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Medical Facilities Corporation Reports Second Quarter 2018 Financial Results

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Medical Facilities Corporation Reports Second Quarter 2018 Financial Results

Canada NewsWire

TORONTO, Aug. 9, 2018 /CNW/ - Medical Facilities Corporation ("Medical Facilities," "MFC," or the "Company") (TSX:DR), reported its financial results today for the three-month and six-month periods ended June 30, 2018. All amounts are expressed in U.S. dollars unless indicated otherwise.

Q2 2018 Summary
(Compared to Q2 2017)

  • Revenue increased 10.8% to $106.5 million
  • Surgical cases increased by 39.5%
  • Income from operations increased 10.3% to $17.9 million
  • EBITDA1 increased 3.4% to $23.9 million
  • Cash available for distributions1 decreased 2.9% to C$11.7 million
  • Payout ratio1 was 74.3% compared to 72.4% in Q2 2017

"Our second quarter results underline the significance of our acquisition of seven ambulatory surgical centers through MFC Nueterra in the first quarter," said Robert O. Horrar, President and CEO of Medical Facilities. "The MFC Nueterra ASCs drove higher case volumes and accounted for most of the revenue growth of 10.8% for the second quarter. Expanding our footprint to 11 states from five, MFC Nueterra's strong contributions to date further validates our strategy to diversify our portfolio."




Financial Results

For the three months ended

For the six months ended

June 30

June 30

(thousands of U.S. dollars, except per share amounts and where otherwise noted)

2018

%
change

2017

2018

%
change

2017

Facility service revenue

106,494

10.8%

96,085

204,112

10.3%

185,089

Consolidated operating expenses

88,633

10.9%

79,892

172,128

10.6%

155,576

Income from operations

17,861

10.3%

16,193

31,984

8.4%

29,513


Finance costs (net interest expense)

1,465

(1.2%)

1,483

2,839

(7.5%)

3,068


Finance costs (changes in values of derivative instruments and gain/loss on foreign currency)

855

106.1%

(14,105)

1,066

115.6%

(6,825)


Income tax expense

2,491

(62.8%)

6,691

4,500

(29.8%)

6,407

Consolidated income from operations

13,050

(41.0%)

22,124

23,579

(12.2%)

26,863


Attributable to:









Owners of the Corporation

6,300

(55.5%)

14,168

10,528

(22.9%)

13,652



Non-controlling interest

6,750

(15.2%)

7,956

13,051

(1.2%)

13,211








Earnings per share









Basic

$ 0.20

(56.5%)

0.46

$ 0.34

(22.7%)

0.44



Diluted

$ 0.18

-

0.18

$ 0.30

(6.3%)

0.32

 

Consolidated income attributable to owners of the Corporation fluctuates significantly between the periods, primarily due to variations in non-cash finance costs (changes in the values of convertible debentures and exchangeable interest liability), and income taxes; these charges are incurred at the corporate level rather than at the Facility level.




Reconciliation of Consolidated Income from Operations to EBITDA

For the three months ended

For the six months ended

June 30

June 30

(thousands of U.S. dollars, except where otherwise noted)

2018

%
change

2017

2018

%
change

2017

Consolidated income from operations

13,050

(41.0%)

22,124

23,579

(12.2%)

26,863

Income tax expenses

2,491

(62.8%)

6,691

4,500

(29.8%)

6,407

Finance costs

2,320

(118.4%)

(12,622)

3,905

(203.9%)

(3,757)

Depreciation and amortization

6,049

(12.6%)

6,924

11,994

(12.5%)

13,707

EBITDA

23,910

3.4%

23,117

43,978

1.8%

43,220

 




Distributable Cash Flow

For the three months ended

For the six months ended

June 30

June 30

(thousands of U.S. dollars, except per share amounts and where otherwise noted)

2018

%
change

2017

2018

%
change

2017

Cash available for distribution (C$)

11,719

(2.9%)

12,068

20,946

(7.0%)

22,534

Distributions (C$)

8,711

(0.2%)

8,732

17,416

(0.3%)

17,463

Distributions per common share (C$)

0.28


0.28

0.56


0.56

Payout ratio

74.3%


72.4%

83.1%


77.5%

 

During the quarter, the Company paid monthly cash dividends of C$0.09375 per common share (or C$1.125 per share on an annualized basis), which represented an annualized yield of 8.05% on the June 30, 2018 closing price of $13.97 per common share.

