Futuremed Healthcare Income Fund

Futuremed Healthcare Income Fund

May 13, 2009 17:30 ET

Futuremed Announces First Quarter 2009 Results

CONCORD, ONTARIO--(Marketwire - May 13, 2009) - Futuremed Healthcare Income Fund (TSX:FMD.UN) ("Futuremed" or the "Fund") announced today its financial and operating results for the three months ended March 31, 2009.


- Sales rise 70% on organic growth and strong Dismed contribution

- Sales up in all geographic regions and across most product lines

- Solid growth in recurring, non-discretionary nursing supplies revenues

- Capital investments in quarter to enhance efficiency, reduce logistical costs

- Long-term debt extended on favourable terms

- Credit facility unutilized in quarter

Sales in the first quarter of 2009 increased to $46.8 million compared to $27.5 million for the same period in 2008. The increase is due primarily to the $18.4 million contribution in sales from Dismed as well as solid increases across most of the Fund's revenue streams. The Fund acquired Dismed on June 30, 2008. Not including sales from Dismed, sales in the first quarter of 2009 increased 3.4%. Sales of the Fund's consumable nursing supplies rose 79.3% to $40.6 million compared to $22.7 million last year, driven primarily by the contribution in sales from Dismed, as well as strong increases in sales of incontinence products and other nursing supplies in the Fund's other markets. Consumable nursing supplies represented approximately 86.8% of the Fund's total sales in the first quarter of 2009.

Sales of the Company's furniture and equipment increased to $6.2 million in the first quarter of 2009 compared to $4.8 million for the same period last year. The increase was due primarily to the $2.5 million contribution in furniture and equipment sales from Dismed.

For the first quarter of 2009, gross profit increased 36.3% compared to the prior year period due primarily to the margin contribution from Dismed in the quarter. Increases in input costs as a result of the higher US dollar exchange rate, higher freight charges on incoming goods, and lower subsidies on goods manufactured in the Orient negatively impacted gross profit margins in the quarter. However, management believes these increases have stabilized, and in some instances, reversed due to current global economic influences, and expects this trend of decreasing cost inputs will have a positive impact on gross margins going forward.

Selling, general and administrative (SG&A) expenses for the three months ended March 31, 2009 increased 63.3% due primarily to the addition of Dismed. In addition, the Fund experienced increased costs due to higher infrastructure expenses incurred to manage the increased level of business activity, and increased delivery costs resulting from higher fuel prices and delivery surcharges levied by transportation suppliers, as well as a reduction in the number of large project orders for which delivery costs are typically recoverable by the Fund. As a percentage of revenues, SG&A costs reduced to 14.0% in the first quarter of 2009 from 14.6% last year.

For the three months ended March 31, 2009 the Fund generated distributable cash of $2.8 million or $0.19 per Unit compared to $3.3 million or $0.24 per Unit in the first quarter of 2008. Capital expenditures amounted to approximately $435,000 in the first quarter of 2009 compared to $71,000 last year. The increase in 2009 relates to a warehouse improvement project that is nearing completion. Excluding the effect of the capital expenditures on the warehouse project, distributable cash flow would have been $3.3 million in the quarter, consistent with last year.

The payout ratio for the first quarter of 2009 was 122% compared to 95% last year. Not including the short-term increase in capital expenditures in the first quarter of 2009, the payout ratio would have been 108%. As at March 31, 2009 the number of Fund trust units outstanding had increased by 14% compared to the prior year, due primarily to the issuance of 1,875,000 units related to the acquisition of Dismed.

Long-term debt increased as at March 31, 2009 due primarily to the Dismed acquisition. Working capital was $18.6 million compared to $12.1 million at March 31, 2008 and $19.6 million at December 31, 2008. The Fund did not utilize its operating credit facility through the first quarter of 2009.

During the quarter the Fund reached an agreement with its existing lender to extend its credit facilities to March 31, 2012 on similar terms and conditions. As at March 31, 2009 the Fund was in compliance with all financial and non-financial covenants on its credit facilities.

"We continue to generate solid organic growth across all of our markets, while last year's acquisition of Dismed continues to make a strong and accretive contribution to our overall results," commented Raymond Stone, President and CEO. "Going forward, we believe our business will continue to grow due to the continuing positive fundamentals in our business. Long-term care in Canada is fully government funded and generally not considered a discretionary service. In addition, demand continues to significantly outstrip supply due to a fast growing seniors population and increased pressure for additional capacity across the country. We are in a strong position to capitalize on this increased demand over the long term."

"Since inception, the Fund has paid out approximately $3.01 per unit in accumulated cash distributions, and we remain confident we will maintain our current distribution level for the foreseeable future," Mr. Stone concluded.

Financial Highlights
(in $,000 except per Unit amounts) Three months ended
March 31,
2009 2008
Nursing supplies $ 40,642 $ 22,674
Furniture & Equipment 6,192 4,819
Total sales $ 46,834 $ 27,493
Gross profit 10,279 7,540
Selling, general & administrative expenses 6,571 4,025
Net earnings 1,878 2,233

Distributable Cash:
Cash flow from operating activities 3,550 1,033
(Less) capital expenditures (435) (71)
Add/(Less) changes in working capital and
unrealized loss on swap contract (224) 2,304
Distributable Cash 2,883 3,266

Distributable Cash per Unit $ 0.19 $ 0.24
Distributions/Declared per Unit $ 0.23 $ 0.23
Payout Ratio 122% 95%
Normalized(i) Payout Ratio 108% 95%

(i)Excluding infrastructure capital expenditures that are outside the
definition of maintenance capital expenditures.

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.futuremed.ca 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.futuremed.ca

Readers are cautioned that Payout Ratio 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