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CML Healthcare has announced the departure of chief executive office Paul Bristow and chief operating officer Kent Nicholson. Though a specific reason wasn't given, TD Securities analyst Lennox Gibbs "interpreted the leadership shakeup as after-the-fact acknowledgement of CML's shortcomings in the U.S. medical imaging market."

Shortcomings may be a nice word for what has transpired since CML made its foray into the U.S. in 2008 by acquiring American Radiology Services. In the years since, earnings performance south of the border has deteriorated and the EBITDA margin fell 613 basis points to the high single digits.

Seeing a problem, CML shook up its U.S. leadership team in February, 2010. A month after that, the U.S. operation took a $50-million impairment charge, and a year later another $51-million was written off.

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Since the last charge there has been a "lack of clarity" regarding the firm's U.S. strategy, Mr. Gibbs noted. And things don't look to be getting any better. TD expects that reimbursement cuts and soft patient traffic will hit the U.S. division's earnings this year. There is also a worry that CML doesn't have enough scale in the U.S. over the long term, meaning it hasn't been adding enough facilities.

Patrice Merrin, who heads CML's board, has been appointed interim CEO until a replacement is found.

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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