As at June 30, 2018, the Company had consolidated net working capital of negative $9.1 million compared to $33.8 million as at December 31, 2017. The change was due mainly to the acquisition of the MFC Nueterra ASCs in the first quarter of 2018. The level of working capital, including financing required to cover any deficiencies, is dependent on operating performance of the Corporation and fluctuates from period to period.

Medical Facilities' complete second quarter 2018 financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, August 9, 2018 and will be available on the same day on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Appointment of Ms. Erin Enright to the Board of Directors

The Company also announced today the appointment of Ms. Erin S. Enright to its Board of Directors effective August 8, 2018. Ms. Enright has extensive board, investment, capital markets, and legal experience. Ms. Enright is a Managing Member of Prettybrook Partners, LLC, a private investment firm, and serves on the Board of Directors of Dynatronics, Inc. (NASDAQ:DYNT), where she chairs the Nominating and Governance Committee and is on the Audit Committee. She has also served on the boards of other NASDAQ companies. Previously, Ms. Enright has held the positions of President and CFO for companies in the medical devices field as well as Managing Director of Citigroup's Equity Capital Markets Group, and was an attorney with Wachtell, Lipton, Rosen & Katz.

Normal Course Issuer Bid ("NCIB")

During the six months ended June 30, 2018, the Corporation did not purchase any of its common shares. As at June 30, 2018, the Company had 30,983,257 common shares outstanding.

Notice of Conference Call

Management of MFC will host a conference call today, August 9, 2018 at 8:30 am EDT to discuss its second quarter financial results. You can join the call by dialing 647-427-7450 or 1-888-231-8191. A replay of the call will be available until Thursday, August 16, 2018 by calling 416-849-0833 or 1-855-859-2056, reference number 1598595. A live audio webcast of the call will be available at https://bit.ly/2JEHcRI.

To view Medical Facilities Q2 2018 financial statements and notes, please click here:
http://files.newswire.ca/940/MFC_FS_IFRS_Q2_2018.pdf

About Medical Facilities

Medical Facilities, in partnership with physicians, owns surgical facilities in the United States. Medical Facilities' portfolio includes controlling interest in five specialty surgical hospitals located in Arkansas, Indiana, Oklahoma, and South Dakota, and an ambulatory surgery center located in California. In addition, through a partnership with NueHealth LLC, Medical Facilities owns majority interest in seven ambulatory surgery centers located in Arkansas, Michigan, Missouri, Nebraska, Ohio, Oregon, and Pennsylvania. The specialty surgical hospitals perform scheduled surgical, imaging, diagnostic and other procedures, including primary and urgent care, and derive their revenue from the fees charged for the use of their facilities. The ambulatory surgery centers specialize in outpatient surgical procedures, with patient stays of less than 24 hours. Medical Facilities is structured so that a majority of its free cash flow from operations is distributed to the holders of its common shares in the form of dividends. For more information, please visit www.medicalfacilitiescorp.ca.

Caution concerning forward-looking statements

Statements made in this news release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. Some forward-looking statements may be identified by words like "may", "will", "anticipate", "estimate", "expect", "intend", or "continue" or the negative thereof or similar variations. 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. Factors that could cause results to vary include those identified in Medical Facilities' filings with Canadian securities regulatory authorities such as legislative or regulatory developments, intensifying competition, technological change and general economic conditions. All forward-looking statements presented herein should be considered in conjunction with such filings. Medical Facilities does not undertake to update any forward-looking statements; such statements speak only as of the date made.

1 EBITDA, adjusted EBITDA, cash available for distribution and payout ratio are non-IFRS financial measures. While Medical Facilities believes that these measures are useful for the evaluation and assessment of its performance, they do not have any standard meaning prescribed by IFRS, are unlikely to be comparable to similar measures presented by other issuers, and should not be considered as alternatives to comparable measures determined in accordance with IFRS. For further information on these non-IFRS financial measures, including a reconciliation of each of these non-IFRS financial measures to the most directly comparable measure calculated in accordance with IFRS, please refer to Medical Facilities' most recently filed management's discussion and analysis, available on SEDAR at www.sedar.com.

SOURCE Medical Facilities Corporation

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