Futuremed Healthcare Income Fund

Futuremed Healthcare Income Fund

May 03, 2007 17:30 ET

Futuremed Announces First Quarter 2007 Results

CONCORD, ONTARIO--(CCNMatthews - May 3, 2007) - Futuremed Healthcare Income Fund (TSX:FMD.UN)("Futuremed" or the "Fund") announced today its results for the three months ended March 31, 2007.

Q1 2007 Highlights:

- Nursing supplies sales up 17% on solid market share growth

- Recent entrance into physicians market generates positive contribution

- Furniture and equipment sales impacted by timing of government contracts

- Conservative 79% Payout Ratio

Futuremed generated increased revenue across all geographic markets and most product lines in its consumable Nursing Supplies division through the first quarter of 2007. Compared to last year's first quarter, sales rose 16.6% to $22.5 million, driven by new customers and increased orders at existing clients. Consumable nursing supplies represented approximately 82% of the Fund's total sales in the quarter.

Effective July 1, 2006 the Fund implemented a new program to enter the physician market with the hiring of dedicated management and sales staff. Physicians utilize many of the same products the Fund sells to its long-term care customers. As expected, the Fund broke-even in this market for 2006 and generated a modest contribution to distributable cash in the first quarter of 2007.

Total sales in the first quarter of 2007 were approximately $27.6 million compared to $30.0 million last year. The first quarter of the prior year included revenue of approximately $3.9 million related to a large Durable Medical Equipment ("DME") project managed by the Ontario Government. Due to the unpredictable nature of the timing of such projects, there was no similar project announced in the first quarter of 2007.

"We were pleased with the solid organic growth generated in our nursing supplies business during the first quarter," commented Raymond Stone, President and Chief Executive Officer of Futuremed. "Our recent penetration into the physicians market has also been very successful, and we expect the contribution to our cash flow from this new aspect of our business will grow going forward."

On a geographic basis, sales in Ontario decreased 14.5% in the first quarter of 2007 compared to the prior year. The decrease was primarily due to the reduced level of furniture and equipment sales discussed above. Not including sales of furniture and equipment, sales in Ontario increased 1.7% in the first quarter of 2007 compared to the same period last year.

In British Columbia sales rose 17.2% for the first quarter of 2007 compared to the same period last year, while sales in the other Western Canadian provinces of Alberta, Saskatchewan and Manitoba rose 17.7%. The increases are the result of increasing market share and higher utilization of consumable nursing supplies for the care and treatment of residents in the respective Province's long-term care facilities.

Gross profit, as a percentage of sales, increased from 28.8% in last year's first quarter to 29.6%. Excluding DME projects, gross profit increased $0.8 million or 11.0% in the first quarter of 2007 compared to the prior year period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $4.5 million in the first quarter of 2007 compared to $5.3 million last year. Selling, general and administrative (SG&A) expenses were higher in the first 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.

The Fund generated distributable cash of $3.9 million or $0.29 per Unit in the first quarter of 2007 compared to $4.7 million or $0.35 per Unit last year. Distributions declared for the first quarter of 2007 were $3.1 million or $0.23 per Unit. The payout ratio was 79% in the first quarter. Capital expenditures were only $61,000 in the period.

"Despite the decline in furniture and equipment sales, we still generated a very conservative 79% payout ratio in the first quarter, underlining how our strong and growing consumable nursing supplies business will continue to support the sustainability of our cash distributions to Unitholders. The focused expansion in our new physicians business will add to this stability, while new government contracts for furniture and equipment, when announced, will contribute to increased cash flow going forward," Mr. Stone concluded.

Financial Highlights

(in $,000 except per Unit amounts) Three months ended
March 31,
2007 2006

Nursing supplies 22,509 19,305
Furniture &Equipment 5,063 10,728
Total sales 27,572 30,033
Gross profit 8,171 8,661
Selling, general & administrative expenses 3,722 3,313
EBITDA 4,489 5,348
Net earnings 2,615 3,598

Distributable Cash 3,919 (a)4,663
Distributable Cash per Unit $0.29 (a)$0.35
Distributions/Declared per Unit $0.23 (a)$0.22
Payout Ratio 79% (a)63%

Sales by Geography:
Ontario 20,651 24,143
British Columbia 2,828 2,413
Alberta, Saskatchewan, Manitoba 4,093 3,477
Total Sales 27,572 30,033
(a) Period January 6, 2006 to March 31, 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
    Vice President, Finance
    (905) 761-0068, ext. 2222
    Toll-free investor relations: 1-800-387-7025
    Website: www.futuremedfund.com