CALGARY, ALBERTA--(Marketwire - Nov. 9, 2012) - Alaris Royalty Corp. ("Alaris" or the "Company") (TSX:AD) is pleased to announce that it has completed an additional $19,000,000 contribution (the "Contribution") to KMH Cardiology Limited Partnership ("KMH" or the "Partnership") in support of KMH's growth program. Pursuant to the terms of the Contribution, Alaris subscribed for additional non-voting preferred partnership units, which units entitle Alaris to receive an additional $2,814,800 preferred distribution ("Distribution") for the first full year following the Contribution. The Contribution was funded with funds drawn on the Company's senior credit facility.
The Contribution is Alaris' fourth capital contribution to KMH since the Partnership's formation in 2010. To date, Alaris has contributed an aggregate of $48,600,000 to KMH and, after giving effect to the Contribution, the total aggregate distribution payable to Alaris from KMH is $7,350,700, on an annualized basis. Alaris will begin receiving the additional Distribution immediately. Following the Contribution, on an annualized basis distributions from KMH now account for approximately 19.6% of Alaris' total revenue, an increase from 13.1% prior to the Contribution.
"KMH has proven to be a tremendous operator in the stable medical diagnostics industry. We are excited to be growing our partnership and supporting their successful acquisition strategy. Deploying more capital into this industry and with this management team is very positive for Alaris shareholders." - Steve King, President and CEO, Alaris Royalty Corp.
Uses of Capital
KMH will use the net proceeds from the Contribution to acquire a group of four (4) jointly owned Independent Diagnostic Testing Facility centers in the United States. The acquisitions will be accretive to KMH and will result in KMH becoming a larger and financially stronger partner to Alaris. Following these acquisitions KMH will own and operate nine (9) clinics in the United States and eight (8) clinics in Canada.
"KMH is pleased to announce that, with the support and involvement of Alaris, we have taken bold new steps to increase our market penetration and presence in the North American healthcare market." - Neena Kanwar, President and CEO of KMH. Ms. Kanwar further stated, "These new ventures would not have been possible without the full support and confidence of Alaris our major partner in achieving our corporate strategic goal of dominance and pre-eminence in the provision of diagnostic services. KMH is fortunate to be in a position to partner with an organization that has and will continue to support our corporate growth strategy and has enabled us to grow our business and realize true investor value."
Impact on Alaris
On an annualized basis, the transaction increases revenue by $2,814,800 and increases interest expense by $1,140,000; for an expected net earnings increase of $1,674,800, or $0.075 on a per share (basic) basis. Alaris expects that its payout ratio, on an annualized basis, will be reduced to approximately 85% after giving effect to the Contribution.
The Company provides alternative financing to a diversified group of private businesses ("Private Company Partners") in exchange for royalties or distributions from the Private Company Partners, with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. Royalties or distributions to Alaris from the Private Company Partners are structured as a percentage of a "top line" financial performance measure such as gross margin, same clinic sales, gross revenues and same-store sales and rank in priority to the owners' common equity position.
KMH provides access to rapidly-evolving medical technology, state-of-the-art diagnostic equipment and highly qualified specialists in Canada and the United States. According to KMH management, KMH has grown from a single facility in 1988 to become the largest provider of Nuclear Cardiology services in North America.
KMH services include Nuclear Medicine, Cardiology and Magnetic Resonance Imaging (MRI) diagnostic services. Physician practice management solutions by KMH further enhance patient care by providing access to specialist consultations and treatment. According to KMH management, more than 85,000 patients visit KMH annually after being referred by physicians, insurance companies, employers and other third party service providers. KMH has successfully administered more than 600,000 cardiology, nuclear cardiology and nuclear medicine diagnostic tests and more than 40,000 magnetic resonance imaging scans. KMH consistently provides a high level of service which has created a strong rapport within the healthcare community. KMH is well recognized by more than 10,000 physicians and has established a preferred provider relationship within the insurance and health services industry.
The terms "distributable cash per share" and "payout ratio" (the "Non-IFRS Measures") are financial measures used in this news release that are not standard measures under International Financial Reporting Standards ("IFRS"). The Company's method of calculating the Non-IFRS Measures may differ from the methods used by other issuers. Therefore, the Company's Non-IFRS Measures may not be comparable to similar measures presented by other issuers. Payout ratio means Alaris' annualized dividend per share divided by its distributable cash per share. Distributable cash per share means Alaris' cash flow from operating activities divided by the weighted average number of common shares issued and outstanding in the share capital of the Company over such period. The Non-IFRS measures should only be used in conjunction with the Corporation's annual audited and quarterly reviewed financial statements, which are available on SEDAR at www.sedar.com.
This news release contains forward-looking statements as defined under applicable securities laws. Statements other than statements of historical fact contained in this news release may be forward-looking statements, including, without limitation, management's expectations, intentions and beliefs concerning the transaction described herein including: the Distribution payable to the Company; the timing of the payment of the Distribution; the impact of the Contribution on the Company's payout ratio; expected impact on net earnings; and the expected impact of the clinic acquisitions on KMH and its financial position. Many of these statements can be identified by looking for words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof. There can be no assurance that the plans, intentions or expectations upon which these forward looking statements are based will occur.
Statements containing forward-looking information by their nature involve numerous assumptions and significant known and unknown facts and uncertainties of both a general and a specific nature. Key assumptions include, but are not limited to assumptions that: the Partnership will grow and may require capital from Alaris in the future; the Canadian and U.S. economies will grow moderately over the balance of 2012; the businesses of the Private Company Partners will continue to grow; interest rates will not rise in a material nature over the next 12 months; and more private companies will require access to alternative sources of capital. In determining the Company's expectations for economic growth, management primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.
The forward-looking statements contained herein are subject to numerous known and unknown risks that may cause actual results to vary from those set forth in the forward-looking statements, including, but not limited to risks associated with: general economic conditions and changes in the financial markets; risks associated with KMH and its business; and a change in the ability of the KMH to continue to pay Alaris' preferred distributions. In addition, the information set forth under the heading "Risk Factors" in the Company's Annual Information Form dated March 25, 2011 (a complete copy of which can be found on SEDAR at www.sedar.com) identifies additional factors that could affect the operating results and performance of the Company and may cause the actual results of the Company to differ materially from those anticipated in forward-looking statements.
As forward-looking statements are subject to risks, uncertainties and assumptions and should not be read as guarantees or assurances of future performance. Accordingly, readers are cautioned not to place undue reliance on any forward-looking information contained in this news release as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. Statements containing forward-looking information reflect management's current beliefs and assumptions based on information in its possession on the date of this news release. Although management believes that the assumptions reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations will prove to be correct.
The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release and Alaris does not undertake or assume any obligation to update or revise such statements to reflect new events or circumstances except as expressly required by applicable securities legislation.