskatchewan and Manitoba rose 6.1% . For the first six months of 2007, sales in B.C. rose 25.3% while sales in other Western Canada provinces were up 11.9% over the same period last year. The increases are the result of further market penetration due to new customers as well as increased business from existing customers.

Gross profit in the second quarter of 2007 increased by 12.8% compared to last year's second quarter. For the six months ended June 30, 2007, gross profit rose 2.5% over the same period last year. Gross profit on nursing supplies rose 11.8% and 15.7% respectively, for the three and six months ended June 30, 2007, compared to the same periods last year.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $3.6 million in the second quarter of 2007 compared to $3.2 million last year. For the six months ended June 30, 2007, EBITDA was $8.1 million compared to $8.6 million for the same period last year. Selling, general and administrative (SG&A) expenses were higher in the second quarter of 2007 due primarily to the hiring of additional staff required to support the anticipated higher level of sales, and increased delivery costs related to higher fuel prices and changes in sales mix. As a percentage of revenue, SG&A expenses decreased to 14.0% from 14.3% for the second quarter of 2006. For the first six months of 2007, SG&A expenses were 13.7% of total revenue compared to 12.5% for the same period last year.

The net loss of $4.6 million was negatively impacted by a future income tax charge of $6.5 million resulting from a change in the tax legislation for Canadian Income Trusts. This tax charge does not impact distributable cash for the quarter or the year to date.

The Fund generated distributable cash of $3.3 million or $0.25 per Unit in the second quarter of 2007 compared to $2.7 million or $0.20 per Unit last year. Distributions declared for the second quarters of both 2007 and 2006 were $3.1 million or $0.23 per Unit. The payout ratio for the second quarter of 2007 improved to 93% from 116% last year. For the first six months of 2007, the Fund generated distributable cash of $7.1 million or $0.53 per Unit compared to $7.3 million or $0.55 per Unit for the same period last year. The payout ratio for the first six months of 2007 was 87% compared to 82% last year. Capital expenditures were only $60,000 in the quarter and $121,000 through the first six months of 2007.

"Our strong and growing consumable nursing supplies business continues to support the stability and sustainability of our cash distributions to Unitholders. Our expansion into the physicians market begun last year is making a positive contribution to cash flow, while new government contracts for furniture and equipment, when announced, will add to our growth over the long term," Mr. Stone concluded.



Financial Highlights

---------------------------------------------------------------------------
---------------------------------------------------------------------------
(in $,000 except per Unit
amounts) Three months ended Six months ended
June 30, June 30,
---------------------------------------------------------------------------
2007 2006 2007 2006
Sales:
Nursing supplies $ 22,276 $ 19,933 $ 44,785 $ 39,237
Furniture &Equipment 2,967 2,841 8,030 13,569
---------------------------------------------
Total sales 25,243 22,774 52,815 52,806
Gross profit 7,326 6,497 15,497 15,114
Selling, general &
administrative expenses 3,527 3,258 7,249 6,614
EBITDA 3,590 3,167 8,079 8,627
Net earnings (4,633) 1,640 (2,018) 5,294

Distributable Cash 3,320 2,662 7,143 (i)7,325
Distributable Cash per Unit $ 0.25 $ 0.20 $ 0.53 (i)$ 0.55
Distributions/Declared per
Unit $ 0.23 $ 0.23 $ 0.46 (i) $ 0.45
Payout Ratio 93% 116% 87% (i)82%

Sales by Geography:
Ontario $ 18,574 $ 17,081 $ 39,225 $ 41,223
British Columbia 3,024 2,257 5,852 4,669
Alberta, Saskatchewan,
Manitoba 3,645 3,436 7,738 6,914
---------------------------------------------
Total Sales 25,243 22,774 52,815 52,806
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(i) Period January 6, 2006 to June 30, 2006


Copies of the Fund's financial statements and Management's Discussion and Analysis for the period can be obtained on the Fund's web site at www.futuremedfund.com or www.sedar.com.

About Futuremed Healthcare Income Fund

Futuremed Healthcare Income Fund, through its operating entities, is Canada's leading value-added distributor of consumable nursing home supplies and specialized furniture and equipment to the growing long-term care facilities sector. Futuremed's Trust Units trade on the Toronto Stock Exchange under the symbol FMD.UN. More information can be found at www.futuremedfund.com .

Readers are cautioned that EBITDA, distributable cash and distributable cash per unit are not Generally Accepted Accounting Principles ("GAAP") measures and should not be construed as an alternative to net earnings and earnings per share determined in accordance with GAAP as an indicator of the Fund's performance. The Fund's methods of calculating these measures may differ from other issuers' methods and accordingly, they may not be comparable to measures used by other issuers.

This document may contain forward-looking statements relating to Futuremed's operations or to the environment in which it operates, which are based on the Fund's operations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, and/or are beyond the Fund's control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in other public filings. In addition, these forward-looking statements relate to the date on which they are made. The Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. More information about these risks and uncertainties can be found in regulatory filings available at www.sedar.com.

Contact Information

  • Futuremed Healthcare Income Fund
    Daniel Sacks
    Chief Financial Officer
    (905) 761-0068, ext. 2222
    Toll-Free investor relations: 1-800-387-7025
    Website: www.futuremedfund.com