MISSISSAUGA, ONTARIO--(Marketwire - Oct. 13, 2011) - CML HealthCare Inc. (TSX:CLC) ("CML") today announced it has entered into a new two-year Performance Based Funding Agreement (the "Agreement") with the Ontario Ministry of Health and Long-Term Care ("MOHLTC") for the periods April 1, 2011 – March 31, 2012 ("Year 1") and April 1, 2012 – March 31, 2013 ("Year 2"). This Agreement, which supplements the existing Base Cap Funding Agreement, is new to the community-based medical laboratory sector and was negotiated between the Ontario Association of Medical Laboratories (the "OAML") and the MOHLTC.

Base Cap Funding Agreement

The terms of the Base Cap Funding Agreement, which expired on March 31, 2011, have been extended and remain in effect. In each of Year 1 and Year 2, base cap funding for laboratory services provided by the sector will total approximately $670 million, which is materially unchanged from total funding received from the MOHLTC for the year ended March 31, 2011. CML's share of the base cap funding is approximately 30.6%.

Performance Based Funding Agreement

In each of Year 1 and Year 2, up to $15.9 million in new performance-based funding will be available to community laboratories. This amount represents 2.4% of the annual sector base cap funding of $670 million. Each laboratory service provider will be funded based on its percent of sector gross billings. Currently, CML's share of sector gross billings is approximately equal to its share of the corporate cap. The performance measures include:

• Maintain uninterrupted operations and hours of service - under certain circumstances/conditions, planned or unplanned short-term closures or reduction of hours of operation are permitted without reducing a laboratory service provider's entitlement to its maximum eligible amount of performance-based funding;
  
  
• Conduct client satisfaction surveys– selected laboratories will be expected to participate in the OAML Provincial Access Study (the "Study"). Service providers not selected to participate in the Study will be expected to undertake a client satisfaction survey using the Study survey instrument to be eligible for the annual performance-based funding; and
  
  
• Innovation projects – in Year 2, a portion of the performance-based funding is available for laboratories which implement an innovation project during the term of the Agreement. An innovation project includes initiatives such as improving access to services; enhancing client satisfaction; improving system collaborations; and other initiatives to enhance the system.
  
  

The MOHLTC has the option of terminating the performance-based funding after Year 1 subject to notification of community-based laboratory service providers by January 31, 2012.

"We are pleased to have concluded this negotiation with the MOHLTC constructively and progressively. The nature of the Agreements and available funding reflect the current economic environment and will continue to provide us with stability of cash flow," said Tom Weber, CML's Executive Vice President and Chief Financial Officer. "We are fully committed to providing high quality health care in Ontario, and intend to meet all performance criteria associated with the Performance Based Funding Agreement as outlined by the MOHLTC."

About CML HealthCare Inc.

CML HealthCare Inc. is one of North America's largest community-based healthcare services providers. Based in Mississauga, Ontario, CML is a leading provider of laboratory testing services in Ontario operating 117 patient centres, the largest provider of medical imaging services in Canada with 105 imaging centres, and operates 23 medical imaging centres in the U.S. Northeast. CML is publicly-traded on the Toronto Stock Exchange under the symbol "CLC" and has approximately 89.8 million common shares outstanding. To reach CML via the worldwide web, log on to [ www.cmlhealthcare.com ].

Caution concerning forward-looking statements

This document includes forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario) and other provincial securities law in Canada. These forward-looking statements include, among others, statements with respect to our objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on these statements, as a number of important factors, many of which are beyond our control, could cause our actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: dependence on government-based revenues in Canada; general economic conditions; pending and proposed legislative or regulatory developments in Canada including the impact of changes in laws, regulations and the enforcement thereof; reliance on funding models in Canada;
intensifying competition resulting from established competitors and new entrants in the businesses in which we operate; our ability to complete strategic acquisitions and to integrate our acquisitions successfully; insurance coverage of sufficient scope to satisfy any liability claims; operational and infrastructure risks including possible equipment failure and performance of information technology systems; fluctuations in total patient referrals; technological change and obsolescence; loss of services of key senior management personnel; privacy laws; ability to pay dividends in the future; structural subordination of common shares; leverage and restrictive covenants; fluctuations in cash timing and amount of capital expenditures; tax-related risks; unpredictability and volatility of the price of common shares; dilution; and future sales of common shares. Additional factors related to business operations in the U.S. imaging market include, but are not limited to: potential termination of the arrangements with contracted radiology practices; fluctuations in total patient referrals; changes in third-party reimbursement rates or methodology; increased pressure to control healthcare costs; increased competition; technological change; exposure to professional malpractice liability; potential termination of the relationship with Johns Hopkins; currency fluctuations; ability to grow business in the U.S.; U.S. income tax matters; different regulatory environment characterized by extensive regulation; penalties arising from failure to comply with all regulations; federal and state fraud and abuse laws; loss of licensing, certification or accreditation; Certificate of Need regulations; privacy legislation; legislative change affecting prices that physicians or suppliers can charge; avoidance of fee-splitting; environmental health and safety laws; and the uncertainty of, and changes in, the U.S. healthcare regulatory environment.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When reviewing our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found in the "Risk Factors" section hereof and elsewhere in the Fund's Management's Discussion and Analysis of Operating Results and Financial Position ("MD&A") for the year ended December 31, 2010 and elsewhere in our filings with Canadian securities regulators. Except as required by Canadian securities law, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf. Such statements speak only as of the date made. The forward-looking statements included in this Annual Information Form are, unless otherwise indicated, made as of December 31, 2010 and are expressly qualified in their entirety by this cautionary language.