FOR IMMEDIATE RELEASE
CANADIAN MEDICAL LABORATORIES ANNOUNCES SECOND QUARTER RESULTS
Company Reports Record Revenue and Earnings
TORONTO, Ontario, May 21, 1998 - Canadian Medical Laboratories Limited (TSE: CLC), a leading medical laboratory testing company in Ontario, today reported record sales of $20,089,000 and a 315% increase in net income to $3,611,000 or $0.22 per share, for the second quarter ended March 31, 1998. This compares to sales of $18,183,000 and net income of $1,146,000 or $0.07 per share for the corresponding period last year.
This dramatic earnings performance reflects increased operating efficiencies in the laboratory testing business resulting from further integration of the operations of Excel Bestview Medical Laboratories, which CML acquired in November of 1996. These efficiencies resulted in an 8% reduction in operating expenses from $13,261,000 to $12,174,000 for the period ended March 31,1998.
Earnings performance was further enhanced as a result of a recent agreement between the Ontario Association of Medical Laboratories (OAML) and the Ministry of Health of Ontario. In addition to elevating the annual spending cap by 1.5% in each of the next two years, the agreement provided for a one-time payment for work billed by the industry in the year ended March 31, 1998.
As a result of this agreement the company was able to release $1.5 million from contingency reserves which increased earnings per share by approximately $0.05.
"Our outlook remains extremely positive," said John Mull, MD, President and CEO. "As we move into the latter half of the fiscal year we anticipate significant additional revenue and earnings growth through continued efficiency improvment in our laboratory testing business and rapid growth in our pharmaceutical research business."
Sales for the six months ended March 31, 1998, were $ 38,218,000 versus $32,892,000 for the corresponding period last year. Resulting net income has doubled from $2,276,000 or $0.17 per share for the six month period ended March 31, 1997, to $5,570,000 or $0.34 per share for the six months ended March 31, 1998.
During the quarter the company continued to invest in its pharmaceutical research business Pharma Medica Research Inc. which opened a Phase I Clinic in the first week of April. Pharma Medica's backlog of research contracts continues to grow as sales efforts intensify.
In March the company expanded its pharmaceutical research business in the United States with the creation of the Academic Network for Clinical Research (ANCR). The new company is 51% owned by CML and 49% owned by the Academic Contract Research Organization (ACRO) located in Washington, DC. ANCR was formed to manage and market the clinical trial services at 125 medical schools in the United States. "We will now be able to offer pharmaceutical companies a large diverse patient population and the world's top researchers," said Craig Mull, Director of Corporate Development.
CML's US based site management organization,, Novoquest Research Inc. continues to pursue acquisition candidates. "Negotiations with several sites are well advanced and very encouraging," said Dr. J. Mull.
Canadian Medical Laboratories Limited, is a leading edge healthcare company providing laboratory testing services in Ontario and pharmaceutical research services to North America. CML's common shares trade on The Toronto Stock Exchange("TSE") under the symbol "CLC" with approximately 16.6 million shares outstanding.
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