Medical Facilities Corporation Reports Full Year and 2016 Fourth Quarter Financial Results

Medical Facilities Corporation Reports Full Year and 2016 Fourth Quarter Financial Results (CNW Group/Medical Facilities Corporation)

TORONTO, March 23, 2017 /CNW/ - Medical Facilities Corporation ("Medical Facilities", or the "Company") (TSX: DR), today reported its financial results for the three-month and full year periods ended December 31, 2016. All amounts are expressed in U.S. dollars unless indicated otherwise.

In 2016, Medical Facilities made two key acquisitions which increased geographic diversity, overall capacity and patient care access. The Company continues to use a strategy that builds on the strengths and surrounding markets of its existing Centers and will add new acquisitions to build scale. 

2016 Highlights

• Acquired an indirect 62% interest in Unity Medical and Surgical Hospital ("Unity"), a physician-owned medical and surgical hospital located in Mishawaka, Indiana
• Acquired 100% of Prairie States Surgical Center located in Sioux Falls, South Dakota, through its subsidiary, Sioux Falls Specialty Hospital
• Increased revenue from continuing operations by 9.9% to $339.5 million, as compared to $308.8 million in 2015, due to 7.6% higher surgical case volume compared to the prior year and contributions from acquired facilities
• Income from operations of $68.1 million, down 8.9% as compared with $74.7 million in 2015. A higher proportion of government payors and shifts in case type were the main causes of the decline, along with increased operating expenses due to acquisition activity
• Increased cash available for distribution¹ by 10.5% to C$50.7 million, as compared to C$45.9 million in 2015
• Continued to pay monthly dividends of C$0.09375 per share, representing an annualized dividend of C$1.125 per share. At year end, the company has paid 153 consecutive dividends since inception
• Payout ratio¹ of 69.0% as compared with 76.7% in 2015

Q4 2016 Financial Highlights

• Increased revenue from continuing operations by 20.3% to $108.0 million, as compared to $89.8 million in Q4 2015, primarily due to revenue from new acquisitions and higher case volume at Company facilities
• Increased income from operations to $25.3 million, as compared to $25.1 million in Q4 2015 when adjusted for a $2.7 million non-cash reversal of an accrued rent liability at a Center in the prior year
• Payout ratio¹ of 49.0% as compared with 69.7% in Q4 2015

"We are pleased with the initial progress we have made with respect to acquisitions in 2016. Looking ahead, continued revenue growth while controlling costs remains a key priority for our hospital leadership and executive team. As our network expands, so will our buying power as well as opportunities to share best practices among Centers," said Britt T. Reynolds, President and CEO of Medical Facilities. "I would like to congratulate our local leadership for continuing to deliver high-quality care and optimum patient outcomes. In 2017, they are now supported by a well-defined strategy for growth that is actively assessing both existing and new markets to identify and act on accretive opportunities," concluded Mr. Reynolds.

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¹ 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.

Financial Results			For the three months ended December 31			For the year ended December 31
(thousands of U.S. dollars, except per share amounts and where otherwise noted)			2016	% change	2015	2016	% change	2015
Revenue from continuing operations			107,994	20.3%	89,760	339,472	9.9%	308,778
Consolidated operating expenses			82,691	33.4%	61,966	271,399	15.9%	234,086
Income from operations			25,303	(9.0%)	27,794	68,073	(8.9%)	74,692
		Finance costs (net interest expense)	1,745	131.7%	753	4,258	40.8%	3,024
		Finance costs (changes in value of derivative instruments and gain/loss on foreign currency)	(23,737)	205.5%	(7,770)	25,121	(208.1%)	(23,230)
		Income tax expenses (recovery)	8,584	(9.6%)	9,500	(944)	(104.0%)	24,719
Consolidated income from operations			38,711	52.9%	25,311	39,688	(43.4%)	70,179
	Attributable to:
		Owners of the Corporation	28,111	106.8%	13,343	9,748	(73.7%)	37,018
		Non-controlling interest	10,600	(11.4%)	11,968	29,940	(9.7%)	33,161
Earnings per share
		Basic	0.91	116.3%	0.43	0.31	(73.7%)	1.18
		Diluted	0.31	40.9%	0.22	0.30	(43.4%)	0.53
Cash available for distribution (C$)			17,805	41.7%	12,566	50,655	10.5%	45,853
Distributions (C$)			8,732	(0.4%)	8,766	34,929	(0.7%)	35,186
Cash available for distribution per common share (C$)			0.573	42.4%	0.403	1.631	11.3%	1.466
Distributions per common share (C$)			0.281	0.0%	0.281	1.125	0.0%	1.125
Payout ratio			49.0%	(29.7%)	69.7%	69.0%	(7.7%)	76.7%

As at December 31, 2016, the Company had consolidated net working capital of $74.0 million, including cash and cash equivalents and short-term and long-term investments of $67.6 million and accounts receivable of $61.1 million, compared with net working capital of $85.7 million, including cash and cash equivalents and short-term investments of $70.9 million, and accounts receivable of $48.8 million, as at December 31, 2015. Long-term debt at the Centers' level, including the current portion, was $76.9 million and the Corporate credit facility was $47.8 million as at December 31, 2016 compared with $35.4 million of total long-term debt at the Centers' level as at December 31, 2015.

Medical Facilities' complete fourth quarter 2016 financial statements and management's discussion and analysis will be issued and filed on SEDAR at www.sedar.com on Thursday, March 23, 2017 and will be available on the same day on Medical Facilities' website at www.medicalfacilitiescorp.ca.

Normal Course Issuer Bid ("NCIB")

The Company repurchases its common shares in the open market. By repurchasing and cancelling its common shares, Medical Facilities reduces the total amount of dividends payable, resulting in cash savings for the Company. The remaining shareholders also benefit from the NCIB as the distributable cash per share increases. During the year ended December 31, 2016, the Company purchased 67,500 of its common shares at an average price of Cdn$13.55 per share, for a total consideration of Cdn$0.9 million. The Company did not purchase any of its common shares during the three-month period ended December 31, 2016.

As at December 31, 2016, the Company had 31,045,945 common shares outstanding.

Notice of Conference Call

Management of Medical Facilities will host a conference call today, Thursday, March 23, 2017 at 8:30 am ET to discuss its full year and fourth quarter 2016 financial results. You can join the call by dialing 647.427.7450 or 1.888.231.8191. A taped replay of the conference call will be available until Thursday, March 30, 2017 by calling 416.849.0833 or 1.855.859.2056, reference number 82018335. A live audio webcast of the call will be available at http://bit.ly/2mm7iNS

To view Medical Facilities Q4 2016 financial statements and notes, please click here: http://files.newswire.ca/940/MedicalFacilitiesQ4.pdf

About Medical Facilities

Medical Facilities owns controlling interests in five specialty surgical hospitals located in Arkansas, Indiana, Oklahoma and South Dakota, as well as an ambulatory surgery center in California. The specialty 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 center specializes in outpatient surgical procedures, with patient stays of less than 24 hours. In addition, Medical Facilities owns controlling interest in a diversified healthcare service company located in Oklahoma City that provides third-party business solutions to healthcare entities such as physician practices, facilities, and insurance companies. 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.

SOURCE Medical Facilities Corporation

Tyler Murphy, Chief Financial Officer, Medical Facilities Corporation, 416.848.7380 or 1.877.402.7162, [email protected]; Craig MacPhail, Investor Relations, NATIONAL Equicom, 416.586.1938, [email protected]