May 4, 2011 / 2:58 PM / 7 years ago

CML Healthcare shares slide as CEO, COO resign

* CEO Paul Bristow, COO Kent Nicholson leave

* Co names Chairwoman Patrice Merrin interim CEO

* Raymond James, NBF cut target prices on CML stock

* Shares fall 7 pct

May 4 (Reuters) - Shares of CML Healthcare Inc fell 7 percent on Wednesday, a day after the sudden exit of the Canadian company’s chief executive and chief operating officer.

CML, which runs imaging and diagnostic clinics, said Chief Executive Paul Bristow and Chief Operating Officer Kent Nicholson resigned to pursue other interests and opportunities.

“While the timing of both senior executive departures is surprising and we are not yet clear as to what ultimately drove this decision,” Raymond James analyst Jamil Murji wrote in a note to clients.

Murji also cut his price target on CML stock by C$1.50 to C$10, but maintained a “market perform” rating.

CML named Chairwoman Patrice Merrinas its interim CEO effective immediately.

Bristow has been with CML since 1998 and CEO since 2006, and it was under his watch that CML ventured into the U.S. healthcare market, buying Maryland-based American Radiology Services Inc in February 2008.

The business, which accounted for about 23 percent of CML’s 2010 revenue, has been a concern due to soft volumes.

“The United States portfolio continues to be a headwind for investors, so in this sense the change could be viewed constructively,” National Bank Financial analyst Trevor Johnson wrote in a note.

“We are still concerned about the optics of losing two important executives,” added Johnson, who cut his target price on CML stock to $10 from $11.50.

Raymond James’ Murji, however, said a fresh set of eyes could be beneficial for CML in longer term.

CML Shares were trading down 5.4 percent at C$9.80 in morning trade on the Toronto Stock Exchange. They touched a low of C$9.65 earlier in the session. (Reporting by Arnika Thakur in Bangalore; Editing by Gopakumar Warrier)

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